Home Operations Projects MEDM Arecanut Leaf Plate Manufacturing Cluster Development Project
Arecanut Leaf Plate Manufacturing Cluster Development Project
The MEDM division of Dhriiti has been promoting arecanut leaf plate manufacturing in the North Eastern states of Assam and Meghalaya since November 2004. After identifying the potential of the arecanut leaf plate industry in the North East in 2004, Dhriiti started off with its own pilot production unit at Barpeta in February 2005. The pilot unit was used by Dhriiti to learn about the whole process of producing and marketing arecanut leaf plates by direct practical experience before spreading the concept among rural producers.

Dhriiti is working to set up small manufacturing units of disposable plates and bowls made from the sheath of arecanut plants. Each arecanut leaf plate manufacturing unit would provide direct employment to 3 persons and there would be an indirect impact of creating employment for 10 other persons. Hence the enterprise would affect employability in a positive light in the region. At the same time it would lead to production of an eco-friendly product from a resource which is generally a waste in these regions.
 
This activity can generate a business of more than 100 crores and Dhriiti’s target is to make arecanut leaf plate manufacturing a 100 crore industry for rural North East by 2015.
 
It has been a very valuable learning experience for Dhriiti over the last three years. We have realized that implementation of a enterprise development project is just not about creating a value chain but to simplify the process for each and every stakeholder in the value chain and creating a win-win relationship between all the stakeholders. We have successfully created this relationship, but what needs to be done hereafter is to strengthen this relationship both in terms of quantity and quality. We are committed to our vision of creating a 100 crore arecanut leaf plate industry for rural Assam and Meghalaya.
 

Project Location

Based from Dhriiti’s branch office in Barpeta in Assam, the MEDM division is implementing the project throught out Assam and in parts of Meghalaya. As the BTAD region has huge raw material resource, Dhriiti has special focus in the 4 Bodoland districts of Baska, Chirang, Kokrajhar, Udalguri and the adjoining districts of Barpeta, Nalbari and Bongaigaon to promote this project.
 

 

Project Objective & Background

It is clear from the macro economic data of Assam that poverty rate is fast increasing in the region and the per capita income is in a decline especially in the rural areas. The unemployment rates are increasing and there is too much dependence on the primary sector. The problem of unemployment amongst the rural youth in the region is leading them towards anti-social behavior. According to Dhriiti, unemployment is the root cause of increasing insurgency and terrorism in this region and it is very important to divert the attention of the youth of this region towards gainful and productive activity. The way out of the unemployment and insurgency scenario is to promote self employment amongst the youth of rural Assam by encouraging and supporting them to set up their own micro enterprises. Thus Dhriiti’s objective is to address the problem of unemployment through the promotion of sustainable community level micro enterprises.

Taking the first step in that direction, the first micro-enterprise selected by Dhriiti is Arecanut Leaf Plate Manufacturing units. Dhriiti is working to set up small manufacturing units of disposable plates and bowls made from the sheath of arecanut plants. Each arecanut leaf plate manufacturing unit would provide direct employment to 3 persons and there would be an indirect impact of creating employment for 10 other persons. Hence the enterprise would affect employability in a positive light in the region. At the same time it would lead to production of an eco-friendly product from a resource which is generally a waste in these regions. There is also enough raw material available in Assam to set more than 3000 manufacturing units even if 30% of the raw material can be tapped. This activity can generate a business of more than 100 crores and Dhriiti’s target is to make arecanut leaf plate manufacturing a 100 crore industry for rural North East by 2015.

Product Description

The product which has been launched is plates and bowls of different shapes and sizes made out of arecanut leaves. These disposable utensils can be used for serving and eating food. Some of the qualities of the raw material are as follows:
•    Completely Eco-friendly
•    Bio-degradable and Compostable
•    Chemical free and Non-Toxic
•    Hygienic
•    Natural and attractive appearance
•    Microwave-oven & Refrigerator safe
•    Sturdy and light which makes it possible to use in buffet parties
•    Can hold liquid for 3-4 hours
•    Can be easily moulded into different shapes and sizes

The above qualities of the raw material makes these plates much better than the existing disposable plates available in the market, made out of plastic, thermocol, paper and sal patta. Thus it has a potential demand at places like marriage halls, hotels, food chains like Haldirams, temples etc. If marketed properly then international environment friendly natural product based markets are also accessible.
 
Product Photos
 

Project History

The MEDM division of Dhriiti has been promoting arecanut leaf plate manufacturing in the North Eastern states of Assam and Meghalaya since November 2004. After identifying the potential of the arecanut leaf plate industry in the North East in 2004, Dhriiti started off with its own pilot production unit at Barpeta in February 2005. The pilot unit was used by Dhriiti to learn about the whole process of producing and marketing arecanut leaf plates by direct practical experience before spreading the concept among rural producers. We built up a knowledge base on various aspects like raw material collection, production process, machinery, financial feasibility, market demand and existing dynamics of this region.

In 2005-06, the team concentrated mainly on research and development to provide solutions for all the production related problems. During this process Dhriiti changed the production technique to suit the North Eastern conditions and designed gas based machines with the help of Sandhya Engineering Concern in Howrah, so that even producers located in interior areas could manufacture the plates and benefit from the project. Along with R&D activities Dhriiti also generated awareness for this product not only amongst rural communities but also with other stakeholders like local NGOs, government departments, banks etc.

In 2006-07, Dhriiti established 18 units in Barpeta and Baksa districts of Assam and 1 in Tura, Meghalaya. Most of these units were financed by State Bank of India (SBI) and Assam Gramin Vikas Bank (AGVB) under Khadi Village Industries Commission’s (KVIC) Rural Employment Generation Programme (REGP), which provides a 30% back end subsidy to the entrepreneurs. The pilot initiative was supported by Friends of Woman’s Word Banking (FWWB) under the USAID Innovation Fund.

In 2007-08 Dhriiti further streamlined the production process in coordination with the existing producers and reduced the production risks by 90%. During this financial year “Tambul Plates Marketing Company” (TPMC) was also established with support from Sir Dorabjee Tata Trust (SDTT), to provide marketing support to the producers. During this year only 2 new units were promoted and more focus was laid on marketing and streamlining the production and procurement processes at the field level. Dhriiti also developed a standard training package so that it can reach out to maximum number of producers. In the last quarter of this financial year 50 new entrepreneurs were trained to set up new units. The arecanut initiative was also selected as a Rural Business Hub (RBH) by the Ministry of Panchayati Raj (MoPR), Government of India and the Confederation of Indian Industry (CII). NABARD also supported the initiative during this year through various training programmes and Rural Innovation Fund Scheme.

In 2008-09, another 23 units were promoted. A complete review of the arecanut programme was done during this year and a standardized process through a cluster based approach is being developed for large scale expansion of the programme.
 

Financial Feasibility of Manufacturing Unit

The model scheme developed by Dhriiti requires an initial investment of Rs.1.4 lakh to establish a manufacturing unit. Each manufacturing unit consists of a machine room (includes finished product stocking space) and a raw material stock room. These units have 2 arecanut leaf plate machines with 3 dies of different sizes. The dies can be easily interchanged and each die can be attached to any machine. The parts of the machine are also flexible and can be easily replaced or repaired. The units have a capacity to process 1,50,000 pieces of arecanut sheaths per annum producing around 4,50,000 plates/bowls. In most of the cases the entrepreneur contributes 5% of the capital and the rest is a bank loan with 30% back end subsidy. This is the most commonly used model but some entrepreneurs also go for single machine smaller units. Presently some SHGs and informal groups have also opted for 3-5 machine units which require an initial investment of more than Rs.2 lakhs. The costing and profitability of each units is as follows:
 

S. No.

Particulars

Amount/Quantity

1

Annual Production (300Days)

2,78,400 pieces

2

Average Variable Cost of Production per piece

0.42

3

Average Selling Price per piece

0.73

4

Annual Fixed Cost

34,600

5

Annual Projected Turnover

2,03,232

6

Annual Projected Profit

51,704

* Due to change in initial investment and some other factors the figures have changed a little bit from the earlier proposal.
 
Presently as most of the producers are not doing this as a full time activity they are earning a profit of Rs.2500-3000 per month, but in this financial year with most of the initial hiccups of first year addressed the producers have started devoting more time to the activity. Apart from the profit, some producers also get another Rs.2000-3000 from the labour income, as they are using family labour.
 

Achievements in Arecanut Leaf Plate Programme

A) Establishment of Units: In the last three years Dhriiti has been able to promote 44 manufacturing units mostly in Barpeta & Baksa district and some spread across Assam. Out of these 44 units 6 have been failures and have closed down and the rest are operating. These 44 units have also led to following outputs.

Sl.No.

Particulars

Quantity / Amount (Approx)

1.

Direct employment generation

75 people

2.

Indirect employment generation

350 people

3.

Income to farmers by selling arecanut sheaths

Rs.2,00,000.00


B) Establishing Tambul Plates Marketing Comapany: Tambul Plates Marketing Company (TPMC) is a company jointly promoted by the producers of arecanut leaf plates and Dhriiti to market the plates nationally and internationally. TPMC was established in March 2007 and started its operations in May 2007. TPMC has not only provided 100% marketing support to the producers but also helped them to improve their qualities and efficiency.

C) Technology Development:  Technology Development has been one of the biggest achievements of Dhriiti in the last 3 years. Initially when we had started production in the pilot unit not only were the machines unsuitable for the region but most of products were of inferior quality and was highly prone to fungus. Today none of our customers have ever complained about the quality of the product. Dhriiti has achieved the following under technology development:

•    Developed efficient and effective gas based machines to suit the North Eastern conditions
•    Developed innovative cutting technology which leads to faster production and good finish of products.
•    Developed simple procedures to counter the fungus problem without use of any chemicals. Presently the incidence of fungus on our products is less than 1%.
•    Developed standardized dies of various shapes and sizes.
•    Developed standard production process to suit the climatic conditions of North East.
•    Designed a standard stock room and procedure for raw material storage due to which raw material can be stocked for more than 6 months presently.
•    Designed quality control and packaging techniques which improved the shelf life of the product.

D) Capacity Building: Capacity building is a very critical component for the successful implementation of any programme. In the last financial year Dhriiti has worked a lot on the capacity building techniques of new entrepreneurs so that the project can be expanded successfully throughout the region.

•    Developed a standard 6 day residential training package for new entrepreneurs.
•    Developed a highly interactive training module for imparting all the soft, functional and technical skills required to operate an arecanut leaf plate unit.
•    Developed a comprehensive guidebook for trainees to refer for all kind of queries.
•     Trained more than 100 potential entrepreneurs in the last 8 months.

E) Market Development: This product is an excellent substitute for thermocol and plastic plates which has huge demand in the market. There is also a large unsatisfied demand for bio-degradable disposables in the food service industry. It is estimated that by 2008, close to 3% of $32 billion worth disposables market in foodservice will be occupied by eco-friendly biodegradable material manufacturers. Market development has been one activity in which Dhriiti has faced least resistance. Wherever the product has been showcased, it has got a very god response. People have not only appreciated the product but have shown willingness to buy the product by immediately placing orders.

•    Got orders for more than 10 lakh pieces in 2007-08.
•    Most of our customers have placed repeat orders.
•    Promoted the product in various cities within and outside North East.
•    Promoted the product amongst sweet shops, temples, wholesalers, fast food outlets apart from retail customers.
•    Sold 25,000 products to small retail customers in 4 days in Delhi in an exhibition.
•    Have received various export queries.
•    Have also received queries for Commonwealth Games 2010.
 

Implementation Strategy

MEDM’s delivery mechanism is unique. It provides support to the entrepreneur in the complete value chain (machinery manufacturers to producer institution) and supply chain (raw material banks to end product marketing) for this industry. MEDM not only provides training to the beneficiaries but also provides technical, financial and marketing linkage. The implementation process ensures that the beneficiaries receive adequate amount of hand holding to set up their enterprises and establish the right systems and institutions so that they are not dependant on Dhriiti after a two-year support period. Dhriiti provides complete end-to-end solution to the beneficiaries. There are seven stages of work in promoting an arecanut leaf plate manufacturing unit. The stages are as follows:

Stage 1: Survey and baseline study of potential area
Stage 2: Creating awareness amongst community and promotion of the project amongst enabling agencies
Stage 3: Capacity building of interested new entrepreneurs and old entrepreneurs
Stage 4: Financial linkage of entrepreneurs raising initial investment
Stage 5: Technical linkage of entrepreneurs for establishing units and producing arecanut leaf plates
Stage 6: Marketing linkage of entrepreneurs for selling arecanut leaf plates
Stage 7: Research & Development for increasing efficiency and effectiveness of units
Stage 8: Continuous monitoring and evaluation of process to identify the loopholes and bottlenecks and thereby improving the process

All these stages of work will be jointly implemented by Dhriiti and TPMC. Though they are two different institutions yet a common team is managing both the institutions and over a period of time the activities are being handed over to TPMC to be run on a commercial basis.

Additional Arecanut project documents:
  1. Arecanut Leafplate Manufacturing Project Proposal
  2. Machine Diagram
  3. Macro Economic Data of Assam
  4. Raw Material Availability