Project “REINDEER”
Date: March 2000

International Public Fund for Support to Social and Economic Development of the Northern Indigenous Peoples
Contact: Stanislav I. Dorzhinkevich <founip@dol.ru>
Date: July 2000

Stage 2: 
Marketing research on reindeer products in the Yamalo-Nenets Autonomous District
with the aim to increase employment and well-being of the northern indigenous population
__________________________________________________________________________________
Implementing organisation: International Public Fund for support to economic and social development of the northern indigenous peoples (Fund NIP)
Supporting organisations: Administration of Yamalo-Nenets Autonomous District, Union of Reindeer Herders of Russia.
Term of project completion: 2 years
The sum sought from financing organisation: 
	US$ 57,684
__________________________________________________________________________________

1. SUMMARY
Fund NIP (the International Public Fund for support to economic and social development of the Northern indigenous peoples) considers as one of its major tasks assistance to development of traditional branches of the northern indigenous peoples' economy, including promoting their goods on the Russian and international markets.
	Through Project "Reindeer", the Fund NIP plans to use the existing reindeer farm in the Yamalo-Nenets Autonomous District as a base for the development of a pilot enterprise for complex processing of reindeer products, including not only meat and skin, but also deer velvet, sinew, endocrines and enzymes. The project could serve as a model for similar initiatives elsewhere in the Russian North, eventually reviving and raising the standard of reindeer herding throughout the region. 
	The first stage of the project, in which the necessity of a network of reindeer processing facilities was shown, has been completely executed and paid for by Yamalo-Nenets Autonomous District (YNAD) administration. Its full cost was 22,400 US dollars.
	Marketing research on reindeer products, including the analysis of the consumers, competitors and market environment, will be an important part of the project. Marketing analysis will allow the determination of optimum volumes of production, and costs and profit in conditions of an economically competitive environment.
	Implementation of the second stage of the “Reindeer” project will require 57,684 US dollars.

2. PROBLEM DESCRIPTION
The indigenous population of the Russian North now totals about 200,000 and consists of 30 peoples who lead a traditional, nomadic way of life. They represent 2 % of the entire population of these regions. They live in places they have traditionally inhabited and lead a way of life based on traditional economic and land use patterns. The Soviet policy of accelerated industrial assimilation of the Russian North and intensive integration of the indigenous peoples in a unified national economic system resulted in the loss of many elements of traditional material and spiritual culture. The hasty and unreasoned realization of market reforms of the last decade severely affected the northern indigenous peoples, destroying a system of welfare that included economic support to reindeer herding which traditionally has been a subsistence basis for the majority of these peoples. As a result of these reforms, the northern domestic reindeer herd was reduced from 2,260,000 head in 1992 to 1,415,100 head in 1998 (even lower than the pre-war level), which severely endangered the cultural survival of these indigenous groups. This has been accompanied by a sharp decrease in employment and standard of living among northern indigenous peoples. Between 1992 and 1997 the rate of unemployment among the aboriginal population was multiplied 7.9 times, while the average of Russia was 3.5 times. 
	The subsistence economy of these peoples traditionally comprised a combination of reindeer herding, fishing, hunting and gathering of wild fruits and plants.
	Prior to the 20th century the Russian Empire chose a policy of indirect management of the northern indigenous people: the authorities collected Yasak (State Tax) but did not interfere with their everyday life. Up to the beginning of the 20th century the natives of the Siberian North managed to preserve their cultural uniqueness, including their traditional economy and social organisation.
	The 20th century, however, was marked by a national policy that aimed to enforce the incorporation of indigenous peoples in the wider process of the country's development. The principal phases of this policy were: the campaign against illiteracy in the 1920s, formation of national districts in the 1920s-40s, collectivization in the 1930s, transition to a sedentary lifestyle in the 1950s, rapid industrialization in the 1950s-60s, and incorporation into the wider market economy in the 1990s.
	The positive effects of this policy included the development of written languages for all indigenous peoples, state education, welfare programmes, and the establishment of nature reserves and other protected areas. 
	At the end of 1980s, the indigenous peoples of the North joined the country's democratic transformations. All-union and regional associations of indigenous peoples were established; in 1993 these were transformed into the current Association of the Indigenous Peoples of the North, Siberia and Far East of the Russian Federation (RAIPON). Parliamentarians elected from the indigenous peoples of the North actively participated in shaping Russian legislation.
	The transfer of Russia's economy to market rails had the hardest impacts on the aboriginal peoples of the North. Cuts in the budgets of public health, culture and welfare services has resulted in disastrous effects on their socio-economic position. Attempts of the state to correct the situation by establishing Goskomsever (State Committee for the Development of the North), with the prime task of developing state programmes to support the aboriginal population, have been obviously insufficient. Compounding difficulties, the activities of Goskomsever were seriously hindered by endless reorganisations and transfers of its functions from one to another ministry. Finally, in 1994 financial support for the traditional economy was stopped.
	Against a backdrop of a nation-wide economic crisis, government measures have been inadequate to address the regional crisis of the North. Only 5-10 % of budgets for national and regional development programmes is actually financed, and this has very little influence on the plight of Northern indigenous peoples. 
	As has been seen in Europe, Asia and Australia, the practice of "helping backward people" to join "civilized people" does not yield favourable outcomes, regardless of the funds allocated to the endeavour. Such attempts inevitably result in the destruction of cultural and economic bases of traditional societies.
	One realistic and effective strategy for ensuring the well-being of the indigenous peoples of North, and the continuation of their unique ways of life is the development of traditional branches of their economy in their traditional residence areas.
	The experience of Norway and Finland in assisting Saami reindeer herding development with the use of modern processing technology and marketing has shown that herding can serve as the basic life-support of the natives, ensuring an acceptable standard of living. Reindeer herding farms in New Zealand and Canada have done well for themselves, seizing a good share of Southeast Asian markets with reindeer products used as raw materials in traditional Eastern medicine. These examples should be used as role models to increase profitability of Russian reindeer herding.

3. IMPLEMENTING ORGANISATION
This situation outlined above induced a number of former employees of federal departments which were involved with the northern indigenous peoples to initiate the establishment of the International Public Fund for support to social and economic development of the Northern indigenous peoples (Fund NIP).
	Fund NIP is a non-governmental, noncommercial, and voluntary organisation of citizens concerned about the position of the northern indigenous peoples and aiming to promote a revival of their traditional economy and culture.
	One of the main founders of the Fund is the Association of the Indigenous Peoples of North, Siberia and Far East of the Russian Federation (RAIPON); the association has 50 % of the votes on the Board of the Fund. In practice, the Association determines priorities, implements political management, and carries out interregional and international coordination. The Fund, on the other hand, organises implementation of scheduled projects and measures directed toward socio-economic development of the Northern indigenous peoples, protection of their rights, revival of traditional economy, and solidifying international cooperation in the Arctic Region,
	The Chairman of the Board of the Fund is Mr. P. Ch. Zaidfoudim, doctor of biological sciences and until 1998 the first deputy chairman of the State Committee of the Russian Federation on Problems of Northern Development (Goskomsever). The General Director of the Fund is Mr. S. Dorjinkevich, who served as the deputy chief of the department of the indigenous peoples in Goskomsever until 1998. All other leading Fund personnel have long experience in responsible posts in official bodies connected with the development of the economy of the Russian North.
	The Fund NIP has been in practical operation since April 1998. Since then it has prepared a number of project proposals at the request of the Northern indigenous communities.
	The Fund cooperates with the International Arctic Scientific Committee (IASC), jointly developing some projects.
	Giving special attention to problems of environmental protection, the Fund is now undertaking a project to utilize barrels from fuel and lubricating materials (in the Russian Arctic there are some hundreds of thousands of empty barrels). The Fund is also carrying out a project involving the use of non-traditional renewable power sources in the Koryak Autonomous District (Kamchatka) with the aim of maintaining a stable power supply and decreasing contamination of the environment. 

4. PROJECT "REINDEER": GOALS AND OBJECTIVES
The aim of the project is an improvement of the well-being of the northern indigenous population, including increasing their employment, by developing complex processing of reindeer products and marketing these products. The entire project consists of three stages.
Stage 1 of the project, a substantiation of the necessity of reindeer products processing units in the Yamalo-Nenets Autonomous District (YNAD), has already been carried out:
1. Current condition of the northern reindeer herd and current processing standards and methods in YNAD.
2. Types of required processing units.
3. Routes of reindeer herds to processing units.
4. The scheme of an optimum disposition of processing units in the district, taking into account current reindeer farm locations, seasonal routes of herds and slaughter and processing sites.
5. Potential of endocrine and enzyme raw materials.
6. Possibilities for wild reindeer hunting, including organisation of wild reindeer processing units.
A copy of the report can be obtained from the Fund NIP.
Stage 2 consists of  marketing research on reindeer products. As an outcome of this research, a report with concrete recommendations for the following problems will be prepared:
1. Formulating a list of reindeer products which have a stable demand in external and internal markets.
2. Behavior analysis of consumers, competitors and the market environment.
3. Use of modern technologies for reindeer products processing, drawing from the experience of Norway, Finland, New Zealand and Canada.
4. Competitiveness evaluation of the products and the measures to increase it.
5. Determination of optimum volume of production to ensure profitability.
The marketing report will contain the data necessary for the development of a pilot project of the enterprise.
Stage 3 is the development of the pilot enterprise for complex processing of reindeer products. On the basis of the stage 2 report, the following measures will be undertaken:
1. Preparation of a refurbishment plan for the existing enterprise with the aim of full use of raw materials and increase of production.
2. Development of the pilot enterprise to process a full range of reindeer products.
2.1. On a tender basis a contractor will be chosen to deliver, mount and start-up newly purchased equipment, as well as to train reindeer-processing workers in the maintenance and use of the equipment.
2.2. For an initial period of one year, an advisor will provide ongoing assistance to the pilot project, particularly to the enterprise's managers, with respect to production and marketing.
3. Rendering assistance to the pilot enterprise regarding the organisation of production and product sales with the aim of ensuring its profitability.
The budget of the third stage and the structure of the working group for its implementation will be determined by results of work on the second stage of the project. 

5. STAGE 2: MARKETING RESEARCH
Stage 2 is the part of project for which funding is presently being applied. The time frame is two years from the start of this stage of the project.

5.1. Personnel
To implement the second stage of the project, Fund NIP will form an international working group consisting of:
•	a representative of the Fund who will serve as project coordinator, 
•	an expert in marketing,
•	an expert in the processing of reindeer products, 
•	a representative of the reindeer enterprise.

5.2 Research issues
1. The working group will conduct research on the reindeer products market, focusing on the following:
•	Reindeer products which have a stable demand in the internal and external markets,
•	The consumers, competitors and market environment;
•	Competitiveness of products;
•	Optimum volume of production, ensuring profitability of work;
•	Basic data necessary for preparation of the third stage of the project.
2. The group will study world practice and technology in reindeer products processing, in particular in Norway, Finland, Canada and New Zealand, focusing on the following issues:
•	Modern technological and processing advances in reindeer husbandry, in Russia and in Scandinavia and New Zealand;
•	Assessing the potential for making use of the contacts and infrastructure forged by New Zealand deer herding firms in the markets of Southeast Asia;
•	Formulation of concrete and specific recommendations for revitalizing reindeer husbandry as a whole, and in particular for ensuring the success of  the proposed pilot project;
•	Recommendations on modern technological equipment, from slaughtering through delivery of products to the consumer, on the basis of profitability of the whole process.
3. The group will select according to the recommendations of the Reindeer Herders Union of Russia a representative reindeer herding enterprise which will be developed as the pilot project.
4. The group will conduct a marketing analysis of goods produced by the selected enterprise, and will develop recommendations for realizing the necessary measures to increase profitability.

5.3. Output
On the basis of the assembled information the group will prepare a report, which will consist of two parts:
A: The general review of products processing problems of the whole deer herding branch and its market;
B: Evaluation of the reindeer herding enterprise selected to serve as the pilot project, elaboration of the recommendations on the extension of its products list, and appropriate refurbishment of processing production.
The report will contain basic data necessary for development of the pilot project of the enterprise (stage 3).

5.4. Monitoring of the project
1. The management of the Fund NIP will monitor and re-evaluate the implementation through quarterly meetings of the participants. 
2. The leader of the working group at the end of each year of the project will prepare general and financial reports and present them to sponsoring organisations and interested state departments.
3. At the end of the second stage of the project the leader of working group prepares:
- A full report on the work made;
- Selected reports and publications prepared during the project;
- A financial report.

5.5. Budget 

6. FUTURE FUNDING (Stage 3)
1. The successful implementation of the second stage of the project will create an economic interest in financing the third stage of the project.
2. It is assumed that the main financing of the third stage of the project will be executed on a commercial credit basis.
3. The necessity and volume of the financial donor participation in financing the third stage will be determined by the results of the second stage.
4. The implementation of the third stage of the project will be entrusted to Fund NIP.

7. CONTACT INFORMATION:
International Public Fund for Support to Economic and Social Development of the Northern Indigenous Peoples 
(Международный общественный фонд содействия экономическому и социальному развитию коренных народов Севера)

Contact persons:
Pavel Kh. Zaidfudim (Зайдфудим Павел Х.), Chairman of the Board
Stanislav I. Dorzhinkevich (Доржинкевич Станислав И.), General Director

Address:
RUS-117415 Moscow (Москва), Pr. Vernadskogo 37, building 2 (пр. Вернадского, 37, корп. 2)

phone: (+7) 095 938 9534
fax: (+7) 095 930 4628
e-mail: founip@dol.ru

5.5. Budget (in US$)

5.5.1. PERSONNEL

SALARIES AND WAGES

Quantity	Post	Salary
$ /month	Duration
(months)	Total	 Obtained	Sought	
1 (75%)	Leader	300		2700	0	2700	
1	Marketing expert	250	12	3000	0	3000	
1	Processing expert	250	12	3000	0	3000	
1 (25%)	Representative of reindeer  nterprise	200	12	600	600	0	
Total				9300	600	8700	

CONSULTANTS and CONTRACT SERVICES

	Payment
$ /day	Number of days	Total	Obtained	Sought	
Payment of services of the 
consultants	40	60	2400	0	2400	
Payment of the interpreter	50	60	3000	0	3000	
Total			5400	0	5400	

SOCIAL and MEDICAL INSURANCE, TAXES

	Total	Currently existing	Sought	
40.5 % from the wages	5953	243	5710	

Total wages	20653	843	19810	

5.5.2. NON-PERSONNEL DIRECT COSTS

SPACE COSTS

Location, 1 room of 20 sq.m.
$150/month for 12 months	1800	0	1800	
Municipal services $20/month	 240	0	 240	
Total	2040	0	2040	

PURCHASE OF EQUIPMENT

PC-386 computer with supplies for preparation of the documentation	1500	0	1500
	
Laser printer with supplies	 700	0	 700	
Total	2200	0	2200	

SUPPLIES

Office supplies 250 $/year	250	0	250	

TRAVEL and TRANSPORT COSTS

4 business trips to reindeer herding enterprise, 4 pers. for 7 days

Transport costs: 4 x $100 x 4 pers.	1600	0	1600	
Hotel and per diem 4 x $30 x 4 pers.x 7 days	3360	0	3360	
Total	4960	0	4960	

2 business trips to Norway, 4 pers., for 5 days

Transport costs 2 x 4 x $300	2400	0	2400	
Hotel and per diem 2 x 5 x 4 $150	6000	0	6000	
Total	8400	0	8400	

2 business trips in Southeast Asia, 4 pers. for 5 days

Transport costs 2 x 4 x $700	5600	0	5600	
Hotel and daily allowances 2 x 4 x 5 x $150	6000	0	6000	
Total	11600	0	11600	
Contingencies $50 x 4 pers. 	200	0	200	

Total on all business trips	25160	0	25160	

MISCELLANEOUS COSTS

The publication of the marketing report 
$3/copy - 200 copies.	600	0	600	
Mail costs $100/year	100	0	100	
Total	700	0	700	

5.5.3. INDIRECT COSTS

	Total	Currently existing	Sought	
15 % from main direct costs and wages 	7524	0	7524	

5.5.4. TOTAL

	Total	Currently existing	Sought	
Total of main direct costs 	30350	0	30350	
Total of direct costs 	50160	0	50160	
Total of indirect costs	7524	0	7524	
FULL COST of the SECOND STAGE of the PROJECT: 
US$ 57684