Government of Nepal
Ministry of Agriculture and Cooperatives
Department of Agriculture
COMMERCIAL AGRICULTURE DEVELOPMENT PROJECT Project Management Unit Biratnagar, Nepal
F
FINAL REPORT PRODUCT CHAIN STUDY TOMATO
B
C
October 2008
Submitted by:
FBC
Full Bright Consultancy (Pvt.) Ltd. 199/53, Maitidevi Marg, Maitidevi, Kathmandu, Nepal Tel: 44 33149 and 44 11780 Fax: ++ 977-1-44 13331 E-mail:
[email protected]
ABBREVIATIONS
ADB ADBL APP BCR CAA CADP CAF DADO DDC DoA EDR GoN Ha MOAC MT NARC SWOT VDC
Asian Development Bank Agriculture Development Bank Limited Agriculture Perspective Plan Benefit Cost Ratios Commercial Agriculture Alliance Commercial Agriculture Development Project Commercial Agriculture Fund District Agriculture Development Office District Development Committee Department of Agriculture Eastern Development Region Government of Nepal Hectare Ministry of Agriculture and Cooperatives Metric Ton National Agriculture Research Council Strength Weakness Opportunities and Threats Village Development Committee
TABLE OF CONTENT CHAPTER I: INTRODUCTION ................................................................................... 1 1.1 RATIONALE OF THE STUDY ............................................................................. 2 1.2 OBJECTIVE OF THE WORK............................................................................... 2 1.3 SCOPE OF WORK .............................................................................................. 2 1.4 METHODOLOGY................................................................................................. 3 CHAPTER II: PRODUCTION ...................................................................................... 4 2.1 LOCATION AND CLUSTERS.............................................................................. 4 2.2 THE PRODUCTION PROCESS .......................................................................... 5 2.3 COST OF PRODUCTION.................................................................................... 5 2.4 TECHNOLOGY AND PRODUCTION STATUS................................................. 10 2.5 PRODUCT CHARACTERISTICS ...................................................................... 10 2.6 ECONOMY OF SCALE...................................................................................... 10 2.7 EMPLOYMENT CHARACTERISTICS............................................................... 11 CHAPTER III: MARKETING....................................................................................... 12 3.1 MARKET GROWTH AND TRENDS .................................................................. 12 3.2 TRADE FLOW AND VOLUME........................................................................... 13 3.3 PRICE VARIATION............................................................................................ 15 3.4 MARKETING CHAIN ......................................................................................... 15 3.5 PROFIT MARGIN .............................................................................................. 16 CHAPTER IV: VALUE CHAIN MAP AND ANALYSIS ............................................... 18 4.1 THE VALUE CHAIN MAP .................................................................................. 18 4.2 THE FUNCTIONS AND ACTORS IN THE MAP................................................ 18 4.3 THE ROLE OF THE ENABLERS....................................................................... 22 4.4 VALUE CHAIN ANALYSIS ................................................................................ 23 CHAPTER V: SWOT ANALYSIS............................................................................... 26 5.1 BACKGROUND ................................................................................................. 26 5.2 ANALYSIS ......................................................................................................... 27 CHAPTER 6: MAJOR ISSUES AND PROBLEMS ................................................... 29 6.1 PROCESSING INDUSTRY................................................................................ 29 6.2 TRADERS.......................................................................................................... 29 6.3 PRODUCER/FARMER ...................................................................................... 30 CHAPTER VII: CONCLUSION AND RECOMMENDATIONS ..................................... 31 7.1 CONCLUSION ................................................................................................... 31 7.2 POTENTIAL INTERVENTIONS......................................................................... 31 SPECIFIC RECOMMENDATION FOR CONTRACT FARMING OF TOMATO FOR 7.3 PROCESSING ....................................................................................................... 33 7.4 ACTION PLAN ................................................................................................... 34 ANNEXES
EXECUTIVE SUMMARY Tomato is not a new crop in the project area and is being cultivated in climatically suitable area of all districts within the CADP command area. Many suitable varieties with high production potential are available, but the most popular ones are Abinash and Allrounder. All operations involved in the production of tomato are done manually in the Hills while some mechanization exists in the Terai in the form of ploughing the land by bullocks and by tractors. Of the two most prevailing varieties of tomato in the project area, farmers prefer Allrounder because it has thick skin, is firm and easier to handle, but it is not suitable for the processing industry. Abinash, on the other hand, is juicy and pulpy and is suitable for processing into ketchups, pastes, and purees, but it gets easily damaged during storage and transportation and therefore is not preferred by the farmers. Cost of production is considerably higher in the Hills than in the Terai, but the benefits are also higher in the Hills because of the climatic suitability for the production of off-season crops which fetches higher prices. Labor constitute 50 percent of the total cost of cultivation in the Hills, while it accounts for only 39 percent in the Terai, but nevertheless, it is the highest cost component. As tomato cultivation is highly labor intensive, it has a potential for employing 166,050 man-days per year in the Hills and 622,415 man-days in the Terai within the project area. The average yield of tomato in the project area is about 18 tons per hectare and is increasing due to advances in technology and growing awareness over the years during the last decade. Dharan, Birtamod, and Biratnagar are the major markets for tomato in the project area. Eventually, all commercial production of tomato enters one of the three market places. Volume of trade varies by season in all districts, but there are complementarities between the times of production between the Hills and the Terai. Production peaks in the summer in the Hills (from May to September) when it is off-season in Terai. On the other hand, it can be produced in the Terai in winter (from November to March) when it is too cold in the Hills. Prices also vary throughout the year in all districts. Of the locally produced tomato that comes into the market, 5% is consumed in the local hat bazaar; 81% finds its way eventually into the Nepali retail market with local collectors, traders, large and small wholesalers and other actors stepping in between; about 8% is consumed by the processor; and the remaining 6% is exported to India from the bordering towns. The processor imports the rest of its requirements of fresh tomato from India and tomato paste from China. The overall prices are higher in the Hills than in the Terai, but in both cases, the prices paid by the consumers are two to three times the farm gate prices. The profit margins also appear to be much higher at all levels in the hills than in the Terai. At a first glance, the profit margin at the farm gate level appears high, but since the volume of transaction at this level is low, the producers have limited income from tomato cultivation. On the other hand, although the margin seems to be low at the wholesale level, they (the wholesalers) gain considerably by trading in large volumes and increased turn over. Thus, it seems that the producers must increase area under tomato in order to really
commercialize tomato farming and to obtain high income. There is a possibility that the margin at the farm level might go down with increased competition, but the total income will be greater due to larger volume sold. Production, collection, trading, processing, trading and retailing are the main functions of the value chain map while the actors who perform specific functions within these broad activities include the farmer/producer, local collectors, roadhead traders, big traders, processing industry, small and big wholesalers, commission agents, Fatke (mobile) traders, and retailers. The enablers who provide support for these activities include the farmers’ groups and cooperatives, DADO, NARC, Vegetable Development Division of DoA, micro credit institutions, District Chamber of Commerce and Industries, Agriculture Inputs Corporation, Agricultural Development Bank, and non-formal credit providers. A critical analysis of the value chain indicates that while margins seem to be reasonable, labor cost is very high in the Hills because all operations are done manually. Staking of the individual plants is particularly expensive, not only in terms of labor, but also in terms of procurement of the staking materials from the forest. The latter is also detrimental for the environment. Losses at the farm level and at retail level are also quite high. Thus, it seems that intervention is necessary in development of technology for reduction in labor, improved staking materials, appropriate storing techniques at the farm and improved packaging and storage at the retail outlets. In spite of some mechanization, the labor cost in Terai is also quite high. Thus, technology for reduction in labor is also required for Terai. It is also necessary to investigate the reasons for low margin at the producers’ level in the Terai in order to find out ways and means to increase the margin and consequently the incentive for the Terai farmers to produce tomatoes on commercial scale. The study shows that cultivation of tomatoes in the Eastern Development Region, especially in Dhankuta, Ilam, Terhathum, Jhapa, Morang and Sunsari districts appears to have great potential and the sub-sector is growing in terms of area expansion, value addition and market expansion. Moreover, tomato farming in the Hill districts is emerging as a highly profitable enterprise and more and more farmers are attracted towards commercial cultivation of tomato. Tomato cultivation has proved to have a high potential for employment generation at local level in general and for women and rural poor in particular. Despite these encouraging trends, the market is experiencing typical constraints of a growing and immature market. The tomato subsector shows the following characteristics: • • • • • • •
Increased price of major raw materials such as seeds, fertilizer, pesticides, fuel Severe price competition with imported fresh tomato from India Limited value addition Supply and price variation due to seasonality of the product Lack of proper information on market demand Heavy wastage during road blockades and strikes Losses due to inappropriate packaging and transportation
There is substantial scope for expanding the area of production and market. The highly favorable climatic condition for the production of high quality tomato in Nepal, especially in Hill districts, has a capacity to attract private sector investment. Product standardization and quality assurance can significantly increase the value addition and comparative advantage of the local product. And last but not the least, increased coordination, networking and harmony with concerned stakeholders/line agencies can minimize internal rivalry and help tap specialized opportunities.
Having analyzed the constraints and potentialities of tomato production in the CADP project area, the inherent strengths, weaknesses, opportunities, and threats of the subsector, as well as the major issues involved and possible actions that can be taken to increase production, productivity, and profitability of tomato cultivation, it is strongly recommended that a contract farming of tomatoes be undertaken in the project area with an aim of moving the product smoothly from production to marketing through processing and value addition along the value chain. The roles of the actors along the chain will be clearly defined and it is recommended that it be introduced in four Village Development Committees, one each in Sunsari, Morang, Jhapa, and Dhankuta districts as a pilot project. Based on the findings of the study, an indicative action plan for future activities and interventions has been proposed. At this stage it is just an indicative plan which attempts to provide a checklist of what needs to be done on a priority basis, where should such activities take place, how much effort is needed, how are the activities to be carried out and who should be responsible. Details must be worked out after a more detailed study on the various aspects of the issues involved, actions to be taken, detailed time frame and resource requirements.
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CHAPTER I: INTRODUCTION It is a bitter truth that majority of Nepalese people (66.6 %) depend on agriculture for their livelihood, but the agriculture sector itself is in dilapidated condition. The present government has correctly depicted the overwhelmingly rural character for Nepal's massive poverty in its budget of 2008-2009. Despite the priority given to agricultural sector and huge money doled out in the sector for the last many years, the country's rural poverty and backwardness have worsened over the years. Continuation of conventional subsistence type of agriculture, big gap between haves and have-nots, poor rural infrastructures, inadequate technological extension and marketing support and services, lack of production inputs in terms of quantity, quality and timely, unorganized institutions of producers and other related stakeholders with weak linkage among them, land scarcity relative to population growth (per capita land availability 0.6 ha in 1954, where as 0.1 ha in 2005), all have played vital role to accentuate rural poverty continuously resulting in the problem of food security, under-employment, poverty and malnutrition. The present government has laid emphasis on making "New Nepal" through bringing revolution and radical change in agriculture sector. For this, the policy of transforming subsistence agriculture into commercial agriculture has been put forth as the fundamental basis for country's economic development. Commercialization, modernization and mechanization of agriculture are understood to provide large number of farming community with a respectable occupation and dependable employment opportunities. The radically modified agriculture is supposed to bring felt positive change in the living level of people and thus, the country will make economic development in a leap-frogging way. The effective implementation of targeted program is estimated to bring 7% economic growth in 2008-2009. Likewise the agricultural and non-agricultural growth rate is expected to reach 4.5 and 8.3% respectively in the current fiscal year. Fresh seasonal and off-seasonal vegetables have been categorized as high value crops and promotion of commercial production of fresh vegetables are essential for increasing the income of farmers, providing them with employment opportunities including the women farmers, and enhancing their accessibility to food security. Hence, in Nepal vegetables are specific agricultural commodity promotion of which could significantly drive rural growth in some market accessible areas of project districts under Commercial Agriculture Development Project. The Agriculture Perspective Plan (APP) has also designated vegetable crops as one of the priority crops for Nepal's agriculture development. Thus, efforts need be made to undertake all the necessary measures to develop the crop commercially benefiting the producers at large. The systematic identification of the constraints and obstacles as well as the opportunities faced by the vegetable producers in fully exploiting the crop is increasingly seen by related development personnel and technicians as an important component of any strategy for achieving the targeted growth. It is a well known fact that there exist a large number of actors who are involved from production to marketing to processing and to end users. The study, therefore, aims to obtain a more detailed understanding of the actors, activities, costs, processes and opportunities related to the flow of the studied product and associated services, starting with farmers and ending with the targeted buyers and/or consumers. These issues need to be understood to identify critical constraints, opportunities and entry points for agroenterprise and investment intervention. The information gained through market chain analysis also helps in identifying the best market
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chain to work on a specific client and in locating key market chain actors who will buy produce. The knowledge obtained will play a critical role in designing, implementing, evaluating and scaling up enterprises. Nonetheless, the lack of market access that many rural farmers face is considered to be a major constraint to combating poverty. Thus, it is of paramount importance of facilitating market access to small scale producers as well as developing chain competitiveness and efficiency in order to improve rural livelihoods. So, with the goal of increasing understanding on the operations and market developments the study was performed. The study was also aimed to analyze the various chain functions within the commodity and to identify points for leveraged intervention within the sector's value chain. The rest of this report begins with a brief discussion about the methodology of the study, followed by production status, marketing ways, pricing, product handling, existing value chains, constraints with suggestions, recommendations and conclusion.
1.1 RATIONALE OF THE STUDY The project facilitated key agricultural stakeholders (farmers, traders, and processors) to work together to increase commercialization in agriculture. The project through CAF will finance i) community based market infrastructure investments, and ii) non infrastructure investments. Only the DDC are eligible to apply for community based market infrastructure investments. Farming communities, through their village development committee will identify needs in a participatory manner, and the DDCs will screen VDCs requests before submitting the proposal to the CAA. Similarly CAF will provide financial assistance for non infrastructure investments of farmers groups and cooperatives, traders, and processors, which are the general members of the CAA. To assist in identifying the investment opportunities this study project identified key constraints and opportunities and suggested the areas of investments required for successful commercialization of agriculture in the EDR.
1.2 OBJECTIVE OF THE WORK The principal objective of this assignment was to understand the functioning and dynamics of the value chains; identifying key players and proposing possible initiatives for CADP program would undertake to promote increased enterprise income and employment.
1.3 SCOPE OF WORK The overall scope of this assignment was to carry-out product chain study of ten high valued commodities: vegetables (Cole crops – cabbage, cauliflower; beans, tomato), fruits (banana, mango, citrus), cash crops (cardamom, ginger), and others (tea, nuts). The study project identified 10 potential commodities (for Eastern Development Region) and proposed investment priorities for the identified value chains. The following were the details of the scope of work: • Collect, compile and review available secondary data/information • Develop and administer data collection tools, primarily interview schedules, checklists and questionnaires • Develop value chain map • Identify chain actors – from input suppliers to retailers
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• • • •
Identify factors affecting the performance of the value chain Availability of service providers and their linkage/relationship Key constraints to and opportunities of the value chain Possible solution to key constraints for the effective development of market oriented value chains
1.4 METHODOLOGY The method adopted in the study relied on semi-structured informal interviews with key informants and a number of participants at different stages of the market chain including the producers of the studied commodity. The interview approach provided the survey team with an opportunity to gather required information from several market chain actors, working on production in question. The methodology was applied for (1) gaining a view of how the commodity is produced, organized, operates and performs; (2) identifying various constraints and opportunities; (3) identifying specific market chains that are most appropriate for a client group and investor; and (4) prescribing interventions in the organization, technology and management of the commodity. The study also focused on identifying the best points of leverage within a market chain by investing to improve market chain performance. Such leverage may focus on technology, specific chain actor performance, improving business development services and changing policies.
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CHAPTER II:
PRODUCTION
The tomato (Solanum lycopersicum, syn. Lycopersicon lycopersicum) is a herbaceous, usually sprawling plant in the Solanaceae or nightshade family, as are its close cousins tobacco, chili peppers, potato, and eggplant. It is a perennial, often grown outdoors in temperate climates as an annual, typically reaching to 1-3m (3 to 10 ft) in height, with a weak, woody stem that often vines over other plants. Tomatoes are a warm season crop and are sensitive to frost. They are usually cultivated in sub-tropical and warm temperate climatic regimes and thrive well in temperatures 10oC to 30oC. Optimum range of temperature is 21o-24oC and temperatures below 16oC and above 27oC are not desirable. Temperature affects germination, crop standing and ultimately affects yield, quality and price. The required temperature regime exists in different agro-climatic regions of Nepal at different times of the year and almost year-round production is possible in different geographical regions of the country.
Table 2.1: Yield potential of selected (improved) varieties of tomato registered in Nepal and released by the Ministry of Agriculture for cultivation in different agro-ecological zones of the country Variety
Year released
Roma Manprekas NBL-1
1995 1995 1990
Yield potential (MT/ha) 12-15 20-40 20-30
Pusa Ruby
1990
15
Suitable for
Mid hills and Terai Mid hills and Terai High hills, Mid hills and Terai High hills, Mid hills and Terai
The potential yields for these varieties are two to six times the average yield of about 7.0 MT/ha at the national level. Source: Statistical Information on Nepalese Agriculture 2005/06, ABPSD, Ministry of Agriculture
Tomatoes come in a number of varieties with highly standardized cultivation practices. Each variety has its own shape, color, size, timing of cultivation, duration of harvesting, yield, disease resistance, etc. The accompanying Table lists some of the varieties officially released by the Ministry of Agriculture and their yield potentials. These varieties have production potentials two to six times the average yield at the national level. Abinash and Allrounder are the most popular varieties in the project districts. Abinash has a good yield (up to 18 MT / ha at Research Station), but the fruits are soft and difficult to transport. Allrounder is a hybrid variety and is gaining popularity because the fruits are firm and can be transported easily. These two varieties and another variety Trishul are Indian varieties. Popular Nepali varieties are Sirjana, Dhanalaxmi and Indra.
2.1
LOCATION AND CLUSTERS
Almost all of the Terai and lower parts of the Hill districts are climatically suitable for tomato cultivation. The following locations within the CADP districts have been identified as the pocket tomato production areas:
Sunsari : Morang: Jhapa:
Inaruwa municipality, Narsingh, Bhokraha, Harinagara, Ramganj, Madhuwan Letang, Dulari, Belbari, Bayarban, Pathari, Jhorahat Surunga, Anarmani, Sanischare, Gouradah, Prithvinagar, Juropani, Maharanijhora
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Saptari: Siraha:
Kochabakhari, Rajbiraj Municipality, Rupani, Kalyanpur Madar, Bhawanipur, Choharwa, Lahan, Majhaura Myanglung, Jirikhimti, Sungnam, Angdim, Morahang, Phulek, Hamarjung, Terhathum: Piple, Basantapur, Myanglung, Jirikhimti Panchthar: Fidim, Amarpur Ilam: Sriantu, Fikkal, Ilam Taplejung: Fungling Udayapur: Gaighat (Triyuga Municipality), Tribeni, Katari Dhankuta Belhara, Dhankutta municipality, Ankhisala, Chhintang, Budhimorang
2.2
THE PRODUCTION PROCESS
Tomatoes produced in the project districts go through five basic operations – 1) seedling production, 2) bed preparation, 3) transplantation, 4) weeding/staking/fertilization/ pesticide application/irrigation and 5) harvesting. Figure 1 shows a generalized flow diagram of the entire production process. Mechanization does not exist in the Hills whereas in the Terai some farmers use tractors to plough land for bed preparation and pumps for irrigation. Information collected at the field level revealed that 80 percent of tomato farmers in the Terai districts used bullocks to plough the land and only 10 percent used tractors. The remaining 10 percent ploughed manually with hoes. Hand held sprayers are used for pesticide application both in the Terai and in the Hills.
2.3
COST OF PRODUCTION
Tables 2.2 and 2.3 show the costs of production of tomato in the Hill and Terai districts of the project area. A comparison of the two tables shows that the cost of cultivation is higher in the Hills than in Terai, but the benefits are also higher in the Hills. Labor comprises the largest cost component (50% of the total cost) indicating that tomato production in the Hills is indeed labor intensive (Figure 2.2). The only mechanized operation is spraying insecticides and occasional sprinkler or drip irrigation. The next largest cost component indicated as “others” in Figure 2.2 includes costs for spraying insecticides and for staking the plants. Each individual tomato plant is staked with bamboo strips or sticks collected from the forests. As the plant population is 16,000 to 20,000 per per hectare, an equal number of stakes is also required. The next highest share of the cost goes for organic manure (13%). The cost of chemical fertilizers is only 3% of the total cost whereas pesticides consume 6%. Eight percent of the total cost goes for seeds. The hybrid seeds are very costly. The seeds of Abinash variety, for instance, costs Rs. 1 Lakh per kg and Allrounder costs Rs. 65,000. The seed rate is about 120 grams per ha.
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Figure 2. 1: Tomato Production Process in CADP Districts
Operations Main Functions Services
Specific Functions
Support-
Primary processing
HARVESTING AND POST HARVEST
Picking
Packaging
Labor/self
FERTILIZERS AND PESTICIDES
WEEDING / STAKING
Fertilizer and pesticide application
Labor/self
TRANSPLANTIN G
Transplanting
Labor/self
Bed preparation
LAND PREPARATION
SEEDLING PREPARATION
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Pump rent (in Terai only)
Irrigation
Ploughing
Tractor rent (in Terai only)
Seedling
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Table 2.2:
Cost of Production of Tomato (Per Hectare) in Dhankuta
Particulars Quantity
Requirements for 1 Hectare Unit Unit Cost Total Cost (Rs) (Rs) Grams 100 600 MT 1000 20,000
Seed 120 Organic manure 20 Chemical fertilizers Nitrogen 90 Kg Phosphorus 60 Kg Potash 60 Kg Pesticide (Lump sum) Total Inputs Land preparation 60 Man-days Land leveling/M.application 30 Man-days Manure application 30 Man-days Transplanting 30 Man-days Irrigation 60 Man-days Weeding and Staking 90 Man-days Pesticide application 15 Man-days Harvesting 60 Man-days Total Labor cost 375 Stakes Sprayer hire Total Other Costs Total All Costs Interest @10% for 6 months Total production cost Production and Profit (Per Hectare): Production 36000 Kg/Hectare Average Price Rs 12/Kg Income Rs. 432,000 Net Profit per Hectare Rs. 269,460 Benefit Cost Ratio (BCR)
2.66
30 25 15
200 200 200 200 200 200 200 200
2,700 1,500 900 9,000 46,200 12,000 6,000 6,000 6,000 12,000 18,000 3,000 12,000 75,000 15,000 15,000 30,000 151,200 11,340 162,540
(36,000 * 12 ) (432,000– 162,540) (432,000/162,5 00)
Source: Field Survey
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Table 2.3:
Final Report
Cost of Production of Tomato (Per Hectare) in Terai Particulars Quantity
Seed Organic manure Chemical fertilizer Nitrogen Phosphorus Potash Pesticide (Lump sum) Total Inputs Land preparation Land leveling/M. application Manure application Transplanting Irrigation Weeding and ridging Pesticide application Harvesting Total Labor cost Tractor rent Sprayer hire Total Other Costs Total All Costs Interest @10% for 6 months Total production cost Production and Profit (Per Hectare): Production Average Price Income Profit per Hectare Benefit Cost Ratio (BCR)
120 20
Requirements for 1 Hectare Unit Unit Cost Total Cost (Rs) (Rs) grams 100 12,000 MT 500 10,000
90 60 60
Kg Kg Kg
30 25 15
2 1 1 3 2 3 1 2
man-days man-days man-days man-days man-days man-days man-days man-days
70 70 70 70 70 70 70 70
360,00 Kg Rs 5/Kg Rs 180,000 Rs 93,217 2.07
2,700 1,500 900 9,000 36,150 4,200 2,100 2,100 6,300 4,200 6,300 2,100 4,200 31,500 6,000 9,000 15,000 82,650 4,133 86,783
(36000 * 5) (180,000 – 86,783) (180,000/86,783)
Source: Field Survey
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Figure 2.2: Cost Components in Tomato Production in Dhankuta
LABOR 50% Land preparation 16%
Land leveling & OM applicat. 8%
Chemical fertilizer application 8%
Transplanting 16%
INPUTS 30%
Seed 8%
Organic matter 13%
Chemical fertilizer 3%
Irrigation 8%
Weeding and staking 24%
Pesticide application 4%
Harvesting 16%
Other costs 20% Pesticide 6%
Staking 50%
Sprayer hire 50%
Figure 2.2 shows that weeding and staking take up the largest share of labor in tomato cultivation. The staking operation seems to be the most costly operation in this regard as the cost of the stakes and labor required for staking each individual plant are both fairly high. Moreover, the stakes need to be replaced after two years. Land preparation, transplanting, and harvesting operations use more or less equal proportions of labor (16% each) and land leveling, manure application, and irrigation consume 8% each of labor cost. Figure 2.3 shows the cost components for cultivation of tomato in Terai. Labor costs the most in Terai as well, but its share at 39% of the total cost is slightly less than that for the Hills. Tractor and sprayer rental, listed under the “others” category is the next highest cost component. Seeds take up 15% and pesticides consume 11% of the cost. Although considerably lesser amount of organic fertilizer is used in Terai than in the Hills, it still comprises a significant proportion of the cost at 12% whereas the cost for chemical fertilizers represents only 5%.
Figure 2.3 Cost Components of Tomato Production in Terai
The financial analysis of tomato cultivation shows benefit cost ratios (BCR) of 2.66 for Hills and 2.07 for Terai (Tables 2.2 and 2.3). The BCR values for both Hills and Terai indicate a fairly good profitability from tomato cultivation, but as the yields obtained at the farm level are still very low in comparison to the potential yields, there is ample room for improvement in raising the production and competitiveness in the market system. Volume of production is highest in the period from Jestha to Mangsir (May to November) in the Hill area and from Mangsir to Falgun (November to February) in the Terai. An
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interesting fact is that the price of tomato tends to be high when the production volume is high in Dhankuta, a typical Hill district. This is so because the production in the hills becomes an off-season product for the Terai where production is low and demand is high during this period. Thus, the price in Dhankuta is high during this time although the production is high.
2.4
TECHNOLOGY AND PRODUCTION STATUS
Farmers follow traditional production methods. Uses of hybrid seeds, chemical fertilizers and pesticides have become common but there is no standardization in the use of technology. Technical support and monitoring from research and extension is poor. The producers hardly follow any post harvest operations and heavy losses are incurred during transportation due to lack of improper packaging materials. This results in losses in both quality and quantity of fruits and much of the burden of such losses are born by the producer, as the transporters and traders pass this loss on to the farmers. As mentioned earlier, tomato production is highly labor intensive and has a high potential for employment generation. The tomato farmers in the project area have not been able to gain any benefit due to the existence of one of the country’s largest processing industries in the area because the products are Box 1: Comparison between Allrounder and not suitable for the industry. It is Abinash varieties of Tomato indeed an irony that on the one hand the farmers are unable to sell to the Allrounder: Abinash: industry and on the other hand the • Firm and fleshy • Soft, juicy and pulpy industry must import tomatoes from • Very little juice • Suitable for the India and tomato paste from China • Less perishable and processing industry to run its factory. This is probably • Highly perishable and easy to transport due to lack of communication • Good for table difficult to transport between the industry and the without damage purpose producers about what is really • Not suitable for needed. The producers try to processing industry minimize risk by growing Allrounder variety which is easier to transport due to its firmness, but is not quite suitable for the industry. The Abinash variety, which is juicy and pulpy, is suitable for the industry, but farmers are reluctant to produce it because it gets easily damaged during transportation and cannot be stored for a long time. Agencies involved in research and technology generation must urgently look into this anomaly.
2.5
PRODUCT CHARACTERISTICS
The most prevalent tomato varieties in the project districts are Abinash, Trishul, Sirjana, Dhanalaxmi, and Indra. Abinash is found to be good from the production point of view as it gives an yield of 18 MT/ha in research condition, but it is difficult to transport due to its softness. Allrounder is a hybrid variety which is gaining popularity due to its firmness and ease of handling, packaging and transportation. Losses during transportation is much less compared to the Abinash variety. It is used mainly as salad. Abinash and Trishul are Indian varieties and the rest are Nepali.
2.6
ECONOMY OF SCALE
Large farmers can gain through economy of scale by spreading their resources over a large area and thus reducing the fixed costs, availing credit facilities, and using technological innovations. Due to their capacity to take greater risks, large farmers gain
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greater benefits per unit area of operation than small farmers. Small farmers cannot compete individually with the large farmers in this regard, but they can compete easily if they unite and work as a cooperative. Guarantee of sale of their product is a crucial factor for small farmers as they are highly reluctant to take risks even when they operate in a cooperative manner.
2.7
EMPLOYMENT CHARACTERISTICS
Labor constitutes a major input for tomato cultivation. Farmers in the study area reported that 18.75 man-days of labor is required to produce tomato in one Ropani in the Hills (Table 2.2) and 15 man-days per Kattha in the Terai (Table 2.3). This translates to 369 man-days in the Hills and 443 man-days of manual labor requred in the Terai per hectare. As tomato is cultivated in 450 hectares of land in the Hills and 1405 hectares in Terai, the total labor requirement is calculated to 166050 man-days in the Hills and 622415 mandays in the Terai.
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CHAPTER III:
3.1
MARKETING
MARKET GROWTH AND TRENDS
Time series data by individual vegetables is not available. The area, production and yield of all vegetables in Nepal for a ten-year period is presented in Table 3.1. The data in Table 3.1 does not show an encouraging trend. Area under vegetables in a ten year period increased slightly and the production increased sluggishly due to a modest increase in yield from 10 to 12 MT per hectare in a period of 10 years. An earlier study found that both area under vegetables and yields increased at an annual rate of about 3 percent over a period of 20 years from 1974 to 1995. The study concluded that “in the first decade, vegetable area expanded rapidly, but yields increased only marginally. During the following decade, there was little increase in vegetable area, but yields increased significantly, due mainly to the spread of improved varieties and increase in the use of other complementary inputs in irrigated areas.”1 The figures in Table 3.1 show an annual growth rate in yield of roughly 2.4 percent since 1997/98. Table 3.1: Year
Area and Production Trend of Vegetables in Nepal Area (Ha) Production (MT) Yield (MT/Ha)
1997/98 149979 1449472 9.7 1998/99 140177 1342567 9.6 1999/2000 149030 1489665 10.0 2000/01 157162 1652979 10.5 2001/02 161048 1738086 10.8 2002/03 165988 1799973 10.8 2003/04 172586 1890100 11.0 2004/05 180823 2065193 11.4 2005/06 189864 2190122 11.5 2006/07 191922 2298689 12.0 Average annual growth rate in yield: Source: Vegetable Development Directorate, Khumaltar, 2064 (2007 AD)
Yield Growth Rate (%) -1.03 4.17 5.00 2.86 0.00 1.85 3.64 0.88 4.35 2.41
The poor performance of the vegetables sector as seen in Table 3.1 may be a result of lumping all vegetables together which masks the good performance of some individual vegetables. Production of tomato, for instance, is said to have increased encouragingly over the years, particularly in the project districts, but unfortunately, time series data does not exist to substantiate this. Table 3.2, below shows the area, production and yield of tomato in the project districts for the year 2006/07 (2063/64 BS). The data shows outstanding performance of tomato in Ilam and Jhapa and good yields in other districts as well for the year2. This clearly indicates the potential for increasing production through increase in yields in most of the project districts.
1Ganesh
B. Thapa and Dibakar Poudyal in http://www.avrdc.org/pdf/dynamics/Nepal.pdf The VDD data shows exceptionally high yields in Jhapa and Ilam, but during our field investigation the producers reported average yields of about 18 to 20 tons per hectare. 2
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Table 3.2: Area, Production, and Yield of Tomato in Project Districts in 2006/07 District Area (Ha) Production (MT) Yield (MT/Ha) Taplejung 10 88 8.8 Average for Mountain districts 8.8 Panchthar 35 360 10.3 Ilam 77 3060 39.7 Terhathum 9 126 14.0 Dhankuta 288 4962 17.2 Udayapur 31 310 10.0 Average for Hill districts 20.0 Jhapa 290 10700 36.9 Morang 365 5475 15.0 Sunsari 220 3080 14.0 Saptari 250 2500 10.0 Siraha 280 3800 13.6 Average for Terai districts 18.2 Total 1855 34461 18.6 Source: Vegetable Development Directorate, Khumaltar, 2064 (2007 AD)
3.2
TRADE FLOW AND VOLUME
Most of the tomato produced in Nepal is for fresh consumption and is consumed mostly within the country, except for a small amount exported across the border in the Terai districts. During our field study it was discovered that about 85 percent of the total production of the project area is consumed locally, 10 percent is exported to India and only 5 percent is sold to the only processor in the region: Rijal Tashi Industry in Itahari. The varied geo-climatic characteristics of the Terai and the Hills of Nepal offers the possibility of year round production of tomato in natural conditions. It is produced in Terai in the winter and in the hills in the summer. Thus, the main season production in Dhankuta, for instance, becomes an off-season crop in the Terai and in India and fetches premium price. Despite this fact, commercialized production of tomato is practically nonexistent, but at the same time there seems to be a good potential for this. Tashi Industry, for example, imports almost 80 percent of tomato from India because the tomato produced in Nepal is not suitable for processing and is much more expensive than that imported from India. The industry wants juicy and pulpy tomatoes for making juice, ketchups, sauces and purees, but most farmers grow varieties that have less juice but are easier to handle and last longer. The varieties preferred by the farmers are suitable more for table purpose than for processing. Dharan, Birtamod, and Biratnagar are the major markets for tomato in the project area. Eventually, all commercial production of tomato enters one of the three market places. Table 5 shows the trading of tomato in Dharan and Birtamod markets by volume and by value in Rupees as well as their wholesale prices. The data in Table 3.3 and chart in Figure 3.1 show considerable variation in volume of trade and prices over the year in Dharan and Birtamod which cater mostly to the Hill and Terai districts, respectively. The Figures show that the volume of tomato trade is much lower in Birtamod than in Dharan. The volume becomes maximum from August to December in Dharan and from December to March and again in July and August in Birtamod.
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Table 3.3: Month
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Trade of Tomato in Major Markets in the Project Area in FY 2064/65 Dharan Birtamod Volume Amount Wholesale Volume Amount Wholesale (MT) (000 Rs) Price (MT) (000 Rs) Price (Rs/Kg) (Rs/Kg) 520 355 325 455 75 210 230 740 650 550 525 720
6760 4260 3900 7280 600 3780 2760 22200 18200 13200 9450 8640
13 12 12 16 8 18 12 30 28 24 18 12
205 236 218 161 65 85 212 163 51 63 46 193
4919 1888 1197 1446 980 1277 2332 3672 1409 1854 955 4641
24 8 5 9 15 15 11 22 27 30 27 24
Source: Dharan and Birtamod Wholesale Market, 2008
Fig 3.1
This trend is related to the production characteristics of tomato in Hills and Terai districts. Figure 3.2 illustrates this trend3 in a generalized diagram prepared to visualize the complementarities of the Hill and Terai production more clearly.
3
This is just an indicative diagram showing complementarities and does not represent actual volume of production. Full Bright Consultancy
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Fig 3.2
3.3
PRICE VARIATION
Due to the seasonality of the product, the price of tomato also varies considerably through the year as shown in Figure 3.3 below in some selected markets within the CADP project area. Fig 3.3
Note: Wholesale prices calculated from Agriculture Marketing Division sales data
3.4
MARKETING CHAIN
Figure 3.4 shows the channel through which tomato moves in the market from production to the consumer in the CADP project area and beyond and an estimated share of each actor in the chain. As is seen in the figure, most of the tomato produced in the area goes to the road head traders, either directly from the consumers or through local collectors.
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Very little of the produce (only about 5%) goes to the local and district haat bazars (weekly markets). Of the 85% collected by the roadhead traders, about 60% goes to the big regional wholesalers known as the Gaddi, and 21% to other district level wholesalers. As mentioned earlier, very little of the locally produced tomato (about 8%) finds its way to the big processor, which imports more than 90% of its requirement from India. About 60% of the product (tomato ketchup, juice, puree, etc.) of the industry (which contains only 5% of locally produced tomato) goes to Kathmandu and the remaining 40% (3% of local production) is consumed in other parts of the country, mainly in the cities and urban areas like Pokhara, Dharan, Biratnagar, Bhairahawa, Janakpur, Nepalgunj, Damak, Birtamod, Bhadrapur, Narayanghat, and Birgunj (considering total output of the industry as 100%). Of the 70% of the produce received by the big regional wholesalers from various sources, half (35%) goes to other district level wholesalers, 31% to retailers in Nepal, and up to about 4% to the Rijal Tashi Industry. The district level wholesalers receive about 56% of the produce and send 50% (almost 90% of what they receive) to the Nepali retailers and the remaining 6% to Indian commission agents. These Indian commission agents sell about 4% to the wholesalers in India and 2% to retailers. Figure 3.4: Tomato Marketing Channel in CADP Districts
2%
Indian retail shops
Other markets in Nepal except Karnali Zone
Kathmandu
Indian Wholesalers
3%
4% 5%
Nepali retail shops (81) 31 %
50 %
District level wholesale market (56)
35 %
6 %
Nepali Processor (Rijal Tashi) (8+ Indian import)
Regional wholesaler (Gaddi) (70)
21 %
4 %
4 %
92 %
60 % 10 %
Local and District Hat‐bajar (5) 5 %
Local collectors (50) 50 %
40 %
Road Head Traders (85)
Import from India
Commission Agents (India) (6)
45 %
T O M A T O G R O W E R S ( 1 0 0 )
3.5
PROFIT MARGIN
Figure 3.5 shows the average prices and price margins of tomato through different levels of transaction. The overall prices are higher in the hills than in the Terai, but in both cases, the prices paid by the consumers are two to three times the farm gate prices. The profit margins also appear to be much higher at all levels in the hills than in the Terai. At a first glance, the profit margin at the farm gate level appears high, but since the volume of transaction at this level is low, the producers have limited income from tomato cultivation. On the other hand, although the margin seems to be low at the wholesale level, they (the wholesalers) gain considerably by trading in large volumes and increased turn over. Thus, it seems that the producers must increase area under tomato in order to really commercialize tomato farming and to obtain high income. There is a possibility that the
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margin at the farm level might go down with increased competition, but the total income will be greater due to larger volume sold. Figure 3.5: Profit Margins of Tomatoes from Dhankuta and Jhapa Farm Gate
Dhankuta
Jhapa
Collection Center
Wholesale
Retail
Price: NRs 10 Margins: Rs 3.99
Price: NRs 11 Margins: Rs 0.61
Price: NRs 15 Margins: Rs 1.64
Price: NRs 20 Margins: Rs 3.44
Price: NRs 4 Margins: Rs 0.58
Price: NRs 5 Margins: Rs 0.5
Price: NRs 8 Margins: Rs 0.6
Price: NRs 15 Margins: Rs 1.62
(Margins derived from Table 4.2 and 4.3)
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CHAPTER IV: 4.1
VALUE CHAIN MAP AND ANALYSIS
THE VALUE CHAIN MAP
The tomato value chain map (Figure 4.1) provides a graphic representation of tomato as it moves from production to the consumers, passing through different stages and processes. The linkages are shown vertically from bottom to the top. The left hand block lists the major functions of the chain. The functions, in this case, include production, collection, trading, processing, trading, and retailing. The middle block depicts the actors involved in carrying out the functions listed on the left. As seen in the diagram, some actors perform more than one functions whereas the others are confined to only one function. For example, the road head traders both collect the product from the farmers and supply them to the wholesalers or other traders. The enablers, shown on the right hand block, assist and facilitate the actors in carrying out their functions. The enablers are mainly the institutions, both formal and informal as well as private and public institutions. The roles of the enablers can encompass several actors and functions in the value chain. Figure 4.1: Tomato Value Chain Map
Large farmers
Local collectors Tomato Growers (Small and Medium Farmers)
Cooperatives NARC, Tarahara
DADO
Main Functions
Non-formal Credit
Roadhead traders
Specific Functions
4.2
THE FUNCTIONS AND ACTORS IN THE MAP
4.1.1
The Farmer/Producer
Vegetable Development Section, DOA
Micro credit
Production
Big traders (Gaddi) at Dharan, Biratnagar,
Agriculture Development Bank
Rijal Tashi Industry
Trading
Collection
Other traders and h l l
Import from India
Agriculture Inputs Corporation
Processing
Agriculture Producers Wholesale Marketing C t Dh
Indian retail shops
Farmers’ Groups
Trading
Nepali retail shops
District Chamber of Commerce and Industries
Retailing
Support Services
Farmers in the Hill districts like Dhankuta typically grow tomato in 0.15 to 0.25 ha of land. They sell their products to the wholesaler or local commission agent. Most of the vegetable farmers are now acquainted with the benefits to be gained from commercial cultivation of tomato, but are afraid to allocate larger pieces of land for it. They say that
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they are ready to expand area under tomato cultivation by 2 to 10 times, provided the government or other agencies guarantee to buy their produce. While the small farmers are confined to the function of production only, many of the large farmers also collect and trade their produce to some extent. Some large farmers even do primary processing of their products such as grading and sorting before sending them to the market. 4.1.2
Local Collectors
Local collectors are directly involved in buying tomato from farmers in different places including remote areas and selling them to big traders or roadhead traders in the market places. They work mainly as commission agents of big wholesalers and traders. 4.1.3
Roadhead traders
These traders often buy tomatoes from the local collectors and directly from the farmers in the vicinity. They combine the functions of collection and trading and sell their commodities in the market. 4.1.4
Big Traders
Big traders, locally known as the Gaddis, like the Gaddi of Giri in Dharan and others in Biratnagar, Damak and Birtamod collect from the local collectors, traders and some large farmers and supply them to the government supported Agriculture Producers Wholesale Marketing Center in Dharan and other traders and wholesalers in different districts. These traders also supply some tomato to the Rijal Tashi Industry. The Gaddi of Giri deals in wholesale of vegetables including tomato, potato, radish, cabbage, onion, garlic, cucurbits, and green leafy vegetables as well as fruits including pears, orange, mandarin, and lemon. They buy tomatoes mainly from Dhankuta and sell them in Biratnagar, Damak and Birtamod. They handle 2 to 2.5 metric tons of tomato daily on an average with price ranging from Rs 6 to 30, depending on the season and secure a commission of 5 to 7 percent. 4.1.5
Processing Industry
Rijal Tashi Industry, located at Itahari of Sunsari district, produces jams, juices, ketchup, sauce, paste, puree and pickles from various fruits and vegetables. Its tomato processing capacity is 1000 metric tons per year. The industry imports most of the tomato from India because it is cheaper than the Nepali product. It also imports tomato paste from China. Some tomatoes are procured locally as well when the price is low, but the quality is poor with spotted, stale and soft fruits. On an average, the industry imports 700 to 800 metric tons of tomato from India and buys 200 to 250 metric tons from Surunga, Jhapa, and Dhankuta. The products are sold only in Nepal and are marketed all over the country through its own marketing system. The product market channel is as follows:
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Rijal Tashi Industry
24 Distributors in Nepal
Subdistributors
Wholesalers
Retailers
Consumers
The products, ketchup, sauce, juice, paste, and puree is marketed by the industry through its distributors located in all zones of Nepal except Karnali. There are altogether 24 such distributors. Up to 60 to 70 percent of the total volume of production is marketed in Kathmandu and the remaining 30 to 40 percent is sold in other markets, mainly in Pokhara, Dharan, Biratnagar, Bhairahawa, Janakpur, Nepalgunj, Damak, Birtamod, Bhadrapur, Naryanghat, and Birgunj. Annual growth rate of the industry is 10 percent and the factory is running in profit. The industry employs 150 persons of which 120 are factory workers and the rest are management personnel. Women constitute 85% of the work force. 4.1.6
Agricultural Produce Wholesale Market Center, Dharan
The infrastructure for this center was built with the help of the World Bank in 2058 BS (2001 AD). The physical infrastructure consists of 13 godowns and one open shed for storage and trading of agricultural products, including vegetables. The volume of trade and its value for the last four years is shown in Table 10, which shows a drop in trade in the year 2062/63 and gradual increase thereafter. Last year’s traded volume was 5,355 metric tons worth Rs. 10 crores. The Center buys tomatoes from the Gaddi and the roadhead traders and sells them to retail shops in Nepal and India. Table 4.1: Trade of Tomato in Agriculture Produce Wholesale Market Center, Dharan Year Traded volume (MT) Value of trade (000 Rs) 4942 71914 2061/62 3152 59319 2062/63 4320 69630 2063/64 5355 101030 2064/65 Source: Dharan Wholesale Market, 2008
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The following diagram shows a typical market linkage for vegetables in Dharan: Producer
/ Farmer / Cooperative / Farmers’ Group / Company
Local Trader
Fatke Trader
Outside Trader
Wholesale Market
Outside Wholesaler
Commission agent
Exporter
Mobile Trader
Retailer
Wholesaler
Consumer
Lately, some companies have also started to participate in production activities. Wholesalers, commission agents, and Fatke traders buy and sell tomatoes in the wholesale market. 4.1.7
Wholesalers
The wholesalers have permanent bases in their own or rented premises from where they buy and sell products in bulk or wholesale. Sometimes, the wholesalers also sell the products for a commission. 4.1.8
Commission Agents
The commission agents sell the products on behalf of the farmers, cooperatives or other traders and pay them after deducting their commission (usually 6 to 7%). 4.1.9
Fatke Traders
Unlike the wholesalers, the Fatke traders have no permanent base to store the commodities they sell, but instead they buy products from the farmers/producers and sell them for a profit of about 10 to 12 percent. They also do some grading. 4.1.10 Other Traders and Wholesalers Other traders and wholesalers also have similar function except that they are completely privately owned and operated. They also buy products from the Gaddi and from roadhead traders and sell them to Nepali and Indian retail shops.
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4.1.11 Retail Shops The retail shops buy fresh tomato from the wholesalers and processed products from the processors through their distributors and sell directly to the consumers, both in Nepal and in India. The processed products from Nepal do not go to India because of the competition with cheap Indian products.
4.3
THE ROLE OF THE ENABLERS
Government and non-governmental organizations as well as private institutions play important roles in moving the commodity along the value chain. The functions and roles of the enablers, as depicted in the Value Chain Map (Figure 9) are described as follows. Enabler DADO
• • •
NARC
• • • • • • •
NARC Tarhara
Vegetable Development Division
Farmers group
Cooperatives
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• • • • • • • • • • • • • • • • • • • • •
Role Potential area identification and selection for pocket program Awareness creation Training/campaigning on technical knowledge and advantage Subsidy on seed, sprayer Support in district level coordination/networking Support in marketing/construction of collection centers Support in formation of farmers group/association Research work Performance testing of vegetables at research stations and farmers field Recommendation of variety and use of fertilizers and pesticides Variety performance testing trials at research station and farmers field of EDR Recommendation of variety, inputs dose Commercialization/Expansion of vegetable farming Identification of high value commodities and its expansion Potential area identification Conducting varietal trials in Nepalese condition (Seed trials) Supply of seed and seed material Coordination and networking Extension materials (booklets, leaflets) Awareness creation among farmers Farmers group formation Discussion/experience sharing on technical aspects of production practices and advantages Lobbying/advocacy Marketing Coordination Representative of farmers/farmers' groups Lobbying/advocacy of member farmers Marketing of inputs and tomato Coordination with line agencies Information sharing Management of hybrid seed/recommended seed and other inputs
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Enabler District Chamber of Commerce and Industry Agricultural Development Bank Ltd. Agricultural Inputs Corporation/Seed Company Microcredit Non-formal credit
4.4
• • • • • • •
Role Support in trading of inputs and product Coordination Lobbying/advocacy Supply of institutional credit in easy accessible manner and with comparatively low interest rate Supply of seeds, fertilizers, and other inputs
Supply of small volume of credit Supply of credit for management of inputs or supply of inputs as credit in easily accessible manner. But interest rate is exorbitant
VALUE CHAIN ANALYSIS
The value chain analysis is done using a standard format which shows all costs, losses, margins and prices along the chain and the share of each actor as the product moves form production to local traders, wholesale market, retail market and finally up to the consumer. As there are marked differences in both production and marketing of tomato in the Hills and Terai, separate analyses are done for each region within the project area. Thus, Table 4.2 illustrates the value chain analysis of tomato in Dhankuta, a typical Hill district and Table 4.3 shows a similar analysis for Jhapa, a Terai district. Table 4.2 shows that it costs Rs 4.52 to produce 1 kg of tomato at the farm in Dhankuta and that labor constitutes nearly half of the production cost. The post production cost is estimated at Rs 0.50 per kg, losses (10%) at Rs 1.00, and margin of Rs 3.99 per kg at the farm. Adding up all these expenses results in the farm gate price of Rs 10.00 per kg of tomato. The assembler level price comes to Rs 11.00 per kg after the local traders add the assembler level costs (Rs 0.39, mainly for packaging), and margin (Rs 0.61). It is assumed that there is practically no loss at the local traders levels as they simply collect tomatoes from the producers and sell them off immediately either to the wholesalers, retailers, or directly to the consumers. The wholesalers add another Rs 4.00 per kg to the cost of tomato which includes the assembly cost at the wholesale level, trucking costs and related DDC and other taxes, losses (5%), and a margin of Rs 1.64 per kg. This results in the wholesale price of Rs 15.00 per kg. Finally, the average retail price of tomato in Dhankuta is around Rs 20.00 per kg, as the retailers add another Rs 5.00 per kg. The added costs at the retail level include sorting, grading, and local transportation comes to Rs 0.56 per kg. Losses at the retail level amount to 5%, or Rs 1.00 per kg, and a margin of Rs 3.44 per kg is obtained by the retailers.
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Table 4.2: Value Chain Analysis of Tomato at Dhankuta (On the basis of cash payment for labor) Unit: 1 kg FARMER/GR0WERS LOCAL TRADER WHOLESALER RETAILER Item Cost Item Cost Item Cost Item Cost Production Costs Assembling Costs Assembly cost 0.28 Retailing Cost Seed 0.33 Sorting, grading Trucking Cost 0.50 Sorting, grading 0.28 Manuring/Fertilizer/ local Chemical 0.95 packaging 0.39 DDC tax 0.28 transportation 0.28 Labor 2.08 Others tax 0.28 Others 1.15 Total Production Costs 4.52 Post Production Porter/Transportation 0.50 Acquisition Cost 10.00 Acquisition Cost 11.00 Acquisition cost 15.00 Total Trucking Costs 12.33 Total Assembling Total Retailing Costs 10.39 Wholesaling Cost 0.28 Costs 15.56 Total Post Production Costs 0.50
Total Wholesaling Costs
TOTAL FARM LEVEL COSTS
TOTAL LOCAL TRADER LEVEL 5.02 COSTS
Losses Margin
1.00 Losses 3.99 Margin Assembler level Farm gate Price (Average) 10.00 price Source: Field Survey, 2008
12.61
TOTAL WHOLESALE LEVEL COSTS
0.00 Losses 0.61 Margin Wholesale level 11.00 price
TOTAL RETAIL LEVEL COSTS
0.75 Losses 1.64 Margin
1.00 3.44
15.00 Retail level price 20.00
In case of the Terai (Table 4.3), the farm level cost amounts to Rs 3.04 and the farm gate price becomes Rs 4 after adding the losses and the margin (which is very little in comparison to the margin to the producers in the Hills). The assembler level price (local traders) is Rs 5 the wholesale level price is Rs 8 and the retail level price is Rs 11 per kg of tomato. The analysis shows that in spite of some mechanization, labor cost is still very high. Table 4.3: Value Chain Analysis of Tomato at Jhapa (On the basis of cash payment for labor) Unit: 1 kg FARMER/GR0WERS Item
Cost
Production Costs Seed
0.33
Manuring/Fertilizer/chemical Labor Others Total Production Costs Post Production
0.67 1.25 0.53 2.79
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LOCAL TRADER Item Assembling Costs Sorting, grading packaging
Cost
0.417
WHOLESALER Item
Cost
Assembly cost
0.25
Trucking Cost
0.5
DDC tax Others tax
0.417 0.417
RETAILER Item Retailing Cost Sorting, grading local transportation
Cost
0.42 0.42
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FARMER/GR0WERS Transportation
0.25
LOCAL TRADER Acquisition Cost Total Assembling Costs
Total Post Production Costs
TOTAL FARM LEVEL COSTS Losses Margin Farm gate Price
WHOLESALER 4
4.42
Acquisition Cost Total Trucking Costs
5
RETAILER Acquisition cost
8
6.58
Wholesaling Cost
0.417
Total Wholesaling Costs
0.417
Total Retailing Costs
8.83
0.25
3.04 0.4 0.56 4
TOTAL LOCAL TRADER LEVEL COSTS Losses Margin Assembler level price
0 0.58 5
TOTAL WHOLESALE LEVEL COSTS Losses Margin Wholesale level price
0.4 0.60 8
TOTAL RETAIL LEVEL COSTS Losses Margin Retail level price
0.55 1.62
Source: Field Survey, 2008
The above analysis indicates that while margins seem to be reasonable, labor cost is very high in the Hills because all operations are done manually. Staking of the individual plants is particularly expensive, not only in terms of labor, but also in the procurement of the staking materials from the forest. The latter is also detrimental for the environment. Losses at the farm level and at retail level are also quite high. Thus, it seems that intervention is necessary in development of technology for reduction in labor, improved staking materials, appropriate storing techniques at the farm and packaging and storage at the retail outlets. In spite of some mechanization, the labor cost in Terai is also quite high. Thus, technology for reduction in labor is also required for Terai. It is also necessary to investigate the reasons for low margin at the producers’ level in the Terai in order to find out ways and means to increase the margin and consequently the incentive for the Terai farmers to produce tomatoes on commercial scale.
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CHAPTER V: SWOT ANALYSIS
5.1
BACKGROUND
Strength, Weakness, Opportunities and Threat (SWOT) analysis is a powerful tool in value-chain analysis of agricultural products. A scan of the internal and external environment is an important part of the strategic planning and intervention process. This tool provides a framework for understanding controllable and non-controllable factors that the interventions should address for the entire value-chain. Environmental factors internal to the product (tomato in our case) usually can be classified as strengths (S) or weaknesses (W) and those factors external to the subsector can be classified as opportunities (O) or threats (T). Often carrying out a SWOT analysis will be enough to reveal changes which can be usefully made. SWOT analysis is a tool for auditing a commodity/organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. Once key issues have been identified, they feed into marketing objectives. The SWOT analysis provides information that is helpful in matching the enterprises' resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how SWOT analysis fits into an environmental scan. SWOT Analysis Framework Environmental Scan
External analysis
Internal analysis
Strengths
Weaknesses
Opportunities
Threats
SWOT Matrix
A typical assessment of subsector’s strengths and weaknesses as well as the opportunities and threats specific to each of the interventions consist of the following: • • • • • • • • •
Production system and delivery of products in the value chain Good reputation among customers Profit margin Past trend Quality of business service provisions Competitive advantages of the value chain members Support of line agencies Market access, infrastructure, management information and financial systems Policy environment.
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While designing the interventions, the focus is generally given on the exploitation of strengths rather than simply addressing on the weaknesses. In other words, the interventions are not only about addressing the constraints, but also nurturing the strength of the subsector. Similarly the opportunities and threats - the external trends that influence the subsector are also analyzed. The external opportunities and threats are usually categorized into political, economic, social, technological, demographic and legal forces. These external forces include such circumstances as changing business trends, increased competition, changing regulations, and so on. They can either help the subsector move forward (opportunities) or hold the subsector back (threats) -- but opportunities that are ignored can become threats, and threats that are dealt with appropriately can be turned into opportunities. The uncontrollable factors are generally dealt through advocacy and networking to bring about changes in the policy framework.
5.2
ANALYSIS
gainst this background, a SWOT analysis for the production and trade of tomato in the project area was conducted on the basis of the information gleaned from literature review and field investigation and the results are summarized as follows: Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis of Tomato Production in Eastern Development Region of Nepal • • •
• • • • • • • • •
Strengths Many potential microclimatic pockets suitable for commercial scale quality production of tomato round the year. Comparative advantage over other cereal and cash crops Rural communities highly attracted by increasing prospect of main and off-season tomato farming and its increasing demand. Large number. For example almost all household in Badhara VDC of Dhankuta district are involved in production of main season & off-season tomato. High local demand (from domestic terai districts), more than 40% of which is still unmet High demand for off-season tomoto (May to November) from India, particularly during the rainy season Goodwill among domestic and Indian customers Existence of some established farmers organization, cooperative societies, and collection centers for marketing Competent traders Technical support from District Agricultural Development Office Inputs availability Requirement of low initial investment Traders/collectors also provide support to farmers by providing inputs
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•
• • •
• • • • •
Weaknesses Lack of technical knowledge (use of fertilizer, plant protection) and technology to rural farmers for commercial scale production practices, harvesting technology, post harvest handling technology, grading, packaging Excessive use of pesticide High pest and disease attacks Questionable quality of inputs. Hybrid seed imported from India, some time have to face problem of mixed seed and low quality seed, fertilizer, pesticide. No processing plant in the production area (especially in the hills) Insufficient infrastructure: road, electricity, irrigation, institutional credit Porter transport cost from farm to road head/collection center is very high, especially in the hill districts Shortage of skilled labor Inputs price is very high and difficult to compete with Indian and Chinese products (Processor like Rijal Tashi Industry prefer Indian fresh tomato and Chinese tomato paste due to cheaper price as compared to Nepalese product) Page 27
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•
• • • • • • • • • • •
Large untapped market within domestic and Indian market (West Bengal and Bihar)
Opportunities Production area can be increased by more than 2 to 3 times Large scale demand from Nepal Terai and West Bengal and Northern Bihar of India. High demand for processed products such as paste, puree, ketchup, etc. Highly attractive price in India (specially for off-season tomato from hill districts) Government has designated tomato as a high value crop and provides support for its commercialization Department of Agriculture has provided support for operation of wholesale market at Dharan and at local areas NGOs are also providing support for commercialization Potential for employment of women Potential for economic upliftment of small and marginal land holders Potential to employ large number of people (labor requirement in each stage of production and post harvest) Higher yield through adoption of hybrid seed variety like Avinash & Allrounder and by adopting improve production technology
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• • • • • • • •
• • • • •
High seasonal prices variation Wastage in transportation. Lack of appropriate storage facilities Poor and inefficient supply chain Poor transportation system Threats Political instability Very high tax imposed by DDC Tax and threats from so many groups (like Limbuwan, Khumbuwan and extremists groups in Terai) Frequent blockades and strikes Increasing price of inputs in Nepal Intense competition from highly subsidised Indian farmers for main season production Large scale commercial production in India and China Dependence on India for inputs (especially hybrid seed, fertilizer, plant protection chemicals and micro nutrients)
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CHAPTER 6: MAJOR ISSUES AND PROBLEMS Numerous problems and issues were identified during the desk study and field investigations. The major problems applicable to the three major players, i.e., the processing industry, the traders, and the producers, are organized separately and presented below.
6.1
PROCESSING INDUSTRY • • • • • •
• • • • • •
• • •
6.2
Commercial farming is not well developed in Nepal as compared to Indian market. There is a lack of commercial attitude and entrepreneurship in Nepalese farmers. Nepali Tomato cannot compete with the Indian and Chinese tomato mainly due to very high cost of production, small scale of production and uncertainty of production volume. The quality of the fresh tomato produced in Nepal is not suitable for the industry. The DDCs impose exceptionally high taxes, causing the raw material to be very expensive. Various political and non-political groups like Khumbuan, Limbuan and various extremist groups in the Terai extort taxes. Lack of facilities in quality testing lab. Recently, the industry had got an order for its products worth US$ 3000 during the Olympic Games in China but failed to supply them due to the inability of the Government to issue quality assurance certificate. There is a severe lack of coordination among producers, supporters, and government agencies. Lack of skilled labor, and even unskilled labor lately, is causing difficulties in expanding the industry. Labor Act for agricultural farming and processing should be separate as the industry runs on a seasonal basis and employing a large labor force permanently undermines the viability of the industry. Most of the materials like pouches, labels, bottles, packaging materials have to be imported from India. Role of Government should be to assure the product quality rather than to control the industry. Quality testing (criteria/indicators for quality control) of products and issuance of quality test certificate must be made on time (Rijal Tashi failed to supply its products during Olympic game in China due to unavailability of such services on time). Local and DDC taxes must be reduced. At present the industry pays up to Rs 16000 local taxes for supplying/bringing one truck of product to/from Kathmandu. Due to high cost of electricity local farmers canot compete with Indian products as electricity for agricultural farming and processing is highly sunsidzed in India. Credit: ADBL should formulate a policy to support commercial scale production
TRADERS • • • •
Retail market and marketing system is not well managed. Insufficient warehouse facility. Warehouses constructed with the support of Government and non government agencies have insufficient space. Lack of proper management of vegetable wastes. Labor unavailability and high cost (Rs 200 with lunch and breakfast daily).
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• • •
• • • • • •
6.3
Increasing cost of transportation (mainly due to scarcity of fuel, strikes, and carteling by the transporters). Unavailability of institutional credit. The traders must borrow at the rate of up to 60% interest from local money lenders. Present physical infrastructure is insufficient and the traders are frequently compelled to do their business under the open sky. Basic facilities in the market places and collection centers like proper sheds, warehouses, drinking water, etc. must be expanded. The recent Koshi flood blocked transportation in western part (Rajbiraj, Janakpur, Birgunj, Narayanghat), resulting in lack of trade and low prices even in the festival season. Frequent road blockades and strikes have resulted in high transportation costs, including the proter charges. Supply, in general, is about 40 to 50% less than demand. Tax collection at so many places and at very high rates. Tomato being perishable in nature, losses due to wastage are very high. Lack of awareness about proper packaging and grading is causing high losses
PRODUCER/FARMER • • • • • • • • •
Very high cost of inputs (fertilizer, plant protection chemicals, seed, labor) Lack of irrigation leads to mostly rainfed cultivation and low productivity Inferior quality and adultration of inputs: seeds, fertilizers, pesticides High cost for staking. The average cost for staking is Rs 2 to 5 per plant Lack of technical knowledge about planting, pesticide application, crop management, harvesting, packaging, grading, etc. Labor unavailability and high cost (up to Rs 200 with lunch and breakfast daily) Tomato blight disease during winter and long rainy periods Increasing cost of transportation (mainly due to scarcity of fuel and frequent strikes) Lack of proper packaging, sorting, and grading techniques
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CHAPTER VII: CONCLUSION AND RECOMMENDATIONS
7.1
CONCLUSION
Cultivation of tomatoes in the Eastern Development Region, especially in Dhankuta, Ilam, Terhathum, Jhapa, Morang and Sunsari districts appears to have great potential and the sub-sector is growing in terms of area expansion, value addition and market expansion. Moreover, tomato farming in the Hill districts is emerging as a highly profitable enterprise and more and more farmers are attracted towards commercial cultivation of tomato. Tomato cultivation has proved to have a high potential for employment generation at local level in general and for women and rural poor in particular. Despite these encouraging trends, the market is experiencing typical constraints of a growing and immature market. The tomato subsector shows the following characteristics: • • • • • • •
Increased price of major raw materials such as seeds, fertilizer, pesticides, fuel Severe price competition with imported fresh tomato from India Limited value addition Supply and price variation due to seasonality of the product Lack of proper information on market demand Heavy wastage during road blockades and strikes Losses due to inappropriate packaging and transportation
To address these classic problems of an agricultural commodity, the world today emphasizes value-added agriculture. Value addition of tomato can be created in any one or a combination of the following measures: − − − − −
7.2
A change in the physical state or form (such as making tomatoes into paste, puree, juice or ketchup). Production of tomato in a manner that enhances its value (such as off-season tomato or organic tomato). The physical seggregation for enhancement of the value/product differentiation (such as an identity preserved marketing system – tomatoes of high hill/mountain/altitude) Storage of tomato so that it enhances value when the product is not available and market price is high (cold storage) Increase export to Indian market
POTENTIAL INTERVENTIONS
There is substantial scope for expanding the area of production and market. The highly favorable climatic condition for the production of high quality tomato in Nepal, especially in Hill districts has a capacity to attract private sector investment. Product standardization and quality assurance can significantly increase the value addition and competitive advantage to local producers. And last but not the least, increased coordination, networking and harmony with concerned stakeholders/line agencies can minimize internal rivalry and help tap specialized opportunities. On this basis, the following recommendations and interventions are proposed for the development of the sub-sector:
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7.2.1
Final Report
Essential support/Intervention
To address the different issues and problems faced by tomato subsector, it would be necessary for the project to provide support in a number of areas. In order to streamline such support or intervention measures, they have been separated into a) infrastruture development and b) non-infrastructure support, and other support as follows: Infrastructure development Community based market infrastructure investments for commercialization of Tomato, other vegetable and fruits through • Construction and expansion of collection centers, expansion of warehouse/ storage space at Mulghat, Rudrabari, Guthitar, Belhara ward no. 7, Dhankuta Municipality, Hile, Siduwa • Establishment of a tomato paste production plant at Guthitar in Dhankuta district. This will add value to the local products by converting 7 kg of fresh tomato into 1 kg of paste and by reducing losses and transportation costs. • Construction, expansion, repair and maintenance of social physical infrastructure like farm-to-collection center roads and market link roads, especially in VDCs linked with collection centers. • Construction and improvement of culverts and suspension bridges • Small scale cool or cold stores at Wholesale market of Dharan • Small scale market related water supply, especially at Rudrabari, Guthitar, and Dharan wholesale Market Center. • Support in electrification at collection centers • Small scale community surface and groundwater irrigation system Non-infrastructure investments • Ensuring the availability of quality hybrid seeds, fertilizers and plant protection chemicals • Subsidy for inputs, especially fertilizers, seed, sprayers • Training to producers and traders on cultivation practices, IPM, use of pesticides and fertilizers, grading and packaging, and marketing • Support for nursery bed preparation (greenhouse equipment) • Farm machinery and equipment, • stands for tomato staking purpose, • greenhouse equipment, • agro-processing equipment and machinery, • laboratory equipment for product testing and quality control, • farm-to-market packaging systems • Local transport such as tractor trailer or pickup van; pushcarts, trishaws oxcarts, pack animals • Market related research and technology development for value addition (pickle making, fruit or vegetable drying or preservation, tomato pulp making etc.) 7.2.2
Other Interventions
In addition to these, assistance will be needed in the following areas as well: • Capacity Development on Improved Production Process: Improve farmer’s knowledge and capacity on improved and scientific cultivation practices such as tillage/minimum tillage practice, seedbed preparation, mulching, appropriate dose and application technique of fertilizer and pesticide, Integrated Pest Management, water management, staking, harvesting and post harvest handling techniques. •
Value Addition of Tomato: To provide opportunities for the farmers to obtain relatively better price through storage of tomatoes during peak season when the
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price is low, as well as to increase demand of tomatoes by setting up small processing plants for making ketchup, juice, paste and sun-dried tomatoes, preferablely one in Dhankuta district and another in a Terai district.
7.3
•
Backward and Forward Linkage: Coordinating the markets from production to processors and from processors to final consumer.
•
Strengthening and Developing Effective Business Service Market: Developing appropriate business services to cater to the needs of the Value Chain members for increased productivity and profitability The critical services include appropriate staking material/stand, packaging materials such as wooden crates, cultivation equipment, Integrated pest management, etc.
•
Mainstreaming Gender in Tomato Production: Women represent a significant portion of those engaged in production practices and post harvest handling of tomato and tomato products, but they do not have adequate access to knowledge, information, market linkage, access to financial services for making their ventures profitable. Assistance will be needed in ensuring the mainstreaming of gender in this respect.
•
Infrastructure Development: The farmers’ profitability decreases significantly due to lack of appropriate feeder road linking the farms with collection centers and road and physical market places especially in Dhankutta district. Some farmers have to walk for more than 4 hours and porter cost is very high in these remote production pockets. Infrastructure Development mainly feeder can decrease post harvest product loss and increase farmers profit from tomato cultivation.
•
Energizing the Associations: The associations of farmer is an outcome of natural demand for knowledge and experience sharing, venue for open discussion, mental preparation for taking risk for investment in new commodity as well as adoption of improved practices, networking, coordination with related line agencies, lobbying/advocacy for farmers and strengthening of bargaining power. Therefore further strengthening of these associations can increase various service provisions to the farmers and at the same time they can collectively bargain their interest with the traders groups, service providers and policy makers
•
Policy Advocacy: Support to favorable policy can encourage engagement by private sector investors in value addition of agriculture. Appropriate taxation, support to local industry, creating provisions for smooth supply of utilities (mainly power), refining the regulatory framework to create an enabling environment for increased private sector investment in agricultural sector can increase the profitability of the farmers. CADP must play a facilitating role and advocate on behalf of the tomato producers and traders for the adoption of appropriate policy for commercialization the tomato sub-sector. Specific Recommendation for Contract Farming of Tomato for Processing
Having analyzed the constraints and potentialities of tomato production in the CADP project area, the inherent strengths, weaknesses, opportunities, and threats of the subsector, as well as the major issues involved and possible actions that can be taken to increase production, productivity, and profitability of tomato cultivation, it is strongly recommended that a contract farming of tomatoes be undertaken in the project area with an aim of moving the product smoothly from production to marketing through processing and value addition along the value chain. The roles of the actors along the chain will be clearly defined and it is recommended that it be introduced in four Village Development Full Bright Consultancy
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Committees, one each in Sunsari, Morang, Jhapa, and Dhankuta districts as a pilot project. The major actors and their specific roles are as described below. Stakeholders Processor / Buyer (Rijal Tashi Industry)
• • • • • • • • • • • • • •
Farmers
Farmers Cooperative
• • • • • • • •
DADO
CADP
ADBL
7.4
Role and Responsibility Specification of variety Selection of pocket, producer, and production area Seed procurement and distribution Transfer of production technology Recommendation for credit from financial institutions Monitoring and follow-up Buying guarantee Facilitation of loan repayment Production of recommended variety in recommended area Adoption of given production technology Sell to the producer/industry according to the contract Awareness creation Training to farmers Coordination between farmers, processors and related line agencies Pocket identification Technical support Subsidy for inputs Follow-up and monitoring Subsidy in inputs Provide training to the farmers Organize observation tours Provide credit for inputs, output marketing, trading, purchase of processing plants and equipments on the recommendation of processor (Rijal Tashi Industry)
ACTION PLAN
Based on the findings of the study, an indicative action plan for future activities and interventions has been proposed. At this stage it is just an indicative plan which attempts to provide a checklist of what needs to be done on a priority basis, where should such activities take place, how much effort is needed, how are the activities to be carried out and who should be responsible. Details must be worked out after a more detailed study on the various aspects of the issues involved, actions to be taken, detailed time frame and resource requirements. The activities and actions identified by the present study are summarized in the following Table. The proposed plan has focused mostly on activities that need to be carried out by CADP. What? Increase commercial farming
Reasonable DDC and other taxes Small Cool or
Where? All pockets
Dharan
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How Much? One in each pocket
One
How? Training Workshop and observation Management of quality inputs Credit Advocacy
By Whom? GoN/CADP Cooperatives
Farmers’ Cooperatives CADP CADP
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What? Cold Storage Provision of quality inputs Mainstreaming gender Energizing farmers’ associations
Contract farming
Where? All pockets Dhankuta All districts
Sunsari, Morang, Dhankuta, Jhapa
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How Much?
How?
By Whom?
Mobilize cooperatives Training
CADP
Training to create a bridge between service providers and farmers Contract among processors, producers, and farmers’ cooperatives
CADP CADP
CADP
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ANNEX
Annex 1 List of Market Chain Actors Interviewed Name Madan Bastola Dhruba Raya Makrdhwaj Rai Hari Bastola Punya Prasad Rolaya Chandra Bahadur Dahal Durga Khadka Rabindra Raj Yogi Madan Ghimire Lok Bahadur Rana Tilak Basnet Kaji Giri
Function Producer, Collector, Trader Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Trader
Ramesh Kumar Shah Binod Poudel Nanda Kumar Subba Rajan Wagle
Trader Trader Trader Trader
Meena Tamang Kumar Pande Purna Giri Santosh Kumar Magar
Trader-------Collector Collector Collector
Bikash Bista Narayan Timsina Padam Singh Bhandari K. D. Sharma, Bishnu Neupane Pradip Kumar karki
Wholesaler and retailer Retailer Packaging laborer Processor
Shambhu Raj Katuwal:
Manager
Sanjay Kumar Yadav Puisparaj Poudel
DADO Agricultural Officer
Address Guthitar Belhara-7 Dhankutta Belhara, Dhankuta Belhara, Dhankuta Belhara, Dhankuta Ankhisalla, Dhankuta Belhara, Dhankuta Belhara, Dhankuta Belhara, Dhankuta Belhara, Dhankuta Belhara, Dhankuta Chairman, Agricultural Products Marketing Association, Dharan Dharan Mulghat, Dhankuta Terhathum Fresh Vegetable Producer and Collection Center, Guthitar, Belhara, Dhankuta Dhankuta Mulghat, Dhankuta Mulghat, Dhankuta Rudrabari Fresh Vegetable Collection Center, Rudrabari, Belhara, Dhankuta Pathari, Morang Dharan Belhara, Dhankuta Rijal Tashi Industry
T6, Chief of horticultural Regional Agricultural Research Center section Horticultural Research Unit, Tarhara, Sunsari Agricultural Products Marketing Center, Amarhat, Dharan, Sunsari District Agricultural Development Office Jhapa Extension District Agricultural Development Office Dhankutta
Annex 2 Product Chain Analysis Commercial Agriculture Development Project Checklist Name of the Commodity: General Background Date of interview: …../…..../2065 Interviewer: …………………………………….. Interviewee's Position in Value chain: (Farmers / Producers) Interviewee's Contact Details: Village/town : ……………… VDC : ……………… District : ….…………… Distance from district HQ : ….…………… Nearest Markets/Haats : ………………. Demography of the area Population : ………….. Ethnicity : ………….. No. of households : ………….. Infrastructure/support services Road networks : ………….. Technical Service centers: ……… Communication : ………….. Others: ……………. Miscellaneous Land use/Cropping pattern : …………. Other industries : …………. No. of grower in your village/VDC/..........No of middle man.....No of processor...... The Product Tomato
Markets Tick mark
Specify
Tick mark
Specify
Who do you sell your products to? • Local consumers • Traders • Exporters • • Where do sell your products? Within the district • Farm • Markets • Collecting Centers • Outside the district • Markets • Collecting Centers • • Marketing How do you market your products? • By yourself • Collectors/Traders comes to buy
Have you ever considered selling your products directly to national markets? Or Exports?
Yes/No
Because, ………
Accessibility/Transportation Tick mark
Specify
Distance to • Local consumers • Traders • Exporters • • How do you transport your products to? • Local consumers • Traders • Exporters • • Use of the products Do you know for what purpose your product is being bought? For consumption (as vegetable, salad…….) For use in processing plants as raw materials (Achar ) Export Farm/Production management Commodity Tomato Variety Local Improved Grade (size) Large Small Medium Area Coverage In Ropanies In Bighas Value addition Production Cost Estimate & Production Nursery (Unit Cost) SN Particulars A Total Inputs 1 Seeds 2 Chemical fertilizer* - Urea - DAP - MoP 3 Organic Manure 4 Insect/Pesticides B MANPOWER 1 Seed bed preparation 2 Shade for seed beds 3 Watering 4 Plant protection 5 Fertilizer application 6 Weeding & hoeing TOTAL for 1 unit area
Unit Gm KG KG KG MT LS MD MD MD MD MD MD
Rate
Commodity: Tomato Quantity Amount, Rs
Plantation (Unit Cost) SN Particulars A Total Inputs 1 Saplings 2 Chemical fertilizers - Urea - DAP - MoP 3 Organic Manure 4 Insect/pesticides B Total Manpower 1 Land preparation 2 Sapling planting 3 Mulching 4 Weeding & sickling Ukera laagaun 5 6 Fertilizer application 7 Irrigation 8 Plant protection 9 Harvesting/storing/packing B Land preparation Tractor Plough TOTAL, for 1 unit area
Unit
Rate
Quantity
Amount, Rs.
No Kg Kg Kg MT LS MD MD MD MD MD MD MD Hour Day
Pricing Could you describe on how you set prices with buyers? Starting price, Rs./kg End price, Rs./kg Are you satisfied with the price? (Please rate your price) - Unfair - Relatively fair - Fair - Good What are the factors governing the price in your area? - Seasonality - Production volume - Production in other districts - Demand from other districts - Demand from Indian Market - Bargaining/negotiating strength - Availability of processing unit in the area - Availability of markets - Road/transport system - Blockade/strike (in own area/highway) - Market information - Others Who are the major players in determining the price in your area? - Collectors/Traders/middle man - Processors - Exporters - Others Inputs supply situations Inputs
Seeds/Seedlings Chemical Fertilizers Organic Manure Pesticides/Insecticides Farm equipments Others
Availability Regular/Irregular
Available locally/ outside
Quality (Good/ Satisf'ry / Bad)
Major Suppliers
Labor supply situation Labor
Availability Regular/ Irregular
Available locally/ outside
Quality (Good/ Satisfy / Bad)
Labor other than locals
Access (easy, difficult, no access)
Name the institutions/ Individuals providing credit services
Own/Household Skilled Semi Skilled Skilled Credit supply situations Credit
Availability Regular/ Irregular
Available locally/ outside
Institutional (Bank/Fin. Inst.) - Production loan - Working Capital Non-institutional (Local money lenders, fertilizer dealers, vegetable traders, vegetable processor etc.)
Services of Credit Supplying Institutions/Individuals Credit Availabili Interest rate Terms & ty of Conditions credit (Favorable/ unfavorable Institutional (Bank/Fin. Inst.) Non-institutional (Local money lenders, fertilizer dealers, vegetable traders, vegetable processor etc.) Quality of Product Quality criteria
Who set the criteria?
Factors affecting success of the product Determining factor Availability of planting materials & inputs on time Quality of seed, fertilizer & other inputs Technical know-how & technical support services Land Irrigation Weeding
Service (Good/ Satisfy / Bad
Who check for quality?
Specify
Areas of improvements
Remarks
Where the inspection is done?
Grade
Major Problems & Constraints Determining factors Availability of planting materials & inputs Quality of seed, fertilizer & other inputs Technical know-how & technical support services Supporting infrastructure - processing units - road & transport - collection centers - credit - land - quality control units
Specify
Grade
Information on price and market Good relationship with buyer Other
Solutions and area of interventions Obstacle Availability of planting materials & inputs
Solutions
Quality of seed, fertilizer & other inputs Technical know-how & technical support services Supporting infrastructure - processing units - road & transport - collection centers - credit - land - quality control units
Information on price and market Good relationship with buyer Other If the possibility would be there, would you be willing to produce the product in larger quantities? No (under no conditions…) Yes, but with some conditions Yes and even if there are some bad years Undecided Overall impression Answer farmer Risky but profitable Risky and unprofitable Unrisky and profitable Unrisky but not profitable
Reason farmer:
