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Vertical Coordination towards Horticultural Value Chain in Punjab Pakistan: Implications for Smallholders and Agribusiness

Muhammad Sharif

Social Sciences esearch Institute !ational Agricultural esearch Centre Islamabad "ul#$ %&'%

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(able of Contents
Chapter ) I**************************************************************************************************************************************************% I!( +,-C(I+!*************************************************************************************************************************************% '*'.ackground*******************************************************************************************************************************************% '*%+bjecti/es of the Stud#*************************************************************************************************************************0 '*1Problem Statement*******************************************************************************************************************************2 '*0 esearch 3uestions and esearch 4aps*********************************************************************************************5 '*2"ustification of the Stud# *********************************************************************************************************************6 '*7+rgani8ation of the Stud#********************************************************************************************************************9 Chapter ) II**********************************************************************************************************************************************'' (H:+ :(ICA; < AM:=+ > A!, M:(H+,+;+4?**************************************************************'' %*'Introduction****************************************************************************************************************************************'' %*%!ew Paradigm of Agri).usiness ,e/elopment*********************************************************************************'' %*1Agro)food Market and Smallholder <armers***********************************************************************************'0 %*0Market eforms and Smallholder <armers*************************************************************************************'7 %*2Agriculture Value Chain /s* Suppl# Chain**************************************************************************************'5 Table 2.1: Supply chain versus value chain...............................................................................................17 Table 2.2: Key attributes of two extreme types of co-ordination...............................................................1 %*7Agricultural Value Chain Approach and Smallholder <armers*****************************************************'9 %*5 e/iew of Vertical Coordination towards High Value Agriculture************************************************%' %*6 esearch ,esign and Implementation***********************************************************************************************%1

2. .1Survey desi!n.............................................................................................................2"

#i!ure 2.1: $ap showin! man!o% citrus and tomato !rowin! districts of &un'ab...2(
Table 2.": Sample distribution for horticultural value chain in &un'ab province.......................................27

2. .2#ieldwor)...................................................................................................................2
%*9Anal#tical (echni@ues************************************************************************************************************************%9

2.*.1Transaction costs.......................................................................................................2* 2.*.2&rofitability analysis.................................................................................................."1 2.*."The value chain analysis +,-./ model....................................................................."1 2.*.(S01T analysis.........................................................................................................."2
%*'&Conclusion*****************************************************************************************************************************************11 Chapter A III********************************************************************************************************************************************17 CHA AC(: IS(ICS +< H+ (IC-;(- A; VA;-: CHAI! +P: A(+ S A!, S-PP+ (: S****************************************************************************************************************************17 1*'Introduction****************************************************************************************************************************************17 1*%Socio):conomic Profile of Primar# Actors***************************************************************************************17

".2.1Socio-economic profile of sample !rowers and their farms......................................"2


Table ".1: Socio-economic profile of the sample !rowers........................................................................."7 Table ".2: 3and holdin!% orchard area and source of irri!ation of !rowers +acres/...................................."

".2.2-haracteristics of sample contractors ......................................................................."


Table ".": -haracteristics of sample contractors in the study area............................................................."*

".2."-haracteristics of sample commission a!ents .........................................................."*


Table ".(: Socio-economic characteristics of sample commission a!ents.................................................(4

".2.(-haracteristics of sample wholesalers.......................................................................(4


Table ".5: Socio-economic characteristics of sample wholesalers.............................................................(1

".2.5-haracteristics of sample retailers ............................................................................(1


Table ".2: -haracteristics of the sample retailers......................................................................................(1

".2.2-haracteristics of sample consumers ........................................................................(1 iii

Table ".7: -haracteristics of the sample consumers ..........................................................................(2 1*1Acti/ities B <unctions and ,escription of Primar# Actors***************************************************************0% Table ". : .ctivity6functions and the description of input suppliers6nursery developers...........................(" Table ".*: .ctivity6functions and description of !rowers..........................................................................(" Table ".14: .ctivity6functions and description of contractors...................................................................(( Table ".11: .ctivity6functions and the description of commission a!ents.................................................(( Table ".12: .ctivity6functions and description of wholesalers..................................................................(2 Table ".1": .ctivity6functions and description of retailers........................................................................(2 Table ".1(: .ctivities6functions and description of processors..................................................................(2 Table ".15: .ctivities6functions and description of exporters....................................................................(7 1*0Acti/ities B <unctions and ,escription of Secondar# Actors************************************************************05 Table ".12: Secondary actors% activities and description...........................................................................( 1*2Conclusion*******************************************************************************************************************************************06 Chapter ) IV*********************************************************************************************************************************************2% MA >:( A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+ *******************************************************2% 0*'Introduction****************************************************************************************************************************************2% 0*%4lobal Market for Mango$ Citrus and (omato *******************************************************************************2%

(.2.17lobal man!o production..........................................................................................5"


Table (.1: $a'or man!o producin! countries of the world in 244* ..........................................................5"

(.2.27lobal citrus production............................................................................................5(


Table (.2: $a'or citrus producin! countries of the world .........................................................................5(

(.2."7lobal tomato production..........................................................................................5(


Table (.": 3ar!est producers in the world +tonnes/....................................................................................5(

(.2.(7lobal man!o import.................................................................................................55

#i!ure (.1 $a'or man!o importin! countries ........................................................55


(.2.57lobal citrus import...................................................................................................55

#i!ure (.2: 3ar!est importers of tan!erines% mandarins% clem ...............................52


(.2.27lobal tomato import.................................................................................................52

#i!ure (.": 3ar!est importers of tomato +8/...........................................................52


(.2.77lobal man!o export.................................................................................................57

#i!ure (.(: $a'or man!o exportin! countries in world .......................................57


(.2. 7lobal citrus export...................................................................................................57

#i!ure (.5: 3ar!est exports of tan!erines% mandarins% clem ...................................57


(.2.*7lobal tomato export.................................................................................................5

#i!ure (.2: 3ar!est tomato exporters9 +8/..............................................................5


0*1 egional Market Anal#sis for Mango$ Citrus and (omato*************************************************************26

(.".1$an!o in the re!ion...................................................................................................5


Table (.(: $a'or man!o producin! countries in .sia ...............................................................................5

(.".2-itrus in the re!ion....................................................................................................5*


Table (.5: $a'or citrus producin! countries in .sia .................................................................................5*

(."."Tomato in the re!ion..................................................................................................5*


Table (.2: 3ar!est .sian producers in world.............................................................................................5* 0*0Mango$ Citrus and (omato Production in Pakistan************************************************************************7&

(.(.1$an!o varieties.........................................................................................................24 (.(.2-itrus varieties...........................................................................................................24 (.(."Tomato varieties........................................................................................................21 (.(.($an!o production......................................................................................................21 iv

Table (.7: .rea% production and yield of man!oes in ma'or producin! districts of &un'ab &a)istan 244 4* 22

(.(.5-itrus production.......................................................................................................22
Table (. : -itrus production in sample districts +244 -4*/........................................................................2"

(.(.2 Tomato production....................................................................................................2"


Table (.*: Tomato production in sample districts +244 -4*/.....................................................................2" 0*2Marketing ChannelsBSuppl# Chain of Mango$ Citrus and (omato************************************************70

(.5.1$ar)etin! channel of man!o.....................................................................................2( (.5.2$ar)etin! channels of citrus.....................................................................................25

#i!ure (.7: $ar)etin! channels of man!oes distribution in &a)istan +small farmers/ .......................................................................................................................22 #i!ure (. : $ar)etin! channels of citrus distribution in &a)istan +small farmers/. 27
(.5."$ar)etin! channel of tomato.....................................................................................27

#i!ure (.*: $ar)etin! channels of tomato distribution in &un'ab &a)istan +small farmers/.........................................................................................................2
0*7Ser/ice Market for Horticulture Sub)Sector************************************************************************************79 0*5Conclusion*******************************************************************************************************************************************5& Chapter ) V**********************************************************************************************************************************************51 VA;-: CHAI! MAPPI!4 +< H+ (IC-;(- A;************************************************************************51 S-.)S:C(+ *****************************************************************************************************************************************51 2*'Introduction****************************************************************************************************************************************51 2*%Value Chain Mapping of Horticultural Sub)Sector through <low Chart**************************************51

5.2.1$appin! of small holder man!o !rowers throu!h flow chart...................................7(

#i!ure 5.1: Small farmer man!oes value chain in &un'ab &a)istan........................7(


5.2.2$appin! of lar!e holder man!o 7rowers..................................................................75

#i!ure 5.2: 3ar!e farmer man!oes value chain in &un'ab &a)istan........................75 #i!ure 5.": Small farmer citrus value chain............................................................72
5.2."$appin! of small holders citrus !rowers .................................................................72 5.2.($appin! of lar!e holders citrus !rowers ..................................................................77

#i!ure 5.(: 3ar!e farmer citrus value chain............................................................77


5.2.5$appin! of small farmer tomato value chain............................................................77

#i!ure 5.5: Small farmer tomato value chain in &un'ab &a)istan...........................7


5.2.2$appin! of lar!e farmer tomato value chain............................................................7

#i!ure 5.2: 3ar!e farmer tomato value chain in &un'ab &a)istan...........................7


2*1An In/entor# of Market Pla#ers for Horticultural Sub)Sector*******************************************************59

5.".1:nventory of mar)et players of man!o and citrus......................................................7*

#i!ure 5.7: :nventory of man!o mar)et players...................................................... 1 #i!ure 5. : :nventory of citrus mar)et players....................................................... 2
5.".2.n inventory of mar)et players for tomato............................................................... "

#i!ure 5.*: ,alue chain mappin! of tomato &a)istan9s &un'ab.............................. "


2*0Conclusions*****************************************************************************************************************************************62 Chapter A VI********************************************************************************************************************************************66 VA;-: CHAI! P +<I(A.I;I(? A!A;?SIS +< (H: H+ (IC-;(- A; S-.)S:C(+ ****66 7*' Value Chain Anal#sis***********************************************************************************************************************66 7*% Anal#sis of the :conomic Viabilit# of the Mango 4rowers************************************************************69

2.2.1-alculatin! costs in man!o value chains................................................................... * v

Table 2.1: -ost analysis of small man!o producers +;s.6K!/.................................................................... * Table 2.2: -ost analysis of lar!e man!o producers +;s.6K!/.....................................................................*4

2.2.2&rofitability of man!o !rowers..................................................................................*4


Table 2.": Small farmers profitability analysis of man!oes .....................................................................*1 Table 2.(: 3ar!e farmers profitability analysis of man!oes.......................................................................*1 7*1:conomic Viabilit# of Citrus 4rowers**********************************************************************************************9%

2.".1-ost analysis to small citrus !rowers .......................................................................*2


Table 2.5: Transaction cost analysis of citrus on small farmers +;s.6K!/..................................................*2 Table 2.2: Transaction cost analysis of citrus on lar!e framers +;s6K!/................................*"

2.".2&rofit analysis............................................................................................................*"
Table 2.7: Small farmers profitability analysis of citrus............................................................................*" Table 2. : 3ar!e farmers profitability analysis of citrus............................................................................*( 7*0:conomic Viabilit# of (omato 4rowers********************************************************************************************90

2.(.1-ost analysis of small tomato !rowers .....................................................................*(


Table 2.*: -ost analysis of small tomato farmer........................................................................................*( Table 2.14: -ost analysis of lar!e tomato farmer +;s6K!/.......................................................*5

2.(.2Tomato profitability analysis.....................................................................................*5


Table 2.11: Small farmers profitability analysis of tomato........................................................................*5 Table 2.12: 3ar!e farmers profitability analysis of tomato........................................................................*2 7*2Horticulture Sub)Sector ,#namics***************************************************************************************************97

2.5.1$an!o on small farms: . potential not well utili<ed in &a)istan..............................*7

&otential output based on yield !ap as compare to lar!e farmers in sample area: :n our sample showed that about "4 percent farmer fall in lar!e farm cate!ory avera!e yields per acre was around ( 21 )!. These yields are a result well mana!ed orchards and more inputs use as compare to small farmers in the sample area +Table 2.1"/...............................................................................*7
Table 2.1": Small farmers profitability analysis of tomato based on potential output...............................*7

The !ap between potential and actual yields is hi!h in a ma'ority of farmin! systems in &a)istan. $an!o is not an exception. Table 2.1( demonstrated the scenario of small holder profitability under potential productivity with re!ard to 1 174 )! per acre the yield level of -ape ,erde hi!hest in the world.............................................................................................................*7
Table 2.1(: Small farmers profitability analysis of tomato = potential output based on yield !ap exist as compare to the world hi!hest yield +-ape ,erde/.........................................................................*

2.5.2-itrus on small farms: . potential not well utili<ed in &a)istan...............................*


Table 2.15: &otential output based on lar!e farmers> output of citrus.......................................................* Table 2.12: Small farmers profitability analysis of citrus = potential output based on yield !ap exist as compare to the world hi!hest yield +:ndonesia/............................................................................**

2.5."Tomato on small farms: . potential not well utili<ed in &a)istan............................**


Table 2.17: Small farmer9s profitability analysis of tomato based on potential output............................144 Table 2.1 : Small farmer9s profitability analysis of tomato based on potential output............................144

2.5.(?ield !aps and ran)in! of man!o% citrus and tomato: . potential not well utili<ed in &a)istan............................................................................................................................144
Table 2.1*: ?ield !ap and ran)in! of man!o% citrus and tomato ............................................................141

2.5.5&ost-harvest losses of man!o% citrus and tomato: . potential not achieved in &a)istan............................................................................................................................141
Table 2.24: &ost-harvest losses in man!o% citrus and tomato...................................................................141

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2.5.2@xport prices of man!o% citrus and tomato: . potential not achieved in &a)istan. .141
Table 2.21: -omparison of export prices of man!o% citrus and tomato....................................................142

2.5.7$an!o% citrus and tomato: ;eal investors or wea)ened !rowers............................142 2.5. Aiverse ori!ins for re!ular supply...........................................................................142 2.5.*7ender issues...........................................................................................................14" 2.5.14$ar)etin!: Aominated by spot transactions..........................................................14"
7*7Value Addition in Horticultural Value Chains: -nderstanding who 4ains Most***********************'&1

2.2.1,alue addition for smallholder man!o !rowers......................................................14"

#i!ure 2.1: Small farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers...............................................................14( #i!ure 2.2: Small farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................14( #i!ure 2.": Small farmer chain " +&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers..........................................145
Table 2.22: Small farmer man!o value chain summary...........................................................................142

2.2.2,alue addition for lar!e man!o !rowers.................................................................142

#i!ure 2.(: 3ar!e farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers...............................................................147 #i!ure 2.5: 3ar!e farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................147 #i!ure 2.2: 3ar!e farmer chain "+&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers..........................................14
Table 2.2": 3ar!e farmer man!o value chain summary...........................................................................14*

2.2.",alue addition for smallholder citrus !rowers........................................................14*

#i!ure 2.7: Small farmer chain 1 +Bori<ontal coordination/ +a/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................114 #i!ure 2. : Small farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................114 #i!ure 2.*: -hannel "+&re harvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers...............................................................111
Table 2.2(: Small farmer citrus value chain summary.............................................................................112

2.2.(,alue addition for lar!e citrus !rowers...................................................................112

#i!ure 2.14: 3ar!e farmer chain 1+Bori<ontal coordination/ +a/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................11" #i!ure 2.11: 3ar!e farmer chain +,ertical coordination/: #armer C @xporter C :nternational ;etailers ..................................................................11" #i!ure 2.12: -hannel " +&re harvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers...............................................................11(
Table 2.25: 3ar!e farmer citrus value chain summary.............................................................................11(

2.2.5,alue addition for small tomato !rowers................................................................115

#i!ure 2.1": Small farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................115
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The tomato sellin! price at farmer level was ;s.12.2 per )! +#i!ure 2.1(/. The !rower harvest tomato and transport to factory. The expenses incurred by the farmers were production activities% harvestin!% however farmers save pac)in! and commission char!es. The value added was produced from the process of tomato cultivation. This chain produced a total value added of ;s.(7.7" per )!% which was the hi!hest value added compared to other value chains. :n this chain farmers save mar)etin! cost and earn more income per acre. The value-added process occurred to any lar!e de!ree at the processor level followed by product wholesaler retailer and farmer respectively +Table 2.22/............................................................................................................115 #i!ure 2.1(: Small farmer chain +,ertical coordination/: #armer C &rocessin! factory C &roduct 0holesalers C ;etailers..................................................112
Table 2.22: Small farmer tomato value chain analysis summary.............................................................112

2.2.2,alue addition for lar!e tomato !rowers.................................................................117

#i!ure 2.15: 3ar!e farmer chain 1+a/: #armer C -ommission .!ents C 0holesalers C ;etailers....................................................................................................117 #i!ure 2.12: 3ar!e farmer chain 1 +b/: #armer C &rocessin! factory C &roduct 0holesalers C ;etailers...............................................................................11
Table 2.27: 3ar!e farmer tomato value chain analysis summary.............................................................11 7*5Price Structure and Cost ,ri/ers for Hori8ontal$ Vertical and Pre)har/est Contract S#stem***''9 7*6S#stemic Constraints with -nderl#ing S#stemic Causes and elated Markets***************************'%' Table 2.2*: -onstraints and their underlyin! systemic causes of citrus value chain................................122 Table 2."4: -onstraints and their underlyin! systemic causes of tomato value chain..............................12" 7*9:ffects of Vertical Coordination on (ransaction Cost and <arm Profitabilit# of Smallholders in Horticultural Value Chain*******************************************************************************************************'%1 Table 2."1: &rofitability of horticultural sub-sector.................................................................................12( 7*'&Identification of Stronger <orms of Integration that could Sustainable Impro/e =ellbeing of Smallholder <armers in Horticultural Value Chains*************************************************************'%0 7*''Implications for Smallholders$ Agri)business$ Public Polic# and In/estment Priorit#**************'%2 7*'%Conclusion***************************************************************************************************************************************'%2 Chapter A VII*****************************************************************************************************************************************'1& 5*'Introduction**************************************************************************************************************************************'1& 5*%Constraints Anal#sis of Smallholder ,ominated Horticulture Sub)Sector**********************************'1& Table 7.1: -onstraints analysis of smallholder dominated horticulture sub-sector..................................1"1 5*1Identif#ing Incenti/es of Market Pla#ers and Agents of Change**************************************************'10

7.".1Dad wor)in! environment in horticulture value chains...........................................1"5 7.".2Dad wor)in! conditions affect output and performance..........................................1"5
&rofitability .nalysis: The profitability analysis is done considerin! cost analysis described above. The economic viability of different farmer !roups alon! different chains is determined based on the profitability analysis. ................................................................................................................1"2

7."."-han!in! consumer awareness and demand...........................................................1"2


5*0<ormulating a Vision and Strateg# for Sustainable S#stemic Change*****************************************'17

7.(.1S01T analysis of horticulture sub-sector...............................................................1"2 Stren!ths of Borticulture Sub-sector...............................................................................1"7 0ea)nesses of Borticulture Sub-sector...........................................................................1"7 1pportunities of Borticulture Sub-sector........................................................................1" viii

Threats of Borticulture Sub-sector..................................................................................1" 7.(.2-onstraints% opportunities% solutions and interventions of horticultural sub-Sector1"*
The findin!s of value chain research !iven in -hapter 2 are translated into solutions and interventions. The brief description of ma'or constraints% opportunities% possible solutions and proposed interventions for the horticultural sub-sector in &a)istan9s &un'ab are briefly presented in Table 7.2. 1"* Table 7.2: -onstraints% opportunities% solutions and interventions of the horticultural sub-sector...........1"* 5*2Value Chain Promotion Strateg# for Mango and Citrus***************************************************************'0' 5*7Conclusions***************************************************************************************************************************************'02 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'05 Chapter A VIII***************************************************************************************************************************************'06 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'06 6*'Introduction**************************************************************************************************************************************'06 6*% ationale for Pilot Mango$ Citrus and (omato Value Chains Schemes***************************************'09

.2.1;ational for pilot man!o value chain development scheme....................................1(* .2.2;ational for pilot citrus value chain development scheme......................................154 .2.";ational for pilot tomato value chain development scheme....................................151
6*14eographical (argeting$ Partnerships and .eneficiar# Categories*********************************************'2%

.".17eo!raphical tar!etin!.............................................................................................152 .".2&artnerships..............................................................................................................15" ."."Deneficiary cate!ories.............................................................................................15(


6*0Project Component ,escription******************************************************************************************************'22 6*2SelectionBIdentification and Situation Value Chain Anal#sis of Sites and Potential Partners****'27

.5.1Selection of exact locations at different sites of proposed pilot schemes................152 .5.2Selection of tar!et !rowers% other chain sta)eholders in each site and potential pro'ect partners................................................................................................................157 .5."Situation value chain analysis6bench mar) survey for each site..............................15
6*7:stablishment of .HS for Input Pro/ision as a <irst Segment for Chain ,e/elopment**********'26

.2.1:nput provision ........................................................................................................15 .2.2@stablishment of clean nursery................................................................................15* .2."@stablishment of model on farm pac) house...........................................................124 .2.(#inancial services.....................................................................................................121
6*5Capacit# .uilding of Chain Stakeholders***************************************************************************************'7'

.7.1-apacity buildin! of man!o !rowers% women and children for addressin! the need for productivity% Euality of improvement of man!o% reducin! post harvest losses and value addition...................................................................................................................121 .7.2-apacity buildin! of citrus !rowers% women and children for addressin! the need for productivity% Euality of improvement of citrus% reducin! post harvest losses and value addition............................................................................................................................122 .7."-apacity buildin! of tomato !rowers% women and children for addressin! the need for productivity% Euality of improvement of tomato% reducin! post harvest losses and value addition...................................................................................................................12" .7.(-apacity buildin! of other chain sta)eholders for addressin! the issue of postharvest handin!% lo!istic and mar)etin! se!ments of value chains.................................12" .7.5Speciali<ed capacity buildin! .................................................................................12(
6*6 esearch for Chain ,e/elopment****************************************************************************************************'76 6*9=orkshops B Seminars B Conference B ,ispla#********************************************************************************'5& 6*'&Costs*************************************************************************************************************************************************'5%

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6*''In/estment and <inancing Assumptions***************************************************************************************'5% 6*'%Institutional <ramework for ProgrammeBProject Implementation +rgani8ation and Management******************************************************************************************************************************'51 6*'1Monitoring and :/aluation************************************************************************************************************'50

.1".1Key performance indicators...................................................................................17( .1".21utcome indicators for man!o% citrus and tomato.................................................175 .1"."1utput indicators for man!o% citrus and tomato....................................................175
6*'0:Cpected .enefits****************************************************************************************************************************'57 6*'2Issues and isks and <ollow)-p Acti/ities************************************************************************************'57 6*'7Conclusions*************************************************************************************************************************************'57 Chapter ) ID*******************************************************************************************************************************************'55 S-MMA ?$ C+!S( AI!(S A!, S( A(:4I:S**************************************************************************'55 9*'Summar# of <indings***********************************************************************************************************************'55

*.1.11b'ectives and methodolo!y...................................................................................177 *.1.2&rofile of horticultural value chain operators..........................................................17 *.1."$ar)et analysis of horticulture sub-sector..............................................................1 4 *.1.(,alue chain mappin! of horticulture sub-sector......................................................1 1 *.1.5,alue chain research of horticulture sub-sector......................................................1 2 *.1.2,alue chain analysis of horticulture sub-sector.......................................................1 5 *.1.7,alue chain development schemes of horticulture sub-sector................................1 2
9*%Horticultural ,e/elopment Constraints******************************************************************************************'67

*.2.1:nput supply.............................................................................................................1 *.2.2Smallness ................................................................................................................1 *.2."$ana!ement of or!ani<ation ..................................................................................1 *.2.($ar)et access ..........................................................................................................1 *.2.5@nablin! environment..............................................................................................1 *.2.23imited capacity buildin! of horticultural chain sta)eholders ...............................1 *.2.7&olicy ......................................................................................................................1 *.2. ;esearch and development constraints....................................................................1

7 7 7

* *

9*1Polic# Implications of the Salient <indingsBConstraints ***************************************************************'69 9*0+pportunities Solutions and Proposed Inter/entions for Identified Constraints ***********************'9& 9*2Horticultural ,e/elopment Strategies*********************************************************************************************'9%

*.5.1;eorientation of subsistence horticulture to sustainable commercial horticultural farmin!.............................................................................................................................1*" *.5.2@stablishment of rural business hubs for input provision as a first se!ment for chain development.....................................................................................................................1*" *.5."@stablishment of model on farm pac) house...........................................................1*( *.5.(.rran!ement of contract farmin!............................................................................1*5 *.5.5;e-orientation of research and development services ............................................1*5 *.5.2;eform of a!ricultural education% research and extension......................................1*2 *.5.7:mprovin! efficiency% productivity and competitiveness........................................1*2 *.5. &romotion of re!ional trade ....................................................................................1*2 *.5.*@ncoura!in! public and private partnership and private sector investment ...........1*7 *.5.14-apacity buildin! of chain sta)eholders of horticulture sub-sector......................1*7 *.5.11&olicy and re!ulatory framewor) for the promotion of horticulture sector...........1* *.5.12To improve Euality ...............................................................................................244 *.5.1"To up!rade vertical coordination ..........................................................................244 *.5.1(To improve hori<ontal coordination .....................................................................244 x

9*7Suggestions for <urther esearch***************************************************************************************************%&'

*.2.1:nvestment appraisal analysis of fruit and ve!etables products industries..............241 *.2.2Bow efficient and eEuitable fruit and ve!etables value chains are with respect to competitiveness% inclusiveness% scalability and sustainability.........................................242 *.2.":mpact of 0T1 on fruit and ve!etables export.......................................................242
'&* :<: :!C:S*********************************************************************************************************************************%&1

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;ist of (ables
Chapter ) I**************************************************************************************************************************************************% I!( +,-C(I+!*************************************************************************************************************************************% '*'.ackground*******************************************************************************************************************************************% '*%+bjecti/es of the Stud#*************************************************************************************************************************0 '*1Problem Statement*******************************************************************************************************************************2 '*0 esearch 3uestions and esearch 4aps*********************************************************************************************5 '*2"ustification of the Stud# *********************************************************************************************************************6 '*7+rgani8ation of the Stud#********************************************************************************************************************9 Chapter ) II**********************************************************************************************************************************************'' (H:+ :(ICA; < AM:=+ > A!, M:(H+,+;+4?**************************************************************'' %*'Introduction****************************************************************************************************************************************'' %*%!ew Paradigm of Agri).usiness ,e/elopment*********************************************************************************'' %*1Agro)food Market and Smallholder <armers***********************************************************************************'0 %*0Market eforms and Smallholder <armers*************************************************************************************'7 %*2Agriculture Value Chain /s* Suppl# Chain**************************************************************************************'5 Table 2.1: Supply chain versus value chain...............................................................................................17 Table 2.2: Key attributes of two extreme types of co-ordination...............................................................1 %*7Agricultural Value Chain Approach and Smallholder <armers*****************************************************'9 %*5 e/iew of Vertical Coordination towards High Value Agriculture************************************************%' %*6 esearch ,esign and Implementation***********************************************************************************************%1

2. .1Survey desi!n.............................................................................................................2"
Table 2.": Sample distribution for horticultural value chain in &un'ab province.......................................27

2. .2#ieldwor)...................................................................................................................2
%*9Anal#tical (echni@ues************************************************************************************************************************%9

2.*.1Transaction costs.......................................................................................................2* 2.*.2&rofitability analysis.................................................................................................."1 2.*."The value chain analysis +,-./ model....................................................................."1 2.*.(S01T analysis.........................................................................................................."2
%*'&Conclusion*****************************************************************************************************************************************11 Chapter A III********************************************************************************************************************************************17 CHA AC(: IS(ICS +< H+ (IC-;(- A; VA;-: CHAI! +P: A(+ S A!, S-PP+ (: S****************************************************************************************************************************17 1*'Introduction****************************************************************************************************************************************17 1*%Socio):conomic Profile of Primar# Actors***************************************************************************************17

".2.1Socio-economic profile of sample !rowers and their farms......................................"2


Table ".1: Socio-economic profile of the sample !rowers........................................................................."7 Table ".2: 3and holdin!% orchard area and source of irri!ation of !rowers +acres/...................................."

".2.2-haracteristics of sample contractors ......................................................................."


Table ".": -haracteristics of sample contractors in the study area............................................................."*

".2."-haracteristics of sample commission a!ents .........................................................."*


Table ".(: Socio-economic characteristics of sample commission a!ents.................................................(4

".2.(-haracteristics of sample wholesalers.......................................................................(4


Table ".5: Socio-economic characteristics of sample wholesalers.............................................................(1

".2.5-haracteristics of sample retailers ............................................................................(1


Table ".2: -haracteristics of the sample retailers......................................................................................(1

xii

".2.2-haracteristics of sample consumers ........................................................................(1


Table ".7: -haracteristics of the sample consumers ..........................................................................(2 1*1Acti/ities B <unctions and ,escription of Primar# Actors***************************************************************0% Table ". : .ctivity6functions and the description of input suppliers6nursery developers...........................(" Table ".*: .ctivity6functions and description of !rowers..........................................................................(" Table ".14: .ctivity6functions and description of contractors...................................................................(( Table ".11: .ctivity6functions and the description of commission a!ents.................................................(( Table ".12: .ctivity6functions and description of wholesalers..................................................................(2 Table ".1": .ctivity6functions and description of retailers........................................................................(2 Table ".1(: .ctivities6functions and description of processors..................................................................(2 Table ".15: .ctivities6functions and description of exporters....................................................................(7 1*0Acti/ities B <unctions and ,escription of Secondar# Actors************************************************************05 Table ".12: Secondary actors% activities and description...........................................................................( 1*2Conclusion*******************************************************************************************************************************************06 Chapter ) IV*********************************************************************************************************************************************2% MA >:( A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+ *******************************************************2% 0*'Introduction****************************************************************************************************************************************2% 0*%4lobal Market for Mango$ Citrus and (omato *******************************************************************************2%

(.2.17lobal man!o production..........................................................................................5"


Table (.1: $a'or man!o producin! countries of the world in 244* ..........................................................5"

(.2.27lobal citrus production............................................................................................5(


Table (.2: $a'or citrus producin! countries of the world .........................................................................5(

(.2."7lobal tomato production..........................................................................................5(


Table (.": 3ar!est producers in the world +tonnes/....................................................................................5(

(.2.(7lobal man!o import.................................................................................................55 (.2.57lobal citrus import...................................................................................................55 (.2.27lobal tomato import.................................................................................................52 (.2.77lobal man!o export.................................................................................................57 (.2. 7lobal citrus export...................................................................................................57 (.2.*7lobal tomato export.................................................................................................5
0*1 egional Market Anal#sis for Mango$ Citrus and (omato*************************************************************26

(.".1$an!o in the re!ion...................................................................................................5


Table (.(: $a'or man!o producin! countries in .sia ...............................................................................5

(.".2-itrus in the re!ion....................................................................................................5*


Table (.5: $a'or citrus producin! countries in .sia .................................................................................5*

(."."Tomato in the re!ion..................................................................................................5*


Table (.2: 3ar!est .sian producers in world.............................................................................................5* 0*0Mango$ Citrus and (omato Production in Pakistan************************************************************************7&

(.(.1$an!o varieties.........................................................................................................24 (.(.2-itrus varieties...........................................................................................................24 (.(."Tomato varieties........................................................................................................21 (.(.($an!o production......................................................................................................21


Table (.7: .rea% production and yield of man!oes in ma'or producin! districts of &un'ab &a)istan 244 4* 22

(.(.5-itrus production.......................................................................................................22
Table (. : -itrus production in sample districts +244 -4*/........................................................................2"

(.(.2 Tomato production....................................................................................................2"


Table (.*: Tomato production in sample districts +244 -4*/.....................................................................2" 0*2Marketing ChannelsBSuppl# Chain of Mango$ Citrus and (omato************************************************70

xiii

(.5.1$ar)etin! channel of man!o.....................................................................................2( (.5.2$ar)etin! channels of citrus.....................................................................................25 (.5."$ar)etin! channel of tomato.....................................................................................27


0*7Ser/ice Market for Horticulture Sub)Sector************************************************************************************79 0*5Conclusion*******************************************************************************************************************************************5& Chapter ) V**********************************************************************************************************************************************51 VA;-: CHAI! MAPPI!4 +< H+ (IC-;(- A;************************************************************************51 S-.)S:C(+ *****************************************************************************************************************************************51 2*'Introduction****************************************************************************************************************************************51 2*%Value Chain Mapping of Horticultural Sub)Sector through <low Chart**************************************51

5.2.1$appin! of small holder man!o !rowers throu!h flow chart...................................7( 5.2.2$appin! of lar!e holder man!o 7rowers..................................................................75 5.2."$appin! of small holders citrus !rowers .................................................................72 5.2.($appin! of lar!e holders citrus !rowers ..................................................................77 5.2.5$appin! of small farmer tomato value chain............................................................77 5.2.2$appin! of lar!e farmer tomato value chain............................................................7
2*1An In/entor# of Market Pla#ers for Horticultural Sub)Sector*******************************************************59

5.".1:nventory of mar)et players of man!o and citrus......................................................7* 5.".2.n inventory of mar)et players for tomato............................................................... "
2*0Conclusions*****************************************************************************************************************************************62 Chapter A VI********************************************************************************************************************************************66 VA;-: CHAI! P +<I(A.I;I(? A!A;?SIS +< (H: H+ (IC-;(- A; S-.)S:C(+ ****66 7*' Value Chain Anal#sis***********************************************************************************************************************66 7*% Anal#sis of the :conomic Viabilit# of the Mango 4rowers************************************************************69

2.2.1-alculatin! costs in man!o value chains................................................................... *


Table 2.1: -ost analysis of small man!o producers +;s.6K!/.................................................................... * Table 2.2: -ost analysis of lar!e man!o producers +;s.6K!/.....................................................................*4

2.2.2&rofitability of man!o !rowers..................................................................................*4


Table 2.": Small farmers profitability analysis of man!oes .....................................................................*1 Table 2.(: 3ar!e farmers profitability analysis of man!oes.......................................................................*1 7*1:conomic Viabilit# of Citrus 4rowers**********************************************************************************************9%

2.".1-ost analysis to small citrus !rowers .......................................................................*2


Table 2.5: Transaction cost analysis of citrus on small farmers +;s.6K!/..................................................*2 Table 2.2: Transaction cost analysis of citrus on lar!e framers +;s6K!/................................*"

2.".2&rofit analysis............................................................................................................*"
Table 2.7: Small farmers profitability analysis of citrus............................................................................*" Table 2. : 3ar!e farmers profitability analysis of citrus............................................................................*( 7*0:conomic Viabilit# of (omato 4rowers********************************************************************************************90

2.(.1-ost analysis of small tomato !rowers .....................................................................*(


Table 2.*: -ost analysis of small tomato farmer........................................................................................*( Table 2.14: -ost analysis of lar!e tomato farmer +;s6K!/.......................................................*5

2.(.2Tomato profitability analysis.....................................................................................*5


Table 2.11: Small farmers profitability analysis of tomato........................................................................*5 Table 2.12: 3ar!e farmers profitability analysis of tomato........................................................................*2 7*2Horticulture Sub)Sector ,#namics***************************************************************************************************97

2.5.1$an!o on small farms: . potential not well utili<ed in &a)istan..............................*7


Table 2.1": Small farmers profitability analysis of tomato based on potential output...............................*7 Table 2.1(: Small farmers profitability analysis of tomato = potential output based on yield !ap exist as compare to the world hi!hest yield +-ape ,erde/.........................................................................*

xiv

2.5.2-itrus on small farms: . potential not well utili<ed in &a)istan...............................*


Table 2.15: &otential output based on lar!e farmers> output of citrus.......................................................* Table 2.12: Small farmers profitability analysis of citrus = potential output based on yield !ap exist as compare to the world hi!hest yield +:ndonesia/............................................................................**

2.5."Tomato on small farms: . potential not well utili<ed in &a)istan............................**


Table 2.17: Small farmer9s profitability analysis of tomato based on potential output............................144 Table 2.1 : Small farmer9s profitability analysis of tomato based on potential output............................144

2.5.(?ield !aps and ran)in! of man!o% citrus and tomato: . potential not well utili<ed in &a)istan............................................................................................................................144
Table 2.1*: ?ield !ap and ran)in! of man!o% citrus and tomato ............................................................141

2.5.5&ost-harvest losses of man!o% citrus and tomato: . potential not achieved in &a)istan............................................................................................................................141
Table 2.24: &ost-harvest losses in man!o% citrus and tomato...................................................................141

2.5.2@xport prices of man!o% citrus and tomato: . potential not achieved in &a)istan. .141
Table 2.21: -omparison of export prices of man!o% citrus and tomato....................................................142

2.5.7$an!o% citrus and tomato: ;eal investors or wea)ened !rowers............................142 2.5. Aiverse ori!ins for re!ular supply...........................................................................142 2.5.*7ender issues...........................................................................................................14" 2.5.14$ar)etin!: Aominated by spot transactions..........................................................14"
7*7Value Addition in Horticultural Value Chains: -nderstanding who 4ains Most***********************'&1

2.2.1,alue addition for smallholder man!o !rowers......................................................14"


Table 2.22: Small farmer man!o value chain summary...........................................................................142

2.2.2,alue addition for lar!e man!o !rowers.................................................................142


Table 2.2": 3ar!e farmer man!o value chain summary...........................................................................14*

2.2.",alue addition for smallholder citrus !rowers........................................................14*


Table 2.2(: Small farmer citrus value chain summary.............................................................................112

2.2.(,alue addition for lar!e citrus !rowers...................................................................112


Table 2.25: 3ar!e farmer citrus value chain summary.............................................................................11(

2.2.5,alue addition for small tomato !rowers................................................................115


Table 2.22: Small farmer tomato value chain analysis summary.............................................................112

2.2.2,alue addition for lar!e tomato !rowers.................................................................117


Table 2.27: 3ar!e farmer tomato value chain analysis summary.............................................................11 7*5Price Structure and Cost ,ri/ers for Hori8ontal$ Vertical and Pre)har/est Contract S#stem***''9 7*6S#stemic Constraints with -nderl#ing S#stemic Causes and elated Markets***************************'%' Table 2.2*: -onstraints and their underlyin! systemic causes of citrus value chain................................122 Table 2."4: -onstraints and their underlyin! systemic causes of tomato value chain..............................12" 7*9:ffects of Vertical Coordination on (ransaction Cost and <arm Profitabilit# of Smallholders in Horticultural Value Chain*******************************************************************************************************'%1 Table 2."1: &rofitability of horticultural sub-sector.................................................................................12( 7*'&Identification of Stronger <orms of Integration that could Sustainable Impro/e =ellbeing of Smallholder <armers in Horticultural Value Chains*************************************************************'%0 7*''Implications for Smallholders$ Agri)business$ Public Polic# and In/estment Priorit#**************'%2 7*'%Conclusion***************************************************************************************************************************************'%2 Chapter A VII*****************************************************************************************************************************************'1& 5*'Introduction**************************************************************************************************************************************'1& 5*%Constraints Anal#sis of Smallholder ,ominated Horticulture Sub)Sector**********************************'1& Table 7.1: -onstraints analysis of smallholder dominated horticulture sub-sector..................................1"1 5*1Identif#ing Incenti/es of Market Pla#ers and Agents of Change**************************************************'10

7.".1Dad wor)in! environment in horticulture value chains...........................................1"5 xv

7.".2Dad wor)in! conditions affect output and performance..........................................1"5


&rofitability .nalysis: The profitability analysis is done considerin! cost analysis described above. The economic viability of different farmer !roups alon! different chains is determined based on the profitability analysis. ................................................................................................................1"2

7."."-han!in! consumer awareness and demand...........................................................1"2


5*0<ormulating a Vision and Strateg# for Sustainable S#stemic Change*****************************************'17

7.(.1S01T analysis of horticulture sub-sector...............................................................1"2 Stren!ths of Borticulture Sub-sector...............................................................................1"7 0ea)nesses of Borticulture Sub-sector...........................................................................1"7 1pportunities of Borticulture Sub-sector........................................................................1" Threats of Borticulture Sub-sector..................................................................................1" 7.(.2-onstraints% opportunities% solutions and interventions of horticultural sub-Sector1"*
The findin!s of value chain research !iven in -hapter 2 are translated into solutions and interventions. The brief description of ma'or constraints% opportunities% possible solutions and proposed interventions for the horticultural sub-sector in &a)istan9s &un'ab are briefly presented in Table 7.2. 1"* Table 7.2: -onstraints% opportunities% solutions and interventions of the horticultural sub-sector...........1"* 5*2Value Chain Promotion Strateg# for Mango and Citrus***************************************************************'0' 5*7Conclusions***************************************************************************************************************************************'02 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'05 Chapter A VIII***************************************************************************************************************************************'06 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'06 6*'Introduction**************************************************************************************************************************************'06 6*% ationale for Pilot Mango$ Citrus and (omato Value Chains Schemes***************************************'09

.2.1;ational for pilot man!o value chain development scheme....................................1(* .2.2;ational for pilot citrus value chain development scheme......................................154 .2.";ational for pilot tomato value chain development scheme....................................151
6*14eographical (argeting$ Partnerships and .eneficiar# Categories*********************************************'2%

.".17eo!raphical tar!etin!.............................................................................................152 .".2&artnerships..............................................................................................................15" ."."Deneficiary cate!ories.............................................................................................15(


6*0Project Component ,escription******************************************************************************************************'22 6*2SelectionBIdentification and Situation Value Chain Anal#sis of Sites and Potential Partners****'27

.5.1Selection of exact locations at different sites of proposed pilot schemes................152 .5.2Selection of tar!et !rowers% other chain sta)eholders in each site and potential pro'ect partners................................................................................................................157 .5."Situation value chain analysis6bench mar) survey for each site..............................15
6*7:stablishment of .HS for Input Pro/ision as a <irst Segment for Chain ,e/elopment**********'26

.2.1:nput provision ........................................................................................................15 .2.2@stablishment of clean nursery................................................................................15* .2."@stablishment of model on farm pac) house...........................................................124 .2.(#inancial services.....................................................................................................121
6*5Capacit# .uilding of Chain Stakeholders***************************************************************************************'7'

.7.1-apacity buildin! of man!o !rowers% women and children for addressin! the need for productivity% Euality of improvement of man!o% reducin! post harvest losses and value addition...................................................................................................................121

xvi

.7.2-apacity buildin! of citrus !rowers% women and children for addressin! the need for productivity% Euality of improvement of citrus% reducin! post harvest losses and value addition............................................................................................................................122 .7."-apacity buildin! of tomato !rowers% women and children for addressin! the need for productivity% Euality of improvement of tomato% reducin! post harvest losses and value addition...................................................................................................................12" .7.(-apacity buildin! of other chain sta)eholders for addressin! the issue of postharvest handin!% lo!istic and mar)etin! se!ments of value chains.................................12" .7.5Speciali<ed capacity buildin! .................................................................................12(
6*6 esearch for Chain ,e/elopment****************************************************************************************************'76 6*9=orkshops B Seminars B Conference B ,ispla#********************************************************************************'5& 6*'&Costs*************************************************************************************************************************************************'5% 6*''In/estment and <inancing Assumptions***************************************************************************************'5% 6*'%Institutional <ramework for ProgrammeBProject Implementation +rgani8ation and Management******************************************************************************************************************************'51 6*'1Monitoring and :/aluation************************************************************************************************************'50

.1".1Key performance indicators...................................................................................17( .1".21utcome indicators for man!o% citrus and tomato.................................................175 .1"."1utput indicators for man!o% citrus and tomato....................................................175
6*'0:Cpected .enefits****************************************************************************************************************************'57 6*'2Issues and isks and <ollow)-p Acti/ities************************************************************************************'57 6*'7Conclusions*************************************************************************************************************************************'57 Chapter ) ID*******************************************************************************************************************************************'55 S-MMA ?$ C+!S( AI!(S A!, S( A(:4I:S**************************************************************************'55 9*'Summar# of <indings***********************************************************************************************************************'55

*.1.11b'ectives and methodolo!y...................................................................................177 *.1.2&rofile of horticultural value chain operators..........................................................17 *.1."$ar)et analysis of horticulture sub-sector..............................................................1 4 *.1.(,alue chain mappin! of horticulture sub-sector......................................................1 1 *.1.5,alue chain research of horticulture sub-sector......................................................1 2 *.1.2,alue chain analysis of horticulture sub-sector.......................................................1 5 *.1.7,alue chain development schemes of horticulture sub-sector................................1 2
9*%Horticultural ,e/elopment Constraints******************************************************************************************'67

*.2.1:nput supply.............................................................................................................1 *.2.2Smallness ................................................................................................................1 *.2."$ana!ement of or!ani<ation ..................................................................................1 *.2.($ar)et access ..........................................................................................................1 *.2.5@nablin! environment..............................................................................................1 *.2.23imited capacity buildin! of horticultural chain sta)eholders ...............................1 *.2.7&olicy ......................................................................................................................1 *.2. ;esearch and development constraints....................................................................1

7 7 7

* *

9*1Polic# Implications of the Salient <indingsBConstraints ***************************************************************'69 9*0+pportunities Solutions and Proposed Inter/entions for Identified Constraints ***********************'9& 9*2Horticultural ,e/elopment Strategies*********************************************************************************************'9%

*.5.1;eorientation of subsistence horticulture to sustainable commercial horticultural farmin!.............................................................................................................................1*" *.5.2@stablishment of rural business hubs for input provision as a first se!ment for chain development.....................................................................................................................1*" xvii

*.5."@stablishment of model on farm pac) house...........................................................1*( *.5.(.rran!ement of contract farmin!............................................................................1*5 *.5.5;e-orientation of research and development services ............................................1*5 *.5.2;eform of a!ricultural education% research and extension......................................1*2 *.5.7:mprovin! efficiency% productivity and competitiveness........................................1*2 *.5. &romotion of re!ional trade ....................................................................................1*2 *.5.*@ncoura!in! public and private partnership and private sector investment ...........1*7 *.5.14-apacity buildin! of chain sta)eholders of horticulture sub-sector......................1*7 *.5.11&olicy and re!ulatory framewor) for the promotion of horticulture sector...........1* *.5.12To improve Euality ...............................................................................................244 *.5.1"To up!rade vertical coordination ..........................................................................244 *.5.1(To improve hori<ontal coordination .....................................................................244
9*7Suggestions for <urther esearch***************************************************************************************************%&'

*.2.1:nvestment appraisal analysis of fruit and ve!etables products industries..............241 *.2.2Bow efficient and eEuitable fruit and ve!etables value chains are with respect to competitiveness% inclusiveness% scalability and sustainability.........................................242 *.2.":mpact of 0T1 on fruit and ve!etables export.......................................................242
'&* :<: :!C:S*********************************************************************************************************************************%&1

xviii

;ist of <igures
Chapter ) I**************************************************************************************************************************************************% I!( +,-C(I+!*************************************************************************************************************************************% '*'.ackground*******************************************************************************************************************************************% '*%+bjecti/es of the Stud#*************************************************************************************************************************0 '*1Problem Statement*******************************************************************************************************************************2 '*0 esearch 3uestions and esearch 4aps*********************************************************************************************5 '*2"ustification of the Stud# *********************************************************************************************************************6 '*7+rgani8ation of the Stud#********************************************************************************************************************9 Chapter ) II**********************************************************************************************************************************************'' (H:+ :(ICA; < AM:=+ > A!, M:(H+,+;+4?**************************************************************'' %*'Introduction****************************************************************************************************************************************'' %*%!ew Paradigm of Agri).usiness ,e/elopment*********************************************************************************'' %*1Agro)food Market and Smallholder <armers***********************************************************************************'0 %*0Market eforms and Smallholder <armers*************************************************************************************'7 %*2Agriculture Value Chain /s* Suppl# Chain**************************************************************************************'5 Table 2.1: Supply chain versus value chain...............................................................................................17 Table 2.2: Key attributes of two extreme types of co-ordination...............................................................1 %*7Agricultural Value Chain Approach and Smallholder <armers*****************************************************'9 %*5 e/iew of Vertical Coordination towards High Value Agriculture************************************************%' %*6 esearch ,esign and Implementation***********************************************************************************************%1

2. .1Survey desi!n.............................................................................................................2"

#i!ure 2.1: $ap showin! man!o% citrus and tomato !rowin! districts of &un'ab...2(
Table 2.": Sample distribution for horticultural value chain in &un'ab province.......................................27

2. .2#ieldwor)...................................................................................................................2
%*9Anal#tical (echni@ues************************************************************************************************************************%9

2.*.1Transaction costs.......................................................................................................2* 2.*.2&rofitability analysis.................................................................................................."1 2.*."The value chain analysis +,-./ model....................................................................."1 2.*.(S01T analysis.........................................................................................................."2
%*'&Conclusion*****************************************************************************************************************************************11 Chapter A III********************************************************************************************************************************************17 CHA AC(: IS(ICS +< H+ (IC-;(- A; VA;-: CHAI! +P: A(+ S A!, S-PP+ (: S****************************************************************************************************************************17 1*'Introduction****************************************************************************************************************************************17 1*%Socio):conomic Profile of Primar# Actors***************************************************************************************17

".2.1Socio-economic profile of sample !rowers and their farms......................................"2


Table ".1: Socio-economic profile of the sample !rowers........................................................................."7 Table ".2: 3and holdin!% orchard area and source of irri!ation of !rowers +acres/...................................."

".2.2-haracteristics of sample contractors ......................................................................."


Table ".": -haracteristics of sample contractors in the study area............................................................."*

".2."-haracteristics of sample commission a!ents .........................................................."*


Table ".(: Socio-economic characteristics of sample commission a!ents.................................................(4

".2.(-haracteristics of sample wholesalers.......................................................................(4


Table ".5: Socio-economic characteristics of sample wholesalers.............................................................(1

".2.5-haracteristics of sample retailers ............................................................................(1


Table ".2: -haracteristics of the sample retailers......................................................................................(1

xix

".2.2-haracteristics of sample consumers ........................................................................(1


Table ".7: -haracteristics of the sample consumers ..........................................................................(2 1*1Acti/ities B <unctions and ,escription of Primar# Actors***************************************************************0% Table ". : .ctivity6functions and the description of input suppliers6nursery developers...........................(" Table ".*: .ctivity6functions and description of !rowers..........................................................................(" Table ".14: .ctivity6functions and description of contractors...................................................................(( Table ".11: .ctivity6functions and the description of commission a!ents.................................................(( Table ".12: .ctivity6functions and description of wholesalers..................................................................(2 Table ".1": .ctivity6functions and description of retailers........................................................................(2 Table ".1(: .ctivities6functions and description of processors..................................................................(2 Table ".15: .ctivities6functions and description of exporters....................................................................(7 1*0Acti/ities B <unctions and ,escription of Secondar# Actors************************************************************05 Table ".12: Secondary actors% activities and description...........................................................................( 1*2Conclusion*******************************************************************************************************************************************06 Chapter ) IV*********************************************************************************************************************************************2% MA >:( A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+ *******************************************************2% 0*'Introduction****************************************************************************************************************************************2% 0*%4lobal Market for Mango$ Citrus and (omato *******************************************************************************2%

(.2.17lobal man!o production..........................................................................................5"


Table (.1: $a'or man!o producin! countries of the world in 244* ..........................................................5"

(.2.27lobal citrus production............................................................................................5(


Table (.2: $a'or citrus producin! countries of the world .........................................................................5(

(.2."7lobal tomato production..........................................................................................5(


Table (.": 3ar!est producers in the world +tonnes/....................................................................................5(

(.2.(7lobal man!o import.................................................................................................55

#i!ure (.1 $a'or man!o importin! countries ........................................................55


(.2.57lobal citrus import...................................................................................................55

#i!ure (.2: 3ar!est importers of tan!erines% mandarins% clem ...............................52


(.2.27lobal tomato import.................................................................................................52

#i!ure (.": 3ar!est importers of tomato +8/...........................................................52


(.2.77lobal man!o export.................................................................................................57

#i!ure (.(: $a'or man!o exportin! countries in world .......................................57


(.2. 7lobal citrus export...................................................................................................57

#i!ure (.5: 3ar!est exports of tan!erines% mandarins% clem ...................................57


(.2.*7lobal tomato export.................................................................................................5

#i!ure (.2: 3ar!est tomato exporters9 +8/..............................................................5


0*1 egional Market Anal#sis for Mango$ Citrus and (omato*************************************************************26

(.".1$an!o in the re!ion...................................................................................................5


Table (.(: $a'or man!o producin! countries in .sia ...............................................................................5

(.".2-itrus in the re!ion....................................................................................................5*


Table (.5: $a'or citrus producin! countries in .sia .................................................................................5*

(."."Tomato in the re!ion..................................................................................................5*


Table (.2: 3ar!est .sian producers in world.............................................................................................5* 0*0Mango$ Citrus and (omato Production in Pakistan************************************************************************7&

(.(.1$an!o varieties.........................................................................................................24 (.(.2-itrus varieties...........................................................................................................24 (.(."Tomato varieties........................................................................................................21 (.(.($an!o production......................................................................................................21 xx

Table (.7: .rea% production and yield of man!oes in ma'or producin! districts of &un'ab &a)istan 244 4* 22

(.(.5-itrus production.......................................................................................................22
Table (. : -itrus production in sample districts +244 -4*/........................................................................2"

(.(.2 Tomato production....................................................................................................2"


Table (.*: Tomato production in sample districts +244 -4*/.....................................................................2" 0*2Marketing ChannelsBSuppl# Chain of Mango$ Citrus and (omato************************************************70

(.5.1$ar)etin! channel of man!o.....................................................................................2( (.5.2$ar)etin! channels of citrus.....................................................................................25

#i!ure (.7: $ar)etin! channels of man!oes distribution in &a)istan +small farmers/ .......................................................................................................................22 #i!ure (. : $ar)etin! channels of citrus distribution in &a)istan +small farmers/. 27
(.5."$ar)etin! channel of tomato.....................................................................................27

#i!ure (.*: $ar)etin! channels of tomato distribution in &un'ab &a)istan +small farmers/.........................................................................................................2
0*7Ser/ice Market for Horticulture Sub)Sector************************************************************************************79 0*5Conclusion*******************************************************************************************************************************************5& Chapter ) V**********************************************************************************************************************************************51 VA;-: CHAI! MAPPI!4 +< H+ (IC-;(- A;************************************************************************51 S-.)S:C(+ *****************************************************************************************************************************************51 2*'Introduction****************************************************************************************************************************************51 2*%Value Chain Mapping of Horticultural Sub)Sector through <low Chart**************************************51

5.2.1$appin! of small holder man!o !rowers throu!h flow chart...................................7(

#i!ure 5.1: Small farmer man!oes value chain in &un'ab &a)istan........................7(


5.2.2$appin! of lar!e holder man!o 7rowers..................................................................75

#i!ure 5.2: 3ar!e farmer man!oes value chain in &un'ab &a)istan........................75 #i!ure 5.": Small farmer citrus value chain............................................................72
5.2."$appin! of small holders citrus !rowers .................................................................72 5.2.($appin! of lar!e holders citrus !rowers ..................................................................77

#i!ure 5.(: 3ar!e farmer citrus value chain............................................................77


5.2.5$appin! of small farmer tomato value chain............................................................77

#i!ure 5.5: Small farmer tomato value chain in &un'ab &a)istan...........................7


5.2.2$appin! of lar!e farmer tomato value chain............................................................7

#i!ure 5.2: 3ar!e farmer tomato value chain in &un'ab &a)istan...........................7


2*1An In/entor# of Market Pla#ers for Horticultural Sub)Sector*******************************************************59

5.".1:nventory of mar)et players of man!o and citrus......................................................7*

#i!ure 5.7: :nventory of man!o mar)et players...................................................... 1 #i!ure 5. : :nventory of citrus mar)et players....................................................... 2
5.".2.n inventory of mar)et players for tomato............................................................... "

#i!ure 5.*: ,alue chain mappin! of tomato &a)istan9s &un'ab.............................. "


2*0Conclusions*****************************************************************************************************************************************62 Chapter A VI********************************************************************************************************************************************66 VA;-: CHAI! P +<I(A.I;I(? A!A;?SIS +< (H: H+ (IC-;(- A; S-.)S:C(+ ****66 7*' Value Chain Anal#sis***********************************************************************************************************************66 7*% Anal#sis of the :conomic Viabilit# of the Mango 4rowers************************************************************69

2.2.1-alculatin! costs in man!o value chains................................................................... * xxi

Table 2.1: -ost analysis of small man!o producers +;s.6K!/.................................................................... * Table 2.2: -ost analysis of lar!e man!o producers +;s.6K!/.....................................................................*4

2.2.2&rofitability of man!o !rowers..................................................................................*4


Table 2.": Small farmers profitability analysis of man!oes .....................................................................*1 Table 2.(: 3ar!e farmers profitability analysis of man!oes.......................................................................*1 7*1:conomic Viabilit# of Citrus 4rowers**********************************************************************************************9%

2.".1-ost analysis to small citrus !rowers .......................................................................*2


Table 2.5: Transaction cost analysis of citrus on small farmers +;s.6K!/..................................................*2 Table 2.2: Transaction cost analysis of citrus on lar!e framers +;s6K!/................................*"

2.".2&rofit analysis............................................................................................................*"
Table 2.7: Small farmers profitability analysis of citrus............................................................................*" Table 2. : 3ar!e farmers profitability analysis of citrus............................................................................*( 7*0:conomic Viabilit# of (omato 4rowers********************************************************************************************90

2.(.1-ost analysis of small tomato !rowers .....................................................................*(


Table 2.*: -ost analysis of small tomato farmer........................................................................................*( Table 2.14: -ost analysis of lar!e tomato farmer +;s6K!/.......................................................*5

2.(.2Tomato profitability analysis.....................................................................................*5


Table 2.11: Small farmers profitability analysis of tomato........................................................................*5 Table 2.12: 3ar!e farmers profitability analysis of tomato........................................................................*2 7*2Horticulture Sub)Sector ,#namics***************************************************************************************************97

2.5.1$an!o on small farms: . potential not well utili<ed in &a)istan..............................*7

&otential output based on yield !ap as compare to lar!e farmers in sample area: :n our sample showed that about "4 percent farmer fall in lar!e farm cate!ory avera!e yields per acre was around ( 21 )!. These yields are a result well mana!ed orchards and more inputs use as compare to small farmers in the sample area +Table 2.1"/...............................................................................*7
Table 2.1": Small farmers profitability analysis of tomato based on potential output...............................*7

The !ap between potential and actual yields is hi!h in a ma'ority of farmin! systems in &a)istan. $an!o is not an exception. Table 2.1( demonstrated the scenario of small holder profitability under potential productivity with re!ard to 1 174 )! per acre the yield level of -ape ,erde hi!hest in the world.............................................................................................................*7
Table 2.1(: Small farmers profitability analysis of tomato = potential output based on yield !ap exist as compare to the world hi!hest yield +-ape ,erde/.........................................................................*

2.5.2-itrus on small farms: . potential not well utili<ed in &a)istan...............................*


Table 2.15: &otential output based on lar!e farmers> output of citrus.......................................................* Table 2.12: Small farmers profitability analysis of citrus = potential output based on yield !ap exist as compare to the world hi!hest yield +:ndonesia/............................................................................**

2.5."Tomato on small farms: . potential not well utili<ed in &a)istan............................**


Table 2.17: Small farmer9s profitability analysis of tomato based on potential output............................144 Table 2.1 : Small farmer9s profitability analysis of tomato based on potential output............................144

2.5.(?ield !aps and ran)in! of man!o% citrus and tomato: . potential not well utili<ed in &a)istan............................................................................................................................144
Table 2.1*: ?ield !ap and ran)in! of man!o% citrus and tomato ............................................................141

2.5.5&ost-harvest losses of man!o% citrus and tomato: . potential not achieved in &a)istan............................................................................................................................141
Table 2.24: &ost-harvest losses in man!o% citrus and tomato...................................................................141

xxii

2.5.2@xport prices of man!o% citrus and tomato: . potential not achieved in &a)istan. .141
Table 2.21: -omparison of export prices of man!o% citrus and tomato....................................................142

2.5.7$an!o% citrus and tomato: ;eal investors or wea)ened !rowers............................142 2.5. Aiverse ori!ins for re!ular supply...........................................................................142 2.5.*7ender issues...........................................................................................................14" 2.5.14$ar)etin!: Aominated by spot transactions..........................................................14"
7*7Value Addition in Horticultural Value Chains: -nderstanding who 4ains Most***********************'&1

2.2.1,alue addition for smallholder man!o !rowers......................................................14"

#i!ure 2.1: Small farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers...............................................................14( #i!ure 2.2: Small farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................14( #i!ure 2.": Small farmer chain " +&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers..........................................145
Table 2.22: Small farmer man!o value chain summary...........................................................................142

2.2.2,alue addition for lar!e man!o !rowers.................................................................142

#i!ure 2.(: 3ar!e farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers...............................................................147 #i!ure 2.5: 3ar!e farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................147 #i!ure 2.2: 3ar!e farmer chain "+&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers..........................................14
Table 2.2": 3ar!e farmer man!o value chain summary...........................................................................14*

2.2.",alue addition for smallholder citrus !rowers........................................................14*

#i!ure 2.7: Small farmer chain 1 +Bori<ontal coordination/ +a/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................114 #i!ure 2. : Small farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers.................................................................................114 #i!ure 2.*: -hannel "+&re harvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers...............................................................111
Table 2.2(: Small farmer citrus value chain summary.............................................................................112

2.2.(,alue addition for lar!e citrus !rowers...................................................................112

#i!ure 2.14: 3ar!e farmer chain 1+Bori<ontal coordination/ +a/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................11" #i!ure 2.11: 3ar!e farmer chain +,ertical coordination/: #armer C @xporter C :nternational ;etailers ..................................................................11" #i!ure 2.12: -hannel " +&re harvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers...............................................................11(
Table 2.25: 3ar!e farmer citrus value chain summary.............................................................................11(

2.2.5,alue addition for small tomato !rowers................................................................115

#i!ure 2.1": Small farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers..........................................115
xxiii

The tomato sellin! price at farmer level was ;s.12.2 per )! +#i!ure 2.1(/. The !rower harvest tomato and transport to factory. The expenses incurred by the farmers were production activities% harvestin!% however farmers save pac)in! and commission char!es. The value added was produced from the process of tomato cultivation. This chain produced a total value added of ;s.(7.7" per )!% which was the hi!hest value added compared to other value chains. :n this chain farmers save mar)etin! cost and earn more income per acre. The value-added process occurred to any lar!e de!ree at the processor level followed by product wholesaler retailer and farmer respectively +Table 2.22/............................................................................................................115 #i!ure 2.1(: Small farmer chain +,ertical coordination/: #armer C &rocessin! factory C &roduct 0holesalers C ;etailers..................................................112
Table 2.22: Small farmer tomato value chain analysis summary.............................................................112

2.2.2,alue addition for lar!e tomato !rowers.................................................................117

#i!ure 2.15: 3ar!e farmer chain 1+a/: #armer C -ommission .!ents C 0holesalers C ;etailers....................................................................................................117 #i!ure 2.12: 3ar!e farmer chain 1 +b/: #armer C &rocessin! factory C &roduct 0holesalers C ;etailers...............................................................................11
Table 2.27: 3ar!e farmer tomato value chain analysis summary.............................................................11 7*5Price Structure and Cost ,ri/ers for Hori8ontal$ Vertical and Pre)har/est Contract S#stem***''9 7*6S#stemic Constraints with -nderl#ing S#stemic Causes and elated Markets***************************'%' Table 2.2*: -onstraints and their underlyin! systemic causes of citrus value chain................................122 Table 2."4: -onstraints and their underlyin! systemic causes of tomato value chain..............................12" 7*9:ffects of Vertical Coordination on (ransaction Cost and <arm Profitabilit# of Smallholders in Horticultural Value Chain*******************************************************************************************************'%1 Table 2."1: &rofitability of horticultural sub-sector.................................................................................12( 7*'&Identification of Stronger <orms of Integration that could Sustainable Impro/e =ellbeing of Smallholder <armers in Horticultural Value Chains*************************************************************'%0 7*''Implications for Smallholders$ Agri)business$ Public Polic# and In/estment Priorit#**************'%2 7*'%Conclusion***************************************************************************************************************************************'%2 Chapter A VII*****************************************************************************************************************************************'1& 5*'Introduction**************************************************************************************************************************************'1& 5*%Constraints Anal#sis of Smallholder ,ominated Horticulture Sub)Sector**********************************'1& Table 7.1: -onstraints analysis of smallholder dominated horticulture sub-sector..................................1"1 5*1Identif#ing Incenti/es of Market Pla#ers and Agents of Change**************************************************'10

7.".1Dad wor)in! environment in horticulture value chains...........................................1"5 7.".2Dad wor)in! conditions affect output and performance..........................................1"5
&rofitability .nalysis: The profitability analysis is done considerin! cost analysis described above. The economic viability of different farmer !roups alon! different chains is determined based on the profitability analysis. ................................................................................................................1"2

7."."-han!in! consumer awareness and demand...........................................................1"2


5*0<ormulating a Vision and Strateg# for Sustainable S#stemic Change*****************************************'17

7.(.1S01T analysis of horticulture sub-sector...............................................................1"2 Stren!ths of Borticulture Sub-sector...............................................................................1"7 0ea)nesses of Borticulture Sub-sector...........................................................................1"7 1pportunities of Borticulture Sub-sector........................................................................1" xxiv

Threats of Borticulture Sub-sector..................................................................................1" 7.(.2-onstraints% opportunities% solutions and interventions of horticultural sub-Sector1"*
The findin!s of value chain research !iven in -hapter 2 are translated into solutions and interventions. The brief description of ma'or constraints% opportunities% possible solutions and proposed interventions for the horticultural sub-sector in &a)istan9s &un'ab are briefly presented in Table 7.2. 1"* Table 7.2: -onstraints% opportunities% solutions and interventions of the horticultural sub-sector...........1"* 5*2Value Chain Promotion Strateg# for Mango and Citrus***************************************************************'0' 5*7Conclusions***************************************************************************************************************************************'02 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'05 Chapter A VIII***************************************************************************************************************************************'06 VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+ *********'06 6*'Introduction**************************************************************************************************************************************'06 6*% ationale for Pilot Mango$ Citrus and (omato Value Chains Schemes***************************************'09

.2.1;ational for pilot man!o value chain development scheme....................................1(* .2.2;ational for pilot citrus value chain development scheme......................................154 .2.";ational for pilot tomato value chain development scheme....................................151
6*14eographical (argeting$ Partnerships and .eneficiar# Categories*********************************************'2%

.".17eo!raphical tar!etin!.............................................................................................152 .".2&artnerships..............................................................................................................15" ."."Deneficiary cate!ories.............................................................................................15(


6*0Project Component ,escription******************************************************************************************************'22 6*2SelectionBIdentification and Situation Value Chain Anal#sis of Sites and Potential Partners****'27

.5.1Selection of exact locations at different sites of proposed pilot schemes................152 .5.2Selection of tar!et !rowers% other chain sta)eholders in each site and potential pro'ect partners................................................................................................................157 .5."Situation value chain analysis6bench mar) survey for each site..............................15
6*7:stablishment of .HS for Input Pro/ision as a <irst Segment for Chain ,e/elopment**********'26

.2.1:nput provision ........................................................................................................15 .2.2@stablishment of clean nursery................................................................................15* .2."@stablishment of model on farm pac) house...........................................................124 .2.(#inancial services.....................................................................................................121
6*5Capacit# .uilding of Chain Stakeholders***************************************************************************************'7'

.7.1-apacity buildin! of man!o !rowers% women and children for addressin! the need for productivity% Euality of improvement of man!o% reducin! post harvest losses and value addition...................................................................................................................121 .7.2-apacity buildin! of citrus !rowers% women and children for addressin! the need for productivity% Euality of improvement of citrus% reducin! post harvest losses and value addition............................................................................................................................122 .7."-apacity buildin! of tomato !rowers% women and children for addressin! the need for productivity% Euality of improvement of tomato% reducin! post harvest losses and value addition...................................................................................................................12" .7.(-apacity buildin! of other chain sta)eholders for addressin! the issue of postharvest handin!% lo!istic and mar)etin! se!ments of value chains.................................12" .7.5Speciali<ed capacity buildin! .................................................................................12(
6*6 esearch for Chain ,e/elopment****************************************************************************************************'76 6*9=orkshops B Seminars B Conference B ,ispla#********************************************************************************'5& 6*'&Costs*************************************************************************************************************************************************'5%

xxv

6*''In/estment and <inancing Assumptions***************************************************************************************'5% 6*'%Institutional <ramework for ProgrammeBProject Implementation +rgani8ation and Management******************************************************************************************************************************'51 6*'1Monitoring and :/aluation************************************************************************************************************'50

.1".1Key performance indicators...................................................................................17( .1".21utcome indicators for man!o% citrus and tomato.................................................175 .1"."1utput indicators for man!o% citrus and tomato....................................................175
6*'0:Cpected .enefits****************************************************************************************************************************'57 6*'2Issues and isks and <ollow)-p Acti/ities************************************************************************************'57 6*'7Conclusions*************************************************************************************************************************************'57 Chapter ) ID*******************************************************************************************************************************************'55 S-MMA ?$ C+!S( AI!(S A!, S( A(:4I:S**************************************************************************'55 9*'Summar# of <indings***********************************************************************************************************************'55

*.1.11b'ectives and methodolo!y...................................................................................177 *.1.2&rofile of horticultural value chain operators..........................................................17 *.1."$ar)et analysis of horticulture sub-sector..............................................................1 4 *.1.(,alue chain mappin! of horticulture sub-sector......................................................1 1 *.1.5,alue chain research of horticulture sub-sector......................................................1 2 *.1.2,alue chain analysis of horticulture sub-sector.......................................................1 5 *.1.7,alue chain development schemes of horticulture sub-sector................................1 2
9*%Horticultural ,e/elopment Constraints******************************************************************************************'67

*.2.1:nput supply.............................................................................................................1 *.2.2Smallness ................................................................................................................1 *.2."$ana!ement of or!ani<ation ..................................................................................1 *.2.($ar)et access ..........................................................................................................1 *.2.5@nablin! environment..............................................................................................1 *.2.23imited capacity buildin! of horticultural chain sta)eholders ...............................1 *.2.7&olicy ......................................................................................................................1 *.2. ;esearch and development constraints....................................................................1

7 7 7

* *

9*1Polic# Implications of the Salient <indingsBConstraints ***************************************************************'69 9*0+pportunities Solutions and Proposed Inter/entions for Identified Constraints ***********************'9& 9*2Horticultural ,e/elopment Strategies*********************************************************************************************'9%

*.5.1;eorientation of subsistence horticulture to sustainable commercial horticultural farmin!.............................................................................................................................1*" *.5.2@stablishment of rural business hubs for input provision as a first se!ment for chain development.....................................................................................................................1*" *.5."@stablishment of model on farm pac) house...........................................................1*( *.5.(.rran!ement of contract farmin!............................................................................1*5 *.5.5;e-orientation of research and development services ............................................1*5 *.5.2;eform of a!ricultural education% research and extension......................................1*2 *.5.7:mprovin! efficiency% productivity and competitiveness........................................1*2 *.5. &romotion of re!ional trade ....................................................................................1*2 *.5.*@ncoura!in! public and private partnership and private sector investment ...........1*7 *.5.14-apacity buildin! of chain sta)eholders of horticulture sub-sector......................1*7 *.5.11&olicy and re!ulatory framewor) for the promotion of horticulture sector...........1* *.5.12To improve Euality ...............................................................................................244 *.5.1"To up!rade vertical coordination ..........................................................................244 *.5.1(To improve hori<ontal coordination .....................................................................244 xxvi

9*7Suggestions for <urther esearch***************************************************************************************************%&'

*.2.1:nvestment appraisal analysis of fruit and ve!etables products industries..............241 *.2.2Bow efficient and eEuitable fruit and ve!etables value chains are with respect to competitiveness% inclusiveness% scalability and sustainability.........................................242 *.2.":mpact of 0T1 on fruit and ve!etables export.......................................................242
'&* :<: :!C:S*********************************************************************************************************************************%&1

xxvii

I!( +,-C(I+!

(his chapter is de/oted to the background$ objecti/es$ statement of the problem$ research @uestions and gaps and justification of the research*

Chapter ) I I!( +,-C(I+!

'*'

.ackground

&a)istan9s economy is under!oin! structural shifts that are fuellin! rapid chan!es in consumers spendin! patterns +71&% 2442/. The sound economic !rowth +(.5- .2 percent per annum for the last four years/ and per capita real 7A& have increased at an avera!e of 5.2 percent per annum durin! the last three years. The recent increases and past trends of the real per capita income% urbani<ation and !lobali<ation have led to a sharp increase in consumer spendin! which have !radually diversified the consumption pattern in favour of hi!h value a!ricultural products +B,.&/ such as mil)% poultry% fisheries% fruits and ve!etables. &er capita consumption of cereals +rice F wheat/ sli!htly decreased from 12.2( )!6month in 1* 5 to 14.11 )!6month in 2442. #or &a)istan% 7ulati et.al.% 2445 estimated that the per capita consumption of fruits% ve!etables% mil) and fisheries has increased by 5% 25% "5 and 15 percent respectively from 1**4 to 2444. .s a result% the domestic demand for B,.& has increased. :n addition% the export of fruits and ve!etables from &a)istan went up by 14 percent% meat by 244 percent and fish by 5 percent +7ulati et.al.% 2445/. This transformation of a!ricultural sector has profound effects on the nature of the a!ricultural supply chain% role of public policy and investment. Such scenario is expected to create opportunities for smallholders but also potential threats to their continued access to remunerative mar)ets +:#&;:% 2445/. This chan!e is also !ood for smallholders as the hi!h-value and processed commodities au!ment income and !enerate additional employment opportunities in rural areas. Bowever% the experience from South .sian countries is that the producers are not well prepared to respond to the chan!e and ma)e the best use of these opportunities +Goshi et.al.% 2447/. .!riculture in &a)istan in !eneral and in &un'ab province in particular is dominated by smallholders% who derive their livelihoods by cultivatin! small holdin!s and supplementin! their incomes with fish farmin!% poultry and dairy. The number of such small-si<ed holdin!s has been steadily increasin! under the !rowin! population pressure. The share of smallholdin!s +H 5 ha/ 2

has increased from 7( per cent in 1* 4 to 2 per cent in 2444 +71&% 2444/. :t is expected that with the same !rowth rate% the per cent of smallholders will be *2 per cent in 2414. Such dominance of smallholders in the country is a real challen!e for expansion of hi!h-value a!riculture. The problems specific to smallholders include hi!h transaction costs per unit of output due to tiny surplusesI low ris) bearin! capacityI low access to information% technolo!y and financeI and low capacity to implement food safety measures +Goshi et.al.% 2447/. 1n the other hand% small holder have certain advanta!es% primarily abundant family labour% as most of the hi!h value of the commodities are labour-intensive. &un'ab is one of the country>s prime a!ricultural province noted for the production of fruits and ve!etables% cereals% and livestoc). This province boasts abundant a!ricultural resources and. .!riculture is a critical economic sector in the province in terms of its contribution to the economy and the number of employment opportunities it creates within local communities in the rural areas. .lthou!h a!riculture9s contribution to the provincial !ross domestic product +7A&/ has decreased over the past five years% a!riculture remains hi!hly labour intensive and is a source of economic relief from poverty for the ma'ority of people in the rural areas of the &un'ab province. #armin! under the smallholder system in &un'ab province is characteria<ed by low levels of production technolo!y and small-si<ed farm holdin! of approximately 5 hectares per farmer with production primarily for subsistence purposes% leavin! little mar)etable surplus +Sharif% 2411/. .ccess to mar)ets is an essential reEuirement for the small farmer in rural areas of &un'ab province if they are to en'oy the benefits of a!ricultural !rowth. The participation of smallholder farmers in hi!h-value mar)ets is unsatisfactory +Sharif% 2411/. :t may be easy to access the mar)et% but retainin! one9s position in the mar)et is more difficult. :n this respect% investment must be dynamic +;eardon% 2445/. The most crucial Euestion is how to support smallholder farmers so that they can participate consistently in the modern mar)ets +Sharif% 2411/. :n order to improve mar)et access for the ma'ority of smallholder farmers% the &un'ab Aepartment of .!riculture +&A./ established the &un'ab .!ricultural $ar)etin! -ompany +&.$-o/ which consists of mar)etin! personal for the "

main commodity !roups% namely !rains% livestoc)% cash crops and horticultural crops. &.$-o offer economic extension to farmers from the point of production and mar)etin! aspects. . ma'or challen!e confrontin! value chain economists is how to increase the access of smallholder farmers to hi!h-value mar)ets in the a!ribusiness value chain% and how to increase such farmers9 participation in the process of addin! value to their products +Sharif% 2411/. 1rtmann +2445/ and Daloyi +2414/ raised the Euestion of whether small-scale farmers can become a successful lin) in the value chain% contended that participation in !rowin! mar)ets for hi!h-value products will most li)ely reEuire si!nificant vertical cooperation by small-scale farmers with processin! and mar)etin! firms due mainly to lac)in! or dysfunctional mar)ets for some inputs and products% as well as economies of scale. :nternational experience has also shown that if smallholder farmers need to parta)e in a!ribusiness value chains and access hi!h-value mar)ets% they should able to produce hi!h-value crops that are demand-driven +Daloyi% 2414/. Be further stated that in producin! and mar)etin! hi!h value-added products% transaction costs tend to be hi!h particularly for smallholder farmers in rural areas. Therefore% the other school of thou!ht is that hi!h transaction costs in the mar)etin! of hi!h value-added products tend to exclude small-scale farmers from participatin! in hi!h-value mar)ets. The ma'or challen!e confrontin! is the creation of an enablin! environment for smallholder farmers to successfully participate in the a!ribusiness value chain +Daloyi % 2414 and Sharif% 2411/. '*% +bjecti/es of the Stud#

Defore su!!estin! possible strate!ies to support smallholder farmers there is need to investi!ate the specific constraints which they are confronted. This study is crucial in pinpointin! the inefficiencies and wea)ness bein! experience by horticultural !rowers producin! man!o% citrus and tomato in &un'ab province and recommend possible policy options to smallholders farmers based on their level of participation in the horticultural supply chain in &un'ab province. @mphasis is placed on the best way to supports smallholders farmers in their efforts to access

hi!h value mar)ets in the a!ricultural value chain in the !lobal% re!ional and national mar)ets. The specific ob'ectives of the study are as under: To assess the effects of vertical coordination on transaction costs and farm profitability of smallholders in dairy% horticulture and poultry sectors. To identify stron!er or different forms of inte!ration that could sustainably improve wellbein! of small holder farmers in dairy% horticulture and poultry value chains. To determine the policy implications for smallholders% a!ribusiness% public policy and investment priorities. '*1 Problem Statement

. shift in the production portfolio from food !rain-based to hi!h-value a!riculture implies a !reater need for close lin)a!es between farmers% processors% traders% and retailers to coordinate supply and demand +:#&;:% 2445/. :n particular !enuinely involvin! smallholders in the process of a!ricultural transition and lin)in! them with new opportunities to share the benefits is a ma'or policy challen!e +:#&;:% 2445/. $any farmers includin! small farmers are facin! difficultly copin! with the rapidly chan!in! mar)et environment +&aroda% 2442/. Be further stated that the challen!e is how to reduce the cost of doin! business so that farmers and producers mutually benefit from the process. #armers need to be empowered and inte!rated in the value-chain +&aroda% 2442/. Be further proposed that efforts should be made to institute policy reforms conducive to innovations% enterprise development and investment. @arlier evidence from several developin! countries indicates that such opportunities do exist for smallholders in the hi!h-value food se!ment +Dar!houti et al.% 244"I ,on Draun% 1**5/. The vertical coordination between producers and processor will !enerate eEually competitive opportunities for the smallholders in the face of concept of food mar)etin! throu!h food retail chains. The vertical coordination towards B,.& are hi!hly relevant one for many reasons. +i/ it incorporates all si<ed producers with a continuum of processors from small medium enterprises to multinational firms% and an array of traders responsible for most of the interactions between the other sta)eholders +.AD% 2445/I +ii/ it provides real opportunities for enhancin! farm 5

incomes and reducin! poverty in the developin! countries li)e &a)istan throu!h participation of small farmers in value chainsI +iii/ there are opportunities to capture !ains by small and medium si<ed industries which are relatively more efficient than lar!e processorsI and +iv/ the primary production centers of B,.& commodities are lar!ely concentrated with small farmers. +:#&;:% 2442/. +v/ !iven the perishability and hi!h value nature of B,.&% it has stron! implications not only for the !rowers but also for financers% processors% exporters and retail industries +:#&;:% 2442/I and +vi/ further% it has also repercussions for the institutional innovations that are emer!in! in an effort to lin) the chan!in! consumers9 preferences and risin! exports of hi!h value a!riculture to the production decisions of the farmers% a move from plate to plou!h. +Goshi et.al.% 2447/. The )ey issue that needs to be researched is how small farmers can switch to hi!h-value food commodities with minimum transaction costs and mar)et ris)s +Dirthal et al.% 2447/. The forms of institutions% such as producer associations% cooperative and contract farmin!% have the potential to reduce transaction costs by vertically coordinatin! production% mar)etin! and processin! +0arnin! and Key 2444I Jarayanan and 7ulati% 2442/. :n the context of &a)istan% vertical coordination is newly emer!in! phenomenon in case of mai<e% citrus% banana% poultry and mil) throu!h cooperative +Balla/ and contract farmin! +$ai<e% citrus and banana/. :t is encoura!in! to note that such innovative institutions are !radually emer!in! in niche areas and are successfully coordinatin! with the farmers in production and mar)etin! of hi!h-value food commodities namely mil) and citrus +Sharif et al.% 244" and Sharif% 244(/. :t is important to understand how firms coordinate with the farmers and their implications for smallholders and a!ribusiness. @fforts are made to understand the modus operandi adopted by such institutions and study its effects on smallholders and a!ri-business with a view to introducin! to policy chan!es to improve efficiency and eEuity of the system. The contribution of smallholder a!riculture to economic development can be reali<ed if smallholder farmers are lin)ed to hi!h-value mar)ets in the a!ricultural supply chain so that they can benefit from these lucrative mar)ets. :n recent times% there has been hi!h demand for hi!hvalue a!ricultural products% alon! with more strin!ent food safety and Euality reEuirements and the emer!ence of supply-chain inte!ration. .ll these chan!es forebode the potential exclusion of 2

small-scale producers from the !rowin! mar)ets. The inability of smallholder farmers to en!a!e in lucrative mar)ets is !reat cause for concern. Dienabe% -oronel% 3e -oE and 3ia!re +244(/ contended that% K.!riculture is becomin! increasin!ly inte!rated and smallholder farmers are often disadvanta!ed% and actions must be ta)en to help them draw profit from their inte!ration into mar)ets.L Several studies have indicated how smallholder farmers can be lin)ed to mar)ets% but they have failed to address the issue of how smallholder farmers can be empowered to benefit from hi!hvalue mar)ets. :t is easy to lin) farmers to mar)ets% but it is difficult for a smallholder farmer to satisfy the mar)et% achieve consistency% and remain sustainable. Defore lin)in! farmers to mar)ets% there is a need to ensure that farmers are consistent in mar)etin! their produce. The essence of the problem lies in identifyin! those factors that are currently preventin! smallholder farmers from benefitin! from reliable mar)ets and determinin! combinations of strate!ies that can assist smallholder farmers to compete consistently in the mar)et arena. To ensure that farmers are consistent alon! the chain% several issues need to be analy<ed and addressed% includin! production factors% on-farm and off-farm infrastructure% mana!ement capacities% amelioratin! transaction costs% financial assistance% advisory support% research% and technolo!y adoption. '*0 esearch 3uestions and esearch 4aps

The main research Euestion is how smallholder farmers9 access to hi!h-value mar)ets in the a!ribusiness value chain can be improved. :n analy<in! and addressin! the contributin! issues mentioned above% different strate!ies need to be explored based on local and national mar)ets. Key areas for research are clustered around several Euestions% namely +Daloyi% 2414 F Sharif% 2411/: 0hat are the main determinants of smallholder farmers9 exclusion from participation in lucrative mar)etsM Bow can new institutional arran!ements be developed to the extent that smallholder farmers can improve and maintain their access to hi!h-value mar)etsM 7

Since studies indicate that smallholder farmers are not consistent in terms of supplyin! products to the formal mar)ets% what could be done to ensure that this actually happensM Bow can smallholder farmers be supported in their efforts to benefit from their lin)a!es to different mar)etsM Bow then could small-scale farmers improve their competitiveness by becomin! an important lin) in the a!ricultural supply chainM

Bow can transaction costs be minimised to enable smallholder farmers to participate successfully in the a!ricultural supply chainM Bow does the a!ricultural policy environment affect smallholder farmersM :s the a!ricultural policy environment sufficiently conducive to enable smallholder farmers participate in lucrative mar)etsM

'*2

0hat could be to done to ensure that smallholder farmers en!a!e in hi!h-value mar)etsM "ustification of the Stud#

The aim is to promote the mainstreamin! of smallholder farmers in the &un'ab &rovince so that they can ta)e part in all levels of a!ricultural activity and si<es of enterprises in the entire a!ricultural value chain +Daloyi% 2414 and Sharif% 2411/. The intention is to focus on smallholder farmers and lin) them with potential horticultural mar)ets in the a!ribusiness value chain. :n order to revive the a!ricultural sector and turn it into a hi!hly competitive sector in the country% this study aimed to pinpoint some of the constraints facin! Borticultural producin! smallholder farmers. :nternational experience has shown that too little has been done to support smallholder farmers and that the services that should be available have not been fully accessible. These ar!uments necessitated this study9s attempts to find solutions to the constraints facin! smallholder horticultural farmers and su!!estions for possible strate!ies that can help to smallholder farmers to access hi!h-value mar)ets in the country +Daloyi% 2414 and Sharif% 2411/. $any scholars have contended that research into the informal economy should consider value chain dynamics in order to understand the complex lin)a!es between traditional mar)ets and modern mar)ets +Daloyi% 2414 and Sharif% 2411/. Several studies have also shown that compared to farmers participatin! in traditional mar)ets% farmers participatin! in hi!h-value mar)ets show hi!her earnin!s per hectare or per )ilo!ram mar)eted +;eardon% Darrett% Derde!uN F Swinnen%

244 /. :n accessin! hi!h-value mar)ets% smallholder farmers need to be inte!rated into the value chain and be supported alon! the chain so that they become competent +Daloyi% 2414 and Sharif% 2411/. This study will see) for the opportunities and threats to small farmers confronted from the consolidatin! a!ricultural value chains for horticultural products with a view to obtain a clear picture of these chains in place% the relative positions of the different actors% the institutions !overnin! their incorporation% and the benefits accruin! to each which will provide the information to identify areas of levera!e for improvin! the position of the small farmers in &a)istan. This research will contribute to increase understandin! of horticultural value chains and will provide new ideas for improvin! the inte!ration of small farmers% small and medium enterprises% and the poor with value chains. . study of innovative institutions such as cooperative% association and contract farmin!% distribution and supermar)et chains will help achieve economic efficiency by reducin! transactions costs and ris) for producers and ensurin! hi!h Euality and safe products for consumers. .ttempt will be made to understand the modest operandi adopted by such institutions and study its effect on smallholders with a view to introduce policy chan!es to improve efficiency and eEuity of the system. :t will also assist the policy ma)ers to desi!n policies for ma)in! a!ricultural mar)ets wor) better for small farmers. '*7 +rgani8ation of the Stud#

#ollowin! the introduction% chapter 2 is devoted to theoretical framewor) and methodolo!y. -haracteri<ation of horticulture value chain operators and supporters is presented in chapter ". The information on mar)et analysis of horticultural sub-sector is discussed in chapter (. ,alue chain mappin! of horticultural sub-sector is !iven in chapter 5. ,alue chain research of horticultural sub-sector is narrated in chapter 2. ,alue chain analysis of horticultural sub-sector is presented in chapter 7. ,alue chain development schemes for horticultural sub-sector are chapter . Summary% constraints and strate!ies in chapter * complete the report.

(H:+ :(ICA; < AM:=+ > A!, M:(H+,+;+4?

(his chapter deals with the conceptual framework for /alue chain approach to address the issues of horticulture sub)sector and techni@ues used for /alue chain mapping$ /alue chain research$ /alue chain anal#sis and /alue chain de/elopment strategies for seeking sustainable outcomes of horticulture sub) sector in the countr#*

14

Chapter ) II (H:+ :(ICA; < AM:=+ > A!, M:(H+,+;+4?

%*'

Introduction

The first part of this chapter reviews the current chan!es in a!riculture development and their implications for lar!e farmers in !eneral and small farmers in particular as well as on a!ribusiness. The main issued reviewed and discussed with reference to smallholder horticultural farmers include new paradi!m shift of a!ri-business development% a!ro-food mar)et reforms% a!ricultural value chain vs. supply chain and the a!ricultural value chain approach for addressin! the vertical coordination of horticulture sector in &un'ab% &a)istan. The second part of this chapter deals with the methodolo!y used to analy<e the vertical coordination towards horticulture sector in &un'ab% &a)istan. %*% !ew Paradigm of Agri).usiness ,e/elopment

Daloyi +2414/ stated that the mar)etin! environment is continuously exposed to a continuum and latitude of chan!es% resultin! in uncertainty% barriers and opportunities which demand constant monitorin! of mar)etin! environment in order to minimi<e ris)s% reor!ani<e% and capitali<e on opportunities. The increases in per capita income% urbani<ation% !lobali<ation and technolo!y in particular are rapidly chan!in! trends in consumer behavior and impact heavily on the way in which a!ribusinesses conduct their business +Daloyi% 2414 F 7ulati et al. 2445/. The chan!es are also hi!hly dynamic% chan!in! the nature of both farmin! and business +@sterhui<en% 2442 F Daloyi% 2414/. :n many developed countries% a!ricultural production is chan!in! from an industry dominated by family-based% small-scale farms or firms to one of lar!er firms that are more ti!htly ali!ned across the production and distribution value chain +Doehl'e% 2444 F Daloyi% 2414/.

11

.lthou!h the process of !lobali<ation and industriali<ation has created opportunities for smallholder farmers to produce a wider ran!e of hi!h-value crops% there is still a possibility that the process of a!ro-industriali<ation% !lobali<ation% and mar)et inte!ration will exclude these farmers from hi!h-value mar)ets +Daloyi% 2414/. Be further stated that the new lifestyles of consumers in the developed and developin! countries% alon! with shiftin! demo!raphics% and a !rowin! appreciation for the lin) between diet and health% have contributed to different eatin! patterns and influenced the foods purchased by consumers in these countries. -oncerns about food safety and the recent food scares have also heavily influenced consumer behavior who now demand tailored foods and% to ensure that they meet their specifications% food companies want more specific farm products from the farmin! community +Goshi et al.% 2447 F Daloyi% 2414/. They further ar!ued that in addition% food safety is also a concern% especially re!ardin! fresh food products% thus brin!in! about increased scrutiny and re!ulation in developed countries. .s a result% processors and mar)eters have avoided traditional spot mar)ets and have en!a!ed in more direct mar)et channels such as mar)et and production contracts% full ownership% and vertical inte!ration +Kirsten F Sartorius% 2442/. The issue of mar)et access by smallholder farmers cannot be addressed completely without ta)in! a holistic perspective that also ta)es into account the !lobal trends in economic transformation that have a direct bearin! on the current smallholder mar)et access situation +&aroda% 2442 F Daloyi% 2414/. The forces of !lobali<ation and industriali<ation in a!riculture have prompted new ways of or!ani<in! the a!ro-food sector +Daloyi% 2414/. ,ertical coordination of food supply chains has attracted a !reat deal of attention +:#&;:% 2445I Goshi et al.% 2447 F Daloyi% 2414/. They further stated that the chan!es in food and a!ricultural mar)ets have influenced the need for hi!her levels of mana!ed co-ordination. This has resulted in the introduction of different forms of vertical inte!ration and alliances% which have become a dominant feature of a!ricultural supply chains +Kirsten F Sartorius% 2442/. ;eardon and Darrett +2444/ revealed how these chan!es have caused small firms and farms to !o out of business under the new competitive pressures. The new competitive environment leads to industrial concentration% with practices that result in the exclusion of domestic firms and small farmers from the benefits and rewards of the hi!h-value mar)ets +Daloyi% 2414/.

12

:nternational experience has shown chan!es in !lobal trends% implyin! new approaches and chan!es of focus by smallholder farmers. $any scholars +Doehl'e% 2444I Arabenstott% 1**5I Sofran)o% #rerichs% Samy F Swanson% 2444I :#&;:% 2445I Goshi et al.% 2447 F Daloyi% 2414/ have ar!ued that the most dramatic chan!es in a!riculture are ta)in! place in terms of chan!es in the fundamental business proposition and the ways of doin! business: #rom producin! for self-sufficiency to producin! in a mar)et-oriented wayI #rom operatin! individually to operatin! in co-operativesI #rom staple crops to hi!h-value crops and value-addin!I #rom spot-mar)et farmin! to contract farmin!I #rom traditional chains to modern value chainsI #rom a focus on production output to a focus on commerciali<ationI #rom mar)etin! to low-profit mar)ets to mar)etin! to hi!h-value mar)etsI #rom supply-driven to demand-driven production +consumer satisfaction/I #rom survivalism to entrepreneurshipI and #rom a focus on conventional farmin! only to or!anic farmin! as well.

Bo!!art and &ania!ua +2441/ provided a sound critiEue of a!ricultural chan!e. They concluded that the empirical evidence cautions a!ainst readily acceptin! that current chan!es are as profound as the literature su!!ests% and that the pace of most a!ricultural chan!e is slower than one would assume from the literature. They contended that there is little that is new about the current debates on a!ricultural chan!eI that farmers have been buffeted by external forces for decades% that rural economies have lon! been driven by the demands +e.!. consumption/ of nonmar)ets% and that pressure on farmers to chan!e production practices to meet the reEuirements of non-populations has lon! been evident. Jevertheless% small-scale farmers find it difficult to ma)e the transition to a more commercial food system% because they stru!!le to meet the private Euality and safety standards set by food processors% lar!e retailers% wholesale buyers and exporters% while at the same time bein! constrained by the limited support services provided by !overnments due to policy reforms% mar)et liberali<ation% and fiscal and !overnance problems +Dienabe et al.% 244( F Daloyi% 2414/. 1"

%*1

Agro)food Market and Smallholder <armers

0ith the increasin! commerciali<ation of a!riculture and food systems worldwide% the food industry is increasin!ly dominated by lar!e a!ribusiness firms whilst the influence of farmers is declinin! +;eardon F Derde!uN% 2442/. :nternational experience has shown that smallholder farmers produce low-value commodities% which face declinin! real prices and increasin! competition from medium- to lar!e-scale producers% and they are excluded from hi!h-value mar)ets +Daloyi% 2414/. .s mentioned above% small-scale farmers find it difficult to ma)e the transition to a more commercial food system because they stru!!le to meet the private standards set by food processors% etc. and are also constrained by limited !overnment support +Dienabe et al.% 244( F Daloyi% 2414/. @xperience with contract farmin! has shown that in both developed and developin! countries% a!ribusiness inte!rators prefer to deal with commercial farmers in order to reduce transaction costs and also due to the need for !reater consistency of Euality and supply +Key F ;unsten% 1*** F Daloyi% 2414/. Bowever% 3ouw% -hi)a<un!a% Gordan and Dienabe +2447/ discovered that many commercial farmers are not interested in contracts or in supplyin! to supermar)ets% as they are of the opinion that their Oprofits are sEuee<ed9 and they cannot afford the additional capital outlays to comply with the strin!ent Euality standards. They further ar!ued that conseEuently this may offer smallholder farmers a ma'or opportunity to en!a!e in contract farmin! if they are supported alon! the value chain. .ccordin! to 3ouw et al. +2447/ the trend in the evolution of procurement systems towards lar!e central procurin! systems receivin! fresh produce from a limited number of preferred suppliers is creatin! barriers for small-scale producers that do not have !rowers9 pro!ramme contracts with retailers. #or smallholder farmers to supply supermar)ets or wholesalers they need a certain si<e of production% hi!h-Euality products% a certain si<e and type of product% and consistency in Euality and supply = reEuirements they find difficult to meet consistently. Smallholder farmers can only have mar)et power if they form co-operatives% which should be established with the help of the !overnment +Daloyi% 2414/. Be further stated that !roups have 1(

the potential to secure better terms of trade such as better sourcin! prices% lower transaction costs% and !reater access to trainin! and other services. The expansion of a!ro-processors% fresh produce mar)ets and supermar)ets is posin! a ma'or challen!e to smallholder farmers in their efforts to position themselves as business driven competitors +Daloyi% 2414/. Be further ar!ued that the buyin! practices of supermar)ets and lar!e processors% such as Euality and safety standards% pac)a!in! and volumes% seriously challen!e small producers% who are threatened with expulsion from the a!ricultural supply chain if they cannot ta)e part in this new type of mar)et. The chains thus reEuire assurances from suppliers that all safety and health standards are bein! met and surpassed% and small-scale farmers must not be excluded from complyin! with these standards if they are to compete successfully in the a!ricultural value chain +Goshi et al.% 2447I :#&;:% 2445 F Daloyi% 2414/. #armers are now faced with new challen!es that include the consistent supply of products of consistently hi!h Euality% )nowled!e of acceptable a!ricultural practices% capacity to comply with mar)et and re!ulatory reEuirements% new issues of conformity assessment% and traceability which setup poses ma'or challen!es for producers% more especially smallholder farmers +Daloyi% 2414/. .s a result% smallholder farmers are still excluded from participatin! fully in the a!ricultural supply chain and are not lin)ed to hi!h-value mar)ets +7ulati and $ullen% 244(I :#&;:% 2442 F Daloyi% 2414/. .ccordin! to 3ouw% ,ermeulen and $adevu +2442/% dominant supermar)ets and processors have tended to favour suppliers who can ensure consistent volumes and Euality% and they have thus en!a!ed in lon!-term production arran!ements +informal contracts/ with such suppliers. These criteria have tended to favour the more capitali<ed commercial producers and processors over the emer!in! sector +3ouw et al.% 2442/. The participation of smallholder farmers in hi!h-value mar)ets is constrained by the many challen!es they must face +7ulati and $ullen% 244( F Daloyi% 2414/. They further stated that a ran!e of impediments to mar)et participation has been identified% includin! lac) of access to finance% on-farm infrastructure% mar)et information and trainin!. The situation is worsened by the fact that farmers are located far away from the mar)ets and have poor access to infrastructure +Daloyi% 2414/* Kirsten +1**(/ and ,an ;ooyen% ,in) and -hristodoulou +1* 7/ emphasi<ed the 15

need for structural reform if the participation of small farmers in the commercial a!ricultural sector is to be enhanced. %*0 Market eforms and Smallholder <armers

The trend of mar)et-oriented reforms followin! multilateral trade liberali<ation and especially structural ad'ustment pro!rammes in developin! countries has led to the increased inte!ration of world mar)ets +Daloyi% 2414/. .!riculture is becomin! increasin!ly inte!rated and smallholder farmers are often disadvanta!ed% and therefore action must be ta)en to help them draw profit from their inte!ration into the mar)ets +Dienabe et al., 244(/. They further stated that there is no doubt that a!riculture is under!oin! si!nificant chan!es% and each partner in the a!ricultural supply chain has to be competitive to ensure profitable returns for all. Similar to the household sector% fresh produce mar)ets and a!ro-food processin! industries have a preference for certain cultivars and Euality standards dependin! on their needs +Daloyi% 2414/. ,in) and Kirsten +2444/ contended that this mar)et liberali<ation has ensured a leaner and stron!er a!ricultural industry% with some farmers and a!ribusinesses able to play in a !lobally competitive environment. 1n the other hand% $a!in!xa and Kamara +244"/ ar!ued that mar)et liberali<ation has widened the !ap between smallholder and commercial a!riculture. Small-scale farmers are mostly ill-eEuipped to respond to the chan!in! mar)et conditions +Aoyer% 2442/. ,in) and Kirsten +2444/ found ample empirical evidence that the dere!ulation of a!ricultural mar)etin! in South .frica has brou!ht about net welfare !ains for commercial a!riculture and therefore for the entire nation. #ood prices have declined% investment in a!riculture has increased% hi!her production per hectare has been achieved% and farmers are producin! hi!hervalue crops. Bowever% they found that this does not necessarily imply that smallholders have en'oyed these !ains because of a number of constraints that inhibit smallholder farmers9 access to a!ricultural mar)ets in South .frica. Such constraints usually include infrastructure% mar)et access% credit% or!ani<ational structures% suitability of technolo!y% and mana!erial capacity of the farmers +Daloyi% 2414/.

12

%*2

Agriculture Value Chain /s* Suppl# Chain

Bobbs and ?oun! +1***/ were amon!st the first to clearly distin!uish between these terms in the economic literature. .s they defined the term% supply chain refers to the entire vertical chain of activities = from production on the farm% throu!h processin!% distribution% and retailin! to the consumer. The supply chain is the mechanism for transmittin! si!nals from consumers to food manufactures% as well as deliverin! products from the farm to the consumer9s table +Daloyi% 2414/. The ma'or components of a supply chain are input supply% production% processin! or manufacturin!% and retailin! +;e!mi F 7ehlhar% 2445/. The value chain is a particular form of supply chain% i.e. the term Ovalue chain9 refers to a vertical alliance or strate!ic networ) between a number of independent business or!ani<ations within the same chain +Daloyi% 2414/. The value chain approach places particular emphasis on the coordination of different actors alon! the chain of activities involved in the production% processin! and distribution of products. :t hi!hli!hts the lin)a!e between enterprises% how their activities are co-ordinated and the role of lead firms in determinin! what is to be produced% how and by whom +Bumphrey% 2445/. The value chain is not the same as the supply chain. . value chain is about lin)a!es !eneratin! value for the consumer% while a supply chain is about process of movin! and transformin! commodities into products from producers to consumers. 0hile a value chain is about !eneratin! value for the consumer% a supply chain is about lo!istics +.AD% 2445/. The differences between supply chain and value chain are illustrated in Table 2.1. (able %*': Suppl# chain /ersus /alue chain
Attributes -ommunication ,alue focus &roduct ;elationship 1r!ani<ational structure &hilosophy Source: ..#- +244(/ Suppl# chain approach 3imited -ost6&rice -ommodity Supply push :ndependent Self-optimi<ation Value chain approach Bi!hly intensive ,alue6Puality Aifferentiated product Aemand pull :nterdependent -hain optimi<ation

There is a need to move from the traditional supply chain approach to a value chain approach where producers and processors are able to compete nationally and internationally +Daloyi% 17

2414/. Be further stated that the basic characteristic of a value chain is mar)et-focused collaboration in that different business enterprises wor) to!ether to produce and mar)et products and services in an effective and efficient manner. The value chain allows businesses to respond to the mar)etplace by lin)in! production% processin! and mar)etin! activities to mar)et demands +..#-% 244(/. The value chain approach establishes co-ordination amon!st its participants by movin! beyond spot mar)et transactions and utili<in! contracts vertical inte!ration% supply networ)s% alliances% and other forms of co-ordination +Daloyi% 2414/. 3ummus +244(/ differentiated between coordination in spot mar)ets and in modern value chain partnerships. These differences are summari<ed in Table 2.2 which is adopted from 3ummus +244(/. Qnli)e in a spot mar)et% in order to function effectively% these dominant players or!ani<e production% processin!% lo!istics and trade% and distribute products to the final consumer +3ummus% 244( F Dolayi% 2414/. (able %*%: >e# attributes of two eCtreme t#pes of co)ordination
Attributes Term Aecision indicator &artners :nterdependence &roduction -ommunication -o-ordination Specific investments :nformation Aelineation :mprovement .ctivities Aecision-ma)in! :ncentives 7oals 1pportunism .ctin! 1rientation Source: 3ummus +244(/ (raditional spot markets Short-term +individual transaction/ $ade on price $ay 3ow Bapha<ard 3imited 3imited .voided &roprietary -lear business boundaries Qnilateral initiatives Separate ;ole of bar!ainin! power .dversarial attitudes Aisharmonious +conflictin!/ !oals Dehave opportunistically .ct only in own interest 0in-lose Value chain partnerships 3on!-term relationships $ade on value #ewer selected Bi!h 1rder-driven 1pen Stron! +or total/ Bi!h +er/ level Shared -ontinuous delineation -ontinuous 'oint activities @n!a!ed Goint decision-mar)in! -ommon% mutual attitudes -ompatible !oals $utual trust .ct for mutual benefit 0in-win

.ccordin! to Bobbs et al. +2444/ value chain is a special strate!ic networ) of independent or!ani<ationI demand driven rather than supply-driven formI reEuires the commitment of all participants in controllin! the factors affectin! product Euality and consistencyI responsive to 1

chan!in! consumer needsI offers security in doin! business with other members of the chainI involves hi!h levels of trust between parties to the alliance. :n order to achieve more preferable position in these chan!ed mar)et condition% the members of a!ri-food chain have to establish effectively mana!ed value chain. .ccordin! to Bobbs et al. +2444/ the effective value chain mana!ement mi!ht include follows: +i/ enterin! into consultations and ne!otiations with other or!ani<ations related to mar)et expansionsI +ii/ sourcin! products from businesses that are not part of the value chainI +iii/ encoura!in! the development of new productsI +iv/ fosterin! cooperation in the value chain %*7 Agricultural Value Chain Approach and Smallholder <armers

This section has derived as such from Daloyi +2414/ and reproduces as such in this section. KThe concept of a!ricultural value chains has attracted many scholars in the mar)etin! environment. #or smallholder farmers to be inte!rated alon! the value chain% they must able to comply with mar)et reEuirements such as economies of scale% !ood Euality% and consistency. Transport lo!istics and the cold chain are necessities for smallholder farmers if they are to participate in the a!ribusiness value chain. The a!ricultural value chain is a vertical alliance of enterprises collaboratin! to secure a more rewardin! position in the mar)et. The term Overtical alliance9 means that a!ribusiness is connected from the production sta!e% throu!h the processin! sta!e to the mar)etin! sta!e% until the products are in the hands of the consumers. &roducers% processors and mar)eters become interdependent in the chain and wor) to!ether to discuss challen!es and share information +..#-% 244(/. #or commercial sta)eholders% the main advanta!es of bein! involved in an effective value chain are the ability to reduce the costs of doin! business% increase revenues% increase bar!ainin! power% and improve access to technolo!y% information and capital% and by doin! so% innovate production and mar)etin! processes in order to achieve a hi!her value and provide a hi!her Euality of product to consumers +.AD% 2445/. The value chain approach can help smallholder farmers to access secure mar)ets and enter into formal mar)et contracts that can be used to access creditI to share information amon! partners% thus helpin! poor farmers to access information better than in spot mar)etsI to consolidate production and minimi<e transaction costsI to improve their bar!ainin! powerI to add value to 1*

the productsI and to access hi!h-value mar)ets. $any scholars have emphasi<ed that if a value chain approach is not adopted% especially in developin! countries% the Oinvisible handL type of co-ordination +such as opportunistic behavior% self-interest% short-term relationships% limited information sharin!/ will predominates in traditional spot mar)ets. .ccordin! to Bumphrey and Schmit< +2442/ smallholder producers need to access lead firms in the value chain. They stated that research in the horticultural industry in the Qnited Kin!dom and .frica su!!ests that smallholder !rowers are excluded from the value chains% with the main reason appearin! not to be the efficiency advanta!e of lar!e producers% but rather the lead firms9 sourcin! strate!ies% which are influenced by consumers9 expectations% the safety and environmental reEuirements of !overnments and non-!overnmental or!ani<ations% as well as labour standards. Smallholder producers who !ain access to supply chains find themselves in a steep learnin! curve% because the lead firms tend to be too demandin! in terms of cost reduction% raised Euality standards% and increased delivery speed. Bowever% these firms do transmit best practices and provide expert advice. -onseEuently% hi!hly !overned chains are normally characteri<ed by such challen!es for smallholders +Bumphrey F Schmit<% 2442/. Bendri)s and 3yne +244"/ contended that for smallholder farmers to participate successfully in the value chain% they should pool their small individual surpluses and mar)et them collectively. They emphasi<ed that smallholder farmers must co-ordinate hori<ontally in order to lin) vertically with intermediaries in preferred supply chains. .ccordin! to Dienabe and ,ermeulen +2447/% there are opportunities for the inclusion of smallscale farmers in formal retail supply chains% includin!: Strate!ic partnerships or mentorship pro!rammes with established farmers so that the small farmers can increase their mar)etin! volumes and have access to established production and mar)etin! infrastructure.

24

-ollective action throu!h either producer or!ani<ations or mar)etin! co-operatives% which can also provide alternative inclusion pathways for smallholder farmers. Aealin! with franchise stores% which can also be a viable inclusion option for smallholder farmers% since these stores have more flexible procurement options and% in many cases% less strin!ent food Euality and safety reEuirements = especially in the case of Spar and &ic) 9n &ay. .ccordin! to Shepherd +2447/ there is considerable scope for addin! value to a!ricultural production. :n international mar)ets% for example% the !rowin! demand for KconvenienceL foods has created a mar)et for pre-cut salads and fruits. Shepherd +2447/ ar!ued that% KJ71s and others sometimes approach a!ro-processin! from a supply-led rather than mar)et-led perspective. That is% they decide to promote processin! because of an abundance of raw material rather than because of a clearly identified mar)et for the processed products. . further error is to induce farmers to become a!ro-processin! entrepreneurs. 3ac)in! capital% education and mana!ement s)ills% it is almost impossible for small farmers to successfully mana!e such ventures.L Smallholder farmers often lac) the experience to function in modern mar)ets and supply chains. $any developin! countries have relatively few or even no si<eable a!ro-processors. 0hile those companies that do exist may presently have surplus capacity% that capacity = and thus their ability to absorb additional production = is usually limited. The promotion of small and medium enterprises +S$@s/ is seen by !overnments and donors as one way to encoura!e competition and increase value-addin!% but this may be constrained by a variety of factors% such as the lac) of a ris)-ta)in! culture% lac) of entrepreneurial s)ills% credit constraints% the hi!h cost of imported processin! eEuipment and pac)a!in! materials% poor infrastructure and low demand +Shepherd% 2447/L---- +Daloyi% 2414/. %*5 e/iew of Vertical Coordination towards High Value Agriculture

There relevant literature to understand the modus operandi of cooperatives% farmers associations and contract farmin! institutions is briefly presented here.

21

Gulati and Mullen, 2004 examined the future of smallholders under hi!h-value a!riculture in :ndia. They stated that the future of small farmers depends critically on whether or not farmers can be !lobally competitive. To do so% they proposed the innovative institutions that lin) the farm% firm and for) in the form of contract farmin! and vertical coordination. They su!!ested that by shortenin! the supply chain% transactions costs and ris) of smallholder can be reduced and their economic efficiency can be increased. #urthermore% they have ar!ued that at the same time% a streamlined production system can respond rapidly to consumers9 preferences. IFPRI, 2005 made recommendations for the promotion of hi!h-value a!riculture which are: +i/ to au!ment income from a!riculture% farmers must !ain !reater access to !rowin! domestic as well as !lobal mar)ets for hi!h-value commodities which would reEuire the identification of critical areas for trade% mar)etin!% capital mar)ets% and re!ulatory reforms +ii/ to increase the participation of smallholders in the hi!h-value chain% policies that unnecessarily impede their participation must be removed. +iii/ the role of innovative institutions is critical in stren!thenin! the lin)a!es between the farm and a!ribusiness. &rocesses +for example% contract farmin! or cooperatives/ must be developed that involve smallholders in the production and mar)etin! of hi!h-value commodities +iv/ to reduce the production and mar)et ris)s of hi!h-value commodities% !ood road networ)s must be developed% a reliable electrical supply must be ensured% and the power of telecommunications must be tapped. Birthal et al., 2007 examined the institutional mechanisms adopted by different firms to inte!rate small producers of mil)% broilers and ve!etables in the supply chain and their effects on producers9 costs and farm profitability. The institutions under study have covered contractin! with farmers in case of mil) and broilers and producers associations in case of ve!etables. Transaction cost as a result of contract farmin! has been reduced by over *4 percent in case of mil) and ve!etables and 5 per cent in case of broilers. The net revenue reali<ation by contract producers has been 2 to ( times hi!her in mil) and ve!etables and 1.1-times in broilers. :t is observed that smallholders are benefited most from such arran!ements as they have low mar)etable surplus and their mar)etin! costs are extremely hi!h.

22

Baloyi, 2010 carried out an analysis of constraints facin! smallholder farmers in the a!ribusiness value chain in Qniversity of &retoria where his wor) focused on analy<in! the production and mar)etin! constraints that often prevent smallholder farmers from accessin! hi!h-value mar)ets in the a!ribusiness value chain. .ccess to mar)ets is an essential reEuirement for the poor in rural areas to en'oy the benefits of a!ricultural !rowth. 3imited access to a!ricultural mar)ets by smallholder farmers in rural areas represents one of the most important challen!es confrontin! policyma)ers in developin! countries. Several studies have indicated how smallholder farmers can be lin)ed to mar)ets% but they have failed to address issues of how to increase the li)elihood of smallholder farmers benefitin! from hi!h-value mar)ets. Aue to the strin!ent sourcin! criteria of formal mar)ets% small-scale farmers are excluded from the a!ricultural value chains. :t may be easy to access the mar)et% but it is very difficult for smallholder farmers to retain that mar)et. This is attributed to the fact that smallholder farmers face various constraints alon! the value chain such as production and mar)etin! constraints. %*6 esearch ,esign and Implementation

:n order to provide some feasible measures and su!!estions about how smallholder horticultural farmers can switch to hi!h value food commodities with minimum transaction cost and mar)et ris)s in &un'ab% &a)istan. .!ricultural value chain approach6framewor) has been adapted. :n order to develop feasible measures and su!!estions% the survey desi!n% samplin! frame% field wor) and analytical techniEues used in this study are briefly described in the followin! subsection: %*6*' Sur/e# design

The aim of the survey was to see) for the opportunities and threats to small farmers confronted from the consolidatin! horticultural value chains with a view to obtain a clear picture of these chains in place% the relative positions of the different actors% the institutions !overnin! their incorporation% and the benefits accruin! to each which will provide the information to identify areas of levera!e for improvin! the position of the small farmers in &a)istan. Keepin! in view the time and financial resources% it was impossible to compile information from the whole 2"

population of horticultural !rowers and mar)et intermediaries in &un'ab province. Therefore% a representative sample of the tar!eted population was used to draw inferences. 1n the basis of more acrea!e under man!o% citrus and tomato in the ma'or producin! districts of the &un'ab province were selected as the study area. The samplin! units were producers% contractors% commission a!ents% wholesalers% retailers and consumers of selected man!o% citrus and tomato. The information of samplin! frame% sample si<e and field wor) is !iven below: Selection of di trict and co!!oditie " The main focus of the survey was &un'ab province of &a)istan% which comprises "2 districts. $an!oes are the most important cash crop of cottonwheat system of &a)istan9s &un'ab. $ultan% ;ahim ?ar Khan and $u<affar!arh districts comprised 4 percent man!o area of &a)istan9s &un'ab were selected to study the man!oes value chain. Sar!odha district is main citrus !rowin! area of &un'ab followed by $andi Dahauddin and Toba Ta)e Sin!h. Therefore these three districts for chosen for conductin! the citrus value chain analysis. $u<affar!arh% Jan)ana Sahib% 7u'ranwala and Shei)hupura districts comprised (4 percent tomato production in &un'ab were selected to study the tomato value chain. These districts of man!o% citrus and tomato are shown in map of &un'ab at #i!ure 2.1. <igure %*': Map showing mango$ citrus and tomato growing districts of Punjab

2(

:nternational experience has shown that an important strate!y for increasin! the incomes of small-scale farmers in developin! countries is to help them diversify from low-value staple food commodities into hi!her value commodities% such as livestoc)% dairy products% fish% fruits% ve!etables% and spices +Daloyi% 2414/. The demand for these products in both developed and developin! countries is risin! rapidly as incomes increase and consumers adopt more diverse diets +JA.% 244*/. :t is a well-)nown fact% needin! no further debate% that horticultural products are an ideal cash crops for both commercial and smallholder farmers in developin! and developed countries. $an!o% citrus and tomato were selected as the three commodities to be studied for purposes of this study due to the fact that they are hi!h-value crops and are commonly produced in the &un'ab province as a whole. 1ver and above their status as important crops in the context of the &un'ab a!ricultural economy% the selected commodities were also chosen on the basis of their potential to !enerate a hi!h income% particularly when prices are at a pea). These hi!h-value commodities can play a si!nificant role in chan!in! the lives of rural farmers in the province% particularly when the production and mar)etin! challen!es confrontin! smallholder farmer alon! the value chain are addressed. @ven households that may not benefit directly can reap indirect benefits throu!h increased demand for hired labor in the value chain +Daloyi% 2414/.

25

The intention of selectin! man!o% citrus and tomato commodities for this study was to help policyma)ers be better informed about the barriers preventin! small-scale farmers in the &un'ab province from participatin! to a !reater extent in hi!h-value mar)ets% as well as the policy options available to reduce these barriers. :n view of the prevailin! favorable climate for the production of a variety of hi!h-value crops by smallholder producers in the province% coupled 22

with !rowin! awareness that some of these hi!h-value crops could solve the problem of food security and poverty reduction amon! rural people +Daloyi% 2414/. :t has become increasin!ly evident that considerable chan!es would be reEuired in their farmin! operations if the economic benefits of increased production are to be fully reali<ed. These chan!es entail producin! !oodEuality% hi!h-value crops on a lar!e scale and accessin! hi!h-value mar)ets. Bowever% this will only happen if smallholder farmers have access to comprehensive a!ri-support services. Sa!#lin$ fra!e and a!#le i%e" . samplin! frame is a list of all samplin! units available for selection at a !iven sta!e of the samplin! process +Darnet% 1**1/. The samplin! frame for fruits and ve!etable producers consist of a list of !rowers of selected commodities in the selected districts was prepared durin! the informal survey. &oate and Aaplyn +1**"/ su!!ested that a sample si<e of 24 is !enerally re!arded as the minimum reEuirement that will yield a sufficient level of certainty for decision-ma)in!. ;odri!ue<% et al +1**5/ selected 54 producers and 54 mar)et intermediaries to collect information re!ardin! expected prices of sheep and !oats in Dalochistan. Bu!ar and Biremath +1* (/ selected 124 producers to study the efficiency of alternative channels in the mar)etin! of ve!etables in Del!aum city% :ndia. Keepin! in view the previous studies% 154 to 2 " sample si<es of horticulture !rowers% 5 to (44 sample si<e of contractors% exporters6processors% commission a!ents% wholesalers% retailers and consumers of man!o% citrus and tomato were chosen respectively. The sample si<e of !rowers% contractors% exporters6processors% commission a!ents% wholesalers% retailers and consumers is presented in Table 2.". (able %*1: Sample distribution for horticultural /alue chain in Punjab pro/ince
Actors &roducers -ontractors @xporters6&rocessors -ommission .!ents 0holesalers ;etailers -onsumers Mango 22* 27 45 2* 27 "2 (44 Citrus 2 " "4 14 24 24 "2 544 (omato 154 4 4" 2( 22 27 (44 (otal 742 57 1 7" 2* *5 1"44

27

%*6*%

<ieldwork

&rimary data were collected throu!h surveys of man!o% citrus and tomato producers% mar)et intermediaries and consumers. The fieldwor) also involved !atherin! data on the prices and mar)et activities of these commodities. :n direct observation% emphasis was placed to identify production and mar)etin! problems and evaluate )ey informants views of the structure and operation of the mar)etin! system a!ainst what was actually observed in the field. &on$itudinal data collection" Secondary data can help to determine internal consistency and it also provides a Euic) insi!ht into trends and relationships. Such data can also be crosschec)ed with different sources of related data% throu!h interviews with mar)et )ey informants and )nowled!eable observers. #or this study secondary data has been collected usin! various statistics bulletins of #ederal and &rovincial Dureau of Statistics and various issues of @conomic Survey of &a)istan re!ardin! the area and production under fruits and ve!etables in the study areas. 'ro ectional data collection" :n this study separate interview schedules were desi!ned for

producers and other mar)et a!encies includin! contractors% commission a!ents% wholesalers% retailers and consumers to cover all aspects of the study. The interview schedules were written in @n!lish but Euestions were as)ed in the local lan!ua!e from the sample respondents. The interview schedules were pre-tested before the formal survey. Aue to the absence of producer9s records re!ardin! farm activities% data collection has depended on a combination of methods which rely on memory recall for basic information such as labor use% wa!es% input costs% mar)etin! char!es and output costs. :nterviews with both producers and other mar)et a!encies were carried out soon after the mar)etin!% in order to reduce the recall period. Producer ( ur)ey" &roducers were assured absolute privacy% interviews were held in places of their choice. $ost of the interviews were held at the farm or in the farmer9s house. The interview usually started with an introduction about the bac)!round of the researchers% the ob'ectives of the study and the way in which the respondent was chosen.

Mar*et ur)ey" 3ocal mar)ets in the selected districts and fruits mar)et at $ultan% ;ahim ?ar Khan% SadiEabad% $u<affar!arh% Sar!odha% Dhalwal% $andi Dahauddin% 3ahore% 7u'ranwala% Jan)ana were selected. $ain focus had been !iven to understand the mar)et structure and operation of these mar)ets. $ar)et traders includin! contractors% commission a!ents% wholesalers and retailers were interviewed. The interview was also supplemented with topicfocused discussion and specific Euestion from a structured Euestionnaire. The interview was held with each mar)et intermediaries in confidence in his office6shops6sellin! place. .fter answerin! their Euestions% they enEuired to )now why the scientists would li)e to study value chain actors of man!o% citrus and tomato. The survey investi!ators informed the respondents about the economic importance of the man!o% citrus and tomato as well as the value chain aspect of these commodities. .dditional information was also collected throu!h personal observation. Sufficient time was spent durin! various visits to mar)ets. %*9 Anal#tical (echni@ues

#ollowin! the methodolo!y Dirthal et al. +244(/% .AD +2445/% :#&;: +2442/ and ,orley and Dienabe +2447/% transaction economics% profitability analysis and S01T analysis were used to study the policy environment and horticulture sector overview% structure conduct and performance of horticultural value chain% effects of horticultural value chain on small farmers and strate!ic options to inte!rate the small farmer into horticultural value chain. The brief description these analysis are as under: %*9*' (ransaction costs

:n order to compare transaction costs9 ma!nitude of both mar)etin! channels under consideration% a Euantitative measure of transaction costs is needed. .lthou!h there is no officially reco!ni<ed methodolo!y for examinin! the ma!nitude of transaction costs% the recent wor)s of Denham and Denham +2445/ propose a standardi<ed methodolo!y that many authors have applied to comparative analysis. :n that methodolo!y% a subset of the total costs !enerated in a transaction is examined. This subset% desi!nated as the cost of exchan!e - ijkm% is defined as Kthe opportunity cost in resources - money% time and !oods -for an individual with characteristics 2*

i to use a !iven form of exchan!e j to obtain a !ood k in an institutional settin! mL +Denham and Denham% 2445/. This methodolo!y see)s to evaluate the opportunity cost faced by an a!ent that underta)es a specified exchan!e in a specified institutional environment. :n order to structure our analysis% we divided the contractual transaction in three main direct transaction costs items: information +:/% ne!otiation +J/ and monitorin!6enforcement +$/ costs +Bobbs% 1**7/. :nformation costs occur ex ante to an exchan!e and include information search on products% tradin! partner and mar)et conditions. Je!otiation costs also occur ex ante and consist of the cost of reali<in! the transaction which may include the cost of the ne!otiation process% contract redaction costs% etc. $onitorin! and enforcement costs occur ex post to a transaction and consist of the costs necessary for the a!reement to be respected. These costs include monitorin!% rene!otiation% maladaptation% termination and enforcement costs. Bobbs +1**7/ has classified the components of transactions costs in relation to the transaction: information costs as arisin! before the transactionI ne!otiation costs as the costs of physically carryin! out the transactionI and monitorin! costs as costs of ensurin! that the terms of the transaction are adhered. Staal% Ael!ado and Jicholson +1**7/ classified transaction costs into observable and unobservable transaction costs. The observable transaction costs include mar)etin! costs such as transport% handlin!% pac)a!in!% stora!e% spoila!e etc. that are visible when a transaction ta)es place. Qnobservable transaction costs include cost of information search% bar!ainin!% and enforcement of contracts etc. The Qnobservable transaction costs faced by producers when sellin! their product to purchasers is represented by the sum of direct transaction costs +-/% composed of information +:/% ne!otiation +J/ and monitorin! +$/ costs. - R S +:% J% $/ The transaction cost of each of the commodity for producer was estimated by summin! up the unobservable and observable transaction costs that include mar)etin! costs such as transport% handlin!% pac)a!in!% stora!e% spoila!e etc. and unobservable transaction cost i.e. cost of information% ne!otiation and monitorin!.

"4

%*9*%

Profitabilit# anal#sis

The profitability analysis was carried out as by Triole +1**"/ and is !iven as under.
Max = P +Q /.Q C +Q /

0here = &r ofit PR Puantity -R-ost

%*9*1

(he /alue chain anal#sis EVCAF model

,-. model emphasi<es on the diverse interrelationships amon! mar)et opportunities constraints and directives at various levels of the supply chain and at different levels of influence% from which specific value addition ta)es place. This feature of the ,-. lends to its completeness% as a strate!ic tool in explorin! different alternative strate!ies for poverty reduction. The value chain analysis model used for this study adopted from .sean #oundation and .sia AB;;. +244 / which is presented in #i!ure 2.2. ,-. is a method for accountin! and presentin! the value that is created in a product or service as it is transformed from raw inputs to a final product consumed by end users and typically involves identifyin! and mappin! the relationships of four types of features: +i/ the activities performed durin! each sta!e of processin!I +ii/ the value of inputs% processin! time% outputs and value addedI +iii/ the spatial relationships% such as distance and lo!istics% of the activitiesI and% +iv/ the structure of economic a!ents% such as suppliers% the producer% and the wholesaler +#:.S% 2447/. The policy and reform a!enda that typically emer!es from the value chain approach relates to three core areas +i/ &roduct mar)et issues +e.!.% trade policy% competition policy% price distortions% subsidies% licensin!% product standards% customs% lo!istics% property ri!hts% enforcement of re!ulations/I +ii/ #actor mar)et issues +e.!.% wa!es% capital char!es% utility mar)et

"1

issues% labor mar)et ri!idities% land price% <onin!/I and +iii/ $ar)et related issues +e.!.% mar)et diversification% research and development% product diversification% supplier lin)a!es/. <igure %*%: Value chain anal#sis model
Capital <low

:nput Suppliers

:Cporters
&roducers &roce ssors 0holesalers ;etailers -onsumers

Information <low

@nablin! environment
&olicies ;ules and ;e!ulations :nfrastructure F @nterprise Aevelopment #acilities ;esearch F Technolo!y F :nstitutional Services Socioeconomic F -ultural -onsideration

Source: .dopted from .sean #oundation and .sia AB;;. +244 /

%*9*0

S=+( anal#sis

The Stren!th% 0ea)ness% 1pportunities and Threat +S01T/ are a powerful tool used in developin! strate!ies for intervention. The tool provides a framewor) for understandin! controllable and non-controllable factors that the interventions should address for the entire value-chain. The critical issues of the S01T are !enerally cate!ori<ed into the followin! four broad cate!ories: S - 0hat are the subsectors internal Stren!thsM 0 - 0hat are the subsectors internal 0ea)nessesM 1 - 0hat external 1pportunities mi!ht move the subsector forwardM T - 0hat external Threats mi!ht hold the subsector bac)M The typical assessments of subsector9s stren!ths and wea)nesses as well as the opportunities and threats specific to each of the interventions consist of the followin!:

"2

&roduction system and delivery of products in the value chain Puality of business service provisions -ompetitive advanta!es of the value chain members $ar)et access% infrastructure% mana!ement information and financial systems &olicy environment.

0hile desi!nin! the interventions% the focus is !enerally !iven on the exploitation of stren!ths rather than simply addressin! on the wea)nesses. :n other words% the interventions are not only about addressin! the constraints% but also nurturin! the stren!th of the subsector. Be further stated that similarly the opportunities and threats - the external trends that influence the subsector are also analy<ed. The external opportunities and threats are usually cate!ori<ed into political% economic% social% technolo!ical% demo!raphic and le!al forces. These external forces include such circumstances as chan!in! business trends% increased competition% chan!in! re!ulations% and so on. They can either help the subsector move forward +opportunities/ or hold the subsector bac) +threats/ -- but opportunities that are i!nored can become threats% and threats that are dealt with appropriately can be turned into opportunities. The non-controllable factors are !enerally dealt throu!h advocacy and networ)in! to brin! about chan!es in the policy framewor)L.

%*'&

Conclusion

This chapter dealt with the conceptual framewor) for value chain approach to address the issues of horticulture sub-sector and techniEues used for value chain mappin!% value chain research% value chain analysis and value chain development strate!ies for see)in! sustainable outcomes of horticulture sub-sector in the country. .!riculture is becomin! increasin!ly inte!rated and smallholders are often disadvanta!ed% and therefore action must be ta)en to help them in drawin! profit from their inte!ration into the mar)ets. :nternational experience has shown that an important strate!y for increasin! the ""

incomes of smallholders in developin! countries is to help them diversify from low-value staple food commodities into hi!her value a!riculture such as livestoc)% dairy products% fish% fruits% ve!etables% and spices. :n order to provide some feasible measures and su!!estions about how smallholder can switch to hi!h value food commodities with minimum transaction cost and mar)et ris)s in &un'ab% &a)istan% a!ricultural value chain approach6framewor) was adapted. .s this study focuses on value chain analysis of man!o% citrus and tomato in &un'ab province of &a)istan% therefore% $ultan% ;ahim ?ar Khan and $u<affar!arh districts were selected for man!o as these districts comprised 4 percent of man!o area in &a)istan9s &un'ab. Sar!odha% $andiDahauddin and Toba Ta)e Sin!h were selected for conductin! the citrus value chain analysis. $u<affar!arh% Jan)ana Sahib% 7u'ranwala and Shei)hupura districts were selected for tomato% as these districts contribute (4 percent in tomato production to &un'ab. #or this purpose a sample of 742 producers% 57contractors% 1 exporters% 7" commission a!ents% 2* wholesalers% *5 retailers and 1"44 consumers of man!o% citrus and tomato was selected. Transaction economics% profitability analysis and S01T analysis were used to study the policy environment and horticulture sector overview% structure conduct and performance of horticultural value chain% effects of horticultural value chain on small farmers and strate!ic options to inte!rate the small farmer into horticultural value chain followin! the methodolo!y of Dirthal et al.% .AD% :#&;: and ,orley and Dienabe.

"(

CHA AC(: IS(ICS +< H+ (IC-;(- A; VA;-: CHAI! +P: A(+ S A!, S-PP+ (: S

(his chapter attempts to present an in/entor# of market pla#ers with their characteristics and description of horticulture chain actors Eprimar# and secondar#F along their functions*

"5

Chapter A III CHA AC(: IS(ICS +< H+ (IC-;(- A; VA;-: CHAI! +P: A(+ S A!, S-PP+ (: S
1*' Introduction

The success or failure of a value chain intervention depends principally on the partnerships that are built between actors and support providers that participate in a particular chain +3undy et al% 244(/. The ,- approach therefore reEuires that the ,- operators are clearly identified. This information enables the ,- supporters involved in the desi!n and implementation of strate!ies to increase competitiveness and to promote the fair distribution of income amon! the ,- actors. #ollowin! this introduction% this chapter attempts to present an inventory of ,- operators with their characteristics and description of horticulture chain actors alon! their functions. There are two types of ,- operators namelyI the primary ,- operator and secondary ,- operators. The primary ,- operators include inputs suppliers% !rowers% contractors% commission a!ents% wholesalers% retailers% processors% exporters and consumers. The secondary ,- operators include research and development institution% transportation% mar)et and communication% !overnment policy and re!ulatory policy. #ollowin! this introduction% the socio-economic profile of primary chain actors is narrated in section ".2. The activities 6 functions and description of primary and secondary actors are presented in section "." and ".( respectively. 1*% 1*%*' Socio):conomic Profile of Primar# Actors Socio)economic profile of sample growers and their farms

The !rowers are the primary and most valued actors in the chain. Dasically% two cate!ories of producers small and lar!e% small farmers !enerally have up to 5 hectare and lar!e farmers more than 5 hectare on their farm. They perform almost all production functions and about 2" percent overall farmers also perform harvestin! function on their own or on a labour sharin! basis. The socio-economic characteristics of sample !rowers of selected fruits are presented in Table ".1. The sample farmers were of middle a!e !roup as the avera!e a!e was about (1 years for all the "2

selected fruits and ve!etable. This observation is Euite similar to other socio-economic studies conducted in &un'ab +Sharif% 1* 2/. $ost of the !rowers were havin! low education as the avera!e education ran!es form 2 to * years of schoolin!. Bowever they had !ood farmin! experience of almost 24 years. There was very little difference across the selected horticultural enterprises for a!e% education and farmin! experience. .n important difference between fruits +man!o% citrus/ and tomato !rowers was found that the fulltime involvement in farmin! was hi!h in the ve!etable farmers whereas the fruit farmers were en!a!ed in farmin! as part time. The most dominant family system was still 'oint family system as the 'oint family system was 55 to 2 8. Bowever in the small farmers 'oint family system was less as compared to lar!e farmers for all the three enterprises of the horticulture under discussion. Similarly the avera!e family si<e of the lar!e farmers was lar!e as compared to small farmers. The family si<e of small farmers ran!ed between 7 and 14 for man!o% citrus and tomato !rowers while lar!e farmers family si<e ran!ed between * and 1" members +Table ".1/. (able 1*': Socio)economic profile of the sample growers
Characteristics #armers +T/ +8/ .!e +?ears/ @ducation +?ears/ #armin! experience +?ears/ #armer involvement+8#ull time/ #amily system +8 'oint/ #amily si<e +T/ Source: Survey results 244*-14 Mango Citrus (omato Small ;arge +/er All Small ;arge +/er All Small ;arge +/er All 1 * 4 22* 1 *" 2 1 11( "2 154 74 "4 144 27 "" 144 72 2( 144 (1 (4 (1 (2 (2 (2 (1 (2 (1 2 7 7 * 7 * 21 1 24 21 24 24 27 21 22 27 "2 2* (7 " (( 7( 75 7" 25 7( 2 2" 27 2( 5" 2 55 14 1" 11 7 * * 11 14

The farm characteristics of the sample man!o% citrus and tomato !rowers are presented in Table ".2. The avera!e own land of the fruit !rowers was almost ali)e however the own land holdin! of the tomato !rowers was less and almost half of the fruit !rowers for both small and lar!e farmers. The land tenural arran!ements indicated that the tomato !rowers mostly rent inland while fruit !rowers rent out land resultin! in almost similar level of operational holdin! for all the sample !rowers of fruits and ve!etables. The operation land holdin! of the small farmers was 5.7(% 7.( and 7.27 acre for man!o% citrus and tomato !rowers respectively. The operational

"7

holdin! of the lar!e man!o !rowers was 54 acres% citrus !rowers 21 acres and tomato !rowers "" acres. 1ne of the important results of the study as emer!ed from the analysis of farm characteristics is that the percent allocation of operational holdin! to hi!h value crops at small farms was hi!h as compared to lar!e farmers in all the three selected commodities. The allocation to tomato +ve!etable/ as percent of total operational area was less as compared to fruits. .ll the sample farmers were from irri!ated area and canal was the main source of irri!ation but mostly con'unctive water was bein! used. Bowever more tube well water was used in tomato !rowin! areas as compared to man!o and citrus. (able 1*%: ;and holding$ orchard area and source of irrigation of growers EacresF
Characteristics #armers +T/ +8/ 1wn land ;ented in ;ented out Shared in Shared out 1perational 1rchard6,e!etable +percent of operational area/ Irrigation Source -anal Tube well -anal F Tube well Source: Survey results 244*-14 Small 1 * 74 2.4" 4."1 4.*" 4.4( 4."2 5.7( 5( " 1* 7 Mango Citrus (omato ;arge +/er All Small ;arge +/er All Small ;arge +/er All 4 22* 1 *" 2 1 11( "2 154 "4 144 27 "" 144 72 2( 144 52."" 1*. 4 2.(2 25.(7 12.72 "."7 1".1" 5.2" .24 2.77 4. ( 4.55 4.75 ".42 24.4" 2.*5 11.52 (.4* 4.4* 1.4 4.(2 4."1 4."7 4."" 4.4( 4.4( 4."5 4.1* 4."4 1.2" 4.22 1.4* 2.4" 4. " 4.4" 4.55 4.21 4.4( 4.44 4.4" 54."( 1*.44 7.( 2(.57 1".1( 7.27 "".(1 1"."1 (1 (* 5 15 4 22 2 ( *4 ( Percent " * 5* 5 5 * 27 1 (" 52 17 4 "4 74 2( 1 (1 5*

1*%*%

Characteristics of sample contractors

-ontractors play an important role in brid!in! the lin) between man!oes !rowers and wholesale mar)et actors and exporters. They buy man!oes and citrus from the farmers and supply them to the local city commission a!ents% other cities commission a!ents and exporters. -ontractors are !uided% financed and !iven information by commission a!ents to whom they are effectively financially bound. -ontractors and contractin! scenario were found differently for man!o and citrus while in tomato self mar)etin! was prevailin! and no contract out services were reported. :n man!o contractors with family bac)!round from farm% business and business plus farm "

--families were found whereas in citrus all the contractors were havin! some business besides farmin! while 21 percent were purely from business community. The education of citrus contractors was better than man!o contractors while man!o contractors were havin! more experience. Jearly one third of both man!o and citrus contractors were doin! business in partnership and all have obtained credit +Table "."/. The contractors do business with the commission a!ents and their selection criteria are mainly the honesty of the -. while !ood reputes and wor)in! relation in the past were also eEually important. 0ith the advancement in communication technolo!y all have mobiles with them. The characteristics of the sample contractors are presented in Table ".". (able 1*1: Characteristics of sample contractors in the stud# area
Characteristics .!e +years/ @ducation +years/ -ontract @xp. +?ears/ #arm #amily +8/ Dusiness #amily +8/ #arm F Dusiness +8/ &artnership +8/ -redit obtained +8/ Selection criteria for -.: +8/ - 7ood repute - Bonest - 3on! wor)in! relation 1wn6mobile +8/ Source: Survey results 244*-14 Mango (4 2 12 15 "1 5( "" 144 "4.44 (5.44 25.44 144 Citrus "* 14 11 4 21 7* "4 144 25.44 54.44 25.44 144 (omato " 1( 15 1" 24 22 2* 144 "4 (( 22 144

3.2.3

-haracteristics of sample commission a!ents

The information on the characteristics of the commission a!ent is presented in Table ".(. -ommission a!ent is an important member of fruits and ve!etable mar)etin! system of &a)istan. Be has a permanent place of business in the fruit and ve!etable mar)ets. .ll the sample commission a!ents were of middle and old a!e with an avera!e education of * years of schoolin! and 1 -2" years of experience. They were doin! business mostly in partnership as 758 in man!o and 48 both in citrus and tomato they had partnership and only 25 to 24 percent wor)in! as sole entrepreneurs. $ostly fruit commission a!ents were from business community in man!o while in citrus and tomato they were also farmin! alon! with commission a!ent. $a'ority of "*

tomato commission a!ents belon! to farm families. .ll of them were havin! !ood communication facilities both mobile and landline telephone and they were well connected with other mar)ets. (able 1*0: Socio)economic characteristics of sample commission agents
Characteristics .!e @ducation +?ears/ Dusiness exp. +?rs/ .usiness t#pe EGF: - Sole - &artner #arm #amily +8/ Dusiness #amily +8/ #arm F Dusiness +8/ Communication facilit# EGF Telephone $obile Contacts in other markets EGF Source: Survey results 244*-14 Mango (( 4* 1* 25 75 44 52 (( 144 144 144 Citrus (2 4* 2" 24 4 42 (1 5" 144 144 144 (omato (* 4* 1 24 4 52 (( 4( 144 75 144

3.2.4

-haracteristics of sample wholesalers

The information on the characteristics of sample fruits and ve!etables wholesalers is presented in Table ".5. The wholesaler is important intermediary in the mar)etin! channel. Be purchases the produce from the commission a!ent and sells to retailers. Be also some time !rades and repac)s the produce. :n other words the wholesalers operate between the commission a!ent and the retailer. The wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. Sometimes he may withhold the stoc) to create shorta!e and manipulate prices. The improvements in pac)in! also help him in !ettin! hi!her price. Some wholesalers purchases from contractors throu!h commission a!ents and sell to other mar)ets after washin! and cleanin! or pac)in!. The mean a!e of the sample fruits and ve!etable wholesaler was ran!ed from " -(2 years with 12 to 2" years of business experience of wholesale mar)et. These wholesalers of fruits and ve!etable are located with the commission a!ents in the mar)ets and deal the lar!e volume of fruits and ve!etables. $a'ority +144 8/ of sample wholesalers belon! to farm family. .nd 5*58 were wor)in! as sole proprietor and all purchase from commission a!ents and wor) in the mar)et. The volume of business of man!o wholesalers was (15 crates% citrus 27 crates and (4

tomato 112 crates on daily basis. .ll of the wholesalers had own telephone for communication +Table ".5/. (able 1*2: Socio)economic characteristics of sample wholesalers
Characteristics .!e +?ears/ @ducation +?ears/ Dusiness experience +?rs/ Dusiness #amily +8/ Sole proprietor ship +8/ 3ocation Dusiness Ety daily in season +crate/ &urchasin! throu!h -. +8/ Source: Survey ;esults 244*-14 Mango " 45 12 144 *5 $ar)et (15 144 Citrus (2 47 2" 144 5 $ar)et 27 144 (omato " 4 12 *5 *4 $ar)et 112 144

3.2.5

-haracteristics of sample retailers

The last intermediary in mar)etin! channel is the retailer. The information on the chrematistics of sample retailers for fruits and ve!etables is presented in Table ".2. The avera!e a!e of the sample fruits retailer ran!ed from "5-(1 years for man!o% citrus and tomato. 1n avera!e% the business experience of sample fruits retailer was 1"% 11 and 12 years for man!o% citrus and 12 years. $ostly they purchase from wholesalers and sell at retail price. (able 1*7: Characteristics of the sample retailers
Characteristics .!e +?ears/ @ducation +?ears/ Dusiness exp. +?ears/ 3ocation Dusiness Euantity +crates6day/ &urchasin! from wholesaler +8/ Sellin! at retailer price Mango (1 45 1" $andi% ba<aar and bus6 wa!on stop (."5 144 ?es Citrus "5 42 11 $andi% ba<aar and bus6 wa!on stop (.74 74 ?es (omato " 45 12 $andi% ba<aar and bus6 wa!on stop ".(4 75 ?es

3.2.6

-haracteristics of sample consumers

-onsumers were interviewed for their socioeconomic characteristics. The avera!e household si<e for man!o consumers was and * for citrus and tomato consumers. The avera!e a!e varies from "2 to (5 years and education above matriculation as the avera!e education was 12% 1" and 14 years for man!o% citrus and tomato. $a'ority of them belon! to !overnment servants followed by (1

business while 75 to 4 percent purchase from retailers and remainin! from wholesale mar)et and street haw)ers as presented in Table ".7. (able 1*5: Characteristics of the sample consumers
Characteristics .!e +?ears/ #amily si<e +T/ :ducation E?earsF Mango "2 12 (4 "4 Source of income EGF: ) 7overnment servant ) Dusiness ) 1verseas ) 1thers Source of purchase of fruits and /egetables EGF: ) Shop ) 0holesale ) Baw)er Source: Survey results 244*-14 55 15 42 2 4 45 14 Citrus (1 * 1" 54 14 52 27 41 24 75 47 1 (omato (5 * 14 25 (5 (4 24 41 "* *4 45 45

1*1

Acti/ities B <unctions and ,escription of Primar# Actors

0holesale mar)ets at $ultan% $u<affar!arh% ;ahim ?ar Khan% Sar!odha and 3ahore are bein! run by the association of commission a!ents havin! office bearers namely &resident and 7eneral Secretary. There is mar)et committee and re!ulations in the wholesale mar)ets. The products are sold to local shop)eepers and the contractors also purchase the produce to brin! to the down country from these mar)ets. @ven the consumers may directly purchase from these mar)ets sometimes +Sharif% 2411/. The primary actors include input suppliers% !rowers% contractors% wholesalers% retailers% processors and exporters. The activities 6 functions and brief descriptions of primary actors are presented in Table ". % ".*% ".14% ".11% ".12% ".1"% ".1( and ".15 respectively.

(2

(able 1*6: Acti/it#Bfunctions and the description of input suppliersBnurser# de/elopers


Items Actor .ctivities6fu nctions Aescription Mango :nput dealers &rovide a!ro-input and advisory services to !rowers :nput suppliers are important partners of man!o !rowers because they provide these inputs for the success of man!o production. This reEuires them to identify the most appropriate inputs product. 0henever reEuired% these input dealers advise the !rowers. -ommission a!ent also provide fertili<er and pesticide to the man!o !rowers. Jursery developer &roduce man!o seedlin!s &ublic +limited level/ and private sectors involved in the man!o nursery raisin! business. Some man!o !rowers also involved in the man!o nursery raisin! business Citrus :nput dealers &rovide a!ro-input and advisory services to !rowers :nput suppliers are important partners of citrus !rowers because they provide these inputs for the success of man!o production. This reEuires them to identify the most appropriate inputs product. 0henever reEuired% these input dealers advise the !rowers. -ommission a!ent also provide fertili<er and pesticide to the citrus !rowers. Jursery developer &roduce citrus seedlin!s &ublic +limited level/ and private sectors involved in the citrus nursery raisin! business. Some citrus !rowers also involved in the citrus nursery raisin! business (omato :nput dealers &rovide a!ro-input and advisory services to !rowers :nput suppliers are important partners of tomato !rowers because they provide these inputs for the success of man!o production. This reEuires them to identify the most appropriate inputs product. 0henever reEuired% these input dealers advise the !rowers. -ommission a!ent also provide fertili<er and pesticide to the tomato !rowers. Jursery developer &roduce tomato nursery plants $a'ority of tomato !rowers are involved in raisin! the tomato nursery plants

!urser# de/eloper .ctivity Aescription

(able 1*9: Acti/it#Bfunctions and description of growers


Items Actor .ctivities6fu nctions Aescription Mango 7rowers &roduce man!o% harvest6preharvestin!% !rade% treat% pac)a!e% bul)% +retail/. There are two main cate!ories of man!o !rowers namely small and lar!e farmers. &roducer lac) of information and )nowled!e for orchard cultivation and mana!ement. 3ar!e farmers in !eneral and small farmers particular are wor)in! in bad conditions. Citrus 7rowers &roduce citrus% harvest6preharvest contractin!% !rade% treat% pac)a!e% bul)% +retail/. There are two main cate!ories of citrus !rowers namely small and lar!e farmers. &roducer lac) of information and )nowled!e for orchard cultivation and mana!ement. 3ar!e farmers in !eneral and small farmers particular are wor)in! in bad conditions. (omato 7rowers &roduce tomato% harvest6pre-harvest sellin! to beopari% pac)a!e% bul)% +retail/. There are two main cate!ories of tomato !rowers namely small and lar!e farmers. &roducer lac) of information and )nowled!e for orchard cultivation and mana!ement. 3ar!e farmers in !eneral and small farmers particular are wor)in! in bad conditions.

("

(able 1*'&: Acti/it#Bfunctions and description of contractors


Items Actor .ctivities6 functions Mango -ontractors $an!o pre-harvest contract Small farmers --- 718 3ar!e farmers --- 28 $an!o self mar)etin! Small farmers --- 2*8 3ar!e farmers --- 1 8 $an!o buyin! sta!es: #lowerin! sta!e R 158 #ruit formation R 228 @arly maturity R 8 $atured R 248 Citrus -ontractors -itrus pre-harvest contract Small farmers --- *(8 3ar!e farmers --- *28 -itrus self mar)etin! Small farmers --- 28 3ar!e farmers --- (8 -itrus buyin! sta!es: #lowerin! sta!e --- 58 #ruit formation --- "8 @arly maturity --- 2*8 $atured --- ( 8 (omato Self mar)etin! Tomato self mar)etin! Small farmers 1448 3ar!e farmers 1448

-----

3abor involved in citrus harvestin! facin! poor wor)in! condition. 3ac) of s)illed harvesters% collectors% pac)ers and transporters for citrus

Aescription

3abor involved in man!o harvestin! facin! poor wor)in! condition. 3ac) of s)illed harvesters% collectors% pac)ers and transporters for man!o. -ontractors play an important role in brid!in! the lin) between man!oes !rowers and wholesale mar)et actors and exporters. They buy man!oes from the farmers and supply them to the local city commission a!ents% other cities commission a!ents and exporters.

3abor involved in citrus harvestin! facin! poor wor)in! condition. 3ac) of s)illed harvesters% collectors% pac)ers and transporters for citrus. -ontractors play an important role in brid!in! the lin) between citrus !rowers and wholesale mar)et actors and exporters. They buy citrus from the farmers and supply them to the local city commission a!ents% other cities commission a!ents and exporters.

#armers sell their tomato by themselves. @xceptional cases are there.

(able 1*'': Acti/it#Bfunctions and the description of commission agents


Items Actor .ctivities6 functions Mango -ommission a!ents &rovide platform to conduct auction% and to do pac)in! and repac)in! of products The commission a!ent is a typical mar)etin! middleman% who has a paternalistic relationship with the producers% contractors on the one hand and with the wholesalers and retailers on the other hands Citrus -ommission a!ents &rovide platform to conduct auction% and to do pac)in! and repac)in! of products The commission a!ent is a typical mar)etin! middleman% who has a paternalistic relationship with the producers% contractors on the one hand and with the wholesalers and retailers on (omato -ommission a!ents &rovide platform to conduct auction% and to do pac)in! and repac)in! of products The commission a!ent is a typical mar)etin! middleman% who has a paternalistic relationship with the producers on the one hand and with the wholesalers and retailers on the other hands

Aescription

((

the other hands

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(able 1*'%: Acti/it#Bfunctions and description of wholesalers


Items Actor .ctivities6 functions Aescription Mango wholesalers Dul)% stora!e% transport and !rade 0holesaler s operate between the commission a!ent and the retailer The wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. Sometimes he may withhold the stoc) to create shorta!e and manipulate prices. The improvements in pac)in! also help him in !ettin! hi!her price. Some wholesalers purchases from contractors throu!h commission a!ents and sell to other mar)ets after washin! and cleanin! or pac)in! Citrus 0holesalers Dul)% stora!e% transport and !rade 0holesaler s operate between the commission a!ent and the retailer The wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. Sometimes he may withhold the stoc) to create shorta!e and manipulate prices. The improvements in pac)in! also help him in !ettin! hi!her price. Some wholesalers purchases from contractors throu!h commission a!ents and sell to other mar)ets after washin! and cleanin! or pac)in! (omato wholesalers Dul)% stora!e% transport and !rade 0holesaler s operate between the commission a!ent and the retailer The wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. Sometimes he may withhold the stoc) to create shorta!e and manipulate prices. The improvements in pac)in! also help him in !ettin! hi!her price. Some wholesalers purchases from contractors throu!h commission a!ents and sell to other mar)ets after washin! and cleanin! or pac)in!

(able 1*'1: Acti/it#Bfunctions and description of retailers


Items Actor .ctivities6 functions Aescription Mango ;etailers 7rade and retail The retailers are the last lin) between the producers and their consumers. There are three types of retailers i.e. shop)eeper% carrier +pushcart6street haw)er/ wor)in! in ba<aars and bus stops and small pharias operatin! at the mar)et. Mango &rocessors 7rade% process and distribute The processors buy man!oes directly from farmers and from contractors There are 25 man!o processin! units in $ultan% Khanewal% Sahiwal and 3ahore 3abor Citrus ;etailers 7rade and retail The retailers are the last lin) between the producers and their consumers. There are three types of retailers i.e. shop)eeper% carrier +pushcart6street haw)er/ wor)in! in ba<aars and bus stops and small pharias operatin! at the mar)et. (omato ;etailers 7rade and retail The retailers are the last lin) between the producers and their consumers. There are three types of retailers i.e. shop)eeper% carrier +pushcart6street haw)er/ wor)in! in ba<aars and bus stops and small pharias operatin! at the mar)et. (omato &rocessors 7rade% process and distribute The processors buy tomato from farmers% contractors and commission a!ents There are " tomato processin! units in Sahiwal and 3ahore 3abor involved in tomato processin!

(able 1*'0: Acti/itiesBfunctions and description of processors


Items Actor .ctivities6 functions Aescription Citrus &rocessors 7rade% process and distribute The processors buy citrus directly from contractors There are 124 citrus processin! units in Sar!odha and Karachi The citrus are purchased throu!h contractors% transported% washed%

(2

involved in man!o processin! units are facin! poor wor)in! conditions 3imited investment made by man!o processors in new product technolo!y ,ery limited share of man!o is bein! processed

waxed% !raded% pac)ed and exported 3abor involved in citrus processin! units are facin! poor wor)in! conditions 3imited investment made by citrus processors in new product technolo!y ,ery limited share of citrus is bein! processed Citrus @xporters Dul)% lin)

units are facin! poor wor)in! conditions 3imited investment made by tomato processors in new product technolo!y ,ery limited share of tomato is bein! processed Tomato processors import tomato pulp for processin! purpose.

(able 1*'2: Acti/itiesBfunctions and description of eCporters


Items Actor .ctivities6 functions Aescription Mango @xporters Karachi export &oor product Euality and poor pac)a!in! are observed There is no alliance of man!o exporters who 'ointly purchase and Dul)% lin) There are 2 man!o exporters in $ultan and 24 exporters in

There are 25 citrus exporters in Sar!odha and 14 in Karachi There is one alliance of " citrus processin! enterprises in Sar!odha who 'ointly purchase from !rowers% processed and exporter. &oor product Euality and poor pac)a!in! are observed

3.4

.ctivities 6 #unctions and Aescription of Secondary .ctors

:n the man!o% citrus and tomato% there are various cate!ories of supplementary service suppliers and different types of institutional support that define the business environment in the sample districts surveyed. The most important of these are !overnmental institutions% includin!: #ederal Seed -ertification and ;e!istration Aepartment +#S-F;A/% $an!o ;esearch :nstitutions $ultan% -itrus ;esearch :nstitute% Sar!odha% 3ocal 7overnment Aistrict -ouncils% $inistry of Jational #ood Security and ;esearch +J#SF;/% Qniversity of .!riculture #aisalabad% &a)istan Borticultural Aevelopment and @xport -ompany +&BA@-/% Jational .ccreditation for .!riculture and #ood% Trade Aevelopment .uthority of &a)istan +TA.&/% Small and $edium @nterprises Aevelopment .uthority +S$@A./% Tradin! -orporation of &a)istan +T-&/% &a)istan .!ricultural ;esearch -ouncil +&.;-/% .yub .!ricultural ;esearch :nstitute% #aisalabad% &un'ab .!riculture Aepartment +$ar)etin! 0in!/% .!ricultural &olicy :nstitute +.&:/ and Aepartment of &lant &rotection +Table ".12/.

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(able 1*'7: Secondar# actors$ acti/ities and description


Secondary .ctors ;FA institution .ctivities6functions -onduct research and development of man!o% citrus and tomato Aescription There is a horticulture section in almost all of the research establishments located in study areas of &un'ab province. $an!o% citrus and tomato variety evaluation% a!ronomic trials% fruits nurseries% ve!etable +includin! potatoes/ farmin! are their ma'or activities. ,ery limited new hi!h yieldin! cultivars have been developed despite the fact that there are number of institutions for ;FA in the study area. The extension system in the study area remains ineffective% and whatever limited research and development wor) done is not properly transferred to end-users. Doth railway% roads and air transportation facilities are available almost in surveyed districts of man!o and citrus. :n case of tomato road and railway facilities are available in tomato surveyed districts There are re!ular fruits and ve!etable mar)ets in the surveyed districts. These mar)ets are lin)ed with other provinces and terminal mar)et at Karachi. .ll these mar)ets are very well connected in case of communication. 7overnment of &a)istan has prepared horticulture policy in 2447 with the vision of transformation of country9s horticulture into a vibrant% sustainable% mar)et driven and export based industry. The main ob'ectives are +i/ achieve efficient and profitable production and mar)etin! +ii/ deliver appropriate Euality and safe products in local and export mar)ets +iii/ enhance export competitiveness and value added +iv/ develop an industry to be profitable for investors and operators. -urrent policy and re!ulatory framewor) for horticulture sub-sector is not functionin! properly and creates hurdlers in the horticultural development strate!y.

Transportation

$ar)et and communication 7overnment policy

Transportin! of man!o% citrus and tomato from farm to mar)et :nformation availability and mar)et place @fficient and profitable production in horticulture subsector :mplementation re!ulatory policy of

;e!ulatory policy

These !overnment a!encies offer a wide ran!e of support to horticultural chains% includin! seed multiplication% research activities% private sector support% lobby and advocacy% le!islatorial functions% policy development and districts 6 local level trainin! and extension services. The second cate!ory of supportive institutions includes J71s% &rivate Sector Borticultural associations and Aonor supported pro!rams that offer farm-to-mar)et chain facilitators and inte!rators. Some of these !overnment institutions and private sector play a crucial role in developin! chain capabilities and chain mana!ement competencies in the surveyed areas. The brief description activities and functions of these actors are briefly presented in Table ".12.

3.5

-onclusion

This chapter dealt with portrayin! the profile of ,alue -hain +,-/ operators. There are two types of ,- operatorsI the primary ,- operator% which include inputs suppliers% !rowers% contractors% commission a!ents% wholesalers% retailers% processors% exporters and consumers% the secondary ,- operators that include research and development institution% transportation% mar)et and communication% !overnment policy and re!ulatory policy. (

3oo)in! at the profile of the &rimary ,- operators it could be stated that the land tenure arran!ements indicated that the tomato !rowers mostly rent-inland while fruit !rowers rent-out land resultin! in almost similar level of operational holdin! for all the sample !rowers of fruits and ve!etables. The operation land holdin! of the small farmers was 5.7(% 7.( and 7.27 acre for man!o% citrus and tomato !rowers respectively.The sample !rowers were of middle a!e !roup havin! low education and with farmin! experience of almost 24 years. The sampled contractors were educated and had business experience of more than ten years. $a'ority of the sampled contractors were doin! business as a sloe proprietor while one third were operatin! in partnership. -ontractors do business with the commission a!ents and their selection criteria are mainly the honesty of the -. while !ood reputes and wor)in! relation in the past were also eEually important. Similarly the sample commission a!ents were of middle and old a!e with an avera!e education of * years of schoolin! and 1 -2" years of business experience. They were doin! business mostly in partnership% while one-fourth were doin! business as sole entrepreneurs. .ll the commission a!ents were havin! !ood communication facilities both mobile and landline telephone and they were well connected with other mar)ets. .s for as% the wholesalers are concerned% wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. The mean a!e of the sampled wholesalers was ran!ed from " -(2 years with 12 to 2" years of business experience. .bout *48 of the sampled wholesalers were wor)in! as sole proprietor dealt more than 144 crates of tomato to (44 crates of man!o per day. .ll of the sampled wholesalers had own telephone for communication. The sampled retailers on the other hand had an avera!e a!e of " years with business experience of 11 years. $ost of the sampled retailers purchase the selected produce from wholesalers. 3astly the sampled consumers of citrus% man!o% and tomato were !overnment servants and business community. Three-fourth of the sampled consumers purchases these commodities from retailers. -oncludin! the activities functions of different &rimary ,alue -hain 1perators +&,-1/% all operators are en!a!ed at their own level in facilitatin! the Euantity and Euality of selected produce enou!h to the consumers9 level of satisfaction at national and international level. :n support to &,-1% Secondary ,alue -hain 1perators +S,-1/ play important role on their part in provision of supplementary services and creatin! conducive business environment. . lon! list of (*

S,-1 includin! !overnment or!ani<ations% statutory bodies% development institutes% civil society and financial institutions are operatin! at their part in research% transportation% information and re!ulations% which offer a wide ran!e of support in developin! chain capabilities and chain mana!ement competencies.

54

MA >:( A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+

(his chapter attempts to present the results of global market anal#sis$ regional market anal#sis and national market anal#sis of mango$ citrus and tomato in PakistanHs Punjab*

51

Chapter ) IV MA >:( A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+


0*' Introduction

Borticulture is an important sub sector of world a!riculture with 128 annual !rowth. :t has a pivotal role in the nutrition and income of the farm households around the world. Borticultural crops are mostly cash crops and !enerate a si!nificant cash income for farmers. Borticulture have hi!her @mployment% hi!her multiplier effect off- -farm 'obs in processin!% pac)a!in!% and mar)etin! +0D% 244 /. Borticulture also has the potential for tremendous social impact on employment creation and income !eneration as well as sustainability in term of better economic use of water. Borticulture is an important sub sector of a!riculture of &a)istan and contributes about 128 to the national a!ricultural 7A&. &a)istan has not captured this opportunity yet% !rowin! slower than the world mar)et +28 vs. 128 per year/. Borticultural sector of &a)istan for increasin! export of premium Euality horticultural produce +&BA@D% 2447/. Borticulture sector also offerin! multiple employment opportunities throu!hout the supply chain% particularly in rural areas. Bowever% its !rowth and profitability is restrained mainly by the lac) of proper post harvest mana!ement and transport infrastructure +&BA@D% 2447/. The issues of the horticulture sector in &a)istan are well reco!ni<ed +i.e. low land dedicated to horticulture +28 of cropped area% low productivity hi!h losses low value added/ however these are only symptoms of the issue The present study has defined man!o% citrus and tomato as a horticulture sub-sector of a!riculture sector. 0*% 4lobal Market for Mango$ Citrus and (omato

$an!o is considered one of the most important tropical fruits in the world% accountin! for approximately 54 percent of total fruit production. .bout *4 percent of tropical fruits produced !lobally are consumed in the producin! countries themselves% while 14 percent are traded internationally. 0ithin international trade% fresh man!o is one of the main products. $an!o trees 52

ori!inated in the foothills of the Bimalayas of :ndia and Durma :ndia from where it spread early on to $alaya% eastern .sia% eastern .frica and introduced -alifornia in 1 $exico% &eru and Dra<il. The man!o +Mangifera indica/ is indi!enous to the :ndian Subcontinent and has been cultivated in that re!ion for at least (%444 years. The man!o is also cultivated in 3atin .merica and tropical and subtropical re!ions from $exico to -hile. $ost of the production is consumed locally% althou!h% :ndia% &a)istan $exico% Dra<il% &eru and Jetherlands are important exporters% :ndia was lar!est man!o exporter in the world in 244 . -itrus fruits are amon! the most important fruits !rown worldwide. -itrus refers to a ran!e of ever!reen shrubs and tree species% which are primarily !rown for their fruit and occupy the lar!est area under cultivation. 0*%*' 4lobal mango production 4 +#er!uson F -o.% 2442/. $an!oes are now widely !rown in -hina% &a)istan% Dan!ladesh% &hilippines% Baiti%

The world production of $an!oes fruit experienced a steady and continuous !rowth in the last decades of the twentieth century. Total "5.2 millions tones the top producers of man!oes are :ndia% -hina% Thailand% :ndonesia% &a)istan and $exico% +Table (.1/. (able 0*': Major mango producing countries of the world in %&&9
Countr# !ame :ndia -hina Thailand :ndonesia Pakistan $exico 1thers 0orld Source: #.1 +2412/ anking 1. 2. ". (. 2* 2. Production E(onnesF 1"557144 (1(42*4 2(2* 14 22("((4 '5%6&&& 154*274 **757 2 "522"2*2 Percent " 12 7 2 2 ( 2 144

5"

0*%*%

4lobal citrus production

Total citrus production was over 12" millions tones. .ccordin! to #.1% the top producers of citrus are -hina% Dra<il% QS.% :ndia% $exico and Spain with 57 percent of world production. -hina bein! the leadin! producer with 1* percent followed by Dra<il 12 +Table (.2/. (able 0*%: Major citrus producing countries of the world
anking 1. 2. ". (. 5. 2. Countr# !ame -hina Dra<il QS. :ndia $exico Spain 1thers 0orld Production E(onnesF 2"4 (71 1*27*2(2 147(4154 22"4 4 7121222 52(4144 ( "44225 122 ""2*( Percent 1* 12 * 7 2 ( "* 144

Source: #.1 +2412/

0*%*1

4lobal tomato production

The world production of tomato experienced a steady and continuous !rowth in the last decades of the twentieth century. Total tomato production was over 15( millions tones in 244* and &a)istan9s production was 4.2 million tonnes as "5 th lar!est producer in world. .ccordin! to the #.1% the top ten producers of tomato were -hina% QS.% :ndia% Tur)ey% @!ypt and :taly. The six ma'or produces about 2( 8 of total world produce. -hina is the leadin! producer with 2*8 !lobal production of tomato +Table (."/. (able 0*1: ;argest producers in the world EtonnesF
anking 1. 2. ". (. 5. 2. Countr# !ame -hina QS. :ndia Tur)ey @!ypt :taly 1thers 0orld Production E(onnesF (5"255(" 1(1 1"44 111( 44 147(5244 1427 544 2 7 124 552"5(2( 15" """27 Percent 2* * 7 7 7 ( "2 144

Source: #.1 +2412/

5(

0*%*0

4lobal mango import

The trade of man!oes is !lobal in scope. Thou!h they are produced mainly in .sian re!ions% they are traded and consumed in all parts of the world. .ccordin! to #.1% the ma'or man!o importin! countries in 244* were: QS.% Jetherlands% Q.@% Qnited Kin!dom% and $alaysia. #i!ure (.1 $a'or man!o importin! countries

Source: #.1 +2412/

0*%*2

4lobal citrus import

The trade of citrus is !lobal in scope. .ccordin! to #.1% the ma'or Tan!erines% mandarins% clem importin! countries in 244* were: ;ussian #ederation% 7ermany% #rance% QK% Jetherlands and :ndonesia% these countries imports about 55 8 of total world import of Tan!erines% mandarins% clem in value term +#i!ure (.2/.

55

<igure 0*%: ;argest importers of tangerines$ mandarins$ clem

Source: #.1 +2412/ 0*%*7 4lobal tomato import

The world9s ma'or tomato importers were QS.% 7ermany% ;ussian #ederation% QK% #rance% Jetherlands and -anada% countries imports 5 8 of total world imports. &a)istan is not a ma'or player in import mar)et. Aata revealed that :n 244* &a)istan was the 1" th lar!est importer of tomato in term of Euantity in the world mar)et +#i!ure (."/. <igure 0*1: ;argest importers of tomato EGF

Source: #.1 +2412/

52

0*%*5

4lobal mango eCport

The world9s ma'or $an!o exportin! countries :ndia% $exico% Thailand Dra<il Jetherlands% and &a)istan in order. :n 244* &a)istan was the 2th lar!est exporter of the man!o in the world mar)et +#i!ure (.(/. #i!ure (.(: $a'or man!o exportin! countries in world

Source: #.1 +2412/

0*%*6

4lobal citrus eCport

The trade of citrus is !lobal in scope. .ccordin! to #.1% the ma'or Tan!erines% mandarins% clem ma'or exportin! countries in 244* were: Spain% -hina% Tur)ey% $orocco% &a)istan and South these countries exports about 7 8 of total world exports of Tan!erines% mandarins% clem in volume term +#i!ure (.5/. <igure 0*2: ;argest eCports of tangerines$ mandarins$ clem

Source: #.1 +2412/

57

0*%*9

4lobal tomato eCport

The world9s ma'or tomato exporters in tem of export volume in 244* were $exico% Jetherlands% Spain% Tur)ey and Gordan. These countries contribute 2 8 of total world exports. &a)istan is not a ma'or player in export mar)et. Aata revealed that in 244* &a)istan was the 24 th lar!est exporter of tomato in term of Euantity in the world mar)et +#i!ure (.2/. <igure 0*7: ;argest tomato eCportersH EGF

Source: #.1 +2412/

0*1 0*1*'

egional Market Anal#sis for Mango$ Citrus and (omato Mango in the region

.sia produces about 72 percent of the world man!o production. &a)istan is 5 th lar!est producer of $an!o .sia with 2 percent of re!ion production. Six ma'or producers in .sia produced about *2 percent of re!ion production +Table (.(/. (able 0*0: Major mango producing countries in Asia
anking 1. 2. ". (. 2* 2. Countr# !ame :ndia -hina Thailand :ndonesia Pakistan Dan!ladesh 1thers .sia Production E(onnesF 1"557144 (1(42*4 2(2* 14 22("((4 '5%6&&& 2 121 214 *4 274752*1 .sia &ercent of 0orld &roduction Percent 54 15 * 7 " 144 72

Source: #.1% +2412/

0*1*%

Citrus in the region

.sia produces about (1 percent of the world production of citrus. Six ma'or producers in .sia produced about ( percent of re!ion production. -itrus !rowers in .sia also exports about "7 percent Tan!erines% mandarins% clem of the world total. &a)istan is " rd lar!est exporter of Tan!erines% mandarins% clem of the .sian re!ion +Table (.5/. (able 0*2: Major citrus producing countries in Asia
anking 1. 2. ". (. 2* 2. Countr# !ame Production E(onnesF -hina 2"4 (71 :ndia 22"4 4 Tur)ey "51"771 :ran +:slamic ;epublic of/ "1"5454 Pakistan %'1%&&& :ndonesia 21"1774 1thers 7 *1* 2 .sia 5451212 .sia &ercent of 0orld &roduction Percent (2 17 7 2 0 ( 12 144 (1

Source: #.1 +2412/

-itrus are traded and consumed in all parts of the world &a)istan is 1" th lar!est producer of citrus. 0*1*1 (omato in the region

.sian re!ion produces 51 8 of world tomato production. :n .sia six ma'or producers produced about * 8 of re!ional tomato production and china is the ma'or producer with 5" 8 followed by :ndia% tur)ey :ran% Q<be)istan and Syrian .rab ;epublic +Table (.2/. (able 0*7: ;argest Asian producers in world
anking 1. 2. ". (. 5. 2. Countr# !ame Production E(onnesF -hina (5"255(" :ndia 111( 44 Tur)ey 147(5244 :ran +:slamic ;epublic of/ 5 7714 Q<be)istan 2114444 Syrian .rab ;epublic 1125214 1thers *121 " .sia 55(51(2 .sia &ercent of 0orld &roduction Percent 5" 1" 1" 7 2 1 11 144 51

Source: #.1 +2412/

5*

.sia produces about 52 8 of the world production of tomato. -hina% :ndia% Tur)ey and :ran are ma'or tomato producin! countries in .sia. &a)istan produces only 1 percent of .sian production of tomato. :n term of trade% .sian re!ion share in exports was about 2( 8 of the world and only 1(8 of world import of tomato. :n 244* &a)istan tomato imports were 12 8 total import of world import into .sia. 0*0 Mango$ Citrus and (omato Production in Pakistan

This section deals with the varieties and production of these commodities in the country. 0*0*' Mango /arieties

$an!o is one of the ma'or fruits of &a)istan. :t is mainly !rown in the &un'ab and Sindh provinces. $an!o season in &a)istan starts with harvest from Sindh province in late $ay and finishes in &un'ab in late .u!ust. $a'or man!o varieties !rown in &a)istan are -hounsa and Sindhri whereas other varieties +Aosehri% $alda% Swarnari)a% 3an!ra% Siroli% .lphonso% 7ulab Khas% #a'ri% 7olden% .nwar ;atol and De!an &hali/ are also !rown in some parts of the &un'ab and Sindh provinces. -hounsa variety dominates in &un'ab. -hounsa variety of &un'ab considered by industry as !ood variety in terms of taste and demanded both in the domestic and international mar)ets +&BA@D% 2445% Bumara $ultan% 2411/. 0*0*% Citrus /arieties

-itrus is the leadin! fruit crop of &a)istan in terms of area% production and export. -itrus !roup comprises of diverse species includin! mandarins% oran!es% lemons% limes and !rape fruits bein! cultivated in all the four provinces. Bowever% &un'ab province leads in citrus area and production. &articularly% the Kinnow of Aistrict Sar!odha +Dhalwal and Kot $omin area/ is famous for its excellent blend of taste% flavour and aroma. $ost common physiolo!ical problems of citrus include alternate bearin!% fruit drop and !ranulation. The diseases include citrus can)er and citrus wither tip and the prominent insects of citrus include citrus psylla% citrus leaf miner% scales% mite% etc. 3oo)in! at national level% over *28 of citrus is !rown in &un'ab% of which 24

(7.*8 is !rown in district KSar!odhaL. Since Kinnow +mandarin/ is the predominant variety% which is more suitable for fresh consumption. &a)istan needs to develop more pac)in!% !radin!% stora!e and reefer transportation facility for its export. #uture development in citrus processin!% stora!e and export will remain centered in Sar!odha. Bowever% Aistrict Toba Te) Sin!h and $andi Dahauddin could be potential areas for establishin! new !radin!% pac)a!in! and cold stora!e facilities. The main varieties of citrus are: Mandarin: Kinnow% #eutrells @arly Sweet oran!e: Dlood ;ed% $usambi% &ineapple% Gaffa% Succri. ;emons: @ure)a. ;imes: Sweet lime% Ka!h<i lime. 4rapefruit: Auncan% #oster% Shamber% $arsh Seedless 0*0*1 (omato /arieties

Tomato is relatively perennial plant and !ives production throu!hout the year. The area and production under tomato increased steadily over time. The main crop is produced in abundance durin! summer and lowers the value of the produce in local mar)et. Bowever% its transportation from one part to other part ma)es the mar)et stable. The crop may suffer from rainy season durin! its maturity. $a'or problems of tomato include bacterial can)er% mosaic virus% and leaf curl virus amon! diseases% while aphids and white fly are main insect pests. The main varieties of tomato are: 3yallpur Selection-:% &eshawar 3on!% T-14% $oney $a)er% ;oma% ;ed Top% $ar!lobe% @lum-2% ;oma-,#% ;io-7raind% Sunmar<ano% Jeema% Dri!ht valley #-1 hybrid% &eto211% &eto- 2% ?a)i% JS--( % and &op. 0*0*0 Mango production

&a)istan has a wide ran!e of climatic conditions and forms a natural resource base for the production of a wide variety of horticultural crops. $an!oes are amon! the important horticulture commodity that contribute to &a)istan9s economy throu!h !eneratin! export revenue% income and employment opportunities. The ma'or man!o cultivars in &a)istan are -haunsa and% Sindhri% however a lar!e number of standard varieties have come onto bein! and is cultivated in the different parts of :ndo-&a)istan. The varietals nomenclature is so much confusin! that one variety carries many names at various places and some cases one name is applied to several varieties. 3an!ra% .man Ausehri% .lphanso% Sammar Dahisht% #a'ri Kalan% $uhammadwala% 21

;ataul +.nwar/% Dan!anpali% $an!o farms ran!e in si<e from less than 2 hectares to more than (44 hectares +-ollins et al.% 2442/. $an!o is the second ma'or fruit in &a)istan in terms of areas% production and export volume. &a)istani man!oes are rich in ,itamin .% - and A and contain carbohydrates% calcium% iron% potassium and little protein +#er!uson F -o.% 2442/. -haracteri<in! for the &a)istan man!o mar)et at the supply side is the hi!h level of fra!mentation. &a)istan as 5th ma'or producer of man!o in world and within &a)istan% &un'ab is main man!o producin! areas with 77 8 of &a)istan production. The ma'or $an!oes !rowin! districts of &un'ab are located in the cotton-wheat production system of &a)istan &un'ab. The five lar!est $an!oes !rowin! districts in terms of production were $ultan% ;ahim ?ar Khan% $u<affar 7arh% Khanewal and Dahawalpur. :n &un'ab &a)istan man!oes are producin! in "2 districts +Table (.7/. -haunsa% 3an!ra% Sindhri% .nwar ;atoul% $alda% 7ulab Khas% #a'ri% Ausehri% De!an &ali% Sensation are !rown in &a)istan. (able 0*5: Area$ production and #ield of mangoes in major producing districts of Punjab Pakistan %&&6)&9
,istrict Area Production EhectareF EtonnesF $ultan "1525 "*"42 ;ahim ?ar Khan 2 7"2 " 1242 $u<affar 7arh 1*222 1*5421 Khanewal 1""1( 1(* 1" Dahawalpur ("54 (4525 Total &un'ab 112(1" 1"2( 75 &a)istan 171144 1727*44 Source: 71&% crop area and production +by districts/% $:J#.3 2414 Production G of Punjab 2*.27 2 . 4 1(.72 11."1 ".42 &un'ab 8 of &a) 77 -

0*0*2

Citrus production

-itrus is the leadin! fruit crop of &a)istan in terms of area% production and export. -itrus !roup comprises of diverse species includin! mandarins% oran!es% lemons% limes and !rape fruits bein! cultivated in all the four provinces. Bowever% &un'ab province leads in citrus area and production with *7 8 of national production +Table (. /.

22

(able 0*6: Citrus production in sample districts E%&&6)&9F


,istrictBpro/inceBcountr# Sar!odha $andi Dahauddin T.T. Sin!h Total &un'ab &a)istan Area EhectareF *751 141"2 11(12 1 *7 ( 1***(4 Production EtonnesF ***2"2 15222( 12475 245*547 21"2272 Production G of Punjab (*

144 *7

Source: 71&% crop area and production +by districts/% $:J#.3 2414

-itrus is amon! the most preferred fruits in &a)istan about " percent of total produce consumed in domestic mar)ets mainly in fresh form. 0ith chan!es in the standard of livin! and increased awareness about health% demand for fresh fruits is increasin! in &a)istan. 0*0*7 (omato production

.ccordin! to statistics% the total tomato area of &a)istan is 5"154 hectares and the area of &un'ab is 5572 hectares while the production of tomatoes in &a)istan is 521 *1 tonnes and in &un'ab is 72(75 tonnes. The percenta!e share of tomato area in &un'ab is 14."8 and the share of tomato production in &un'ab is 1".478. Tomato is !rown in all districts of &un'ab however for this study four ma'or tomato producin! districts where selected for tomato value chain analysis. These districts were $u<affar!arh% Jan)ana Sahib% 7u'ranwala and Shei)hupura +Table (.*/. (able 0*9: (omato production in sample districts E%&&6)&9F
,istricts $u<affar!arh Jan)an Sahib 7u'ranwala Shei)hupura &un'ab Total &a)istan Area EhaF 5 7 542 5(( ("" 5572 5""*" Production EtonnesF 7"24 5 "2 1"" 5"*2 72(75 521 *1 Area EGF 14.5 *.1 *. 7. 144.4 Production EGF 14.2 .4 11.2 7.( 144.4 -

Source: -rops area and production +by districts/ 2447-4 F 244 -4*% $:J#.3% :slamabad

The percenta!e wise share of tomato area and production of ma'or four districts are mentioned in above table. ;esult revealed that 7u'ranwala is lar!est producer with 11.2 8 production in

2"

&un'ab followed by $u<affar!arh 14.2 8 and Jan)ana Sahib with .4 8 and Shei)hupura with 7.( 8 production in 244 -4*. 0*2 Marketing ChannelsBSuppl# Chain of Mango$ Citrus and (omato

This section deals with the characteri<in! into main end mar)ets or products for these commodities. Bere we will try to identify the main mar)ets on which farmers products are sold. :t also deals with identifyin! the way by which these commodities reach end mar)ets. :t also divides the subsector into several mar)ets channels. The mar)etin! channels of man!o% citrus and tomato are presented in #i!ure (.7% (. F (.* respectively. 0*2*' Marketing channel of mango

:t describes the routes ta)en by commodity from producers to consumers. They consist of individuals and firms involved in the process of ma)in! the fruits or value added fruit products available for consumption. $an!oes in sample area of &un'ab &a)istan follow one of the followin! two basic routes +#i!ure (.7/. 'hannel 1 involves pre-harvest contractors in between !rowers and -ommission a!ents6exporters or processors% whole sellers etc. :t was noted that ma'ority of the farmers sell their orchard as a whole to contractors one or two months before harvest. The deal entirely depends on trustin! each other and these contractors tend to be re!ular buyers of certain poc)ets of production or from certain !roups of farmers. The contractors perform transactional functions that involve buyin! arran!ements% harvestin!% sortin!% !radin!% pac)in! and transport of fruits to mar)ets etc. 7enerally% the contractors ma)e a profit because of their ris)-ta)in! functions but sometimes they can also come out at a loss due to lower mar)et prices. Aurin! the study it was observed that 71 percent small farmers sell their produce in the hand of contractors. 'hannel 2 is the simplest one% in which !rowers themselves sell their produce after harvestin! pac)in! and delivered to local mar)ets to commission a!ents. Study confirmed that 2* percent small fruit !rowers involved themselves in the direct mar)etin! of their $an!oes fruits.

2(

0*2*%

Marketing channels of citrus

$ar)etin! channels describe the routes ta)en by products from producers to consumers. They consist of individuals and firms involved in the process of ma)in! the fruits or value added fruit products available for consumption. -itrus in &a)istan follow one of the followin! four routes +#i!ure (. /: 'hannel + involves pre-harvest contractors in between !rowers and -ommission a!ents6exporters or processors. :t was noted that mostly the !rowers sell their orchard as a whole to contractors one or two months before harvest. The deal entirely depends on trustin! each other and these contractors tend to be re!ular buyers of certain poc)ets of production or from certain !roups of farmers. The contractors perform transactional functions that involve buyin! arran!ements% harvestin!% sortin!% !radin! and transport of fruits% overseein! the auctionin! etc. 7enerally% the contractors ma)e a profit because of their ris)-ta)in! functions and advance payments but sometimes they can also come out at a loss due to lower mar)et prices. Aurin! the study it was observed that *( percent small farmers sell their produce in the hand of contractors.
'hannel B is the simplest one% in which !rowers themselves sell their produce after harvestin!

pac)in! and delivered to local mar)ets to commission a!ents. Study confirmed that 2 percent small fruit !rowers involved themselves in the direct mar)etin! of their -itrus fruits.

25

Figure 4.7: Marketing channels of mangoes distribution in Pakistan (small farmers)

$an!o consumers +local Unational/


-onsumers in $iddle @ast @urope

;etailers at national mar)et

;etailers

144 8 88
3ocal ;etailers

-.60holes aler

-.60holes aler

7".1 8 3ocal ;etailers

12.2 8

Jational $ar)ets

12.2 8
1(."8

7".1 8

Jational $ar)ets 1(."8 0holesaler

0holesaler

@xporters " .5 8 2 8

" .5 8 2 8

"".5 8

"".5 8 3ocal -ommission .!ent

-ommission a!ent

1.5 8

*( 8

(.5 8

-ontractor
2 8 18

71 8

2. 7rowers +Self mar)etin!/ 2* 8

7rowers +pre harvest contract/ 71 8

22

<igure 0*6: Marketing channels of citrus distribution in Pakistan Esmall farmersF -itrus consumers +local Unational/
144 8 88
;etailers -onsumers in .f!hnistan. ;ussian fereration

144 8 88
;etailers at national mar)et

28
*8

&rocessor

*8

28

58

58
0holesaler 0holesaler

1( 8 @xporters 1( 8 1( 8 58 (5 8

(5 8

"2 8

58

"2 8

-ommission a!ent
22 8 1( 8 2( 8 2( 8

-ommission a!ent

-ontractor
"( 8 (2 8

2. 7rowers +Self mar)etin!/ 28

7rowers +pre harvest contract/ *( 8

0*2*1

Marketing channel of tomato

$ar)etin! channels describe the routes ta)en by commodity from producers to consumers. They consist of individuals and firms involved in the process of ma)in! the fruits or value added fruit 27

products available for consumption. Tomato in sample area of &un'ab &a)istan follow one of the followin! two basic routes +#i!ure (.*/: 'hannel 1 Gro,er mar)et tomato throu!h commission a!ents% whole seller9s etc. farmers perform transactional functions that involve !rowin! % harvestin!% sortin!% !radin!% pac)in! and transport of to mar)ets etc. Aurin! the study it was observed that **.5 percent small farmers sell their produce throu!h this channel. 'hannel 2 is the simplest one% in which !rowers themselves sell their produce after harvestin! with loose pac)in! and delivered to tomato processin! factory. Dut this channel is very small. . very small has access to this channel. <igure 0*9: Marketing channels of tomato distribution in Punjab Pakistan Esmall farmersF Tomato consumers +fresh% products/
&roduct ;etailers &roduct wholesaler

;etailers at national mar)et

144 8 88
3ocal ;etailers

-.60holesaler

&rocessors
1ther $ar)ets

28
7( 8 22 8 0holesaler

28

17 8

15 8

27 8

18

-ommission a!ent

** 8

18

-hannel 1. 7rowers

-hannel 2 7rowers

0*7

Ser/ice Market for Horticulture Sub)Sector

The horticulture subsector identified a number of services used by the different horticulture producers and the status of these services as well as related sales by the actors of the man!o% citrus and tomato value chain. Some of lar!e farmers offer their facilities +tractors% sprayers% and tubewell water/ to the small farmers in exchan!e of price. These services become available primarily because of the close clustered and intense internal harmony of the horticulture producers in the study area. The followin! services are provided: +i/ &re-cultivation and cultivation services +ii/ Barvestin! services +iii/ &ost harvestin! and mar)etin! services:
Ser/ice Phases Pre) culti/ation ser/ices (#pe of ser/ices Knowled!e and information about new seed varieties6 seedlin!6 nursery plants and their cultivation techniEues Ser/ice pro/iders .!ricultural extension departments% private and public nursery producers .deEuate services are not available Aue to limited resources as well as poor )nowled!e about improved farmin! techniEues by the extension wor)ers% nursery producers% the dissemination process is not properly functional $oreover% the availability of such services from the seed testin! laboratory only reaches a fraction of farmer9s who are near the urban or semi-urban areas $an!o% citrus and tomato producers are not satisfied with these services in the study area $a'ority of the farmers !et this information from farmers and local dealers. Bowever% the Euality of information is poor and the remote farmers !et very little access to this information due to lac) of )nowled!e by the local dealers. The farmers who purchase seeds for tomato and nursery plants from private and public nursery producers reported that they !et update information from the service providers The absence of source of appropriate )nowled!e and information about fertili<er and pest control has also been reported as one of the critical problems faced by the farmers. The a!ricultural extension department is supposedly the primary supplier of this )nowled!e. Aue to limited resources the dissemination process is not at all functional. The ma'ority of the farmers !et this information from the chemical traders. Bowever the Euality of information is poor and the remote farmers !et very little access to this information due to lac) of )nowled!e on the part of the local dealers. The soil testin! facilities are completely non-existentI as a result% the farmers either use an excessive amount of fertili<er or inappropriate fertili<ers. This si!nificantly reduces yield and productivity of the man!o% citrus and tomato producers The cultivation is done by both powered eEuipment and manually +animal draft power/. The use of tractors is much hi!her in most of the areas .bout 148 small farmers use animal draft power to cultivate their lands because

Culti/ation ser/ices

Knowled!e and information about fertili<er and pesticide doses and their application techniEues Soil Testin!

Tractor

2*

Sprayers

Tubewells

Har/esting and post) har/esting ser/ices

Knowled!e and information about harvestin! techniEues% collections% !radin! and pac)a!in! material

Transportations

-old stora!es

of affordability $a'ority of the farmers rely on rented spray eEuipment from the pesticide dealers or sprayer service providers. Sprayers are rented on hourly basis. This particular service is reEuired by ma'ority of the farmers !enerally who are beyond the covera!e of irri!ation canals. Tubewells are also rented on hourly basis. The farmers outside the covera!e of irri!ation canals reported both unavailability and inaccessibility of irri!ation devises durin! pea) season $a'ority of farmers and contractor have limited6poor )nowled!e and information about harvestin! techniEues% collections% !radin! and pac)a!in! material. .vailability and affordability of pac)a!in! materials are two extremely critical problems faced by all the farmers. The service mar)et is not developed to provide value-added service to the farmers and contractors. The Euality of service is not only poor but also inadeEuate to serve the lar!e number of lar!e farmers in !eneral and small farmers in particular. The service mar)et players are focused on relatively lar!er farmers with lon! term arran!ement. 3ac) of )nowled!e and s)ills as well as rudimentary technolo!ies are one of the prime constraints faced by the ma'ority of the farmers in the study area. The producers and traders have expressed their dissatisfaction re!ardin! the availability of transportation services particularly in the rural areas. The price of transportation is si!nificant and the Euality of service is !enerally poor. Decause of this both the producers and the traders lose about "48-(48 due to not reachin! the mar)et in time. -old stora!e facilities are seen as one of the critical factor in the overall profitability of tomato production and tradin!. The excess supply of man!o% citrus and tomato durin! the pea) season can be stored and when the mar)et price increases the products can be sold at the relatively hi!her price. -urrently there is very very limited cold stora!e facility available in man!o% citrus and tomato producin! areas of &un'ab. 3ac) of cold stora!e in &un'ab province for preservation of tomatoes.

0*5

Conclusion

This chapter focused mainly on the mar)et analysis of man!o% citrus and tomato in &a)istan as well as !lobally. Borticulture is an important sub sector contributes about 128 to the national a!ricultural 7A& of &a)istan. &a)istan is ran)ed fifth in respect of man!o production of nearly 2 millions tons annually after% :ndia% -hina% Thailand% and :ndonesia. Thou!h &a)istan do not fall in top ten citrus producin! countries with production of 12" millions tones annually but ran)ed fifth in citrus export. &a)istan produces nearly 4.7 millions tones of tomato annually with ne!li!ible share in world tomato production.

74

;eviewin! the !lobal import and export scenario of these selected commodities% QS. is top ran)ed in man!o and tomato import while ;ussian #ederation is top ran)ed in citrus import. Similarly :ndia is top ran)ed in man!o export followed by $exico% Spain in citrus followed by -hina% and $exico is top ran)ed in tomato export followed by Jetherlands. Sindhri and -huansa are the most popular varieties of man!o !rown in &a)istan% )innow% #eutrell and blood red are the most common citrus varieties while 3yallpur Selection-:% &eshawar 3on!% T-14% $oney $a)er% ;oma% ;ed Top etc. are the common tomato varieties of tomato !rown in &a)istan. $an!o is mar)eted throu!h two different channels in &a)istan: channel 1involves pre-harvest contracts in between !rowers and -ommission a!ents6exporters% processors% and6or wholesalers followed by 71 percent farmers% channel 2is followed by 2* percent farmers where farmers directly mar)et their produce. -itrus too is mar)eted throu!h two different channels in &a)istan:
channel 1involves pre-harvest contracts in between !rowers and commission a!ents6exporters

and6or processors followed by *( percent citrus farmers% throu!h channel 2farmers directly mar)et their produce and this channel is followed by only 42 percent citrus farmers. Similar channels were observed in tomato mar)etin! in the research area. Jinety nine percent tomato is mar)eted throu!h channel 1is where !rowers sell their produce to commission a!ents and6or wholesalers while only one percent farmers opted channel 2where !rowers themselves sell their produce after harvestin! with loose pac)in! and delivered to tomato processin! factory. . number of services have been identified used by different actors of man!o% citrus and tomato value chain. Some of lar!e farmers offer their facilities +tractors% sprayers% and tubewell water/ to the small farmers in exchan!e of price. These services become available primarily because of the close clustered and intense internal harmony of the horticulture producers in the study area. Some of the common services were pre-cultivation and cultivation services% harvestin! services% post harvestin! and mar)etin! services.

71

VA;-: CHAI! MAPPI!4 +< H+ (IC-;(- A; S-.)S:C(+

(his

chapter

presents

understanding

relationships of chain actors* It also present the /isual representation of the connections between businesses in /alue chains as well as other market pla#ers of horticulture sub) sector of PakistanHs Punjab*

72

Chapter ) V VA;-: CHAI! MAPPI!4 +< H+ (IC-;(- A; S-.)S:C(+


2*' Introduction

Berr and $u<ira +244*/ stated that value chain mappin! is often confused with value chain research or development itself +many value chain !uides focus to a lar!e extent on mappin! rather than the actual purpose of mappin!: facilitatin! value chain development/. They further ar!ued that drawin! a value chain map is only a tool% an aid to illustrate the complexities of sectors and their value chains. $appin! a horticultural chain means creatin! a visual representation of the connections between businesses in value chains as well as other mar)et players and they help to identify bottlenec)s and levera!e points. ,alue chain mappin! are established usin! flow and !rid charts. The flow chart loo)ed at the different function in horticultural value chain and illustrates them as process leadin! from raw material to final consumption. This maps thus used for creatin! and inventory of mar)et players alon! the horticulture chain in &a)istan9s &un'ab +Berr and $u<ira% 244*/. .ccordin! to them% the !rid chart illustrates the different mar)et channels within horticulture sector% thus underlinin! the fact that value chains are never simple linear relationships% but rather a complex system with mar)et players feedin! into different chains and mar)ets. 7rid chart illustrated different mar)et channels and includes further relevant information such as si<e of enterprise% number of wor)ers% nature of relationships and a flow chart illustrated different levels in the value chain and serves as a basis for an inventory of mar)et players of horticulture subsector as well as an analysis of opportunities and constraints by value chain level% or for showin! )ey information for each level +e.!. prices/ in this subsector +Berr and $u<ira% 244*/. 2*% Value Chain Mapping of Horticultural Sub)Sector through <low Chart

,alue chain mappin! of these commodities were established throu!h flow chart and !rid chart. Arawin! the flow chart of these commodities includes followin! steps: +i/ mappin! man!o% citrus and tomato value chains throu!h a flow chart +ii/ creatin! an inventory of mar)et players for man!o% citrus and tomato +iii/ usin! the flow chart to illustrate opportunities and constraints +7.& analysis/ for man!o% citrus and tomato +iv/ usin! the flow chart to illustrate relevant reference. 7"

2*%*'

Mapping of small holder mango growers through flow chart

,alue chain was based on the sample 22* man!o farmers% contractors% commission a!ents% wholesaler% retailers% and exporters in three ma'or man!o producin! districts of &un'ab &a)istan. .nalysis revealed that 1 * +748/ of sample man!o farmers were in small farmer cate!ory and 4 +"48/ of the sample man!o farmers were in lar!e farmer cate!ory. Bere man!o value chain analysis focused on small farmers. 1verwhelmin! ma'ority +718/ Small farmers involved in preharvest contractin! of their produce throu!h contractor% whereas +2*8/ small farmers were involved in self mar)etin!. Dased on the survey data two main chain were identified and analy<ed % -hain 1 pre harvest contractin! system for man!o throu!h contractor and -hain 2 farmer self mar)etin! after harvestin!% pac)in! and transportin!. Qnder self mar)etin! there are two main channels Bori<ontal and vertical coordination. .bout 2* percent Small farmers used self mar)etin! value chain +#i!ure 5.1/ as the mar)etin! channel for their man!oes after harvestin!% !radin!% pac)in! and transportin! to local wholesale mar)et and sell out the produce throu!h -ommission a!ent. #i!ure 5.1: Small farmer man!oes value chain in &un'ab &a)istan
Mango marketing s#stem Self) Marketing I of farmers G 20 %9G

Value Chain '*


EHori8ontal
coordination F

7rower 0hole seller

-ommission .!ent

;etailer
@xporter

%*

EVertical coordination F

7rower :mporter

;etailer
-ontractor -ommission .!ent

Pre) har/est Contract

'12 5'G

1*

=hole Sale Maket

7rower

0hole seller
(otal '69 1 chains '&&G Source: Aevelop by authors based on man!o survey data% 244*

;etailer

7(

2*%*%

Mapping of large holder mango 4rowers

Qnder self mar)etin! there are two main channels Bori<ontal and vertical coordination. .bout 1 percent lar!e farmers used self mar)etin! and performed the function of harvestin!% !radin!% pac)in! and transportin! to local wholesale mar)et and sell out the produce throu!h -ommission a!ent whereas 28 lar!e farmer used pre harvest contract system for mar)etin! their produce +#i!ure 5.2/. #i!ure 5.2: 3ar!e farmer man!oes value chain in &un'ab &a)istan
Mango marketing s#stem Self) Marketing I of farmers G '0 '6G

Value Chain '*


EHori8ontal
coordination F

7rower 0hole seller

-ommission .!ent

;etailer
@xporter

'*
EVertical
coordinat ion F

7rower :mporter 7rower

;etailer
-ontractor -ommission .!ent

Pre) har/est Contract

77 6%G

1*

0hole seller
(otal '69 1 chains '&&G Source: Aevelop by authors based on man!o survey data% 244*

;etailer

75

<igure 2*1: Small farmer citrus /alue chain


Mango marketing s#stem Self) Marketing I of farmers G '' 7G

Value Chain

'*
EHori8ontal
coordination F

7rower 0hole seller

-ommission -ommission .!ent .!ent

;etailer

%*
EVertical
coordinat ion F

7rower :mporter 7rower

@xporter @xporter

;etailer
-ontractor -ontractor -ommission -ommission .!ent .!ent

Pre) har/est Contract

'55 90G

1*

0hole seller
(otal '66 1 '&&G Source: Survey data% 244*

;etailer

chains

2*%*1

Mapping of small holders citrus growers

-alculation of the value chain was based on the sample data for citrus orchards in &un'ab &a)istan. The citrus valued-added chain was calculated startin! with the farmer and !oin! throu!h to the final mar)et destination of each respective mar)etin! chain. #rom the samplin! of 2 " citrus farmers in three ma'or citrus producin! districts of &un'ab% 1 small cate!ory. $a'ority of the small farmers 1 citrus farmers were in +278/ small farmers involved in pre harvest

contractin! of their produce throu!h contractor whereas 11 +28/ small farmers were involved in self mar)etin!. Two main chain were identified pre harvest contractin! throu!h contractor and farmer self mar)etin! +#i!ure 5."/.

72

2*%*0

Mapping of large holders citrus growers

.bout ( percent lar!e farmers used self mar)etin! after harvestin!% !radin!% pac)in! and transportin! to local wholesale mar)et and sellin! to exporter6processor +#i!ure 5.(/. <igure 2*0: ;arge farmer citrus /alue chain
Mango marketing s#stem Self) Marketing I of farmers G 0 0G

Value Chain

'*
EHori8ontal
coordination F

7rower 0hole seller

-ommission -ommission .!ent .!ent

;etailer

%*
EVertical
coordinat ion F

7rower :mporter 7rower

@xporter @xporter

;etailer
-ontractor -ontractor -ommission -ommission .!ent .!ent

Pre) har/est Contract

69 97G

1*

0hole seller
(otal 91 1 '&&G Source: Survey data% 244*

;etailer

chains

2*%*2

Mapping of small farmer tomato /alue chain

,alue chain was based on the sample 154 tomato farmers% commission a!ents% wholesaler% retailers% and processors in three ma'or producin! districts of &un'ab &a)istan. .nalysis revealed that 11( +72 8/ of sample tomato farmers were in small farmer cate!ory and "2 +2( 8/ of the sample tomato farmers were in lar!e farmer cate!ory. present study focused on small farmers. 1verwhelmin! ma'ority Small farmers involved in self mar)etin!. Dased on the survey data two main chains were identified and analy<ed% -hain 1 self mar)etin! throu!h commission a!ent and -hain 2 farmer sellin! to processin! factory +#i!ure 5.5/. 77

<igure 2*2: Small farmer tomato /alue chain in Punjab Pakistan


(omato marketing s#stem Self) Marketing I of farmers

Value Chain ' 7rower 0hole seller % 7rower &roduct wholeseller


&rocessor -ommission .!ent +3ocal/

;etailer

;etailer

(otal

''0 % chains '&&G Source: ,e/elop b# authors based on tomato sur/e# data$ %&&9

2*%*7

Mapping of large farmer tomato /alue chain

The ma'ority of lar!e farmers used this traditional supply chain as the mar)etin! channel for their tomato to the wholesale mar)et to retail mar)et. Several characteristics of this mar)etin! channel are !iven below +#i!ure 5.2/. <igure 2*7: ;arge farmer tomato /alue chain in Punjab Pakistan
(omato marketing s#stem Self) Marketing I of farmers

Value Chain ' 7rower 0hole seller % 7rower &roduct wholeseller


&rocessor -ommission .!ent +3ocal/

;etailer

;etailer

(otal

17 % chains '&&G Source: Aevelop by authors based on tomato survey data% 244*

2*1

An In/entor# of Market Pla#ers for Horticultural Sub)Sector

,alue chain mappin! means drawin! a visual representation of the chain% which involves various lin)a!es amon! the fruit +man!o F citrus/ !rowers% inputs and lo!istical service providers% transporters% contractors% commission a!ents% wholesalers% retailers% and exporters. 2*1*' In/entor# of market pla#ers of mango and citrus

The value chain map depicts the flow of fruit in the mar)et% activities carried out at each sta!e of the value chain% the structure of actors and the support involved in the value addin! process +#i!ure 5.7 F 5. /. This map consists of three elements: functions% operators and promoters. There is a clear difference between operators and promoters6supporters of a fruit value chain +Sprin!er- Bein< and .ndreas% 2447/. The people or enterprises performin! the basic functions of a value chain are operators +also called actors/. .t one sta!e in the value chain% they become owners of the +raw% semi-processed or finished/ product. Dased on this definition% the man!o and citrus ,- actors can be !rouped by the followin! functions: Production" Actors whose functions are directly related to basic production of man!o and citrus% includin! pre-cultivation% cultivation% harvest% or extractive activities. Po t har)e t handlin$ and #roce in$: Actors whose functions are directly related to post harvest mana!ement of man!o and citrus +cleanin!% sortin!% pac)a!in!% etc/ or processin! of basic !oods into value added products. -radin$" Actors whose functions are related to buyin! and sellin! of the man!o and citrus +product+s// .' #ro!oter / u##orter " ,alue chain promoters6supporters are the associations% networ)s or or!ani<ations that provide support services and represent the common interests of the ,operators. They remain outsiders to the re!ular business process and restrict themselves to temporarily facilitatin! a chain up!radin! strate!y. Typical facilitation tas)s include creatin! 7*

awareness% strate!y buildin! and co-ordination of support activities. 0hereas the services offered by individual actors% or!ani<ations% or companies to the value chain% tan!ible +transport% machinery% stora!e% amon! others/ or intan!ible +technical assistance% trainin!% etc./% are )nown as +&BA@D/. .s depicted in the map above% many man!o !rowers in &a)istan act as inte!rated value chain operators and perform two or more functions. They often arran!e farm inputs +chemical fertili<er% #?$% seedlin!s% pesticide% etc/ on their own% di! pits and plant seedlin!s% mana!e orchards% harvest the fruits% !rade and pac) them% and then assemble them and transport them to the wholesale mar)et in case of self mar)etin!.

Figure 5.7: Inventor of mango market !la ers

-onsumptio n

$an!o consumers +local and #orei!ner/


Puality assurance

J:&BS#

#ruits importer in 7ulf and @Q mar)ets


Jational $ar)ets

$ana!ement of .uction ?ard6@xport

Tradin! +@xpert or ;etail Fprocess in domestic mar)et/

s
@xporters -% a!ent
3ocal mar)ets

$ar)et committee at

&ost Barvest tech% trainin!

&BA@D etc

-ollection F Transportation

-ontractors6 $iddle men

F other support

$ar)et infrastructure % $:S

&un'ab .!ricultural $ar)etin! Aept

&roduction

<armers
Aisease% pest control%
&.;- and &rovincial .!ri. ;esearch Aepart

:nputs

3ocal tree nurseries% -.s

trainin!% technical advise &lantin!


materials% fertili<ers% trainin!

&un'ab .!ricultural @xtension Aept.

$a'or ,- #unctions

,- 1perators

,- &romoters

Source: Aeveloped by authors based on field survey and literature review

<igure 2*6: In/entor# of citrus market pla#ers

-itrus -onsumptio n

-onsumers +local and #orei!ner/


#ruits Traders in .f!hanistan &rocessors

Puality assurance

J:&BS#

$ana!ement of auction in

$ar)et committee

Tradin! +@xpert or ;etail Fprocess in domestic mar)et/

mar)et
3ocal mar)et

@xporters

-% a!ent
&ost Barvest tech% trainin!

&BA@D etc

-ollection F Transportation

-ontractors6 $iddle men

F other support

$ar)et infrastructure% $:S

&un'ab .!ricultural $ar)etin! Aept

&roduction

<armers
Aisease% pest control% trainin!% technical advise
&.;- and &rovincial .!ri. ;esearch Aepart

:nputs

3ocal tree nurseries% -.s

&lantin! materials% fertili<ers% trainin!

&un'ab .!ricultural @xtension Aept.

$a'or ,- #unctions

,- 1perators

,- &romoters

2*1*%

An in/entor# of market pla#ers for tomato

,alue chain mappin! means drawin! a visual representation of the chain% which involves various lin)a!es amon! the tomato !rowers% inputs and lo!istical service providers% transporters% commission a!ents% wholesalers% retailers% and traders. The value chain map depicts the flow of tomato in the mar)et and activities carried out at each sta!e of the value chain% the structure of actors and the support involved in the value addin! process +#i!ure 5.*/. <igure 2*9: Value chain mapping of tomato PakistanHs Punjab -onsumers

Tomato -onsumptio n
;etailer ;etailer
;etail of #resh and process Tomato

&roduct &roduct ;etailer ;etailer

$ana!ement of auction in

mar)et
0holesaler
&roduct &roduct 0holesaler 0holesaler

Aistricts $ar)et committee

-ommission .!ents
-ollection F Transportation

&rocessors &rocessors

Tomato processin! into tomato products

&BA@D etc

$ar)et infrastructure

&un'ab .!ricultural $ar)etin! Aept

&roduction

<armers
Aisease% pest control% trainin!% technical advise
&.;- and &rovincial .!ri. ;esearch Aepart

:nputs

:nput suppliers seed% fertili<es% &esticides

&lantin! materials% fertili<ers% trainin!

&un'ab .!ricultural @xtension Aept.

$a'or ,- #unctions

,- 1perators

,- &romoters

"

This map consists of three elements: ma'or value chin functions% operators and promoters. There is a clear difference between operators and promoters6supporters of a value chain. The people or enterprises performin! the basic functions of a value chain are operators +also called actors/. .t one sta!e in the value chain% they become owners of the +raw% semi-processed or finished/ product. Dased on this definition% the tomato ,- actors can be !rouped by the followin! functions: Production" Actors whose functions are directly related to basic a!ricultural production% includin! pre-cultivation% cultivation% harvest in case of self mar)etin! Po t har)e t handlin$ and #roce in$" Actors whose functions are directly related to post harvest mana!ement +cleanin!% sortin!% pac)a!in!% and deliverin! etc/ -radin$" Actors whose functions are related to the buyin! and sellin! of the product fall under tradin! in case of tomato% commission a!ents% wholesalers% retailers and processors .' #ro!oter / u##orter " The associations% networ)s or or!ani<ations that provide support services and represent the common interests of the ,- operators are )nown as ,promoters6supporters. They remain outsiders to the re!ular business process and restrict themselves to temporarily facilitatin! a chain up!radin! strate!y. Typical facilitation tas)s include creatin! awareness% strate!y buildin! and co-ordination of support activities. 0hereas the services offered by individual actors% or!ani<ations% or companies to the value chain% tan!ible are transport% machinery% stora!e% amon! others or intan!ible technical assistance% trainin!% etc. .s depicted in the map% many tomato !rowers in &a)istan act as inte!rated value chain operators and perform two or more functions. They often arran!e farm inputs +chemical fertili<er% #?$% seedlin!s etc/ on their own% perform harvest and post harvest handlin! transport them to the wholesaler.

2*0

Conclusions

This chapter aims to establish value chain mappin! of the selected commodities. ,alue chain mappin! are established usin! flow and !rid charts. The flow chart loo)ed at the different function in horticultural value chain and illustrates them as process leadin! from raw material to final consumption% while !rid chart illustrates the different mar)et channels within horticulture sector. The mar)etin! channels have already mentioned in chapter "% however in this chapter mappin! of smallholder man!o !rowers% mappin! of lar!e holder man!o !rowers% mappin! of small holders citrus !rowers% mappin! of lar!e holders citrus !rowers% mappin! of small holders farmer tomato !rowers and mappin! of lar!e holders tomato !rowers throu!h flow chart were presented. Deside this an inventory of mar)et players of man!o% citrus and tomato were also presented. Borticulture Sub-Sector Aynamics were captured also in this chapter and it was witnessed that stallholders man!o !rowers were not well utili<ed their potential as lar!e holders !ot ( 21 )! yield per hectare due to well mana!ed orchards and more inputs use as compare to small holders man!o !rowers. The potential output for smallholder man!o !rowers could !enerate !ross income of ;s.1"1"22% ;s.1( *24 and ;s.2 " 2 and total cost of ;s.77((7% ;s.5*(1*and ;s."7((* under hori<ontal% vertical and pre-harvest contract mar)etin! system respectively. Qnder vertical coordination farmers can earn more profit and hi!h return. .lso smallholders citrus !rowers did not well utili<e their potential and smallholder profitability under potential productivity could !et yield of 1(""5 )! per acre. This scenario could !enerate !ross income of ;s.224(72% 1(22"" and ;s.*17(( with total cost of ;s.12*414I ;s. 22 " and ;s 2"47( under hori<ontal% vertical and pre-harvest contract system respectively. Similarly smallholders tomato !rowers could !enerate !ross income of ;s.15*44* and ;s.1(7"2* under hori<ontal and vertical coordination respectively. Total cost in this re!ards would be ;s.14242 in case of hori<ontal coordination and ;s.75"2 in case of vertical coordination. ?ield !ap and ran)in! of man!o% citrus and tomato were also analy<ed in this chapter. Thou!h horticultural crops6industry facin! a number of challen!es% however% lar!e yield !ap: farm-tofarm as well as compared to other countriesI hi!h post-harvest lossesI and lower mar)et 5

prices6export price !ap were assessed. &ost-harvest losses of man!o% citrus and tomato produce were estimated from 24-(48% export price differences were found to be V*5( for tomato% followed by citrus +5*5 V/% and +(14 V/ per metric ton. :t was revealed that smallholders have poor and limited access to a!ricultural credit% which prohibits them to underta)e necessary farm investments. .lso men still dominate in man!o% citrus and tomato production and their mar)etin! and no women involvement as small traders6retailers on local mar)ets were observed. There was limited structured trade in the subsector% there are interests expressed amon! players to en!a!e in mar)et lin)a!es between chain actors.

VA;-: CHAI! :S:A CH +< H+ (IC-;(- A; S-.)S:C(+

This chapter deals with the value chain research for horticulture sub-sector. :t presents the results of understandin! the functionin! of services% information% )nowled!e and s)ills% innovation mar)ets for horticulture value chain system% the role of these mar)et players within this system and their relationship to others.

Chapter A VI VA;-: CHAI! P +<I(A.I;I(? A!A;?SIS +< (H: H+ (IC-;(- A; S-.)S:C(+

7*' Value Chain Anal#sis ,alue chain .nalysis is about understandin! the functionin! of specific mar)ets = +services% information% )nowled!e and s)ills% innovation% etc./ for horticulture value chain system% the role of specific mar)et players within this system and their relationship to others +Berr and $u<ira% 244*/. They further stated that ,alue chain research !oes into much !reater depth% analy<in! the reasons for specific constraints in the value chain and loo)in! for ways to reali<e mar)et opportunities and hence value chain research therefore% +i/ serves to identify the underlyin! reasons for mar)et failure of service mar)et i.e.% deficits that are preventin! the value chain from achievin! certain economic and social tar!ets +systemic constraints/I +ii/ helps to understand incentives of private and public mar)et players to en!a!e in transactions and contribute to solutions for addressin! the failure of service mar)etI and +iii/ hi!hli!hts pathways to sustainable chan!e for improvin! services mar)et by focusin! on mar)et opportunities and relationships and helps to identify levera!e points for intervention strate!ies. #ramewor) for value chain research consists of two steps namelyI +i/ decidin! on specific service mar)et and relevant mar)et player for understandin! how that mar)et wor) and identify the underlyin! causes for mar)et failures% the role of mar)et player and their centre +ii/ decidin! on the contents on value chain research for assessin! the underlyin! causes of a mar)et systems under performance as well as the primary obstacles to and opportunities for overcomin! these problems. The previous chapter on horticultural value chain mappin! hi!hli!hted the )ey problems of horticultural sub-sector which are hi!her cost of production% low labor productivity% poor Euality of horticultural products and low productivity% hi!h post harvest losses% loss of opportunities for income and employment creations% lac) of investment in new productive technolo!ies% low income% supply shorta!es on product mar)ets% low export prices and low share of processin!. :n order to understand the underlyin! reasons there is a need to carry out the analysis of economic viability of horticulture +man!o% citrus and tomato/ sub-sector in &un'ab &a)istan.

7*% Anal#sis of the :conomic Viabilit# of the Mango 4rowers -osts and profitability analysis has !enerated information on the economic viability of horticultural sub-sector. The brief description of such analysis is presented in the followin! subsection: 7*%*' Calculating costs in mango /alue chains

The analysis of the economic viability of the sub-sector +man!o% citrus and tomato/ was carried out by calculatin! costs in horticultural value chains and assessin! their profitability. This starts from the bifurcation of cost includin! production% transaction and operational to profitability% value addition at different sta!es alon! the chains. 'o t to !allholder !an$o $ro,er " The information on the costs analysis of small farms is presented in Table 2.1. -omparin! the cost by different chains for small farmers% it was hi!hest in case of self mar)etin! in the traditional chain of commission a!ent in the whole sale mar)et mainly due to the hi!h operational cost. The second case was also self mar)etin! but in the vertical coordinatin! mar)et directly to the processors6exporters. :n this case operational cost was less than the whole sale mar)etin! system but production cost was little hi!h than the farmers wor)in! with the hori<ontal chain. Bowever transaction cost was less due to few actors alon! the vertical coordination. The third case is the pre-harvest contract system which is main dominated practice at small farms% no operational cost for harvestin! and post harvestin! practices was involved at farmers9 level. The cost of production was almost similar to farmers doin! self mar)etin! while transaction cost was also lowest than the other two chains. (able 7*': Cost anal#sis of small mango producers E s*B>gF
(ransaction costJ E sB>gF Production !egotiation information (otal (otal Value Chain (#pes cost monitoring +perational cost Bori<ontal +sellin! to -./ 7.7* 4.475 2.11 2.1 5 1".*7 ,ertical coordination .45 4.451 ". 7 ".*21 11.*7 &re-harvest contract 7.7 4.4"5 4.44 4.4"5 7. 2 W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

'o t to lar$e holder !an$o $ro,er " The information on the costs analysis of lar!e farms is presented in Table 2.2. :n case of lar!e farmers the cost comparison by different chains resulted hi!hest cost in case of self mar)etin! in the traditional chain of commission a!ent in the whole sale mar)et mainly due to the hi!h operational cost whereas the transaction cost was also hi!hest. :n case of vertical coordination sellin! directly to the processors6exporters % operational cost was less than the whole sale mar)etin! system but production cost was hi!hest than the farmers wor)in! with the hori<ontal chain and pre-harvest contract system. Bowever transaction cost was less due to few actors alon! the vertical coordination than hori<ontal chain. :n case of pre-harvest contract system operational cost for harvestin! and post harvestin! practices was <ero at farmers level. The cost of production was little less than farmers doin! self mar)etin! while transaction cost was also lowest than the other two chains. (able 7*%: Cost anal#sis of large mango producers E s*B>gF
(ransaction cost E sB>gF Production !egotiation information +perational (otal (otal Value Chain (#pes cost monitoring cost Bori<ontal +sellin! to -./ 7.(*( 4.422 5.4 5.1(2 12.2( ,ertical coordination .12* 4.421 2. ( 2.*41 11.4" &re-harvest contract 7.( 1 4.4"* 44 4.4"* 7.52 W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

7*%*%

Profitabilit# of mango growers

Profita0ility analy i of !all !an$o $ro,er " #arm level profitability analysis% based on data collected from ma'or man!o producin! area of &un'ab &a)istan result revealed that small farmers which were 74 percent in our sample still don9t mana!e their man!o farms optimally and !et low avera!e yield +(444 )! per acre/ and low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more outputs ( 44 )! per acre. :n order to provide an indicative picture based on data !athered durin! the survey% we have considered three possible cases: small holder farm a low performin! and lar!e farms a farm whose performance !et close to the potential described earlier at local level. 0e developed a case for analysis a yield potential which was achieved by a ma'or exporter and competitor of &a)istan in the export mar)et.

*4

This situation is characteri<ed by an avera!e yield of (425 )! per acre attained by small holder under Bori<ontal -oordination or traditional mar)etin! system. This production is the result of a present level of production practices and inputs used by small holder. Qnder this mar)etin! system small farmers !enerate ;s.5"7 4 per acre. Qnder vertical coordination net profit !enerate by small holder is hi!hest ;s.72(2* per acre with yield (2"* )! per acre. :n case of pre harvest contractin! system man!o plantation !enerate !ross revenue ;s.52**( and production cost per acre is limited to ;s."121" per acre and the net profit was ;s.257 1 per acre eEuivalents to the S7$ (58. This !ross profit is not a success for farmers who have been investin! on lon!-term activities and considerin! the potential of the crop. (able 7*1: Small farmers profitabilit# anal#sis of mangoes
Marketing S#stem Market Bori<ontal -oordination ,ertical -oordination &re- harvest sale ProductionBSale E>gBacreF (425 (2"* "**( Sale Price E s*B>gF 27.2 "4 1(.27 4ross Cost cost Profit Income E s*B>gF E s*BacreF E sBacreF E sBacreF 11452 1".*7 527 5"7 4 127174 52**( 11.*7 7. 2 547(1 "121" 72(2* 257 1

Self $ar)etin! &re- harvest sale

Profita0ility analy i of lar$e holder !an$o $ro,er : :n case of lar!e farmers avera!e yield of ( 2 )! per acre attained under Bori<ontal -oordination or traditional mar)etin! system. This production is the result of a present level of production practices and inputs used by lar!e farmer. Qnder this mar)etin! system lar!e farmers !enerate ;s. 1(44 per acre which is hi!her as compare to small farmer under same mar)etin! system. Qnder vertical coordination net profit !enerate by lar!e farmer is hi!hest ;s.14121" with yield (*2( )! per acre. :n case of pre harvest contractin! system man!o plantation !enerate !ross revenue ;s.74((2 and production cost per acre is limited to ;s. "24"2 and the lowest net profit was ;s."((42 (able 7*0: ;arge farmers profitabilit# anal#sis of mangoes
Marketing S#stem Market Bori<ontal -oordination ,ertical -oordination ProductionB Sale E>gBacreF ( 2 (*2( Sale Price E s*B>gF 2*.5 "1.5 4ross Cost cost Profit Income E s*B>gF E s*BacreF E sBacreF E sBacreF 1(2(22 12.2( 21422 1(44. 152"22 11.4" 5(752.* 14121"

Self $ar)etin!

*1

&re- harvest &re- harvest sale (7*2 sale Source: .uthors own calculation base on survey data% 244*

1(.7

74((2

7.52

"24"5.

"((47

7*1 :conomic Viabilit# of Citrus 4rowers 7*1*' Cost anal#sis to small citrus growers

The detailed cost analysis both at small farms and lar!e farms is conducted for different mar)et chains and presented in Table 2.5. -omparin! the cost by different chains for small farmers% it was hi!hest in case of hori<ontal coordination in the traditional chain of commission a!ent in the whole sale mar)et mainly due to the hi!h operational cost. The second case was also self mar)etin! but in the vertical coordinatin! mar)et directly to the processors6exporters. :n this case operational cost was less than the whole sale mar)etin! system but production cost was hi!h than the farmers wor)in! with the hori<ontal chain. Bowever transaction cost was less due to few actors alon! the vertical coordination. The third case is the pre-harvest contract system which is main dominated practice at small farms% no operational cost for harvestin! and post harvestin! practices was involved at farmers level. The cost of production was almost similar to farmers doin! self mar)etin! while transaction cost was also lowest than the other two chains. (able 7*2: (ransaction cost anal#sis of citrus on small farmers E s*B>gF
(ransaction cost Production !egotiation information +perational (otal (otal cost monitoring cost Bori<ontal +sellin! to -./ (.(2 4.4"( 7."( 7."7( 11.7* ,ertical coordination (."( 4.425 1." 1.(45 5.7( &re-harvest contract (." 4.422 44 4.422 (.(4 W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

&ar$e holder citru $ro,er " The detailed cost analysis lar!e farms is conducted for different mar)et chains and presented in Table 2.2. The cost was hi!hest in case of hori<ontal coordination in the traditional chain due to the hi!h operational cost. :n self mar)etin! directly to the processors6exporters operational cost was less than the whole sale mar)etin! system but production cost was low than the farmers wor)in! with the hori<ontal chain or wet mar)et at sample farms. Qnder pre-harvest contract system which is main dominated practice cost of production was almost hi!hest while transaction cost was also lowest than the other two chains.

*2

(able 7*7: (ransaction cost anal#sis of citrus on large framers

+;s6K!/

(ransaction cost Production !egotiation information (otal (otal Value Chain (#pe cost monitoring +perational cost Bori<ontal +sellin! to -./ (.5 4.4" 2.4( 2.47 14.22 ,ertical coordination (.(* 4.4"2 1.25 1.2 2 5.7* &re-harvest contract (.2* 4.422 44 4.422 (.71 W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

7*1*%

Profit anal#sis

S!all holder citru $ro,er " #arm level profitability analysis% based on data collected from ma'or citrus producin! area of &un'ab &a)istan result revealed that small farmers which were 72 percent in our sample still don9t mana!e their citrus farms optimally and !et low avera!e yield +7244 )! per acre/ and low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more output 7524 )! per acre. This situation is characteri<ed by an avera!e yield around 7244 )! per acre attained by small holder durin! survey period. This production is the result of a present level of production practices and inputs used by small holder. Bori<ontal coordination the citrus plantation !enerates !ross revenue on an acre of ;s.1115*7 with total cost ;s. 55( !eneratin! net profit ;s.224(*. Qnder vertical coordination yield become little hi!h and small farmer !enerate ;s."1244 per acre net profit hi!her than as compare hori<ontal coordination. Qnder pre harvest contract system yield is low as compare to self mar)etin! !ross revenue is ;s.(2414 with lowest cost ;s."12"2 and net profit ;s.1("7 per acre. Self mar)etin! under vertical coordination demonstrate more profitability and competitiveness of small holders (able 7*5: Small farmers profitabilit# anal#sis of citrus
Marketing S#stem Self $ar)etin! Bori<ontal -oordination ,ertical -oordination Sale E>gBAcreF 7252 7(11 Price +;s.6K!/ 15." *.*5 Sales +;s.6acre / 1115*7 7"7"* Cost +;s.6K!/ 11.7* 5.7( Cost +;s.6acre / 55( (25"* !et profit 224(* "1244

*"

&re-harvest sale &re- harvest sale 71 * Source: .uthors own calculation base on survey data% 244*

2.(

(2414

(.(4

"12"2

1("7

&ar$e holder citru $ro,er " :n our sample showed that about 2( percent farmer fall in lar!e farm cate!ory avera!e yields per acre was 7524 )!. These yields are a result well mana!ed orchards and more inputs use as compare to small farmers in the sample area. :n case of lar!e farmers hori<ontal coordination the citrus plantation !enerates !ross revenue on an acre of ;s.117111 with total cost ;s. 4 4" !eneratin! net profit ;s."2"4 . Qnder vertical coordination yield become little hi!h and lar!e farmers !enerate ;s."22(4 per acre little lower than hori<ontal coordination. Qnder pre harvest contract system yield is low as compare to self mar)etin! !ross revenue is ;s.5( 5*4 with lowest cost ;s."5"*5 and net profit ;s.1*(2( per acre. Self mar)etin! under vertical coordination demonstrate more profitability and competitiveness of small holders (able 7*6: ;arge farmers profitabilit# anal#sis of citrus
Chain (#pe Self $ar)etin! Bori<ontal -oordination ,ertical -oordination &re- harvest sale Sale E>gBAcreF 75 4 725 7515 Price E s*B>gF 15.(5 11.2 7." Sales E s*BacreF 117111 572*.2 5( 5*.5 Cost E s*B>gF 14.22 5.7* (.71 Cost E s*BacreF 4 4" (("(4 "5"*2 !et profit "2"4 (1("4 1*(2(

&re harvest sale

7*0 :conomic Viabilit# of (omato 4rowers 7*0*' Cost anal#sis of small tomato growers

Similar to the other commodities complete cost and profitability analysis under prevailin! mar)et systems alon! the value chain are completely studied for the tomato. The system of the tomato was little bit different than the fruits as there was no pre-harvest contract system. #armers used to wor) under hori<ontal and vertical coordination only. The cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical tomato coordination resultin! in low cost to the tomato farmers sellin! their commodity directly to the processors. (able 7*9: Cost anal#sis of small tomato farmer
Production cost (ransaction cost E sBkgF !egotiation information +perational monitoring (otal (otal cost

Chain (#pe

*(

Bori<ontal +sellin! to -./ (.* 4.4 2.22 2."( 11."2 ,ertical coordination 5.4" 4.4( 1.(2 1.(2 2.(* W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

&ar$e holder to!ato $ro,er " :n case of lar!e farmers tomato !rowers complete cost and profitability analysis under prevailin! mar)et systems alon! the value chain are presented in Table 2.14. Similar to small farmers the cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical tomato coordination resultin! in low cost to the tomato farmers sellin! their commodity directly to the processors. Bowever the cost of lar!e farmers was low under hori<ontal coordination system while production cost under vertical coordination was hi!h as compared to small farmers but the operational cost was low due to lar!e volume. (able 7*'&: Cost anal#sis of large tomato farmer E sB>gF

(ransaction cost Production !egotiation information +perational (otal (otal Value Chain (#pe cost monitoring cost Bori<ontal +sellin! to -./ 2."2 4.4 (. 4 (. 11.2 ,ertical coordination 5.2" 4.4( 1."5 1."* 2.(* W:t consists of unobservable +ne!otiation% information% monitorin! and enforcement of contract6deal/ and observable +operational consistin! of harvestin!% pac)in! and mar)etin! etc/ cost

7*0*%

(omato profitabilit# anal#sis

S!all holder to!ato $ro,er " #arm level profitability analysis% based on data collected from ma'or tomato producin! area of &un'ab% &a)istan result revealed that small farmers which were 72 percent in our sample still don9t mana!e their tomato farms optimally and !et low avera!e yield + 7"4 )! per acre/ and low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more outputs *"74 )! per acre. This situation is characteri<ed by an avera!e yield 7"4 )! per acre attained by small holder durin! survey period. .nother situation in which farmers delayed harvestin! for sellin! to processin! factory which result increased yield per acre and profitability. This production is the result of a present level of production practices and inputs used by small holder. (able 7*'': Small farmers profitabilit# anal#sis of tomato
Value Market (#pe 0holesale mar)et ProductionBSale E>gBacreF 7"4.4 Sale Price E s*B>gF 12.*7 4ross Income E sBacreF 1( 1( .1 Cost E s*B>gF 11."2 cost E s*BacreF * 2".2 Profit E sBacreF (*"2(.5 4ross Margin EGF ""."

*5

&rocessin! 14 24.4 12.2 1"71*7.2 factory Source: .uthors own calculation base on survey data% 244*

2.(*

74221.

22*75.

( .

:n self mar)etin! case% tomato !ross revenue on an acre of ;s.1( 1( and ;s.1"71* after harvestin! throu!h local mar)et and processor respectively. 1verall due to low input used by small holders total cost +production and mar)etin!/ were limited to ;s.* 2(* and ;s.74222 per acre respectively. Jet profit per acre from local mar)et and export sale were mar)et ;s.(*(** and ;s.22*72 respectively eEuivalent to the !ross mar!in ""8 to (*8 respectively. Aue to delay harvestin! for processors total production increased si!nificantly and unit cost decreased that yields hi!her income for farmers. 3oo)in! at the hi!her per acre income from the vertical coordination between farmers and processor profitability it is necessary to promote this mar)etin! channel an aim of movin! the product smoothly from production to mar)etin! throu!h processin! and value addition alon! the value chain that can ensure farmer level profitability. &ar$e holder to!ato $ro,er " :n case of lar!e farmers tomato !rowers complete cost and profitability analysis under prevailin! mar)et systems alon! the value chain are presented in Table 2.12.3ar!e holder and they can !enerate !ross income ;s.12 1*2 and ;s.1(7717 under hori<ontal and vertical coordination respectively. Total cost which is the combination of production and mar)etin! costs would be ;s.1452*( in case of sell to wholesale mar)er and ;s.75"2 in case of sell to processin! factory remains a net profit per acre of ;s.22(* and ;S.72"(* +Table 2.12/. (able 7*'%: ;arge farmers profitabilit# anal#sis of tomato
Value Chain (#pe Bori<ontal -oordination +0holesale mar)et/ ,ertical -oordination +&rocessin! factory/ Production B Sale E>gBacreF *"74 1121" Sale Price E s*B>gF 17.*5 12.72 4ross Income E sBacreF 12 1*2 1(7717 Cost E s*B>gF 11.2 2.(* cost E s*BacreF 1452*( 75"2 Profit E sBacreF 22(* 72"(* 4ross Margin EGF "7 (*

7*2 Horticulture Sub)Sector ,#namics

.bove mentioned support or!ani<ation are crucial to increase the inflow of new technolo!y and !ood orchard mana!ement and a!ronomic practices which is currently limited which stron!ly *2

limit the productivity of man!o% citrus and tomato. &otential yields on small vs. lar!e farms in &a)istan and !lobally are compared to assess the potential not well utili<ed in &a)istan. The brief description of such potential for man!o% citrus and tomato is briefly presented in the followin! sub-sections: 7*2*' Mango on small farms: A potential not well utili8ed in Pakistan

Potential out#ut 0a ed on yield $a# a co!#are to lar$e far!er in a!#le area : :n our sample showed that about "4 percent farmer fall in lar!e farm cate!ory avera!e yields per acre was around ( 21 )!. These yields are a result well mana!ed orchards and more inputs use as compare to small farmers in the sample area +Table 2.1"/. (able 7*'1: Small farmers profitabilit# anal#sis of tomato based on potential output
Marketing S#stem Self $ar)etin! Market Bori<ontal -oordination ,ertical -oordination &re- harvest sale Potential Production E>gBacreF ( 2 (*2( (7*2 Sale Price E s*B>gF 27.2 "4 1(.27 4ross Income E s*BacreF 1"1"22 1( *24 2 " 2 Cost E s*B>gF 1".*7 11.*7 7. 2 Cost E s*BacreF 27((7 5*(1* "7((* Profit E s*BacreF 2" 7( *541 "4*"2

&re harvest sale

This could be a potential output for small holder and they can !enerate !ross income ;s.1"1"22% ;s.1( *24 and ;s.2 " 2 under hori<ontal% vertical and pre-harvest contract mar)etin! system respectively. Total cost which is the combination of production and mar)etin! costs would be ;s.77((7% ;s.5*(1* and ;s."7((* under three mar)etin! system respectively remains a net profit per acre of ;s.2" 7(% ;s. *541 and ;s."4*"2. This scenario is a possible outcome for small holder in &a)istan if man!o farmin! is ta)en mana!ed orchards. Qnder vertical coordination farmers can more profit and hi!h return. The !ap between potential and actual yields is hi!h in a ma'ority of farmin! systems in &a)istan. $an!o is not an exception. Table 2.1( demonstrated the scenario of small holder profitability under potential productivity with re!ard to 1 174 )! per acre the yield level of -ape ,erde hi!hest in the world*

*7

(able 7*'0: Small farmers profitabilit# anal#sis of tomato A potential output based on #ield gap eCist as compare to the world highest #ield ECape VerdeF
Smallholder Marketing S#stem Self $ar)etin! Market Bori<ontal -oordination ,ertical -oordination &re- harvest sale Potential Production 1 174 1 174 1 174 Sale Price E s*B>gF 27.2 "4 1(.27 4ross Income E sBacreF (*(22( 5(5144 25*2 2 Cost Cost Profit E s*B>gF E s*BacreF E sBacreF 1".*7 11.*7 7. 2 25" "5 217(*5 1(24 * 2(4" * "27245 1171*7

&re-harvest contract

Source: This could be a potential output in &a)istan by elimination yield !ap exists as compare with world hi!hest yield. This scenario can !enerate !ross income of ;s.(*(22(% ;s.5(5144 and ;s.25*2 2 under hori<ontal% vertical and pre-harvest contract system. Total cost which is the combination of production and mar)etin! costs were ;s.25" "5% ;s.217(*5 and ;s.1(24 * respectively will leave a profit of ;s.2(4" *% ;s."27245 and ;s.1171*7 per acre. This scenario is a possible outcome for small holder in &a)istan if man!o farmin! is ta)en as business and productivity should reaches to the world hi!hest level as achieved by -ape ,erde. 7*2*% Citrus on small farms: A potential not well utili8ed in Pakistan

:n this case the profitability of the small farmer9s increase also considerin! their own cost and prices for hori<ontal and pre-harvest contract system while for vertical coordination the net profit is hi!her based on the sample data mainly due to difference in prices and cost +Table 2.15/. (able 7*'2: Potential output based on large farmersK output of citrus
Market S#stem Self $ar)etin! Sale E>gBAcreF Price E s*B>gF 15." *.*5 2.( Sales E s*BacreF 1125 4 721*7 ( 4*2 Cost E s*B>gF 11.7* 5.7( (.( Cost E s*BacreF *"2 ("*57 ""422 !et profit 27212 "22(4 154"4

Bori<ontal 75 4 -oordination ,ertical 725 -oordination &re harvest sale &re- harvest sale 7515 Source: .uthors calculation by usin! Survey data% 244*

The !ap between potential and actual yields is hi!h in a ma'ority of farmin! systems in &a)istan. -itrus is not an exception. Table 2.12 demonstrated the scenario of small holder profitability under potential productivity with re!ard to ;s.1(""5 )! per acre the yield level. This could be a *

potential output in &a)istan by elimination yield !ap exists as compare with world hi!hest yield +:ndonesia/. This scenario can !enerate !ross income of ;s.224(72% ;s.1(22"" and ;s.*17(( under Bori<ontal% vertical and pre-harvest contract system respectively. Total cost which is the combination of production and mar)etin! costs were ;s.12*414I ;s. 22 " and ;s.2"47( respectively will leave a profit of ;s.51(2"% ;s.24"54 and ;s.2 274 per acre respectively. This scenario is a possible outcome for small holder in &a)istan if citrus farmin! is ta)en as business and productivity should reaches to the level of yield achieved by :ndonesia hi!hest yield in world. (able 7*'7: Small farmers profitabilit# anal#sis of citrus A potential output based on #ield gap eCist as compare to the world highest #ield EIndonesiaF
Smallholder Marketing S#stem Self $ar)etin! Bori<ontal -oordination ,ertical -oordination &re- harvest sale Sale E>gBAcreF 1(""5 1(""5 1(""5 Price E s*B>gF 15." *.*5 2.( Sales E s*BacreF 224(72 1(22"" *17(( Cost E s*B>gF 11.7* 5.7( (.( cost E s*BacreF 12*414 22 " 2"47( !et profit 51(2" 24"54 2 274

&re harvest sale

Source: .uthors calculation by usin! Survey data and #.1 ST.T% 2412

7*2*1

(omato on small farms: A potential not well utili8ed in Pakistan

:n our sample showed that about 2( percent farmer fall in lar!e farm cate!ory avera!e yields per acre was *"74 )!. These yields are a result well mana!ed tomato farms and more inputs use as compare to small farmers in the sample area +Table 2.17/. This could be a potential output for small holder and they can !enerate !ross income ;s.15*44* and ;s.1(7"2* under hori<ontal and vertical coordination respectively. Total cost which is the combination of production and mar)etin! costs would be ;s.14242 net profit per acre of ;s.52*(1 and ;s.71 respectively. in case of hori<ontal coordination and ;s.75"2 in case of sell to processin! factory +vertical coordination/ remains a ( for hori<ontal and vertical coordination

**

(able 7*'5: Small farmerHs profitabilit# anal#sis of tomato based on potential output
Market Bori<ontal coordination ,ertical coordination ProductionB Sale E>gBacreF *"74 1121" Sale Price E s*B>gF 12.*7 12.2 4ross Income E sBacreF 15*44* 1(725" Cost E s*B>gF 11."2 2.(* cost E s*BacreF 14242 75"2 Profit E sBacreF 52*(1 71 (

The !ap between potential and actual yields is hi!h in a ma'ority of farmin! systems in &a)istan. Table 2.1 demonstrated the scenario of small holder profitability under potential productivity with re!ard to 212411 )! per acre the yield level. This could be a potential output in &a)istan by elimination yield !ap exists as compare with world hi!hest yield achieved by Del!ium. This scenario can !enerate !ross income of ;s."5*7 2(% and ;s.22 2* under Bori<ontal% vertical system respectively. Total cost which is the combination of production and mar)etin! costs were ;s.2"**22" and ;s.1"75*54 respectively will leave a profit of ;s.11*7 21 and ;s.1"12"(7 per acre respectively. (able 7*'6: Small farmerHs profitabilit# anal#sis of tomato based on potential output
Market 0hole sale mar)et ,ertical coordination ProductionB Sale E>gBacreF 212411 212411 Sale Price E s*B>gF 12.*7 12.2 4ross Income E sBacreF "5*7 2( 22 2* Cost E s*B>gF 11."2 2.(* cost E s*BacreF 2"***2" 1"75*54 Profit E sBacreF 11*7 21 1"12"(7

7*2*0

?ield gaps and ranking of mango$ citrus and tomato: A potential not well utili8ed in Pakistan

The horticultural crops are of ma'or importance in some areas of &a)istan% while remain ne!lected in other parts and people !row these crops to fulfill the local fruit and ve!etable reEuirements only rather than producin! for export mar)ets% hence crop yield but not Euality remain a priority. #urther% poor post-harvest handlin! and mar)etin! system leads to the lower net profit in the overall supply chain% while consumer prices both in local and international mar)ets are risin!. 3ocal horticulture industry is currently facin! a number of challen!es% however% three main aspects are very important: +1/ 3ar!e yield !ap: farm to farm as well as compared to other countriesI +2/ Bi!h post-harvest lossesI +"/ 3ower export mar)et prices6@xport

144

price !ap. The information on yield !ap% post-harvest losses and less export prices of man!o% citrus and tomato is presented in the Table 2.1* respectively. (able 7*'9: ?ield gap and ranking of mango$ citrus and tomato
Crops $an!o -itrus Tomato Source: #.1 Stat% 2412 MaC* #ield in world EtonnesBhaF ((.* +-ape ,erde/ "5.( +:ndonesia/ 52".* +Del!ium/ ?ield of Pakistan EtonnesBhaF and anking 14.2 +2*th/ 14.7 +24th/ 14.5 +12*st/ ?ield gap EtonnesBhaF "(.7 2(.7 51".(

7*2*2

Post)har/est losses of mango$ citrus and tomato: A potential not achie/ed in Pakistan

Borticultural produce are perishable and needs special care to reduce the post-harvest losses. 1ften% the post-harvest losses of man!o% citrus and tomato produce are estimated from 25-(48. Bowever% the estimated losses with value of man!o% citrus and tomato is !iven in Table 2.24. (able 7*%&: Post)har/est losses in mango$ citrus and tomato
Crops $an!o -itrus Tomato Production E&&& tonnesF 172 21"2 522 Post har/est losses E&&& tonnesF ("2 "24 225 Post har/est losses E s* millionF 1(522 2""5 ((*5 (otal /alue E s* millionF 5 14( 15525 112" Post har/est losses EGF 25 15 (4

Source: .!ricultural Statistics of &a)istan% 244*-14 &ercent &ost harvest losses &BA@D% 2447

7*2*7

:Cport prices of mango$ citrus and tomato: A potential not achie/ed in Pakistan

Table 2.21 provides a comparison of the avera!e export prices of selected horticultural produce compared with world export prices. :t is very clear that all of our commodities are bein! sold in international mar)ets at far cheaper prices compared to world avera!e prices. The export price difference is maximum for tomatoes +V*5(/% followed by citrus +V5*5/% and +V(14/ per metric ton.

141

(able 7*%': Comparison of eCport prices of mango$ citrus and tomato


Crop =orld A/erage 3uantit# Value Price EtonnesF ELBtF EV&&& F $an!o 1255712 **7771 7*5 * -itrus (1(2225 "(**7 1 (( Tomato 2""1*24 2 2"727 147 Source: #.1 Stat 2412 W Tan!erine% $andarin -lem 3uantit# EtonnesF 7"575 17 4"* (4*47 Pakistan Value EV&&& F 2 "45 (("21 5451 Price ELBtonnesF " 5 2(* 12" Price gap ELBtonnesF (14 5*5 *5(

7*2*5

Mango$ citrus and tomato: eal in/estors or weakened growers

Aurin! the survey and dialo!ue with !roup of man!o% citrus and tomato farmers% the farm business mana!ement practices9 are !enerally poor. The full reEuirement of the farm investment to ma)e it economically viable is often i!nored and farm record )eepin! is ne!lected. :t was also observed that business acumen and cooperation with other producers are limited. Survey revealed that small farmers have poor and limited access to a!ricultural credit which prohibits them to underta)e necessary farm investments. $any surveyed horticulture producers as well as or!ani<ations outside man!o and citrus are expectin! to reEuest investment financin! from Xari TarEiati Dan)% &a)istan. These observations revealed that horticultural surveyed farmers in !eneral and small farmers in particular are wee)end !rowers. 7*2*6 ,i/erse origins for regular suppl#

The leadin! man!o producin! districts are $ultan% ;ahim ?ar Khan and $u<affar!arh in &un'ab but an increasin! number of man!os are comin! from Sindh province. 3eadin! citrus producin! districts are Sar!odha% $andi Dahauddin and Toba Te) Sin!h but an increasin! number of citrus are comin! from Ghan!% Sahiwal and other provinces li)e Khaber &a)htoon)aha. &rices and volumes are normally fluctuatin! stron!ly throu!hout the year% namely low prices and hi!h volumes in the pea) months +Gune = Guly in case of man!o and Jovember = Aecember in case of citrus/ and hi!h prices 6 lower volumes in the remainin! months in case of man!o and citrus respectively. The hi!hest concentration of improved man!o is from $ultan% Khanewal and $u<affar!arh districts. Bence there is a hu!e challen!e but also a development opportunity for the sub sector to coordinate and enhance efficiency of different supply chains from the remainin! districts !rowin! both man!o and citrus. 142

7*2*9

4ender issues

Some women with the laborer of contractor of man!o and citrus orchards play a role in harvestin! of these commodities and sometimes the whole family plays a role in man!o% citrus and tomato !rowin! in case of leasin! in land. 7enerally men still dominate in man!o% citrus and tomato production and their mar)etin!. :n &a)istan all the traders are men and no women involvement as small traders6retailers on local mar)ets is observed. 7*2*'& Marketing: ,ominated b# spot transactions -ontract enforcement is an essential precondition for horticultural supply chain development which is stren!thened by mutual trust and by the successful demonstration of business benefits resultin! from lon!-term business interactions +$$.3td% 2411/. Be further stated that several traders and wholesalers have succeeded in demonstratin! the benefits% which can result from mutually supportive activities built around lon!-term trustin! relationships. These findin!s support the result of value chain mappin! of man!o% citrus and tomato in &a)istan9s &un'ab. . trader can buy from lar!er producers on credit +at farm !ate/ and pay bac) after they sold their produce. #or a trader to buy from the same lar!er producer on credit% he has to ma)e sure the previous payment has been paid. .lthou!h there is limited structured trade in the sub-sector% there are interests expressed amon! players to en!a!e in mar)et lin)a!es between chain actors. 7*7 Value Addition in Horticultural Value Chains: -nderstanding who 4ains Most The followin! fi!ures 2.1 to 2.12 depicts two percenta!es one on cost which shows percent of total cost of the chain bear by different actors of the value chain and other percenta!e depicts the percent profit of the total profit of the chain earned by the different actors. 7*7*' Value addition for smallholder mango growers

:n channel 1 the farmer sold their man!o by self mar)etin! to the traditional wholesale mar)et after !radin!% pac)in! and transportin!% called hori<ontal coordination. The man!o sellin! price at farmer level was ;s.27.24 per )! +#i!ure 2.1/. Some interestin! matters to note are as follows: This chain produced a total value added of ;s."2.(5 per )!% which was lowest as compare to other two chains. :n this value chain the value-added process occurred at hi!h de!ree at the farm level "28 followed by ;etailers (2 8 wholesaler 1*8 and commission a!ent " 8 lowest value added in the value chain% at a value of ;s.27.24 per )!.

14"

#i!ure 2.1: Small farmer chain 1 +Bori<ontal coordination/: #armer C -ommission .!ents C 0holesalers C ;etailers

Cost Vale added

18 Small !rower "2 8

(8
C. Agents

28

0hole seller
1* 8

"8

*8 ;etailer (2 8

Total value added ;S "2.(56K!

;s.6K! 27.24

:n channel 2 the farmer sold their man!oes directly to exporters6 &rocessor. $an!o sellin! price at farmer level was ;s."4 per )! +#i!ure 2.2/. :n this value chain the value-added process occurred at hi!h de!ree at the exporter 2 8 and farmer 1( 8. . The value added at farmer level was produced from the process of man!o cultivation and value added at export level is result of man!o export under vertical coordination between farmer and exporter. This chain produced a total value added of ;s.12*.4" per )!. .ccordin! to survey data the total volume of this chain is less than one percent of mar)eted man!o. There is dare need to increase the volume of this chain as this chain is more beneficial to the small holders and !enerate more value-added for them and exporters as well . #i!ure 2.2: Small farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers

Cost Vale added

8 Small !rower 1( 8

*2 8

@xporter
28

Total value added ;S 12*.4"6K!

;s.6K! "4

:n channel " +pre harvest system/ the farmer sold their man!oes to the traditional contractor at pre-harvest. The sellin! price was !enerally stipulated on the basis of price ne!otiations with the 14(

traditional contractor. .ccordin! to the contractor survey about (.4 percent produce of this chain was sold out in local mar)ets i.e. $ultan and ;ahim ?ar Khan and *2 8 Euantity sold to interprovincial mar)ets. The man!o sellin! price at farmer level was ;s.1(.27 per )! +#i!ure 2."/. The contractors harvest the fruit sortin!% !radin!% and pac)in! and transport it to the wholesale mar)et of country. The farmer produced the lowest value added in the value chain * percent% at a value of ;s.1(.27 per )!. This chain produced a total value added of ;s."2.27 per )!% which was the second lowest value added as compared to other two chains discussed earlier.

#i!ure 2.": Small farmer chain " +&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers

#ertili<er inputs "48 land rent 228 $ar)up *8 1ther production cost "58

Cost Value added

(58 Small !rowers 1 8

"58

(8
C. Agents

28
0holesaler
1*8

148

-ontractor
218

;etailer
(48

428

;s.6K! 1(.27

Total value added ;s. "2.276K!

145

(able 7*%%: Small farmer mango /alue chain summar#


S*!o* ' Chain actors and acti/ities (otal cost to <armer 8 ,alue added 8 Sell price (otal cost to Contractor 8 ,alue added 8 Sell price (otal cost Commission Agent 8 ,alue added 8 Sell price (otal cost =holesaler 8 ,alue added 8 Sell price (otal cost etailer 8 ,alue added 8 Sell price (otal cost :Cporter 8 ,alue added 8 Sell price (otal Cost G cost (otal /alue added s*B>g G /alue added -nit s*B>g Chain ' Hori8ontal Coordination '1*95 6' '1*%1 17 %5*%& ) ) ) ) ) &*52 0 '*&% 1 %5*% '*' 7 7*9 '9 12*% '*2 9 '2*1 0% 2% ) ) ) ) ) '5*1% '&& "2.(5 '&& Chain % Vertical Coordination ''*95 6 '6*&1 '0 1& ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) '10 9% ''' 67 %02 '02*95 '&& 12*.4" '&& Chain 1 Pre har/est Contract 5*6 02 7*05 '6 '0*%5 7 12 5*51 %' %6 &*52 0 '*&5 %*9% %6 '*' 7 7*9 '9 17 '*2 9 '0*2 0& 2% ) ) ) ) ) '5*'2 '&& "2.27 '&&

s*B>g

sB >g

sB >g

sB >g

sB >g

7*7*%

Value addition for large mango growers

:n channel 1 the farmer sold their man!oes by self mar)etin! to the traditional wholesale mar)et after !radin! and pac)in! and transportin! called hori<ontal coordination. The man!o sellin! price at farmer level was ;s.2*.5 per )! +#i!ure 2.(/. Some interestin! matters to note are as follows: :n this value chain the value-added process occurred at hi!h de!ree at the retailer level ((8 followed by farmer "*8 wholesaler 1( 8 and commission "8.

142

Figure 6.4: Large farmer chain 1 (Horizontal coordination): Farmer Commission Agents holesalers !etailers
#ertili<er inputs 128 land rent 1(8 $ar)up 58 1ther production cost 218 $ar)etin! cost ((8

Cost Vale added

(8 Small !rower "*8

(8
C. Agents

28

0hole seller
1(8

;etailer
((8

"8

Total value added ;S 2 .(16K!

;s.6K! 2*.54

:n channel 2 the lar!e farmer sold their man!oes directly to exporters6 &rocessor. $an!o sellin! price at farmer level was ;s."1.54 per )! +#i!ure 2.5/. Some interestin! matters to note are as follows: :n this value chain the value-added process occurred at hi!h de!ree at the exporter ( 8 and farmer 12 8. The farmer produced the hi!hest value added as compare to other four chains at a value of ;s."1.54 per )!. The value added at farmer level was produced from the process of man!o cultivation vertical coordination of farmer to exporter. This chain produced a total value added of ;s.1"1.(7 per )!. .ccordin! to survey data the total volume of this chain is less than one percent of total purchase of exporters. There is dare need to increase the volume of this chain as this chain is more beneficial to the small holders and !enerate more value-added for them. #i!ure 2.5: 3ar!e farmer chain 2 +,ertical coordination/: #armer C @xporter C :nternational ;etailers
#ertili<er inputs 218 land rent 178 $ar)up 28 1ther production cost 2"8 $ar)etin! cost ""8

Cost Vale added

8 Small !rower 128 ;s.6K! "1.5

*28

@xporter
(8

Total value added ;S 1"1.(76K!

147

:n channel " +pre harvest contract system/ the farmer sold their man!oes to the traditional contractor at pre-harvest. The sellin! price was !enerally stipulated on the basis of price ne!otiations with the traditional contractor. .ccordin! to the contractor survey about (.4 percent produce of this chain was sold out in local mar)ets i.e. $ultan and ;ahim ?ar Khan. The man!o sellin! price at farmer level was ;s.1(.74 per )! +#i!ure 2.2/. The contractors harvest the fruit sortin!% !radin!% and pac)in! and transport it to the local wholesale mar)et. The expenses incurred by the contractors by doin! harvestin! procurement and distribution activities. .:n this traditional value chain the value-added process occurred to any lar!e de!ree at the retailer level followed by commission level a!ent wholesale% contractor +#i!ure 2.2/. The farmer produced value added in the value chain 1 percent% at a value of ;s.15.24 per )!. This chain produced a total value added of ;s."*.5* per )!. #i!ure 2.2: 3ar!e farmer chain "+&re- Barvest contract/: #armer C -ontractors C -ommission .!ents C 0holesalers C ;etailers
#ertili<er inputs "48 land rent 228 $ar)up *8 1ther production cost "58

Cost Value added

"* 8 Small !rowers 1 8

(58

(8
C. Agents

58

78

-ontractor
1*8

0holesaler
148

;etailer
548

"8

;s.6K! 15.24

Total value added ;s. 51."16K!

14

(able 7*%1: ;arge farmer mango /alue chain summar#


S*!o* ' Chain actors and acti/ities -nit Chain ' Bori<ontal -oordination '7*% 6' '1*1 19 %9*2& ) ) ) ) ) &*52 0 '*&% 1 %9*2 '*' 7 0*6 '0 12*0 '*1 5 '2*1 00 2% ) ) ) ) ) '9*12 '&& "(.(2 '&& Chain % ,ertical -oordination ''*&1 6 %&*05 '7 1'*2 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) '10 9% ''' 60 %02 '02*&1 '&& 1"1.(7 '&& Chain 1 &re harvest -ontract 5*2% 02 5*'6 '6 '0*5 6*7 02 5*5 '9 1' &*52 0 '*'' 1 1' '*' 7 1*9 '& 17 '*1 5 '9*5 2& 2% ) ) ) ) '9*%5 '&& "*.5* '&&

(otal cost to <armer s*B>g 8 ,alue added 8 Sell price % (otal cost to Contractor s*B>g 8 ,alue added 8 Sell price 1 (otal cost Commission Agent sB >g 8 ,alue added 8 Sell price 0 (otal cost =holesaler sB >g 8 ,alue added 8 Sell price 2 (otal cost etailer sB >g 8 ,alue added 8 Sell price 7 (otal cost :Cporter sB >g 8 ,alue added 8 Sell price (otal Cost G cost (otal /alue added G /alue added Source: .uthors -alculation based on survey data% 244*

7*7*1

Value addition for smallholder citrus growers

.alue 'hain 1" .bout 2 percent small farmers used self mar)etin! value chain +#i!ure 2.7/ as the mar)etin! channel for their citrus after harvestin!% !radin!% pac)in! and transportin! to local wholesale mar)et and sell out the produce throu!h commission a!ent.

14*

:n this channel the farmer sold their citrus after harvestin! to commission a!ent under hori<ontal coordination. :n this value chain the value-added process occurred at hi!h de!ree at the retail level 548 followed by farmer 228% wholesaler 2"8 and commission a!ent 58 at the farmer price of ;s.15." per )!. The value added was produced from the process of citrus cultivation. <igure 7*5: Small farmer chain ' EHori8ontal coordinationF EaF: <armer M Commission Agents M =holesalers M etailers Cost Vale added
(8 Small !rower 228 28
C. Agents

78

78

0hole seller
2"8

;etailer
548 Total value added ;S 12.556K!

58

;s.6K! 15."

In channel 2 run by the farmer under self mar)etin! is vertical coordination between farmer and exporter6processor. :n this value chain the value-added process occurred at hi!h de!ree at the exporter *28 and !rower (8 at a value of ;s.*.*5 per )!. The value added was produced from the process of citrus cultivation and exports under this value chain. This chain produced a total value added of ;s.115.21 per )!% which was the hi!hest value added compared to other two citrus value chains. <igure 7*6: Small farmer chain % EVertical coordinationF: <armer M :Cporter M International etailers

Cost Vale added

1(8 Small !rower (8

28

@xporter
*28 Total value added ;S 115.216K!

;s.6K! *.*5

114

.alue chain 1" The ma'ority of the small farmers% i.e.% 177 persons +*(8/% used this traditional supply chain throu!h pre-harvest contract system. -ontractor harvest the produce% did sortin!% !radin!% pac)in! and transported to local and national mar)ets and also deliver the produce to exporter6processors commission .!ents etc. :n channel " the farmer sold their citrus to the traditional contractor at pre-harvest sta!e. The sellin! price was !enerally stipulated on the basis of price ne!otiations with the contractor. The citrus sellin! price at farmer level was ;s.2.(46)!. The contractors harvest the fruit sortin!% !radin!% and pac)in! and transport it to the local wholesale mar)et. The expenses incurred by the contractors by doin! harvestin! procurement and distribution activities. :n this channel farmer !et only 128 of total value added% contractor 158 commission a!ent 58 wholesaler 1*8 and retailer (*8 of total value added. :n term of cost of this channel contractor bear 52 8 followed by farmer "28 retailer 12 8 wholesaler 28 and commission a!ent "8 +Table 2.2(/.

<igure 7*9: Channel 1EPre har/est contractF: <armer M Contractors M Commission Agents M =holesalers M etailers

Cost Vale added

"28 Small !rower 128

528

"8
C. Agents

28

78

-ontractor
15 8

0hole seller
1*8

458

;etailer
(*8

;s.6K! 2.(4

Total value added ;s.12. 2K!

111

(able 7*%0: Small farmer citrus /alue chain summar#


S*!o* 1 Chain actors and acti/ities -nit ;s.6K! Chain ' Bori<ontal -oordination 11.7* ( ".5* 22 15." 4."5 2 4. 5 15." 4.*2 7 ". 2 2" 24.2 4.*" 7 54 2*."5 1(.4" 144 12.55 144 Chain % ,ertical -oordination 5.7( 1( (.21 ( *.*5 "2.15 2 111 *2 51.1( (1. * 144 115.21 144 Chain 1 &re harvest -ontract (.( "2 2 12 2.( 7.1 52 2.5 15 12 4."5 " 4. 5 5 12 4.*5 7 ".25 1* 24.2 4.*" 7 (* 2*."5 1".7" 144 12. 2 144

Total cost to farmer 8 ,alue added 8 Sell price 2 Total cost to contractor 8 ,alue added 8 Sell price " Total cost -ommission .!ent 8 ,alue added 8 Sell price ( Total cost 0S 8 ,alue added 8 Sell price 5 Total cost ;etailers 8 ,alue added 8 Sell price . Total cost exporter 8 ,alue added 8 Sell price Total -ost 8 cost Total value added 8 value added Source: .uthors calculation Survey data% 244*

;s.6K!

;s6 K!

;s6 K!

;s6 K!

;s6 K!

7*7*0

Value addition for large citrus growers

:n this channel the farmer sold their citrus after harvestin! to commission a!ent under hori<ontal coordination. :n this value chain the value-added process occurred at hi!h de!ree at the retail level (2 8 followed by farmer 278% wholesaler 228 and commission a!ent 58 at the farmer price of ;s.15.(5 per )!. The value added was produced from the process of citrus cultivation and mar)etin! in the local mar)et. 112

<igure 7*'&: ;arge farmer chain 'EHori8ontal coordinationF EaF: <armer M Commission Agents M =holesalers M etailers Cost Vale added
28 Small !rower 278 "8
C. Agents

78

0hole seller
228

58

;etailer
(28 Total value added ;S 17.((6K!

;s.6K! 15.(5

In channel 2 run by the farmer under self mar)etin! is vertical coordination between farmer and exporter6processor. :n this value chain the value-added process occurred at hi!h de!ree at the exporter 7"8 and !rower 27 8 at a value of ;s.11.24 per )!. The value added was produced from the process of citrus cultivation. This chain produced a total value added of ;s.24.(4 per )!% which was the hi!hest value added compared to other two value chains. <igure 7*'': ;arge farmer chain EVertical coordinationF: <armer M :Cporter M International etailers Cost Vale added
1(8 Small !rower 278 28

@xporter
7"8 Total value added ;S.24.(46K!

;s.6K! 11.24

.alue chain 1" The ma'ority of the lar!e farmers % i.e.% +*28/% used this traditional supply chain throu!h pre-harvest contract system. -ontractor harvest the produce% did sortin!% !radin!% pac)in! and transported to local and national mar)ets and also deliver the produce to exporter6processors commission .!ents etc. The sellin! price was !enerally settled on the basis of price ne!otiations with the contractor. The citrus sellin! price at farmer level was ;s.7."46)!. The contractors harvest the fruit sortin!% !radin!% and pac)in! and transport it to the wholesale mar)et. The expenses incurred by the contractors by doin! harvestin! procurement and distribution activities. :n this channel farmer !et only 158 of total value added% contractor 17 8 commission a!ent ( 8 wholesaler 1 8 and retailer (2 8 of total value added. :n term of cost of this channel contractor bear (( 8 followed by farmer "78 +Table 2.25/. 11"

<igure 7*'%: Channel 1 EPre har/est contractF: <armer M Contractors M Commission Agents M =holesalers M etailers Cost Vale added
248 Small !rower (8 (* 8 8
C. Agents

118

12 8

-ontractor
248

0hole seller
12 8

"( 8

;etailer
"48 Total value added ;s.27.1"K!

;s.6K! 2.(4

(able 7*%2: ;arge farmer citrus /alue chain summar#


S*!o* ' Chain actors and acti/ities -nit s*B>g Chain ' Hori8ontal Coordination '&*77 6% 0*59 %5 '2*02 & & & & '2*02 &*12 1 &*6' 2 '2*02 &*97 5 1*59 %% %&*% '*' 6 6*&2 07 %9*12 & & '1*&5 '&& 17.(( '&& Chain % Vertical Coordination 2*59 '0 2*0' %5 ''*% & & & Chain 1 Pre har/est Contract 0*5' 15 %*29 '2 5*1 5.7 00 1 '5 '7 &*12 1 &*55 0 '7 &*97 5 1*%0 '6 %&*% '*' 9 6*&2 07 %9*12 & & '%*6% '&& 17.25 '&&

(otal cost to <armer 8 ,alue added 8 Sell price % (otal cost to Contractor 8 ,alue added 8 Sell price 1 (otal cost Commission Agent 8 ,alue added 8 Sell price 0 (otal cost =holesaler 8 ,alue added 8 Sell price 2 (otal cost etailer 8 ,alue added 8 Sell price 7 (otal cost :Cporter 8 ,alue added 8 Sell price (otal Cost G cost (otal /alue added G /alue added Source: .uthors calculation Survey data% 244*

s*B>g

sB >g

& &

sB >g

& &

sB >g

& & & 17*'2 67 '0*99 51 2'*'0 0'*90 '&& 24.(4 '&&

sB >g

11(

7*7*2

Value addition for small tomato growers

.alue 'hain 1" The ma'ority of the small farmers used this traditional supply chain as the mar)etin! channel for their tomato to the wholesale mar)et to retail mar)et. Several characteristics of this mar)etin! channel are !iven below Small farmer Chain 'EaF: <armer M Commission Agents M=holesalers M etailers :n channel 1 the farmer sold their tomato to the traditional wholesale mar)et .The tomato sellin! price at farmer level was ;s.12.*7 per )!. :n this traditional value chain the value-added process occurred to any lar!e de!ree at the farmer level followed by retailer level followed by wholesale% and commission a!ent . This chain produced a total value added of ;s.12.(4 per )!% which was the lower value added compared to other chain. <igure 7*'1: Small farmer chain ' EHori8ontal coordinationF: <armer M Commission Agents M =holesalers M etailers
#ertili<er inputs 128% &roductiom cost 5" 8 land rent 2"8 $ar)etin! cost (78 $ar)up (8

Cost Value added

65 G Small !rowers 07G

%G
Commission Agents

1G &7 G

6G

0holesaler '6 G

;etailer
"4 G
Total value added ;S 12.(4 6K!

;s.6K! 12.*7

The tomato sellin! price at farmer level was ;s.12.2 per )! +#i!ure 2.1(/. The !rower harvest tomato and transport to factory. The expenses incurred by the farmers were production activities% harvestin!% however farmers save pac)in! and commission char!es. The value added was produced from the process of tomato cultivation. This chain produced a total value added of ;s.(7.7" per )!% which was the hi!hest value added compared to other value chains. :n this chain farmers save mar)etin! cost and earn more income per acre. The value-added process occurred to any lar!e de!ree at the processor level followed by product wholesaler retailer and farmer respectively +Table 2.22/. 115

<igure 7*'0: Small farmer chain EVertical coordinationF: <armer M Processing factor# M Product =holesalers M etailers
&roduction cost 72 8 $ar)etin! cost 2( 8

Cost Value added

%0 G Small !rowers '1G

7% G
Factory

21 G

7G &roduct 0holesaler '6 G

6G

;etailer
12 G

;s.6K! 12.2

Total value added ;S (7.7"6K!

(able 7*%7: Small farmer tomato /alue chain anal#sis summar#


S* !o* ' Chain actors and acti/ities (otal cost to <armer 8 ,alue added 8 Sell price (otal cost Processor 8 ,alue added 8 Sell price (otal cost Commission Agent 8 ,alue added 8 Sell price (otal cost =holesaler 8 ,alue added 8 Sell price (otal cost etailer 8 ,alue added 8 Sell price (otal cost G cost (otal /alue added G /alue added -nit s*B>g Hori8ontal Coordination ''*1% 7 5.25 (2 12.*7 4 4 4 s*B>g &*%% 2 4. 4 2 12.*7 &*0 " 2.21 1 1*.5 '*' ".72 "4 2(.( '1*&0 144 '%*0 144 Vertical coordination 7*09 2( 2.1* 1" 12.2 17 22 25."2 5" 55 & 4 4 '*29 2 .(1 1 25 %*'9 7. 1 12 75 %5*%5 144 05*5 144

s*B>g

s*B>g

s*B>g

112

7*7*7

Value addition for large tomato growers

;arge farmer Chain 'EaF: <armer M Commission Agents M =holesalers M etailers :n channel 1 the farmer sold their tomato to the traditional wholesale mar)et .The tomato sellin! price at farmer level was 17.*5 per )!. :n this traditional value chain the value-added process occurred to any lar!e de!ree at the farmer level followed by retailer% commission a!ent and wholesaler .The farmer bear 7 8 cost of this chain. The chain produced a total value added of ;s.1(.4( per )!% which was the lower value added compared to other value chains +#i!ure 2.15/. <igure 7*'2: ;arge farmer chain 'EaF: <armer M Commission Agents M =holesalers M etailers
#ertili<er inputs 128 % &roductiom cost 5" 8 land rent 2"8 $ar)etin! cost (78 $ar)up (8

Cost Value added

65 G lar!e !rowers 00G

%G
Commission Agents

1G '1 G

6G

0holesaler '' G

;etailer
"2 G
Total value added ;s.1(.4(6K!

;s.6K! 17.*5

Qnder -hain 2% the tomato sellin! price at farmer level was ;s.12.72 per )! +#i!ure 2.12/. The !rower harvest tomato and transport to factory. The expenses incurred by the farmers were production activities% harvestin!% however farmers save pac)in! and commission char!es. :n this chain farmer produced the lower value added in the value chain per cent% at a value of ;s.12.72 per )!. The value added was produced from the process of tomato cultivation. This chain produced a total value added of ;s.(7.7" per )!% which was the hi!her value added compared to other hori<ontal value chain. :n this chain farmers save mar)etin! cost and earn more income per acre +Table 2.27/.

117

<igure 7*'7: ;arge farmer chain ' EbF: <armer M Processing factor# M Product =holesalers M etailers
&roduction cost 72 8 $ar)etin! cost 2( 8

Cost Value added

%0 G 3ar!e !rowers '1G ;s.6K! 12.72

2% G
Factory

21 G

7G &roduct 0holesaler '6 G

6G

;etailer
12 G

Total value added ;S (7.7"6K!

,ertical coordination between lar!e farmers and processors !ave si!nificant reduction in transaction6mar)etin! cost and ensure more profit as compare to hori<ontal coordination (able 7*%5: ;arge farmer tomato /alue chain anal#sis summar#
S* !o* ' Chain actors and acti/ities (otal cost to <armer 8 ,alue added 8 Sell price (otal cost Processor 8 ,alue added 8 Sell price (otal cost Commission Agent 8 ,alue added 8 Sell price (otal cost =holesaler 8 ,alue added 8 Sell price (otal cost etailer 8 ,alue added 8 Sell price (otal cost G cost (otal /alue added G /alue added -nit s*B>g Hori8ontal Coordination ''*%6 65 2.27 ( 17.*5 4 4 & s*B>g &*%% 2 4. 2 2 17.*5 &*0 " 1.75 12 24.1 '*' (. "( 22 '1 '&& '0*&0 '&& Vertical coordination 7*09 %0 2.2" 1" 12.72 '5 22 25.2 21 55 4 4 '*29 2 .(1 1 25 %*'9 7. 1 12 75 %5*%5 '&& 05*51 '&&

s*B>g

s*B>g

s*B>g

11

7*5 Price Structure and Cost ,ri/ers for Hori8ontal$ Vertical and Pre)har/est Contract S#stem The price structure of the fruits and ve!etables depends not only upon the system of supply chain throu!h which the commodity moves but also a lot of price variability is observed durin! the production cycle particularly for the ve!etables. :n case of hori<ontal coordination in man!o the price depends upon the tar!et mar)et and upon the sta!e of the season. The price of the product varies considerably durin! the season for the same whole sale mar)et. The price structure in case of vertical coordination is more constant with little variation but are not unexpected as in case of hori<ontal coordination. Similarly in case of pre-harvest contact system the price of the output +per wei!ht/ basis remain almost similar in a production domain. The price determination depends upon the sta!e of the orchard% amount of advance payment% expected output determined by the condition of the orchard and bar!ainin! between the producers and the contractor. :n addition to it the price structure also depend upon the scale of production and business. Bence the price offered to lar!e man!o !rowers is little hi!h as compared to small farmer of almost similar other conditions and factors. This means that the traditional system of the wet mar)et also favors the lar!e farmers due to more bar!ainin! power and scale of the business. :n case of citrus the similar system of price structure prevails alon! different supply chain systems as observed in case of man!o. :n case of hori<ontal coordination the price fluctuation is less due to more established processin! and vertical coordination throu!h sellin! direct to the processin!6export factories. The price structure also depends upon the volume of export and supply orders particularly from the nei!hbourin! countries li)e :ran and .f!hanistan. The price in the whole sale mar)ets with in the country are hi!hly inte!rated with the export mar)et for citrus. Same price structure in the wholesale mar)et is followed for small and lar!e farmer except that the advances from commission a!ents. :n case of vertical coordination the price structure remain almost similar with less price fluctuation in the short run. 1ver the season price variation was observed in early% middle and late season. Bi!h price was observed in case of hori<ontal coordination but less operational6observable cost in case of vertical coordination resultin! in hi!her returns in this case. .s for as the pre-harvest contract system is concerned the price structure depends more on the first sale out in a vicinity and the fellow farmers price becomes a 11*

reference point. The important factors li)e man!o considered by the contractors are condition of orchard and the expected fruit bearin!6production alon! with ad'ustments for the expected ris)s and advances paid to the farmers. 3ittle different supply chain arran!ements prevailed in the selected tomato value chain. $ainly self mar)etin! in the hori<ontal and vertical coordination was found. The prices were determined by the tar!et mar)et% production sta!e and tomato production cycles of the other re!ions. The price of the &un'ab tomato decreased if there is supply from the other re!ions also. :n case of vertical coordination little price differences between small and lar!e farmers were reported due to scale of production whereas the prices were low as compared to hori<ontal coordination which was mainly covered throu!h hi!her production and supply of more ripened tomato to the industry. The cost drivers are more complex than the price structure of the horticultural commodities for different systems of the supply chain. The production cost is the main element in all commodities under discussion for all the systems. There is little variation in production cost dependin! upon the scale of business and the characteristics of the farmers. :n the production cost the cost of production inputs li)e fertili<er% pesticides and irri!ation water +(4-(58/ followed by machinery +tractor/ involved and the labor cost are the main drivers at production sta!e for all the commodities under discussion. :n the hori<ontal coordination of man!o value chain all post harvestin! cost are born by the farmer. Qnder this system pac)in! cost is the main cost +(58/ followed by the commission +278/ transportation +28/. Qnder the vertical coordination system the labor char!es in harvestin!% sortin!% pac)in! and loadin! are the main costs as the other cost of pac)in! material and commission are not paid by the farmer. $ain drivers of transaction cost in case of fruits depend upon the system of the product disposal. The information% ne!otiation and monitorin! were the main drivers. Bowever it was hi!hest in case of hori<ontal coordination in the fruits +man!o and citrus/ followed by the vertical

124

coordination. 0ith the advancement in communication technolo!y mainly visitin! for ne!otiation was the main cost. :n tomato under hori<ontal coordination amon! the post harvest costs% pac)in! cost share was around (*8 followed by the transportation cost +248/ and commission +128/. Qnder vertical coordination is the transportation cost is the main cost. .mon! the production fertili<er +158/ pesticide +128/% seed +128/ land preparation + 8/ and irri!ation +148/ were the ma'or cost drivers. The labor cost was one of the important factors as compared to fruits as in case of tomato there was around 24 percent. 7*6 S#stemic Constraints with -nderl#ing S#stemic Causes and elated Markets This sub-section deals with the framewor) for analysis% and draws up a number of )ey considerations for identifyin! the deeper systemic constraints behind the symptoms identified in the value chain research. :t is in the evaluation of value chain research findin!s that we need to find the lin) between symptoms and causes in the mar)et system and appropriate answers for addressin! systemic constraints +Berr F $u<ira% 244*/. Borticulture sub-sector constraints and opportunities are cate!ori<ed into ei!ht headin!s: +i/ input supply +ii/ production mana!ement +iii/ mar)et access +iv/ infrastructure6technolo!y +v/ finance and ris) +vi/ enablin! environment +vii/ policy +viii/ or!ani<ation and mana!ement and presented in Tables 2.2 % 2.2* F 2."4.

121

(able 7*%6: Constraints and their underl#ing s#stemic causes of mango /alue chain
,eeper s#stemic constraints &oor Euality of man!o and low productivity 3ow labor productivity 3oss of opportunities for income and employment creations 3ac) of investment in new productive technolo!ies 3ow family income Supply shorta!es on product mar)ets Bi!h post harvest losses 3ow share of processin! +78/ 3ow export prices Causes &ac* of infor!ation and *no,led$e for culti)ation resultin! in poor Euality and low productivity Poor ,or*in$ condition of !all #roducer resultin! in low labor productivity &o, inco!e of !all #roducer resultin! in loss of opportunities for income and employment creation In ufficient acce to financial re ource resultin! in lac) of investment in new productive technolo!ies 2i cri!ination a$ain t ,o!en ,or*in$ in the field resultin! in low family income level &ac* of *illed la0or and recruit!ent of youth resultin! in supply shorta!es on product mar)ets &ac* of *illed har)e ter , collector , #ac*er and tran #orter resulted in hi!h post harvest losses &o, !an$o #roducti)ity and chee# !an$o #ul# fro! other countrie resulted in low share of man!o processin! Poor #roduct 3uality and #oor #ac*a$in$ resulted in low export prices Market Service F information mar)ets 3abor mar)et -ore mar)et between buyers and suppliers -apital mar)et 3abor mar)et 3abor mar)et 3abor mar)et &rocessin! mar)et 3abor mar)et

(able 7*%9: Constraints and their underl#ing s#stemic causes of citrus /alue chain
Problems &oor Euality of citrus and low productivity 3ow labor productivity 3oss of opportunities for income and employment creations 3ac) of investment in new productive technolo!ies 3ow family income Supply shorta!es on product mar)ets Bi!h post harvest losses 3ow export prices 3ow share of processin! +78/ Causes &ac* of infor!ation and *no,led$e for culti)ation resultin! in poor Euality and low productivity Poor ,or*in$ condition of !all #roducer resultin! in low labor productivity &o, inco!e of !all #roducer resultin! in loss of opportunities for income and employment creation In ufficient acce to financial re ource resultin! in lac) of investment in new productive technolo!ies 2i cri!ination a$ain t ,o!en ,or*in$ in the field resultin! in low family income level &ac* of *illed la0or and recruit!ent of youth resultin! in supply shorta!es on product mar)ets &ac* of *illed har)e ter , collector , #ac*er and tran #orter resulted in hi!h post harvest losses Poor #roduct 3uality and #oor #ac*a$in$ resulted in low export prices &o, citru #roducti)ity resulted in low share of citrus processin! Market Service F information mar)ets 3abor mar)et -ore mar)et between buyers and suppliers -apital mar)et 3abor mar)et 3abor mar)et 3abor mar)et 3abor mar)et &rocessin! mar)et

122

(able 7*1&: Constraints and their underl#ing s#stemic causes of tomato /alue chain
Problems &oor Euality of tomato and low productivity 3ow labor productivity 3oss of opportunities for income and employment creations 3ac) of investment in new productive technolo!ies 3ow family income Supply shorta!es on product mar)ets Bi!h post harvest losses 3ow export prices 3ow share of processin! +78/ 1nly 5 tomato varieties are released and re!istered so far in &a)istan Causes &ac* of infor!ation and *no,led$e for culti)ation resultin! in poor Euality and low productivity Poor ,or*in$ condition of !all #roducer resultin! in low labor productivity &o, inco!e of !all #roducer resultin! in loss of opportunities for income and employment creation In ufficient acce to financial re ource resultin! in lac) of investment in new productive technolo!ies 2i cri!ination a$ain t ,o!en ,or*in$ in the field resultin! in low family income level &ac* of *illed la0or and recruit!ent of youth resultin! in supply shorta!es on product mar)ets &ac* of *illed har)e ter , collector , #ac*er and tran #orter resulted in hi!h post harvest losses Poor #roduct 3uality and #oor #ac*a$in$ resulted in low export prices &o, to!ato #roducti)ity and chee# to!ato #a te fro! 'hina and Iran resulted in low share of tomato processin! 45nly 20 )e$eta0le 0reeder in the country 4Pun6a0 11, Sindh 1, 7P7 4, 8+R' 2 +&athetic situation re!ardin! B;A for ve!etable breedin! in !eneral and tomato in particular/ Market Service F information mar)ets 3abor mar)et -ore mar)et between buyers and suppliers -apital mar)et 3abor mar)et 3abor mar)et 3abor mar)et 3abor mar)et &rocessin! mar)et ;FA institutions

7*9 :ffects of Vertical Coordination on (ransaction Cost and <arm Profitabilit# of Smallholders in Horticultural Value Chain 1verall positive effect of vertical coordination on farm profitability was observed for the three commodities under consideration throu!h lower transaction cost and observable post harvestin! cost alon! with little hi!her productivity as compared to the hori<ontal coordination +Table 2."1/. 0hen compared with all the three systems in fruits and two in tomato the net benefits were found hi!her to the farmers vertically coordinated with the processin!6export mar)et. The increase profitability with better production was resultin! with little hi!her production cost for Euality product for the processors in vertical coordination. Puality production also reEuire better mana!ement which ultimately is translated into better productivity. The transaction cost was also lower in this case as compared to hori<ontal coordination due to smaller chain of intermediaries. Bowever it was observed little bit hi!her than the pre-harvest contract system in addition to other benefits little price fluctuations resulted in less ris) as compared to hori<ontal coordination. The only draw bac) in the system reported by the small farmers was that some preferential treatments 12"

were !iven to the lar!e farmers and contractors due to lar!e Euantity of the produce as compared to small farmers in terms of prices offered. Bence there is need to develop a collective system of mar)etin! for increasin! bar!ainin! power of the small farmers. The results in table 2."1 revealed that vertical coordination has less transaction cost and more profitability than hori<ontal in case of man!o% citrus and tomato in the study. Aue to small volume of man!o% citrus and tomato small farmers are bearin! relatively hi!her transaction cost than lar!e farmers with more volume of their produce. (able 7*1': Profitabilit# of horticultural sub)sector
Characteristics #arm Si<e owned +.cres/ #arm Si<e operational +.cres/ $ean commodity area+.cres/ -ommodity area of oper. farm si<e +8/ Hori8ontal Coordination ?ield +K!6.c/ 7ross ;evenue+;s6.c/ -ost of production+;s6.c/ Transaction -ost+;s6.cre/ &rofit +;s6.cre/ Vertical Coordination ?ield +K!6.c/ 7ross ;evenue+;s6.c/ -ost of production+;s6.c/ Transaction -ost+;s6.cre/ &rofit +;s6.cre/ Pre har/est contract ?ield +K!6.c/ 7ross ;evenue+;s6.c/ -ost of production+;s6.c/ Transaction -ost+;s6.cre/ &rofit +;s6.cre/ Small 2.4" 5.7( ".27 57 (425 11452 527 .1 251(2.4" 5"7 4 (2"* 127174 547(4. 12221.12 72(2*.2 "**( 52**(.( "121".1 1"*.7* 257 1." Mango ;arge 52."" 54."( 21.(* (" ( 2 1(2(22 21425.* 2( ((. * 1(44.4 (*2( 152"22 5(752.* 1((44.52 14121".1 (7*2 74((2 "24"5. 1 2. * "((42.52 Small 2.(2 7.( ".** 5" 7252 1115*7." 55( .2( 5"545.7( 224(*.4( 7(11 7"7"*.(5 (25"*.1( 14(12.(2 "1244."1 71 * (244*.2 "12"1.2 15 .15 1("7 Citrus ;arge 25.(7 2(.57 12.14 (* 75 4 117111 4 42. (2471.2( "2"4 .2 725 572* (("(4 * 17.552 (1("4.4 7515 5( 5*.5 "5"*5.25 125."" 1*(2". 5 Small "."7 7.27 1.5 22 7"4.4 1( 1( .1 * 2".2 55"( .2 (*"2(.5 14 24.4 1"71*7.2 74221. 157*7.2 22*75. (omato ;arge 1".1" "".(1 5.72 17 *"74 12 1*1.5 1452*".2 (5725.2 22(*7.* 1121" 1(7717."2 75"2 ."7 121(2.47 72"( .** -

7*'& Identification of Stronger <orms of Integration that could Sustainable Impro/e =ellbeing of Smallholder <armers in Horticultural Value Chains Dased on the results of the analysis of the three ma'or commodities it could be concluded that the ob'ectives of hi!her profitability alon! with lower cost were achieved in the vertical coordination. Similarly the purpose of hi!her productivity for achievin! the self sufficiency and surplus for forei!n exchan!e earnin! is also achievable under vertical coordination as yield was 12(

reported hi!h% reported in the section of profitability. The vertical coordination also develops competition for the other systems resultin! in hi!her prices for the farmers. Keepin! in view the above discussion and the results presented in this chapter it could be concluded that developin! vertical coordination could sustainably improve the wellbein! of the smallholders in horticultural value chains. Bowever the underdeveloped system of processin! and less opportunities due to lower share in the !lobal trade of horticultural commodities is hinderin! bac) the industry to develop vertical coordination in the study area. 7*'' Implications for Smallholders$ Agri)business$ Public Polic# and In/estment Priorit# The analysis of the economic viability helps to draw important implications for the smallholders and a!ribusiness alon! with policy ma)er. Bi!her returns with lower cost imply that the small farmers could be benefited throu!h vertical coordination that would help to increase rural income and reduce poverty. There is stron! indication for the public policy to promote processin! and international trade and develop policies for promotin! investment in the local processin! and export industry. This also implies that the priorities for investment should also be focused for promotion of vertical inte!ration. 7*'% Conclusion This chapter dealt with the value chain research for horticulture sub-sector to identify the underlyin! reasons for mar)et failure of service mar)et% to understand incentives of private and public mar)et players to en!a!e in transactions and contribute to solutions for addressin! the failure of service mar)etI and to hi!hli!hts pathways to sustainable chan!e for improvin! services mar)et by focusin! on mar)et opportunities and relationships. The analysis of the economic viability of man!o% citrus and tomato revealed that smallholders man!o !rowers incurred hi!hest cost throu!h self mar)etin!% while pre-harvest contract system was cost efficient. :n case of lar!e holders man!o !rowers hi!hest cost was reali<ed in case of self-mar)etin!% in case of vertical coordination sellin! directly to the processors6exporters% operational cost was less than the whole sale mar)etin! system but production cost was hi!hest 125

than the farmers wor)in! with the hori<ontal chain and pre-harvest contract system. &rofitability analysis revealed that small holders did not mana!e their man!o farms optimally and !et low avera!e yield and hence low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more outputs per acre. -ost analysis both at small and lar!e holder citrus !rowers revealed that transaction cost was hi!hest in case of hori<ontal coordination in the traditional chain of commission a!ent in the whole sale mar)et mainly due to the hi!h operational cost while transaction cost was less due to few actors alon! the vertical coordination. #arm level profitability analysis for smallholders citrus !rowers revealed that 72 percent of the sampled !rowers didn9t mana!e their citrus farms optimally and !et low avera!e yield and low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more output per acre. Bori<ontal coordination in citrus !enerates !ross revenue of ;s.1115*7 with total cost of ;s. 55( and net profit of ;s.224(* per acre. Qnder vertical coordination per acre yield is sli!htly hi!h and !enerate ;s."1244 per acre as net profit. :n case of lar!e holder citrus !rowers hori<ontal coordination !enerates !ross revenue of ;s.117111 with total cost of ;s. 4 4" and net profit of ;s."2"4 . 3ar!e holders fetched more profitability and competitiveness as compared with small holders. Similarly in tomato% the cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical tomato coordination resultin! in low cost to the tomato farmers sellin! their commodity directly to the processors. #or lar!e holder tomato !rowers to the cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical coordination. The profitability result revealed that small holders tomato !rowers did not man!e their tomato farms optimally and !et low avera!e yield and low returns. 3ar!e farmers have been investin! more intensively and !ot more outputs per acre. .nalysis of value addition throu!h different channels and different actors it was revealed that hi!h de!ree was observed at retailer level +"58/% in hori<ontal coordination% while at exporter 122

level + 28/ in vertical coordination for small holders man!o !rowers. :n case of lar!e holders man!o !rowers the hi!hest de!ree of value added was reali<ed at 728 at retail level and ( percent at exporter in vertical coordination. Similarly for small holders citrus !rowers a!ain it was hi!hest at retail level +528/ in hori<ontal coordination and *2 percent by exported in vertical coordination. :n case of lar!e holders citrus !rowers% hi!hest value addition at the level of 52 percent was observed at retail level under hori<ontal coordination and at the level of *28 by exporters under vertical coordination. .nalysis for tomato value chain revealed that hi!hest de!ree of value addition was observed at farmers level at the de!ree of (2 8 and (( percent under hori<ontal coordination for smallholders and lar!e holders tomato !rowers respectively and 5" percent by processors under vertical coordination both for smallholders and lar!e holders tomato !rowers. The price structure analysis revealed that man!o price depends upon the tar!et mar)et and upon the sta!e of the season under hori<ontal coordination% while in case of vertical coordination price is more constant with little variation but are not unexpected as in case of hori<ontal coordination. Similar price structure prevails alon! different supply chain systems as observed in case of citrus as in case of man!o. 3ittle different supply chain arran!ements prevailed in the selected tomato value chain. $ainly self-mar)etin! in the hori<ontal and vertical coordination was found. The prices were determined by the tar!et mar)et% production sta!e and tomato production cycles of the other re!ions. -onstraints analysis revealed that smallholder face a number of constraints% which increase ris) and uncertainty and act as disincentives for increased production% conseEuently preventin! smallholders from accessin! a!ricultural mar)ets. $a'or challen!es faced by smallholders such as poor access to landI lac) of on-farm and off-farm infrastructureI lac) of access to finance for production inputsI lac) of access to mechani<ation% transport lo!istics% extension and research support servicesI and limited access to hi!h-value mar)ets. Bowever% positive effect of vertical coordination on farm profitability was observed for the three commodities under consideration throu!h lower transaction cost and observable post harvestin! cost alon! with little hi!her productivity as compared to the hori<ontal coordination.

127

The analysis of the economic viability helps to draw important implications for the smallholders and a!ribusiness alon! with policy ma)er. Bi!her returns with lower cost imply that the small farmers could be benefited throu!h vertical coordination that would help to increase rural income and reduce poverty. There is stron! indication for the public policy to promote processin! and international trade and develop policies for promotin! investment in the local processin! and export industry. This also implies that the priorities for investment should also be focused for promotion of vertical inte!ration.

12

VA;-: CHAI! A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+

The chapter is about translatin! value chain research into the development of a vision for chan!e and intervention strate!ies after analy<in! and understandin! the value chain research findin!s. 1n the basis of evaluation of findin!s of value chain research a proposed for value strate!y chain +solutions6interventions/

development of horticulture sub-sector

12*

Chapter A VII VA;-: CHAI! A!A;?SIS +< H+ (IC-;(- A; S-.)S:C(+


5*' Introduction

The framewor) for findin! sustainable up!radin! solutions in horticultural +man!o% citrus and tomato/ value chains consist of four steps namelyI +i/ identifyin! constraints and their underlyin! systemic causes +ii/ identifyin! incentives of mar)et players and a!ents of chan!e +iii/ formulatin! a vision and strate!y for sustainable systemic chan!e: The interventions are proposed. 5*% Constraints Anal#sis of Smallholder ,ominated Horticulture Sub)Sector

Smallholder farmers face a number of constraints% which increase ris) and uncertainty and act as disincentives for increased production% conseEuently preventin! them from accessin! a!ricultural mar)ets. This chapter discusses some !eneral constraints facin! smallholder farmers. Small farmers are facin! both internal and external constraints. 7enerally% smallholder farmers in &a)istan face ma'or challen!es such as poor access to landI lac) of on-farm and off-farm infrastructureI lac) of access to finance for production inputsI lac) of access to mechani<ation% transport lo!istics% extension and research support servicesI and limited access to hi!h-value mar)ets. @xternal constraints emanate from the broader a!ricultural environment and are lar!ely beyond the control of the individual farmer which include natural ris)s typical to a!ricultural activityI limited availability of inputs% credit% mechani<ation% and mar)etin! servicesI poor institutional and infrastructural supportI inappropriate policies and le!islationI restrictive administrative and social structuresI and problems associated with land tenure and the acEuisition of a!ricultural resources +Daloyi% 2414/. Be further stated that internal constraints are those constraints that affect the farmer9s ability to operate efficiently% despite any innate potential the farmer mi!ht have to allocate resources in an economically efficient manner. Jormally the farmer has some control over such constraints which include liEuidity problemsI shorta!e of

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labourI lac) of s)ills% )nowled!e and educationI and a ran!e of cultural factors that in some instances prevent more effective mana!ement of resources. Sharif +2411/ ar!ued that some of the challen!es facin! &a)istani smallholders are lac) of mar)ets and hi!h transaction costs due to poor access to mar)ets and hi!h transaction costs% poorer farmers are excluded from participatin! in potentially remunerative commodities li)e man!o% citrus and tomato. .lternative avenues for smallholder mar)et participation include vertical inte!ration with processors and mar)eters of a!ricultural products +Daloyi% 2414/. Bowever% lac) of assets% mar)et information and access to services a!ain hinders smallholder participation in these potentially lucrative mar)ets li)e supermar)et% $etro% $acro% Dest &rices and other mar)ets in :slamabad% 3ahore% #aisalabad and Karachi. The constraints were expressed by the various actors of the man!o% citrus and tomato value chains +input suppliers% producers% traders% wholesalers% retailers/ )ey informants +related !overnment officials% a!riculture researchers% academicians% J71s% practitioners. The constraints were cate!ori<ed into the followin! ei!ht !roups which are: +i/ Smallness +ii/ $ana!ement61r!ani<ation +iii/ :nput Supply +iv/ Technolo!y F &roduct Aevelopment +v/ $ar)et .ccess +vi/ #inance +vii/ @nablin! @nvironment and +viii/ &olicy. The brief description of these constraints with their features is presented in Table 7.1. (able 5*': Constraints anal#sis of smallholder dominated horticulture sub)sector
4roups S#mptoms BConstraints 3imited availability and access to Euality inputs +particularly seed 6seedlin!s/ results in poor yield conseEuently per unit production costs increase dramatically ma)in! production less profitable. Causes :ncreased price of primary inputs +seed6seedlin!s% fertili<er/ pushes the cost of production hi!her ma)in! it less competitive a!ainst inexpensive resultin! in loss and discoura!ement for production. 3imited )nowled!e of seed6seedlin!s production and preservation by the farmers reduces production yield conseEuently per unit production costs increase dramatically ma)in! production less profitable. Aependent on supply from &a)istan @rratic supply due to poor mar)et pro'ection 3ac) of financial capacity of the farmers to purchase Euality seed 3ac) of )nowled!e of farmers about seed Euality. Aependent on supply from &a)istan @rratic supply due to poor mar)et pro'ection Bi!h transaction cost +tax% toll% bloc)a!e of wor)in! capital% :ncreased transportation cost/ :nadeEuate )nowled!e about seed collection and preservation +utcomes constraints ;educes yield of =ho isBare affected Small farmers

Input Suppl#

:ncreases of production

cost

Small farmers

;educes yield

Small farmers

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3imited availability and access to cultivation technolo!y +tractor% irri!ation eEuipments% weeder% spray machine% etc./ increases the rental fees or reEuires more manual labor thus increasin! the cost of production and reduces profit of the producers. $an!o small farmers +748/I -itrus +278/I Tomato +728/ 3ow Euantity and poor Euality :nconsistency in production &oor collective bar!ainin! to safe !uard their interest 3ower sharin! of )nowled!e% information and experience resultin! in poor productivity and profitability.

;eEuires substantial investment Aemand and supply of service is not )nown

:ncreases cost production

of

Small farmers

Smallness

:nheritance 3ow endowment in production factors :ncreases demand of consumer and their concerns about food safety 3ac) consistency in terms of supplyin! products to mar)ets 3ac) of consistency in terms of producin! products 3ac) of adeEuate farmer association 3ac) of functional farmers9 association

Management B +rgani8ation

3imited )nowled!e and s)ills of commercial farmin! resultin! in poor productivity and poor profitability

3imited )nowled!e on appropriate record )eepin! +particularly cost of various inputs% farmin! harvestin!% post harvestin! activities% etc. as well as production% wasta!e fi!ures/ to determine profitability and competitive advanta!e resultin! in poor satisfaction or hi!her expectation from production of tomatoes. 3imited )nowled!e about man!o% citrus and tomato varieties result in poor yield and less profit 3ac) of )nowled!e of man!o% citrus and tomato disease and its protection results in poor yield and less profit 3ac) of bar!ainin! power +Since they have poor access to mar)et information and limited access to financial mar)ets% which prevents them from sellin! their products at the most profitable time/. 3imited )nowled!e about improved cultivation practices +soil testin!% crop rotation% orchard mana!ement% water mana!ement% weed mana!ement% plant spacin!% etc.%/ resultin! in low productivity and poor Euality thus ma)in! production less attractive.

&ractice of subsistence a!riculture 3ac) of mar)et &oor profitability &ractice of subsistence a!riculture :lliteracy 3ac) of awareness

3ac) of bar!ainin! power due to little mar)etin! surplus ;educe productivity and profitability KSupermar)ets would rather not deal with smallholder farmers = they don9t deliver +start6stop/% don9t invest +invest 'ust one time and don9t )eep up/% and are a ma'or hassle to wor) withL. ;educe productivity :ncreases dissatisfaction of man!o% citrus and tomato !rowers

Small farmers

3ar!e farmers .ll farmers

&ractice of subsistence a!riculture &oor )nowled!e of input suppliers &oor extension activities &oor )nowled!e of input suppliers &oor extension activities Qnor!ani<ed !roups &oor cooperation amon! them

;educes yield

Small farmers .ll farmers Small farmers

;educes yield

;educe profitability ;educe share of added value in the value chain :ncreases cost of production ;educes yield

3imited )nowled!e and information on new and improved production technolo!ies +planters% harvesters% etc./ reduces productivity +yield/ and Euality resultin! hi!her cost of production and lower profit thus ma)in! production less attractive to producers. 3imited )nowled!e on hi!h yieldin!% pest resistant% early6late6off season varieties of tomatoes% seedlin!s of man!o and citrus by the !rowers results in lower productivity and profitability

3ac) of effort towards continual development of technolo!y. 3imited capacity of the extension department &oor resource allocation for a!ricultural research. 3ac) of service providers &oor coordination amon! ;esearch :nstitute% .!riculture Qniversity% and @xtension Aepartment .bsence of lar!e .! machinery suppliers

.ll farmers

;educes productivity :ncreases of production ;educes profitability

.ll farmers cost

&oor coordination amon! ;esearch :nstitute% .!riculture Qniversity% and extension department ;esource limitation of extension department

.ll farmers

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Market access (echnolog# N Product ,e/elopment

3imited )nowled!e of appropriate application and dosa!e of fertili<er and pesticide use reduces productivity resultin! in poor profit.

3imited adeEuate local expertise and s)ills on stora!e and processin! technolo!y is retardin! the mar)et !rowth conseEuently the farmers are deprived from hi!h income opportunities from production and are discoura!ed

&oor coordination amon! ;esearch :nstitute% .!riculture Qniversity% and extension department ;esource limitation of extension department Jo available facilities Services are outsourced from &a)istan Jo technical institutions

;educes yield ;educes profitability ;educes profitability

.ll farmers

.ll farmers

3ac) of human capital Bi!h transaction cost 3ac) of adeEuate mar)et information results in poor decision of the farmers to harvest and select ri!ht mar)et conseEuently lower mar)et price.

:lliteracy &oor technolo!ical s)ills 3ac) of mar)ets in rural area 3ac) of poor transportation system &oor information sharin! facilities Jo intermediate mar)et &oor supply channel

3ac) of mar)ets in rural areas

3imited public and investment in rural area

private

3ac) of cold stora!e facilities forcin! the farmers to sell their produce even the price is lower thus in increases the financial loss of farmers :nadeEuate bac)ward +for seed% fertili<er% pesticide% eEuipments% )nowled!e/ and forward +traders% wholesalers% retailers/ lin)a!e with farmers results in poor productivity and profitability thus discoura!es the farmers to !row horticultural crops. &oor mar)et mechanism +lac) of information% sin!le mar)et% poor ne!otiation power of the farmers% etc./ encoura!es exploitative tendency of the traders thus discoura!es the farmers to produce horticultural crops. 3ac) of availability of Euality inexpensive pac)a!in! materials +wooden crates/ increases cost and wasta!es durin! transportation resultin! in lower profit.

3ac) of local technical )nowled!e Bi!h investment cost

Jo intermediate mar)et &oor supply channel

;educes yield and profitability ;educes profitability &rice reduction &oor decision of farmers re!ardin! harvestin! time and selectin! the ri!ht mar)et &rice reduction Bi!her transaction costs ;eduction in early season price Sellin! at below cost price :ncreases prices of inputs ;educes profitability

Small farmers Small farmers Small farmers

Small farmers .ll farmers

Small farmers

Stron! $ar)et re!ime #armers are not united

;eduction in early season price Sold at below the cost price &oor sources of raw material

Small farmers

<inance

3ac) of access to finance for purchasin! Euality seed6seedlin!s% adeEuate fertili<ation and appropriate dose of pesticide application results in lower yield and poor profitability. 3ac) of access to finance result in production in smaller land thus reducin! the scope for attainin! economy of scale and competitive advanta!e for more profit. 3ac) of access to finance force the producers to sell their products in advance to traders at a lower price thus ma)in! production less profitable

&oor sources of raw materials -rates are outsourced from &a)istan @asy availability of recycled crates but are !enerally poor Euality Jon availability of formal financial institutes. 3ac) of owners9 eEuity. Jon availability of formal financial institutes. 3ac) of owners9 eEuity. Jon availability of formal financial institutes. 3ac) of owners9 eEuity.

Small farmers

;educes yield

Small farmers

;educes productivity ;educes profitability

Small farmers

Small farmers

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:nabling :n/ironment

3ac) of access to finance forces the producers to depend on money lenders and pay hi!her interest rate6profit-sharin! ratio thus ma)in! the cost of capital hi!h which reduces 3ac) of adeEuate feeder road lin)in! farms with mar)ets resultin! in hi!h cost% wasta!e resultin! in low profitability. 3ac) of adeEuate supply and access to electricity hinders value addition plants

Jon availability of formal financial institutes. 3ac) of owners9 eEuity. .bsence of !overnment priority #reEuent floodin! &oor !overnment resources &oor private investment incentives

:ncreases of production

cost

Small farmers

:ncreases postharvest losses 3ow share in processin! 3ow share in export :ncreases postharvest losses Bi!her transaction cost ;eduction of prices

.ll farmers .ll farmers

3ac) of adeEuate and appropriate transportation facilities results in hi!her cost% hi!h wasta!e thus reducin! profitability

3ac) of improved communication system

road

.ll farmers

3ac) of cold stora!e facilities results in compellin! the producers to sell their products even at a lower price. 3ac) of processin! facilities results in lower capacity to absorb excess supply thus reducin! the price and poor profitability. 3ac) of appropriate enforcement of policy for seed6seedlin!% fertili<er and pesticide Euality testin! and standard resultin! in increased supply of non-Euality inputs in mar)et 3ac) of adeEuate policy for re!ulatin! the trade of man!o% citrus and tomatoes with nei!hborin! countries 3ac) of hi!h Euality% )nowled!e of 7ood .!ricultural &ractices +7.&/% Sanitary and &hytosanitary +S&S/ measures% capacity to comply with mar)et and re!ulatory reEuirements% new issues of conformity assessment% and traceability. 3ac) of adeEuate policy !uidelines for coordination between a!ricultural research and extension results in slow adoption of research results at the field level conseEuently the producers can not ta)e advanta!e of the research results for profitable production process 3ac) of policy for encoura!in! value addition of a!ricultural products throu!h processin!% stora!e% etc. resultin! in poor private sector investment in this area conseEuently the farmers9 profitability reduces. 3ac) of policy for tax incentives on import of modern appropriate a!ricultural machineries to increase productivity resultin! in low competitiveness advanta!e in a!riculture 3ac) of appropriate policy for suitable a!ricultural credit facilities for increasin! farm production resultin! in poor productivity and low profitability

lab

3ac) of local technical )nowled!e Bi!h investment cost 3ac) of local technical )nowled!e Bi!h investment cost

.ll farmers .ll farmers

Polic#

3ac) of !ood !overnance 3imited resources of seed testin!

3ow share in processin! 3ow share in export ;educes profitability 3ow share in export of man!o% citrus and tomato

Small farmers

.bsence of farmers9 .ssociation participation in policy ma)in! &oor representation of trade association in policy ma)in!

.ll farmers

&oor policy formulatin! structure .bsence of farmers9 .ssociation participation in policy ma)in!

;ate of research adoption and diffusion is very slow ;educes profitability

.ll farmers

&oor representation of trade association in policy ma)in! &oor policy formulatin! structure &oor representation of trade association in policy ma)in! &oor policy formulatin! structure &oor policy formulatin! structure .bsence of farmers9 .ssociation participation in policy ma)in!

.ll farmers

&oor competitive advanta!e ;educes profitability

.ll farmers

Small farmers

5*1

Identif#ing Incenti/es of Market Pla#ers and Agents of Change

The success and sustainability of up!radin! solutions depend on whether they sufficiently address the interests and incentives of mar)et players. This section !ives an introduction to a rapid sta)eholder6incentive analysis. -apacity buildin! of chain sta)eholders especially 1"(

producers and contractors for the s)ill transfer of their uns)illed labor for harvestin!% collectin!% !radin!% pac)in!% transportin!% loadin! and unloadin!. Dad wor)in! environment and chan!in! consumer awareness and demand are ma'or factors creatin! hindrance for upholdin! the horticultural sub-sectors. The role of these factors is briefly discussed in the followin! subsection:

5*1*'

.ad working en/ironment in horticulture /alue chains

Berr and $u<ira +244*/ stated that poor and disadvanta!ed people are part of horticulture value chain systems at various levels: as producers% service providers% laborers and consumers. They further ar!ued that a symptom of poverty is poor wor)in! and livin! conditions affectin! not only the health of people +producers% services providers% laborers and consumers/ but also their social and economic status and reco!nition% their commitment to wor) and = most importantly = their productivity and loyalty to their employer% buyers or suppliers. The wor)in! environment of horticulture producers are not only a symptom of poverty but are often also a cause of system inefficiency and lac) of horticultural product Euality% resultin! in the inability to compete on mar)ets as well as such wor)in! environment is therefore not only a social condition but become a serious economic factor determinin! income and employment opportunities for horticulture producers in !eneral and small producers in particular +Berr and $u<ira% 244*/. The small horticultural producers always remain in vicious circle because harsh wor)in! environment lead to low horticultural productivity and lac) of Euality which ma)e them unable to meat mar)et reEuirement demanded by the consumer preference. Thus horticultural demand shifts towards lar!e and commercial horticultural producers which lead to lac) of investment% capital and demand which ultimately provide the platform of poor wor)in! condition of small horticultural producers. &oor wor)in! environment conditions also undermine the ability of lar!e farmers6processors6exporters to compete 5*1*% .ad working conditions affect output and performance

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&roductivity and6or Euality wea)nesses of suppliers6buyers also mean that processors6exporters face serious competitive pressure in terms of costs and Euality structures +Berr and $u<ira% 244*/. They further stated that wea) supply also means that the buyers will have problems meetin! its own customers9 demand as well as instead of cuttin! bac) on investments in more wor)-friendly production facilities% improvin! wor)in! conditions can enhance the competitiveness of processors6exporters6traders on the mar)et. This can be reflected the productivity and Euality wea)ness of small horticulture producers profitability analysis. &rofitability .nalysis: The profitability analysis is done considerin! cost analysis described above. The economic viability of different farmer !roups alon! different chains is determined based on the profitability analysis. 5*1*1 Changing consumer awareness and demand

-onsumer associations% media and policy-ma)ers are increasin!ly ur!in! +multinational/ companies to improve social and environmental standards in their supply6mar)etin! chains% a fact that is underlined by the emer!ence and increasin! popularity of fair trade standards and certifications +Berr and $u<ira% 244*/. They further stated that unless processors6exporters are able to respond to this demand% they will lose mar)ets to competitors who already have implemented !ood wor)in! conditions and control mechanisms. 5*0 <ormulating a Vision and Strateg# for Sustainable S#stemic Change

The information on S01T .nalysis of horticulture sub-sector is presented in sub-section 7.(.1. #ollowin! S01T .nalysis the constraints% opportunities% solutions and interventions for horticulture sub-sector is presented in sub-section 7.(.2. 5*0*' S=+( anal#sis of horticulture sub)sector

Stren!ths% 0ea)nesses% 1pportunities F Threats +S01T/ a powerful tool is used in developin! strate!ies for intervention. The tool provides a framewor) for understandin! controllable and 1"2

non-controllable factors that any interventions should address if they are to benefit the entire value chain of horticulture sub-sector. -ritical issues of the S01T analysis come under the ( cate!ories namely stren!th% wea)ness% opportunities and threats. Borticulture sub-sector is confine to man!o% citrus and tomato in this report. The brief description of stren!ths% wea)nesses opportunities and threats of horticulture sub-sector is briefly narrated in the followin! subsections:

Strengths of Horticulture Sub)sector Aiversity of produce - hi!hly suitable climatic condition for fruits +man!o and citrus/ and ve!etables +tomato/ cultivation 3ow cost labour 3ar!e domestic mar)et Aepartment of a!ricultural mar)etin! &un'ab is in place &a)istan horticulture development and export company is in place =eaknesses of Horticulture Sub)sector &oor Euality and low productivity 3oss of opportunities for income and employment condition 3ac) of investment in new productive technolo!y Supply shorta!es on product mar)ets Bi!h product losses 3ow export prices 3ow share of processin!6little value addition 3ac) of on-farm infrastructure 3imited capacity buildin! of horticulture !rowers and other chain sta)eholders to address the issue of low productivity% poor Euality% hi!h post harvest losses% low share in processin!% low

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export prices and limited or no )nowled!e on re!ulatory framewor) +7.&% S&S% 0T1 reEuirements etc./. +pportunities of Horticulture Sub)sector .vailability of certified6Euality seed and seedlin!s .vailability of cheaper and Euality farm inputs +fertili<er% herbicide% pesticide/ Qse of farm machinery enable intensive farmin! @stablishment of farmer or!ani<ation6association6!roups6cluster -ommercial orientation &roximity $iddle @ast and #ar @ast mar)ets :ncreasin! international demand @xcellent business -apacity buildin! of horticulture !rowers% women% children and other chain sta)eholders Jational policy of horticulture sector in line with food security and trade promotion &ublic private partnership (hreats of Horticulture Sub)sector -ompetition Aiseases and pests Puarantine6S&S compliance60T1 reEuirement

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5*0*%

Constraints$ opportunities$ solutions and inter/entions of horticultural sub)Sector

The findin!s of value chain research !iven in -hapter 2 are translated into solutions and interventions. The brief description of ma'or constraints% opportunities% possible solutions and proposed interventions for the horticultural sub-sector in &a)istan9s &un'ab are briefly presented in Table 7.2. (able 5*%: Constraints$ opportunities$ solutions and inter/entions of the horticultural sub)sector
4ro) ups Input Suppl# Constraints 3imited availability and access to Euality inputs +particularly seed6seedlin!s/. @xpensive and poor Euality other inputs +fertili<er% herbicide and pesticides/ +pportunities -ertified6Euality seed6seedlin!s will ensure hi!her yields and reduce the incidence of insect pest and disease -heaper and Euality other inputs +fertili<er% herbicide and pesticides/ will ensure hi!her productivity and reduce the incidence of weeds% insects6pest and diseases Timely application of balance use of fertili<er% herbicide and pesticide accordin! to reEuirement of the critical sta!es will ensure hi!her productivity and increase input use efficiency Bi!h crop intensity will result in hi!her yields -heap credit availability will promote balance input use needin! to increase productivity of #arm mechani<ation will enable intensive farmin! that enable increase farm profitability #ormation of farm or!ani<ation6associations will ensure better access to input% hi!her productivity and more return Solutions :mproved Euality seeds and establishment of clean nurseries Inter/entions ;esearch and development need to focus to ensure availability and access of certified Euality seed6seedlin!sI and awareness campai!n for their use @stablishment of rural business hubs for input provision at union council level will facilitate cheaper and Euality chemical fertili<er at farmer door steps -apacity buildin! other chain sta)eholders for addressin! the issue of post harvest handlin! and lo!istic &romotion of participatory research and development throu!h farmer field school approach +##S./

-heaper Euality fertili<er% herbicide and pesticide

Qnbalance and untimely use of inputs

Knowled!e and s)ill sharin!

:nefficient water utili<ation and hi!h cost of irri!ation Bi!h credit cost

Detter methods techniEues

irri!ation and

&romotion of crop specific hi!h efficiency irri!ation +drip% tric)le etc./ &ro-small holder subsidi<ed credit scheme

-heap credit facilities

3ow level mechani<ation

.ssess to cultivation technolo!y and promotion from rental mar)et -ollective action6collective voice for bar!ainin! power

@stablishment of competitive rental service mar)et of farm machinery at rural business hubs6farm service hubs

Smallness

Aominance farmers smallness/

of small +absolute

3ow Euantity% inconsistent production and poor Euality

Speciali<ed farmin! for consistent supply of Euality product

-ommodity specific and enablin! environment

@stablishment of farmer or!ani<ation6 association throu!h farmer field school approach and lin)in! them rural business hubs and farm service centers capacity buildin! of !rowers for addressin! the need of productivity% Euality of improvement% reducin! post harvest losses and value addition of value addition Aevelopment of functional farmers association lin)ed under rural business hubs +cluster approach/

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Market access ManagementBorgani8ation

&revalence of subsistence farmin! resultin! in low productivity and profitability 3imited )nowled!e and traditional practices

-ommercial orientations for optimum production to maximi<e profitability #armers that are trained at latest techniEues and methods will be able to do farmin! and scientific lines 3in)a!es with input and output mar)et will increase productivity and profitability :mproved mar)et mechanism with access to mar)etin! information and development of cold chains and improved cold harvest process will result in value addition Aecrease the number of mar)etin! intermediary for the commodities movement from farm to for) :mproved infrastructure will increase mar)etin! efficiency ;e!ular supply of cheap ener!y will reduce cost and enhance profitability :mproved processin! facilities will help to absorb excess supply and reduce price variability -apacity buildin! of horticultural !rowers% women and children will ensure to enhance the productivity% Euality improvement% reduction in post harvest losses and value addition -apacity buildin! of other horticultural chain sta)eholders will ensure to reduce post harvest losses% lo!istic issues and mar)etin! problems speciali<ed capacity buildin! to all chain sta)eholders will ensure the better )nowled!e and information on 7.&% food safety and Euality !rades% establishin! proper procedure of pac)in!% :&$ philosophy

$ar)et lin) awareness

and

,ertical coordination with mar)etin! and processin! industries

Aissemination of updated )nowled!e and s)ill

#armer networ)in! with a!ricultural science and technolo!y innovation system

:nadeEuate bac)ward and forwarded lin)a!e with farmers &oor mar)et mechanism and traditional mar)etin! methods

Aevelopment of lin)a!es throu!h buy bac) !uarantee with mar)et chains :mproved mar)etin! system +rules re!ulation system/ and product handlin! in compliance with 0T1 standards :ncrease the awareness of the farmers to lin)in! them with processin! industries6modern retail chains :nfrastructure development :ncrease supply of ener!y throu!h diversified sources #arm based processin! semi

&romotion of contract farmin! throu!h contract farmin!

&romotion of 7.& and development of cold stora!e improved pac)a!in! and transportation.

@xploitation of the farmers by the middle man

@stablishment of vertical coordination where farmer association6or!ani<ation will sell their product to the alliance of processors6exporters Aevelopment of lin)s roads to production areas &romotion of alternative ener!y sources i.e. bio!as% solar and biofuel Small scale processin! facilities +small enterprise development/ i.e. )innow and man!o processin! and tomato pulpin! process @stablishment of model on farm pac) house @stablishment of male farmer field school% women open school and children ecolo!ical clubs

:nabling en/ironment

3ac) of farm to mar)et road +poor infrastructure/ Shorta!e and hi!h cost of electricity6ener!y Qnder develop processin! of horticultural products

;imited capacit# building of horticultural chain stakeholders

&oor capacity buildin! of horticultural !rowers% women and children for addressin! the need of productivity% Euality improvement% reducin! post harvest losses and value addition &oor capacity buildin! of other horticultural chain sta)eholders for addressin! the issue of post harvest handlin!% lo!istic and mar)etin! Jo speciali<ed capacity buildin! to all sta)eholders of horticultural value chain +trainin! on 7.&% food safety and Euality !rades% establishin! proper procedure of pac)in!% :&$ philosophy/

Knowled!e and s)ill transfer to farmers% women and children on enhancin! productivity% improvin! Euality% reducin! post harvestin! losses and enhancin! value addition Knowled!e and s)ill transfer to other chain sta)eholders for reducin! post harvest losses% pac)in!% transportation and stora!e Knowled!e and s)ill transfer to all chain sta)eholders will improve information on 7.&% S&S% food standards and 0T1 reEuirements

@stablishment of business field schools

1r!ani<ed special trainin! course on 7.&% post harvest handlin!s% hi!h Euality and education on food safety and Euality !rades and standard% proper procedure for pac)in! facilities as well as standard trainin! curricula on 7B&s% 7$&s and B.--&.

1(4

Polic#

0ea) enforcement6 implementation

policy

:nadeEuate policy and re!ulatory framewor)

3ac) of public6private partnership in formulatin! policy structure

&olicy implementation will help in availability of Euality6standard inputs6outputs Jational level policy and re!ulatory framewor) line with food security and trade promotion will develop vibrant horticulture sector @ncoura!ement and involvement of private sector in policy decision will help to promote investment value addition and processin!

:mproved6!ood !overnance Jational policy with holistic re!ulatory framewor)

.rran!ement of resources for Euality testin! field lab facilities and mana!ement #ormulation of national horticultural policy #ormulation of re!ulatory framewor) for fulfillin! the S&S reEuirements% food safety and standard as well as 0T1 reEuirements ;epresentation of processin! and trade association and policy dialo!ue

&articipation of concerned sta)eholders in policy ma)in!

5*2

Value Chain Promotion Strateg# for Mango and Citrus

,alue -hain +,-/ promotion strate!y basically focuses on two areas: 1/ mar)et orientation% which aims at !reater volume sold and6or a better end price !ained and 2/ income distribution% the poor small holder benefit at least eEually or more from the income !enerated by a chain. ,alue chain &romotion Strate!y is a set of activities to achieve common ob'ectives% around which one or more business or!ani<ations and6or interest !roups are lin)ed. The activities are planned and carried out to increase the competitiveness of the subsector% with the active participation of a value chain9s diverse actors. . ,- promotion strate!y for the man!o and citrus has been proposed based on mappin! and a detailed analysis of the most pressin! bottlenec)s that are hinderin! !rowth. . review of the literature and 71&% statistics% and discussions with various )ey informants has shown that &a)istan9s fruit sector has both !reat potential and si!nificant challen!es. To tap into the opportunities and to address the challen!es in a systematic manner it is essential to wor) 'ointly with various sta)eholders includin! !overnment departments% the private sector and the operators of this particular value chain. .i ion" To increase production volume and yield and maintain the position of the man!o and citrus sub-sector at the top of &a)istan9s export commodities

1(1

Goal" To reduce the cost of production and improve mar)et lin)a!es throu!h better provision and use of business development services% to increase the mar!ins and share of distributed income of small holders. Strate$ie " :n order to achieve the !oal described above% stron! collaboration between the public sector% development a!encies and the private sector +business associations/ is a precondition. #rom the public side% investments in transport and other basic infrastructure +irri!ation% cold stores etc/% re!ulation of trade and support for technolo!y development are reEuired. #rom the private sector% !reater lin)a!es are needed to structure value chains% create scale effects% and explore post-harvest processin! and mar)etin! opportunities. ,- operators performin! different functions +vertical relation/ and the firms and companies en!a!ed in a particular level of value chain +hori<ontal relation/ need to put collective efforts into up!radin! the value chain. Small producers could benefit throu!h co-operatives or lin)s directly with lar!e companies as suppliers6exporters. &articularly with re!ard to delivery of the produce from farm to the wholesale mar)et% export depots% the amounts !rown by farmers are often too small to meet the needs of bi! traders. Therefore% small producers need to 'oin hands and form a !roup6cooperative to be able to supply the reEuired Euantity to bi! traders6bul) buyers. #armers capacity +financial and mana!ement/ need to be stren!thened so that they can improve their mana!ement practices and adopt new technolo!ies to increase production volume and improve the Euality of fruits. :ncreased financial capacity of small holder can increase the share of self mar)etin! of their produce which insured more profit as compare to pre harvest contract. :t is obvious that no one sin!le or!ani<ation can overcome all the problems% nor it is advisable to have a hu!e crowd of actors at a particular level of the value chain when there is no-one wor)in! at another level. The first pre-reEuisite is therefore to clarify roles amon! the support service providers as to which or!ani<ation can best provide which services. Dased on the analysis of functional flow% mappin! of actors and supporters and mar)et analysis% we su!!est the followin! model +#i!ure 7.1/.

1(2

.s depicted in the fi!ure% various efforts are needed at different levels of the value chain to improve the competitiveness of the man!o sub-sector which insures small holder better !ain from their produce. .t input supply level% private a!ro-input firms need to be attracted into the business to enhance farmers 9 access to Euality seedlin!s% fertili<ers and chemicals. :mprovement in plantin! materials and timely availability are the crucial areas that need support services from various or!ani<ations. .t production level% there is a need to provide trainin! and on-the-spot advice on how to mana!e orchards properly and how to control diseases and pests. .s for the delivery of fruits from the farm to the auction yard6export depots% there is a need to develop and stren!then farmer9s !roups6co-operatives on the one hand and improve post-harvest handlin! facilities on the other. #or export of the fruits% there is a need to improve the inspection and certification process% 3- procedures and transportation. There is ur!ent need to develop financial capacity of the small holders for the purchase of inputs that can save small holder from the exploitation of mar)et intermediaries +contractors and commission a!ents/.

1("

Figure ".1:

#u$$orting agencies and ser%ices for &C anal'sis

$in. com% TA.&

Aevelopment of depots new export exit point in the @ast :nspection of Euality at field depots Fissuance of certificate
:mprovement in post harvest handlin! Fstora!e facility facilities at wholesale mar)et

-onsumers

J.&B:S

#ruits Traders in $iddle @ast% QS.% @urope &rocessors

&BA@-

@xporter

s
;.$-1 DA#-3
Stren!thenin! of #7s6-oop for collective mar)etin! .ccess to finance F technolo!y :mprovement in roads access Fstora!e facilities

Bi!hwa y% &BA@$an!o research Aep


@xt.Aep. &BA@D-

#armers !roup -ooperativ es

-ommiss ion .!ent

3ocal mar)et

-ontractors6 $iddle men

Support to control diseases F pest to reduce fruits drops6sudden death Trainin! F technical support for proper mana!ement of orchard
:mprovement in plantin! material F increasin! !rower9s access to seedlin!% fertili<ers F chemicals

#armers

#F, research

&vt. .!ri input Supply #irms6companies

3ocal tree nurseries%inp uts dealers% -.s

,- 3in) presently exist ,- lin) needed to expanded6 established .ction presently involved in Borticulture ,alue chain .ction needed to !et involved in Borticulture ,alue chain Support services needed for ,- promotion 1r!ani<ation that may tan!ible play lead role

1((

5*7

Conclusions

This chapter presented the various constraints faced by man!o% citrus and tomato industry and their systematic causes. #urther it explored the potential of the industry as well as strate!y for value chain development of man!o% citrus and tomato. &oor Euality and low productivity% low labor productivity% loss of opportunities for income and employment creations% lac) of investment in new productive technolo!ies% low family income% supply shorta!es on product mar)ets% hi!h post harvest losses% low share of processin!% and low export prices were the plausible constraints identified for value chain development of man!o% citrus and tomato. The underlyin! causes identified behind these constraints were lac) of information and )nowled!e for cultivation% poor wor)in! conditions of small producers% low income of small producers% insufficient access to financial resources% discrimination a!ainst women wor)in! in the field% lac) of s)illed labor and recruitment of youth% lac) of s)illed harvesters% collectors% pac)ers and transporters% and poor product Euality and poor pac)a!in!. There were some positive initiatives and opportunities identified for the value chain development% li)e: clusters of farmers in strate!ic areas are emer!in! in man!o and citrus !rowin! areas throu!h farmer field school approachI some institutions li)e% J.;-% Q.#% .QT% Q.&% and some J71s have started initiatives to increase re!ulations and certification systemsI the !overnment subsidies-inputs pro!ram !ives a window to brin! this pro!ram to the horticulture sub-sectorI under .S3& some districts have prioriti<ed horticulture and man!o and citrus in particular and are allocatin! funds and expertise to the sub-sector for this purposeI availability of commercially attractive and relative resistant man!o% citrus and tomato varietiesI a practical trainin! center to improve the approach and capacity of horticulture in !eneral and man!o% citrus and tomato in particularI success stories usin! 7.& in some country exist and can be replicated for man!o% citrus and tomatoI fast-trac) researches on technolo!y transfers for man!o% citrus and tomatoI many actors of the sub-sector are )een to sponsor experts for improvin! man!o% citrus and tomato !rowers s)ill for production mana!ementI S$@s has already feasibility studies +processin! and pac) house/ for horticulture sub-sectorI increasin! financial institutions are tailorin! their products and services to specific a!ricultural sub sectorI 1(5

the $inistry of Jational #ood Security and ;esearch has identified horticultural sub-sector as one of the hi!h potential sector to be promotedI and &BA@- is promotin! clusters for fresh and processed man!o% citrus and tomato. Stron! collaboration between the public sector% development a!encies and the private sector +business associations/% farmers capacity +financial and mana!ement/ need to be stren!thened so that they can improve their mana!ement practices and adopt new technolo!ies to increase production volume and improve the Euality of fruits% and clear identification of roles amon! the support service providers as to which or!ani<ation can best provide which services are the main strate!ies for value chain development of man!o% citrus and tomato.

1(2

VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+

The main focus of this chapter is to prepare pilot man!o% citrus and tomato value chain development schemes under which their !rowers and other chain sta)eholders should ensure their participation in modern value chains% thereby increasin! their production improvin! their incomes and livelihood.

1(7

Chapter A VIII VA;-: CHAI! ,:V:;+PM:!( SCH:M:S <+ H+ (IC-;(- A; S-.)S:C(+


6*' Introduction

Jotwithstandin! its declinin! share in 7A&% a!riculture is still the sin!le lar!est sector% contributin! 21 percent to 7A& and employin! (( percent of the wor)force +71&% 244 /. The sector is even more vital from perspective of creatin! employment opportunities% particularly in the rural communities% where an estimated *58 of the total employed population is attached directly or indirectly to a!riculture +.AD% 244(/. 3i)e in other developin! countries% poverty in &a)istan is lar!ely a rural phenomenonI therefore% !overnment has declared a!riculture as main en!ine for development i.e. alleviatin! rural poverty and it is expected to contribute si!nificantly to the overall !rowth of the economy +71&% 244 /. 0ith in a!riculture sector % !overnment plans to provide support to smallholders as they could reduce their own poverty by improvin! their income throu!h participation in modern a!riculture value chain while at the same time contributin! in to increase a!riculture production throu!h adoption of modern technolo!y% hence to the national economy and food security . .ccordin! to 7overnment plan% the current poverty level of "2.18 is to be reduced to 158 by 2411 and to achieve this tar!et% development of a!riculture sector in !eneral and horticulture in particular is very important for ensurin! food security% increasin! incomes% !eneratin! employment and its contribution to poverty reduction +71&% 2441 and &BA@D% 2447/. -hain sta)eholders especially traders and exporters are currently stru!!lin! with in domestic and !lobal mar)et places +&roustica% 2442/. Borticulture sub-sector in !eneral and man!o% citrus and tomato industries in particular have been sub'ect to increasin! centrali<ation and consolidation of mar)ets and the value chains which serve them. ,alue chains comprise the full ran!e of the activities reEuired to brin! a product from consumption to end and use and beyond includin! input provision% production% post harvest handlin!% mar)etin! and lo!istics and support to buyers 1(

and consumers. $an!o% citrus and tomato value chains today are dominated by the buyin! power and contractual success of the processors and retailers in form of super mar)et% hyper mar)ets li)e $etro in &a)istan as well as wholesale business. Supporters of food system develop mentors believe that a dedicated investment strate!y is reEuired to develop shorter and more dedicated horticultural sub-sector6man!o% citrus and tomato value chains +&roustica% 2442/. $an!o% citrus and tomato industries are one where there is much innovations% ener!y and lar!e !rowth potential% held bac) by several factors includin! financial constraints. This chapter is devoted to pilot a man!o% citrus and tomato value chain investment schemes for their !rowers and other chain sta)eholders in &a)istan. The main focus of this chapter is to prepare pilot man!o% citrus and tomato value chain development schemes under which their !rowers and other chain sta)eholders should ensure their participation in modern value chains% thereby increasin! their production improvin! their incomes. This chapter is based on the findin!s of this study. 6*% 6*%*' ationale for Pilot Mango$ Citrus and (omato Value Chains Schemes ational for pilot mango /alue chain de/elopment scheme

$an!os are second important fruit crop of &a)istan. The production of man!o is 1.72 million tons +( percent of world production/ with a value of ;s."5.2" billion durin! 2442-47. The man!o yield in &a)istan is 14.7 tons per hectare as compared to 22.7 tons per hectare man!o yield in 7uatemala puttin! &a)istan on 1"th position in the !lobal ran)in! with a yield !ap of 12 tons per hectare. .fter a decade of steadily increasin! production% there is now concern in &a)istan that man!o production is static or declinin! +.S3&% 2447/. Key production issues that affect man!o yield and its Euality are inadeEuate orchard and irri!ation mana!ement% incidence of ma'or diseases and pests and non-adoption of modern orchard mana!ement practices. The estimated post-harvest losses of man!o are (4 percent which implies the losses of 4.5 million tones of man!o with a value of QSV 24( million in the supply chain from over-ripe% immature% dama!ed and diseased fruit. These losses are related to the hi!h perishability of the man!o% sub-standard production% harvestin!% and postharvest practices% compounded by lac) of !radin!% handlin! and stora!e infrastructure +.S3&% 2447/. :f postharvest losses could be reduced% the ensuin! !ains 1(*

would provide more and better Euality fruit for local and export mar)ets. &a)istan exported 4.422 million tons +58 of production/ with a value of QSV 1*.* million. &a)istan receives the lowest avera!e price per )ilo!ram +QSV4."4/ of any ma'or man!o exportin! country in the world and resulted price !ap of !lobal and &a)istan amountin! to QSV 5(2 per ton or QSV 4.5(2 per )!. The translation of this price !ap of QSV 5(2 per ton for man!o export of 4.422 million ton durin! 2442-47 will add QSV "". 5 million in man!o economy resultin! addition to the overall economy of the country which is lar!ely due to the poor Euality of its fruit combined with poor mar)etin! practices. $an!o industry is facin! these critical issues due to inefficient and ineEuitable man!o value chain. The efficient man!o value chain operatin! more effectively would !enerate more value% share it more eEuitably and create more 'obs in the rural economy of &a)istan. #ollowin! &roustica +2442 /% this proposal is to pilot a value chain investment pro!ramme for man!o value chain development in a defined sub districts of &un'ab and Sindh provinces of &a)istan. The ob'ective is to develop a pro!ramme for support interventions with man!o value chain from production to end consumer. The proposed Kinterventions would address specific constraints holdin! bac) man!o industry and help reduce value chain ris)s and thereby create a more conducive environment for investment. The pilot would act as an example of how an inte!rated pro!ramme of value chain support can safe!uard existin! rural businesses and encoura!e !rowth% create multiple local economic benefits and meet other sustainable development ob'ectives% and act as a catalyst for the introduction of mainstream finance into local food value chain developmentL --- +&roustica% 2442/. Be further stated that the specific aims will involve wor)in! closely with all sta)eholders within an identified man!o value chain to define where investment and other forms of support are needed% identify constraints% desi!n investment vehicles% offer support to donors and enterprises% and inte!rate the investment pro!ramme with other initiatives of horticulture sector. 6*%*% ational for pilot citrus /alue chain de/elopment scheme

&a)istan is the 1"th producer of Kinnow +mandarin/ in the world +#.1 ST.T% 2411/. Aue to the inherent !ood Euality of taste% forei!n fruit vendors !enerally prefer Kinnow from &a)istan. :t 154

has become an important variety in the &un'ab province occupyin! a ma'or part of the area under cultivation for fruit crops i.e. 1*4 thousand hectares. :ts production has increased overtime. 1verall production of citrus in &a)istan was 1 * thousand tons in 2441 and has increased to 2154 thousand tons in 2414 +.!ricultural Statistics of &a)istan 244*-14/. .ccordin! to an estimate proximately *5 percent of the total Kinow produced all over the world is !rown in &a)istan. .t this point Sar!odha is the main citrus producin! district% with about 2" per cent of &a)istan9s total citrus plantin!s. -itrus value chain is conducted to address the issues of efficiency and eEuitability of citrus value chains with respect to competitiveness% inclusiveness% scalability and sustainability. -itrus is second ma'or fruit export commodities of &a)istan in terms of volume and value of exports. .n improved understandin! of the system from !rower to domestic and export mar)ets would boost utili<ation and prevent waste. The present research sou!ht to identify the constraints and associated impediments in representative value chains and would help &a)istani citrus !rowers to receive increased value from their produce and to provide recommendations for future research. #ollowin! are the main ob'ectives of the study. 6*%*1 ational for pilot tomato /alue chain de/elopment scheme

Tomato industry% in !eneral% is showin! si!ns of healthy !rowth with expandin! product ran!e and increased acceptability in the local mar)et. #avorable natural environment% increasin! population% risin! demand for processed ve!etables and fruits% and relatively lower labour cost are some of the factors that can contribute towards sustained !rowth rate in this particular sector. Tomato is one of the most popular ve!etables in the world. The derivatives of tomato li)e paste% 'uice% )etchup% etc. are widely used in )itchens all around the world. 0ith the increasin! affluence of the world% its demand has increased very rapidly resultin! in wide scale development of tomato industry for production of tomato paste6puree. ;ise of the fast food industry in the country is also havin! a si!nificant impact on the demand for tomato and fruit products. :t is expected that this trend will continue in the near future and the consumption of tomato will increase. Tomato )etchup industry is 'ust another example of the success for the &a)istani companies which !rew from its very humble be!innin! to the position of a player in the lea!ue. The future also loo)s very bri!ht with developin! local and export mar)ets around.

151

The producers and all chain sta)eholders alon! with exporters community in &a)istan needs to reali<e the importance of compliance of international Euality reEuirements in order to not only increase the Euality production and export but also to sustain even the existin! level of production and exports. The focus of pro'ect is ,alue addition of tomato in &a)istan as the additional value created at a particular sta!e of production or throu!h ima!e and mar)etin!. ,alue added a!riculture is a process of increasin! the economic value and consumer appeal of an a!ricultural commodity. :t is an alternative production and mar)etin! strate!y that reEuires a better understandin! of the rapidly chan!in! e.!I food industry and food safety issues% consumer preference and effective mana!ement* +0alia% 2447/. 6*1 6*1*' 4eographical (argeting$ Partnerships and .eneficiar# Categories 4eographical targeting

Man$o" Jational ran)in! reveals that man!o is predominantly !rown in &un'ab province. The concentration of man!o plantation is in $ultan% ;ahim ?ar Khan and $u<affar!arh districts contributin! 5 percent production. Bowever% since man!o crop in Sindh province is almost one month early% the importance of $atari +earlier part of Byderabad/ and $irpur Khas man!o concentratin! districts will remain si!nificant both for domestic and export mar)ets +&BA@D% 244 /. Keepin! in view man!o concentration% two districts in each province will be chosen for implementin! this pilot scheme. $ultan and ;ahim ?ar Khan from &un'ab and $atari and $irpur Khas from Sindh provinces will be tar!et districts. Then one man!o concentratin! tehsil +sub)district/ from each district will be selected i.e. four tehsils as a tar!et sub-districts. 1ne man!o concentratin! union council from each tehsil will be chosen as a pro'ect site. 'itru " Jational ran)in! reveals that citrus is predominantly !rown in &un'ab province. The concentration of citrus plantation is in Sar!odha% $andi Dahauddin and Toba Te) Sin!h districts contributin! 4 percent production. Keepin! in view citrus concentration% two districts +Jamely Sar!odha and $andi Dahauddin/ in &un'ab province will be chosen for implementin! this pilot scheme. Then one citrus concentratin! tehsil +sub)district/ from each district will be selected i.e. four tehsils as a tar!et sub-districts. 1ne citrus concentratin! union council from each tehsil will be chosen as a pro'ect site. 152

-o!ato" Jational ran)in! reveals that tomato is predominantly !rown in &un'ab province. The concentration of tomato plantation is in Jan)ana Sahib% $u<affar!arh% ;ahim ?ar Khan% and Shei)hupura districts contributin! "( percent production. Keepin! in view tomato concentration% four districts will be chosen for implementin! this pilot scheme. Jan)ana Sahib% $u<affar!arh% ;ahim ?ar )han and Shei)hupura are four districts from &un'ab province will be tar!et districts. Then one tomato concentratin! tehsil +sub)district/ from each district will be selected i.e. four tehsils as a tar!et sub-districts. 1ne tomato concentratin! union council from each tehsil will be chosen as a pro'ect site. 6*1*% Partnerships

Man$o" The man!o value chain development scheme will be implemented by Jational :&$ &ro!ramme +Jat-:&$/ at Jational .!ricultural ;esearch -entre +J.;-/ in consultation with the provincial F local !overnment administration and :&$ farmers or!ani<ations namely the Kissan #oundation +K#/ in &un'ab% #armer .!riculture :nnovative Aevelopment 1r!ani<ation +#.:A1/ in $irpur Khas% and Sustainable .!riculture and #riendly @nvironment +S.#@/% Jawab Shah% Sindh. :t is proposed that K# in &un'ab and #.:A1 and S.#@ in Sindh will facilitate coordination and lin)a!es amon! all the sta)eholders of value chain development. &ublic institutions li)e J.;-I &BA@-I Qniversity of .!riculture% #aisalabadI Dahauddin Xa)ria Qniversity% $ultanI $an!o ;esearch :nstitute% Shu'abadI/I officials of .S3& pro'ectI private sectors and J71s will be proposed partners of this pilot scheme. The focus of the pro'ect is the development of efficient and eEuitable man!o value chain. 'itru " The citrus value chain development scheme will be implemented by Jational :&$ &ro!ramme +Jat-:&$/ at Jational .!ricultural ;esearch -entre +J.;-/ in consultation with the provincial F local !overnment administration and :&$ farmers or!ani<ations namely the Kissan #oundation +K#/ in &un'ab. :t is proposed that K# in &un'ab will facilitate coordination and lin)a!es amon! all the sta)eholders of value chain development. &ublic institutions li)e J.;-I &BA@DI Qniversity of .!riculture% #aisalabadI Dahauddin Xa)ria Qniversity% $ultanI -itrus ;esearch Station% Dhalwal% Sar!odha/I officials of .S3& pro'ectI private sectors and

15"

J71s will be proposed partners of this pilot scheme. The focus of the pro'ect is the development of efficient and eEuitable citrus value chain in &un'ab province. -o!ato" The tomato value chain development scheme will be implemented by Borticulture Airectorate% J.;- and !rowers association of &un'ab. The focus of the pro'ect is the development of efficient and eEuitable tomato value chain in &a)istan9s &un'ab. 6*1*1 .eneficiar# categories

Man$o" .ll sta)eholders +!rowers% contractors% commission a!ents% wholesalers% retailers% processors% exporters and consumers/ of man!o value chain will be beneficiaries of this pilot scheme. The total number of these sta)eholders would be about 444 at each site time four sites will result into "244 sta)eholders. Bowever% the ma'or beneficiaries will be !rowers who will be benefited throu!h their capacity buildin! in the form of transfer of )nowled!e and s)ill re!ardin! modern orchard husbandry% !ood orchards practices% harvestin! techniEues and tools and assistance in obtainin! Euality farm inputs% services and assistance in sellin! out their man!o orchards6produced. $an!o contractors% pic)ers% pac)ers and transporters will be benefited throu!h their capacity buildin! on proper harvestin!6pic)in! techniEues6tools% harvestin! machine% de-sappin! and de-stemmin! techniEues% proper handlin! and care of harvested fruit can help them achieve the tar!ets. 0holesaler% retailers% processors and exporters will also benefited throu!h capacity buildin! on processin! techniEues6methods% processin! machinery% processed products% price and trade information for wholesalers% retailers and enhanced self life and Euality of man!o for exporters. 'itru " .ll sta)eholders +!rowers% contractors% commission a!ents% wholesalers% retailers% processors% exporters and consumers/ of citrus value chain will be beneficiaries of this pilot scheme. The total number of these sta)eholders would be about (444 at each site time four sites will result into 1244 sta)eholders. Bowever% the ma'or beneficiaries will be !rowers who will be benefited throu!h their capacity buildin! in the form of transfer of )nowled!e and s)ill re!ardin! modern orchard husbandry% !ood orchards practices% harvestin! techniEues and tools and assistance in obtainin! Euality farm inputs% services and assistance in sellin! out their citrus 15(

orchards6produced. -itrus contractors% pic)ers% pac)ers and transporters will be benefited throu!h their capacity buildin! on proper harvestin!6pic)in! techniEues6tools% harvestin! machine% de-sappin! and de-stemmin! techniEues% proper handlin! and care of harvested fruit can help them achieve the tar!ets. 0holesaler% retailers% processors and exporters will also benefited throu!h capacity buildin! on processin! techniEues6methods% processin! machinery% processed products% price and trade information for wholesalers% retailers and enhanced self life and Euality of man!o for exporters. -o!ato" .ll sta)eholders +!rowers% contractors% commission a!ents% wholesalers% retailers% processors% exporters and consumers/ of tomato value chain will be beneficiaries of this scheme. The total number of these sta)eholders would be about 44 at each site time four sites will result into "244 sta)eholders +Sharif% 244 /. Bowever% the ma'or beneficiaries will be !rowers who will be benefited throu!h their capacity buildin! in the form of transfer of )nowled!e and s)ill re!ardin! modern field practices% harvestin! techniEues and tools and assistance in obtainin! Euality farm inputs% services and assistance in sellin! out their tomato produced. Tomato contractors% pic)ers% pac)ers and transporters will be benefited throu!h their capacity buildin! on proper harvestin!6pic)in! techniEues6tools% harvestin! machine% proper handlin! and care of harvested ve!etable can help them achieve the tar!ets +Sharif% 244 /. 0holesaler% retailers% processors and exporters will also benefited throu!h capacity buildin! on processin! techniEues6methods% processin! machinery% processed products% price and trade information for wholesalers% retailers and enhanced self life and Euality of tomato for exporters. 6*0 Project Component ,escription

This pro'ect will support the implementation of !rowth strate!y for the development of a!riculture sector in !eneral and horticulture sector +man!o% citrus and tomato/ in particular for ensurin! food security increasin! income% !eneratin! employment and reducin! poverty throu!h a pilot man!o value chain development schemes in &un'ab and Sindh provinces of &a)istan% citrus and tomato value chains development schemes in &un'ab province only.

155

The pro'ect will addressed the constraints and inefficiency of man!o% citrus and tomato industries in &a)istan and provide feedbac) to policy ma)ers% planners and development practitioners. The ma'or component of the pro'ect are: +1/ selection of sites% identification of partners and situation value chain analysis% +2/ @stablishment of rural business hubs +;DBs/ for input provision +"/ capacity buildin! of man!o% citrus and tomato !rowers and other chain sta)eholders includin! !ender main streamin! alon! with children throu!h male farmers field school +$##S/% female farmers field school +###S/% business field school +D#S/ and -hildren @colo!ical -lub +-@-/ approach respectively +(/ speciali<ed capacity buildin! throu!h trainin!s% +5/ research for chain development% +2/ communication with beneficiaries throu!h wor)shops% seminars% conferences and displays% +7/ monitorin! and evaluation of all pilot schemes. 6*2 SelectionBIdentification and Situation Value Chain Anal#sis of Sites and Potential Partners Qnder first component of the pro'ect% followin! activities are proposed for the implementin! man!o pilot scheme in four districts of two provinces of &a)istan% citrus and tomato pilot schemes in two districts of &un'ab for each commodity. 6*2*' Selection of eCact locations at different sites of proposed pilot schemes

This reEuires technical% administrative and economic analysis for its acceptability and viability. This activity will be carried out for selection of exact location of four pro'ect sites from where pro'ect activities +capacity buildin! throu!h $##S% D#S% 01S% -@-% trainin! input provision% demonstration% seminars% wor)shops% conference etc./ will implemented. This activity will provide the exact locations of proposed man!o schemes. The pro!ramme needs resources for local consultancy for a period of "4 man days +assumin! one wee) of one specialist for each site/. This activity will cost ;s. 4.254 millions. +This will include travel by air and road% AS.% &13 etc./. The same activity for citrus will cost ;s.4.125 million. 3i)ewise ;s.4.144 million will cost to carry the same activity for tomato value chain.

152

6*2*%

Selection of target growers$ other chain stakeholders in each site and potential project partners

Man$o" This activity will !enerate information on the tar!et man!o !rowers and other chain sta)eholders. This will be done throu!h conductin! censes of selected villa!es% mar)ets% contractors% commission a!ents% wholesalers% retailers% consumers% service providers% pic)ers and pac)ers% processors% transporters and exporters. :dentification of exact )ey pro'ect partners +research% development and financial institutions6specialists% service providers and support a!encies such as business lin)s and processors6retailers --- supermar)ets% hyper mar)ets will be selected after detailed dialo!ues and in-depth discussions on the strate!ies for the development man!o value chain. This activity will provide the list of tar!et man!o !rowers% mar)ets% contractors% commission a!ents% wholesalers% retailers% consumers% service providers% pic)ers and pac)ers% processors% transporters and exporters etc. . census of 144 villa!es of four sites will be carried out for final selection of (444 tar!et man!o !rowers with inclusiveness of small man!o !rowers. The pro!ramme needs resources for local consultancy for a period of 124 man days +assumin! four wee)s of one specialist coverin! 25 villa!es and 1444 man!o !rowers for each site/. This activity will cost ;s. 1.44 million. 'itru " . census of 144 villa!es of four sites will be carried out for final selection of (444 tar!et man!o !rowers with inclusiveness of small citrus !rowers. The pro!ramme needs resources for local consultancy for a period of 124 man days +assumin! four wee)s of one specialist coverin! 25 villa!es and 1444 citrus !rowers for each site/. This activity will cost ;s. 1.44 million. -o!ato" . census of 54 villa!es of four sites will be carried out for final selection of "444 tar!et tomato !rowers with inclusiveness of small !rowers. The pro!ramme needs resources for local consultancy for a period of 24 man days +assumin! four wee)s of one specialist coverin! 25 villa!es and 544 citrus !rowers for each site/. This activity will cost ;s. 1.44 million.

157

6*2*1

Situation /alue chain anal#sisBbench mark sur/e# for each site

Man$o" Situation analysis6baseline survey will provide the information on the existin! croppin! pattern% access to and use of inputs% institutional services i.e. credit and extension = )nowled!e level% production practices% harvestin! techniEues% output produce% post-harvest handlin!% processin!% transportation and mar)etin!. :t will also !enerate information on current postharvest losses and prices received by man!o !rowers from domestic mar)ets. :nformation on mar)et volume at domestic mar)et and export mar)et and export prices will also be !enerated. This situation analysis6bench mar) level will be used for evaluation of the pro'ect or impact assessment of the pro'ect. This activity will be carried out usin! ;;. or &;. techniEues. This activity will provide bench mar) information prior to pro'ect implementation. The pro!ramme needs resources for local consultancy for a period of 44 man days. This activity will cost ;s. 2.54 millions. 'itru " This activity will provide bench mar) information prior to pro'ect implementation of citrus value chain development scheme. The pro!ramme needs resources for local consultancy for a period of 44 man days. This activity will cost ;s. 2.54 millions. -o!ato" The pro!ramme needs resources for local consultancy for a period of (44 man days. This activity will cost ;s. ".25 millions. 6*7 :stablishment of ,e/elopment 6*7*' Input pro/ision .HS for Input Pro/ision as a <irst Segment for Chain

Man$o" :ntroducin! service delivery and support mechanism for enhancin! timely access to Euality input throu!h establishment of rural business hubs +;DBS/ is proposed first se!ment of pilot man!o chain development scheme. These could be a bi! stride in this direction as a replication of success story in :ndian &un'ab. ;DBS is Kone stop shopL encompassin! solutions to the farmers under one roof which will lin)s farmers to mar)ets via bac)ward as well as 15

forward lin)a!es as an private sector initiatives6public private partnership initiatives. They are aimed at providin! end to end !round level support to the man!o !rowers and his KprofitabilityL and KproductivityL. These ;DBS will be operated by K# in &un'ab and #.:A1 and S.#@ in Sindh respectively. @ach ;DBS at one site will cater to a!riculture land of about 12444 = 15444 acres with 5444 acres under man!o. This will !enerate impact on the life of about 14444 !rowers in !eneral and 1444 man!o !rowers in particular. :n total a!riculture land ( 444 = 24444 acres with 24444 acres under man!o and this will impact on the life of about (4444 !rowers in !eneral and (444 man!o !rowers in particular. These ;DBS will provide Euality and certified inputs li)e nursery seedlin!s% fertili<er% pesticide% farm implements and tools% fuel% veterinary products% animal feed% financial services% buybac) opportunities and membership card to man!o !rowers. This activity will ensure timely availability of Euality inputs for (444 man!o !rowers. The pro!ramme needs resources of 5 millions as a revolvin! fund for its establishment and functionin! from pilot pro'ect for each site. This activity will cost ;s. 24 millions. +This will include stora!e% procurements of inputs% and functionin! of ;DB9s etc./. 'itru " This activity will ensure timely availability of Euality inputs for (444 citrus !rowers. The pro!ramme needs resources of 5 millions as a revolvin! fund for its establishment and functionin! from pilot pro'ect for each site. This activity will cost ;s. 24 millions. +This will include stora!e% procurements of inputs% and functionin! of ;DB9s etc./. -o!ato" This activity will ensure timely availability of Euality inputs for "444 tomato !rowers. The pro!ramme needs resources of 5 millions as a revolvin! fund for its establishment and functionin! from pilot pro'ect for each site. This activity will cost ;s. 15 millions. +This will include stora!e% procurements of inputs% and functionin! of ;DB9s etc./. 6*7*% :stablishment of clean nurser#

Man$o" @stablishment of ( clean certified man!o nurseries +one at each site/ capable of offerin! sufficient certified plants to all farmin! community of their respective districts will be part of ;DBS. The pro!ramme needs resources of 1.5 million for its establishment and functionin! from

15*

pilot pro'ect for each site. This activity will cost ;s. 2 millions. +This will include land% labor% nursery material% !reen houses% travel and technical assistance of 15 days etc./. 'itru " @stablishment of ( clean certified citrus nurseries +one at each site/ capable of offerin! sufficient certified plants to all farmin! community of their respective districts will be part of ;DBS. The pro!ramme needs resources of 1.5 million for its establishment and functionin! from pilot pro'ect for each site. This activity will cost ;s. 2 millions. +This will include land% labor% nursery material% !reen houses% travel and technical assistance of 15 days etc./. -o!ato" &rocurement of Euality seed for raisin! tomato seedlin!s. The pro!ramme needs resources of 4.5 million for its establishment and functionin! from pilot pro'ect for each site. This activity will cost ;s. 2 millions. +This will include land% labor% nursery material% !reen houses% travel and technical assistance of 15 days etc./. 6*7*1 :stablishment of model on farm pack house

Man$o" #our models on farm pac) house will be established in each proposed pro'ect sites for demonstratin! the populari<ation of this technolo!y. The ob'ective of establishin! $odel on #arm &ac) Bouse are: +i/ :ncome diversification throu!h settin! up small scale processin! of man!o% +ii/ reducin! the post harvest losses throu!h processin! and value addition% +iii/ and promotin! the local man!o product in the national and international mar)et. The pro!ramme needs resources of 24 million for its establishment and functionin! for each site. +This will include -ost of -ustomi<ed Structures to serve as pac) house &re-fabricated% low cost (4x24 m/ " million% Ae-sap machine +locally developed/ 4.74 million% 0ei!ht !rader +:mported from .ustralia/ 14.4 million% 0asher and dryer +local/ 1.44 million% Bot water treatment unit +S&S -ompliance for :ran% -hina/ 2.4 million% $obile -hiller +-ombo type includin! blast chiller and cold room/ ".4 million% @thylene 7enerator 4.54 million/ etc./. This activity will cost ;s. 24 millions for each site and total cost will be ;s. 24 millions. 'itru " 3i)ewise% this activity will cost ;s. 14 millions for each site and total cost will be ;s. 24 millions. 124

6*7*0

<inancial ser/ices

:mprovin! access to financial services will be ensured throu!h development of formal lin)a!e between !rowers and financial institutions that facilitate the desi!n of appropriate financial products for man!o !rowers. 6*5 6*5*' Capacit# .uilding of Chain Stakeholders Capacit# building of mango growers$ women and children for addressing the need for producti/it#$ @ualit# of impro/ement of mango$ reducing post har/est losses and /alue addition Sustainable implementation of best man!o orchard production and mana!ement practices will be ensured throu!h already assessed farmer field school +##S/ approach. ( Trainin! of #acilitators +To#/ for capacity buildin! of 144 master facilitators6trainers alon! with "44 $an!o #armer #ield School +$##S/% 4 0omen 1pen School +01S/ and 4 -hildren @colo!ical -lub +-@-/ coverin! 444 +(444 man!o !rowers F (444 women and children/ will be used for the capacity buildin! of man!o !rowers% women and children in the defined area. The master facilitators will impart trainin!% and transfer )nowled!e and s)ill to (444 man!o !rowers on best man!o production practices. Boldin! of "44 $an!o #armer #ield Schools +$##S/ +75 at one site/ followin! one villa!e one facilitator concept in 144 villa!es of four union councils +25 villa!es in each union -ouncil/ in $ultan +Jawabpur/% ;ahim ?ar Khan +Ba'ipur/% $atari and $irpur Khas in &un'ab and Sindh provinces +see annexure 2/. The reEuirement of a To# includes +holdin! of To#% trainin! plots% resource persons% mobility of To#% AS. and material etc./ is amountin! to ;s.14.44 million. The total cost of four To# for a period of one year is ;s.(4.44 million. #acilitators of MFFS ill transfer kno ledge and skills on the modern orchard mana!ement to

!rowers throu!hout the man!o production season +appropriate selection of variety% optimal methods of plantation propa!ation% fertili<ation% irri!ation and prunin!/. They will also provide )nowled!e to man!o !rowers on allowable inputs +pesticide% fun!icide and fertili<er/. Knowled!e on @Q;@&7.& pre and post harvest food safety certification scheme for fresh 121

man!o will also be disseminated. $an!o !rowers will be updated on 7.&% harvestin! techniEues by followin! maturity indices% proper harvestin! tools6harvestin! machine. The reEuirement of a $##S includes eEuipments +5 steel double side stairs% 25 prunin! )nife-lon!% 25 hand prunin! )nife% 5 newly desi!ned harvestin! stic)s etc. / amountin! to ;s. 4.425 million% crop mana!ement +fruit fly pheromones% traps% wooden lo!s% pesticides% consumables and entertainment/ amountin! to ;s. 4.11 million% Salary and travel of one facilitator per month is ;s. 1 4446month. The total cost of one $##S includin! follow-up for the period of three years +"2 months/ is 4.25 million and total cost of (24 $##S +"44/% 01S + 4/% and -@- + 4/ is ;s. 115 million for "2 months. 6*5*% Capacit# building of citrus growers$ women and children for addressing the need for producti/it#$ @ualit# of impro/ement of citrus$ reducing post har/est losses and /alue addition Sustainable implementation of best citrus orchard production and mana!ement practices will be ensured throu!h already assessed farmer field school +##S/ approach. ( Trainin! of #acilitators +To#/ for capacity buildin! of 144 master facilitators6trainers alon! with "44 citrus #armer #ield School +$##S/% 4 0omen 1pen School +01S/ and 4 -hildren @colo!ical -lub +-@-/ coverin! 444 +(444 citrus !rowers F (444 women and children/ will be used for the capacity buildin! of citrus !rowers% women and children in the defined area. The master facilitators will impart trainin!% and transfer )nowled!e and s)ill to (444 citrus !rowers on best citrus production practices. Boldin! of "44 citrus #armer #ield Schools +$##S/ +75 at one site/ followin! one villa!e one facilitator concept in 144 villa!es of four union councils +25 villa!es in each union -ouncil/. The reEuirement of a To# includes +holdin! of To#% trainin! plots% resource persons% mobility of To#% AS. and material etc./ is amountin! to ;s.14.44 million. The total cost of four To# for a period of one year is ;s.(4.44 million. #acilitators of MFFS ill transfer kno ledge and skills on the modern orchard mana!ement to

!rowers throu!hout the citrus production season +appropriate selection of variety% optimal methods of plantation propa!ation% fertili<ation% irri!ation and prunin!/. They will also provide )nowled!e to citrus !rowers on allowable inputs +pesticide% fun!icide and fertili<er/. Knowled!e 122

on @Q;@&7.& pre and post harvest food safety certification scheme for fresh citrus will also be disseminated. -itrus !rowers will be updated on 7.&% harvestin! techniEues by followin! maturity indices% proper harvestin! tools6harvestin! machine. The reEuirement of a $##S includes eEuipments +5 steel double side stairs% 25 prunin! )nife-lon!% 25 hand prunin! )nife% 5 newly desi!ned harvestin! stic)s etc. / amountin! to ;s. 4.425 million% crop mana!ement +fruit fly pheromones% traps% wooden lo!s% pesticides% consumables and entertainment/ amountin! to ;s. 4.11 million% Salary and travel of one facilitator per month is ;s. 1 4446month. The total cost of one $##S includin! follow-up for the period of three years +"2 months/ is 4.25 million and total cost of (24 $##S +"44/% 01S + 4/% and -@- + 4/ is ;s. 115 million for "2 months. 6*5*1 Capacit# building of tomato growers$ women and children for addressing the need for producti/it#$ @ualit# of impro/ement of tomato$ reducing post har/est losses and /alue addition 3i)e man!o and citrus% the same activity will be carried out in proposed !rowin! areas of tomato. The total cost of this activity will be ;s.24 million for "2 months. 6*5*0 Capacit# building of other chain stakeholders for addressing the issue of post) har/est handing$ logistic and marketing segments of /alue chains Man$o" #acilitators of business field school +D#S/ will transfer )nowled!e and s)ills to harvesters6man!o pic)ers% pac)ers and transporters on best post-harvest handlin! techniEues6tools% methods6harvestin! machine% de-sappin! and de-stemmin! techniEues and proper handlin! and care of harvested man!o. #acilitators of D#S will also impart )nowled!e6information6s)ills to transporter and pac)ers on @Q;@&7.& or eEuivalent food safety certification standard to improve acceptability of fresh man!o for export. Knowled!e and s)ill transfer on modern processin!% !radin! and pac)in! techniEues will be ensured by facilitators of D#S. :nformation on effective plan to comply with international standards for hy!iene in pac)in! facilities with particular emphasis on facility desi!n% water Euality% wor)er health and hy!iene and trainin! of wor)ers will also be disseminated to man!o pac)ers in processin! sector. #acilitators of D#S will also transfer )nowled!e6information on mar)et 12"

development areas to the mar)eters. They will facilitate partnership +e.!. contract farmin!/ amon! producers% pac)ers and collectors% retailers +supermar)ets% hyper mar)ets and bi! ba<ars/ for distribution and mar)etin! of fresh man!o. The reEuirement of a D#S includes eEuipments +harvestin! tools6machines% pac)in! material% processin! facilities% etc./ amountin! to ;s. 4.2 million% Salary and travel of one facilitator per month is ;s. 254446month. The total cost of one D#S includin! follow-up for the period of three years +"2 months/ is 4.(4 million and total cost of 24 D#S is ;s. 2(.44 million for "2 months. 'itru " The reEuirement of a D#S for citrus includes eEuipments +harvestin! tools6machines% pac)in! material% processin! facilities% etc./ amountin! to ;s. 4.2 million% Salary and travel of one facilitator per month is ;s. 254446month. The total cost of one D#S includin! follow-up for the period of three years +"2 months/ is 4.(4 million and total cost of 24 D#S is ;s. 2(.44 million for "2 months. -o!ato" The reEuirement of a D#S for tomato includes eEuipments +harvestin! tools6machines% pac)in! material% processin! facilities% etc./ amountin! to ;s. 4.2 million% Salary and travel of one facilitator per month is ;s. 254446month. The total cost of one D#S includin! follow-up for the period of three years +"2 months/ is 4.(4 million and total cost of 24 D#S is ;s. 2(.44 million for "2 months. 6*5*2 Speciali8ed capacit# building

Qnder this activity% followin! speciali<ed capacity buildin! will be or!ani<ed throu!h trainin!s of chain sta)eholders: Man$o" +i/ 15 days trainin! course on 7.& for 54 +facilitators and )ey informant man!o !rowers and women/ participants from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals,

12(

hall charges, &anners, stationar# for %( participants cost of this e*ent ill &e 's. $.-% million.

ill &e 's. $., million. !he total

+ii/ 15 days trainin! course on post harvest handlin! for 54 +facilitators% )ey man!o !rowers% harvestors6pic)ers% transporters/ participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants e*ent ill &e 's. $.-% million. +iii/ 15 days Bi!h Euality trainin! and education on food safety and Euality !rades and standards for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +iv/ 15 days trainin! for establishin! proper procedures for proper pac)in! facilities for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +v/ 15 days trainin!6refresher of 54 field staff6wor)er farmers9 or!ani<ation representatives% .!riculture @xtension and &lant &rotection in best man!o production technolo!ies followin! the :&$ philosophy. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +vi/ 15 days trainin! of 54 food safety mana!ers and supervisor at processin! facilities usin! standard trainin! curricula on 7B&s% 7$&s and B.--& throu!h D#S by hirin! international consultant6specialists. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. ill &e 's. $., million. !he total cost of this

125

'itru " +i/ 15 days trainin! course on 7.& for 54 +facilitators and )ey informant citrus !rowers and women/ participants from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, ill &e 's. $., million. !he total hall charges, &anners, stationar# for %( participants cost of this e*ent ill &e 's. $.-% million. +ii/ 15 days trainin! course on post harvest handlin! for 54 +facilitators% )ey citrus !rowers% harvestors6pic)ers% transporters/ participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants e*ent ill &e 's. $.-% million. +iii/ 15 days Bi!h Euality trainin! and education on food safety and Euality !rades and standards for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +iv/ 15 days trainin! for establishin! proper procedures for proper pac)in! facilities for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +v/ 15 days trainin!6refresher of 54 field staff6wor)er farmers9 or!ani<ation representatives% .!riculture @xtension and &lant &rotection in best man!o production technolo!ies followin! the :&$ philosophy. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +vi/ 15 days trainin! of 54 food safety mana!ers and supervisor at processin! facilities usin! standard trainin! curricula on 7B&s% 7$&s and B.--& throu!h D#S by hirin! international consultant6specialists. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, ill &e 's. $., million. !he total cost of this

122

stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. -o!ato" +i/ 15 days trainin! course on 7.& for 54 +facilitators and )ey informant tomato !rowers and women/ participants from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +ii/ 15 days trainin! course on post harvest handlin! for 54 +facilitators% )ey tomato !rowers% harvestors6pic)ers% transporters/ participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants e*ent ill &e 's. $.-% million. +iii/ 15 days Bi!h Euality trainin! and education on food safety and Euality !rades and standards for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +iv/ 15 days trainin! for establishin! proper procedures for proper pac)in! facilities for 54 participants. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +v/ 15 days trainin!6refresher of 54 field staff6wor)er farmers9 or!ani<ation representatives% .!riculture @xtension and &lant &rotection in best man!o production technolo!ies followin! the :&$ philosophy. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. +vi/ 15 days trainin! of 54 food safety mana!ers and supervisor at processin! facilities usin! standard trainin! curricula on 7B&s% 7$&s and B.--& throu!h D#S by hirin! 127 ill &e 's. $., million. !he total cost of this

international consultant6specialists. !he international cons"ltanc# charges for the period of $% da#s ill &e ;s.(.)% million. !he tra*elling, +SA, meals, hall charges, &anners, stationar# for %( participants ill &e 's. $., million. !he total cost of this e*ent ill &e 's. $.-% million. 6*6 esearch for Chain ,e/elopment

Man$o" Qnder this component% followin! research studies for man!o chain development are proposed: +i/ #easibility of developin! fresh cut man!o products for export in association with established industry leaders from international consultant. !he international cons"ltanc# charges for the period of .( da#s ill &e 's.$.% million. +ii/ Aevelopin! value added processed man!o products for the domestic retail mar)et in partnership with established processor in &a)istan from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +iii/ @stablishment of proper procedures for pac)in! facilities to deliver man!os of uniform Euality and physiolo!ical maturity to buyers for domestic retail and export mar)ets from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +iv/@stablish a common brand position and product man!o for K&a)istani $an!oL in establish with national and international or!ani<ations from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +v/ @xplorin! strate!ies to capture more of the value added mar)ets for processed man!o products within &a)istan and for the export mar)et from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. 'itru " Qnder this component% followin! research studies for citrus chain development are proposed:

12

+i/ #easibility of developin! fresh cut citrus products for export in association with established industry leaders from international consultant. !he international cons"ltanc# charges for the period of .( da#s ill &e 's.$.% million. +ii/ Aevelopin! value added processed citrus products for the domestic retail mar)et in partnership with established processor in &a)istan from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +iii/ @stablishment of proper procedures for pac)in! facilities to deliver citrus of uniform Euality and physiolo!ical maturity to buyers for domestic retail and export mar)ets from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +iv/@stablish a common brand position and product citrus for K&a)istani -itrusL in establish with national and international or!ani<ations from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +v/ @xplorin! strate!ies to capture more of the value added mar)ets for processed citrus products within &a)istan and for the export mar)et from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. -o!ato" Qnder this component% followin! research studies for tomato chain development are proposed: +i/ #easibility of developin! fresh tomato pulp for export in association with established industry leaders from international consultant. !he international cons"ltanc# charges for the period of .( da#s ill &e 's.$.% million. +ii/ Aevelopin! value added processed tomato products for the domestic retail mar)et in partnership with established processor in &a)istan from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +iii/ @stablishment of proper procedures for pac)in! facilities to deliver tomato of uniform Euality and export mar)ets from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million.

12*

+iv/@stablish a common brand position and tomato paste for K&a)istani TomatoL in establish with national and international or!ani<ations from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. +v/ @xplorin! strate!ies to capture more of the value added mar)ets for processed tomato products within &a)istan and for the export mar)et from international consultant. !he international cons"ltanc# charges for the period of $% da#s ill &e 's.(.)% million. 6*9 =orkshops B Seminars B Conference B ,ispla#

Qnder this component% followin! activities are proposed for functionin! of the pro'ect for man!o% citrus and tomato: Man$o" +i/ -hain sta)eholder9s consultation wor)shop for 54 participants for 7 days from international consultant. The international consultancy char!es for the period of 7 days will be ;s.4."7 million. The other cost on refreshment% publicity% caterin!6hall char!es% transportation etc. will be ;s. 1.4 million. The total cost will be ;s. 1."7 million. +ii/ 12 .wareness Seminars on -hain Aevelopment for three years. The participants of each seminar would 144-154 includin! !rowers and other chain sta)eholders. The cost one seminar +resource person% refreshment% publicity% caterin!6hall char!es% transportation etc./ will be ;s. 4.1 million and the total cost for 12 seminar for three years will be ;s.1.2 millions. +iii/ * $an!o tastin! displays in super mar)ets of :slamabad% 3ahore and Karachi. The cost one tastin! display will be ;s.4.1 million and the total cost of * displays will be ;s.4.* millions. +iv/ ( man!o $ela6@xhibitions will be arran!ed. The cost of one $ela6@xhibition will be ;s.4." million +includes publicity% transportation% caterin!6tentin!% entertainment% openin! and closin! ceremony etc/.

174

+v/

1ne day &ro'ect findin!s -ommunication 0or)shop for 54 participants at national level. The cost of AS.% travel% meal% publicity6banners% stationary etc. will be ;s. 1 million.

+vi/

&ublication of print media literature% videos and audio material re!ardin! best man!o production technolo!y. The lump sum cost of ;s. 2.4 million for three years for all sites includin! &$Q at :slamabad.

'itru " +i/ -hain sta)eholder9s consultation wor)shop for 54 participants for 7 days from international consultant. !he international cons"ltanc# charges for the period of ) days will be ;s.4."7 million. The other cost on refreshment% publicity% caterin!6hall char!es% transportation etc. will be ;s. 1.4 million. The total cost will be ;s. 1."7 million. +ii/ 12 .wareness Seminars on -hain Aevelopment for three years. The participants of each seminar would 144-154 includin! !rowers and other chain sta)eholders. The cost one seminar +resource person% refreshment% publicity% caterin!6hall char!es% transportation etc./ will be ;s. 4.1 million and the total cost for 12 seminar for three years will be ;s.1.2 millions. +iii/ * citrus displays in super mar)ets of :slamabad% 3ahore and Karachi. The cost one tastin! display will be ;s.4.1 million and the total cost of * displays will be ;s.4.* millions. +iv/ 1ne day &ro'ect findin!s -ommunication 0or)shop for 54 participants at national level. The cost of AS.% travel% meal% publicity6banners% stationary etc. will be ;s. 1 million. +v/ &ublication of print media literature% videos and audio material re!ardin! best citrus production technolo!y. The lump sum cost of ;s. 2.4 million for three years for all sites includin! &$Q at :slamabad. -o!ato"

171

+i/

-hain sta)eholder9s consultation wor)shop for 54 participants for 7 days from international consultant. !he international cons"ltanc# charges for the period of ) days will be ;s.4."7 million. The other cost on refreshment% publicity% caterin!6hall char!es% transportation etc. will be ;s. 1.4 million. The total cost will be ;s. 1."7 million.

+ii/

12 .wareness Seminars on -hain Aevelopment for three years. The participants of each seminar would 144-154 includin! !rowers and other chain sta)eholders. The cost one seminar +resource person% refreshment% publicity% caterin!6hall char!es% transportation etc./ will be ;s. 4.1 million and the total cost for 12 seminar for three years will be ;s.1.2 millions.

+iii/

* tomato fast displays in super mar)ets of :slamabad% 3ahore and Karachi. The cost one tastin! display will be ;s.4.1 million and the total cost of * displays will be ;s.4.* millions.

+iv/

1ne day &ro'ect findin!s -ommunication 0or)shop for 54 participants at national level. The cost of AS.% travel% meal% publicity6banners% stationary etc. will be ;s. 1 million.

+v/

&ublication of print media literature% videos and audio material re!ardin! best tomato production technolo!y. The lump sum cost of ;s. 2.4 million for three years for all sites.

6*'&

Costs

The tentative cost of the pro'ect is estimated at ;s. 554 millions. 6*'' In/estment and <inancing Assumptions

:nvestment plan and estimatin! finances are estimated on the bases of proposed staff and proposed pro'ect activities.

172

6*'%

Institutional <ramework for ProgrammeBProject Implementation +rgani8ation and Management

This is a multi-partner pro'ect under the ae!is of &a)istan .!ricultural ;esearch -ouncil +&.;-/ - $inistry of Jational #ood Security and ;esearch which will be the pro'ect9s primary partner. The premier research establishment of &.;- namely Jational .!ricultural ;esearch -entre +J.;-/ is expected to play a ma'or role in the implementation of this pro'ect at national level as it has already 8ational IPM Pro$ra!!e 48at9IPM: with relevant expertise and sub'ect specialists for the implementation of the pro'ect. The J.;- of &.;- = $oJ#SF; will also facilitatin! access to selected districts for man!o% citrus and tomato and ensurin! that experience !ained and lessons learned and feedbac) to national policy level% donors and its replications to other districts. &rovincial components of Jational :&$ &ro!ramme +Jat-:&$/ in collaboration with provincial department of a!riculture and :&$ farmer or!ani<ations +li)e K# in &un'ab% #.:A1 and S.#@ in Sindh/ will be direct partner of this pro'ect in the selected districts for man!o% citrus and tomato. &rovincial components of Jat-:&$ in collaboration with local !overnment can play a vital role in district development plannin!% brin! to!ether authorities operatin! at district level in the district. :t could be ar!ued that the private sector well established K# in &un'ab% #.:A1 and S.#@ in Sindh could be more suitable home for the pro'ect at the local level. Bowever% the main strate!y of ensurin! dialo!ue between public% private sector partner and establish J71 and importance of enhancin! the policy and re!ulatory environment for man!o chain development% ma)e provincial components of Jat-:&$ a more appropriate focal point. Jat-:&$% :&$ #armer 1r!ani<ations and chain sta)eholders involvement in plannin! and decision ma)in! is crucial for the successful outcome of the pro'ect and representative of !rowers and other chain sta)eholder will constitute pro'ect steerin! committee. Jational steerin! committee will be headed by -hairman% &.;- and will include Airector 7eneral% J.;-% a representative from $oJ#SF;% &ro!ramme 3eader +Jat-:&$/% &ro'ect -oordinator% Aeputy -oordinators% representative of K#% #.:A1% S.#@% Site -oordinators and representative of #.1. 17"

Jational steerin! committee +JS-/ will set-up overall strate!ic direction and coordinate between national and district level !overnments for exchan!in! ideas and experiences for better implantation of the pro'ect. JS- will meet twice a year for assessin! the pro'ect performance and provide !uidelines for its improvement. The technical assistance will be or!ani<ed in such a way that &ro'ect -oordinators will serve as a $ana!er of the pro'ect and coordinate the timely arran!ement of technical assistance reEuired for smooth functionin! of the pro'ect. &ro'ect -oordinator will be assisted by the selected Site -oordinators for man!o% citrus and tomato. .t the national level will be supported by the national experts. #unds are )ept for international and national short-term experts for the speciali<ed expertise reEuired for the development of the chain. 6*'1 Monitoring and :/aluation

.ctivities of the pro'ect are prepared for each year which can be used for monitorin! of the pro'ect. The development of a monitorin! system is much more than the establishment and measurement of overall )ey performance indicators. :t is now reco!ni<ed all over the world% and especially in developin! country environments% that the usefulness of such a system to primary sta)eholders is of the utmost importance. Therefore a bottom up approach will be used to developed wor) plan alon! with time frame for each activity to be done startin! form farm i.e. !ross root level durin! the initial phase. The achievements in relation to the plan will be monitored accordin! to these plans. :nformation !enerated from situation analysis 6 bench mar) survey will be used for conductin! pro'ect evaluation or pro'ect impact assessment. &roposed pro'ect activities and baseline information can be used for conductin! monitorin! and evaluation of the pilot man!o value chain development scheme in &un'ab and Sindh provinces of &a)istan. To measure the short term effect and lon! term impact on-!oin! assessment% evaluation and impact assessment methodolo!ies will be used. 6*'1*' >e# performance indicators

17(

The primary pro'ect outcome would be increased producer9s share in consumer rupees and a shift towards export led man!o production. The other associated outcomes would be increase in export earnin!s% farm household incomes of farmers participatin! in man!o% citrus and tomato value chains% and employment in a!ro-processin! and a!ro-business enterprises. The outcome indicators are lin)ed directly to millennium development !oals of sustainable% diversified and export oriented economy that responds to mar)et demands% particularly: +a/ positive contribution of sectors to 7A& !rowth and +b/ !rowth of exports. The outcome indicators are: 6*'1*% +utcome indicators for mango$ citrus and tomato :ncrease in production volumes throu!h enhanced productivity and reduction in post harvest lossesI Safe and hy!ienic Euality man!o handlin! and mar)etin! to the end users :ncrease in value of man!o produceI :ncrease in avera!e income of small farmers lin)ed to value chain pro'ect activities. :ncrease in export volume at hi!her export price by meetin! the S&S standards 6*'1*1 +utput indicators for mango$ citrus and tomato 1utput indicators are lin)ed to the intermediate results described in the results framewor) and comprise mainly the followin!: :ncrease in man!o% citrus and tomato productivity of small farmers lin)ed to man!o% citrus and tomato value chain pro'ectI Jumber of man!o% citrus and tomato farms who adopted 7.& Jumber of villa!es and farmers lin)ed to the man!o% citrus and tomato value chains Jumber of man!o% citrus and tomato farmers associations developed and sustained by decreasin! the pro'ect supportI -han!e in effectiveness and efficiency of services provided by man!o% citrus and tomato processin! industry and its related public and private institutes to sta)eholdersI 175

,olume of Euality man!o% citrus and tomato produced and reached to the consumers throu!h vertical coordination in the value chain.

6*'0

:Cpected .enefits

&ilot man!o% citrus and tomato value chain development schemes will ensure timely availability of Euality input to man!o, citrus and tomato !rowers at their doorstep which will provide opportunities for the adoption of recommended input use. -apacity buildin! and trainin! on )nowled!e and s)ill transfer will be empower !rowers for the adoption of modern man!o production% mana!ement and harvestin! and handlin! technolo!ies. These interventions will enhance man!o, citrus and tomato productivity and its Euality and resultantly will !enerate more income with hi!her yield and better man!o , citrus and tomato Euality. The capacity buildin! and trainin! on )nowled!e% s)ill% post-harvestin! techniEues% handlin!s% food safety and standard% pac)in!% processin! to other chain sta)eholders will improve their capacity for reducin! hu!e post-harvest losses and !ettin! hi!her prices from export mar)ets. So% other chain sta)eholders will also be benefited in the farm of more )nowled!e% s)ill% techniEues and more income from better prices from the export mar)ets. 6*'2 Issues and isks and <ollow)-p Acti/ities

The security situation in &a)istan is unstable. .ny deterioration would harm both domestic and forei!n investment in the man!o, citrus and tomato value chain development schemes. 6*'7 Conclusions

Dased on the analysis of first hand information and after developin! an empirical evidence of value chain analysis of citrus man!o and tomato% development schemes for each commodity are developed. These schemes ensure inclusiveness of the lar!e number of small farmers while developin! a competitive value chain scheme for each of the commodity of interest by up-scalin! on the existin! stren!ths and opportunities with providin! solutions for sustainability throu!h incentives for chain partners. @nsurin! the participation of !rowers in modern value chains is the 172

)ey to success. The cost and operation framewor) includin! desi!n criteria% !eo!raphical tar!etin!% partnership and beneficiaries9 cate!ories for these schemes is also su!!ested besides enlistin! possible options and approaches includin! pro'ect components description% selection of sites and partners for implementin! laid down activities for each se!ment of the value chain to achieve the ob'ectives.

Chapter ) ID S-MMA ?$ C+!S( AI!(S A!, S( A(:4I:S

This chapter covers summary of findin!s followed by horticultural development constraints and horticultural development strate!ies. The first section is devoted to salient findin!s on vertical coordination towards horticulture sub-sector in &a)istan9s &un'ab. The horticultural development constraints are discussed in section 2. The policy implications of horticultural development constraints are outline in section ". The information on the opportunities% solutions and proposed intervention for addressin! the identified constraints of horticulture sub-sector is !iven in section (. The proposed horticultural development strate!ies are presented in section 5. The su!!estions for further research for the promotion of horticulture sector of &a)istan9s &un'ab in section 2 complete this chapter. 9*' Summar# of <indings

-hapter wise summary of the salient findin!s of the study are briefly presented in the followin! sub-sections. 9*'*' +bjecti/es and methodolog#

The purpose of this study was to assess the effects of vertical coordination on transaction costs and farm profitability of smallholders in horticulture sub-sectorI to identify stron!er or different forms of inte!ration that could sustainably improve wellbein! of small holder farmers in 177

horticultural value chains and to determine the policy implications for smallholders% a!ribusiness% public policy and investment priorities. .s this study focuses on value chain analysis of man!o% citrus and tomato in &un'ab province of &a)istan% therefore% $ultan% ;ahim ?ar Khan and $u<affar!arh districts were selected for man!o as these districts comprised 4 percent of man!o area in &a)istan9s &un'ab. Sar!odha% $andiDahauddin and Toba Ta)e Sin!h were selected for conductin! the citrus value chain analysis. $u<affar!arh% Jan)ana Sahib% 7u'ranwala and Shei)hupura districts were selected for tomato% as these districts contribute (4 percent in tomato production to &un'ab. #or this purpose a sample of 742 producers% 57contractors% 1 exporters% 7" commission a!ents% 2* wholesalers% *5 retailers and 1"44 consumers of man!o% citrus and tomato was selected. .!riculture is becomin! increasin!ly inte!rated and smallholders are often disadvanta!ed% and therefore action must be ta)en to help them in drawin! profit from their inte!ration into the mar)ets. :nternational experience has shown that an important strate!y for increasin! the incomes of smallholders in developin! countries is to help them diversify from low-value staple food commodities into hi!her value a!riculture such as livestoc)% dairy products% fish% fruits% ve!etables% and spices. :n order to provide some feasible measures and su!!estions about how smallholder can switch to hi!h value food commodities with minimum transaction cost and mar)et ris)s in &un'ab% &a)istan% a!ricultural value chain approach6framewor) was adapted. Transaction economics% profitability analysis and S01T analysis were used to study the policy environment and horticulture sector overview% structure conduct and performance of horticultural value chain% effects of horticultural value chain on small farmers and strate!ic options to inte!rate the small farmer into horticultural value chain. 9*'*% Profile of horticultural /alue chain operators

3oo)in! at the profile of the &rimary ,- operators it could be stated that the land tenure arran!ements indicated that the tomato !rowers mostly rent-inland while fruit !rowers rent-out land resultin! in almost similar level of operational holdin! for all the sample !rowers of fruits and ve!etables. The operation land holdin! of the small farmers was 5.7(% 7.( and 7.27 acre for 17

man!o% citrus and tomato !rowers respectively. The sample !rowers were of middle a!e !roup havin! low education and with farmin! experience of almost 24 years. The sampled contractors were educated and had business experience of more than ten years. $a'ority of the sampled contractors were doin! business as a sole proprietor while one third were operatin! in partnership. -ontractors do business with the commission a!ents and their selection criteria are mainly the honesty of the -. while !ood reputes and wor)in! relation in the past were also eEually important. Similarly the sample commission a!ents were of middle and old a!e with an avera!e education of * years of schoolin! and 1 -2" years of business experience. They were doin! business mostly in partnership% while one-fourth were doin! business as sole entrepreneurs. .ll the commission a!ents were havin! !ood communication facilities both mobile and landline telephone and they were well connected with other mar)ets. .s for as the wholesalers are concerned% wholesaler operates exclusively in the mar)et and wor)s closely with commission a!ents. The mean a!e of the sampled wholesalers was ran!ed from " -(2 years with 12 to 2" years of business experience. .bout *48 of the sampled wholesalers were wor)in! as sole proprietor dealt more than 144 crates of tomato to (44 crates of man!o per day. .ll of the sampled wholesalers had own telephone for communication. The sampled retailers on the other hand had an avera!e a!e of " years with business experience of 11 years. $ost of the sampled retailers purchase the selected produce from wholesalers. 3astly the sampled consumers of citrus% man!o% and tomato were !overnment servants and business community. Three-fourth of the sampled consumers purchase these commodities from retailers. 3oo)in! at the activities functions of different &rimary ,alue -hain 1perators +&,-1/% all operators are en!a!ed at their own level in facilitatin! the Euantity and Euality of selected produce enou!h to the consumers9 level of satisfaction at national and international level. :n support to &,-1% Secondary ,alue -hain 1perators +S,-1/ play important role on their part in provision of supplementary services and creatin! conducive business environment. . lon! list of S,-1 includin! !overnment or!ani<ations% statutory bodies% development institutes% civil 17*

society and financial institutions are operatin! at their part in research% transportation% information and re!ulations% which offer a wide ran!e of support in developin! chain capabilities and chain mana!ement competencies. 9*'*1 Market anal#sis of horticulture sub)sector

Borticulture is an important sub sector contributes about 128 to the national a!ricultural 7A& of &a)istan. &a)istan is ran)ed fifth in respect of man!o production of nearly 2 millions tons annually after% :ndia% -hina% Thailand% and :ndonesia. Thou!h &a)istan do not fall in top ten citrus producin! countries with production of 2.1 millions tones annually but ran)ed fifth in citrus export. &a)istan produces nearly 4.7 millions tones of tomato annually with ne!li!ible share in world tomato production. ;eviewin! the !lobal import and export scenario of these selected commodities% QS. is top ran)ed in man!o and tomato import while ;ussian #ederation is top ran)ed in citrus import. Similarly :ndia is top ran)ed in man!o export followed by $exico% Spain in citrus followed by -hina% and $exico is top ran)ed in tomato export followed by Jetherlands. Sindhri and -huansa are the most popular varieties of man!o !rown in &a)istan% )innow% #eutrell and blood red are the most common citrus varieties while 3yallpur Selection-:% &eshawar 3on!% T-14% $oney $a)er% ;oma% ;ed Top etc. are the common tomato varieties !rown in &a)istan. $an!o is mar)eted throu!h two different channels in &a)istan: channel 1involves pre-harvest contracts in between !rowers and -ommission a!ents6exporters% processors% and6or wholesalers followed by 71 percent farmers% channel 2is followed by 2* percent farmers where farmers directly mar)et their produce. -itrus too is mar)eted throu!h two different channels in &a)istan:
channel 1involves pre-harvest contracts in between !rowers and commission a!ents6exporters

and6or processors followed by *( percent citrus farmers% throu!h channel 2farmers directly mar)et their produce and this channel is followed by only 42 percent citrus farmers. Similar channels were observed in tomato mar)etin! in the research area. Jinety nine percent tomato is mar)eted throu!h channel 1is where !rowers sell their produce to commission a!ents and6or 1 4

wholesalers while only one percent farmers opted channel 2where !rowers themselves sell their produce after harvestin! with loose pac)in! and delivered to tomato processin! factory. . number of services have been identified used by different actors of man!o% citrus and tomato value chain. Some of lar!e farmers offer their facilities +tractors% sprayers% and tubewell water/ to the small farmers in exchan!e of price. These services become available primarily because of the close clustered and intense internal harmony of the horticulture producers in the study area. Some of the common services were pre-cultivation and cultivation services% harvestin! services% post harvestin! and mar)etin! services. 9*'*0 Value chain mapping of horticulture sub)sector

,alue chain mappin! are established usin! flow and !rid charts. The flow chart loo)ed at the different function in horticultural value chain and illustrates them as process leadin! from raw material to final consumption% while !rid chart illustrates the different mar)et channels within horticulture sector. The mappin! of smallholder man!o !rowers% mappin! of lar!e holder man!o !rowers% mappin! of small holders citrus !rowers% mappin! of lar!e holders citrus !rowers% mappin! of small holders farmer tomato !rowers and mappin! of lar!e holders tomato !rowers throu!h flow chart were presented. Deside this an inventory of mar)et players of man!o% citrus and tomato were also presented. Borticulture Sub-Sector Aynamics were also captured and it was witnessed that stallholders man!o !rowers were not well utili<ed their potential as lar!e holders !ot ( 21 )! yield per hectare due to well mana!ed orchards and more inputs use as compare to small holders man!o !rowers. The potential output for smallholder man!o !rowers could !enerate !ross income of ;s.1"1"22% ;s.1( *24 and ;s.2 " 2 and total cost of ;s.77((7% ;s.5*(1*and ;s."7((* under hori<ontal% vertical and pre-harvest contract mar)etin! system respectively. Qnder vertical coordination farmers can earn more profit and hi!h return. .lso smallholders citrus !rowers did not well utili<e their potential and smallholder profitability under potential productivity could !et yield of 1(""5 )! per acre. This scenario could !enerate !ross income of ;s.224(72% ;s.1(22"" and ;s.*17(( with total cost of ;s.12*414I ;s. 22 " and ;s.2"47( under hori<ontal% vertical 1 1

and pre-harvest contract system respectively. Similarly smallholders tomato !rowers could !enerate !ross income of ;s.15*44* and ;s.1(7"2* under hori<ontal and vertical coordination respectively. Total cost in this re!ards would be ;s.14242 in case of hori<ontal coordination and ;s.75"2 in case of vertical coordination. ?ield !ap and ran)in! of man!o% citrus and tomato were also analy<ed in this chapter. Thou!h horticultural crops6industry facin! a number of challen!es% however% lar!e yield !ap: farm-tofarm as well as compared to other countriesI hi!h post-harvest lossesI and lower mar)et prices6export price !ap were assessed. &ost-harvest losses of man!o% citrus and tomato produce were estimated from 24-(48% export price differences were found to be V*5( for tomato% followed by citrus +V5*5 /% and +V(14 / per metric ton. :t was revealed that smallholders have poor and limited access to a!ricultural credit% which prohibits them to underta)e necessary farm investments. .lso men still dominate in man!o% citrus and tomato production and their mar)etin! and no women involvement as small traders6retailers on local mar)ets were observed. There was limited structured trade in the subsector% there are interests expressed amon! players to en!a!e in mar)et lin)a!es between chain actors. 9*'*2 Value chain research of horticulture sub)sector

The analysis of the economic viability of man!o% citrus and tomato revealed that smallholders man!o !rowers incurred hi!hest cost throu!h self mar)etin!% while pre-harvest contract system was cost efficient. :n case of lar!e holders man!o !rowers hi!hest cost was reali<ed in case of self-mar)etin!% in case of vertical coordination sellin! directly to the processors6exporters% operational cost was less than the whole sale mar)etin! system but production cost was hi!hest than the farmers wor)in! with the hori<ontal chain and pre-harvest contract system. &rofitability analysis revealed that small holders did not mana!e their man!o farms optimally and !et low avera!e yield and hence low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more outputs per acre.

1 2

-ost analysis both at small and lar!e holder citrus !rowers revealed that transaction cost was hi!hest in case of hori<ontal coordination in the traditional chain of commission a!ent in the whole sale mar)et mainly due to the hi!h operational cost while transaction cost was less due to few actors alon! the vertical coordination. #arm level profitability analysis for smallholders citrus !rowers revealed that 72 percent of the sampled !rowers didn9t mana!e their citrus farms optimally and !et low avera!e yield and low returns. 3ar!e farmers have been investin! more intensively and spendin! more money on their farms and !et more output per acre. Bori<ontal coordination in citrus !enerates !ross revenue of ;s.1115*7 with total cost of ;s. 55( and net profit of ;s.224(* per acre. Qnder vertical coordination per acre yield is sli!htly hi!h and !enerate ;s."1244 per acre as net profit. :n case of lar!e holder citrus !rowers hori<ontal coordination !enerates !ross revenue of ;s.117111 with total cost of ;s. 4 4" and net profit of ;s."2"4 . 3ar!e holders fetched more profitability and competitiveness as compared with small holders. Similarly in tomato% the cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical tomato coordination resultin! in low cost to the tomato farmers sellin! their commodity directly to the processors. #or lar!e holder tomato !rowers to the cost of production was low under hori<ontal coordination with more operational cost as compared to vertical coordination. The transaction cost was also low in vertical coordination. The profitability result revealed that small holders tomato !rowers did not man!e their tomato farms optimally and !et low avera!e yield and low returns. 3ar!e farmers have been investin! more intensively and !ot more outputs per acre. .nalysis of value addition throu!h different channels and different actors it was revealed that hi!h de!ree was observed at retailer level +(28/% in hori<ontal coordination% while at exporter level + 28/ in vertical coordination for small holders man!o !rowers. :n case of lar!e holders man!o !rowers the hi!hest de!ree of value added was reali<ed at ((8 at retail level and ( percent at exporter in vertical coordination. Similarly for small holders citrus !rowers a!ain it was hi!hest at retail level +548/ in hori<ontal coordination and *2 percent by exported in vertical coordination. :n case of lar!e holders citrus !rowers% hi!hest value addition at the level of (2 1 "

percent was observed at retail level under hori<ontal coordination and at the level of 7"8 by exporters under vertical coordination. .nalysis for tomato value chain revealed that hi!hest de!ree of value addition was observed at farmers level at the de!ree of (2 8 and ( percent under hori<ontal coordination for smallholders and lar!e holders tomato !rowers respectively and 5" percent by processors under vertical coordination both for smallholders and lar!e holders tomato !rowers. The price structure analysis revealed that man!o price depends upon the tar!et mar)et and upon the sta!e of the season under hori<ontal coordination% while in case of vertical coordination price is more constant with little variation but are not unexpected as in case of hori<ontal coordination. Similar price structure prevails alon! different supply chain systems as observed in case of citrus as in case of man!o. 3ittle different supply chain arran!ements prevailed in the selected tomato value chain. $ainly self-mar)etin! in the hori<ontal and vertical coordination was found. The prices were determined by the tar!et mar)et% production sta!e and tomato production cycles of the other re!ions. -onstraints analysis revealed that smallholder face a number of constraints% which increase ris) and uncertainty and act as disincentives for increased production% conseEuently preventin! smallholders from accessin! a!ricultural mar)ets. $a'or challen!es faced by smallholders such as poor access to landI lac) of on-farm and off-farm infrastructureI lac) of access to finance for production inputsI lac) of access to mechani<ation% transport lo!istics% extension and research support servicesI and limited access to hi!h-value mar)ets. Bowever% positive effect of vertical coordination on farm profitability was observed for the three commodities under consideration throu!h lower transaction cost and observable post harvestin! cost alon! with little hi!her productivity as compared to the hori<ontal coordination. The analysis of the economic viability helps to draw important implications for the smallholders and a!ribusiness alon! with policy ma)er. Bi!her returns with lower cost imply that the small farmers could be benefited throu!h vertical coordination that would help to increase rural income and reduce poverty. There is stron! indication for the public policy to promote processin! and international trade and develop policies for promotin! investment in the local processin! and 1 (

export industry. This also implies that the priorities for investment should also be focused for promotion of vertical inte!ration. 9*'*7 Value chain anal#sis of horticulture sub)sector

&oor Euality and low productivity% low labor productivity% loss of opportunities for income and employment creations% lac) of investment in new productive technolo!ies% low family income% supply shorta!es on product mar)ets% hi!h post harvest losses% low share of processin!% and low export prices were the plausible constraints identified for value chain development of man!o% citrus and tomato. The underlyin! causes identified behind these constraints were lac) of information and )nowled!e for cultivation% poor wor)in! conditions of small producers% low income of small producers% insufficient access to financial resources% discrimination a!ainst women wor)in! in the field% lac) of s)illed labor and recruitment of youth% lac) of s)illed harvesters% collectors% pac)ers and transporters% and poor product Euality and poor pac)a!in!. There were some positive initiatives and opportunities identified for the value chain development% li)e: clusters of farmers in strate!ic areas are emer!in! in man!o and citrus !rowin! areas throu!h farmer field school approachI some institutions li)e% J.;-% Q.#% .QT% Q.&% and some J71s have started initiatives to increase re!ulations and certification systemsI the !overnment subsidies-inputs pro!ram !ives a window to brin! this pro!ram to the horticulture sub-sectorI under .S3& some districts have prioriti<ed horticulture and man!o and citrus in particular and are allocatin! funds and expertise to the sub-sector for this purposeI availability of commercially attractive and relative resistant man!o% citrus and tomato varietiesI a practical trainin! center to improve the approach and capacity of horticulture in !eneral and man!o% citrus and tomato in particularI success stories usin! 7.& in some country exist and can be replicated for man!o% citrus and tomatoI fast-trac) researches on technolo!y transfers for man!o% citrus and tomatoI many actors of the sub-sector are )een to sponsor experts for improvin! man!o% citrus and tomato !rowers s)ill for production mana!ementI S$@s has already feasibility studies +processin! and pac) house/ for horticulture sub-sectorI increasin! financial institutions are tailorin! their products and services to specific a!ricultural sub sectorI the $inistry of Jational #ood Security and ;esearch has identified horticultural sub-sector as

1 5

one of the hi!h potential sector to be promotedI and &BA@- is promotin! clusters for fresh and processed man!o% citrus and tomato. Stron! collaboration between the public sector% development a!encies and the private sector +business associations/% farmers capacity +financial and mana!ement/ need to be stren!thened so that they can improve their mana!ement practices and adopt new technolo!ies to increase production volume and improve the Euality of fruits% and clear identification of roles amon! the support service providers as to which or!ani<ation can best provide which services are the main strate!ies for value chain development of man!o% citrus and tomato. 9*'*5 Value chain de/elopment schemes of horticulture sub)sector

Dased on the analysis of first hand information and after developin! an empirical evidence of value chain analysis of citrus% man!o and tomato% development schemes for each commodity are developed. These schemes ensure inclusiveness of the lar!e number of small farmers while developin! a competitive value chain scheme for each of the commodity of interest by up-scalin! on the existin! stren!ths and opportunities with providin! solutions for sustainability throu!h incentives for chain partners. @nsurin! the participation of !rowers in modern value chains is the )ey to success. The cost and operation framewor) includin! desi!n criteria% !eo!raphical tar!etin!% partnership and beneficiaries9 cate!ories for these schemes is also su!!ested beside enlistin! possible options and approaches includin! pro'ect components description% selection of sites and partners for implementin! laid down activities for each se!ment of the value chain to achieve the ob'ectives. 9*% Horticultural ,e/elopment Constraints

1n the findin!s of value chain research of horticulture sub-sector in the study area% the horticultural development constraints can be classified into seven cate!ories. These constraints are related to input supply% smallness% mana!ement of or!ani<ation% mar)et access% enablin! environment% limited capacity buildin! of horticultural chain sta)eholders and policy. The brief description of each cate!ory of constraint is presented in the followin! sub sections. 1 2

9*%*'

Input suppl#

,alue chain research revealed that limited availability and access to Euality inputs +particularly seed6seedlin!s/% expensive and poor Euality other inputs +fertili<er% herbicide and pesticides/% unbalance and untimely use of inputs% inefficient water utili<ation and hi!h cost of irri!ation% hi!h credit cost and low level of mechani<ation were ma'or constraints faced by man!o% citrus and tomato !rowers in the study area. :n other words% technical constraints include nonavailability of healthy% disease free% true-to-type fruit plants% limited availability of certified ve!etable seed% non-availability of Euality chemicals% and wea) capacity in orchard mana!ement which conver!e at low productivity than the potential outputs of these commodities in the study area. The lac) of capital% limited access to institutional credit and non timely availability of Euality input lead !rowers to limit the use of fertili<ers% pesticides and labor inputs in fruit orchard and ve!etables fields. 9*%*% Smallness

,alue chain research revealed that the resources are not optimally allocated in the horticulture sub-sector of study area which is reflected by the fact that horticulture !rowers obtain low yields of fruit and ve!etables as compared to the potential yield. The absolute smallness of farmers !enerates socio-economic and technical constraints. The small farm si<es with limited financial resources are obstacles to improve the productivity and profitability of horticulture sub sector. The dominance of small farmers +absolute smallness/ resulted in low Euantity% inconsistent production and poor Euality of horticulture sub-sector. 9*%*1 Management of organi8ation

,alue chain research revealed that prevalence of subsistence farmin! resulted in low productivity and profitability$ limited )nowled!e and use of traditional practices are ma'or constraints mana!ement of or!ani<ation of horticultural !rowers in the study area. 1 7

9*%*0

Market access

,alue chain research revealed that inadeEuate bac)ward and forwarded lin)a!e with farmers% poor mar)et mechanism and traditional mar)etin! methods and exploitation of the farmers by the middle man are ma'or constraints hinderin! mar)et access to horticultural !rowers in the study area. :n assembly and wholesale mar)ets% these !rowers are treated as temporary client without access to the credit and other facility extended to the contractors of the orchards and beoparies of the ve!etables fields. 0ithout adeEuate access to mar)et information% !rowers also face price uncertainty. Aue to institutional constraints% !rowers depend on hi!h cost informal credit sources and advances from fruit contractors and ve!etables beoparies. :n this process by not mar)etin! their own produce% the !rowers do not benefit from seasonal price variation particularly in the early and late season. 9*%*2 :nabling en/ironment

:t is evident from the findin!s of value chain research that post-harvest handlin! issues include contractin! out fruit orchard and ve!etables% out-dated harvestin! techniEues% un s)illed% nontechnical harvester and handlers% lac) of cool chains% hi!h post-harvest losses% costly pac)in! materials and absence of processin! facilities at farm level% lac) of farm to mar)et road +poor infrastructure/% shorta!e and hi!h cost of electricity6ener!y and under develop processin! of horticultural products are main constraints of enablin! environment of horticultural sub-sector in the study area. 9*%*7 ;imited capacit# building of horticultural chain stakeholders

:t is evident from the findin!s of value chain research that &oor capacity buildin! of horticultural !rowers% women and children for addressin! the need of productivity% Euality improvement% reducin! post harvest losses and value addition% &oor capacity buildin! of other horticultural chain sta)eholders for addressin! the issue of post harvest handlin!% lo!istic and mar)etin! are

ma'or constraints of limited capacity buildin! of horticultural chain sta)eholders of horticultural !rowers in the study area. 9*%*5 Polic#

:t is evident from the findin!s of value chain research that wea) policy enforcement6 implementation% inadeEuate policy and re!ulatory framewor) and lac) of public6private partnership in formulatin! policy structure are main constraints of policy for horticulture subsector. There is no research and development facility for conductin! research on controlled atmosphere stora!e and shippin! of fruit and ve!etables in the study area. #urther the research on fruit and ve!etables is not demand driven% and is often replicated time and a!ain. The extension system in the study area remains ineffective% and whatever limited research and development wor) done is not properly transferred to end-users. Survey findin!s revealed that the constraints related to policy and re!ulatory framewor) create more hurdles in horticultural development strate!y in the country. 9*%*6 esearch and de/elopment constraints

.nalysis of study revealed that the issues related to research and development% processin! and refri!eration% transportation and mar)etin! F communication in the study area are limited and poorly-functionin! of these institutions creates problems for all sta)eholders of mar)et chain of fruit and ve!etables in the study area. 9*1 Polic# Implications of the Salient <indingsBConstraints

The 7overnment has a ma'or role in settin! Euality standards% policies% creatin! a pro-business environment and creatin! a strate!ic direction for the horticulture sub-sector that can benefit all actors in the value chain. -urrently !overnment policy is defined by the imperative of the former while wor)in! towards the lon!-term !oal of achievin! the latter. This creates a policy environment that is part socially driven and part mar)et driven.

1 *

$ost value chain studies to date focus on mar)et relations and pay little attention to the business environment in which chain actors operate. ?et% this environment may both enable and constrain value chain up!radin! processes. #or a balanced analysis of value chains we proposed three )ey elements: networ) structure% of hori<ontal and +vertical/ mar)et channel relationshipsI value added% as related to the )ey competitive aim of any business chainI and !overnance% coverin! or!ani<ational arran!ements between value chain actors. These elements should always be studied as embedded in the value chain9s business environment% where we focus on mar)ets% resources and infrastructures and institutions. $oreover% they form the basis for our cate!ori<ation of value chain up!radin! options. ,alue chain actors may be motivated to improve their position in the chain by chan!in! their production of value added% their relationships +!overnance/ with other actors in the value chain and by choosin! different mar)et channels for their products. #inally% the role of non-value chain actors% such as development or!ani<ations and interest !roups% in up!radin! value chains has not been widely examined. Bowever% with recent developments such as corporate social responsibility and pro-poor mar)et development% these actors are li)ely to play a pivotal role in value chain up!radin!. .t the !lobal level% a!ricultural sector has seen increasin! vertical coordination and emer!ence of a!ri-food supply chains to meet consumers9 demand for Euality and food safety. There are empirical evidences establishin! that successful coordination in the value chain has a si!nificant impact on cost reduction and farm-income enhancement as well as resultin! in positive externalities. Dut% the overarchin! Euestion is whether the a!ricultural sector has the necessary and sufficient conditions for the development of successful value chains. 7overnment policies not at par with the promotion of value chain development and promotion. Special institutional and policy reforms needed to ensure inclusiveness of the resource-poor farmers in a!ricultural value chains. 7reat opportunities exists for stren!thenin! value chains in a!ricultural sector that address the issue of food security and help reduce poverty for those dependents on a!riculture for their livelihood. 9*0 +pportunities Solutions and Proposed Inter/entions for Identified Constraints

1*4

1n the basis of identifies constraints and policy implications% the opportunities% possible solutions and proposed interventions for addressin! these constraints are briefly narrated in table *.1 (able 9*': +pportunities$ solutions and inter/entions of the horticultural sub)sector
4ro) ups Input Suppl# +pportunities -ertified6Euality seed6seedlin!s will ensure hi!her yields and reduce the incidence of insect pest and disease -heaper and Euality other inputs +fertili<er% herbicide and pesticides/ will ensure hi!her productivity and reduce the incidence of weeds% insects6pest and diseases Timely application of balance use of fertili<er% herbicide and pesticide accordin! to reEuirement of the critical sta!es will ensure hi!her productivity and increase input use efficiency Bi!h crop intensity will result in hi!her yields -heap credit availability will promote balance input use needin! to increase productivity #arm mechani<ation will enable intensive farmin! that enable increase farm profitability Smallness #ormation of farm or!ani<ation6associations will ensure better access to input% hi!her productivity and more return Solutions :mproved Euality seeds and establishment of clean nurseries -heaper Euality fertili<er% herbicide and pesticide Inter/entions ;esearch and development need to focus to ensure availability and access of certified Euality seed6seedlin!sI and awareness campai!n for their use @stablishment of rural business hubs for input provision at union council level will facilitate cheaper and Euality chemical fertili<er at farmer door steps -apacity buildin! other chain sta)eholders for addressin! the issue of post harvest handlin! and lo!istic &romotion of participatory research and development throu!h farmer field school approach +##S./

Knowled!e sharin!

and

s)ill

Detter irri!ation methods and techniEues -heap credit facilities

&romotion of crop specific hi!h efficiency irri!ation +drip% tric)le etc./ &ro-small holder subsidi<ed credit scheme

.ssess to cultivation technolo!y and promotion from rental mar)et -ollective action6collective voice for bar!ainin! power

@stablishment of competitive rental service mar)et of farm machinery at rural business hubs6farm service hubs @stablishment of farmer or!ani<ation6 association throu!h farmer field school approach and lin)in! them rural business hubs and farm service centers capacity buildin! of !rowers for addressin! the need of productivity% Euality of improvement% reducin! post harvest losses and value addition of value addition Aevelopment of functional farmers association lin)ed under rural business hubs +cluster approach/ ,ertical coordination with mar)etin! and processin! industries #armer networ)in! with a!ricultural science and technolo!y innovation system

Speciali<ed farmin! for consistent supply of Euality product Market access nManagementBorgani8atio -ommercial orientations for optimum production to maximi<e profitability #armers that are trained at latest techniEues and methods will be able to do farmin! and scientific lines

-ommodity specific and enablin! environment $ar)et lin) awareness and

Aissemination of updated )nowled!e and s)ill

3in)a!es with input and output mar)et will increase productivity and profitability :mproved mar)et mechanism with access to mar)etin! information and development of cold chains and improved cold harvest process will result in value addition

Aevelopment of lin)a!es throu!h buy bac) !uarantee with mar)et chains :mproved mar)etin! system +rules re!ulation system/ and product handlin! in compliance with 0T1 standards

&romotion of contract farmin! throu!h contract farmin!

&romotion of 7.& and development of cold stora!e improved pac)a!in! and transportation.

1*1

Aecrease the number of mar)etin! intermediary for the commodities movement from farm to for)

:nabling en/ironment

:mproved infrastructure increase mar)etin! efficiency

will

:ncrease the awareness of the farmers to lin)in! them with processin! industries6modern retail chains :nfrastructure development :ncrease supply of ener!y throu!h diversified sources #arm based processin! semi

@stablishment of vertical coordination where farmer association6or!ani<ation will sell their product to the alliance of processors6exporters

Aevelopment of lin)s roads to production areas &romotion of alternative ener!y sources i.e. bio!as% solar and biofuel Small scale processin! facilities +small enterprise development/ i.e. )innow and man!o processin! and tomato pulpin! process @stablishment of model on farm pac) house @stablishment of male farmer field school% women open school and children ecolo!ical clubs

;e!ular supply of cheap ener!y will reduce cost and enhance profitability :mproved processin! facilities will help to absorb excess supply and reduce price variability -apacity buildin! of horticultural !rowers% women and children will ensure to enhance the productivity% Euality improvement% reduction in post harvest losses and value addition -apacity buildin! of other horticultural chain sta)eholders will ensure to reduce post harvest losses% lo!istic issues and mar)etin! problems speciali<ed capacity buildin! to all chain sta)eholders will ensure the better )nowled!e and information on 7.&% food safety and Euality !rades% establishin! proper procedure of pac)in!% :&$ philosophy &olicy implementation will help in availability of Euality6standard inputs6outputs Jational level policy and re!ulatory framewor) line with food security and trade promotion will develop vibrant horticulture sector @ncoura!ement and involvement of private sector in policy decision will help to promote investment value addition and processin!

Polic# stakeholders;imited capacit# building of horticultural chain

Knowled!e and s)ill transfer to farmers% women and children on enhancin! productivity% improvin! Euality% reducin! post harvestin! losses and enhancin! value addition Knowled!e and s)ill transfer to other chain sta)eholders for reducin! post harvest losses% pac)in!% transportation and stora!e Knowled!e and s)ill transfer to all chain sta)eholders will improve information on 7.&% S&S% food standards and 0T1 reEuirements :mproved6!ood !overnance Jational policy with holistic re!ulatory framewor) &articipation of concerned sta)eholders in policy ma)in!

@stablishment of business field schools

1r!ani<ed special trainin! course on 7.&% post harvest handlin!s% hi!h Euality and education on food safety and Euality !rades and standard% proper procedure for pac)in! facilities as well as standard trainin! curricula on 7B&s% 7$&s and B.--&.

.rran!ement of resources for Euality testin! field lab facilities and mana!ement #ormulation of national horticultural policy #ormulation of re!ulatory framewor) for fulfillin! the S&S reEuirements% food safety and standard as well as 0T1 reEuirements ;epresentation of processin! and trade association and policy dialo!ue

9*2

Horticultural ,e/elopment Strategies

:t is !eneral perception that producers are exploited in the mar)etin! chain as other middlemen in the consumer price fetch more shares. Dut this is !enerali<ed statement% there are other ar!uments too that leads to producers6!rowers exploitation. $ore efforts are made for consumer satisfaction and less attention bein! paid towards producers9 satisfaction. 1n the basis of this 1*2

study followin! recommendations are extended for ma)in! the mar)etin! system friendlier and facilitatin! for all mar)etin! actors in the study area. 9*2*' eorientation of subsistence horticulture to sustainable commercial horticultural farming The avera!e farm si<e and area allocated to fruit and ve!etables at ma'ority of our farms is Euite low and overtime% their farm si<e shall further decline. These farmers have very small Euantities of mar)etable surpluses. 1r!ani<ation of farmers into clusters for economies of scale is the need of the day. &romote the adoption of 7.& throu!h improved extension services% demonstration farms. &romote a system for certification of seedlin!s and improve the availability of improved plantin! material. #acilitate the acEuisition of expertise and promote the correspondin! technolo!y for Euality and productivity. &romote awareness about the dynamics and challen!es of the sub-sector- wherever possible% collaborate with the institutions to tap in the potential !rowth of man!o% citrus and tomato. :t is need of the time to ma)e their small farmers viable for stayin! in hi!h value a!riculture business by transformin! them from subsistence a!riculture to sustainable commercial horticultural farms in the study area throu!hI a/ promotion of cooperative business and value creation enterprises which are more appropriate options for the economic viability of small farmersI b/ review the re!ulatory framewor) for developin! mar)et for land and infrastructureI c/ developin! and stren!thenin! mar)et lin)a!esI d/ establishin! rural business hubs for inputs provision to enhance timely access to Euality inputs at competitive prices. e/ trainin! of entrepreneurs in the mar)et dynamicsI f/ development of mar)et information services.

9*2*%

:stablishment of rural business hubs for input pro/ision as a first segment for chain de/elopment

Man$o" :ntroducin! service delivery and support mechanism for enhancin! timely access to Euality input throu!h establishment of rural business hubs +;DBS/ is proposed first se!ment of pilot man!o chain development scheme. These could be a bi! stride in this direction as a replication of success story in :ndian &un'ab. ;DBS is Kone stop shopL encompassin! solutions 1*"

to the farmers under one roof which will lin)s farmers to mar)ets via bac)ward as well as forward lin)a!es as an private sector initiatives6public private partnership initiatives. They are aimed at providin! end to end !round level support to the man!o !rowers and his KprofitabilityL and KproductivityL. These ;DBS will be operated by K# in &un'ab and #.:A1 and S.#@ in Sindh respectively. @ach ;DBS at one site will cater to a!riculture land of about 12444 = 15444 acres with 5444 acres under man!o. This will !enerate impact on the life of about 14444 !rowers in !eneral and 1444 man!o !rowers in particular. :n total a!riculture land ( 444 = 24444 acres with 24444 acres under man!o and this will impact on the life of about (4444 !rowers in !eneral and (444 man!o !rowers in particular. These ;DBS will provide Euality and certified inputs li)e nursery seedlin!s% fertili<er% pesticide% farm implements and tools% fuel% veterinary products% animal feed% financial services% buybac) opportunities and membership card to man!o !rowers. This activity will ensure timely availability of Euality inputs for (444 man!o !rowers. @stablishment of clean certified man!o nurseries capable of offerin! sufficient certified plants to all farmin! community of their respective districts will be part of ;DBS. 'itru " This activity will ensure timely availability of Euality inputs for (444 citrus !rowers. The pro!ramme needs resources of 5 millions as a revolvin! fund for its establishment and functionin! from pilot pro'ect for each site. @stablishment of clean certified citrus nurseries capable of offerin! sufficient certified plants to all farmin! community of their respective districts will be part of ;DBS. -o!ato" This activity will ensure timely availability of Euality inputs for "444 tomato !rowers. The pro!ramme needs resources of 5 millions as a revolvin! fund for its establishment and functionin! from pilot pro'ect for each site. &rocurement of Euality seed for raisin! tomato seedlin!s. 9*2*1 :stablishment of model on farm pack house

Man$o" #our models on farm pac) house will be established in each proposed pro'ect sites for demonstratin! the populari<ation of this technolo!y. The ob'ective of establishin! $odel on #arm &ac) Bouse are: +i/ :ncome diversification throu!h settin! up small scale processin! of 1*(

man!o% +ii/ reducin! the post harvest losses throu!h processin! and value addition% +iii/ and promotin! the local man!o product in the national and international mar)et. The pro!ramme needs resources of 24 million for its establishment and functionin! for each site. +This will include -ost of -ustomi<ed Structures to serve as pac) house &re-fabricated% low cost (4x24 m/ " million% Ae-sap machine +locally developed/ 4.74 million% 0ei!ht !rader +:mported from .ustralia/ 14.4 million% 0asher and dryer +local/ 1.44 million% Bot water treatment unit +S&S -ompliance for :ran% -hina/ 2.4 million% $obile -hiller +-ombo type includin! blast chiller and cold room/ ".4 million% @thylene 7enerator 4.54 million/ etc./. 3i)ewise for citrus% this activity will cost ;s. 14 millions for each site and total cost will be ;s. 24 millions. 9*2*0 Arrangement of contract farming

&roductivity !ains are probably the most important lin) for cost savin!s alon! the value chain. &roven technolo!ical and institutional innovations provide an incentive for private and public sector investments in a!ricultural research and development. #or such innovations to benefit farmers% they have to be made accessible to farmers in a cost-effective way. -ontract farmin! arran!ements have proven to be effective in brin!in! technolo!y to farmers while at the same time providin! better incentives for continued investments. :n order to improve and sustain the competitive ed!e% there is need for more rapid technolo!y transformation tar!etin! productivity !rowth. $ore efficient farmin! practices should also be promoted throu!h a!riculture extension services% educatin! farmers about !ood husbandry% optimal plantin! timin! and crop distribution% etc. -ost of fertili<er% seed and other a!ricultural inputs could be reduced throu!h interventions aimed at reducin! the transport costs% such as for example% rationali<ation of levies on fuel% reduction in domestic taxes and duties. :t is also important to consider implementin! some innovative approaches in the mana!ement of fertili<er and inputs supply chains such as timely procurement and bul)-buyin! arran!ements with other countries in the re!ion so as to be able to !et lower prices at the ori!in. 9*2*2 e)orientation of research and de/elopment ser/ices

;esearch and development in fruit and ve!etables should be directed towards repositionin! the horticulture sub-sector vis-Y-vis international and national mar)et reEuirements in the study area throu!h: a/ introduction of 7.& to brin! the horticultural production in the area at par with 0T1 1*5

complianceI b/ the production methods need to be chan!ed to ma)e it in line with both domestic and international mar)et demands in order to achieve best prices of the farmers9 produceI c/ facilitatin! faster adoption of hi!h efficiency irri!ation systems for sustainable natural resource conservation and it is now a vital input for !rowin! hi!h value a!ricultural commoditiesI d/ it is su!!ested to inte!rate farmers with processors% value addition sectors and exporters in order to accrue maximum returns. 9*2*7 eform of agricultural education$ research and eCtension

There is a need of reforms in a!ricultural education% research and extension in the study area throu!hI a/ re-ali!nin! research pro!rams to be demand driven% cost effective and replicable under farmers9 condition by focusin! on control of post-harvest losses% value creation and value additionI b/ crop diversification in order to enhance producers9 profitability and sustainabilityI and c/ inte!ration of research% teachin! and extension under one umbrella at the pattern of 3and 7rant :nstitution +37:/ of QS. and is successfully replicated in some of the provinces of :ndia. 9*2*5 Impro/ing efficienc#$ producti/it# and competiti/eness

:n order to compliance with the chan!in! demand of consumers% 0T1 reEuirements and Sanitary and &hyto-sanitary measures% horticultural !rowers need to be more efficient% productive and competitive both in domestic and international mar)et. This can be achieved in study areas throu!hI a/ promotin! value addition throu!h improved a!ro-processin! and mar)et access throu!h innovationsI b/ promotin! the adoption of 7.& throu!h improved extension services and demonstration farmsI c/ providin! incentive-based introduction of Euality standards and certification schemes for domestic and international mar)etsI d/ &romotion of products for niche mar)ets based on comparative and competitive advanta!eI e/ establishin! business center for timely supply of Euality inputs at affordable pricesI and f/ promote awareness about the dynamics and challen!es of horticulture sector. 9*2*6 Promotion of regional trade

&a)istan has maintained a surplus for man!o and citrus so there is a !rowin! need to access potential export mar)ets Euic)ly and efficiently. Stimulatin! exports of man!o and citrus must first address the Euantity of produced in locally and in particular the productivity of smallholders who are the dominant producers. :ndustry infrastructure such as power supply and roads need to 1*2

be improved to reduce the costs of the processin! and tradin! industry and ma)e &a)istani products competitive versus other re!ional producers. Barmoni<ation of Euality standards and trade documentation will encoura!e freer movement of these commodities within the re!ion. 1ther issues in this respect are: - -larification at borders with respect to duties and char!es with up to date information on chan!es to be available more Euic)ly - :ncrease re!ional information re!ardin! production% demand and price - :ncrease credibility of international or!ani<ations involved in Euality control - :ncrease accessibility of 7overnment services involved in documentation - #aster decision ma)in! by the 7overnment to !rant export permission 9*2*9 :ncouraging public and pri/ate partnership and pri/ate sector in/estment

#or copin! the 0T1 reEuirement and S&S measurements% there is need to encoura!e the public private partnership and private sector investment in study areas throu!h: a/ provide incentives and re!ulatory framewor) for establishment of private sector wholesale mar)etsI b/ establishment of commission a!ents9 stora!e% cool chain and other lo!istic facilitiesI c/ stimulate investment in horde business sector by encoura!in! public-private and private-private partnershipsI and d/ launch special schemes for promotin! direct and indirect forei!n6private investment 9*2*'& Capacit# building of chain stakeholders of horticulture sub)sector Sustainable implementation of best horticultural production and mana!ement practices will be ensured throu!h #armer #ield Schools +##S/ approach% which can provide capacity buildin! to !rowers% women and children for addressin! the need of productivity% Euality improvement of commodities% reducin! post harvest losses and value addition. Dy holdin! horticultural farmers field schools% followin! one villa!e one facilitator concept in the study area can enhance capacity buildin! of chain sta)eholders. #acilitators will transfer )nowled!e and s)ills on the modern mana!ement to horticultural !rowers throu!hout the production season +appropriate selection of variety% optimal methods of plantation propa!ation% fertili<ation% irri!ation and prunin!/. They will also provide )nowled!e to !rowers on allowable inputs +pesticide% fun!icide and fertili<er/. Knowled!e on @Q;@&7.& pre- and post-harvest food safety certification scheme for fresh

1*7

horticultural produce will also be disseminated. Borticultural !rowers will be updated on 7.&% harvestin! techniEues by followin! maturity indices% proper harvestin! tools6harvestin! machine. #acilitators of Dusiness #ield Schools +D#S/ will transfer )nowled!e and s)ills to harvesters% pic)ers and pac)ers and transporters on best post-harvest handlin! techniEues6tools% methods6harvestin! machine% de-sappin! and de-stemmin! techniEues and proper handlin! and care of harvested produce. They will also impart )nowled!e6information6s)ills to transporter and pac)ers on @Q;@&7.& or eEuivalent food safety certification standard to improve acceptability of fresh fruit and ve!etables for export. Knowled!e and s)ill transfer on modern processin!% !radin! and pac)in! techniEues will be ensured by facilitators of D#S. :nformation on effective plan to comply with international standards for hy!iene in pac)in! facilities with particular emphasis on facility desi!n% water Euality% wor)er health and hy!iene and trainin! of wor)ers will also be disseminated to pac)ers in processin! sector. #acilitators of D#S will also transfer )nowled!e6information on mar)et development areas to the mar)eters. They will facilitate partnership +e.!. contract farmin!/ amon! producers% pac)ers and collectors% retailers +supermar)ets% hyper mar)ets and bi! ba<aars/ for distribution and mar)etin! of fresh fruit and ve!etables. The speciali<ed capacity buildin!s are reEuired in the field of 7.&% post harvest handlin!% hi!h Euality trainin! and education on food safety and Euality !rade and standards% procedures for proper pac)in! facilities and :&$ philosophy informant of horticulture sub-sector. 9*2*'' Polic# and regulator# framework for the promotion of horticulture sector #ederal% provincial and district !overnments should play their due role in performin! their responsibility for the development of horticulture sector in the study area. #ederal !overnment should formulate national import-export policy to comply 0T1 reEuirements. Seed certification and re!istration of nurseries and ve!etables seed production farms% formulation of Euarantine rules and re!ulations and settin! the standards and !rades for the horticultural produce fall under the responsibility of the federal !overnment. &rovincial !overnments are responsible for the implementation of federal policies in their respective provinces and if reEuired% they can develop their own policies% standards and !rades for the promotion of horticultural production and export in the compliance of 0T1 reEuirements. 1* for relevant horticulture chain sta)eholders )ey

Aistrict !overnments are responsible for mana!in! extension activities% local mar)etin! systems% monitorin! of inputs and coordinatin! with provincial and federal !overnments in developin! a!ricultural pro'ects in !eneral and horticultural pro'ects in particular. 7overnment is also reEuired to facilitate the en!a!ed sta)eholders in horticulture business in !ettin! credit from the ban)s and other financial institutions to easy terms and conditions as Euic)ly as possible. The public sector institutions should also !enerate accurate and reliable data on post harvest losses of horticulture commodities to ascertain the causes of losses at pre- and post-harvest sta!es. :n order to facilitate faster chan!es in production% stora!e and mar)etin! techniEues% !overnment is reEuested to award complete exemption of duties and surchar!e on imported machinery li)e !radin! units% cold stora!e chambers% !reenhouses% tric)le irri!ation accessories +li)e microtubes% mini sprin)lers and bubblers/ for interested businesses. Borticulture should be accorded to the status of an industry in &a)istan. Re$ulatory Policy Mea ure " The proposed re!ulatory policy measures for the study area are briefly described below: a/ re!istration of fruit plant nurseries and ve!etables seed production fields will be ensured by the provincial !overnment. b/ !overnment will ensure throu!h le!islation the Euality and liability fruit plant and seeds from nurseries and fields and the truthfulness of labels on inputs li)e seeds% fertili<ers and pesticidesI c/ !overnment should provide incentives +!rants% study tours and trainin!s/ to the re!istered nursery men and input suppliers. Production and Mar*etin$ Policy Mea ure " The proposed production and mar)etin! of horticulture policy measures for the study area are as under: a/ promotion of environmentally safe production practices and pac)in! materialI b/ facilitate sta)eholders involved in horticulture business in !ettin! credit from ban)s% other institutions on easy terms and conditions and as Euic)ly as possibleI c/ establishment and development of modern wholesale mar)ets% cold stora!e facilities% !radin! facilities in the production areasI and d/ availability of technical expertise to the private sector for the preparation of feasibility of any business related activities of horticulture sector In titutional Policy Mea ure " The proposed institutional policy measures for the study area are as under: a/ re-or!ani<e the present horticulture research pro!ram from conventional to demand driven in view of the reEuirements of domestic and forei!n mar)etsI b/ availability of resources 1**

li)e land% bud!et% trained man power and other facilities for the establishment of full-fled!ed 1rnamental Borticulture ;esearch Section6Aivision in the existin! research or!ani<ationsI c/ ensure the collection of accurate and reliable data on post-harvest losses for horticultural commodities and to ascertain the causes durin! pre-harvest sta!es which lead to post-harvest lossesI and d/ $inimi<e import and export re!ulations but not at the cost of Euality and conditions set by 0T1. 9*2*'% (o impro/e @ualit# :mprovin! Euality of man!o% citrus and tomato is value addition in its simplest form. . focus on Euality should involve farmers earnin! a premium for hi!h Euality crop. #or this purpose farmers need to be empowered with the correct !radin! mechanisms. -urrently private traders pay for the lowest !rade in the carat and ma)e the money from the Euality after sortin!. :n some commodities the reEuirements for improvin! Euality are Euite hi!h% but the return on investment can also be hi!h. :mprovin! the Euality reEuires awareness campai!ns on pre and post harvest sta!es. 9*2*'1 (o upgrade /ertical coordination @ncoura!e collaborative contract farmin! arran!ements. :t is a waste of time% funds and extension effort to encoura!e farmers to !row any crop until a !uaranteed mar)et chain exists. Too much effort has been put into !ettin! farmers to increase production of existin! crops or new ones without firstly ensurin! entrepreneurs% processors or businesses exist to competitively purchase the crop with a mar)et !uaranteed throu!h a contract. $ore simply a commodity exchan!e forum that provides a venue at which buyers and sellers are brou!ht to!ether to conduct business% normally throu!h a !roup of re!istered bro)ers must be created. . properly run exchan!e should accommodate people active in the production% trade% processin! and consumption of commodities% and reduce their costs of doin! business. 9*2*'0 (o impro/e hori8ontal coordination

244

-apacity buildin!s of farmers in stren!thenin! farmer or!ani<ations that can promote value chain in man!o% citrus and tomato with respect to mar)etin!. #armers must also be encoura!ed to or!ani<e themselves in order to receive inputs at a more competitive price and consolidate loads for transport. This will !ive smallholders the chance to ma)e better returns and ma)e mar)etable surpluses available. Aue to distrust or lac) of information% farmers often operate in isolation without bein! aware of new developments within the local settin!% but also at a !lobal level. Qnderstandin! the mar)et advancements in the sector and their implications can arm a commodity trader to ta)e advanta!e of positive chan!es and strate!i<e in the case of ne!ative developments. To increase the effectiveness of man!o% citrus and tomato value chains throu!h mar)etin! these strate!ies are su!!ested: i. ii. iii. iv. 9*7 &roducin! a hi!her Euality !rain and char!in! a price premium for itI Storin! and sellin! later in the year to benefit from the seasonal price increaseI Sellin! +and purchasin!/ bul) Euantities of outputs and buyin! inputs in bul) to increase ne!otiatin! powerI and Sellin! to premium mar)ets that are willin! to pay more li)e food processorsI and Suggestions for <urther esearch

Some areas are hereby delineated where further research is still reEuired. 9*7*' In/estment appraisal anal#sis of fruit and /egetables products industries

. number of products can be produced from fruit and ve!etables that are consumed throu!hout the year both in domestic mar)et as well as abroad. There is a !reat demand of these products in @uropean mar)ets and in $iddle @ast. Bowever producers and exporters are unaware of processin! of these products. Therefore% there is a need to underta)e an investment appraisal analysis of fruit and ve!etables9 processin! industries and this information should be disseminated amon! all sta)eholders. This will help boostin! export of the country in value added products of fruit and ve!etables.

241

9*7*%

How efficient and e@uitable fruit and /egetables /alue chains are with respect to competiti/eness$ inclusi/eness$ scalabilit# and sustainabilit#

,alue chains for fruit and ve!etables are different from food !rains* These are hi!hly perishable commodities and there are issues of food safety both for domestic and international mar)ets. There is a need to envision a complete a!ri-food system. .!ricultural processors and retailers are scalin! up very fast while farmers continue to be small and fra!mented. The Euestion of economic viability of small farmers arises. Qnder such scenario% whether small farmers + (8/ will be competitive domestically and !lobally or will leave farmin!. #or this it is important to study how efficient and eEuitable fruit and ve!etables chains are with respect to competitiveness% inclusiveness% scalability and sustainability in the study area. 9*7*1 Impact of =(+ on fruit and /egetables eCport

The 0T1 measures and policies have created !reat concerns amon! developin! countries. The policies and rules of 0T1 cover various sub'ects includin! environment% labor standards +e.!. -hild labor/% human ri!hts etc. :t is !eneral perception that these rules and polices favor industriali<ed countries. Aevelopin! countries are unable to comply with these rules and policies which ma)e 0T1 a controversial accordin! to poor and developin! countries. The economies of developin! countries li)e &a)istan are !enerally not technolo!y driven% therefore% all issues need to be discussed and evaluated in a holistic manner before layin! down uniform policies for all economies. .!ricultural exports of the country will be adversely affected if the country follows the 0T1 rules in holistic manner.

242

'&*

:<: :!C:S

1 .lberta .!riculture and #ood -ouncil +..#-/. 244(. /al"e Chain 0"ide 1ook: A Process
for /al"e Chain +e*elopment. /al"e Chain 2nitiati*e. ,nd 3dition. September 244(. .vailable online at: www.a!foodcouncil.com

2 .sean #oundation and .sia AB;;.. 244 . K,alue -hain .nalysis ;eportL% -ambodia%
&hilippines and ,ietnam% 3in)in! Small #armers to $ar)et &ro'ect.

" .AD. 244(. .!ri-Dusiness Aevelopment &ro'ect% Araft #inal report T. Jo. &.K (45 in
association with @nterplan and Sebcon Guly 244(

( .sian Aevelopment Dan) +.AD/. 2445. The &articipation of the &oor in .!ricultural ,alue
-hains: . -ase Study of -assava. &roposal by .sian Aevelopment Dan)% ,iet Jam ;esident $ission $a)in! $ar)ets 0or) Detter for the &oor.

5 .S3&. 2447. $an!o Supply $ana!ement &ro'ect: 0al)in! the -hain 0or)shop Ganuary 2427% 2447- . $an!o Supply -hain -ase Study.

2 Daloyi% G.K. 2414. .n .nalysis of -onstraints #acin! Smallholder #armers in the


.!ribusiness ,alue -hain: . -ase Study of #armers in the 3impopo &rovince. Qniversity of &retoria% &retoria.

7 Dar!houti% S.% S. Kane% and K. Sorby. 244". &overty and .!ricultural Aiversification in
Aevelopin! -ountries. The 0orld Dan) +$emeo/% 0ashin!ton A-% QS.. Darnett% ,. 1**1. Sample Survey &rinciples and $ethods. 3ondon. @dward .rnold &ublishers 3td.

* Denham% .lexandra and 3ee Denham. 2445. Meas"ring the Costs of 3xchange. :n -. $Nnard
+eds/: :nstitutions% -ontracts and 1r!anisations: &erspectives from Jew :nstitutional @conomics% -heltenham% QK: @dward @l!ar% pp. "27-"75.

14 Dienabe% @. F ,ermeulen% B. 2447. 4e !rends in S"permarket Proc"rement S#stems in


So"th Africa: !he Case of 5ocal Proc"rement Schemes from Small6Scale Farmers &# '"ral 1ased 'etail Chain Stores. ;e!overnin! $ar)ets :nnovative &ractice Series. 3ondon: ::@A.

11 Dienabe% @.% -oronel -.% 3e -oE% G. F 3ia!re% 3. 244(. 5inking Smallholder Farmers to
Markets: 3essons 3earned from 3iterature ;eview and .nalytical ;eview of Selected &ro'ects. Study ;eport% #inal draft% $arch 244(. -:;.A F :;.$. 0orld Dan).

12 Dirthal% &.S.% &.K. Goshi and .. 7ulati. 244(. ,ertical -oordination in Bi!h-,alue #ood
-ommodities: :mplications for Smallholders. :nternational #ood &olicy ;esearch :nstitute% 0ashin!ton A-% Jovember 244(.

1" Dirthal% &.S.% &.K. Goshi and .. 7ulati. 2447. ,ertical -oordination in Bi!h-,alue #ood
-ommodities: :mplications for Smallholders. -hapter Jo.1( Doo) on .!ricultural Aiversification and Smallholders in South .sia. @dited by Goshi% &.K.% .. 7ulati and ;. -ummin!s% .cademic #oundation% Jew Aelhi. 24"

1( Doehl'e% $. 2444. Critical +imensions of Str"ct"ral Change. Qnpublished Aocument.


Aepartment of .!ricultural @conomics. 0est 3ayafette% &urdue Qniversity.

15 -ollins% ;.% T. Aunne% G. -ampbell% &. Gohnson and ..Q. $ali). 2442. . -onstraints .nalysis
of &a)istan $an!o Supply -hains. Study -arried 1ut under the .uspices of the .ustralia-&a)istan .!ricultural Sector 3in)a!es &ro!ram.

12 Aoyer% 1.T. 2442. .n @nEuiry into @volvin! Supply -hain 7overnance Structures in South
.frican .!ribusinesses. Qnpublished &hA Thesis. Qniversity of &retoria% &retoria.

17 Arabenstott% $. 1**5. .!ricultural :ndustriali<ation: :mplications for @conomic


Aevelopment and &ublic &olicy. 7o"rnal of Agric"lt"ral and Applied 3conomics, 27+1/: 1"-24.

1 @sterhui<en% A. 2442. An 3*al"ation of the Competiti*eness of the So"th African


Agri&"siness Sector. Qnpublished &hA Thesis. Qniversity of &retoria% &retoria.

1* #.1.

2412. #ood http:66www.fao.or!

and

.!ricultural

1r!ani<ation%

Statistics

Aivision

244 %

24 #er!uson% ..#. F -o. 2442. :mprovements in .!ricultural $ar)etin! in &un'ab% &a)istan. 21 #:.S. 2447. K&a)istan ,alue -hain .nalysisL. 3eaders in :nvestment -limate Solutions. .
multi-donor service mana!ed by the :nternational #inance -orporation and the 0orld Dan)

22 71&. 2441. &lannin! -ommission% 7ovt. of &a)istan% Ten-?ear &erspective Aevelopment


&lan 2441-11

2" 71&. 2444. .!ricultural Statistics of &a)istan. @conomic 0in!% $:J#.3% 7overnment of
&a)istan% :slamabad.

2( 71&. 244*-14. .!ricultural Statistics of &a)istan. @conomic 0in!% $:J#.3% 7overnment


of &a)istan% :slamabad.

25 71&. 244 . @conomic Survey of &a)istan 2447-4 .


&a)istan.

$inistry of #inance% :slamabad%

22 7ultai% .. and K. $ullen. 244(. Bi!h ,alue .!riculture in :ndia: &rospects for the Small
Bolder. :nternational #ood &olicy ;esearch :nstitute% 0ashin!ton A-. .u!ust 244(.

27 7ultai% ..% J. $inot% -. Ael!ado and S. Dora. 2445. 7rowth in Bi!h-,alue .!riculture in
.sia and the @mer!ence of ,ertical 3in)s with #armers. &aper &resented at the 0or)shop on K5inking Small Scale Prod"cers to Markets 8ld and 4e Challenges L% 0orld Dan)% Aecember 15% 2445.

2 Bendri)s% S.3. F 3yne% $.-. 244". .!ricultural 7rowth $ultipliers for two -ommunal
.reas of Kwa<ulu-Jatal. +e*elopment So"thern Africa% 24+"/: (2"-(((.

2* Berr% $.3. and $u<ira% T.G. 244*. ,alue -hain Aevelopment for Aecent 0or): . 7uide for
Aevelopment &ractitioners% 7overnment and &rivate Sector :nitiatives. :nternational 3abour 1ffice% 7eneva.

24(

"4 Bobbs% G. @.% -ooney% ..% #ulton% $. 2444. ,alue -hain in .!ri-#ood Sector. 0hat .re
TheyM Bow do They 0or)M .re They for $eM Aepartment of .!ricultural @conomics Qniversity of Sas)atchewan.

"1 Bobbs% G.@. F ?oun!% 3.$. 1***. 2ncreasing /ertical 5inkages in Agrifood S"ppl# Chains:
A Concept"al Model and some Preliminar# 3*idence. &aper &resented at the -anadian .!ricultural @conomics Society and the 0orld .!ricultural @conomics Society. #ar!o% Jorth Aa)ota% QS.. 14-1( Guly 1***.

"2 Bobbs% Gill. 1**7. $easurin! the :mportance of Transaction -osts in -attle $ar)etin!.
American 7o"rnal of Agric"lt"ral 3conomics% 7*: 14 "-14*5.

"" Bo!!art% K. F &ania!ua% .. 2441. 0hat ;ural ;estructurin!M 7o"rnal of '"ral St"dies%
17:(1-22.

"( Bu!ar% -.D. and Biremath% K.-. 1* (. @fficiency of .lternative -hannels in the $ar)etin!
of ,e!etables in Del!aum city = . -omparison. @conomics% "*+"/: 1*2-244. :ndian Gournal of .!ricultural

"5 Bumphrey% G. F Schmit<% B. 2442. +e*eloping Co"ntr# Firms in the 9orld 3conom#:
0o*ernance and :pgrading in 0lo&al /al"e Chains. 243F 'eport, ;eft <$=,((,. :nstitut fur entwic)lun! und #rieda der 7erhard-$ercator-Qniversitat Auisbur!.

"2 Bumphrey% G. 2445. Shapin! ,alue -hains for Aevelopment: 7lobal ,alue -hains in
Agri&"siness. #ran)furt: 7TX.

"7 :#&;:. 2445. South .sia .!ricultural and ;ural Aevelopment. &roceedin!s of Seminars%
Jew Aelhi.

" :#&;:. 2442. #rom &late to &lou!h: .!ricultural Aiversification in :ndia and :mplications for
the Smallholders. &ro'ect &roposal by :#&;: 0ashin!ton A-.

"* Goshi% &.K.% .sho) 7ulati% -ummin!s% ;. 2447. .!ricultural Aiversification and
Smallholders in South .sia. .cademic #oundation% Jew Aelhi.

(4 Key% J. F ;unsten% A. 1***. -ontract #armin! Smallholders and ;ural Aevelopment in


3atin .merica: The 1r!ani<ation of .!ro-&rocessin! #orms and the Scale of 1ut7rower &roduction. 9orld +e*elopment% 27+2/: " 1-(41.

(1 Kirsten G.#. F Sartorius% K. 2442. 3in)in! .!ribusiness and Small-Scale #armers in


Aevelopin! -ountries: :s there a Jew ;ole for -ontract #armin!M +e*elopment So"thern Africa% 17+(/% 1ctober 2442.

(2 3ouw% ,ermeulen and $adevu. 2442. :nte!ratin! small-scale fresh produce producers into
the mainstream a!ri-food Systems in South .frica: The case of a retailer in ,enda and local farmers. &aper presented at the 7th:nternational -onference on $ana!ement in .!ri#ood -hains andJetwor)s% @de% The Jetherlands% "1 $ay = 2 Gune% 2442

(" 3ouw% ..% -hi)a<un!a% A.% Gordan% G. F Dienabe% @. 2447. ;e!overnin! $ar)ets: Smallscale
&roducers in $odern .!rifood $ar)ets .!rifood Sector Series: ;estructurin! #ood $ar)ets in South .frica: Aynamics within the -ontext of the Tomato Sub-Sector. &retoria: Qniversity of &retoria. 245

(( 3ummus% ;.;. 244(. S"ppl# Chain 8ptions for 1io&ased 1"sinesses . . #inal ;eport
&repared for the 3eopold -enter for Sustainable .!riculture 4*62764(. 3eopold -enter9s $ar)etin! and #ood Systems :nitiative &ro'ect Jo: $1"-244(.

(5 3undy% $.% 7ottret% $.,.% -ifuentes% 0.% 1sterta!% -.#.% Dest% ;.% #erris% S.% &eters% A. 244(.
Aesi!n of Strate!ies to :ncrease the -ompetitiveness of Smallholder -hains. :nternational -enter for Tropical .!riculture% -:.T% ;ural .!roenterprise Aevelopment &ro'ect% -ali% -olombia. http:66www.ciat.c!iar.or!6a!roempresas6pdf6manual"Zmar)etchain

(2 $a!in!xa% 3.3. F Kamara ..D. 244". 2nstit"tional Perspecti*es of 3nhancing Smallholder


Market Access in So"th Africa. -ontributed &aper &resented at the (1st .nnual -onference of the .!ricultural @conomics .ssociation +.@.S./. &retoria% South .frica. 2-" 1ctober 244".

(7 Jarayanan% S. and .. 7ulati. 2442. 7lobali<ation and the Smallholders: . ;eview of :ssues%
.pproaches% and :mplications. $SSA Aiscussion paper 54. 0ashin!ton% A-% QS.: :#&;:.

( Jational Aepartment of .!riculture +JA./. 244*. Airectorate @conomic .nalysis% Jational


Aepartment of .!riculture. ;esource -entre% Airectorate .!ricultural :nformation Services% &retoria. .vailable online at: www.nda.a!ric.<a6docs6html

(* 1rtmann% 7.#. 2445. &romotin! the -ompetitiveness of South .frican .!riculture in a


Aynamic @conomic and &olitical @nvironment. Agrekon% ((+"/: 2 2-"24.

54 &aroda% ;. 2442. &roceedin!s of @xpert -onsultation on .!ricultural :nnovations: 3in)in!


#armers to $ar)et. J.S-% :-.;% Jew Aelhi% :ndia Sponsored by .&..;:% :-.; and 7#.;. 2442.

51 &BA@D. 2445. -itrus $ar)etin! Strate!y Borticulture &ublication% (22=51* 52 &BA@D. 2447. &re-feasibility StudyI @stablishment of -old -hain System under Jational
Trade -orridor :mprovement &ro'ect% ,olume-: Borticulture :ndustry. Dy .rch ,ision -onsultin! @n!ineers% @nvironmentalists and .rchitects.

5" &oate% -.A. and &.#. Aaplyn. 1**". Aata for .!rarian Aevelopment. -ambrid!e Qniversity
&ress.

5( &roustica. 2442. :nvestin! in 3ocal #ood Supply -hains: . #undin! &roposal to &ilot ,alue
-hain Aevelopment. @nablin! 3ocal and Sustainable #ood :nitiatives% QK.

55 ;eardon% T. F Darrett% -.D. 2444. .!ro :ndustriali<ation% 7lobali<ation% and :nternational


Aevelopment: .n 1verview of :ssues% &atterns% and Aeterminants. Agric"lt"ral 3conomics% 2": 1*5-245.

52 ;eardon% T. 2445. 'etail Companies as 2ntegrators of /al"e Chains in +e*eloping


Countries: Aiffusion% &rocurement System -han!e% and Trade and Aevelopment @ffects. #ran)furt: 7TX.

57 ;eardon% T. and Derde!uN% G. .. 2442. The ;apid ;ise of Supermar)ets in 3atin .merica:
-hallen!es and 1pportunities for Aevelopment. Aevelopment &olicy ;eview 24 +(/: "71. 242

5 ;eardon% T.% Darrett% -.D.% Derde!uN% G... F Swinnen% G.#.$. 244 . .!rifood :ndustry
Transformation and Small #armers in Aevelopin! -ountries. +e*elopment% accepted Guly 244 . at: www.ers.usda.!ov #orthcomin!: 9orld

5* ;e!mi% .. F 7ehlhar% $. 2445. 4e +irections in 0lo&al Food Markets. .vailable 1nline 24 ;odri!ue<% ..% .li% :.% .ff<al% $.% Shah% J... and $ustafa% Q. 1**5. &rice @xpectations of
Sheep and 7oat by &roducers and :ntermediaries in Puetta $ar)et. &a)istan: .!ricultural @conomics. ,ol. 12+1/: 7*-*4.

21 Sharif% $. 1* 2. The @ffects of ;is) on the -hoice of 1ptimal -roppin! &atterns by #armers
in #aisalabad Aistrict% &a)istan% the Qniversity of Jew @n!land% .rmidale .ustralia.

22 Shairf% $.% 0. $ali)% J.:. Bashmi and Q. #arooE. 244". .ction &lan for $ar)etin! of
3ivestoc) System in &a)istan. SS:-#.1% :slamabad ;eport.

2" Sharif% $. 244(. 1pportunities and -onstraints in the &roduction% $ar)etin! and @xport of
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2( Sharif% $. 0. .)htar% .. Bassan. 244 . -haracteri<ation and .ppraisal of $an!o :ndustry in


&a)istan% SS: ;eport% 244 .

25 Sharif. 2411. Structure% -onduct and &erformance of the $ar)etin! Systems $ar!ins and
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22 Shepherd% ..0. 2447. Approaches to 5inking Prod"cers to Markets: A 'e*ie of 3xperience


to +ate. Agric"lt"ral Management, Marketing and Finance. 1ccasional &aper Jo. 1". ;ome: #ood and .!riculture 1r!ani<ation of the Qnited Jations.

27 Sofran)o% ..% #rerichs% ;.% Samy% $. F Swanson% D. 2444. 9ill Farmers 8rgani>e?
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2 Sprin!er- Bein< and .ndreas. 2447. ,alue 3in)s $anual = the $ethodolo!y of ,alue -hain
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2* Staal% S.% Ael!ado% -. F Jicholson% -. 1**7. Smallholder Aairy under Transactions -osts in
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74 Tirole% G. +1* /. The Theory of :ndustrial 1r!ani<ation. -ambrid!e% $.: $:T &ress. 71 ,an ;ooyen% -.G.% ,in)% J. F -hristodoulou% J.T. 1* 7. Access to the Agric"lt"ral Mar)et
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