Opportunity analysis of agriculture products in Measuring markets and feasibility

Ministry of Primary Industries - Agriculture Sector Modernizaon Project Harvard Center for Internaonal Development Introducon q The Purpose: q To find the best products/s to be focused by ASMP-MOPI project q Select the best product/s for value chain analysis q Find our the demanded market for different agricultural products. q Analysis the most feasible products in Agriculture Sector q Understand the current strength of the export of Agricultural products. q Idenfy the new area of expansion of the Agricultural products considering the poverty. Introducon q The Team: Ø Tim O’Brien : Harvard University Ø Daniel Stock :Harvard University Ø Paula Marra :Entrepreneur in USA Ø D.C.A Gunawardana :MOPI /ASMP Ø Sapumal Kapukotuwa :MOPI /ASMP Ø Nandani Siriyalatha :Stascian in MOPI Selected Sectors in Agriculture q Spices: Cinnamon, Pepper, Vanilla, Ginger, Turmeric, Clove, Nutmeg, Cardamom q Aquaculture: Shrimp, Cule Fish, Octopus, Bivalves, Sea Cucumber & Urchins q Floriculture: Foliage, Branches, Cut Flowers q Fruits: Plantains, Banana, Mango, Guava, Soursop, Pineapple, Passion Fruit, Jackfruits q Vegetables: Bell Pepper, Cassava, Cucumber, Gherkins, Tomatoes

Why • Most relevant to Ministry’s current work these • Mix of current and new crops for Sri Lanka crops? • Representave of different types of agriculture Market Demand Key Markets for Selected Sectors, 2016

IMPORTS, 2016 IMPORTS, 2016 (% MARKETS (USD, bn) of world) Why these EU Market 40.6 42.0% markets?

USA Market 18.2 18.8% • Mix of regional and global Middle East Market 3.7 3.8% demand • Mix of high, mid East Asian Market (China, Japan, 14.9 15.4% South Korea, Singapore, Hong Kong) and low income Indian Market 0.6 0.6% economies • Represents 80.7% Total 78.0 80.7% of total world trade Rest of the World 18.6 19.3% Bell Pepper Cassava Import share by Cucumber, Gherkin Tomatoes Cardomom, nutmeg & mace region Cinnamon Clove Ginger • EU & USA: Almost all the Pepper products have their largest Turmeric markets in the EU & USA Vanilla Mango, guava • East Asia: Cassava, Live Fish, and Pineapple Plantains & bananas Sea Cucumber Soursop, Passionfruit, jackfruit, Strawberry • Middle East: Cardamom, Cut flowers Nutmeg & Mace, and Turmeric Foliage, Branches Live plants • : Clove and Turmeric, as Cule fish, Octopus, Bivalves Live fish well as other spices Sea cucumber & urchins Shrimp • Cinnamon is mainly Mexico

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Demand, share of total world trade, 2016 India Middle East East Asia USA EU Rest of World Source: ITC, calculaons from MoPI Bell Pepper Cassava Cucumber, Gherkin Demand by region: Tomatoes Cardomom, nutmeg & mace EUROPEAN UNION Cinnamon Clove Ginger • Mango , Vanilla , Ginger, Pepper Turmeric Turmeric, and Cinnamon have Vanilla Mango, guava the highest growth rates in the Pineapple EU market. Plantains & bananas Soursop, Passionfruit, jackfruit, other Strawberry • Shrimp and Cule Fish, Octopus Cut flowers Foliage, Branches & Bivalves have large markets in Live plants Cule fish, Octopus, Bivalves the EU with high growth rates. Live fish Sea cucumber & urchins • Plantains & Bananas, Bell Shrimp 0.0 2.0 4.0 6.0 8.0 Pepper, and Cut Flowers have EU imports, 2016 (USD billion) large markets but lower growth Growth, Shrinking 0% - 8% 8% - 33% Over 33% 2012-16 rates. Source: ITC, calculaons from MoPI Bell Pepper Cassava Demand by region: Cucumber, Gherkin Tomatoes Cardomom, nutmeg & mace USA Cinnamon Clove Ginger • Most of the products have high Pepper Turmeric or very high growth rates in the Vanilla Mango, guava US market. MoPI has to consider Pineapple the US market and implement a Plantains & bananas Soursop, Passionfruit, jackfruit, other specific program to expand Sri Strawberry Cut flowers Lanka’s market share in the USA. Foliage, Branches Live plants Cule fish, Octopus, Bivalves • In parcular, Shrimp, Tomatoes, Live fish Sea cucumber & urchins Bell Pepper, Cut Flowers, and Shrimp Plantains & Bananas have very 0.0 1.0 2.0 3.0 4.0 5.0 USA imports, 2016 (USD billion) large markets in the US. Growth, 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% Source: ITC, calculaons from MoPI Bell Pepper Cassava Demand by region: Cucumber, Gherkin Tomatoes Cardomom, nutmeg & mace MIDDLE EAST Cinnamon Clove Ginger • Most off the selected products Pepper Turmeric are growing rapidly in the Vanilla Mango, guava Middle East market. Pineapple Plantains & bananas • Comparavely, Tomatoes, Soursop, Passionfruit, jackfruit, other Strawberry Plantains & Bananas, and Shrimp Cut flowers Foliage, Branches have the highest market Live plants Cule fish, Octopus, Bivalves opportunies in the Middle East. Live fish Sea cucumber & urchins • However, the Middle East Shrimp 0.0 0.2 0.4 0.6 0.8 1.0 market is smaller overall than ME imports, 2016 (USD billion) the other markets (US,EU,EA). Growth, 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% Source: ITC, calculaons from MoPI Bell Pepper Cassava Demand by region: Cucumber, Gherkin Tomatoes Cardomom, nutmeg & mace EAST ASIA Cinnamon Clove Ginger • The largest East Asian markets are Pepper Turmeric for Shrimp and Cule Fish, Octopus Vanilla & Bivalves. Mango, guava Pineapple • While Pineapple, Cinnamon, Plantains & bananas Soursop, Passionfruit, jackfruit, other Vanilla, Plantains & Bananas, Live Strawberry Plants, and Strawberries have the Cut flowers Foliage, Branches highest growth rates. Live plants Cule fish, Octopus, Bivalves • MoPI targeted the development of Live fish Sea cucumber & urchins the Sea Cucumber projects for the Shrimp East Asian market. However, this 0.0 1.0 2.0 3.0 4.0 product has a shrinking market in East Asia imports, 2016 (USD billion) East Asia, which should be Growth, 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% considered. Source: ITC, calculaons from MoPI Bell Pepper Cassava World Market Size Cucumber, Gherkin Tomatoes Cardomom, nutmeg & mace and Growth Cinnamon Clove • Largest markets are: Shrimp (15 Bn, Plantains Ginger 14 Bn, Cule Fish/Bivalves 11 Bn, and Pepper Tomatoes 8.5 Bn) Turmeric Vanilla • Shrimp, Pepper, Mango, Vanilla, Ginger & Mango, guava Pineapple Cinnamon have the highest growth rates Plantains & bananas Soursop, Passionfruit, jackfruit, other • Cule Fish, Octopus & Bivalves , Plantains & Strawberry Bananas, Soursop & Passion Fruits, Bell Cut flowers Pepper are also growing in the world market Foliage, Branches Live plants • Cucumber & Gherkin, Tomatoes, Clove, Cule fish, Octopus, Bivalves Live fish Pineapple, Strawberry, Cut Flowers, Live Fish, Sea cucumber & urchins Sea Cucumber have more limited growth Shrimp • 0.0 5.0 10.0 15.0 20.0 Cardomom, Nutmeg & Mace, Cassava, Live World market, 2016 (USD billion) Plants, Foliage & Branches have shrinking Growth, markets 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% Source: ITC, calculaons from MoPI

Current Strength Bell Pepper Cassava Sri Lankan Exports Cucumber, Gherkin Tomatoes and Growth Cardomom, nutmeg & mace Cinnamon Clove • Largest exports are Cinnamon and Ginger Pepper Pepper. Both are growing, but Turmeric Vanilla Cinnamon is growing faster. Mango, guava Pineapple • Cardamom and Cloves are smaller spice Plantains & bananas Soursop, Passionfruit, jackfruit, exports. Cardamom exports are Strawberry growing; Clove exports are not. Cut flowers Foliage, Branches Live plants • Most of the fruit exports are smaller in Cule fish, Octopus, Bivalves Live fish scale but growing very fast. Sea cucumber & urchins Shrimp • Others, including vegetables, seafood, 0.0 50.0 100.0 150.0 200.0 and floriculture, have low volumes and Sri Lankan exports, 2016 (USD million) Growth, varying growth rates. 2012-16 Shrinking 0% - 8% 8% - 33% Over 33%

Source: ITC, calculaons from MoPI Feasibility Analysing feasibility

• This study considers 17 dimensions of feasibility: • From culvaon to processing to markeng, and stages in between. • Includes the costs, skills, and other barriers involved with each. • While these dimensions would ideally be measured with data, not enough was available at the me of study. • Instead, a 5-point qualitave scoring scale was devised: • 1 = most feasible, 5 = most challenging • To assign scores, the team consulted private sector representaves for mulple crops and value chain segments. • The judgement and experience of MoPI officers was also used. Feasibility criteria used Example of low-scoring Example of high-scoring product (very easy) product (very difficult)

1. CULTIVATION COSTS: skills, money, technology needed for cultivation

Skills / special knowledge needed for cultivation Cassava Live Plants, Strawberry

Equipment / technology needed for cultivation and harvest (including Spices Bell Pepper, Strawberry tractors, greenhouses, drip irrigation, etc.)

Labour needs for cultivation (estimate) (Similar qualitative values across products, still collecting data)

2. CULTIVATION QUALITY: difficulties for high-quality cultivation (finding inputs & successfully growing)

Difficulty to get inputs for cultivation (including planting materials, Cassava, Cut Flowers, Shrimp Live Plants, Strawberry seed varieties, etc.) & some spices

Difficulty reaching adequate quality by farmers (including vulnerability Vanilla Shrimp to damage during cultivation)

3. PROCESSING COSTS: skills, money, technology needed for processing

Skills for processing Bell Pepper, Tomatoes Octopus, Bivalves

Money needed for processing Bell Pepper, Tomatoes Octopus, Bivalves

Technology needed for processing Bell Pepper, Tomatoes Octopus, Bivalves, Shrimp

Note: Feasibility criteria and qualitave scores developed by MoPI Feasibility criteria used Example of low-scoring Example of high-scoring product (very easy) product (very difficult)

4. MEETING STANDARDS: for processed crops / foods (ISO, FDA, etc.)

Indian market standards Most products No products

Middle East markets standards Spices Fruits and Vegetables

Fruits, Vegetables, Spices, and US market standards Floriculture Aquaculture Fruits, Vegetables, Spices, and EU market standards Floriculture Aquaculture 5. SCALING UP: difficulty getting high-quality supply Cinnamon, Pepper, Plantains Difficulty for processors to get enough supply Vanilla, Turmeric, Ginger & Bananas

Difficulty reaching adequate quality by processors and exporters Vanilla, Pineapple Spices, Fruits, Vegetables

6. INFRASTRUCTURE COSTS: assets needed across the entire value chain

Water Spices Shrimp

Electricity Floriculture Shrimp, Octopus, Cuttle Fish

Transportation infrastructure Cassava Aquaculture, Live Plants

Note: Feasibility criteria and qualitave scores developed by MoPI Bell Pepper 3.3 3.0 1.3 3.0 2.0 2.7 Cassava 2.3 1.0 2.3 3.0 2.5 2.0 Cucumber, Gherkin 3.0 3.0 2.7 3.0 3.0 2.0 Measuring Tomatoes 2.7 3.0 1.0 3.0 2.0 2.7 Cardomom, nutmeg & mace 2.3 2.5 2.3 2.8 3.0 2.3 Feasibility Cinnamon 2.0 2.0 3.0 2.8 2.5 2.3 Clove 2.3 2.0 2.7 2.8 3.0 2.3 Ginger 3.0 2.5 2.7 2.5 3.5 2.0 • Plantains & Bananas have the Pepper 2.3 2.5 3.0 2.8 2.5 2.3 highest feasibility (easiest) based Turmeric 3.0 2.5 1.7 2.8 3.5 2.0 Vanilla 3.3 2.5 3.0 2.8 3.0 2.0 on the index. Mango, guava 2.7 3.5 1.7 2.5 3.0 2.3 • However, they may also have the Pineapple 3.3 2.0 2.3 2.3 3.0 2.3 highest compeon with low Plantains & bananas 2.3 2.5 1.7 2.5 2.0 2.3 Soursop, Passionfruit, jackfruit, other 3.0 4.0 2.7 3.0 3.0 2.7 income/low-wage countries. Strawberry 4.0 4.5 1.7 2.8 3.0 3.3 Cut flowers 2.7 3.0 2.7 2.0 3.0 2.7 • Cassava and Tomatoes also have Foliage, Branches 3.3 4.0 3.0 2.0 3.0 2.7 high feasibilies (easy products) Live plants 4.0 5.0 3.0 2.5 3.0 3.7 Cule fish, Octopus, Bivalves 3.7 4.0 3.7 2.5 3.5 4.7 based on the index. Live fish 2.3 3.5 2.7 2.5 3.0 3.0 Sea cucumber & urchins 3.3 3.0 2.3 1.0 3.5 4.3 • Cule Fish, Octopus & Bivalves, Shrimp 2.7 3.0 3.7 2.5 3.5 5.0 Live Plants, Shrimp, and then 0 2 4 6 8 10 12 14 16 18 20 22 Strawberries are the most Feasibility indices Culvaon costs Culvaon quality challenging. (0-easiest, 5-hardest) Processing costs Meeng standards Scaling up Infrastructure costs Note: Feasibility criteria and qualitave scores developed by MoPI Poverty Consideraons Poverty Headcount Index District Province 2016 2012-13 average Mullaitivu Northern 13% 29% 21% Poverty and ASMP Kilinochchi Northern 18% 13% 16% Batticaloa Eastern 11% 19% 15% Moneragala Uva 6% 21% 13% • The poorest districts appear to be in the Mannar Northern 1% 20% 11% Badulla Uva 7% 12% 10% Northern, Eastern, Uva, and Trincomalee Eastern 10% 9% 10% Sabaragamuwa Provinces. Ratnapura Sabaragamuwa 7% 10% 9% Jaffna Northern 8% 8% 8% • Central & Southern Provinces come next. Kegalle Sabaragamuwa 7% 7% 7% Nuwara Eliya Central 6% 7% 7% Galle Southern 3% 10% 6% • For this reason, we should make sure that Central 6% 6% 6% ASMP includes projects in these districts. Matale Central 4% 8% 6% Matara Southern 4% 7% 6% • (and Western Province) is the North Central 4% 8% 6% Kurunegala North Western 3% 7% 5% least poor. However, more MoPI ASMP Polonnaruwa North Central 2% 7% 5% projects are there. Ampara Eastern 3% 5% 4% Puttalam North Western 2% 5% 4% • Hambantota Southern 1% 5% 3% Note: poverty stascs are based on Kalutara Western 3% 3% 3% surveys, with large changes between Vavunia Northern 2% 3% 3% 2016 & 2012/13. Thus averages are used. Gampaha Western 2% 2% 2% Colombo Western 1% 1% 1% Source: DCS Household income and Expenditure Surveys Crop Crop Category Poverty and Crop Sabara- gamuwa provinces provinces inUva and inNorthern andEastern Cinnamon Spices ✓ ✓ Selecon Pepper Spices ✓ ✓ Ginger Spices ✓ Turmeric Spices ✓ • Cardomom, nutmeg & mace Spices ✓ In the Northern and Eastern Clove Spices ✓ Provinces, all aquaculture and Vanilla Spices ✓ Mango, guava Fruits ✓ ✓ vegetables under this study appear Strawberry Fruits ✓ to be possible. Also, some fruits and Plantains & bananas Fruits ✓ ✓ Pineapple Fruits ✓ spices, but no floriculture. Soursop, Passionfruit, jackfruit Fruits ✓ ✓ Tomatoes Vegetable ✓ ✓ Cucumber, Gherkin Vegetable ✓ ✓ • In Uva and Sabaragamuwa, most of Bell Pepper Vegetable ✓ ✓ Cassava Vegetable ✓ ✓ the products studied are possible. Foliage, Branches Floriculture ✓ The excepon is aquaculture. Cut flowers Floriculture ✓ Live plants Floriculture ✓ Shrimp Aquaculture ✓ Live fish Aquaculture ✓ ✓ Sea cucumber & urchins Aquaculture ✓ Cuttle fish, Octopus, Bivalves Aquaculture ✓ Source: Ministry of Primary Industries evaluaon Combining the Analysis 10,000 Feasibility, Market Opportunity and Current Exports

Shrimp Plantains & bananas • Posion in graph is determined by feasibility Cuttle fish, Octopus, Bivalves (x-axis) and world market size (y-axis) Tomatoes Cut flowers 1,000 Live plants • Upper-le: Products are high feasibility and Bell Pepper Pepper high market opportunity Mango, guava Soursop, Passionfruit, Strawberry • However, given low feasibility, there might jackfruit, other be compeon from low-wage countries. Cassava Pineapple Live fish • Upper-right: High market opportunity but Cardomom, Foliage, Branches nutmeg & mace Vanilla more challenging products Ginger

World market, 2016 (Rs billion) 100 Sea cucumber & urchins • Lower-le and centre: Low-to-moderate World Market Clove Growth, 2012-16 market opportunies coinciding with low-to- Cinnamon Turmeric Over 33% moderate difficulty 8% - 33% 0% - 8% • Circle size shows current Sri Lankan exports Shrinking • Circle colour shows world market growth 10 2.0 2.5 3.0 3.5 4.0 Feasibility index (1-easiest, 5-hardest) Source: MoPI calculaons & ITC data Note: Circle size represents 2016 exports from Sri Lanka 10,000 Feasibility, Market Opportunity and Current Exports

Shrimp Some Noteworthy Products Plantains & bananas Cuttle fish, Octopus, Bivalves Tomatoes Cut flowers • Pepper: Feasibility is easy, world market 1,000 Live plants Bell Pepper opportunies are high and growing fast, and Pepper Mango, current exports are large. guava Soursop, Passionfruit, Strawberry jackfruit, other • Cinnamon & some other spices are similar, Cassava Pineapple Live fish but much smaller world market as of today Cardomom, Foliage, Branches nutmeg & mace Vanilla Ginger • Shrimp: Somewhat difficult, however good

World market, 2016 (Rs billion) 100 Sea cucumber & urchins opportunity in world market and growing, World Market Clove Growth, 2012-16 and exports are already considerable. Cinnamon Over 33% Turmeric • Similar for Cule Fish, Octopus & Bivalves 8% - 33% 0% - 8% • Plantains & Bananas: Very easy, large and Shrinking growing market, high current exports. 10 2.0 2.5 3.0 3.5 4.0 Feasibility index (1-easiest, 5-hardest) Source: MoPI calculaons & ITC data Note: Circle size represents 2016 exports from Sri Lanka Noteworthy Sectors: Pepper and other spices

Pepper: Other spices: • Moderate size and high-to-moderate • High world market growth but lower growth in EU, US, ME volumes • Shrinking in EA • Highest growth rates in EU and US and • Low-to-moderate difficulty ME, but small market volumes • Low-to-moderate difficulty • Large current exports from Sri Lanka & growing • (Cinnamon) large current exports from • Possible in Northern & Eastern and Sri Lanka & growing fast Uva & Sabaragamuwa provinces • Possible in Uva & Sabaragamuwa provinces (but not Northern & Eastern, except for Cinnamon) Noteworthy Sectors: Aquaculture

Shrimp: Cule Fish / Octopus / Bivalves: • Growing fastest and has a very large • Growing moderately fast with large world market market • In East Asia, large market but slow • In East Asia, large market but slow growth growth • In EU, large market and considerable • In EU, US and ME, larger market and growth rate considerable growth rate • Smaller in US, with moderate growth • More challenging, due to costs for • More challenging, due to costs for infra- infrastructure structure and quality control difficules • Possible in Northern & Eastern • Possible in Northern & Eastern provinces (but not Uva & provinces (but not Uva & Sabaragamuwa) Sabaragamuwa) Bell Pepper: Noteworthy Sectors: • Moderate market sizes in EU, US and globally; Fruits and Vegetables most growth coming from US • Low-to-moderate difficulty, easier to process Plantains & Bananas: • Possible in all of the poorest provinces

• Growing moderately fast with a very large Tomatoes: world market • Large world market but low growth (moderate • In East Asia, moderate growth and in US and shrinking in EU) moderate market size • Low-to-moderate difficulty, easier to process • In EU & US, large market but slow growth • Possible in all of the poorest provinces

• In Middle East, large market and high Other fruits and vegetables: growth • Smaller world market, mixed growth rates • Least challenging—high feasibility (but (highest in Middle East) perhaps also high internaonal compeon) • Mixed difficulty (strawberry is highest) • Possible in Northern & Eastern as well as • Low Sri Lankan exports but growing very fast Uva & Sabaragamuwa provinces • Possible in all of the poorest provinces Conclusions and Next Steps Conclusions

• Based on consideraon of market opportunity (size and growth rate), feasibility, current exports and potenal in high-poverty districts, some of the most noteworthy growth opportunies are: • Pepper • Shrimp • Plantains & Bananas • Also noteworthy are the following sectors: • Cinnamon and other spices • Cule Fish, Octopus & Bivalves • Bell Pepper, Tomatoes, and other fruits and vegetables • MoPI ASMP could include a special focus on these products. • Beyond the ASMP, MoPI should explore other support mechanisms to help high- poverty areas beer connect to exisng value chains for these products. Next Steps (on expanding analycal work)

Addional variables for this analysis: New value chain analyses: • Need to add analysis of internaonal • Value chain analysis for the top sectors compeon (pepper, shrimp, maybe plantains) • Analysis on shrimp sector already finalized; • For Plantains & Bananas, do other, sector has dedicated project budget poorer countries compete on price to an • Pepper is a priority extent that will keep farmers poor? • Plantains and other fruits and vegetables • Should also consider tariff barriers are also priories • For products of interest, an analysis • MoPI plans to hire a specialist that can of comparave advantages should be devote dedicated resources to this. completed, including the potenal • Value chain analyses must be for Sri Lanka to deliver high quality conducted in close collaboraon with products to niche markets. value chain actors and must produce clear acon steps.

Appendix Subsectors studied:

Crop HS codes Full HS description (ITC website) Cinnamon 0906 Cinnamon and cinnamon-tree flowers

Pepper 0904 Pepper of the genus Piper; dried or crushed or ground fruits of the genus Capsicum or of the genus Pimenta

Ginger 091011 &12 Ginger, neither crushed nor ground (091011); Ginger, crushed or ground (091012)

Turmeric 091030 Turmeric "curcuma"

Cardomom, nutmeg & mace 0908 Nutmeg, mace and cardamoms

Clove 0907 Cloves, whole fruit, cloves and stems

Vanilla 0905 Vanilla

Mango, guava 080450 Fresh or dried guavas, mangoes and mangosteens

Strawberry 081010 Fresh strawberries

Plantains & bananas 0803 Bananas, incl. plantains, fresh or dried

Pineapple 080430 Fresh or dried pineapples

Soursop, Passionfruit, jackfruit, other 081090 Fresh tamarinds, cashew apples, jackfruit, lychees, sapodillo plums, passion fruit, carambola, pitahaya and other edible fruit

Tomatoes 0702 Tomatoes, fresh or chilled

Cucumber, Gherkin 0707 Cucumbers and gherkins, fresh or chilled

Bell Pepper 070960 Fresh or chilled fruits of the genus Capsicum or Pimenta

Cassava 071410 Fresh, chilled, frozen or dried roots and tubers of manioc "cassava",

Foliage, Branches 0604 Foliage, branches and other parts of plants

Cut flowers 0603 Cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes

Live plants 0602 Live plants incl. their roots, cuttings and slips; mushroom spawn

Shrimp 030617 Frozen shrimps and prawns, even smoked, whether in shell or not

Live fish 0301 Live fish

Sea cucumber & urchins 0308 Aquatic invertebrates other than crustaceans and molluscs, live, fresh, chilled, frozen, dried, salted

Cuttle fish, Octopus, Bivalves 0307 Molluscs, fit for human consumption, even smoked, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine Bell Pepper Cassava World Market Size & Growth: Cucumber, Gherkin Tomatoes Vegetables Cardomom, nutmeg & mace Cinnamon Clove • Tomatoes and Bell pepper have the Ginger largest global markets and have Pepper

Turmeric considerable market growth. Vanilla Mango, guava • Cassava and Gherkin have

Pineapple comparatively smaller global markets. Plantains & bananas

Soursop, Passionfruit, jackfruit, other The cassava market is shrinking.

Strawberry Cut flowers Foliage, Branches Live plants Cule fish, Octopus, Bivalves Live fish Sea cucumber & urchins Shrimp

0.0 5.0 10.0 15.0 20.0 World market, 2016 (usd billion)

Growth, Shrinking 0% - 8% 8% - 33% Over 33% 2012-16 Source: ITC, calculaons from MoPI

Bell Pepper Cassava World Market Size & Growth: Cucumber, Gherkin Tomatoes Spices Cardomom, nutmeg & mace Cinnamon Clove • Pepper, Cinnamon, Ginger, Vanilla, Ginger Turmeric have growing world markets. Pepper

Turmeric Vanilla • However, Pepper has the largest overall Mango, guava market by a substantial amount.

Pineapple

Plantains & bananas • Cardamom, Nutmeg & Mace has Soursop, Passionfruit, jackfruit, other

Strawberry negative overall growth in global Cut flowers markets. Foliage, Branches Live plants • Clove is growing slowly on the world Cule fish, Octopus, Bivalves Live fish market while also having a low global Sea cucumber & urchins volume. Shrimp

0.0 5.0 10.0 15.0 20.0 World market, 2016 (usd billion)

Growth, Shrinking 0% - 8% 8% - 33% Over 33% 2012-16 Source: ITC, calculaons from MoPI

Bell Pepper Cassava World Market Size & Growth: Cucumber, Gherkin Tomatoes Fruits Cardomom, nutmeg & mace Cinnamon Clove • Plantains & Bananas have the largest Ginger market and the market is growing at a Pepper Turmeric considerable growth rate. Soursop & Vanilla Passion Fruit has a smaller market that

Mango, guava is also growing strongly. Pineapple

Plantains & bananas • Mango & Guava have a higher growth Soursop, Passionfruit, jackfruit, other Strawberry rate of the world market, but Cut flowers comparatively lower market size. Foliage, Branches Live plants • Strawberry and Pineapple have less Cule fish, Octopus, Bivalves Live fish growth in the world market and market Sea cucumber & urchins sizes that are similar to the other fruits Shrimp except for Plantains & Bananas. 0.0 5.0 10.0 15.0 20.0 World market, 2016 (usd billion)

Growth, Shrinking 0% - 8% 8% - 33% Over 33% 2012-16 Source: ITC, calculaons from MoPI

Bell Pepper Cassava World Market Size & Growth: Cucumber, Gherkin Tomatoes Floriculture Cardomom, nutmeg & mace Cinnamon

Clove • Live Plants and Foliage are shrinking on Ginger the world market. Pepper Turmeric Vanilla • Cut Flowers have a significant market

Mango, guava size and low market growth.

Pineapple

Plantains & bananas Soursop, Passionfruit, jackfruit, other Strawberry Cut flowers Foliage, Branches Live plants Cule fish, Octopus, Bivalves Live fish Sea cucumber & urchins Shrimp 0.0 5.0 10.0 15.0 20.0 World market, 2016 (usd billion) Growth, 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% Source: ITC, calculaons from MoPI

Bell Pepper Cassava World Market Size & Growth: Cucumber, Gherkin Tomatoes Seafood Cardomom, nutmeg & mace Cinnamon

Clove • Shrimp has the highest market Ginger opportunity given its very large market Pepper Turmeric and fast growth. Vanilla Mango, guava • Cuttle Fish, Octopus & Bivalves also have Pineapple Plantains & bananas a large market and promising growth. Soursop, Passionfruit, jackfruit, other Strawberry • Live Fish and Sea Cucumbers & Urchins Cut flowers have smaller world markets with limited Foliage, Branches growth. Live plants Cule fish, Octopus, Bivalves Live fish Sea cucumber & urchins Shrimp 0.0 5.0 10.0 15.0 20.0 World market, 2016 (usd billion) Growth, 2012-16 Shrinking 0% - 8% 8% - 33% Over 33% Source: ITC, calculaons from MoPI

Feasibility criteria Scores: 1 (low) 2 3 (medium) 4 5 (high) 1. CULTIVATION COSTS skills, money, technology needed for cultivation Needs special awareness for soil / planting. Different No need of special awareness for soil or planting. most or all farmers can do it, but not all are aware of from other crops -needs very specialized knowledge -- Very little specialized knowledge -- just throw seeds. the right planting materials / varieities, but can easily only applies to that specific crop. Very few people or Skills / special knowledge needed for cultivation Nearly all of farmers in Sri Lanka puluwan. Easy to teach them. Techniques are relatively easy to follow. companies know how to grow it, very few are aware. learn. Harder to learn. Equipment / technology needed for cultivation some of the equipment (e.g. drip irrigation) would be all of the equipment is needed (drip irrigation, (cultivation equipment or harvest equipment (e.g. tractors for none of this equipment useful, but not yet common in Sri Lanka , paddle greenhouse, high tech cultivation or harvest paddy), greenhouses, or drip irrigation whele for shrimp farming etc eqiupment e.g. tractor) additional labors need for the cultivation which home high labor intensive cultivation & equipment can't no need labor for cultivation. labour need for cultivation (estimate) labor not sufficient replace 2. CULTIVATION QUALITY difficulties for high-quality cultivation (finding inputs & successfully growing) difficulty to find inputs for cultivation (inc planting Planting materials are low cost; shortage of planting Key inputs or varieties are banned (due to Seed Act or Very low cost, easy-to-get inputs materials, quality, varieties) materials for some variety other) or are prohibitively expensive. difficulty reaching adequate quality by farmers Little-to-no quality prremium; no special treatment High quality premium and care needed to reach Buyers need extremely high quality and product is needed during growing, harvest and transport; hard to quality during growing and harvesting and during vulnerable to damage; very high costs to protect the (inc. vulnerability to damage) damage transport product during transport 3. PROCESSING COSTS skills, money, technology needed for processing Skills for processing products are not processing and no skill required high skill required for pocessing skill labor is not available in the country high investment required for change the entire set up no product processing and no money need for monery need for primary processing (e.g.drying, of the processing. (biosecurity farm for shrimp Money needed for processing proceessing value addition) production) advance technolgy required for processing which is technology is only available in developed countries no technolgoy applicable for processing Technology needed for processing availble in local context and can't transferred. 4. MEETING STANDARDS for processed crops / foods (ISO, FDA, etc) Indian market standards Middle East markets standards Relatively simple regulations / standards. Many (but Most strict / difficult standards / regulations. Only the Virtually no regulations. US market standards not all) companies can meet them. -- top Sri Lankan companies can meet them. EU market standards 5. SCALING UP difficulty getting high-quality supply difficulty for processors to get enough supply adequate supply for processing (e.g. pepper) supply is not adequate for pocessing (e.g. Gherkin) supply is not available for processing (e.g. Vanilla) quality is extreamly bad which is rejected by the difficulty reaching adequate quality processors qualit is not consider as importanta factor for quality can be enhace by limited processing processors and exporterse and more advance and exporters processors and exporters e.g vanilla (tomatoes , bell peppers) processing and required (E.g. Prawns product which has not gain adequat weight) 6. INFRASTRUCTURE COSTS assets needed across the entire value chain drought resistance for some agriclutural products / water required for cultivation /procesing (most of the Water is must for cultivation /procesing (E.g Shrimp, water procesing (E.g. lemmon grasss) crops) sea cucumber) no need electricity for enire value chian/minor cost due to the cost factor electricity can't be supply avarage cost incur through out the value chain electricity incur through out the value chain - e.g Shrimp high tech transportation facilities required when quality does not deteriorate by transporttion e.g dry requried extrac attention with low cost - mango transportation and effect to deteriorate quality due to transportation infrastructure products very sensitive e.g. shrimp 10,000 Aquaculture Feasibility, Market 1 Shrimp 2 Sea cucumber & urchins Demand and Current 3 Live fish 4 Cule fish, Octopus, Bivalves Exports Floriculture 1 10 5 Live plants 4 6 Foliage, Branches • Posion in graph is given by 20 7 7 Cut flowers feasibility (x-axis) and world 1,000 5 Fruits 23 8 Strawberry market size (y-axis) 15 9 Soursop, Passionfruit, jackfruit • Upper-le: Products are high 10 Plantains & bananas 9 8 1112 21 11 Pineapple feasibility and high market 22 3 12 Mango, guava opportunity Spices 6 13 Vanilla • Upper-right: High market 13 2 14 Turmeric opportunity but more 16 15 Pepper

World market, 2016 (Rs billion) 100 19 16 Ginger challenging products 18 17 Potential in high- 17 Clove • Lower-le and centre: Low-to- poverty districts 18 Cinnamon 14 in NE & SabUva 19 Cardomom, nutmeg & mace moderate market Vegetable in North & East opportunies coinciding with 20 Tomatoes in SabUva 21 Cucumber, Gherkin low-to-moderate difficulty. 22 Cassava • Circle size shows current Sri 23 Bell Pepper 10 Lankan exports 2.0 2.5 3.0 3.5 4.0 Feasibility index (1-easiest, 5-hardest) Source: MoPI calculaons & ITC data Note: Circle size represents 2016 exports from Sri Lanka