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Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II

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Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II FINAL REPORT Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II -Bihar- March 2010 Prepared by Client: Asian Development Bank OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Table of Contents 1 Introduction 1 1.1 Project outline and intent 1 1.1.1 Value chain approach 1 1.1.2 Hub and spoke model 2 1.2 Integrated value Chain Regions 3 1.2.1 Agri‐Marketing and Infrastructure 3 1.2.2 Selection of Region 4 1.3 Methodology 5 1.4 Structure of the Report 9 Muzaffarpur Integrated Value Chain 10 2 FOCUS CROP: LITCHI 12 2.1.1 Post harvest infrastructure 12 2.1.2 Value chain analysis 13 2.1.3 Gaps in the value chain 18 2.1.4 Potential for intervention 19 3 FOCUS CROP: MANGO 20 3.1.1 Value chain analysis 21 3.1.2 Post harvest infrastructure 24 3.1.3 Gaps in the value chain 24 3.1.4 Potential for intervention 25 4 FOCUS CROP: BANANA 26 4.1.1 Value chain analysis 27 4.1.2 Post harvest infrastructure 31 4.1.3 Institutional Infrastructure 32 4.1.4 Gaps in the value chain 32 4.1.5 Potential for intervention 32 DPR: Muzaffarpur Integrated Value Chain Project 33 5 HUB: MUZAFFARPUR 35 5.1 Focus Crops and Estimated Throughput 36 5.2 Existing Facilities 36 5.2.1 Traders’ Shops 37 5.2.2 Open & Covered Platforms 37 5.2.3 Godowns 37 5.2.4 General Amenities and Support Infrastructure 37 5.3 Proposed Facilities 37 5.3.1 Pack House (with cold infrastructure) 37 5.3.2 Banana Ripening Facility 41 5.3.3 Potato Cold Store 41 5.3.4 Dry Warehouse 42 5.3.5 Ambient Onion Stores 42 5.3.6 Multi Fruit Processing Plant 42 5.4 Other Facilities 42 i OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 5.4.1 Business Centre 42 5.4.2 Knowledge Centre 42 6 SPOKE: HAJIPUR 44 6.1 Focus Crops and Estimated Throughput 45 6.2 Existing Facilities 45 6.2.1 Traders’ Shops 45 6.2.2 Open & Covered Platforms 46 6.2.3 Godowns 46 6.2.4 General Amenities and Support Infrastructure 46 6.3 Proposed Facilities 46 6.3.1 Pack House (with cold infrastructure) 46 6.3.2 Banana Ripening Facility 49 6.3.3 Dry Warehouse 49 6.4 Other Facilities 50 7 SPOKE: DARBHANGA 51 7.1 Focus Crops and Estimated Throughput 51 7.2 Existing Facilities 52 7.2.1 Traders’ Shops 52 7.2.2 Open & Covered Platforms 52 7.2.3 Godowns 52 7.2.4 General Amenities and Support Infrastructure 52 7.3 Proposed Facilities 53 7.3.1 Ambient Pack Shed 53 7.3.2 Banana Ripening Facility 53 7.3.3 Other Facilities 54 8 SPOKE: DALSINGHSARAI 55 8.1 Focus Crops and estimated Throughput 55 8.2 Existing Facilities 56 8.2.1 Traders’ Shops 56 8.2.2 Open & Covered Platforms 56 8.2.3 Godowns 56 8.2.4 General Amenities and Support Infrastructure 56 8.3 Proposed facilities 56 8.3.1 Pack house (ambient) 56 8.3.2 Banana Ripening Facility 58 8.3.3 Dry Warehouse 58 8.3.4 Ambient Onion Stores 58 8.3.5 Other Facilities 58 9 SPOKE: BEGUSARAI 60 9.1 Focus Crops and estimated Throughput 60 9.2 Existing Facilities 61 9.2.1 Traders’ Shops 61 9.2.2 Open & Covered Platforms 61 9.2.3 Godowns 61 9.2.4 General Amenities and Support Infrastructure 61 9.3 Proposed facilities 61 9.3.1 Pack house (ambient) 61 9.3.2 Ripening Facility 62 9.3.3 Dry Warehouse 63 ii OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 9.3.4 Ambient Onion Stores 63 9.4 Other Facilities 63 10 FINANCIAL ANALYSIS 65 10.1 IVCs in Bihar 65 10.2 Muzaffarpur IVC 65 10.2.1 Project Details 65 10.2.2 Project Cost 66 10.2.3 Means of Finance 69 10.2.4 Key Operating Assumptions 69 10.2.5 Financial Performance 72 10.2.6 Sensitivity Analysis 73 11 ECONOMIC ANALYSIS 74 11.1 Methodology and Assumptions 74 11.2 Muzaffarpur IVC 75 11.2.1 Quantification of Benefits 75 11.3 Quantification of Costs 77 11.3.1 Recurring Costs 78 11.4 Cost‐Benefit Statement 78 11.5 Calculation of Economic IRR (EIRR) 79 11.6 Economic Appraisal Results 79 11.6.1 Major Economic Indicators: 79 PATNA‐NALANDA INTEGRATED VALUE CHAIN 80 12 FOCUS CROP: POTATO 82 12.1 Value Chain Analysis 82 12.1.1 Value Chain Actors and Functions: 84 12.1.2 Post Harvest Infrastructure 86 12.1.3 Institutional Arrangements 86 12.2 Gaps in the value chain 86 12.3 Proposed Interventions 87 13 FOCUS CROP: VEGETABLES 88 13.1 Value Chain Analysis 89 13.1.1 Price Build up in the value chain of Cauliflower 92 13.1.2 Price Build up in the value Chain of Brinjal 94 13.2 Post Harvest/Marketing Infrastructure 95 13.3 Gaps in the value chain and Proposed Interventions 96 DPR: PATNA‐NALANDA INTEGRATED VALUE CHAIN PROJECT 97 14 SPOKE: MUSALLAHPUR 99 14.1 Focus Crops and estimated Throughput 99 14.2 Existing Facilities 100 14.2.1 Traders’ Shops 100 14.2.2 Open & Covered Platforms 100 14.2.3 Godowns 100 14.2.4 Cold Storage 100 14.2.5 General Amenities and Support Infrastructure 100 14.3 Proposed facilities 100 14.3.1 Pack house (ambient) 100 iii OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 14.3.2 Ripening Facility 102 14.3.3 Potato Cold Store 102 14.3.4 Dry Warehouse 102 14.3.5 Ambient Onion Stores 102 14.4 Other Facilities 103 15 HUB: BIHAR SHARIF 105 15.1 Focus Crops and Estimated Throughput 106 15.2 Existing Facilities 106 15.2.1 Traders’ Shops 106 15.2.2 Open & Covered Platforms 106 15.2.3 Godowns 106 15.2.4 General Amenities and Support Infrastructure 107 15.3 Proposed Facilities 107 15.3.1 Ambient Pack‐shed for vegetables 107 15.3.2 Banana Ripening Facility 108 15.3.3 Potato Cold Store 109 15.3.4 Dry Warehouse 109 15.3.5 Ambient Onion Stores 109 15.3.6 Other Facilities 109 16 SPOKE: GAYA 111 16.1 Focus Crops and estimated Throughput 111 16.2 Existing Facilities 111 16.2.1 Traders’ Shops 112 16.2.2 Open & Covered Platforms 112 16.2.3 Godowns 112 16.2.4 General Amenities and Support Infrastructure 112 16.3 Proposed facilities 112 16.3.1 Pack house (ambient) 112 16.3.2 Ripening Facility 113 16.3.3 Potato Cold Store 113 16.3.4 Dry Warehouse 114 16.3.5 Ambient Onion Stores 114 16.4 Other Facilities 114 17 SPOKE: ARRAH 116 17.1 Focus Crops and Estimated Throughput 116 17.2 Existing Facilities 116 17.2.1 Traders’ Shops 117 17.2.2 Open & Covered Platforms 117 17.2.3 Godowns 117 17.2.4 General Amenities and Support Infrastructure 117 17.3 Proposed Facilities 117 17.3.1 Pack House 117 17.3.2 Potato Cold Store 118 17.3.3 Dry Warehouse 118 17.3.4 Ambient Onion Stores 118 17.3.5 Other facilities 119 18 SPOKE: BUXAR 120 18.1 Focus Crops and Estimated Throughput 120 18.2 Existing Facilities 121 iv OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 18.2.1 Traders’ Shops 121 18.2.2 Open & Covered Platforms 121 18.2.3 Godowns 121 18.2.4 General Amenities and Support Infrastructure 121 18.3 Proposed Facilities 121 18.3.1 Ambient Pack House 122 18.3.2 Potato Cold Store 123 18.3.3 Dry Warehouse 123 18.3.4 Onion Store 123 18.3.5 Other Facilities 123 19 SPOKE: NOKHA 124 19.1 Focus Crops and Estimated Throughput 124 19.2 Existing Facilities 124 19.2.1 Traders’ Shops 124 19.2.2 Open & Covered Platforms 125 19.2.3 Godowns 125 19.2.4 General Amenities and Support Infrastructure 125 19.3 Proposed Facilities 125 19.3.1 Pack Shed 125 19.3.2 Potato Cold Store 126 19.3.3 Dry Warehouse 127 19.3.4 Onion Store 127 19.3.5 Other facilities 127 20 FINANCIAL ANALYSIS 129 20.1 Patna‐Nalanda IVC 129 20.1.1 Project Details 129 20.1.2 Project Cost 129 20.1.3 Means of Finance 132 20.1.4 Key Operating Assumptions 132 20.1.5 Financial Performance 135 20.1.6 Sensitivity Analysis 136 21 ECONOMIC ANALYSIS 137 21.1 Patna‐Nalanda IVC 137 21.2 Quantification of Benefits 137 21.3 Quantification of Costs 138 21.3.1 Recurring Costs 139 21.4 Cost‐Benefit Statement 139 21.5 Calculation of Economic IRR (EIRR) and NPV 139 21.6 Economic Appraisal Results 140 21.6.1 Major Economic Indicators: 140 BIHAR: INTEGRATED VALUE CHAINS 141 22 CONCEPTUAL PLANS FOR FACILITIES 142 22.1 Conceptual Plans for facilities at selected locations of the IVCs 142 22.1.1 Planning Concept 142 22.1.2 Master Plan 143 22.1.3 Buildings 143 22.1.4 Services 143 v OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 1 INTRODUCTION IL&FS Cluster Development Initiative Limited (IL&FS Clusters) has been appointed by Asian Development Bank (ADB) to prepare a Detailed Project Report for operationalising the Agribusiness Infrastructure Development Investment Program Phase II in the states of Bihar and Maharashtra.
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