Value Chain Analysis of Potato in Ilam District, Nepal

South Asian Journal of Social Studies and Economics

2(3): 1-13, 2018; Article no.SAJSSE.46158

Keshav Prasad Shrestha1* and Surendra Yadav2

1Socioeconomics and Agriculture Research Policy Division, Khumaltar, Lalitpur, Nepal. 2Agriculture Research Station, Jaubari, Ilam, Nepal.

Authors’ contributions

This work was carried out in collaboration between both authors. Both authors read and approved the final manuscript.

Article Information

DOI: 10.9734/SAJSSE/2018/v2i325861 Editor(s): (1) Dr. Mehmood Ali Noor, Chinese Academy of Agricultural Sciences, Key Laboratory of Crop Physiology and Ecology, Ministry of Agriculture, Institute of Crop Science, Beijing 100081, China. Reviewers: (1) Jayath P. Kirthisinghe, University of Peradeniya, Sri Lanka. (2) Abdullah-Al-Zabir, Sylhet Agricultural University, Bangladesh. Complete Peer review History: http://prh.sdiarticle3.com/review-history/27980

Received 06 October 2018 Accepted 21 December 2018 Original Research Article Published 26 December 2018

ABSTRACT

The purpose of the study was to analyze the value chain of potato in the Ilam district. Potato is one of the major stable food and source of income for the majority rural farmers of the Ilam district. Using random sampling techniques, data were collected using semi-structured household survey with 165 respondents, 50 traders, input and service providers and along with 5 focus group discussion. Data were analyzed using SPSS and excel software. Results of the compound annual growth analysis showed that area, production and productivity is increasing significantly by 8.12, 2.87 and 2.79% respectively over 19 years in the country and 3.78, 2.84, and 3.55 respectively in the Ilam district. The farmers are generally growing local variety however; they also grow some improved varieties. The benefit cost ratio of local varieties is very low (0.68) whereas for improved varieties higher (1.73). Farmers do not adopt the grading and packaging which is generally done by the traders. The import of potato sharply increasing over the years which was 46,097 t worth of NPR 35.74 million in 2008/09 and reached to 249,368 t worth of NPR 531.25 million in 2016/17 which is 14.86 fold increases in value within 8 years. The value chain analysis reveals that, the margin received by the farmers is 27% of the retail price whereas traders and wholesalers deals in big quantities and extract substantial margin. The major constraints of potato production are diseases accompanied by weak availability of seed, high production cost, decreasing labor availability, and weak backward and forward linkage. Therefore, findings suggest that, government and developing agencies should support farmers organizations for the adoption of new variety,

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*Corresponding author: Email: [email protected];

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

involve in quality seed production, integrated management of diseases, reduce cost of production, develop agricultural marketing infrastructures to boost up the production and make market access to the farmers.

Keywords: Benefit-cost ratio; compound annual growth rate; marketing, productivity; value chain.

1. INTRODUCTION altitude of about 70 meter mean above sea level (masl) to 4500 masl in Nepal where potato is Agriculture in Nepal is still subsistence but with planted in different seasons and harvested the right policies and supportive investments at accordingly in different times, almost throughout local, provincial and national levels, agriculture the year [10]. Mostly, the farming is subsistence offers new opportunities to move out of poverty. type with small landholding of only 0.68 ha [11]. Pathways out of poverty open to Nepal by means The cultivation of potato is popular among of agriculture include smallholder farming and smallholder farmers due to its wider adaptability, animal husbandry, employment in the “new high yield potential and demand. Thus, becomes agriculture” of high value products and major sources of food, income and employment entrepreneurship. to many rural farmers. The share of potato to Gross Domestic Product (GDP) is 2.17 and In Nepal, agriculture and its associated industries Agriculture Gross Domestic Product (AGDP) is are essential for the economic growth, reducing 6.57% [12]. The per capita consumption of potato mass poverty and food insecurity. Using found 80.56 kg in 2013 which was 16.44 in 1961 agriculture as the basis for economic growth [13]. requires a productivity revolution in smallholder farming. Given the very poor rural infrastructure Nepalese farmers have been cultivating potato and poorly placed institutions, this revolution over 200 years with its earliest record of its must be different from the so called “Green introduction in Nepal was in 1973. But, the crop th Revolution”. With number of associated efforts in becomes economically important only in 19 the past, the success is limited and the century. The National Potato Research Program challenges are getting bigger with changing (NPRP) of Nepal under Nepal Agricultural situation of liberalization and globalization. Research Council (NARC) is involved in research and developing improved cultivar of potato in Potato (Solanum tuberosum) is grown worldwide Nepal. Similarly, Potato Development Program in more than 150 countries of the world as staple (PDP) under Department of Agriculture (DoA) is food including Nepal [1]. The survival of involved in dissemination and production of hundreds of millions of people in the developing recommended varieties and technologies countries depends on the potato today [2]. It is through District Agriculture Development Office fourth most important crops in the world after (DADO) located in all districts of Nepal [14]. wheat, rice and maize [3]. It is also important cash crops to address food insecurity and reduce The main objective of this study was to analyse poverty among small holders in the countries like the value chian stituation of potato in Ilam district. Nepal [4]. It is important food crops for food Also understand the function and dynamics of security and fourth most important staple food the value chains; identify key players and after rice, maize, and wheat in Nepal [5]. In propose possible initiatives for Agriculture Nepal, it occupies first position in terms of Research Station (ARS), Jaubari, Ilam for the productivity (14.03 t ha-1), 2nd position in total future reserch program development on potato to production (2,805,582 ha), and 5th position in promote increased enterprise income and area of production [6]. Potato is an important employment. crop for both hills and terai of Nepal [7]. It is an important crop for food security in the high hills of 2. MATERIALS AND METHODS Nepal contributing substantially to the livelihood of resource poor farmers in the mountains [8]. 2.1 Selection of the Study Area

Potato cultivation occupy about 199,971 ha of Ilam district was selected purposively, where land and the total production reached about of ARS, Jaubari, Ilam under NARC has been newly 2,805,582 t with average productivity of 14.03 t established. The study was conducted during -1 ha in 2015/16 in Nepal [9]. It is grown from an May-August, 2016. Selection of this district was

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

due to its potentiality of production to marketing 2.4 Use of Primary Information along with accessibility of researcher, and budget and lack of time availability of researchers. For The primary data on area, production and the study, field survey and literature review were productivity of potato was used from the conducted along with expert consulatation, data reported in the Statistictical Information of traders survey and Focus Group Discussion Ministry of Agriculture Development in (FGD). deirrenent years such as 2013, 2014, 2015, qne 2016. 2.2 Sampling of Stakeholders and Chain Actors 2.5 Data Analysis

For field study, the the main stakeholders such The primary information was collected from the as farmers, traders (local, district, and field survey through semi structured open ended wholeseller level), service providers, transporters questionnaire schedule. The secondary were focussed for this research. A total of 165 information related to the study was collected potato producing farmers were selected through different journal, proceeding, annual randomly from the list of DADO, Ilam. Similarly, reports of NARC, NPRP, PDP, DADO, 50 traders including local, road head, district Department of Agriculture (DoA), Ministry of level and regional level were also selected and Agriculture and Development (MoALD) and other interviwed through semi-structured questionnaire developing agencies. The collected information survey. Likewise, 10 input suppliers from the were coded, tabulated and analyzed by using Fikkal, Ilam Bazar and Birtamod were also Statistical Package of Social Science (SPSS) consulted. Likewise, other actors like and Micro-soft Excel for calculating transporters, representative from cooperatives, cost of production, benefit cost ratio. and other service providers like, DADO, District Moreover, SWOT (Strengths, Weaknesses, Development Committee (DDC), Non Opportunities and Threats) analysis was also Government Organizations (NGOs) were also carried out. selected for the expert consultations. 2.6 Profitability and Benefit Cost Ratio 2.3 Interview and FGD The profitability was estimated by deducting total An in-depth interview was also held with value cost from gross return. chain agents including input suppliers, producers, collectors/local traders, road side The gross return was calculated by multiplying traders, transporters, wholesalers, processors, the average yield of potato with the price of the retailers, service providers, representatives from potato Gross margin was calculated as: cooperatives etc. Identification and selection of such stakeholders were done in consultation with Gross margin = Gross return – total variable cost the officials at the district level. The interview and interaction was mainly focused on the value Where, chain performance, constraints and opportunities, cost and margins, prices in Gross return = Price of potato x Total different markets, trends and perspectives, and potato production growth potentials. Total variable cost = Sum of all variable costs In depth meeting and interacion were held with government organizations, research institutions, Variable cost = Cost of inputs (Seed, INGOs, and NGOs. FYM/Compost, human labor cost, bullock labor cost, other cost such as transportation cost, FGD was held with concern stakeholders loading unloading cost) specially the producers, traders, input suppliers. The major issues covered in the FGDs are: value Benefit Cost analysis calculated by using chain performance, constraints and following formula opportunities, profitability, efficiency of the value chain, prices, trends and perspectives, growth Benefit Cost ratio = Gross return/Total variable potentials etc. Similarly, it also covered the cost issues identified at various level of interaction.

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

2.7 Mapping the Value Chains t ha-1 in 2015/16 [9]. Over the past decade high growth rate was recorded for production and the The proposed mapping methodology drew source of growth was both the extension in primarily on secondary data supplemented with potato production area and productivity. The field interviews with farmers, traders, and expert compound annual growth rate (CAGR) for the panel through the value chain. The value chain period area, production and yield during 1997/88 maps have been presented in a conventional to 2016/17 are 8.12 (p=0.024), 2.87 (p=0.000) format with the key stages in the value chain and 2.8 (p=0.000) percent respectively (Table 1). identified on the left of the map and associated enterprises at each stage to the right. The study 3.2 Potato Production in Ilam District differentiated between enterprises that engage in one stage of the value chain e.g. primary The area, production and yield of potato in Ilam production, and composite enterprises that are also in increasing trend. However, trend has engage in more than one stage of the value sharply increased from the year 2008/09 [13] chain e.g. production and processing. (Fig. 2). In year 2015/16, the area, production and productivity of potato In Ilam has found 7815 2.8 SWOT Analysis ha, 133,772 t and 17.11 t ha-1 respectively [9]. The CAGR on area, production and yield during SWOT (Strength, Weakness, Opportunity, last 3 decades (1997/88 to 2016/17) are 3.78 (p Threats) analysis is a strategic planning value=0.0001), 2.842 (p=0.000), and 3.546 technique used to help a person or organization (p=0.000) percent respectively. identify strengths, weaknesses, opportunities, and threats related to business competition or 3.3 Management Practice of Potato project planning. It is intended to specify the Production objectives of the business venture or project and identify the internal and external factors that are 3.3.1 Variety and source of seed favorable and unfavorable to achieving those objectives. Users of a SWOT analysis often ask Farmers are generally growing local variety of and answer questions to generate meaningful potato predominantly Bite, Jhyale, and Holange. information for each category to make the tool They are also growing some improved variety useful and identify their competitive advantage. namely, Disire, Kufri Jyoti, NPI, and newly introduced Janakdev from ARS, Jaubari, Ilam. This tool provides a framework for understanding The local variety is susceptible to wart and late controllable internal and external factors that the blight diseases hence giving low yield. But, due interventions should address for the entire value to lack of availability of improved variety and chain (Fig. 1). better taste of they are reluctant to grow local variety.

The seed is generally produced in the high altitude areas in the summer season, which sold to the grower of low altitude area in the hills for growing early-winter season crop. In low altitude areas the potato are grown only for ware purpose and farmers do not store their potato for seed purpose and therefore, every year they get seed form higher hill area. This is well established traditional seed flow system in the hills. However, with the improvement of access to road in Ilam to terai districts, seed produced in the high hills also

Fig. 1. Frame work of SWOT analysis marketing to the tarai districts.

3. RESULTS AND DISCUSSION 3.3.2 Use of manures and fertilizers

3.1 Potato Production in Nepal Farmers were using both organic and inorganic manure for the cultivation of potato crop. As the In Nepal, potato is grown in 199,971 ha and potato is a well adopted income generating crop produce 2,805,582 t with the productivity of 14.03 and availability of Farm Yard Manure (FYM) in

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

their own farm, farmers generally use high doses planting by digging small pit and maintaining of FYM. The average application of FYM was spacing about 50-60 cm x 20-30 cm. found 33 t with minimum of 13 and maximum of 100 t. Similarly, they were using 79, 101 and 40 3.3.4 Disease/pest incidence and control kg of urea, Di-Ammonium Phosphate (DAP), and measures Murate of Potatsh (MoP) in an average during the seeding the potato tubers (Table 2). The major prevailing problems of disease and pest were reported by the farmers are: wart, late 3.3.3 Planting blight, scab, potato tuber moth, white grub, and red ants. Farmers were not found aware of The potato is grown in both winter and summer management practices and most of them are not season crops. It is grown as summer season using pesticides. Only about two percent farmers crop in higher altitude and as winter season at reported they use chemicals to control the lower altitude (Table 3). Women and children are disease and pest but the initiative taken by the generally involved in the planting. In the high farmers is not sufficient. hills, flat planting is also common and they are

Table 1. CGAR trend of area, production and yield of potato in Nepal over the decades

Period CAGR Area% CAGR of Production% CAGR of Yield% 1997/98-2006/07 9.302 (p=0.000) 2.861 ((p=0.000) 1.3194 (p=0.000) 2007/08-2016/17 2.336 (p=0.000) 1.493 (p=0.013) 1.006 (p=0.072) 1997/98-2016/17 8.124 (p=0.024) 2.869 (p=0.000) 2.797 (p=0.000) Source: Researcher calculation based on MoAD data [9, 12, 15, and 16].

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Fig. 2. Trend of area, production, and yield of Potato in Ilam district over the decades (Source: 9, 12, 15 and 16]

Table 2. Application of compost, urea, DAP, and MoP in study area

SN Description FYM (ton) Urea (kg) DAP (kg) MoP 1 Average 33 79 101 40 2 Minimum 13 20 20 10 3 Maximum 100 300 400 100 Source: Field Survey 2016 (N=165)

Table 3. Potato Growing Season in the Ilam district

Area August Sep Oct Nov Dec Jan Feb March April May June July High hills Low hills Planting Growth Harvesting Source: Field Survey 2016

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

3.3.5 Harvesting and postharvest handling cultivar is in negative (NPR -93,428 ha-1) with benefit cost (BC) ratio of 0.69 whereas improved In summer season crop is harvested during the cultivar gives better net income of NPR 182,979 months of June-May and the winter season ha-1 with BC ratio of 1.73 (Table 4). The local harvested in January-March. Generally, farmers cultivar has negative net income as well as BC do not hold potato after harvest. Commercial ratio even though farmers are cultivating it due to farmers fix the harvesting date and after the date the opportunity cost as they work their self and has been agreed with the traders, farmers do not hire the labor for work. The taste of local harvest the crop and traders from his side cultivar is also very good and like by the people. arrange grading, packaging and transportation. Similarly, its storage characteristic is also better Semi-commercial and subsistence farmers than the improved one. generally harvesting on their own, and sell their produce to collector, trader or commission 3.5 Import and Export Analysis agents at the wholesale market. They were also found involved in retail business in haat bazar. It Import of potato and seeds are increasing trends was found that in the case of small producer the in terms of both quantity and values. The data trader generally dictate the price but the received from the Trade Export Promotion commercial producers negotiate the price just Centre (TEPC) total quantity of ware potato as before harvest. well as seed potato in year 2008/09 was 46,097 t which increased drastically to 249,368 t in The productivity greatly differs from place to 2016/17 which values was NRs. 35.74 million to place and year to year. It also depends on 531.25 million respectively (Fig. 3). The variety. The multiplication ratio of early varieties regression analysis over 9 years of quantity is generally low compared to long duration import found CAGR of increasing significantly variety. The overall average productivity of potato with 9.03% with p value 0.001 and in case of -1 was about 6-8 t ha which is below the national value of import increasing highly significantly with and district average. 15.07% having p value 0.0001.

In general, the farmers do not store ware potato Export of potato and seeds are also being from for a prolonged duration. Postharvest handling Nepal but it is very limited amount compared to practice is greatly lacking. import. The data received from the TEPC reveals that it was exported 38.1 t in years 2010/11 3.4 Cost of Production and Benefit Cost which reached to 292 t in 2014/15 and fall down Analysis to 58.5 t in 2016/17. Similarly, its value found NRs. 329,875 in 2010/11 and 1170,800 in The cost of production of local and improved 2016/17 (Fig. 4). The regression analysis over 7 cultivar of potato in study area is greatly differs years of quantity export found CAGR increasing due to their yield/productivity. The cost of local with 6.51% with p value 0.67 and in case of value and improved cultivar has calculated NPR 35 import increasing with 13.48% having p value and 14 kg-1 respectively. The net income of local 0.39.

Table 4. Cost of production of local and improved Potato cultivation ha-1 and BC Ratio

Particulars Total cost of production per ha Local Variety Improved Human and bullock labor 131,750 124,350 Input cost 159,700 123,085 Land tax 645 645 Repair and maintenance 2,000 2,000 Depreciation 2,133 2,133 Total cost NPR 296,228 252,213 Total Production (kg) 8,450 18,133 Cost of Production per kg 35 14 Sale Price per kg 24 24 Gross Return NPR 202,800 435,192 Net Income NPR -93,428 182,979 Benefit Cost ratio 0.68 1.73 Source: Field Survey 2016 (N=165)

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

6,000,000 . s R N

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t 1,000,000 n a u - Q 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 1014/15 2015/16 2016/17 Quantity (t) 46,097 83,154 84,242 163,343 228,908 215,175 240,660 212,943 249,368 Value NRs. 000' 357,426 890,025 1,106,4 2,148,3 3,121,4 4,143,0 5,096,7 4,533,3 5,312,5

Fig. 3. Import of Potato quantity (tons) and Value NRs. (thousands) (Source: TEPC)

3.6 Value Chain Mapping units, i.e. the supply, production and distribution involving physical product flow from supplier to The chain map provides a graphic representation the end-user. In general, the more the units are of the structure showing how products flow integrated, the more competitive advantage they through the primary system as well as alternative gain and more capital-intensive they are. channels. The channels are generally vertical chain of enterprises that transforms raw 3.6.1 Institutional involvement materials and delivers them to consumers as finished goods. The map lists functions vertically 3.6.1.1 Farmers organizations along the left-hand side with the final markets across the top. The participants or actors of the The numbers of groups is quite impressive; value chain are designated by boxes. however, the functioning of such groups seems to be less effective. However, these groups have In the potato map (Fig. 5), the channels have better access to technical and other services and been identified on the basis of core business regularly visit the service providing agencies,

50,000,000 .

s 45,000,000 R N

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Q 5,000,000 0 2010/11 2011/12 2012/13 2013/14 1014/15 2015/16 2016/17 Quantity 38,100 162,946 645,322 1,085,52 2,930,05 307,470 58,540 Value NRs. 329,875 1,659,37 7,553,85 10,173,4 44,264,0 6,043,64 1,170,80

Fig. 4. Export of Potato quantity (t) and Value NRs. (thousands) (Source: TEPC)

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

Fig. 5. Value Chain Map of Potato in Ilam district participate in training, get new improved seed associations operating at district level. However, and technical support in disease, pest and there is no specialized traders’ organization nutrient management practices and so on. working in potato. The linkages of these traders However, it was reported by the farmers that the with public and private sector agencies are very groups are still weak and functioning poorly and poor and function in isolated environment. No they are more engaged in saving and credit in institutional mechanism has been developed to general. Similar tendency was observed in the establish efficient value chain of potato. case of cooperatives. There are some good examples of cooperatives functioning in the 3.6.1.3 Facilitating agencies sector of saving and credit, vegetable production and marketing; however such cases are limited This is an extremely critical area for increasing in numbers and coverage. Such informal groups farmer’s productivity and profitability. However, are generally promoted by public institutions, adequate services are not available. The NGOs/INGOs and other support agencies. Department of Agriculture is supposedly, the primary suppliers of this knowledge; however, 3.6.1.2 Traders organizations due to limited resources, the dissemination process is very limited. Commercial farmers get The organizational development is relatively this information through “embedded services” better compared to farmers. There are from the input suppliers. However, the quality of

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

information is very poor and in the remote areas 3.6.2.2 Village level traders and subsistence farmers get very little or no access even to this information. Small traders residing in the same village and commercial producers are occasionally involved 3.6.1.4 Service providers in potato marketing. These traders are frequent visitors of wholesale markets and keep good DADO is implementing various activities on relation with producers and big traders. potato promotion. Activities area focused only at Generally, they deal with small quantity at a time the level of production. Group formation, owing to their small amount of capital. To some technical advice to growers, technology extent, these traders are aware of price demonstrations, training is the key activities information and generally they do not take any implemented by the DADO. risk of loss because only after knowing the assembly market price they make purchase in Potato Development Program (PDP) is in the village. Kathmandu based public agency. The objective of this public sector agency is to promote potato 3.6.2.3 Big traders cultivation. Big traders purchase potato from commercial Potato Development Farm, Nigale was farmers who have scale of production and village established to produce high quality seed of new level small traders who generally functions like varieties for hill conditions. It is also involved in collector. In the district these traders are retailers the production of True Potato Seed (TPS). of foodstuff and other goods of basic needs. However, it is located in the Central Region with Generally, they have permanent farmers who very few or no activity in the Ilam. occasionally purchase foodstuff and other requirements of daily need. At the national level "Potato Research program (PRP)" has the mandate to conduct research 3.6.2.4 Commission agent/wholesalers works on potato. It has recommended several potato varieties. PRP is also involved in These functionaries play a vital role in marketing producing high quality pre-basic seed (PBS) channels. Quite a substantial part of the through tissue culture technique which is marketable volumes potato goes the commission distributed throughout the country through PDP. agents functioning in the wholesale markets like Birtamod. Usually, they do not take the 3.6.2 Functionaries in the value chain ownership of the product but arrange for the sale on behalf of the traders, and they act only on 3.6.2.1 Farmers commission and bear no risk. For this service, they charge 5% commission on the total sale Three types of production system have been value. Payments are generally made in observed: I) Subsistence production, II) Semi- installments. The small traders and farmers commercial and III) Commercial production. reported that delayed payment by the Subsistence production is carried out for commission agents is one of the problems in household consumption and produced in small potato trading. Grading and packing function is quantities. The produce from the first category of generally carried out by the traders who buy the farmers generally enters in a very limited quantity stock from the farmers. The commission agents in the local hat-bazar (market). Commercial have very good trade relationship with the farmers sell most of their produce to various wholesalers and even retailers including Indian market intermediaries. The producers generally traders. They regularly exchange market deal with traders and wholesalers. In most cases, information with Nepali and Indian traders on farmers depend on road head traders and village demand and prices. level traders for price information. Some of the farmers reported that they get price and other 3.6.2.5 Transporters information through the truck drivers who frequently visit the wholesale markets. But now- These functionaries are just involved in the a-days, the situation has slightly changed due to transport business and are not involved in the easy access to communication technology and potato trade. However, farmers and small traders the commercial farmers generally have access to reported that they get market information through market information to some extent. the truck drivers too.

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Table 5. Strength, weakness, opportunity and threat of potato sector in Ilam district

Helpful/Positive Factors Harmful/Negative Factors Internal Factors Strengths Weakness 1. Research Station established in 1. Weak adoption of improved Jaubari technology 2. Developing road access to the rural 2. Worse seed quality area 3. High incidence of diseases 3. Access to communication facilities 4. Poor value addition activities 4. Year round production suitable 5. Farmers not fully aware of climate quality seed 5. Potentials for area and productivity 6. Lack of availability of improved growth variety 6. Traditional knowledge and skills of 7. Poor road accessibility to growers reach market 7. Organic production system in the high 8. Lack availability of inputs hills 9. Weak backward and forward 8. Traditional seed storage in the high linkage hills 10. Lack of investment 9. Many high yielding varieties are released 10. Functional traditional marketing linkage 11. Groups and cooperatives involved in market 12. Great potential of import substitution External Factors Opportunity Threats 1. Potential for increase area and 1. Serious threat of diseases like productivity wart, late blight, and brown rot 2. Scope of establish potato processing 2. Potato tuber moth is also industry emerging threat 3. Government policy support as a high 3. High cost of production in hills value income generating crop 4. Decreasing labor availability 4. Potentials to provide assistance in food technology and quality management 5. Scope of value added products 6. Import substitution is great opportunity 7. High hills could be developed for the organic seed production hub Source: Field survey 2016

3.6.3 Analysis of value chain of Birtamod. The local traders generally buy immediately after harvest. It is local trader who The value chain analysis done which shows all bears the cost for post-harvest grading, packing cost, losses, margins and prices along the chain weighing, and transportation to wholesale and the shares of each actor as the product market. The total assembly level cost is NPR moves from production to local traders, 28.05 which also includes acquisition cost. The wholesale market, retail market and finally up to traders generally do not have losses. The losses the consumers. As given in the Annex 1, the total made during grading and packaging is farm level cost is about NPR 13.96. Of the total shouldered by the growers and in addition the farm level cost, cost on labor represents the most jute bags are overfilled by at least 4% to important cost item, followed by seed, manures compensate the moisture loss. The wholesalers and fertilizers. The losses are quite substantial at functioning in the wholesale market of Birtamod the farm level about 5%. The average farm gate generally function as commission agents and price during the last marketing season was NRs enjoy good margin of about 4%. The retailers 24 per kg. The margin received by the producers generally do grading and packaging. Losses are is NPR 9.05 kg-1 which is 27% of the retail price quite high at this level (around 6%). The margin

Shrestha and Yadav; SAJSSE, 2(3): 1-13, 2018; Article no.SAJSSE.46158

is about 10% at the retailers’ level. The analysis COMPETING INTERESTS of the value chain of potato indicates that the traders and wholesalers deal in big quantities Authors have declared that no competing and extract substantial margin. interests exist.

3.7 SWOT Analysis REFERENCES

The SWOT analysis of the potato shows number 1. Sapkota M, Bajracharya M. Resource use of strengths and opportunities for boosting value efficiency analysis for potato in Nepal. adding interventions. The researcher and Journal of Nepal Agricultural Research developing agencies must give emphasis while Council. 2018;4:54-59. designing of interventions for addressing the DOI:http://dx.doi.org/10.3126/jnarc.v4i1.19 weaknesses and threats for the growth of the 690 potato sector. The following Table 5 shows the 2. Timsina KP, Kafle K, Sapkota S. strength, weakness, opportunity and threat of Economics of potato (Solanum tuberosum potato sector in study districts as well as in the L.) production in Taplejung districts of Ilam district. Nepal. Agronomy Journal of Nepal. 2011; 2:173-181. 4. CONCLUSION AND RECOMMENDA- 3. Tolno E, Kobayashi H, Ichizen M, Esham TIONS M, Balde BS. Potato production and supply by smallholder farmers in Guinea: An Area, production and productivity of the country economic analysis. Asian Journal of as well as study district are increasing Agricultural Extension, Economics & significantly. However, the majority of the farmers Sociology. 2016;8(3):1-16. are growing local varieties which are diseases DOI: 10.9734/AJAEES/2016/201726 susceptible. The import of potato is also 4. Bajracharya M, Sapkota M. Profitability increasing sharply for which substitution is and productivity of potato (Solanum required. The area and productivity could be tuberosum) in Baglung district, Nepal. increased by introducing new improved varieties, Agriculture and Food Security. 2017;6:47. management of diseases and pest, reduce DOI: 10.1186/s40066-017-01250 production cost and provided training to the 5. Gairhe S, Gauchan D, Timsina KP. grower farmers. Adoption of improved potato varieties in Nepal. Nepal. Journal of Nepal Agricultural Based on the assessment and analysis of Research Council. 2017;3:38-44. findings, especially the constraints faced by the DOI:http://dx.doi.org/10.3126/jnarc.v3i1.17 farmers following major recommendations have 274 been made: 6. Panta S, Luitel BP, Upadhyay KP, Chaudhary JN, Sapkota P, Pariyar K. On-  Support farmers for the adoption of new station evaluation of potato clones in mid- varieties released by PRP/NARC along western region of Nepal. In: Upadhyay, with quality seed production in their locality K.P. and Bhattarai, P. (eds). Proceedings so as improved variety should be available of the National Potato Working Group held in the district. in 9-10, November, 2017. National Potato  Verification and demonstration of suitable Research Program, Khumaltar, Lalitpur, varieties of potato should be done so as Nepal; 2017. farmers could select their appropriate 7. Ghimire S, Pandey S, Gautam S. Study on cultivar. degeneration of potato seed in the terai  Promote integrated disease and pest region of Nepal. Agrotechnology; 2016. management practices. DOI: 10.4172/2168-9881.1000149.  Research should be done to reduce the 8. Luitel BP, Khatri BB, Lama L, Dhakal R, cost of production. Khadka K, Choudhary D, Aryal S,  Training program should be organized on Bonierbale M, Kadian MS. Journal of improved cultivation practices Nepal Agricultural Research Council.  Farmers should be encouraged to form a 2017;3:6-14. group and cooperative DOI:http://dx.doi.org/10.3126/jnarc.v3i1.17 269

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Annex 1. Value chain analysis of potato in Ilam District

1. Farmers Level Item Price Kg-1 Potato Human and bullock labor 6.86 Seed 5.29 Manure 1.10 Fertilizer 0.44 Land tax 0.04 Repair and maintenance 0.11 Depreciation 0.12 Total Farm Level cost 13.96 Losses 0.99 Margin 9.05 Farm Gate Price 24.00 2. Local Trader Level Packaging bag 0.30 Grading and Weighing 0.20 Acquisition cost 24.00 Total assembling cost 24.50 Transportation, loading, unloading 1.00 Total local trader level cost 25.50 Losses 0.00 Margin 2.55 Assembler level price 28.05 3. Wholesaler/Commission Agent Level Storage and communication 0.05 Acquisition cost 28.05 Total wholesaler level cost 28.10 Losses 0.00 Margin 1.41 Wholesaler commission agent level price 29.91 4. Retailers level Rent and other cost 0.50 Packaging 0.40 Acquisition cost 29.91 Total retail level cost 30.41 Losses 1.82 Margin 3.04 Retailer level price 35.27 Source: Field Survey 2016 and calculation by researcher

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