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Feed the Future Monitoring and Evaluation Program (AID-367-C-14-00001) Cost Benefit Analysis Report on On-Season Cauliflower Submitted to USAID/Nepal by Research Inputs and Development Action (RIDA) October 2016 The contents of this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government Table of Contents List of Acronyms and Abbreviations .............................................................................................. 3 Executive Summary ........................................................................................................................ 4 1. Introduction ............................................................................................................................... 10 1.1 Background ......................................................................................................................... 10 1.2 Context ................................................................................................................................ 11 2. Methodology ............................................................................................................................. 17 2.1 Source of Information ......................................................................................................... 17 2.2 Sampling Techniques .......................................................................................................... 18 2.3 Limitations .......................................................................................................................... 22 3. Analysis Framework ................................................................................................................. 22 3.1 Analysis Overview .............................................................................................................. 22 3.2 Preparatory Tables .............................................................................................................. 24 3.3 Result of the Finding and Analysis ..................................................................................... 25 3.3.1 Farm Budget Analysis.................................................................................................. 25 3.3.2 Financial Analysis ........................................................................................................ 28 3.3.3 Economic Analysis ...................................................................................................... 30 3.3.4 Impact on Family Income ............................................................................................ 31 3.3.5 Stakeholder Analysis ................................................................................................... 33 3.3.6 Sensitivity Analysis ..................................................................................................... 35 3.3.7 Cost Benefit Analysis of Value Chain Delivery .......................................................... 37 3.3.8 Comparison of Production and Yield .......................................................................... 37 4. Conclusion ................................................................................................................................ 38 5. Recommendations ..................................................................................................................... 39 6. Annexes..................................................................................................................................... 41 Annex I: CBA Models .............................................................................................................. 41 Annex II: CBA Tools ................................................................................................................ 42 List of Tables, Charts and Figures Figure 1 : Map of Nepal with FTF Program Districts ............................................................. 10 Table 1: List of Districts and their respective VDCs of On-Season Cauliflower Beneficiaries 11 Table 2: Methods and Data Sources 17 Table 3: List of Total Beneficiaries, Total Production, and Yield of Cauliflower in the Intervention Districts 19 Table 4: Total Number of On-Season Cauliflower Growers and Sample Size 19 Table 5: List of Hill Districts and VDCs, Expected Beneficiaries of On-Season Cauliflower and Sample Size 20 Table 6: Results of the Financial Analysis from Project’s Perspective 29 Table 7: Results of the Financial Analysis from Farmer’s Perspective 30 Table 8: Results of the Economic Analysis 31 Table 9: Results of Stakeholders' Analysis 35 Table 10:Comparison of Yield and Production with Farm Size and Socio-economic Characteristics 38 Chart 1 : Hill Farm Budget Analysis "with" Intervention, Real NPR .................................. 26 Chart 2 : Hill Farm Budget Analysis "without" Intervention, Real NPR ............................ 26 Chart 3: Terai Farm Budget Analysis "with" Intervention, Real NPR ................................ 27 Chart 4: Terai Farm Budget Analysis "without" Intervention, Real NPR........................... 27 Chart 5: Annual Family Income with on-season Cauliflower Cultivation in Terai ............. 32 Chart 6: Annual Family Income with On-season Cauliflower Cultivation in Hills ............. 33 Chart 7: Price Variation of Cauliflower at Border Towns in Nepal ...................................... 37 Report on CBA On-Season Cauliflower (Hills/Terai) 2 List of Acronyms and Abbreviations ADSCR Annual Debt Service Coverage Ratios AICL Agriculture Inputs Company Limited ANPV Annualized Net Present Value BCA Benefit-Cost Analysis CBA Cost-Benefit Analysis CBS Central Bureau of Statistics CRO Cash Required For Operation DADO District Agriculture Development Office DAP Di-ammonium Phosphate DoA Department of Agriculture DSCR Annual Debt Capacity Ratios FTF Feed the Future FTF-M&E Feed the Future – Monitoring and Evaluation FWDR Far-Western Development Region GoN Government of Nepal HH Household HMRP Hill Maize Research Program INR Indian Rupee (1 INR is equal to 1.60 NPR) IPs Implementing Partners IRR Internal Rate of Return KII Key Informant Interview KISAN Knowledge-based Integrated Sustainable Agriculture and Nutrition Program LLCR Loan Life Coverage Ratios LPM Levelized Profit Margins MOP Muriate of Potash MT Metric Ton MWDR Mid-Western Development Region NARC Nepal Agricultural Research Council NEAT Nepal Economic Agriculture and Trade NPR Nepali Rupee (1 USD is equal to 87.9 NPR) NPV Net Present Value NRB Nepal Rastra Bank (The Central Bank of Nepal) RIDA Research Inputs and Development Action USAID United States Agency for International Development USD United States Dollar VDC Village Development Committee WDR Western Development Region ZOI Zone of Influence Report on CBA On-Season Cauliflower (Hills/Terai) 3 Executive Summary Nepal is one of the 19 designated countries for the Feed the Future (FTF) Presidential Initiative. The FTF initiative aims to address the root causes of global hunger by sustainably increasing agricultural productivity to meet the demand for food, facilitating access to markets, increasing incomes for the rural poor, and reducing under-nutrition. The initiative in Nepal has been launched in 20 Terai and Hill districts of Western, Mid-Western and Far-Western Development Regions with several multifaceted programs covering over 80,423 smallholder agrarian households encompassing more than 1 million beneficiaries. FTF initiative provides, inter alia, extension and advisory services for paddy, lentil, maize and high value vegetable production. One of the major projects of FTF (USAID) in Nepal is Knowledge-based Integrated Sustainable Agriculture and Nutrition (KISAN), whose major interventions are: promotion of improved seed; support in establishing irrigation scheme; increase credit availability in project districts; increase use of improved technologies; and build linkages with market center. Research Inputs and Development Action (RIDA), an implementing agency of the FTF-M&E program, has been assigned the responsibility of carrying out Cost Benefit Analysis (CBA) and submitting periodic updates of the KISAN interventions. This report presents the third round of CBA - the first two CBAs being on maize and off-season cauliflower. Cauliflower (Brassica oleracea L., var. botrytis) is one of the major high value winter vegetables of Nepal. Its varieties are very responsive to temperature and photoperiod. It is therefore, very important to sow the appropriate variety at right time. Early varieties if sown late produce “button” head whereas late varieties if sown early give leafy growth producing curds very late. The conventional method of cauliflower cultivation is normally practiced with locally available varieties and surface flood method of irrigation without proper fertilizers and plant protection measures whereas advance technology for cauliflower cultivation, inter alia, makes use of improved/hybrid seeds, application of optimum quantities of manures and fertilizers, irrigation, and disease/pest control measures. This (On-season cauliflower) CBA report is based on data collected through household surveys conducted in the sampled six districts (viz., Rolpa, Dailekh, Dadeldhura, Jajarkot, Bardiya and Kanchanpur). In addition, literature review and key informant interviews (KII) also provided the data needed for the analysis. The cost benefit analysis (CBA) of on-season cauliflower involves
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