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A Value Chain Analysis of Apple from Jumla

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A Value Chain Analysis of Apple from Jumla A Value Chain Analysis of Apple from Jumla MINISTRY OF AGRICULTURE & COOPERATIVES DEPARTMENT OF AGRICULTURE Foreword Apple is one of the key fruits with potential to generate income and employment in the high mountain districts of Western Nepal, especially with road constructions gaining pace in these areas. However, a systematic value chain analysis for apple was not yet carried out till date to diagnose constraints and identify the opportunities. We are pleased to report that this knowledge gap has been fi lled and that this information can now be shared with a wider audience. The study analyses the existing situation of apples in terms of their geographical spread, area coverage and production. It provides a good understanding on the value chain of apple and its constraints that need to be overcome to realise its potential contribution to pro-poor impact. Finally, it provides specifi c value chain solutions and recommendations to the actors involved in this specifi c value chain, and to the District Agriculture Development Offi ce (DADO) Jumla, SNV Nepal and other interested organisations on possible interventions to realise enhanced production, income and employment for the rural poor. As the DADO Jumla, SNV Nepal and other organisations started facilitating and supporting the Jumla apple farmers in a more structured way from 2008 onwards, already quite some positive changes have taken place in the value chain, which are also described in this report. It is encouraging that prices for the farmers have more than doubled since, that the Jumla organic apple is starting to get a name in the market. While the present publication will be of immediate value to implement programme activities for the further development and promotion of the apple value chain in Jumla, it will also be useful for government policy makers, planners, and extension workers at both central, regional and district levels to develop the apple sub-sector in other potential districts of Nepal. January 2011 Vijay Kumar Mallik Hans Heijdra Director General Country Director Department of Agriculture SNV Nepal Acknowledgement Firstly, we would like to express our gratitude to all the apple growers, farmers, traders, private sector, development organisations and governmental organisations in Jumla who gave their valuable time for interviews, as well as to those who actively participated in multi-stakeholder workshops in Khalanga, Jumla and Kathmandu. We are very grateful to Mr. Suresh Kumar Verma, Joint Secretary and Chief of the Planning Division of Ministry of Agriculture and Cooperatives (MoAC) for his encouragement and moral support to carry out this study. We would also like to acknowledge Mr. Ram Prasad Pulami, former Regional Director of Regional Directorate of Agriculture, Mid-West for his moral support and feedback. Several staff of SNV in Nepal have contributed to this value chain analysis and fi nalising it into this report. Special thanks for their efforts go to Dr. Pradeep Tulachan, Monisha Rajbhandari, Chandra Regmi, Chhabi Lal Paudel, Padam Bhandari who undertook the analysis in 2008. Thanks also to Solution Consultants Pvt Ltd which provided useful information on the national apple market dynamics. Ananta Ghimire and Rik van Keulen updated the analysis to include the latest insights and developments and fi nalised it into this up-to-date publication. Although a lot of analysis work was already done in 2008, by including the interventions and various lessons learned, we hope this becomes a more useful and interesting publication. Mr. Dila Ram Bhandari, DADO Jumla has been involved and cooperated throughout the study. Without his efforts this study would not have been successful. Finally, we are very thankful to Keshab Datta Joshi, West Portfolio Coordinator of SNV in Nepal who took the initiative for this study, and constantly facilitated and supported it. The views expressed in the publication are those of the value chain analysis team and not necessarily of SNV and the Department of Agriculture. Similarly, the fi ndings, interpretations and conclusions herein are those of the author(s) and do not necessarily refl ect the views of SNV or the Department of Agriculture. SNV Netherlands Development Organisation Nepal Abbreviations APP Agricultural Perspective Plan AEC Agro-Enterprise Centre AFE Action for Enterprise AP&MDD Agribusiness Promotion and Marketing Development Directorate CSP Community Support Project CSIDB Cottage and Small Industries Development Board DADO District Agriculture Development Offi ce DCCI District Chamber of Commerce and Industry DDC District Development Committee DFID Department for International Development DoA Department of Agriculture EIG-CM Education for Income Generation and Confl ict Mitigation Project FDD Fruit Development Directorate FNCCI Federation of Nepalese Chambers of Commerce and Industry ha Hectares HH Households HVA-IB High Value Agriculture-Inclusive Business Pilot Project IEDI Industrial Enterprise Development Institute IFAD International Fund for Agricultural Development JAPC Jumla Apple Processing Centre JAPEC Jumla Agricultural Producers’ and Entrepreneurs’ Cooperative JHRF Jumla Horticulture Research Farm KAC Karnali Apple Company KFC Karnali Fruit Cooperative LARF Local Agricultural Resource Farmers m.a.s.l. Metres above sea level MDGs Millennium Development Goals MEDEP Micro Enterprise Development Programme MoAC Ministry of Agriculture and Cooperatives MSMEs Micro Small Medium Enterprises MT Metric Ton NARC Nepal Agricultural Research Council NGO Non-Governmental Organisation NHPC Nepal Horticulture Promotion Centre NRP Nepalese Rupee OCN Organic Certifi cation Nepal OWF Organic World & Fair Future Pvt. Ltd. PIE Production, Income and Employment REAP Rural Enterprise Assistance Programme SEDA Sustainable & Equitable Development Academy SHCC Small Holder Cash Crops SNV SNV Netherlands Development Organisation VCA Value Chain Analysis VCD Value Chain Development VDC Village Development Committee WUPAP Western Upland Poverty Alleviation Project WV World Vision Summary Apple is one of the agricultural products with a good potential in the mountainous districts of Mid- and Far-Western Nepal. In contrast to the other districts, apples were already introduced in Jumla in the 1970s. But it was only since 2006 when the Surkhet-Jumla road – the Karnali Highway – was opened as a seasonal road that the people of Jumla suddenly saw apple production as one of the major, or even the major income source for the near future. Since 2008, farmers have been planting more than 100,000 saplings per year. Operating apple nurseries has become a lucrative and fully commercial business. According to the DDC Household Survey of 2008, nearly 10,000 households were already engaged in apple production in 2008, producing together more than 1800 MT. The production will increase year by year, because in 2008 most trees (70%) were still in a non-fruiting stage. On top of this, farmers are expanding their orchards large scale. Although a large part is already being blacktopped, the Karnali Highway is still a seasonal road, and remains closed during the monsoon season, which is also the harvesting season. Therefore, nearly all apples ‘exported’ out of the district need to be fl own out by air, which is the single most important factor impeding increased apple sales. Possibly only 10% is sold, while the rest is used for household purpose or remains on the trees. With this oversupply, farmers logically have not invested in orchard management like pruning, use of manure, pest control, etc. Jumla declared itself an organic district in 2007, and in 2009, the District Agricultural Development Offi ce initiated organic certifi cation of apples for three Village Development Committees, with support of organisations like SNV Nepal and World Vision. Also nursery improvements, pruning, professional apple packaging materials, grading and market linkage with wholesalers were promoted from 2009 onwards. One major success was the apple price increase in Jumla from NRP 10/kg in 2008 to NRP 35 and NRP 25/ kg for organic certifi ed and non-certifi ed respectively. Partially, this was also caused by high prices in the apple market in general. In 2010, the prices went down respectively to NRP 30 and 26/kg for grade A – the fi rst year with price differentiation for different grades. Progress has also been made on the organisational side. In 2009 the three certifi ed farmer groups undertook joint marketing, and in 2010, nine Jumla cooperatives did so under the umbrella of the Jumla District Cooperative Federation. A major factor in this development was not just the price increase in the year before, but also a change in the agricultural policy, as for the fi rst time only cooperatives were allowed to apply for the air transport subsidy. Although progress has been made, still more needs to be done if apple is to become the major agriculture sub sector and the major source of income for Jumla and surrounding districts. The Jumla apple will need to compete with the Chinese and Indian apples, which now have a market share of nearly 90% and 10% each in Nepal. One way to create a niche is to further promote the Jumla apple as organic, with or without certifi cation. The price premium received by producers for their organic certifi ed apple still is not suffi cient to cover the extra costs coming with organic certifi cation. Various improvements still need to be made. Modern high-yielding varieties need to be introduced, those which will do well in Jumla from the perspective of organic production, dry area with little irrigation, less required chilling hours because of climate change, etc. Nurseries must be able to provide disease free saplings and provide advice to farmers. Commercial supply of bio-pesticides and bio-fertilisers through agro-vets and also piloting of home-brewed bio-pesticides are necessary for pest control, which will even become more urgent with the climate change. Further promotion of pruning, irrigation, compost making – lack of available bio-mass being a problem here, and handling of apples during the harvest, especially on-farm, to avoid bruises are important to be able to supply large apples with good appearance for which most consumers are looking for.
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