value chain/ market analysis of the ginger sub-sector ... - Nepal Trade

EXECUTIVE SUMMARYThe Nepal Economic, Agriculture, and Trade (NEAT) Activity is a 30-month project fundedby the United States Agency for International Development (USAID) that aims to promoteeconomic growth, reduce poverty, and improve lives in Nepal. Under NEAT component 2-encouraging competitiveness and exports in selected agricultural and non agriculturalcommodities or services, the Asia Network for Sustainable Agriculture and Bioresources(ANSAB) conducted a value chain/market study of the ginger subsector in Nepal.Ginger is an important spice crop traditionally grown in the mid-hill areas of Nepal. Thissector contributes to 0.59 percent of total exports with an export value of about 403 millionNPR (Nepali Rupees) in FY 2008/9 (TEPC, 2010). It is estimated to be cultivated by over66,000 families in five regions of the country, and due to its high value it has a greater impacton smallholder farmers. Globally, Nepal is fourth in ginger production which translates toabout 11.5 percent of the worlds production (FAO, 2008). Nepal mostly exports ginger toIndia in fresh form and partly in traditionally dried form as Sutho.The overall objective of this study is to carry out an in-depth value chain/market assessmentof ginger and provide insights to NEAT for interventions, activity designs, andimplementation. This study is based on a value chain approach focusing on the marketcompetitiveness and involved market visits, interactions with stakeholders, and consultationswith traders, processors and exporters. Validation of findings was achieved through privatesector dialogue meetings and expert reviews. After a thorough analysis of the subsector,value chain mapping was completed, and constraints, opportunities, and strategic areas forintervention were identified.The major constraints of the ginger sector include: a) unavailability of quality rhizome andappropriate plant protection remedies; b) prevalence of rhizome rot disease; c) traditionalcultivation practices resulting in low productivity; d) lack of proper knowledge andtechnology on production; e) lack of collective marketing practices; f) lack ofcleaning/washing facilities and use of inefficient processing and product developmenttechnologies; g) low quality of products; h) multiple and unofficial taxation duringtransportation; i) heavy dependence on India for trade and Indian governmentsdiscouragement of import from Nepal whenever Indian ginger production is high; and, j)insufficient collection and storage facilities and minimum value addition within the country.Opportunities in this sector include: a) good demand of quality inputs; b) possibility toincrease price through improved post-harvest practices like cleaning, grading & sorting; c)opportunities exist to increase the production area and overall productivity; d) possibility ofmother rhizome harvesting; e) possibility of product and market diversification; f)opportunity for import substitution; g) opportunities to employ women and disadvantagedgroups in processing activities; and, h) potential for the inward flow of foreign currency.After analyzing the constraints and opportunities, the suggested interventions include bothshort-term and long-term solutions. The short-term interventions include: a) support forquality production and post-harvest handling; b) support to the Government of Nepal (GON)to declare seed production pockets; c) introduction of mother rhizome harvesting practicesnationally; d) support to farmers on business development and planning; e) exposure visitswith farmers and traders and participate in trade fairs and exhibitions; f) linkages withmicrofinance institutions (MFIs); g) support to establish rhizome washing facilities andValue Chain/Market Analysis-Ginger 1