competitiveness for job creation -afghanistan...
TRANSCRIPT
Competitiveness for job creation
- Afghanistan agricultural value chains -
Stakeholders’ Meeting
MoLSAMD, Kabul, 25 February 2015
Hideki Kagohashi, Senior Coordinator, ILO Office for Afghanistan
Khairul Islam, Research Coordinator
Objective of the workshop
• To share key findings, preliminary
conclusions and recommendations with the
national stakeholders (concerned ministries
and representatives of employers and
workers) in order to receive feedback prior
to the finalization of the technical report of
the cross-country agriculture value chain
study.
• After the workshop, some information, conclusions
and recommendations may be modified/added in the
final report.
Why work on value chains?
Improve the overall efficiency of the value chain
by addressing a bottleneck
VC Development model – chain and doughnut
Inputs Production & post-harvest
Transport & delivery
Rules
Support functions
Interventions
Interventions
Why we are concerned?
Has the country lost price competitiveness vis-à-vis
regional trade partners? -1
0
1
2
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Compared to 2003, the currencies depreicated against USD by
Pakistan India Iran (official) Iran (market) Afghanistan Bangladesh China
IRR - 218%
PKR - 75%
BDT - 33%INR - 31%
Afs – 18%
CHY - (26%)
Has the country lost price competitiveness vis-à-vis
regional trade partners? -2
Source) UN COMTRADE
1,315,722
12,941
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
US D
olla
r th
ousa
nd
Iran's Exports toAfghanistan
Iran's Imports fromAfghanistan
Linear (Iran's Exportsto Afghanistan)
275,943
4,7950
50,000
100,000
150,000
200,000
250,000
300,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
US D
olla
r th
ousa
nd
Turkey's Exportsto Afghanistan
Turkey's Importsfrom Afghanistan
Trade withIran
Trade withPakistan
Trade withTurkey
1,684,666
138,3750
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2003
2004
2005
2006
2007
2008
2009
2010
US D
olla
r th
ousa
nd
Pakistan's Exportsto Afghanistan
Pakistan's Importsfrom Afghanistan
Has the country lost price competitiveness vis-à-vis
regional trade partners? -3
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,0002003
2004
2005
2006
2007
2008
2009
2010
US D
olla
r Thousa
nd
Edible fruit, nuts, peelof citrus fruit, melons
Edible vegetables andcertain roots andtubers
Dairy products, eggs,honey, edible animalproduct nes
Wood and articles ofwood, wood charcoal
Vegetable, fruit, nut,etc food preparations
Imports of competing products from Pakistan
Has the country lost price competitiveness vis-à-vis
regional trade partners? -4
-50,000
0
50,000
100,000
150,000
200,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
US
Dol
lar
Thou
sand
Carpets and other textile floorcoverings
Salt, sulphur, earth, stone,plaster, lime and cement
Animal,vegetable fats and oils,cleavage products, etc
Edible fruit, nuts, peel of citrusfruit, melons
Wool, animal hair, horsehairyarn and fabric thereof
Stone, plaster, cement,asbestos, mica, etc articles
Edible vegetables and certainroots and tubers
Poly. (Carpets and othertextile floor coverings)
Poly. (Salt, sulphur, earth,stone, plaster, lime andcement)Poly. (Animal,vegetable fatsand oils, cleavage products,etc)Poly. (Edible fruit, nuts, peel ofcitrus fruit, melons)
Poly. (Stone, plaster, cement,asbestos, mica, etc articles)
Poly. (Edible vegetables andcertain roots and tubers)
Imports of competing products from Iran
Key questions
Key questions – I (where to invest)
1. Which subsectors lost competitiveness (and
jobs & income), which remain competitive
(and generate employment & wealth)?
2. Do the priority subsectors of GoIRA and
donors match with the competitive
subsectors as of today?
3. How many additional labour can be
absorbed in the growth subsectors?
Key questions – II (on what to invest)
4. Which factors explain the competitiveness
and employment situation better?
5. Can the competitiveness and employment
situation of the struggling subsectors be
turned around by addressing the key
factors?
6. Do the policies and programmes of GoIRA
and donors address the key factors?
Key questions – III (HHs’ response)
7. Do ag works provide decent income for
HHs’ survival?
8. Where do youth from ag HHs find jobs?
9. Are ag HHs in the growth spiral or in the
poverty trap?
Scope of the research
Benchmark years2007 and 2012
3 countries
Afghanistan, Pakistan and Iran
5 VCsGrapes, wheat, rice,
tomatoes and potatoes
3 major production
clusters in each country
Allmajor cities in
each country
Data collection
• Literature review (VC and subsectoral
studies)
• Stats review (e.g., production, commercial,
consumption, trade, exchange rate, labour &
migration, price)
• VC actor interviews (of core VCs, service
chains, waste/recycle chains if appropriate)
• HHs and community interviews (on HH jobs
portfolio, education-to-work transition, HH
income/expenditure/finance)
Research findings
Major production factors
How is the price change for major factors
of production
•Energy
•Fertilizer
•Labour
Pakistan is gaining P advantage in energy
Changes in price between 2007 and 2012
Country Change in local
currency
Change in USD
Afghanistan App. + 100% App. + 96%
Pakistan App. + 121% App.+ 43%
Iran App. > +400% App. +120%
Pakistan is gaining P advantage in fertilizer
Country Change in local
currency
Change in USD
Afghanistan App. + 100% App. + 96%
Pakistan App. + 109% App. +35%
Iran App. +>500% App. +160%
Changes in price between 2007 and 2012
Pakistan P leader on labour cost
Farm wage rate in 2007 and 2012
Afghanistan (per
day)
Pakistan (per day) Iran (per day)
Year 2007 2012 2007 2012 2007 2012
Local
currency
200 Afs 350 Afs 185 PKR 310 PKR 120.00
IRR
270,000
IRR
USD 4.00 6.87 3.05 3.32 12.82 12.86
Grape
Grape/raisin value chain in Afghanistan
Other international markets
LEGEND Enterprise boundary Skipped function Sales of goods in spot market Contract sale Subcontract
Input importing
Input wholesaling
Input retailing
Farming
Primary Processing
Grape trading
Raisin trading
Secondary level
processing
Retailing
Exporting
Agri-inputs (fertilizer, crop protection, vitamins) importers with urban
sales outlet
Urban based wholesaler/retailer Urban based Distributor
of input companies
Mobile vender
Grape farmers
Commercial
grape
farmers
cum raisin
processors
Rural traders/grape
aggregators cum
Urban based
large grape
trader
Rural raisin
aggregator
Urban based
private raisin
companies
Fresh Fruit venders
Domestic market
Pakistan market
Urban based large
raisin trader
Grape exporter
Contract grape
farmers
Dried Fruit
venders
Raisin importing
Iranian Raisin
importers
Afghan Fertilizer manufacturer Input production
VC FUNCTIONS
END MARKETS
Input retailer
Grape
Importers
50% 50% 20%
10%
70%
Enterprise and jobs
Export
Retail
Wholesale
Import
Production
Inputs Inputs importers cum wholesaler N=100, E=2700, F= 0%
Fertilizer manufacturer N=1, E= 1500, F=10%
Inputs retailer N=750, E=750, F=0%
Grapes farmer
N=67350; E=740850; F = 18% (for processing 50+%)
Grapes importer N=10, E=500, F=0%
Raisin importer N=5, E=50, F=0%
Urban based grape wholesaler N=200, E=4000, F=0%
Rural grape aggregator N=500, E=5000, F=0%
Rural raisin aggregator N= 200, E=2000, F=0%
Urban based raisin wholesaler N=40, E=800, F=0%
Grape retailer N=3,000, E=3000, F=0%
Raisin retailer N=1,200, E=1200, F=0%
Grape exporter N=65, E=3250, F=0%
Raisin exporter N=135, E=11,750, F = 0% (Kandahar) 50+% (Kabul & Mazaar)
N= enterprise
E=employment
F= female
involvement
Afghan grape losing P competitiveness?
0.460
0.432
1.038
1.520
0.6…
0.381
0.000
0.200
0.400
0.600
0.800
1.000
1.200
1.400
1.600
2007 2012
Domestic wholesale price of grapes USD/kg
AFG PAK IRN
Iranian grape became more price competitive
Lost in Pakistan but remain competitive in Afghanistan
Afghanistan stagnant, Iran grows fast
Chile 853,000 tons
USA 416,000 tons
Turkey 240 ,000 tonsChina 217,000 tons
Uzbekistan 112 ,000 tons
Iran 10,000 tons
Afghanistan 20,000tons
Pakistan 172 tons-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
-$500 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
Global annual growth rate in value 2001-11:
10 %
Global average price in 2011per ton $1,788.44
Costs of performing functions to reach fresh grapes in Afghan wholesale market (USD/Ton)
Farmer sale 238.55 Farmer profit 71.53
2 0
1 2
Fertilizer 56.20
Crop protection 6.48
Irrigation 24.96
Land preparation 39.89 Labour over the period
(irrigation, fertilizing, pruning etc) 17.49
Harvesting 6.29 Cleaning, sorting,
grading 15.72
Transport from farm-gate to market 10.41
Labour for packing, Loading, unloading 22.40
Packing material 21.22
Attrition 2.16
Municipality tax 8.45
87.64 79.39 64.65 Inputs Production &
post-harvest
Transport &
delivery
wholesaler sale 337.00
wholesaler profit 33.80
Wholesale price
337.00
2
0
0
7 Fertilizer 35.00
Crop protection 2.80
Irrigation 16.00
Land preparation 30.60 Labour over the period
(irrigation, fertilizing, pruning etc) 13.40
Harvesting 4.80
Cleaning, sorting, grading 12.00
Transport from farm-gate to market 8.40
Labour for packing, Loading, unloading 20.00
Packing material 8.40
Attrition 2.00
Municipality tax 2.80
53.80 60.80 41.60 Inputs Production &
post-harvest
Transport &
delivery
Farmer sale 228.60
Farmer profit 114.00
wholesaler sale 343.00 wholesaler profit 72.80
Wholesale price
343.30
1
23
Large drop in profit due to cost increase of …
Conclusions – fresh grapes
•Losing price competitiveness but surviving in domestic market
•Increased fertilizer cost, packaging and irrigation cost
•Low farm-gate price
•Shrinking profit margin for wholesalers/ exporters
•Limited export market
•Poor business enabling environment
Recommendations – fresh grapes
R1- Reduce unit cost of production by
adopting trellis method
Inputs Production & post-harvest
Transport & delivery
Rules
Support functions
• Promote trellis
method in Shamali
plain land in the
short-run
• Establishing trellis
system and thereby
increased supply in
the VC can create 1.1
million new labour
days (= 4000+ full
time employment)
R2 - Educate farmers on financial management to better manage their farms
Inputs Production & post-harvest
Transport & delivery
Rules
Support functions
R3 - Access alternate market with existing
infrastructure
Inputs Production & post-harvest
Transport & delivery
Rules
Support functions
Export to India via
Kabul airport by
improving business
enabling
environment
Raisins
Afghan raisin losing P competitiveness
5.800
7.466
2.6363.212
1.… 1.238
0.000
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
2007 2012
Domestic wholesale price of raisin USD/kg
AFG PAK IRN
Afghan raisin keeps losing
its price competitiveness
Pakistani raisin maintains
its position in between
Iranian raisin still maintains
its price competitiveness
Lost P competitiveness in all market but….
Still showing a high growth in parallel to Iran
Uzbakistan 26,000 tons
USA 148,000 tons
China 48 ,000 tons Turkey 214,000 tons
Chile 70 ,000 tons
Iran 112,000 tonsAfghanistan 28,000tons
Pakistan 47 tons
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500
Global annual growth rate in value 2001-11:
12 %
Global average price in 2011per ton $1,788.44
Large drop in profit due to cost increase of…
Farmer sale 828.84 Farmer profit 94.32
2
0
1
2 Fertilizer 168.57
Crop protection 19.45
Irrigation 74.85
Land preparation 119.67 Labour over the period
(irrigation, fertilizing, pruning etc) 52.47
Harvesting 18.86 Cleaning, drying,
Collection 280.60
Factory level cleaning, processing 90.00
Machine processing 33.00
Packing material 71.00
Attrition 124.00
Transport from factory gate to border 30.00
Custom clearance 12.00
262.87 471.60 330.00 Inputs Production & post-
harvest
Processing, transport
& delivery
exporter sale 1300.00 exporter profit 141.21
FoB price 1300.00
Farmer sale 660.00 Farmer profit 138.00
2
0
0
7 Fertilizer 105.00
Crop protection 8.40
Irrigation 48.00
Land preparation 91.80 Labour over the period
(irrigation, fertilizing, pruning etc) 40.20
Harvesting 14.40 Cleaning, drying,
Collection 214.20
Factory level cleaning, processing 82.00
Machine processing 29.00
Packing material 73.00
Attrition 107.12
Transport from factory gate to border 25.60
Custom clearance 10.00
161.40 360.60 326.72 Inputs Production & post-
harvest
Processing, transport
& delivery
exporter sale 1150.00 exporter profit 163.28
FoB price 1150.00
1
2
3
Costs of performing functions to reach raisins in Afghan border for export (USD/Ton)
Conclusions
• Eroded price competitiveness
• Shrinking profit and market in traditional market against competitors
• Stands out by quality for high-end market
• Only few exporters currently reach high-end market
• More raisins, more jobs
Recommendations – raisins
R1- Assist current high end exporters to
penetrate further
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
50% increase in export volume of 5 such exporters can create 0.8 million new labour days where around 50% for women
R2 - Enable raisin exporters to reach high end
markets
Inputs Production & post-harvest
Processing Transport &
delivery
Rules
Support functions
220% increase in export volume of 35 such exporters can create 3.1 million new labour days where around 50% for women
R3 - Support certification agencies to get access
to Afghan market
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
Wheat
Wheat value chain in Afghanistan
Input importing
Input wholesaling
Input retailing
Farming
Wheat trading
Processing
Wheat flour
importing
Wheat flour
trading
Bread making
Wholesaling
Agri-inputs (fertilizer, crop protection, vitamins) importers with urban
sales outlet
Urban based
large wholesaler
Urban based Distributor
of input companies
Rural retailers
Rural/localized market National market
Flour mills
Semi
commer
cial
wheat
farmer
Rural wheat trader
Wheat retailer
Commercial/large wheat farmer
Urban large wheat trader
Millers’ urban based distributor
Rural wheat flour trader
Urban based imported wheat flour trader
Rural imported wheat flour trader
Input production
Seed producing farms supported by FAO/GIZ
Grocery shops Retailing
Bakery
Wheat bran
Livestock farms
Wheat bran trader
Wheat bran retailer
Local millers
Contract seed growers
Mobile vender
Wheat bran importer
Wheat
importing
Afghan Fertilizer manufacturer
FAO
VC FUNCTIONS
END MARKETS
Threshing Threshers
Wheat and wheat flour importers
24%
6%
70%
Enterprise and jobs
Processing
Retail
Wholesale
Import
Production
Inputs Inputs importers cum wholesaler N=100, E=2700, F= 0%
Fertilizer manufacturer N=1, E= 1500, F=10%
Inputs retailer N=750, E=750, F=0%
Wheat farmer N=480,011; E=2,400,055; F = 5%
Wheat importer N=20, E=680, F=0%
Wheat flour importer N=450, E=9,900; F=0%
Rural wheat aggregator N=360, E=360, F=0%
Urban based wheat flour wholesaler N=500, E=10,000, F=0%
wheat retailer N=300, E=300, F=0%
Wheat flour retailer N=5,000; E=5,000, F=0%
Flour mills N=35, E=3500, F=10%
Zirandas N=30,000; E=30,000, F = 0%
N= enterprise
E=employment
F= female
involvement
Seed processor N=100, E=2600, F=0%
Wheat bran importer N=8, E=40; F=0%
Threshers N=3,600; E=3,600,; F = 5%
Bakery N=3,600; E=7,200; F = 0%
Afghan wheat lost P competitiveness further
while Pakistan gained
0.260
0.363
0.214
0.1890.199
0.212
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
2007 2012
Domestic wholesale price of wheat USD/kg
AFG PAK IRN
Afghan wheat price lost its
price competitiveness
further
Pakistani wheat gains
further price
competitiveness
Iranian wheat slightly lost
its price competitiveness
but still competitive against
Afghani wheat
Afghan wheat flour also lost P competitiveness
further
0.340
0.452
0.264
0.3210.…
0.333
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
0.450
0.500
2007 2012
Domestic wholesale price of wheat flourUSD/kg
AFG PAK IRN
Afghan wheat flour lost its price
competitiveness further
Iranian wheat slightly lost its
price competitiveness against
Pakistan flour but still
competitive against Afghani
wheat flour
Pakistani wheat flour still price
competitive against both
Afghani and Iranian flour
Afghan wheat flour only can compete in north due
to higher availability of wheat grains
In wheat, Iran has higher growth though little in
volume compared to Pakistan
China 40,000 tons
USA 33 million tons
Kazakhstan 3 million tons
Pakistan 2 million tons
Iran 45,000 tons
Uzbekistan 130,000 tons
India 500,000 tons-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
160.00%
$0 $100 $200 $300 $400 $500 $600
Global annual growth rate in value 2001-11:
11 %
Global average price in 2011per ton $316
In wheat flour, Pakistan is regional large player second to
Kazakhstan though the latter shows higher growth
China 300,000 tons
USA 300,000 tons
Kazakhstan 2 million tons
Pakistan 1.2 million tons
India 70,000 tons
Uzbekistan 2,000 tons
Iran 70,000 tons
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
$0 $100 $200 $300 $400 $500 $600 $700
Global annual growth rate in value 2001-11:
12 %
Global average price in 2011per ton $434
High flour price due to high production cost
Farmer sale 345.25 Farmer profit 92.94
Aggregator sale 359.20 Aggregator profit 7.66
2 0
1 2
Seeds 28.30
Fertilizer 99.04
Crop protection 3.14
Irrigation 6.09
Land preparation 34.78
Labour over the period (sowing, planting, weeding etc) 19.06
Harvesting 29.48 Threshing 32.42
Aggregation cost 6.29
Transport from Aggregation to mill 9.83
Labour for packing, Loading, unloading 1.57
Milling cost 56.99
Packing material 15.72
136.57 122.02 84.10 Inputs Production, post-
harvest & aggregation
Processing, transport
& delivery
miller sale 451.95 miller profit 8.65
Miller price
451.95
Farmer sale 262.00 Farmer profit 90.80 Aggregator sale 270.00 Aggregator profit 3.80
2 0
0 7
Seeds 22.60
Fertilizer 43.40
Crop protection 1.60
Irrigation 5.00
Land preparation 27.20
Labour over the period (sowing, planting, weeding etc) 14.40
Harvesting 24.40 Threshing 32.60
Aggregation cost 4.20
Transport from Aggregation to mill 8.00
Labour for packing, Loading, unloading 1.20
Milling cost 43.00
Packing material 12.00
72.6 102.08 64.20 Inputs Production, post-
harvest & aggregation
Processing, transport
& delivery
miller sale 343.00 miller profit 8.80
Miller price
343.00
Costs of performing functions to wheat flour in Afghan wholesale market (USD/Ton)
21
3
Low cost at each level makes Pakistani flour
cheaper
Farmer sale 278.46 Farmer profit 113.53
Aggregator sale 283.82 Aggregator profit 2.14
2 0
1 2
Seeds 15.32
Fertilizer 57.41
Crop protection 5.78
Irrigation 23.88
Land preparation 39.52
Labour over the period (sowing, planting, weeding etc) 3.21
Harvesting 19.17 Threshing 0.64
Aggregation cost 3.21
Transport from Aggregation to mill 1.29
Labour for packing, Loading, unloading 1.07
Milling cost 26.78
Packing material 12.00
102.39 65.76 41.13 Inputs Production, post-
harvest & aggregation
Processing, transport
& delivery
miller sale 348.08
miller profit 23.13
Miller price
348.08
Farmer sale 164.80 Farmer profit 23.896
Aggregator sale 175.18 Aggregator profit 5.44
2 0
0 7
Seeds 13.184
Fertilizer 41.20
Crop protection 4.45
Irrigation 22.08
Land preparation 38.23
Labour over the period (sowing, planting, weeding etc) 3.30
Harvesting 17.63 Threshing 0.82
Aggregation cost 4.94
Transport from Aggregation to mill 1.15
Labour for packing, Loading, unloading 0.82
Milling cost 29.66
Packing material 13.18
80.92 64.93 44.83 Inputs Production, post-
harvest & aggregation
Processing, transport
& delivery
miller sale 282.63 miller profit 62.62
Miller price
282.63
Costs of performing functions to wheat flour in Pakistan wholesale market (USD/Ton)
12
3
Conclusions
• Increased cost of production due to high
input cost
• Low yield
• Competitiveness is lost further
Recommendations – wheat
• R1- Policy review to check economic
viability to adjust cost of production
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
R2 – Increase the availability of improve wheat seeds through private sector channel
Inputs Production & post-harvest
Transport & delivery
Rules
Support functions
Rice
Rice value chain in Afghanistan
Input importing
Input wholesaling
Input retailing
Farming
Paddy trading
Processing
Rice
importing
Rice trading/
wholesaling
Agri-inputs (fertilizer, crop protection, vitamins) importers with urban
sales outlet
Urban based large
wholesaler
Urban based Distributor
of input companies
Rural/localized market
National market
Retailing
Contract
growers
Rural input retailers cum rice wholesaler/retailer
Rice importer
Commercial farmer
Retailer /grocery shop
Rural rice trader
Regional traders
Small rice farmers
Mobile vender
Farming
Input production Afghan Fertilizer manufacturer
Spot market Restaurants Institutional buyers
(ANP, ANA, NDS) and public universities, public hospitals
Local
millers
Local
millers
Threshing
service
Threshin
g service
Tajikistan, Kazakhstan
market
Rural paddy
trader
Urban paddy
trader
Mazaar
Rice mill Exporting
VC FUNCTIONS
END MARKETS
Kunduz
Enterprise and jobs
Export
Retail
Wholesale
Import
Production
Inputs Inputs importers cum wholesaler N=100, E=2700, F= 0%
Fertilizer manufacturer N=1, E= 1500, F=10%
Inputs retailer N=750, E=750, F=0%
Paddy farmer N=15,000; E=75,000; F = 0%
Rice retailer N=3,400, E=3400, F=0%
Rice exporter N=1, E=85, F=0%
N= enterprise
E=employment
F= female
involvement
Thresher N=500; E=500; F = 0%
Processing
Rice importer N=100, E=5200, F=0%
local millers N=500, E=500, F=0%Rice mill N=2, E=220, F=0%
Rice wholesaler N=340, E=680, F=0%
Pakistani rice reaches at price parity with
Afghan rice
0.8200.923
0.988 0.942
2.…
1.571
0.000
0.500
1.000
1.500
2.000
2.500
2007 2012
Domestic wholesale price of rice USD/kg
AFG PAK IRN
Pakistani rice is gaining
further price
competitiveness
Once most competitive,
Afghan rice is losing its
price competitiveness
against Pakistani rice
Still surviving in domestic market
Pakistan is showing significant growth rate
Russia 130,000 tons
India 5 million tons
Iran 110 tons Pakistan 3 million tons
Thailand 10.5 million tons
China 0.5 million tons
Viet Nam 7 million tons
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
$0 $200 $400 $600 $800 $1,000 $1,200
Global annual growth rate in value 2001-11:
11%
Global average price in 2011per ton $ 639.42
Still rice is giving good profit to VC actors though
increased production cost
Farmer sale 491.25 Farmer profit 242.48
2
0
1
2 Seeds 14.34
Fertilizer 76.05
Irrigation 0.79
Land preparation 37.53 Labour over the period
(sowing, planting, weeding etc) 47.16
Harvesting 45.00 Threshing 27.90
Transport from farmgate to mill 13.95
Milling cost 82.14
Packing material 2.75
Distribution cost 9.83
91.18 157.59 108.66 Inputs Production & post-
harvest
Processing, transport
& delivery
miller sale 925.52
miller profit 325.60
Miller price
925.52
Farmer sale 428.40 Farmer profit 261.60
2
0
0
7 Seeds 10.08
Fertilizer 42.20
Irrigation 0.8
Land preparation 26.4
Labour over the period (sowing, planting, weeding etc) 27.00
Harvesting 33.80 Threshing 25.80
Transport from farmgate to mill 12.00
Milling cost 69.60
Packing material 6.00
Distribution cost 6.00
53.80 113.00 93.60 Inputs Production & post-
harvest
Processing, transport
& delivery
miller sale 820.00 miller profit 298.00
Miller price
820.00
Costs of performing functions to reach milled rice in Afghan wholesale market (USD/Ton)
1
2 1
Conclusions
• Like wheat, increased cost of production
due to high input cost
• Low yield
• Price competitiveness is at parity
Recommendations – rice
• R1- Policy review to check economic
viability to adjust cost of production
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
• R2- Trade policy review to check the viability of protecting
domestic rice production and thereby jobs in the sector
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
Tomato
Tomato value chain in Afghanistan
Input importing
Input wholesaling
Input retailing
Farming
Processing
Importing
Aggregation/
collection
Exporting
Retailing
Wholesaling
Agri-inputs (fertilizer, crop protection, vitamins) importers with urban
sales outlet
Urban based
large wholesaler
Urban based Distributor
of input companies
Rural retailers
Rural market Pakistan market
Small Farmer
Rural retailers
Input production
Commercial Farmer
Vegetables exporters
Fresh tomato importer cum wholesaler
Rural traders
Large urban traders
National market
Vegetables venders
Tomato paste making factory
Contract farmers
Processed food items wholesaler
Grocery shops
Afghan Fertilizer manufacturer
Mobile vender
Dried tomato processor
Spice, dried tomato trader
Tomato paste, ketchup, sauce importer
VC FUNCTIONS
END MARKETS
Rural trader
LEGEND Enterprise boundary Skipped function Sales of goods in spot market Contract sale Subcontract
Enterprise and jobs
N= enterprise
E=employment
F= female
involvement
Export
Retail
Wholesale
Import
Production
Inputs Inputs importers cum wholesaler N=100, E=2700, F= 0%
Fertilizer manufacturer N=1, E= 1500, F=10%
Inputs retailer N=750, E=750, F=0%
tomato farmer
Tomato retailer N=3,400, E=3400, F=0%
Fresh tomato exporter N=100, E=3200, F=0%
Processing Tomato paste factory N=6, E=90, F=20%
Fresh tomato importer N=100, E=2500, F=0%
processed tomato importer N=30, E=900, F=0%
Fresh tomato wholesaler N=200, E=4400, F=0%
Rural tomato aggregator N=650, E=650, F=0%
Tomato paste wholesaler N=250, E=2500, F=0%
Processed tomato retailer N=3,400, E=3400, F=0%
Dried tomato retailer N=200, E=200, F=0%
Iran is at price parity with Afghanistan though the
latter still competitive against Pakistan
0.160
0.196
0.3130.332
0.237
0.200
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
2007 2012
Domestic wholesale price of tomatoes USD/kg
AFG PAK IRN
Pakistani fresh tomato lost
its price competitiveness
further
Iranian fresh tomato gains
price competitiveness and
reached parity with Afghan
tomatoes
Competitiveness of Afghan
tomatoes is eroded and at
parity with Iranian tomatoes
Iranian tomato paste also reached at price parity
with Afghani
0.740
0.845
1.…
0.857
0.000
0.200
0.400
0.600
0.800
1.000
1.200
2007 2012
Domestic wholesale price of tomato pasteUSD/kg
AFG IRN
Iranian tomato paste gained
price competitiveness and
at parity with Afghan tomato
paste
Afghan tomato paste lost
competitiveness against
Iranian tomato paste
Competitive in domestic as well as in Pakistan market
Afghan tomato paste is still P competitive in
domestic market
Iran is growing in fresh tomato
Tajikistan 12,000 tons
India 230,000 tons
Turkey 550,000 tons
China 130,000 tons
Uzbekistan 52,000 tons
Iran 140,000 tonnsUSA 200,000 tons
Pakistan 45,000 tons
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
160.00%
180.00%
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000
Global annual growth rate in value 2001-11:
10 %
Global average price in 2011per ton $1,141
Iran is also the largest regional player in processed
tomato
Netherlands 8,000 tons
Kazakhstan 1,300 tons
Iran 96,000 tons
Turkey 72,000 tons
Pakistan 304 tons
USA 350,000 tons
India 450 tons
Uzbekistan 1,800 tons
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
Global annual growth rate in value 2001-11:
8 %
Global average price in 2011per ton $1,244
Processor profit is shrinking due to high raw material cost
Farmer sale 352.52 Farmer profit 173.55
*2.3 kg makes 800 gm canned tomatoes
2 0
1 2
Seeds 2.71
Fertilizer 52.43
Crop protection 5.42
Irrigation 50.62
Land preparation 14.46 Labour over the period
(sowing, planting, weeding etc) 13.11
Cleaning, sorting packing 8.14
Transport to processing plant 32.09
Processing cost 50.01
Packing material 358.61
Distribution cost 6.29
111.18 67.79 414.91 Inputs Production & post-
harvest
Processing, transport
& delivery
processor sale 844.95 processor profit 77.52
Processor price
844.96
Farmer sale 276.00 Farmer profit 166.98
*2.3 kg makes 800 gm canned tomatoes
2 0
0 7
Seeds 1.84
Fertilizer 25.76
Crop protection 3.68
Irrigation 30.36
Land preparation 8.74 Labour over the period
(sowing, planting, weeding etc) 6.44
Cleaning, sorting packing 6.90
Transport to processing plant 25.30
Processing cost 40.00
Packing material 322.50
Distribution cost 4.40
61.64 47.38 366.90 Inputs Production & post-
harvest
Processing, transport
& delivery
processor sale 780.00 processor profit 137.10
Processor price
780.00
Costs of performing functions to reach tomato paste in Afghan wholesale market (USD/Ton)
1
2
1
Conclusions
• Eroded competitiveness brought at price
parity with Iran
• Still competitive for fresh produce at
domestic and Pakistan market
Recommendations – tomato
• R1- Policy review to check economic
viability to adjust cost of production
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
• R2- Devise appropriate sourcing
mechanism to procure at low price
Inputs Production & post-harvest
Processing, Transport &
delivery
Rules
Support functions
Potato
Potato value chain in Afghanistan
LEGEND Enterprise boundary Skipped function Sales of goods in spot market Contract sale Subcontract
Input importing
Input wholesaling
Input retailing
Farming
Storing
Trading
Wholesaling
Processing
Retailing
Exporting
Agri-inputs (fertilizer, crop protection, vitamins) importers with urban
sales outlet
Urban based wholesaler/retailer Urban based Distributor
of input companies
Small Potato farmers
Potato
traders
cum
seed
seller
Rural vegetables retailers
National market International market
Urban based large trader
Potato chips
manufactur
er
Large commercial farmers
Processed items distributer
Importing
French fries processors
Afghan Fertilizer manufacturer Input production
VC FUNCTIONS
END MARKETS
Input retailer
Large
farmer
cum
trader
Regional trader
Potato Importers
General stores
Potato chips
importers
Distribution
Localized market
Vegetables/fruits vendors/ grocery shops
Enterprise and jobs
N= enterprise
E=employment
F= female
involvement
Export
Retail
Wholesale
Import
Production
Inputs Inputs importers cum wholesaler N=100, E=2700, F= 0%
Fertilizer manufacturer N=1, E= 1500, F=10%
Inputs retailer N=750, E=750, F=0%
potato farmer N=21000; E=105,000; F =20%
Potato retailer N=10,000; E=10000, F=0%
Potato exporter N=50, E=1000, F=0%
Processing
Potato importer N=100, E=500, F=0%
Processed potato importer N=50, E=600, F=0%
Potato chips factory N=2, E=10, F=0%
French fries processor N=340, E=340, F=0%
Urban/regional trader N=320, E=640, F=0%
Rural potato aggregator N=1000, E=1000, F=0%
Processed potato retailer N=10,000; E=10000, F=0%
Afghanistan and Pakistan keep losing P
competitiveness while Iran is gaining
Afghan potato kept losing
price competitiveness
Pakistani potato also kept
losing price competitiveness
but is still more competitive
against Afghan potato
Iranian potato gained
significant price
competitiveness against
two others
0.220
0.255
0.181
0.225
0.2…
0.181
0.000
0.050
0.100
0.150
0.200
0.250
0.300
2007 2012
Domestic wholesale price of potatoes USD/kg
AFG PAK IRN
Afghan potato Still P competitive in domestic market
and nearby Pakistan areas
Pakistan still shows good export growth
France 2 million tons
Netherlands 2 million tons
Pakistan 443,000 tons Iran 239,000 tonsChina 377,000 tons
Afghanistan 9,000 tonsIndia 218,000 tons
Russia 42,000 tons
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
$0 $100 $200 $300 $400 $500 $600 $700
Global annual growth rate in quantity 2001-
2011: 4%
Global average priceper ton $371
Conclusions
• Lost price competitiveness
• Increased production cost due to high
fertilizer cost
Households’ response to
changing environment
Varying levels of income – by occupation
-50000
0
50000
100000
150000
200000
250000
300000
Sub
sist
ence
Bam
yan
Po
tato
Far
mer
Sub
sist
ence
Kab
ul G
rap
e Fa
rmer
Sub
sist
ence
Bag
hla
n W
hea
t Fa
rmer
Sem
i-C
om
mer
cial
Kab
ul G
rap
e fa
rme
r
Lab
ou
r (c
on
stru
ctio
n)
Co
mm
erci
al B
amya
n P
ota
to F
arm
er
Lab
ou
r (o
ther
far
ms)
Co
mm
erci
al B
agh
lan
To
mat
o F
arm
er
Sem
i-C
om
mer
cial
Kab
ul W
hea
t Fa
rmer
Cle
aner
Teac
her
Lab
ou
r (o
ther
far
ms)
Co
ntr
acti
ng
Maz
ar T
om
ato
Far
mer
Go
vern
men
t (D
AIL
)
Ow
n t
ruck
Co
mm
erci
al K
abu
l Gra
pe
Farm
er
Taxi
Dri
ver,
par
t ti
me
Lab
ou
r (o
ther
far
ms
+ co
nst
ruct
ion
)
Car
pen
ter
Gu
ard
NG
O
Po
lice
Lab
ou
r (o
ther
far
ms)
Teac
her
Taxi
Dri
ver
Co
mm
erci
al B
agh
lan
Ric
e fa
rmer
Secu
rity
Co
mp
any
Mili
tary
Ow
n S
ho
p
Go
vern
men
t (D
ail)
Co
ntr
acti
ng
Wh
eat
Ku
nd
uz
Farm
er
NG
O D
rive
r
Teac
her
Ve
teri
nar
y Sh
op
Teac
her
Mili
tary
agri income per person; daily labourers; formal public jobs; formal private jobs, own activity
Subsistence farms rely on non-ag income
Grand
pa/ma
Parents
Young
adults
Kids
• Agriculture work by head of HH
and family labour
[underemployment]
• Total agri income negative due
to self consumption
• Daily labour by head of HH
[underemployment]
• Female jobs?
• Multiple loans & debt shuffling
• Sell animals/other assets to
compensate insufficient income
Struggling subsistence farm HH (sell less than 20% of harvest)
w/o sufficient income earners
Semi-commercial still rely on non-ag income
Grand
pa/ma
Parents
Young
adults
Kids
• Agriculture work by adult males
and family labour
[underemployment]
• Total agri income could be
negative or positive
• Daily labour by adult males
[underemployment]
• Educated youth in low-rank
formal jobs [fully employed]
• Female jobs?
• Vary from debt shufflers to
savers at home
Semi-commercial farm HH (sell 20-60% of harvest)
w/o sufficient income earners
Commercial farming – more ag promises
Grand
pa/ma
Parents
Young
adults
Kids
• Agri work by adult males and
family labour [underemployment
to near full emp]
• Total agri income could cover
50% or more of HH expense
• Daily labour by adult males if
needed
• Educated youth in low-rank
formal jobs [fully employed]
• Female jobs for highly educated?
• Vary from loan takers to loan
givers, but savings at home
Commercial farm HH (sell 60% or more of harvest)
w/o sufficient income earners
To where labour moves?
Estalif district (Kabul) Yakawlang (Bamyan)
School-to-work transition
• The level of education of those under 18 is significantly higher than that of their parents and grandparents
• Children in 70% HHs combine light agricultural field work with school
• 28% of HHs had to stop children’s school before 18 years mainly due to economic hardship (while for girls, religious reason
• Students seem to access formal jobs after high school (e,g,. teachers, army, police), but a significant portion still gets wage, agriculture or skills-based jobs even after completing high school. Higher studies after high school usually lead to government or NGO jobs.
Poverty trap or upward mobility
• 75% of HHs borrowing but mainly for HHs expense.
• Average outstanding amount is 27% of annual income but the borrowing pattern is in constant or increasing trend
• Significant percent of HHs repay loans by taking another loans
• Only 17% HHs actually save money
Just for farm19%
Farm + HH42%
Just for HH39%
Reasons for borrowing
Never45%
Often 2%
Sometimes
49%
Very often 4%
Borrow to repay?
Summary outputs – macro picture:
Afghanistan-Pakistan
Which is the situation of your VC?
a) expanding domestic production with expansion of exports to
neighboring countries; grapes, raisins, fresh tomatoes
b) expanding domestic production with expansion of imports
from neighboring countries; wheat, wheat flour, rice, processed
tomatoes.
c) declining domestic production with expansion/flat level of
exports to neighboring countries;
d) declining domestic production with expansion of imports
from neighboring countries; potatoes
e) or somewhere in-between.
Summary outputs – macro picture
Labour & migration trends with each VC?
Due to the lack of longitudinal data on labour migration, the
questions below remain as future research questions.
a) expanding production with increase of Afghan labour & incoming foreign
labour;
b) expanding production with increase of Afghan labour & flat/declining foreign
labour;
c) Expanding production with flat/declining Afghan labour & increase in
incoming foreign labour;
d) declining production with increase of Afghan labour & incoming foreign
labour;
e) declining production with declining Afghan labour & incoming foreign
labour;
f) Declining production with flat/declining Afghan labour & increase of incoming
foreign labour;
… and more scenarios.
Overarching Recommendations
• Establish an Observatory of Competitiveness and Jobs
which will continuously monitor critical indicators and report
to the top level policymakers and the private sector
stakeholders.
• Establish a National Commission on Competitiveness and Jobs
as an inter-ministerial body chaired by an executive member
of the Government with the participation of the employers
and workers representatives
to review the reports of the Observatory and coordinate
policies in order to guide sectoral strategies on the basis of
the dynamic competitiveness and to ensure optimal
employment outcomes.
Thank you
Questions & Discussion