BaselineReport

Vegetable Market Intermediaries in Pakistan

September 2015

Agricultural Innovation Program (AIP) for Pakistan

AVRDC – The World Vegetable Center is the leading international nonprofit research organization committed to alleviating poverty and malnutrition in the developing world through the increased production and consumption of nutritious, health-promoting vegetables.

AVRDC – The World Vegetable Center P.O. Box 42 Shanhua, Tainan 74199 TAIWAN Tel: +886 6 583 7801 Fax: +886 6 583 0009 Email: info@worldveg.org Web: avrdc.org AVRDC Publication No.: 15-792 © 2015 AVRDC – The World Vegetable Center Disclaimer This study was made possible by the support of the American people through the United States Agency for International Development (USAID). The contents are the sole responsibility of the International Maize and Wheat Improvement Center (CIMMYT) and AVRDC – The World Vegetable Center and do not necessarily reflect the views of USAID or the United States Government.

Suggested citation Nasir M. 2015. Baseline Report: Vegetable Market Intermediaries in Pakistan. AVRDC – The World Vegetable Center Publication No. 15-792, AVRDC – The World Vegetable Center, Taiwan. 53 p.

BASELINE REPORT

Vegetable Market Intermediaries in Pakistan

September 2015

i

TableofContents

List of Tables ......................................................................................................................................... iii

List of Figures ........................................................................................................................................ iv

EXECUTIVE SUMMARY .................................................................................................................... v

ACKNOWLEDGMENTS ..................................................................................................................... vi

List of Acronyms and Abbreviations .................................................................................................... vii

Chapter 1: Introduction ........................................................................................................................... 1

1.1 Background ................................................................................................................................... 1

1.2 Objectives and Scope .................................................................................................................... 2

1.3 Presentation Plan ........................................................................................................................... 2

Chapter 2: Methodology ......................................................................................................................... 3

2.1 Research Methodology ................................................................................................................. 3

2.2 Survey Sites .................................................................................................................................. 5

2.2.1 Administrative Locations in Pakistan .................................................................................... 5

2.2.2 Basic Data Information and Enumerators’ Capacity Building ............................................... 6

2.3 Time Frame and Study Team ........................................................................................................ 6

2.4 Data Analyses and Results Presentation ....................................................................................... 7

Chapter 3: Farmers’ Marketing Practices and Perceived Sources of Losses .......................................... 7

3.1 Where and How Vegetables are Sold ........................................................................................... 7

3.2 Preharvest, Harvest, and Postharvest Losses ................................................................................ 8

3.3 Marketing Channels .................................................................................................................... 10

3.3.1 Markets and Sales Channels ................................................................................................ 10

3.3.2 Market Determinants ........................................................................................................... 14

3.4 Summary .................................................................................................................................... 14

Chapter 4: Vegetable Growers .............................................................................................................. 15

4.1 Status of Vegetable Seed Production .......................................................................................... 15

4.2 Fresh Vegetable Production ........................................................................................................ 16

4.3 Grading Fresh Vegetables ........................................................................................................... 16

4.4 Packing Fresh Vegetables ........................................................................................................... 17

4.5 Access to Wholesale Markets for Fresh Vegetables ................................................................... 17

4.5 Satisfaction about Facilities at the Marketplace .......................................................................... 18

4.6 Mode of Payments from Commission Agents ............................................................................ 19

4.7 Satisfaction About Commission Agents’ Behavior .................................................................... 19

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4.8 Credit from Commission Agents ................................................................................................ 20

4.9 Commission Agents’ Role in Facilitation ................................................................................... 20

4.10 Summary ................................................................................................................................... 21

Chapter 5: Commission Agents ............................................................................................................ 22

5.1 The Role of Commission Agents ................................................................................................ 22

5.2 Commission Agents’ Business Experience ................................................................................. 22

5.2 Summary ..................................................................................................................................... 26

Chapter 6: Seed Dealers ........................................................................................................................ 27

6.1 Information about Seed Dealers’ Businesses .............................................................................. 27

6.2 Seed Dealers’ Business Types and Levels .................................................................................. 27

6.3 Seed Dealers’ Sale of Varieties ................................................................................................... 28

6.4 Seed Dealers’ Source of Vegetable Seed Purchased ................................................................... 29

6.5 Seed Dealers’ Perceptions of Seed Quality ................................................................................. 30

6.6 Seed Dealers’ Promotional Methods ........................................................................................... 30

6.7 Seed Dealers’ Seed Storage, Sufficiency of Supply and Improvement Efforts .......................... 31

6.8 Seed Dealers’ Knowledge of Vegetable Seeds and Crop Production ......................................... 31

6.9 Seed Dealers’ Financial Needs ................................................................................................... 31

6.10 Summary ....................................................................................................................................... 32

Recommendations ................................................................................................................................. 34

References ............................................................................................................................................. 36

Appendices ............................................................................................................................................ 37

Appendix I: Clusters for Assessing Vegetable Value Chains .......................................................... 37

Appendix II: Area & Production Statistics of Important Vegetables in Pakistan ............................ 38

Appendix III: Questionnaire – Vegetable Value Chains Baseline Information ............................... 39

iii

List of Tables

Table # Title of Table Page #

1 Sample Distribution by Provinces and Key Value Chain Players 4 2 Proportion of Vegetables Sold by Farmers to Different Buyers 7 3 Preharvest, Harvest, and Postharvest Losses 8 4 Growers’ Perceptions for Losses Before Harvesting 9 5 Growers’ Area Allocation for Seed Production 14 6 Growers’ Area Allocation for Fresh Vegetable Production 15 7 Growers’ Level of Grading and Expected Benefits 16 8 Growers’ Packing Preferences 16 9 Growers’ Difficulties in Accessing Markets 17

10 Growers’ Satisfaction About Facilities at Wholesale Marketplaces 18 11 Growers’ Mode of Payments from Commission Agents 18 12 Vegetable Growers’ Satisfaction About Commission Agents Behavior 19 13 Vegetables Growers’ Credit Dealings with Commission Agents 19 14 Commission Agents’ Role in Facilitation 20 15 Commission Agents’ Business Association with Regulatory Bodies 21 16 Commission Agents’ Business Status 22 17 Commission Agents’ Facilitation for Vegetables Growers 22 18 Commission Agents’ Interaction with Vegetables Growers 22 19 Commission Agents’ Business Financial Sources 23 20 Commission Agents’ Financial Shortfall Management 23 21 Male and Female Labor Working for Commission Agents 23 22 Percent Cash Received as Commission 24 23 Various Activities Satisfaction of Commission Agents 24 24 Methods Used by Commission Agents to Attract Vegetable Growers 24 25 Basic Information about Seed Dealers’ Businesses 26 26 Seed Dealers’ Business Types, and Levels 27 27 Seed Dealers’ Sale of Hybrid and Open Pollinated Varieties 28 28 Mean Quantity of Hybrid and Open Pollinated Varieties sold by Seed Dealers 28 29 Seed Dealers’ Source of Vegetable Seeds 29 30 Seed Dealers’ Perceptions About Seed Related Issues 30 31 Seed Dealers’ Seed Promotional Methods 30 32 Seed Dealers’ Storage, Sufficiency of Supply and Improvement efforts 30 33 Seed Dealers’ Knowledge of Vegetable Seeds 31 34 Seed Dealers’ Financial Need Sources 31

iv

List of Figures

Figure # Title of Figure Page #

1 Data collection and grading of vegetables in the vegetable market 5

2 Interviewing commission agents at a fresh vegetable market 5

3 Location of markets where respondents were interviewed 6

4 Marketing channels in Pakistan 10

5 Marketing channels: The Case of Tomato 11

6 Inventory of vegetable market players: The Case of Tomato 12

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EXECUTIVE SUMMARY Pakistan has a complex and relatively unregulated vegetable marketing system due to the large number of vegetables grown, a diversity of production systems and limited government control. Growers, seed dealers and commission agents along with others play the major roles in the value vegetable chain that operates through more than 200 major markets in Pakistan. A survey was conducted in nine wholesale markets representative of major vegetable production areas across the country. A total of 222 respondents were interviewed, representing about 10% of the growers, seed/input dealers and commission agents operating in these districts. The four-month study started in June 2014 and mainly focused on the value chains for tomato, onion, cucumber, chili and okra.

Farmers generally grow two to five vegetables for home consumption and others are grown for cash sales at local and wholesale markets. Over a third sold their standing crops to agents before harvest to obtain quick cash, repay loans from agents and to minimize postharvest losses. Almost all farmers had preharvest losses that averaged around 25% of anticipated marketable yields. Most graded their crops to obtain higher prices, but less than half used some sort of packing material when sending produce to market. The most popular containers were plastic bags, which provide little protection. More than half of growers received credit from commission agents who not only sold their crops but also provided fertilizer, seeds, pesticides and crop management information. Many commission agents have long-term relationships with farmers and most have operated at a local level for many years. They normally charge 5% commission to both vegetable growers and buyers for their services. Despite many claiming cash shortages in their businesses, very few borrow from banks, but rather from family and friends. They were generally happy with market operations.

Seed dealers sell a wide variety of seeds besides those of vegetables, and some supply fertilizers and pesticides. The seed industry has been relatively unregulated until recently and government inspections are now more common. Unlike commission agents, seed dealers are more likely to be linked to international or national companies rather than working as local level operators. Overall, they sell more seed of open pollinated varieties—particularly for onion and tomato—rather than hybrid vegetables, which are more commonly used for off-season or protected vegetable production. However, many could not distinguish whether a variety was open pollinated or a hybrid. Most dealers obtain their seed from international or national sources but about half obtained it locally and many found problems of mixed seed or poor packaging. Their own seed storage was often not satisfactory and half indicated they had lost a significant quantity of seed in the last year due to weather damage. Many indicated financial problems in managing their businesses but most relied on informal credit sources using family and friends rather than banks.

There were many inefficiencies found within the selected vegetable value chains in Pakistan, and significant sources of losses in the preharvest and postharvest stages, as well as in critical input supplies such as seed. Some of these may be addressed by physical improvements in management, but others are institutional. There is a common problem of access to credit by key players, which limits the investments needed to improve the system. Organizing better sources of finance, and grouping and training key players will be needed to improve value chain operations.

vi

ACKNOWLEDGMENTS

This document is a result of baseline study on vegetable value chains in four provinces of Pakistan, conducted under the vegetable component of the Agricultural Innovation Program (AIP) - Pakistan. The author would like to acknowledge the United States Agency for International Development (USAID), the International Wheat and Maize Improvement Center (CIMMYT), and AVRDC – The World Vegetable Center for commissioning this study as a contribution to the field of agricultural development in general and vegetable value chains in particular. The author is also grateful to AVRDC staff members, enumerators, vegetable growers, commission agents, seed dealers and other stakeholders for their participation during the course of this study. Their generous contributions of time and the valuable information provided to survey teams is highly appreciated.

Mr. Mazullah Khan, Mr. Asrar Sarwar, Dr. Ashgar Ali, Mr. Arif Shahzad, and Mr. Mazhar Hussain Shah provided technical input at various stages of this work, and were instrumental in conceptualizing this study. The author is greatly indebted to Dr. Warwick Easdown, Dr. Pepijn Schreinemachers, Dr. Mansab Ali, and Dr. Mohammad Iqbal, who contributed reviews, critical input, editing and expertise in compiling this study. I would like to thank many others who directly or indirectly contributed to this study.

None of the opinions or comments expressed in this study are endorsed by the organizations mentioned or individuals interviewed. Factual errors or interpretations are exclusively the responsibility of the consultant, Dr. Mohammad Nasir: nasir786.2012@gmail.com

vii

List of Acronyms and Abbreviations AARI Ayub Agricultural Research Institute

ACP Agricultural Commodities Programme

AIP Agricultural Innovative Program

AMAPSGF Accelerated Microenterprise Advancement Project Small Grant Facility

ANSAB Asia Network for Sustainable Agriculture and Bio-resources

AVRDC AVRDC – The World Vegetable Center

Agents Commission Agents

CBO Community Based Organization

CIMMYT International Wheat and Maize Improvement Center

FAO Food and Agriculture Organization

FGDs Focus Group Discussions

FIAS Freight Investment Advisory Service

GDP Gross Domestic Product

GOs Government Organizations

GOP Government of Pakistan

ha Hectare

IDE International Development Enterprises (WI)

kg Kilogram

MNFSR Ministry of Food Security and Research

NARC National Agriculture Research Center

NGOs Non-Governmental Organizations

NEAT Nepal Economic, Agriculture, and Trade Activity

PARC Pakistan Agriculture Research Council

SAARC South Asian Association for Regional Cooperation

SAC SAARC Agriculture Centre

Dealers Seed Dealers

UNDP United Nations Development Programme

USAID United States Agency for International Development

Growers Vegetable Growers

WAI Weidemann and Associates, Inc.

WI Winrock International

1

Chapter 1: Introduction

1.1 Background The global consumption of vegetables (and fruits) is increasing at 4.5% per annum, which is higher than

world population growth. Sixty percent of global vegetable production comes from Asia; China and

India occupy first and second ranks, respectively. Although Pakistan is not one of the top-ranked Asian

producing countries, it does have a large domestic market for fresh vegetables (FAO, 1989 & 2002).

Fruits and vegetables contribute 12% to Pakistan’s gross domestic product (GDP). Both are cultivated

on an area of 1.24 million ha, while vegetables are cultivated on 0.39 million ha (about 2% of the

country’s cultivated area) with a total production of 6.2 million tonnes (GOP, 2012-13; FIAS, 2007).

The percentage of the total area occupied by major vegetables: tomato (16%), turnip (9%), spinach

(7%), carrot (7%), cauliflower (7%), and radish (5%). Minor vegetables include okra (4%), squash

(3%), brinjal (eggplant; 3%), bitter gourd (2%), bottle gourd (2%), and cabbage (2%), with a combined

total of 16%. The remaining 33% is accounted for by other vegetables (GOP, 2013-14).

Pakistan has a complex vegetable marketing system due to the large number of vegetables grown, and

a diversity of production systems that encompass traditional, off-season (protected) and off-season

(natural) production in different parts of the country. Approximately 203 regulated and un-regulated

markets in the country also make the system more complex. The system faces many deficiencies. These

include a lack of cold storage (without any integrated cold chains), high transport costs, price

fluctuations, the manipulative role of commission agents/middlemen, poor marketing infrastructure,

and high pre- and postharvest losses (Bourne, 1986; Khan et al., 2008).

The traditional market system has prevailed in the country for many decades, and this includes assembly

markets, wholesale markets, and terminal markets. In this system, the major market players are

vegetable growers, input dealers/seed dealers, contractors, commission agents, wholesalers, inter-

market traders/retailers, processors and exporters. The majority of growers have little influence in this

value/supply chain, while agents and dealers dominate the chain since they play more than one role in

the marketing system. For example, seed and input dealers supply vegetable/fruits/flowers/seeds and/or

other inputs including fertilizers and pesticides (weedicides, fungicides, etc.) Traders and Pharia (a

specific person who operates in close collaboration with commission agents in wholesale markets in

South Asian countries) also play an important role in vegetable value chains. Similarly, agents also play

the additional roles of contractors, wholesalers, traders, processors or exporters (SAARC Agriculture

Centre, 2014). Growers, agents, and dealers were selected for this value chain survey as they are the

key players in the system.

2

1.2 Objectives and Scope

The general objective of the study was to determine basic information regarding the activities of

vegetable value chains, and to understand their functioning in the project areas. The following were the

specific objectives:

To highlight existing vegetable marketing practices and price mechanisms

To document the preharvest, harvest, and postharvest losses of vegetables

To identify trends in areas grown and vegetable production constraints in different ecologies of

Pakistan

To understand the role of commission agents in formal and informal vegetable markets

To identify the vegetable seed marketing system and the role of seed dealers in supporting

vegetable growers

1.3 Presentation Plan

Information was collected from three key players in vegetable value chains: vegetable growers

(growers), commission agents (agents), and vegetable seed dealers (dealers). Results will be presented

for each of these groups, and an overview of growers’ vegetable handling practices will precede a

discussion of the activities of the other value chain players.

3

Chapter 2: Methodology

2.1 Research Methodology The AIP vegetable component has three sub-components: protected cultivation of vegetables, improved

mungbean production, and vegetable value chains. This baseline study was conducted to provide a

preliminary understanding of key vegetable value chains using a questionnaire translated into Urdu.

The questionnaire consisted of module 1 [vegetable growers (growers)], module 2 [commission agents

(agents)], and module 3 [seed dealers (dealers)]. Growers were those who are growing fresh vegetables

(e.g. onion, tomato, chilies, okra, and peas) and/or vegetable seed growers in the project areas. Agents

facilitate growers in selling their vegetables through an open bidding process (in which they are

specialized) at their respective wholesale markets. They do not conduct bidding for other commodities.

However, they assist vegetable growers in facilitating the supply of inputs (e.g. seed and fertilizers) and

act as lending agents. Dealers are those who mainly sell vegetable seed to the growers, though they also

may deal in fertilizers and pesticides.

These modules were pretested in the field and amended accordingly. Ten enumerators were selected

throughout the country. Their selection was based on familiarity with their respective wholesale market

areas and experience in conducting formal surveys. One enumerator each was selected from

Bahawalpur, Gujranwala, Faisalabad, Kunri, and Karachi areas, whereas two each were selected from

Swat and Quetta areas. All of the enumerators were provided with training in direct one-on-one

interview sessions with the consultant at their respective wholesale market locations, except for those

who collected data sets at the Kunri and Karachi wholesale markets. Their training sessions were

conducted over extended telephone conversations. The questionnaires were sent to them in advance,

and they were asked to go through them. Each question was explained, clarified, and discussed over the

phone. All enumerators had between 9 and 16 years’ experience in the field of social science research.

All enumerators were sent to their respective wholesale markets to fill in three schedules to pre-test

them, which were then discussed. The schedules were modified, improved, and finalized after

pretesting. Data for growers, agents, and dealers were collected from fresh vegetable markets. However,

some seed dealers were interviewed at their businesses, which were located in the centers of cities or

towns. The distribution of the respondents is provided in Table 1. The data was edited and cleaned after

entering in SPSS and Microsoft Excel Sheets for analysis.

4

Table 1: Distribution of Key Value Chain Players by Province

Provinces

Vegetable Value Chain Players Total Vegetable

Growers Commission

Agents Seed Dealers

Balochistan 5 5 5 15

KPK 20 21 21 62

Punjab 34 37 36 107

Sindh 15 13 10 38

Pakistan 74 76 72 222

Vegetable production in Pakistan is highly diverse and localized in pockets of production, and the work

of this sub-project is focused on six production clusters of locally similar vegetable value chain activities

including seed production. These clusters are situated in different regions and there may be more than

one cluster per province. For example, Cluster 3 (Chenab) is located in the central Punjab rice belt in

the Sheikhupura, Chiniot and Faisalabad districts, while Cluster 4 (ARCO) is in the south Punjab cotton

belt in the Pakpattan district (Annex I). The study focused on five major vegetables; tomato, onion,

chili, okra and peas, but these vegetables are not grown in all clusters. The selection of respondents

sought to be representative of activities within each cluster, but because of the diversity of production

systems, the results cannot be generalized to the whole country. Instead, the results need to be seen as

generalizations across a series of six localized case studies.

Approximately 2000 growers, agents, and dealers operate in the targeted clusters and 222 respondents

were randomly selected for data collection. Agent and dealer respondents were selected from nine

markets; either from one of the eight large wholesale provincial fresh vegetable markets or from the 20

smaller wholesale markets operating within the target clusters.

Important information assessed included marketing channels, vegetable prices, the varieties of open

pollinated and hybrid vegetables used, and sources of seed. The handling of vegetable seed and fresh

produce preharvest, during harvest, and postharvest was assessed. Activities evaluated included

harvesting and picking, grading, packing, transporting, commissioning / bidding, the mode of payment,

and financial assistance available to different actors in the value chains.

5

Figure 1: Grading vegetables in vegetable market

Figure 2: Interviewing commission agents at a fresh vegetable market

2.2 Survey Sites

2.2.1 Administrative Locations in Pakistan

The AVRDC project areas exist in all four provinces of Pakistan and there are almost 100 regulated

wholesale markets are in these areas. Out of these, the nine markets selected for study were Quetta

(Balochistan); Dera Ismail Khan, Swat, and Tamirgara (KP); Bahawalpur, Gujranwala, Faisalabad, and

Lahore (Punjab); Karachi, Kunri (Sindh). These locations are shown in Figure 3.

6

Figure 3. Location of markets where respondents were interviewed

2.2.2 Basic Data Information and Enumerators’ Capacity Building

The nine markets selected were widely spaced out across the country and there was only a short time

for data collection. The enumerators were provided with basic training on the key concepts of vegetable

value chains and the variables included in the questionnaire. The purpose of this training was to

harmonize the level of understanding of the enumerators.

2.3 Time Frame and Study Team

The baseline study started in June 2014 and ran for a period of four months. The questionnaire was

formulated, pretested, revised, and translated into Urdu in five weeks. The enumerators’ selection,

training, and other logistics took another four weeks. The data collection operation was carried out in

the field for another four weeks. The remaining time was spent in data entry, editing, cleaning, and

analyzing the information.

All the enumerators had some level of understanding of interviewing. They came from areas close to

where the fresh vegetable markets were located to address the issue of local dialects / languages, and

familiarity with the prevailing circumstances in and around these remote markets. The enumerators’

educational backgrounds ranged from 10 years of schooling to the MSc level.

7

2.4 Data Analyses and Results Presentation

The data were entered, edited, cleaned and analyzed using SPSS and Microsoft Excel Software. The

results presented in the subsequent chapters focus on vegetable growers, commission agents, and seed

dealers.

Chapter 3: Farmers’ Marketing Practices and Perceived Sources of Losses

3.1 Where and How Vegetables are Sold

In Pakistan, almost all vegetable growers plant more than one vegetable, grow crops over several

seasons, and may use several different types of cultivation method. In the AVRDC project areas,

farmers generally grow two to five vegetables for home consumption and others are grown for cash

sales at local and wholesale markets. Results presented in Table 2 indicate that farmers sold their

vegetables in diverse locations including in the field before harvest, at village shops and local markets,

in the nearest wholesale vegetable markets and at distant wholesale vegetable markets. The percentages

add up to 175, indicating that three-quarters of farmers sold their produce to more than one outlet.

Local markets were the most popular sales outlet for growers with just under two-thirds selling there.

The next most popular outlet for more than half were the nearest wholesale markets. Almost a fifth sold

to distant wholesale markets, which may provide better market prices than local outlets.

Over a third sold their crops before harvest while they were still standing in the fields. The main reasons

for preharvest selling of vegetables were repayment of credit taken from commission agents, to

minimize the risk of late pest and disease damage, to get early cash payment, or to solve the difficulty

of getting timely labor for harvesting.

Generally, growers with the smallest landholdings sold vegetables to their village shop, as they may

have had a very limited amount of produce to sell, or did not anticipate recovering the transportation

costs to local or wholesale markets given abrupt fluctuations in vegetables prices. However the very

low percentage of those surveyed who admitted selling to a local village shop may have been because

interviews were conducted at wholesale markets, which biased results towards larger growers and those

who were prepared to travel considerable distances to sell their crops.

8

Table 2: Proportion of Vegetables Sold by Farmers to Different Buyers

Vegetables Selling Information Yes (%)

Sold Vegetables at Local Market 63

Sold Vegetables at Nearest Wholesale Market 56

Sold Vegetables Before Harvest 36

Sold Vegetables at Long Distance Wholesale Market 19

Sold Vegetables at Village Shop 1

3.2 Preharvest, Harvest, and Postharvest Losses

Vegetables have to go through several stages before reaching the hands of consumers, and the quality

of the final product can be affected by physical, biological, and social factors. For example, selection

of varieties (hybrid or open pollinated), deviation from the right planting time, and the decision to start

harvesting are some of the important factors determined by the vegetable grower. Pests and diseases,

poor weather, and labor available for harvesting can also affect vegetable yields.

An effort has been made to understand the farmers’ actions and strategy in minimizing vegetable losses

before, during, and after harvest. Growers attributed preharvest losses to several causes, while harvest

and postharvest losses were primarily attributed to labor issues. The information is presented in Tables

3 and 4.

Table 3: Preharvest, Harvest and Postharvest Losses

When vegetable losses occur Percent of farmers

acknowledging losses

Estimated percent loss

of expected yield

Before harvest* 97 25

During harvest 74 5

After harvest 18 34

NOTE: The percent responses (in each row) are based on a total number of 74 observations. The column totals will not add up to 100 due to multiple responses by the respondents.

Figure 4. Packing tomatoes on the roadside in Samaro, Sindh.

9

Almost all farmers admitted to losses that occurred before harvest and they estimated these at an average

of 25% loss of anticipated yields. These losses are comparable to those estimated in earlier studies

(PHDEB, 2007). Perhaps because they felt they had more control over these losses, they were also able

to attribute the main causes (Table 4). In general, the major causes of preharvest losses are diseases,

pests, natural disasters, market price fluctuations, lack of labor, and bad weather conditions during

growing and harvesting (Khan et al., 2008 and Zaldivar, 1991). Almost three-quarters of growers (74%)

also perceived losses during harvesting, and they mainly attributed this to the labor involved for the

purpose. It was interesting to note that a small number of farmers (18%) indicated vegetable losses

immediately after harvesting and before transportation to markets. Transportation losses are elaborated

in other sections.

Table 4: Growers’ Perceptions for Losses Before Harvesting**

Vegetables losses due to Percent of farmers

acknowledging losses

Estimated percent loss

of expected yield

Diseases 75 15

Bad weather 75 23

Insects / pests 70 15

Disasters 66 36

Low price 44 12

Lack of labor 34 18

NOTE: The percent responses (in each row) are based on a total number of 74 observations. The column totals will not add up to 100 due to multiple responses / activities of the respondents.** Questions on topics in column 1 were asked independently and separately.

Figure 5. Packing overripe and ungraded tomatoes in wooden crates in Hazar Ganji wholesale market in Quetta, Balochistan.

10

The most commonly recognized sources of preharvest losses were insect pests and diseases along with

poor weather conditions, market uncertainties and natural disasters. Natural disasters were regarded

almost as common a cause of losses as from insects and diseases combined. There also may be some

overlap in definitions of bad weather or disasters. One storm may be a disaster for one grower, but just

bad weather for his neighbor. Poor prices were recognized as a major source of losses, and 12% of crops

were not sent to market. A third of farmers blamed a lack of labor for losses and this exceeded the

estimates for losses from either insects or disease. However, it is much easier to estimate losses in the

field from a lack of labor at the right time. It is much harder to estimate losses due to insects or diseases

that may have occurred early in the crop. Overall, the results indicate a very high degree of risk involved

in vegetable production from factors that many farmers may believe are beyond their control.

3.3MarketingChannels

3.3.1 Markets and Sales Channels

The agro-climatic conditions of Pakistan range from tropical to temperate, allowing the production of

40 different kinds of vegetables across the country (Raja and Khokhar, 1993). These vegetables are sold

in formal and informal markets and the marketing system is complex and problematic for farmers. The

number of vegetables grown, local geography and sociopolitical situations in the markets are also

important. Moreover, the traditional marketing system has poor farm-to-market infrastructure, improper

handling, high transportation costs, lack of refrigerated transportation, the high cost of packing

materials, and poor grading and packing. Other important factors include low prices and fluctuations in

market prices, poor access to market information, preharvest or postharvest technologies, and limited

access to financial resources. Unfortunately, the majority of these factors are biased against the interests

of vegetable growers, particularly to smallholder farmers with less than 5 ha (Bourne, 1986 and Kader,

1992).

Interviews were conducted with respondents in local, wholesale, and terminal markets. The vast

majority of vegetable produce goes through a complex series of steps involving vegetable growers,

contractors, commission agents, wholesalers, inter-market traders / retailers, processors, and exporters

(Figure 6). These intermediaries’ dominate the marketing system, which leave little scope of

intervention for vegetable growers to directly deal with consumers, as the example of tomato shows in

Figures 7 and 8.

11

Figure 6: Marketing Channels in Pakistan

12

Figure 7: Marketing Channels: The Case of Tomato

1%

CA Wholesale

Other Markets

Commission agent

17% 15% 67%

100%

Local

2%

22% 74% 2%

Wholesaler

99%

Channel-1 Growers

Retailers at

nationalm

Tomato Consumers (Fresh, Products)

Product

Product wholesaler

Processors

1%

Channel-2 Growers

Source: SAARC Agricultural Center (2014)

13

Figure 8: Inventory of Vegetables Market Players: The Case of Tomato

Source: SAARC Agricultural Center (2014)

Consumers

Tomato

Consumption

Retail of fresh &

processed tom

ato

Collection &

transportation

Production Inputs

Retailer Product Retailer

Wholesaler Product wholesaler

Commission agents Processors

Farmer

Input suppliers seed, fertilizers, pesticides

VC Operators

Management of auction in market

Tomato processing into tomato products

Market infrastructure

Disease, pest control, training, technical advice

Planting materials, fertilizers, training

District Market Committee

PHDEB etc.

Pakistan Ag Marketing Department

PARC & Provincial Ag Research Department

Punjab Ag Extension Department

VC Promoters Major VC Functions

14

3.3.2 Market Determinants

Many actors contribute to the marketing and pricing of vegetables. Vegetables prices are mainly

determined based on supply and demand of produce. Organizers of the markets and traders are supposed

to provide places to conduct business, regulate trade, and administer vegetable markets, but these market

intermediaries’ can tilt prices in their favor by creating artificial supply gaps. Wholesale markets are

operated by commission agents’ associations, which are governed by a president and general secretary.

The produce is sold to local shopkeepers, contractors, retailers, and even directly to consumers (Sharif

et al., 1998).

This system does not operate as well as it could. There are supply issues with bulk production of

specific vegetables for short periods of the year, infrastructure issues such as a lack of cold storage and

a lack of market price information for all players. While the supply of major inputs into vegetable

production such as fertilizers have been stable over time due to government control, vegetable growers

have to cope with highly fluctuating prices for their produce, compounded by competition from imports.

3.4 Summary

This chapter provided some basic information about vegetable growers in project areas related to the

production of onion, tomato, chilies, okra and peas over the last year. The main conclusions and results

were:

One-third of the growers do not manage the harvesting of their vegetables but sell them to

agents while the crop is still in the field to obtain quick cash, repay loans from agents, minimize

the risk of damage from pests, diseases, and weather, and save having to deal with labor issues.

Most growers at large wholesale markets also sold their vegetables at local markets or at the

nearest wholesale markets.

An quarter of all marketable yield losses are estimated by growers to occur preharvest due to

diseases, insects/pests, a lack of labor for harvesting, and bad weather conditions.

The vegetable marketing system is complex, due to the diversity and seasonality of vegetable

production, the perishability of the products, the many players involved, and various

infrastructure, information and policy issues.

15

Chapter 4: Vegetable Growers

4.1 Status of Vegetable Seed Production

Growers were asked about the vegetable seed they used. Most farmers (62%) depended on external

sources of seed for the next growing season. Any hybrids used came from external sources. Another

reason for the reliance on external sources could be a lack of pure and high quality seed of open

pollinated varieties for growers’ own production. However, a significant number of farmers grew their

own seed of the target crops. Average areas of seed production for each farmer are shown in Table 5:

Table 5: Growers’ Area Allocation for Seed Production

Vegetables % of farmers growing their own seed

Area under seed production (kanals)

Onion 19 2

Okra 15 4

Tomato 14 2

Chilies 7 8

NOTE: The percent responses (in each row) are based on a total number of 74 observations. The column totals will not add up to 100 due to multiple responses / activities of the respondents. 1 Kanal = 490 square meters approximately.

Growers were asked about their own seed production for tomato, onion, chilies, and okra. These

vegetables were grown in the cluster areas for seed production. Onion growers were more dependent

on producing their own seed than chili growers. This may have been due to a higher reliance on hybrid

chili varieties. While over 60% of growers relied on external seed sources, more than a third produced

their own seed. However, the areas grown were small (1000 – 4000 m2) despite the growers having a

range of small, medium and large holdings; this indicates that seed was being produced more for

meeting personal or perhaps local needs than to supply any national market. Other reasons for the lack

of interest and the small amount of local seed production could be a lack of high yielding open pollinated

vegetable varieties, a lack of expertise in vegetable seed production, poorly developed markets for open

pollinated vegetable seed and low prices for seed.

The seed area under chilies was highest at 8 kanals (0.4 ha), which may be due to localized seed

production in one pocket of Sind province where chili is a major crop. Another reason is a better

marketing system due to collaboration between several private-public agencies in that part of the

country. This indicates the potential to increase national seed production of other popular vegetables.

Table 5 reveals that all these vegetables have great scope for seed production in the country, while

cucumber has highest scope among them in terms of highest seed production.

16

4.2 Fresh Vegetable Production

Almost all vegetable growers interviewed grew fresh vegetables or vegetable seeds, but not usually on

the same farm or at the same time. Some grew fresh vegetables, and others grew vegetables for seed

only. The areas of the target vegetables grown were similar on farms throughout the country, and fell

within a narrow range of 12-16 kanals (about 0.6 – 0.8 ha). Based on the available cultivable area for

vegetables across the nation, most vegetable professionals believe there is potential to increase the

productivity of fresh vegetables without making a major shift in the existing cropping systems but with

increased use of IPM and improved crop management techniques. Most farmers interviewed also

believed that vegetable production could be expanded to other areas of the country depending upon the

suitability of land and market opportunities. The question remains whether the risks in vegetable

production shown in Table 4 are so high that they encourage growers to produce only small areas of

any one crop to spread out their risks. The production of fresh vegetables along with areas under various

vegetables are presented in Table 6.

Table 6: Growers’ Area Allocation for Fresh Vegetable Production

Vegetables % of growers producing

fresh vegetables

area under fresh vegetables

(kanals)

Tomato 59 15

Okra 56 12

Onion 55 16

Chilies 52 13

NOTE: The percent responses (in each row) are based on a total number of 74 observations. Column totals will not add up to 100 due to multiple responses / activities of the respondents. 1 Kanal = 490 square meters approximately.

4.3 Grading Fresh Vegetables Farmers were asked about their vegetable grading, and the levels of grades. Eighty-two percent of

growers graded their produce. Among this group, 84 and 81% graded into first, and second classes

respectively. First class meant that only high quality produce was separated for transport to the markets,

and the remainder was not sold. However, it was consumed locally by household members or by the

community. With second-class grading, the remaining produce was sold, but at a lower price. Seventy-

seven percent of farmers also indicated in their responses that grading brought them high prices. Results

in Table 7 indicate that a large majority of vegetable growers were aware of this important value chain

activity, and were using it to fetch better prices. However, considering that the sample of growers

interviewed were those who could be found in large wholesale markets where there would be the best

selection of buyers available, this preference for grading is not unexpected.

17

Table 7: Growers’ Level of Grading and Expected Benefits Growers Information about Grading Yes (%)

Graded their Vegetables 82

Graded their Vegetables into Class 1 84

Graded their Vegetables into Class 2 81

Graded their Vegetables into Class 3 21

Graded their Vegetables into Class 4 3

Obtained Higher Prices due to Grading 77

4.4 Packing Fresh Vegetables

Vegetable packing is one of the important value chain postharvest activities. Various packing materials

were in use for this purpose. These included plastic boxes, plastic sheets, plastic bags, plastic nets,

wooden boxes, and cardboard boxes (Table 8). Some sort of plastic container was the most popular

option for packing, particularly plastic bags (44%). Wooden boxes were the next most popular packing

method (38%). The majority of packing methods used provided very little protection to the produce

during transport and handling. There may be significant potential to make big improvements to packing

practices, as only 10% is packed into plastic boxes, which are likely to provide the most protection. For

the majority of farmers who sold at wholesale or local markets rather than selling their crops in the

field, better packing methods and a focus on improving this aspect of postharvest technology could

make a significant difference to their incomes.

Table 8: Growers’ Packing Preferences

Packing Information Yes (%)

Packed in Plastic Bags 44

Packed in Wooden Boxes 38

Packed in Plastic Sheets 27

Packed in Plastic Nets 25

Packed in Cardboard Boxes 22

Packed in Plastic Boxes 10

NOTE: The percent responses (in each row) are based on a total number of 74 observations. The column totals will not add up to 100 due to multiple responses / activities of the respondents. This applies to all subsequent tables in this chapter unless specified otherwise.

4.5 Access to Wholesale Markets for Fresh Vegetables

The respondents were asked about any difficulties in accessing wholesale markets (Table 9). A majority

63% indicated that they had difficulty in accessing the markets. The main problems were a lack of

finance, poor transportation, and a lack of time after harvesting vegetables to transport them to the

markets. This may be why over a third of farmers leave not only the marketing, but also the harvesting,

18

of their crops to others. Such difficulties make it less likely that farmers will deal with consumers or

buyers directly and more likely that they will not receive adequate returns for their investment in

growing the crops.

Table 9: Growers’ Difficulties in Accessing Markets

Access to Markets Yes (%)

Difficulty in Accessing the Markets due to Weather 63

Financial Difficulty in Accessing the Markets 37

Transportation Difficulty in Accessing the Markets 30

Lack of Time Difficulty in Accessing the Markets 14

Other Difficulties in Accessing the Markets 1

The majority indicated that weather hinders vegetable transportation to markets. Weather also causes

significant losses before harvest, since about two-thirds of growers claimed that weather disasters before

harvest reduced their expected yields by around 36% and a third claimed that a lack of labor at harvest

reduced yields by 18% (Table 4). Clearly, weather has a major impact on returns both before and after

harvest. Rain that makes roads impassable and reduce access to markets at a critical time can have a

big impact on returns. Perhaps farmers do not feel ownership of that impact once the produce leaves

their farm, or conceptualize that impact as an on-farm labor problem.

4.5 Satisfaction about Facilities at the Marketplace

Table 10 shows respondents’ approval about the facilities they have to use at the marketplace. A large

majority (85-94%) indicated satisfaction in regard with the essential procedures / facilities available to

them at the wholesale market. They were happy about the space, auction procedures and getting

reasonable prices. However, a considerable proportion were dissatisfied with the weighing procedures

available in the vegetable markets.

19

Table 10: Growers’ Satisfaction about Facilities at Wholesale Marketplaces

Vegetable Growers Information Yes (%)

Satisfaction with Overall Facilities Available at the Marketplace 94

Satisfaction about Space at the Marketplace 85

Satisfaction about Auction Procedure at the Marketplace 89

Satisfaction about Getting a Reasonable Price at the Marketplace 79

Satisfaction about Weight (Scale) Procedures at the Marketplace 25

Satisfaction about Getting the Worst Price at the Marketplace 8

Satisfaction about Getting a Desired Price at the Marketplace 4

4.6 Mode of Payments from Commission Agents

The vegetable growers were asked about the mode of payments when they bring their produce into the

wholesale markets. Most growers received cash upon the sale of their vegetables. A small group of

growers (19%) used the option of credit (part or in full) obtained from the commission agents. This

means some farmers made partial repayment of loans from the agents, while some took part payment

of total payable cash and left the remaining amount for later collection. A similar percentage of agents

and growers were able to make transactions at the time they wanted. Table 11 provides information

about the mode of payments between growers and agents.

Table 11: Growers’ Mode of Payments from Commission Agents

Mode of Payments Yes (%)

Received Cash Payment (Full or Part) 75

Used Credit Facility (Full or Part) 19

Received Payment on Their Own Will 11

Received Payment at Commission Agents’ Will 10

4.7 Satisfaction About Commission Agents’ Behavior

Overall results reveal that a significant percentage of sample farmers were satisfied when dealing with

commission agents in the markets. The question of their satisfaction was bifurcated to probe the role

of commission agents in the fresh vegetable market. Among the respondents 94, 88, and 82 %

reported the commission agent’s personal behavior, vegetable sale behavior, and cash payment

behavior as positive (Table 12).

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Table 12: Vegetable Growers’ Satisfaction about Commission Agents’ Behavior

Satisfied with Commission Agents’ Behavior Yes (%)

Overall Behavior 94

Personal Behavior 94

Vegetable Sale Behavior 88

Cash Payment Behavior 82

Other Behavior 3

4.8 Credit from Commission Agents

Table 13 provides information about credit dealings between growers and commission agents. In some

cases, these relationships had been going for up to 30 years. Almost two-thirds of growers had received

credit from agents during recent years. About a fifth of growers (21%) were free from any outstanding

debt, and repaid full credit received. However, about two-thirds were not able to pay back their loans

to agents, an indicator of their poor household status. About half repaid their credit in part or in full

with the proceeds of the sale of their vegetables. Only 3% of growers defaulted, but this may be under-

reported because it is considered to have negative social connotations.

Table 13: Vegetables Growers’ Credit Dealings with Commission Agents

Growers’ Credit Dealings Yes (%)

Received Credit from Agents 64

Returned Credit to Agents 21

Returned Credit with Proceeds of Vegetables to Agents 49

Who Did Not Return Credit to Agents 3

Returned Credit Using Other Ways 0

4.9 Commission Agents’ Role in Facilitation

The commission agents play many roles in vegetable markets (Table 14). They make a living by

facilitating the sale of produce for growers. They also provide technical information to vegetable

growers, help to meet their household cash requirements, and can provide seed, new/improved varieties,

fertilizers, and pesticides. Most vegetable growers relied on them for more than just selling their

produce—in particular, for credit and inputs to grow their next crop.

21

Table 14: Commission Agents’ Role in Facilitation

What Assistance Growers Sought from Commission Agents Yes (%)

Obtained Assistance from Commission Agents 71 Cash 53 Fertilizers 40 Local Seeds 36 New/Improved Varieties Seeds 33 Pesticide Information 25 Vegetable Related Information 8 Other Matters 1

4.10 Summary This chapter provided information about vegetable growers’ production of seed and fresh produce of

the five target crops, and their interaction with commission agents in wholesale markets.

Most growers depended on external seed sources instead of their own farms mainly because of

the use of hybrids and a lack of high quality open pollinated varieties and confidence in their

performance, as well as a lack of expertise in seed production.

Almost all growers planted the target vegetables for fresh production. However, half also used

some of them for household consumption, and the remaining half were sold as a marketable

surplus.

The great majority of growers graded their vegetables and this brought better prices for them.

The growers used different types of packing material for different vegetables. For example, the

packing material used for onion or tomato was not used for leafy vegetables.

Less than half of growers used some sort of packing material while transporting vegetables to

markets. There is scope for increasing growers’ income by adopting improved methods to pack

vegetables for transport.

Growers faced several difficulties in transporting their vegetables to the markets. These include

high transport cost, a lack of appropriate transport facilities, and a lack of finance at the time of

harvesting.

Most growers indicated their satisfaction with the operations of wholesale markets, but all the

growers interviewed were also selling in wholesale markets.

Most growers were paid cash after the sale of their vegetables, and were happy with the agents’

behavior.

More than half of growers received credit from agents, which was repaid after selling their

vegetables at the market.

Agents not only sold the growers’ crops but they also provided credit, fertilizer, seeds,

pesticides and information to growers for their next crops.

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Chapter 5: Commission Agents

5.1 The Role of Commission Agents In Pakistan, vegetable growers sell their produce at several types of markets. Wholesale markets

operating in towns and cities are among the most important, and most growers transport their fresh

vegetables to sell at these venues. The vegetables are sold to the retailers (or sometimes to consumers

directly) in a process of open bidding. Commission agents play a vital role in managing this process.

The commission agents receive a percent cash amount from sellers for their services, termed as a

commission fee. This chapter provides a summary of their roles in facilitating the supply of fresh

vegetables from farm gate to consumers.

Table 15 and 16 give basic information about agents and their businesses. Various types of private and

public bodies exist in wholesale vegetable markets. These bodies assist stakeholders (including agents

and growers) in doing business at the markets. Almost all agents are registered with at least one such

body, while some of agents have registration with more than one body. For example, 72% of agents

were registered with one of the major organizations of the wholesale market, and 65% of agents were

registered with an additional market body. Almost all agents were associated with one organization,

namely “Anjuman Arthian Sabzi Mandi” of a particular city/town.

Table 15: Commission Agents’ Business Association with Regulatory Bodies

Registration Status Yes (%)

Business Registration 72

Any Other Organization Registration 65

NOTE: The percent responses (in each row) are based on a total number of 76 observations. The column totals will not add up to 100 due to multiple responses / activities of the respondents. Unless indicated otherwise this applies to all other tables in this chapter.

5.2CommissionAgents’BusinessExperienceCommission agents had between 4 and 55 years of experience, and Table 16 shows that this length of

experience in the business indirectly indicates the profitability and viability of the commissioning

business.

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Table 16: Commission Agents’ Business Experiences

Experience Status Minimum (years) Maximum (years) Mean (years)

Business Experience (BE) 4 55 21

BE at the same premises 3 55 14

These agents operate at several levels. Table 17 shows that most operate locally, about half operate

between districts, about a fifth between provinces, but only a small number worked nationally and

internationally.

Table 17: Commission Agents’ Business Status

Business Status YES (%)

Local Business 85

Inter-district Business 55

Inter-provincial Business 18

International Business 7

Table 18 shows that the commission agents help vegetable growers in several ways when they visit

wholesale markets. These include sanitation and resting facilities while they are waiting, and space to

put their vegetables. While the agents provide satisfactory facilities to growers in general, proper space

for sanitation purposes was reported to be below standard.

Table 18: Commission Agents’ Facilitation for Vegetables Growers

Facilities YES (%)

Proper Space for Vegetable Growers 84

Proper Space for Sale of Produce 68

Proper Space for Sanitation 36

Table 19 shows that agents maintain regular formal and informal contacts with growers. The fact that

almost a third of them are related to each other suggests another source of bias in the selection of farmers

to interview who are visiting wholesale markets. It may be that because they are relatives they are more

likely to be given space, credit and to use the wholesale markets rather than sell into local markets.

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Table 19: Commission Agents’ Interaction with Vegetables Growers

Contacts with Vegetable Growers YES (%)

Contact with Vegetables Growers 93

Personal Contact with Vegetables Growers 77

Mobile Contact with Vegetables Growers 68

Friends and Family Contact with Vegetables Growers 31

Any Other Kind of Contact with Vegetables Growers 3

The agents were asked about the source of cash needed to run their businesses. Most (80%) reported

cash shortages, but almost the same percentage relied on their own savings. Table 20 shows that only

12% were using bank credit facilities. This may mean that the commission businesses are mostly small

and local, with little incentive to expand or to seek outside financial assistance to do so. As Table 21

shows, when they have a financial shortfall, they are more likely to obtain cash from family or friends

than from a bank.

Table 20: Commission Agents’ Business Financial Sources

Business Financial Sources YES (%)

Owners’ Own Assets / Cash 81

Friends’ Assets / Cash 16

Banks’ Credit Facility 12

Other Financial Sources 1

Table 21: Commission Agents’ Financial Shortfall Management

Business Financial Shortfall Management YES (%)

Fulfill Need from Friends/Family 54

Fulfill Need from Bank 18

Fulfill Need from Personal Borrowings 15

Fulfill Need from Other Financial Sources 4

The commission agents were asked about what role female labor played in their business. They said

that female labor is not in demand in the commissioning business, and only 1% indicated the possibility

of employing women. A similar picture was evident from Table 22, which shows that most labor is

provided by temporary male workers and virtually no women are employed. Table 23 provides the

percentage of cash received as commission for male and female labor.

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Table 22: Male and Female Labor Working for Commission Agents

Male and Female Labor Minimum (no.) Maximum (no.) Mean (no.)

Permanent Males Working 1 10 3

Permanent Females Working 2 2 2*

Temporary Males Working 3 3 15

Temporary Females Working 1 1 1*

NOTE: The percent responses (in each row) are based on a total number of 76 observations. *based on 1 observation only.

Table 23: Percent Cash Received as Commission

Male and Female Labor Minimum (no.) Maximum (no.) Mean (no.)

From Sellers 0 10 5

From Buyers 0 10 5

NOTE: The percent responses (in each row) are based on a total number of 76 observations. This table indicates the percent cash as commission from sellers and buyers, which provided same (i.e. 5%) amount.

Table 24 shows satisfaction of commission agents regarding various administrative activities of the

wholesale market. They showed a reasonable level of satisfaction with these committees, except for the

district administration and price control committees.

Table 24: Commission Agents’ Satisfaction with Various Activities

Satisfaction with Various Activities YES (%)

Market Committee 61

Administration / Management 61

Amount of Commission 59

District Administration 39

Price Control Committee 22

Commission agents need to attract customers to pay their commission fees and to stay in business. Table

25 indicates the various methods used by commission agents to attract vegetable growers. Cash

incentives are the most important, followed by supplying seed or fertilizers.

Table 25: Methods Used by Commission Agents to Attract Vegetable Growers

Methods Used to Attract Vegetable Growers YES (%)

Offering Cash Incentives 76

Supplying Seed / Fertilizers 62

Offering Other Incentives 18

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5.2 Summary

This chapter provides information about commission agents operating in the AVRDC project areas

based on interviews with 76 agents. This included the role of agents, commission fees, their financial

sources along with shortfalls, and their mode of interaction with growers, which are summarized below:

Most agents operating at the local levels have been in business for many years and were

registered with one or more market bodies that assist growers and agents.

A high level of formal contact existed between agents and growers including personal, family,

and telephone communications.

Most agents indicated a cash shortage for their businesses, but very few borrowed from banks,

preferring to borrow from family and friends.

Agents charged 5% commission from growers and vegetables buyers in fees.

Agents indicated a high level of satisfaction with local administration/management, market

committees, and the levels of commission fees paid to them, but were less satisfied with district

administration and price control committees.

Agents used various methods to attract growers, which include offering cash incentives, and

supplying seed and fertilizers.

27

Chapter 6: Seed Dealers

6.1 Information about Seed Dealers’ Businesses

Quality seed is essential for good production of vegetables and field crops. Farmers use traditional

home-kept seed, improved, certified, and hybrid seed. Because there is a lack of quality seed available

and malpractice in the seed industry further limits the quality of the seed on offer, many farmers still

rely on keeping their own seed. The seed business in Pakistan generally has been operated with loose

monitoring and government regulation. Only in Punjab province have legal requirements been followed

to any significant extent. In 2015, the Government of Pakistan amended the 1976 Seed Act to invigorate

the seed industry and improve legal compliance. All provincial governments are now trying to

institutionalize the seed business, and government inspectors are now making regular visits to inspect

dealers’ businesses. About two-thirds of the dealers had been inspected by the government (Table 26).

However, less than a third have registered their businesses and about this same percentage said that a

permit is needed to sell seeds.

Table 26: Basic Information about Seed Dealers’ Businesses

Seed Dealers Information Yes (%)

Business Inspected by Any Government Agency 68

Seed Sale Permit Required 32

Business Registered 29

Seed Sale Permit Issued 23

NOTE: The percent responses (in each row) are based on 72 interviews. The column totals will not add up to 100 due to multiple responses / activities of the respondents. This applies to all other tables in this chapter unless otherwise specified.

6.2 Seed Dealers’ Business Types and Levels

Table 27 gives information about dealers’ businesses and the levels at which they operate. Most sold

vegetable seed, about half sold fodder seed, and more than a third sold crop seeds, and they sold

relatively similar percentages of hybrid or open pollinated varieties. Seed dealers were very different in

some ways from commission agents. The majority also operate at the international level rather than just

at the local level and are importing quality seed from different countries to sell across Pakistan. This is

different from the commission agents, who tend to be more focused at the local market level.

28

Table 27: Seed Dealers’ Business Types and Levels

Types of Seed sales conducted Yes (%)

CROP TYPES Vegetables 87

Crops 39

Fodder 51

SALES LEVEL Local Level 51

National Level 56

International Level 63

SEED TYPES Hybrid Varieties 82

Open Pollinated Varieties 77

6.3 Seed Dealers’ Sale of Varieties Between half and three-quarters of dealers sold both hybrid and open pollinated seed of tomato, onion,

chili, okra, and peas (Table 28). Hybrids dominate sales of tomato and cucumber seed, and open

pollinated varieties dominate onion sales. This indicates that open pollinated varieties still have an

important role to play in national vegetable production systems. About half of all traders are dealing in

significant quantities of open pollinated seed for these crops.

Table 28: Seed Dealers’ Sale of Hybrid and Open Pollinated Varieties

Sale of Hybrid and Open Pollinated Varieties Yes (%)

Tomato Hybrid Varieties 76

Tomato Open Pollinated Varieties 52

Onion Hybrid Varieties 48

Onion Open Pollinated Varieties 61

Chili Hybrid Varieties 55

Chili Open Pollinated Varieties 55

Cucumber Hybrid Varieties 75

Cucumber Open Pollinated Varieties 49

Comparison of hybrid and open pollinated seed sold

Information about vegetable varieties and the quantities sold was also collected. During the survey, it

was found that some dealers could not distinguish between e hybrids or open pollinated varieties. This

was true throughout the country, and for almost all vegetables grown. Hence, it was not possible to

classify, analyze, or provide accurate information on the relative use of hybrids and open pollinated

varieties. The average quantities of the seed of some vegetables sold over the last year are provided in

29

Table 29. Sales of open pollinated onions dominate, followed by sales of tomato and cucumber. Sales

of open pollinated varieties were higher than sales of hybrids.

Table 29: Mean Quantity of Hybrid and Open Pollinated Varieties Sold by Seed Dealers

Sale of Hybrid and Open Pollinated Varieties kg/Season

Tomato Hybrid Varieties 10

Tomato Open Pollinated Varieties 52

Onion Hybrid Varieties 36

Onion Open Pollinated Varieties 403

Chilies Hybrid Varieties 4

Chilies Open Pollinated Varieties 18

Cucumber Hybrid Varieties 10

Cucumber Open Pollinated Varieties 39

NOTE: Mean figures (in each row) are based on a total number of 72 observations.

The diversity of cultivars or varieties sold varied from 16 in tomato, 13 in cucumber and 10 in onion to

only five chili varieties. The 16 tomato cultivars/varieties of tomato sold by seed dealers last season

included Raja, Fransis, Moon Star, Rachna, GVS1010, Sahil, M55, E1359, Poni Express, Green Gold,

Quartz, Yakki, Larika, Dollar, Holland, and Rio Grandi. The latter five varieties were also popular

among vegetable growers, with Rio Grandi the most popular variety. Thirteen cucumber varieties were

sold: Edna, Deep Heat, Yousuf, Internet, March, Alpha, Mehran, Abdullah, Waleed, Saeed, Bilbio,

Market More, and Long Red. Mehran was the most popular among these varieties. Ten

cultivars/varieties of onion were sold including Tikki, Recita, Naserpuri, Red Commander, Flat Globe,

and Phulkara, with Swat-1 being the most popular variety. Five chili varieties were sold, including-6,

410-S, Sun Valley, and Rosy F1, with Sky-2 planted by most farmers interviewed.

6.4 Seed Dealers’ Source of Vegetable Seed Purchased

Dealers were asked about where they sourced their seed and to what extent they discounted seed sales.

Table 30 provides information about their seed purchases from various sources. In keeping with the

international and national connections of most seed dealers, the most common source of seeds were

from international or national companies or seed importers. About half the dealers were sourcing seed

locally from farmers or other seed companies, while only about a third sourced their seed from the

government. Almost all the seed dealers received seed from multiple sources. When asked how many

discounted seed sales, 46% admitted to selling seed at reduced rates.

30

Table 30: Seed Dealers’ Source of Vegetable Seeds

Source of Vegetable Seed Purchase Yes (%)

International Seed Company 62

National Seed Company 59

Seed Importers 57

Local Farmers 51

Local Seed Company 51

Government Seed Producing Department 35

Government Research Department 31

6.5 Seed Dealers’ Perceptions of Seed Quality

The seed dealers were asked about their satisfaction in relation to the quality of seed and the seed

packing material. Over a third expressed dissatisfaction with the packing of seed that was not up to an

acceptable standard. They were almost equally concerned about the attractiveness of packing material.

Overall, the majority of the seed dealers were satisfied with seed quality, but about a third claimed there

were problems of mixing, packing or seed standards that were not satisfactory (Table 31).

Table 31: Seed Dealers’ Perceptions about Seed Related Issues

Perceptions About Seed Related Issues Yes (%)

Seed Packing Not Up to Standard 37

Seed Packing Not Attractive 31

Seed Varieties Mixed 35

Seed Not up to Standard 32

6.6 Seed Dealers’ Promotional Methods

Seed dealers use various methods to promote their seeds to farmers. These included media, exhibitions,

and personal contacts. As Table 32 shows, using personal contacts was by far the most popular method

of seed promotion to farmers.

Table 32: Seed Dealers’ Seed Promotional Methods

Seed Introduction Methods Yes (%)

Personal Contacts 79

Progressive Growers 47

Exhibitions 44

Media 31

31

6.7 Seed Dealers’ Seed Storage, Sufficiency of Supply and Improvement

Efforts

Table 33 provides information about dealers’ satisfaction with their vegetable seed storage, their

abilities to meet seasonal demands for seed, and any efforts they made to improve the quality of seed

before sale (e.g. improved grading or packaging). Two-thirds of dealers were satisfied with the quality

of seed storage that they had available, but only half were satisfied with their ability to provide a

sufficient quantity of vegetable seeds for vegetable growers. Only a third improved the quality of seed

by grading and cleaning. Dealers were also asked to quantify the monetary loss due to weather

conditions while storing their vegetable seeds. Just under half had no losses, but the rest suffered an

average loss of PKR 132879 last season. The maximum loss faced by a seed dealer was PKR 1000000

in the last season due to bad weather conditions. This indicates that a significant number of dealers have

problems with both storage and supply of seeds to meet market demand.

Table 33: Seed Dealers’ Storage, Sufficiency of Supply and Improvement Efforts

Efforts, Storage and Availability Yes (%)

Availability of Vegetable Storage 66

Availability of Sufficient Seed for the Season 51

Efforts to Improve Seeds Before Sale 32

6.8 Seed Dealers’ Knowledge of Vegetable Seeds and Crop Production

Interviews with dealers revealed that three-quarters provide advice on varieties and more than half know

about the seed source, but only about a third provided advice on other production technologies (Table

34).

Table 34: Seed Dealers’ Knowledge of Vegetable Seeds

Knowledge of Vegetable Seeds Yes (%)

Varieties/Hybrid 75

Seed Source 57

Production Technologies 35

6.9 Seed Dealers’ Financial Needs

Dealers were asked about the financial difficulties in operating their businesses. Most dealers were

facing financial hardships and they required help from formal and informal financial institutions. Table

35 shows how the seed dealers fulfilled their financial needs. Similar to commission agents, most seed

dealers relied on family and friends for finance, while less than a quarter were using moneylenders or

banks.

32

Table 35: Seed Dealers’ Financial Need Sources Sources from Which Financial Needs Were Met Yes (%)

Friends/Family 56

Loan Providers (other than banks) 24

Banks 22

Other Sources 6

6.10 Summary

This chapter provides information about vegetable seed dealers in the project areas based on interviews

with 72 respondents. The dealers sell a wide variety of seeds of vegetables, fruits, flowers, fodder and

some grain crops. Some of the dealers also supply fertilizers and pesticides in addition to seeds. The

interview team focused on the sale of onion, tomato, chili, okra and pea seeds, and explored issues

related to the types of business conducted, how seeds were sourced, stored, and promoted, and how the

financial needs of the business were met. Results were as follows:

One-third of the dealers registered their businesses and almost two-thirds had been visited by

government inspectors during the last three months.

Seed dealers more commonly sell vegetable seeds than seeds of fodder or other crops, and they

are more likely to operate at the international or national level than just at the local level. This

indicates that many are connected through larger companies to national or international

networks.

Open pollinated varieties dominate the quantity of seed sold but hybrids appear to dominate the

diversity of seeds sold for some crops in particular. About half of all dealers sell open pollinated

varieties and a larger quantity of this seed is sold than hybrid seed, particularly for onions and

tomato. However, hybrids for off-season vegetable production are more widely sold by dealers

and they contribute to the large diversity of varieties of tomato (16 cultivars) and cucumber (13

cultivars) that are being sold.

Many dealers could not confidently distinguish between open pollinated varieties and hybrid

vegetables, but most regularly provide varietal information to growers, and about a third are

providing other production advice.

Most dealers source their seed from international or national sources and are generally happy

with the quality. However, half sourced seed locally and about a third indicated problems of

mixed seed or poor packaging.

Although dealers were using several methods to promote their seeds, personal contacts were

far more important than promotion through exhibitions or the media.

33

Two-thirds of dealers were satisfied with the quality of their seed storage, but only half were

satisfied with their ability to meet seasonal seed demands. Half had also lost a significant

quantity of seed in the last year due to weather damage.

Over 80% of dealers indicated financial hardships to meet their business needs, but less than a

quarter were using banks or moneylenders, with most preferring to rely on family and friends

for finance. This may indicate difficulty in accessing commercial finance, or the high costs of

doing so, and possibly indicate limitations to them being able to improve their businesses.

34

Recommendations

There appears to be a major problem of access to credit by key players along the vegetable

value chain that needs to be addressed by organizing groups and by bringing in reputable

finance agencies. More than a third of farmers sell their crop before harvest, losing a significant

proportion of potential income because they need the cash. About two-thirds of growers that

sell in wholesale markets get credit from commission agents and about half use their crop

payments to repay those debts. Although 80% of the agents claim to be in financial difficulty,

only 18% access loans from a bank. A similar percentage of seed dealers are in financial

difficulty, but only 22% access banks rather than relying on friends or family. Organizing better

sources of finance and grouping of key players along the value chain may be needed to improve

its functioning.

Most growers are producing a diversity of crops on very small areas. Many sell their fresh

vegetables without getting the best available prices.

Growers perceive about a quarter of their potential yields are lost in the preharvest stage, mainly

from pests, diseases and weather damage. These can be minimized if appropriate integrated

pest management (IPM) training is provided.

Most growers mainly depend on external sources instead of their own farms for supplies of

vegetable seeds. This may be because of increasing use of hybrids for crops such as tomato and

cucumber or a lack of high quality open pollinated varieties available. However, 15-20% of

growers were producing their own onion, okra and tomato seed, which indicates a significant

supply problem.

Most growers grade their vegetables to receive a higher price and use various packing materials

for different vegetables. Less than half use any sort of packing and the most common method

was plastic bags. Introducing and demonstrating other packing materials in the project areas

may be useful.

Growers face several difficulties in transporting their vegetables to the markets, including high

transport cost, a lack of appropriate transport facilities, and a lack of finance at the time of

harvesting. Once they reached the wholesale markets, they were generally happy with the

facilities provided.

Commission agents provide a range of services to growers in addition to selling their produce

for a fee. The most common are providing credit, fertilizers and seed. Growers were generally

happy with their relationship with agents, who mainly operated on a local rather than on an

inter-district or national basis. In about a third of cases, growers and commission agents in

wholesale markets were related to each other.

35

The amended Seed Act needs continued attention to implement its provisions to improve the

operations of the seed industry and improve services to farmers in Pakistan.

Seed dealers had little understanding of the difference between hybrids and open pollinated

varieties and found it hard to distinguish between them, yet three-quarters provided varietal

advice to growers. The quantity of seed of open pollinated varieties sold appears to be higher

than the quantity of hybrid seed sold, particularly for onions, but there is a greater diversity of

hybrids sold, particularly for tomato and cucumber. As dealers can provide a trusted source of

information to growers, there is a need to provide training to them to enhance their

understanding of varieties and production technology.

Almost half of seed dealers suffered significant loss of seed stocks in the last year. A third were

dissatisfied with the quality of their storage facilities and half had suffered average losses of

over PKR 130,000 in the last year. Only half were able to meet market demand for seed and

only a third did anything to improve the quality of the seed they sold. There is a need for more

training of seed dealers to improve their seed storage.

36

References

Bourne, M. 1986. Overview of Postharvest Problems in Fruits and Vegetables, In: Postharvest Food Losses in Fruits and Vegetables, Bourne, B., Z. Yilt and F.W. Liu. (eds.), National Academy Press, Washington, USA. pp. l-16.

FAO. 2002. http:\ \www.fao.org/decrep/t0073e/t0073e00.htm # Contents (verified January 30, 2015).

FAO. 1989. Prevention of Postharvest Losses: Fruits, Vegetables, and Root Crops, A Training Manual, No. 17/2, Rome.

FIAS. 2007. Moving Towards Competitiveness: A Value Chain Approach, FIAS, The World Bank Group, Washington, USA.

GOP. 2012-13. Fruits, Vegetables, and Condiments Statistics of Pakistan, Agriculture Statistics of Pakistan, Ministry of Food Security, Agriculture and Livestock, Economic Wing, Islamabad, Pakistan.

GOP. 2013-14. Pakistan Economic Survey 2013-14, Economic Advisory Wing, Finance Division, Islamabad, Pakistan.

Kader, A.A. 1992. Postharvest Technology of Horticultural Crops, 2nd Edition, University of California, Division of Agriculture and Natural Resources, USA. 3311p.

Khan M., Tariq R., Muhammad N., Mirkalan S., Yahya B., Mohammad T. 2008. Post Harvest Economic Losses in Peach Production in District Swat, Sarhad J. Agric. Vol.24, No.4

PHDEB (2007). Pre-Feasibility Study; Establishment of Cold Chain System under National Trade Corridor Improvement Project, Volume-1 Horticulture Industry, By Arch Vision Consulting Engineers, Environmentalists and Architects.

Raja, M.B and Khokhar, K.M. 1993. Postharvest horticulture technology and its future prospects (pp.265-277). Proceeding of First International Horticulture Seminar (9-11 January 1992), Pakistan Agricultural Research Council, Islamabad, Pakistan.

SAARC Agricultural Centre. 2014. Value Chain Analysis and Market Studies on Fruits and Vegetable in SAARC Members Countries, BARC Complex, Dhaka, Bangladesh.

Sharif M., Shah N.A., Ali S.I., Alvi A.S., Munir M. 1998. Rapid Appraisal of Illegal Trade Among Pakistan, Afghanistan, and Iran, PARC Scientist, Islamabad, Pakistan.

Zaldivar, C.P. 1991. Postharvest losses: Significance, assessment and control. In: Memorias Simposio Nacional Fisiologiay Tecnologia Postcosecha de Productos Horticolas en Maxico. E.M. Yahia, and I.H. Higuera C. (eds.). Noriega Eds. Mexico. pp. 205-209.

37

Appendices

Appendix I: Clusters for Assessing Vegetable Value Chains

Province Region District Institute Cluster

# Cluster Name

Location

KPK KPK Mingora, Bunir

ARI (N) Mingora

1 Swat Mingora,

Bunir

KPK-Punjab Hazara-Pothwar

Haripur, Attock, ISLD/RWP

NARC, islamabad

2 Pothwar ICT

Punjab Central Punjab (Rice Belt)

Sheikhupura, Chiniot, Faisalabad

VRI Faisalabad

3 Chenab Faisalabad

Punjab South Punjab (Cotton Belt)

Pakpattan Private 4 ARCO Pakpattan

Sindh Upland Sindh

MirpurKhas /UmerKot

Private 5 Kunri Kot GM / Umer Kot

Balochistan Upper/Lower Lands

Quetta, Pishin, Khuzdar, Jafferabad, Mastung

ARI Quetta

6 Ziarat

Quetta, Pishin,

Khuzdar, Jafferabad, Mastung

38

AppendixII:Area&ProductionStatisticsofImportantVegetablesinPakistan

Source: Fruits, Vegetables & Condiments Statistics of Pakistan 2013-14, Govt. of Pakistan, Ministry of National Food Security & Research (Economic Wing), Islamabad.

Name of crop Area (ha) Production (tonne)

Onion 115,912 1,660,740

Chilies 63,617 147,162

Tomato 58,196 574,052

Cucumber 3499 49,947

Bitter gourd 5993 58,730

Okra 14,461 110,114

Peas 17,194 113,067

39

AppendixIII:Questionnaire–VegetableValueChainsBaselineInformation

2: Information about household members:

Family member

Relationship with household head

Gender (M/F)

Age (Years)

Education (Schooling Years)

Occupation

Estimated Income

Head of household

2

3

4

5

6

7

a-Cropping systems (rice-wheat/wheat-fallow/ intercropping/double cropping/others) _______________

b-Area (irrigated/rainfed) ___________________________

a-District _______________ b-Tehsil/location __________________________ c-village name ____________________

d-date _________________e-Enumerator names and Cell number/CNIC_____________________________________

f- Respondent name ___________________ g- Respondent cell number _______________ h-Age (years) ______________

i-Education (years) _______________j- Marital status (Single/Married/Widower) ____________________________________

k-Status of Respondent (Beneficiary / non-beneficiary) ______________ l-Farming experience(years) ____-________________

m- Relationship with HH head (Self / Father / Brother / Son / Other) __________________________

40

8

9

10

11

12

13

14

15

Number of labourers (male/female)_______________________

Number of days of employment (cost incurred) ______ /year

Male: _____________ Female: _________

1. In Cash _________ /year 2. In Kind ________/year

3: Source of Vegetable Seed: (last one year)

Source Amount (kg) Source Amount (kg)

Home Seed Research Department

Fellow Farmers Extension Department

Seed Companies Village Shop

Tehsil/District Market

Others ____________

4: Access to Credit

Source Amount (Rs.) Purpose Duration (in months)

Monthly interest rate (%)

Bank

ZTBL

Commission Agent

Input Dealers

41

Relative/Friends

Other

5: Name of Value Chain/Product

Vegetable Seeds Mungbean Seeds Others

6: Role in Value Chain (Please tick multiple boxes if applicable)

Input Supplier Retailer Market based Wholesaler

Intermarket Trader Seed Dealer Commission Dealer

Contractor Exporter Importer Others

7: What is your employment status in your respective value chain?

Owner/Project Employee Others

8: Please indicate your registration status?

Sole Proprietor National Company

Partnership Firm International Company Others

9: How much quantity did you market, and at what price? (Last one year) Commodity Profit Margin (%) Av Expenditure/month (Rs)

Seed

Others

10: Details of resources you engaged to market these products (last business cycle)

Resources Duration (month) Total Cost (Rs.)

Owned Infrastructure

Rented Infrastructure

Shared Infrastructure

11: Have you engaged labour in marketing of these products?

Yes No NA

42

12: How much labour required during different stages?

Labour No. and Type of Employee Cost

Order Booking

Packaging and distribution

Selling

Marketing

Management

13: Capital (if applicable)

Capital Ownership Status

Building (Godown, shop)

Machinery & Equipment

Vehicles

Others

14: Do you have any Certification to Market your produce?

Certification Respondent

Product Certification

Brand Name

Process Certification

Export License

Import License

15: How much of the produce have you lost while marketing your vegetable seed during last

year?

Vegetable Seed % Losses

16: What are the major challenges you are facing in marketing your seed?

a)

b)

c)

d)

43

17: Where did you sell your produce?

Market % Sold Mode of Payment(Cash/Cheque)

Local Market

National Market

International Market

18: Have you signed any purchase contract with growers?

Purchase Contract Formal Contract

Months Contract still Valid

Proportion of Total Sales

Direct Customers/End Users/Consumers

Retailers Wholesalers Processor / Lead Firms Contractor/Middle Man/Woman

Exporter Any others

19: Have you signed any sale contract with the buyers?

Purchase Contract Formal Contract

Months Contract still Valid

Proportion of Total Sales

Direct Customers/End Users/Consumers

Retailers

Wholesalers

Processor / Lead Firms

Contractor/Middle Man/Woman

Exporter

Any others

20: Do you have information regarding service providers/farmers? (Please encircle)

Information Status Status

Do you give facility to farmers Yes/No Yes/No

Mode of Contract Yes/No Yes/No

Do you have access to IT Tools & Techniques Yes/No Yes/No

44

21: Do you see an increase in income by value addition of following activities? (Please encircle)

Activities Responses % increase

Storage Yes/No Yes/No

Machinery Yes/No Yes/No

Market Contract Yes/No Yes/No

Linkages with Buyers/Customers Yes/No Yes/No

Outreach/Coverage Yes/No Yes/No

Packing Yes/No Yes/No

22: Do you see the potential to decrease marketing cost in this chain? (Please encircle)

Marketing Responses % decreased

Cost of marketing Yes/No

23: Do you see the need to increase capacity of your workers/employees/labour engaged in this Value Chain?

Yes No NA

24: Do you see the need to improve access to business development services in this value chain?

Yes No NA

25: Do you see the need to increase institutional capacity/entrepreneur competencies in this value chain?

Yes No NA

AVRDC - The World Vegetable CenterUSAID Agricultural Innovation Program (AIP)PGRI Building, NARC Campus, Park RoadIslamabad 45500 Pakistan

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