value addition, value chain and market development of
TRANSCRIPT
Value Addition, Value Chain and Market Development of Niche
Mountain Agro-Products
Devendra Gauchan, PhDAgricultural Economist & Honorary Research Fellow
Alliance of Bioversity International & CIAT
Email: [email protected]
A Lecture delivered Virtually in “Summer Field School [Online] onMOUNTAIN ECOSYSTEMS AND RESOURCE MANAGEMENT, 19-28 September 2021.9/23/2021 Devendra Gauchan, PhD 1
Presentation Outline
• Himalayas and Concept of Niche Mountain Products
• Concept of Value Addition, Value Chain and Niche Market
• Value chain and Market System Analysis
• Priority Strategy for Niche Mountain Value Chains
• Biodiversity based Value Chain and Market Development
• Conclusions and Way forward
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Features of Himalayan Mountains
• Himalayan mountains often referred as HinduKush Himalayas (HKH) located in Asia between China-Tibet and South Asia (India, Bhutan, Nepal and Pakistan)
• Himalayan mountains have complex & diverse topographic features with steep mountains, gorge and highland valleys
• It is the center of globally important hotspots of biodiversity with high potential for unique niche agro-products
Mountain Specificities, and Exploitation of Comparative
Advantages
• Mountains have diverse and unique features with the variation in altitude and relief and therefore, different from the plains; referred as “mountain specificities”.
• “Mountain specificities” include, “diversity”, limited “accessibility”, a high degree of “fragility”, and “marginality” as well as “niche”, and “adaptation” mechanisms (Jodha 1992; Jodha and Shrestha, 1994).
• Mountain specificities that are generally considered “constraints” to development can be transformed into “economic opportunities” through value addition, value chain & market development of unique niche or comparative advantage products of the mountains
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Concept of “Niche” Mountain Products
• Mountains have high level of agroecological, socioeconomic and cultural diversity resulting in development of biodiversity-based “niche” products
• Niche commodities/products are high value, low volume, non-perishable and have comparative advantage to produce in the mountains.
• Mountain Niche Products have “Niche Markets” specifically organic and ecological markets that need to be captured through value addition, value chain and market development
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What are Biodiversity based Niche Products?
• Cash crops (cardamom, honey, tea, coffee, ginger, turmeric, mushrooms etc.)
• Fruits (apple, apricot, walnut, citrus, kiwi & other Indigenous and wild ones)
• Vegetable seeds, off-season vegetables, potato, spices, flowers
• Traditional mountain crops /Himalayan Superfoods (amaranth, naked barley, buckwheat, millets, beans etc.)
• Livestock products; yak cheese, firs, wools
• Medicinal & Aromatic Plants and other Non-timber forest products (NTFPs)
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Key Issues and Rationale for Niche Value Chains in the Mountains
• Generic value chains are not suited to the value chain for the mountains due to mountain specific constraints, challenges and opportunities eg, inaccessibility, fragility, marginality and diversity, niche and adaptation
• Currently, the value addition, value chain and market for niche products are often poor, fragmented and underdeveloped. The collection, processing, and marketing processes suffer from a multitude of problems
• Markets are often secretive and disorganized, and small producers traders, and service providers lack the capacity to interact actively and negotiate with more experienced buyers & traders.
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Value Addition, Value Chain Analysis &
Market Development
of Niche Mountain Products
8
What is Value Addition?
• Value- addition” refers to a process by which the value of a commodity is enhanced during different stages in the value chain (e.g., production, processing, marketing and use)
• Value-added products are goods with an enhanced value stemming from some extra process or product
• Value-added is effectively the difference between a product's price to consumers & the cost of producing it
• Value can be added in different ways, such as, product diversification, adding a brand name to a generic product or assembling a product in an innovative way.
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Value Chain Analysis
• A value chain is made up of a series of actors -from input suppliers, producers and processors, to exporters, buyers and users
• Value chain focuses on the use of the biodiversity to improve performance, quality, interlinkages and efficiency to promote economic value
• Value chains can be mapped and analyzed using value chain analysis.
Value Chain Mapping Involves
• Value chain Actors
• Product flows
• Information flows
• Relationships
• Constraints /Issues in the chain
• Opportunities for improvement9/23/2021 Devendra Gauchan, PhD 10
Difference
between
Value Chains
and Supply
Chains
Value Chain Concept
• Value addition in each chain
• Two-way flow of information
• Market Demand Pull
Supply Chain Concept
• Supply side push• No value addition
• One direction flow of information
Source: Umberger (2017)
Steps in Value Chain Development
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Steps in value chain development of NUS (Neglected Underutilized Species)
Source: Will
(2008)
Priority Strategy for Niche Mountain Value Chains
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Source:
ICIMOD (2010)
What is Market System Analysis?
• A market systems analysis (MSA) is a research tool that allows us to assess and understand how market functions
• It unpack the complexities of a market to identify the root causes of underperformance and reasons why the market might not be benefitting a certain target group.
• Market systems analyses are most commonly used, to help project's better target their intervention design at key leverage points to address the root causes in a sustainable way
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Market System and Incentive Analysis
Market Channel Analysis
Market Margin
Analysis
Market Price
Analysis
Market System Analysis
Price signals
Margin&Profit signals
Product flow & outlet of cultivars& Crops
Market Incentive and Disincentive
Analysis
Fig 1. Adapted from market systems analysis (Gauchan et al. 2005)
Diversity in
Consumption
System
Nutrition
Sensitive
Agriculture
Diversity in
Marketing
System
Diversity in
Production
System
Diversity in
Processing
System
Framework for Biodiversity based “Niche” Value Chain for Nutrition Sensitive Agriculture Development
Gauchan et al.(2020)9/23/2021 Devendra Gauchan, PhD 16
Mapping Value Chains of Traditional Himalayan Crops (Case of Nepal Himalaya)
Policy
Environment
• Under-developed, poorly
connected, informal value chains
Driving of
Value Chains
4 “P’1. Production
2. Processing
3. Promotion
4. Policy
• Limited participation of R &D
Actors & Private sectors
Source: Gauchan et al.
(2020). Value Chain
Development and
Mainstreaming of Traditional
Crops for Nutrition Sensitive
Agriculture in the Mountains
of Nepal. Alliance of
Bioversity International &
CIAT/NARC/LI-BIRD.
Value Chain Upgrading for “Niche” Markets
• Identify “niche market” and enhance
inter-firm linkages for the value chain
• ;Introduce new products: green-clean
ecological/organic, healthy
• Changing the mix of activities conducted within the firm- nature positive
• Increasing the efficiency of internal operations with nature positive ways
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Seed System
(Seed diversity
& quality)
Production
System
Processing
and Value
Addition
Promotion
Market
Methods
Non Market
Methods
Preparedness
and
Consumption
Enabling Policy Environment
Service Provision
o Diversity
Deployment
o Diversity
Sourcing
o Selection
o Evaluation
o Improvement
o Seed quality
o Variety
Adaptation
o Crop
diversification
o Crop
Management
o Extension
Service
Provision
o Novel Food
Recipe
o Food
Processing
o Nutrition
analysis
o Quality
Standards
o Food
preparation
o Dietary
diversity
o Healthy
diversity
o Food hygiene
Source: Gauchan et al (2020)
o Branding
o Packaging
o Labelling
o Market
Linkage
o Trade
Agreement
o Diversity Fair
o Food Fair
o Advertisement
o Nutrition
Education
o Behavioral
Change
Communication
Value Chain Upgrading of Himalayan Crops for Nutrition Sensitive Agriculture(Case of Nepal Himalaya)
Value Chain Development of Agrobiodiversity (e.g. Taro)
Consumption“ Value chain concept”
Marketing valued added products
Income
Production
Processing
(Supermarket)
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Source: Nepal In situ Project (2005)
Third Party Certification, Market
Linkages and Incentives to producers
Market Development and Linkage
Farmer
Retailers
Agro
processor
Exporter
Local Trader
Contract
farming
Cooperative
arrangement
Humla Delight Food MenuExport
linkage
Niche Agro-
Company
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Improved Income, livelihood and Food Security of smallholder farmers and communities in the mountains
Improved resilience, inclusion and sustainability of mountain development
Increased choices for nutritious, healthy diverse diets and improved ecofriendly production & environment protection
Adaptation to changing climate and market vulnerability enhanced in the mountains
Expected Impact of
Niche Value Chain & Market Development
Expected Impact: Inclusive, holistic and Sustainable Value Chain and Market Development
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Source: FAO, (2014)
Developing Sustainable food Value Chain
Conclusions and Ways Forward
• Value Addition, Value Chain and Niche’ Market development are important for promoting healthy and ecofriendly mountain niche agro-products
• Promotion of nature positive production system such as ecological and organic farming to support and promote value of niche agro-products
• Adoption of certification system with ecolabelling, GI branding & nutrition pack niche products to increase value of mountain agrobiodiversity
• Enabling policy support in the form of incentives, subsidies, price support, market linkages, and Incentives to producers and entrepreneurs are important for promotion of mountain niche agro-products
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References
• ICIMOD 2010. Integrated Value Chain Development as a Tool for Poverty Alleviation in Rural Mountain Areas: An analytical andstrategic framework. International Center for Integrated Mountain Development (ICIMOD), Kathmandu, Nepal.
• FAO. 2014. Developing sustainable food value chains – Guiding principles. Food and Agricultural Organization (FAO), Rome
• Gauchan D., M. Smale and P. Chaudhary, 2005. Market-based Incentives for Conserving Diversity on-farm: A case of rice landraces,Central Terai, Nepal. Journal of Genetic Resources and Crop Evolution 52:293-303.
• Gauchan, D. 2019. Exploiting Biodiversity of Traditional Crops for Mainstreaming Nutrition Sensitive Agriculture in Nepal. NAPA Research & Policy Brief, RPB #5, 2019. Association of Nepalese Agricultural Professionals of America (NAPA). www.napaamericas.org
• Gauchan, et al. 2020. Value Chain Development and Mainstreaming of Traditional Crops for Nutrition Sensitive Agriculture in Nepal. In: Traditional Crop Biodiversity for Mountain Food and Nutrition Security in Nepal (D. Gauchan, BK Joshi, B. Bhandari, HK Manandhar, DI Jarvis, eds.). Tools and Research Results of the UNEP GEF Local Crop Project; Nepal; NAGRC, LI-BIRD, and the Alliance of Bioversity International and CIAT, Kathmandu, Nepal. Book p 220.
• Hellin, J. and M. Meijer. 2006. Guidelines for Value Chain Analysis. Food and Agriculture Organization (FAO), Rome, Italy
• Jodha, NS. 1992. Mountain agricultural development strategies: Comparative perspectives from the countries of the Hindu Kush-
Himalayan region’. In Jodha, NS; Banskota, M; Partap, T (eds) Sustainable Mountain Agriculture. New Delhi: Oxford and IBH
Publishing Co. Pvt. Ltd.
• Jodha, NS; S. Shrestha, 994. ‘Sustainable and more productive mountain agriculture’. In Mountain Environment and Development:
Constraints and Opportunities, Proceedings of the 10th Anniversary Symposium. Kathmandu: ICIMOD
• ILO, 2017. A Guide to Market-Based Livelihood Interventions for Refugees, ILO and UNHCR. International Labour Office; United Nations High Commissioner for Refugees (UNHCR). Geneva
• Will, M. 2008. Promoting Value Chains of Neglected and Underutilized Species for Pro-Poor Growth and Biodiversity Conservation. Guidelines and Good Practices. Global Facilitation Unit for Underutilized Species, Rome, Italy.
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Thank you for your Kind Attention !!
Devendra Gauchan, PhDAgricultural Economist & Honorary Research Fellow
Alliance of Bioversity International & CIAT
Adjunct Professor (Agricultural Economics)
IAAS, Tribhuvan University, Kathmandu, Nepal
Email: [email protected]