Value Chain Analysis and Rural marketing strategy ….

Nepal

Submitted To

Shiva Chandra Dhakal PHD

Agri Business and Rural marketing Instructer

Submitted by

…………

MBA 5th Trimester

Boston International College

November 16, 2018

Acknowledgement
I would like to extend my sincere thanks to all of them. I thank my god for providing me
with everything that I required in completing this project.

I am highly indebted to our respected Shiva Chandra Dhakal sir for his guidance and
supervision as well as providing necessary information regarding this, and support for
completing this report.

I would like to express my gratitude towards my parents for their kind cooperation and
encouragement which helped me in the completion of this project. My thanks and
appreciations also go to Boston International College and to people who have willingly
helped me out with their abilities.
Table of contents

Acknowledgement ........................................................................................................................... 2
Executive Summary.......................................................................................................................... 4
1. Introduction ............................................................................................................................. 5
1.1 Manage of the firm: ............................................................................................................... 6
1.2 Climate and Soil:- ................................................................................................................... 7
1.3 Planting Season:-.................................................................................................................... 7
1.4 Background ............................................................................................................................ 8
1.5 Objective of the study .......................................................................................................... 10
1.6 Limitation of the study ......................................................................................................... 10
2. Review of literature ............................................................................................................... 11
3. Research Method ................................................................................................................... 14
3.1 Study Area ............................................................................................................................ 14
3.2 Selection of population and sampling frame ....................................................................... 14
3.3 Data and information collection .......................................................................................... 14
3.4 Value chain map................................................................................................................... 15
4. Results .................................................................................................................................... 15
5. CONCLUSIONS AND RECOMMENDATIONS ............................................................................ 15
Suggestion .................................................................................................................................. 16
6. References ............................................................................................................................. 16
Executive Summary
Tomato is said to be the native of tropical America (Thompson and Kelly, 1957). From
tropical America it spread to other part of world in the 16th century and it became
popular in Nepal within the last four – five decades. Tomato is also known as the poor
man’s apple in Nepal. China is the largest producer of tomato in the world. Tomato is
grown throughout the year in recent years in Nepal with the introduction of plastic house
for off season production.

Tomato is the third most important vegetable after cauliflower and cabbage in terms of
area, and production in Nepal. It is cultivated in about 20,000 hectares (ha) producing
about 0.3 million MT tomatoes annually (MoAD 2014). Tomato is though best suited to
tarai and mid hills, it is also becoming an attractive option for cash generation in the high
hills (Pandey and Chaudhary 2004). Tomato is grown from subsistence to commercial
scale; and from the east to far west and Terai to mid hill and mountain regions. Earlier,
tomato was used to be grown only in the rainy season in the hills at subsistence level.

The study is conducted only in the Gondryang area of Bharatpur. The study is limited by
the cost and time, so it cannot be generalized.
 1. Introduction
The farm is started on 2072 by others group and the Chitwan Fulwari Buy on 2073 BS.
The business started with partnership of 5 members. The team members also include
students of agriculture and veterinary. The farm is situated at Bharatpur, Gondrang, and
Kadagadi. It covers around 3 Bigha areas. The farm capital is collected from their
partners. The all partners along with 2 others paid staffs to run the farm. The land is
totally leased for the 10 years periods.

The major products are;

 Tomato
 Chilly
 Bitter gourd
 Bottle gourd
 Radish
 Israel banana
 Fish
 Mustard greens/ coriander greens
 Bodi
 Lady finger
 Pumpkin

The vegetables are supplied to the Bhatbateni and shop to the Bharatpur. Their vegetables
are organic and healthy. The ideas of agro farm came because they think that the market
consumption of vegetable is always increasing.
Challenge facing in farming is;

 Staff management
 Theft of fish and vegetable
 Climate problem
Major source of products sale:
  Bhatbhateni
 Individual shop
 Own Chitwan Fulwari Boys hostel
 Local people
 Market (Whole Sale)

1.1 Manage of the firm:

They use every corner of the idle land. The every product they produce has logical
reasons. For example; the production of Bodi helps stop the unnecessary herbs in the
field. They use hand uses small tractor to solve man power problem. The most focused on
off season vegetable because its helps to sold at high prices and attract the customer.
They also provide certain types of benefits to their staff so that can retain them.

Tomato is one of the important vegetable crops, cultivated throughout the year,
positioned in second top rank after cauliflower in terms of area of cultivation, and
highly tradable commodity that led to select tomato in this study.
Numerous varieties of the tomato plant are widely grown in temperate climates across the
world, with greenhouses allowing for the production of tomatoes throughout all seasons
of the year. Tomato plants typically grow to 1–3 meters (3–10 ft) in height. They are
vines that have a weak stem that sprawls and typically needs support.[2]Indeterminate
tomato plants are perennials in their native habitat, but are cultivated as annuals.
Determinate, or bush, plants are annuals that stop growing at a certain height and produce
a crop all at once.

Tomato, universally treated as protective food is being extensively grown as an annual

plant all over the world. It is a rich source of minerals, vitamins and organic acids.
Tomatoes are used directly as raw vegetables in sandwiches, salad etc. Several processed
items like paste, puree, syrup, juice ketchup etc. are prepared on a large scale. Tomato is
a very good appetizer and its soup is said to be a good remedy for patients suffering from
constipation. Tomato is also known as poor man’s orange.
Tomato is said to be the native of tropical America (Thompson and Kelly, 1957). From
tropical America it spread to other part of world in the 16th century and it became
popular in Nepal within the last four – five decades.

Depending upon the growth habit, tomato plants have been categorized into two types
viz. determinate and indeterminate types. The plant of former type are dwarf because the
plant terminates in a flower bud and is appropriately called ‘self topping’ or ‘self
pruning’ type whereas the latter are tall because the terminal portion of the stem is
growing and flower is produced at every 3rd

The determinate varieties can be harvested in 2 – 3 harvests while the fruiting period of
indeterminate type is prolonged.

1.2 Climate and Soil:-

Tomato is a warm season crop and can be grown between 100C – 300C. The optimum
range of temperature is 210C – 250C. Tomato is neither tolerant to frost nor to
waterlogged condition.

Soil which is well drained, fairly fertile, rich in organic matter with fair moisture holding
capacity is ideal. For early crop, a sandy loam soil is best, however for higher yield,
heavy soils rich in organic matter are preferred. Tomato performs well in soil having pH
6.0 – 7.0. It is moderately tolerant to acid soils (pH 5.5).

1.3 Planting Season:-

The tomato can be grown almost throughout the year in the country. The number of crops
grown varies from region to region.
1.4 Background
Tomato is also known as the poor man’s apple in Nepal. China is the largest producer of
tomato in the world. Tomato is grown throughout the year in recent years in Nepal with
the introduction of plastic house for off season production.

Majority of Nepalese people depend on agriculture for their livelihoods and has
contributed about 32.6% of nation's GDP alone by the agricultural sector in the year
2015/16 (WB, 2016). In the year 2014/15, the average economic growth was confined to
0.77% where agriculture sector growth rate was only 1.3% due to devastating earthquake
and blockade by India (MoF, 2016). Traditional and conventional subsistence farming
system, lack of rural infrastructures facilities, lack of proper market information system,
inadequate technological extension as well as marketing support system, unavailability of
sufficient quantity of quality production inputs and weak linkages among the
stakeholders are hindering the rapid development of the agriculture sector. Nevertheless,
agriculture commercialization and production of high value crops is gradually increasing.
Fresh seasonal and off-season vegetables have been categorized as high value crops.
Different promotional campaigning for the commercial production of vegetables has been
initiated by government as well as private sector to increase the income of farmers and
generation of employment opportunities at rural areas of the country resulting into
significant increment of vegetable production. In the year 2013/14, the area of vegetable
crops was 2,54,932 ha, total production was recorded at 34,21,035 mt and the yield was
recorded at 13,419 kg/ha (MOAD, 2016).

Majority of Nepalese people depend on agriculture for their livelihoods.

Tomatoes production generally comprises five basic operations such as seedling

production, bed preparation, transplantation, intercultural (weeding, staking, fertilization,
and pesticide application), irrigation and harvesting. Mechanization is limited in land
preparation and irrigation 14 Demand and Supply Situation of Tomato in Nepal activities.
Land preparation is done using tractor in Terai and hand tractor in the hills in limited
scale. Pumpsets and electric motors are often used for irrigation. While open field
cultivation is common in Terai, plastic tunnels are used in the hills for off-season tomato
production. Drip irrigation and sprinklers are introduced in recent past which are found
efficient in locations where irrigation water is a limiting factor.

Tomatoes can be grown optimally in deep, medium textured sandy loam or loamy, fertile
and well-drained soils. Sites that have good air movement (to reduce disease) and that are
free from problem weeds are preferred. The degree to which the soil adequately provides
physical support and anchorage, soil nutrients, and water depends upon topography, soil
type, soil structure and soil management practices. The extent to which the root systems
of tomato plants develop is influenced by the soil profile. Tomatoes are considered to be
deep rooted crop. The majority of roots, however, are in the upper 12 to 24 inches of soil.
Since root development is severely limited by compacted soil, proper land preparation
should eliminate or significantly reduce soil compaction and hard pans. Tomatoes are
usually transplanted into plastic mulch on raised beds. A raised bed will warm up more
quickly in the spring and therefore will enhance earlier growth. Since tomatoes grow
poorly in excessively wet soils, a raised bed facilitates drainage and helps prevent water
logging in low areas or in poorly drained soils. The negative aspect is that tomatoes
planted on raised beds may require more irrigation during drought conditions. Tomato
production is common in most of the farming communities of Nepal. It is the most
popular and high value vegetable crop of Nepal. Fresh tomato as well as processed
products has high market demand in Nepal and also Nepalese tomato has good marketing
opportunities in bordering Indian market, especially during offseason. Tomatoes are a
warm season crop and are sensitive to frost.

Tomato is the third most important vegetable after cauliflower and cabbage in terms of
area, and production in Nepal. It is cultivated in about 20,000 hectares (ha) producing
about 0.3 million MT tomatoes annually (MoAD 2014). Tomato is though best suited to
tarai and mid hills, it is also becoming an attractive option for cash generation in the high
hills (Pandey and Chaudhary 2004). Tomato is grown from subsistence to commercial
scale; and from the east to far west and Terai to mid hill and mountain regions. Earlier,
tomato was used to be grown only in the rainy season in the hills at subsistence level.
However, the introduction of improved varieties has made it possible to grow tomato in
the spring season as well (Ghimire et al 2001). Although a total of four varieties of
tomato are released, and 28 varieties are registered, a large number of tomato variety
seeds are available to farmers in Nepalese market due to open border and weak regulatory
measures (MoAD 2013)

1.5 Objective of the study

To study value chain structure mapping and governance of Tomato production in the
Bharatpur area.

To understand the present scenario of market dynamics of tomato and tomato products

To identify the major constraints hindering development of tomato value chain

1.6 Limitation of the study

The study is conducted only in the Gondryang area of Bharatpur.

There is no separate budget for the study.

 2. Review of literature
Seed is one of the major inputs of agriculture and means for dissemination of new
technologies to farmers. Use of quality seeds of improved varieties is necessary to
increase productivity and income of farmers (Gauchan et al 2014). Vegetable seed are
one of the promising sub sectors for improving agricultural production, poverty reduction
and food security (MoAD 2013, CEAPRED 2014). Vegetable seed are high-value and
low-volume products and demand for improved and hybrid vegetable seeds are
increasing every year due to increasing area under fresh vegetables production both for
main season and off-season in Nepal (SCPL 2011). More than 60% area of the
commercial vegetable production pockets are under hybrid seeds with increasing trend
due to their high yielding ability against open pollinated varieties (OPV) (MoAD 2013).
However, hybrid seed production in Nepal is limited to only few crops, mainly tomato
and maize, therefore, import of hybrid seed is increasing particularly in vegetables, rice
and maize (MoAD 2013). The estimated vegetable seed demand for 2013/14 is 1,900
Metric Tons (mt) (SEAN 2013) while domestic seed production meets only half (53%) of
the total demand, the rest is fulfilled by import. National Seed Vision-2025 formulated by
the Government of Nepal (GoN) has emphasised on self-sufficiency, import substitution
and export promotion of quality seeds through domestic production for achieving
increased seed replacement rate of vegetables from current 67% to 90%, including
development of 30 hybrids (20 from public sector and 10 from the private sector) in
Nepal (MoAD 2013). Tomato is the third most important vegetable after cauliflower and
cabbage in terms of area, and production in Nepal. It is cultivated in about 20,000
hectares (ha) producing about 0.3 million MT tomatoes annually (MoAD 2014). Tomato
is though best suited to tarai and mid hills, it is also becoming an attractive option for
cash generation in the high hills (Pandey and Chaudhary 2004). Tomato is grown from
subsistence to commercial scale; and from the east to far west and Terai to mid hill and
mountain regions. Earlier, tomato was used to be grown only in the rainy season in the
hills at subsistence level. However, the introduction of improved varieties has made it
possible to grow tomato in the spring season as well (Ghimire et al 2001). Although a
total of four varieties of tomato are released, and 28 varieties are registered, a large
number of tomato variety seeds are available to farmers in Nepalese market due to open
border and weak regulatory measures (MoAD 2013). The ‘Srijana’ is one of the popular
varieties of tomato registered by National Seed Board with the effort of Nepal
Agricultural Council (NARC) in 2010 (MoAD 2013, NARC 2014). Srijana tomato is
mostly preferred by the farmers for its wider adaptability including its suitability for off
seasonal production, superior taste, as well as tolerance to bacterial wilt disease. Srijana
tomato is particularly recommended and popular among farmers for its farming inside the
plastic house (Chapagain et al 2010, Pokharel and Thakur 2012). Thus, plastic house
tomato production of this variety is gaining popularity among farmers (Chapagain et al
2010). The Srijana tomato variety has also been identified as one of the potential crop
variety for import substitution and export promotion (MoAD 2013).

Srijana is the single hybrid variety of tomato so far developed by NARC through the
cross between HRD-1 (female line) and HRD-17 (male line). Female line (HRD-1) is
bacterial wilt resistant Hawaiian indeterminate type tomato line with round shaped small
fruit size, while male line (HRD-17) is determinate type elite line obtained from The
World Vegetable Center (AVRDC), Taiwan with oblong and large sized fruit (HRD
2006, DS Shrestha, personal communication, April 22, 2016 ). The research work on
Srijana hybrid tomato development was started since 2005; when a total of 18 tomatoes
inbred collected from various sources were evaluated and crossed in Horticulture
Research Division of NARC (HRD 2006). From the series of evaluation of F1 crosses,
HRD identified the F1 hybrid obtained from HRD-1 and HRD-17 cross superior in
bacterial wilt resistant, yield and yield attributing characters and it was finally registered
in the name of Srijana hybrid in 2010. HRD, Khumaltar of NARC is the main actor for
maintaining and also supplying the Srijana parental lines to commercial Srijana seed
producers and it supplied about 0.4 kg of parental lines to different seed producers in the
year 2013/14 (HRD 2014).
Almost all of the Terai and lower parts of the Hill districts are climatically suitable for
tomato cultivation. Tomato cultivation is also found in lower parts of mountain districts.
The national figures show that tomato was cultivated on a total 19,726 ha producing
2,98,594 mt in 2012/13 and decreased to 17, 273 ha producing 2,32,897 mt in 2013/14.
Average productivity was reported to be 15.1 mt/ha in 2012/13 and reduced to 13.5 12
Demand and Supply Situation of Tomato in Nepal in 2013/14 which is quite low
compared to other Asian countries. This may be because majority of tomato production
was done at subsistence farming condition, cultivated without proper care or intercropped
with other crops. Among the 15 ecological/development belts, Central hill (which
includes Kathmandu valley) produced largest volume of tomato followed by Eastern hills
and Central Terai.

The Agri Business Promotion Policy highlights the diversification, commercialization

and promotion of agriculture sector with private sector involvement in commercial
farming. It emphasizes that the living standard of the farmer would not improve unless
the agriculture sector is transformed from subsistence level to commercial farming.The
policy aims to reduce poverty by encouraging production of market-oriented and
competitive agro-products. It realizes the need of promoting internal and external
markets. This policy was prepared in the spirit of National Agriculture Policy 2061
emphasizing business service centers establishment for quality agriculture inputs and
services. Partnership between the private sector and Government has been emphasized
for the export of quality goods. In the context of Nepal’s entry into the WTO, developing
market network is its priority. The policy considers infrastructure development as a
cornerstone for commercialization and has envisaged promotion of partnership approach
between Government and the private sector.
 3. Research Method

3.1 Study Area

Chitwan is known as the economic hub of the country. This study is conducted on the
Gondhang area of Bharatpur. All the participants from the same locality.

The method adopted in the study relied on semi-structured informal interviews with key
informants and a number of participants at different stages of the market chain including
the producers of the studied commodity. The Chitwan district is one of the 75th district of
Nepal and is located in the south western part of Province no 3.

3.2 Selection of population and sampling frame

The people inhabiting the Chitwan district are predominantly peasant farmers cultivating
mainly food and cash crops such as rice, maize, wheat, bean, mustard and vegetables.
Though the district is the major maize producer, the cultivation of tomato is also found
satisfactory. The major pocket areas of tomato production in Chitwan district are
Sukranagar, Divyanagar, Ratnanagar, Chanauli, Prembasti, Darechowk, Chandi Bhyang.
And for other actors like input suppliers, producers, collectors, wholesalers, retailers and
consumers, major market area of Chitwan district i.e. Narayanghad were selected.

For the study of the subject matter total population size is nearly twenty five. Among
them 15 participants are taken as a sample size. Sample error is four.

3.3 Data and information collection

The information collected from the field were first noted and systematically analyzed.

Market margin and Marketing Channel and market Analysis

There are three different channels to bring tomato from farmer’s field to consumers’
hand. They are

I. Producer –Wholesalers- Retailers -Consumers

 II. II. Producer- Retailer- Consumer
III. III. Producer- Consumer

3.4 Value chain map

The agricultural value chain is defined as the whole range of goods and services
necessary for an agricultural product to move from the farm to the final costumers or
consumers. It involves different actors with their different functions.

In figure, the linkages are shown vertically from bottom to top. The left-hand block
lists the major function of the chain, which includes input supply, production,
collection and marketing.

4. Results
Tomato is one of the top vegetables grown in Nepal. To support the increased production
and productivity of tomato in the country, NARC has developed Srijana tomato hybrid,
which embraces various attributes that are increasingly preferred by the farmers and is
increasingly becoming popular among the farmers and entrepreneurs. The present study
revealed an increasing production, supply and price of Srijana seed over the years.
Farmers and entrepreneurs involved in production and marketing of Srijana seed also
received high price and profit margins from Srijana hybrid seeds. Although, several
actors were involved in Srijana seed production, private sector had the largest share in
Srijana hybrid seed production and marketing.

5. CONCLUSIONS AND RECOMMENDATIONS

Different problems were seen which has severely affected the production process. Among
them insect problems were the major one followed by disease problem, low technical
knowledge, insufficient farm labor, irrigation and fertilizer. Due to the unavailability of
storage facilities over ripening and decaying were the major problems during postharvest
handling. Various problems were seen during the process of marketing which includes
price variation, low farm price, communication with traders and transportation problems.
Availability of land, market access and suitable agro climatic conditions were the major
strength. Similarly, presence of agricultural stations such as line agencies, agro vets, high
demand of the product and the employment generation were the major opportunities.

Suggestion
Based on the general study, following recommendations were made
 Implementation of farm mechanization in Tomato farming
 Establishment of collection center and cold storage
 Training and subsidies to farmers on different aspects of production

6. References
Bhomi, B. (1994). Patato trainer manual.

Neupane, H. (2018). Isntitute of agriculture and animal science .

NPRP. (2009). Annual Report. Khumaltar: Nepal Agriculture Research Prorgamme.

NPRP. (2012/2013). Annual Report. Khumaltar: Nepal Agriculture Research Council.

(2010). Potato facts. Lima: CIP.
(B, 1994)and Statistics Division. Singha Durbar,Kathmandu: MOAD publication.