Characterization of Mango Value Chain in Punjab, Pakistan

8/13/2019 Characterization of Mango Value Chain in Punjab, Pakistan

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Characterization of MangoValue Chain in Punjab

By Dr. Muhammad Sharif

Social Sciences Institute, NARC, PARC, Islamabad, 2009


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Mango Economy of Pakistan,

Total reported area ----------------------------------- 79.60 m ha

Cultivated area ---------------------------------------- 20.80 m ha

Area under horticulture ------------------------------1.30 m ha

Fruit area ------------------------------------------- 0.80 m ha

Vegetable ---------------------------------------- --- 0.50 m ha

Production of horti------------------------------------ 13.70 m t

Fruit area -------------------------------- --------- 6.00 m t

Vegetable ------------------------------------------- 7.70 m t

Crop economy --------------------------------------- 8.9 bl US$

Horticulture economy ---------------------------------- 2.0 bl US$

Hort. Processing units ---------------------------------- 25.0

Fruit intake of units -------------------------------------- 0.05 m t Processed output ------------------------------------------ 0.015 m t

Jam jelly marmalades-------------------------------- 200 t

Pickle & chutnies-------------------------------------- 1000 t

Syrups & squashes -------------------------------------18 m bottles

Hort. Contributes in Pakistans Agri. Production ---12%

2006-07


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Mango Economy of Punjab, 2006-07

Total Area unde Hot ---------------------------------- 1.40 m ha

Fruits -------------------------------------------------------- 58 %

Vegetables ------------------------------------------------- 42 % Pakistan Produces-

Fruit ------------------------------------------------------9.7 M Tones

Vegetable ----------------------------------------------- 4.2 M Tones

Punjab leading Hort. Province with share of

Share in Fruit area---------------------------------- ---- 48% Share in Fruits production -------------------------- 67%

Share in Vegetable area -------------------------------- 48%

Share in Production ------------------------------------- 55%

Contribution on Punjab to National Production in

Citrus -----------------------------------------------------97%

Mango ----------------------------------------------------79%

Potato ---------------------------------------------------- 89%

Output value of Punjab Hort. -------------------- 2.25 billion US$

Fresh Fruits Processing units --------------------- 125.0


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Objectives

To study the characteristics of mango markets

To appraise the different components of mango

supply chains and their associated constraints

To suggest policy and strategies for establishing

competitive mango industry in Pakistan.


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Survey Method

A team of social scientists and biological scientists with avaluable inputs and assistance from various stakeholders

Thirty-four mango growers from seven villages (S = 14 andL = 20)

Mango processing plant in Khanewal was visited Meetings and dialogues were held with contractors (3),

commission agents (2), wholesalers (2), retailers (5),broker (1) and exporters (3) to exchange information for

understanding the organization, functions, main actors,type of institutions and form of coordination concerns ofmango supply chain.


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Characteristics of Mango Markets

Mango available for human consumption was 1.65

million tons during 2006-07.

The majority of poor quality with a short shelf lifemango is retailed in.

There are six types of mango retail markets namelystreet vendors/hawkers (selling to 20% consumers),fruit shops (51%), Tuesday, Friday and Sundaybazars (25%), roadside stalls (3%), super markets

(1%) and food service (1%).

A small proportion of mango (3%) are processed intovalue added products as mango pulp which is used incanned mango, dried mango, drinks and ice cream.


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Contd

Pakistan exported 5 percent of its mango productionin the fresh form.

During the last decade (1998-99 to 2006-07),

Pakistani mango industry has been able to tripleincrease its total mango export revenue US$ 6.4million in 1998-99 to US$ 19.9 million in 2006-07 andit is expected to continue further expansion in thecoming years.

The main destination markets for Pakistansmangoes exports are the United Arab Emirates(46%), Saudi Arabia (18%), Oman (13%) and UnitedKingdom (11%) respectively.


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Mapping the mango value chain

Input

provision Production

Post

Harvesthandling

RetailConsum

ption

Marketing and

Logistic

Seedlings,fertilizers,

pesticides,labour andmachinery

Plantingand

applicationof inputuse

Handling,sorting,

packing

Loading,transporting ,

unloading,storing,auctioning,transporting topack house,unloading,

grading,repacking, pre-cooling, loading,airport handlingand customclearance

Loading,transporting,

unloading,sorting andselling

Consum-ption


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Mapping value added throughout the in domesticretail mango value chain

Value

Valueadded

Rs.10 Rs.23/kg

Rs.23 Rs.24/kg

Rs.24 Rs.30/kg

Rs.30 Rs.40/kg

Rs.13/kg

Growers

Contractor

Wholesaler

Retailer

Rs.1/kg Rs.6/kg

Rs.7.25 -Rs.10/kg

Rs.10/kg

Commis

sionAgent

InputSupplier

Rs.7.25/kg

Rs.2.75/kg


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Mapping value added throughout the mango exportvalue chain to UK market

Value

Valueadded

Rs.15 Rs.24/kg

Rs.24 Rs.25/kg

Rs.25 Rs.120/kg

Rs.120 Rs.130/kg

Rs.9/kg

Growers

Contractor

Exporters

Importers

Rs.1/kg Rs.95/kg

Rs.10 -Rs.15/kg

Rs.10/kg

Commi

ssionAgent

Rs.5/kg

UKRetailers

Rs.130 Rs.230/kg

Input

supply

Rs.10

Rs.100/kg


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Profit Distribution Marketing Marginal AnalysisMarket

agenciesSale

priceAbsolute

cashmargin

Marketing

costNet

profitPercent

profit

Producer 10 10 7.25

2.75 28

Contractor 23 12 5.5

6.5 54

Commissionagent

- 1 0.5

0.5 50

Wholesaler 30 6 2.0

4.0 67

Retailer 40 10 2.5

7.5 75

Rs./kg


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Cost of Production of Mango (Rs./ac/kg)

Particulars Small Farmer Large Farmer

First Year Mango Plantation 16385 17635

Total Cost 2-6 year 100707 111358

Total Cost 7-12 Years 170822 197605

Total Cost 13-40 Years 897776 972835

Present Worth of Cost 204,469 227,234

Productivity 7-12 Years kg/plant 82 89

Productivity 13-40 Years kg/plant 132 140

Present Worth of Out put 205,769 229,458

Net Present Worth 1,300 2,224

Net Present Worth Per Year 32.50 55.61

Cost per Kg for 7-12 years 9.92 10.57

Cost Per Kg for 13-40 years 8.10 8.27

Average cost Rs./kg for 7-40 years 8.58


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Competitiveness Issues of Mango Value Chain

Inputs Pakistan Thailand India USA

Land ($/m2) 17 55 41 80

Capital (interest rate %) 10.65 7 7.5 5.25

Labor ($/month) 173 290 196 4000

Power ($/Kwh) 0.09 0.04 0.08 0.06

Freight (40gt container $ toJapan)

1600 1340 900 800

1. Comparative input costs

CSF, 2007


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Contd

2. Agricultural research and development

No research and development facility forconducting research on controlledatmosphere storage and shipping of mangoexport.

No institution is working on thedevelopment cold chain aspects of mangoexport.

Limited research and development workdone on mango is not properly disseminatedto mango growers due to ineffective

extension system.


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Contd

3. Sanitary and phyto-sanitary (SPS) issues and action

Compliance:In 2004 Pakistan ranked 32nd in the number ofcountries with consignments rejected by the EU.Pesticide residues:Maximum residue levels (MRLs) areexceeded. Studies suggest serious misuse of pesticides.Traceability:Farm and mango market records are non-existent. Such records are essential for mango exports to USA

and EuropeHACCP and GMP certifications:Some progress has beenmade with pack houses but it is limited. HACCP needs top becombined with Good PracticesEuroGAP E-GAP:Certification is a focus for development

especially in the mango industry.Post-harvest treatments:Specific post-harvest treatmentsare prescribed for mango exports. The industry is makingsome progress but facilities are generally inadequate andknowledge is lacking

Pest risk assessment:Pakistan must be able to provideevidence of pest free areas


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4. Quality and food safety issues

Contd

Pakistan does not have adequate packing, gradingand cold storage facilities.

Pakistani mango is generally delivered in inferiorand inconsistent quality which fetch lower price as

global markets are more conscious about qualitystandards of fresh mango.

Sustainability of mango export would be at thestake unless and until Pakistan effectivelycompliance to quality and safety standards

The existing food laws are more relevant toprocessed products but their implementation isgenerally poor because of political pressures andweak institutions


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Issues, activities,

crops/ product/

processes and

intervention

Component of mango chain

Input provision Production Post-harvest Handling/Processing Product manufacturing

Major competitiveissues

Limited/poor access to quality farminputs (Nursery seedling, fertilizer,

pesticide, water, machinery, credit

and extension

Poor cultivation technologyLow yields and returns

Unreliable and poor quality

mango supply

Poor storage and handling systemWastage and losses

Complex and inefficient mango

marketing channels

Small scale, disaggregated and

disorganized units

Poor work practices and bad

conditions in these units

Inability to predict or manageraw material supply

Erratic supply of electricity and

water

Poor financing arrangements

Poor technical choices and lack

of innovation

Quality and food safety is

lacking

Value adding

activities Agro-industries Agriculture

Post harvest/logistic/

Primary and secondaryprocessing

Tertiary processing

domestic market and exportmarket

Crop and products

and processes

Nursery industry, chemical

industries, mechanical industries,

institutional services industries

Horticultural and tree crops

mango fruit tree

Storage, cooling, logistics, packing for

domestic market, packing for export

or pulping

Mango drinks and ice-cream

Economic and market

interventions

Development programme for high

yielding nursery seedlings

Development programme for high

quality chemical inputs at lower

price

Development programme for

ensuring equitable access of

institutional services (credit and

extension)

Skill development programs

on mechanized production

practices and innovations

Improved management of

scarce water resources

Ban on intercropping in

mango orchard

Incentives for backward linkages and

integration

Skill development programme to a

target group of mango pickers and

packers

Skilling mango growers and

contractors in post harvest

management

Grants for improved storage and

handling system

Introduction of innovative contract

farming i.e. vertical coordination

model

Up scaling the capacity of secondary

processing i.e. mango pulping

Standards and penalties for workcondition in processing units

Incentives for industry links

Incentives for backward

linkages and integration

Improve infrastructures

Industrial loans and guaranties

Links with R&D and foreign

technology

Standards and penalties for

consumer health

Characterization of Mango Supply Chain in Pakistan


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ISSUES OF MANGO INSDUSTRY PAKISTAN

Domination of smallholders

97% small orchard growers cultivate 69% of orchard area

2.4 million farms reported a fruit tree inventory of 81 million fruit trees(mango, citrus, apple and banana as major fruits)

out of 6.6 million farm only 0.5 million (7%) grow vegetables

Limited physical farm performance:poor orchard practices,

improper use of irrigation, inadequate pest and disease management,poorharvesting practices, ---- low productivity

Week financial farm performance:Low product prices, highpost harvest losses, physical constraints in marketing and

distribution

Low share of processing/value addition and small share in export

Institutional and regulatory issues:Poor investment ininfrastructure, establishment and implementation of legislation

for trade in Hort. Products


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Conclusions

Low mango productivity and output (10.7 t/ha vs.26.7 t/ha - yield gap of 16 t/ha with a value lossof US$ 740 million)

Harvest losses of mango is 25% of the totalharvest (0.42 mt with a value of loss to US$ 118million)

Exports only about 5% of total harvest Relatively low export price (price gap US$ 546/t

for a mango export of 0.062 mt will add US$33.85 million)

High air transport cost leading to low profitmargins

Inadequate international market information


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Contd

Urgent efforts are required for skilling mangogrowers in modern production practices to narrow

mango yield gap domestically as well as globallybecause the expected mango yields with theimproved and modern management practices are12-15 and 15-20 ton/ha.

Skilling mango growers and contractors in post-harvest management can add US$ 118 million inthe mango economy of the country sharing tooverall economy of the country.

Pakistan needs to explore new mango exportmarkets. Moreover, the implementation ofinternational compliances for mango quality,standards and safety can narrow down global

mango price gap

Characterization of Mango Value Chain in Punjab, Pakistan

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