Livelihood diagnosis and value chain analysis:Options for enhancing and monitoring development impact Presented by Aden A Aw-Hassan IFAD/ICARDA Knowledge Exchange Workshop26 – 29 October 2009 Knowledge and Technology Exchange for Enhanced Quality of IFAD/ICARDA Operations in the NENA region
Non-farm Livelihoods Strategies Sources of off-farm income 60 Agriculture Non agriculture 50 31 40 % off-farm income 30 9 20 25 8 20 10 7 0 Countries outside Syria National Local Migration: Permanent: importance of remittances Seasonal: off-farm income Off-farm income = 48%
Stunting (Height for Age): Example of a non-monetary measure
Role of Local Institutions: Farmer associations Two valleys; Taddarine has paved road which stimulated development of apple cultivation and allowed traders to come, compete & offer good price for apple. Anougal has no paved road, difficult to access, apple not well developed, thus few traders go to buy fruits on trees, and monopolize on apple trade.But Abougal farmers has strong cooperative which enabed to develp profitable dairy cow production and get high income from this activity
The dairy cooperativehas now 120 members and increased the milk that is marketed through the cooperative from 1800 liters in 1993 to 30,000 liters in 2004 The overall income of the two communities are now comparable. It is not clear why the coperative did not extend its success to apple.
Poverty Outreach of Micro-credit in Jebel Al Hoss Interest rates of different credit sources informal credit sources are more flexible, have no waiting period, do not ask for guarantors and give higher loan amounts than informal
Sources of Agricultural Finance Sources: 59% informal, 17% formal, 24% Sanduq Many rural houseless are investing in their productive assets There is potential, but limited by high capital cost
Main Point about Micro-finance There is a substantial demand for rural credit, which traditional systems (formal and informal) are unable to meet. More flexible, innovative methods are needed. The sanadiq experience has shown that households are investing borrowed funds to build assets, e.g. new agricultural technologies to enhance productivity. Wider availability of credit could bring about an agricultural revolution in the dry areas, if properly designed and sustainably managed.
Adoption Lag of Modern Wheat Varieties 2007/08 % area % area Durum Bread Older varieties cham3 (1987) and Cham 6 (1991) are the dominant varieties planted by farmers The newer varieties of cham5 (1994) and cham8 (2000) have low but increasing adoption levels The most modern varieties of cham7 (2004) and cham10 (2004) are not available to farmers yet
Distribution of Human Poverty in Sudan (2006) Composite index of deprivation in survival (life expectancy), deprivation in knowledge, and deprivation in material well being measured by access to services (UNDP 1997). Based on data from two national surveys; The 2000 Multiple Indicators Clusters Survey (MICS) The 2006 Health Survey (SH).
Main Idea behind VCA Approach(Andrew W. Shepherd, FAO, 2007) Increased role of supermarkets Increased coordinated links between farmers, processors, retailers and others. Greater income-driven demand for high value products such as meat, dairy products and fruits and vegetables, and healthy foods, medicinal & herbal plants, etc. Increased attention on quality and safety
Value chain: Conceptual framework ACTIVITIES BY STAGE & ACTOR Small holder farmers Large farmers L INKAGES&POWER Traders /intermediaries Local market/ retailers Exporters Processors Canned food Fresh: wholesale, retailers, shops; hotels Supermarkets International consumer Domestic consumers Institutions, policies, government regulations, etc
Value Chain Analysis Movement of products through successive stages Transactions through the chain actors- producers, traders, processors, retailers, etc. Money and information exchanged, and Progressive addition of value along the chain The ‘rules of the game’ – laws, regulations, policies and other institutional elements The support services, which form the environment where all activities take place
Criteria for Selecting Crops: Suitability of their production by smallholders, Potential for export Their potential to contribute to poverty alleviation and Their link to IFAD ongoing projects in both countries. There is gap in market research
Source: CAPMAS Price trends of Pomegranate and Onions Source: CAPMAS
Domestic Consumption and Export Trends of Onion and Pomegranate in Egypt Source: CAPMAS
Pomegranate / Onion Cultivated Area and Production
Pomegranate / Onion Cultivated Area and Production
Pomegranate Area and Production in Assiut Governorate Source: MALR. See Table (12): Pomegranate Area and Production in Assiut Governorate
Importance of Exports for Pomegranate and Onion Pomegranate: Export share of production was stagnant or in decline in the 1990s, but sharply increased since 2003, reaching 20% in 2006 Export growth is result of to strong export demand for pomegranate; this will continue given the growing consumer awareness. Egypt can increase its market shares in the markets where it has competitive advantage Onions: Exports has declined in the 90s, but recovered later & peaked in 2003 reaching over 45% of production, then dropped in the following year, then again recovered in 2006 at 27%. It appears the domestic demand is becoming stronger contributor to onion growth in Egypt.
Importance of the Main Onion Market for Egyptian Exports The Egyptian exports is not diversified enough. It relies on one major market-Saudi Arabia More effort is needed to diversify exports
Shares of Exports and Values of Main Onion Market
Exporters Estimate of the Shares of their Onion Exports to Different Markets 2008 Survey The reported increase of share of exports to Eastern Europe could be a reflection of new market for Egypt or only specific to the sample of exporters surveyed
Egypt’s Market Share of Onion Export Markets Egypt dominates the markets of Lebanon, Saudi Arabia and Greece (holding 40-70% market share). Has modest share in Jordan and Romanian (13%-below 20%) Egypt has increased its market shares in Saudi Arabia, Russia, the Netherlands, UK and, Germany, but decreased its share in the Lebanon market.
Egypt’s Market Shares of Pomegranate Export Markets Egypt has respectable share of the Saudi market (22%) Has modest share in the Lithuanian market Egypt’s market shares in all these market has rapidly grown recently, The highest growth was in Russia, Lithuania, and the Netherlands markets.
Exporters’ Procurement of Pomegranate Over halve of the surveys farmers sell through agreed contracts But sell only 18% through contracts mainly to exporters due to stringent standards farmers’ complains about their relationship with traders including: delayed payments, high rates of rejected products due to poor quality, and traders’ occasional noncompliance with agreements 2350 LE/t 2099 LE/t 2691 LE/t
Farmers marketing channel of choice is farm gate sales to wholesalers and other traders Second most common channel is sales at the wholesale market with LE100/t higher price Sales to traders of the crop in-field (kelala) is less important (5%) but with lowest price practiced by farmers who are in dire need of cash. Sales to processors is low but gives the highest prices Greater linkage of farmers to market points with highest prices is the goal of value chain analysis 1000 LE/t 1100 LE/t 700 LE/t 1050 LE/t 1250 LE/t Farmers Market Channels: The case of Onions in Egypt
Market Infrastructure Egypt has reasonably good road and rail network, But there is still general poor marketing infrastructure in Upper Egypt Airport cooling facilities at local airports and improvements in Safaga port could enhance access of Upper Egypt products to international markets. Upper Egypt has particular advantage in climate, water resource and relatively cheep labor that gives a competitive advantage to produce and export these commodities. But this advantage can be severely eroded by poor marketing infrastructure.
Product Quality Pomegranate prices: High quality 1700 LE/t Low quality 1070 LE/t Pesticide residuals were found to be the most important factor for rejecting pomegranate shipments. About 80% of the surveyed farmers consider it as the most important constraint to export. This study shows that in both onion and pomegranate, farmers do not practice rational use of pesticides and chemical fertilizers, and they are not fully aware of the relationship between product quality and farming practices. Adopting good practices is complicated by the fact that different markets have different standards and what is not sold in one market may be sold in another market, albeit at lower prices
Quality of Agro-chemicals An important factor affecting farmers’ use of inputs is related to the availability of inputs when needed and the quality of inputs. The surveyed farmers complained about both quality of chemicals provided by traders and their availability in the quantity needed. The findings point out that input supply is not any more only about increasing production but, even more importantly, it is also about producing a product with right characteristics that is demanded by the market.
Post Harvest Management A number of malpractices or lack of information and awareness in post harvest handling of the products are identified. For example, Fruit picking is done by twisting and sometimes strongly pulling, without any tools. This could damage the fruits as well as the trees. Unsuitable packing of piling approximately 85 fruits in a container compressing over each other; causing mechanical damages such as cuts, bruises and pressure damage. Similarly, farmers practice less efficient curing of onions. These practices lead to losses that can be avoided by following specific and simple post-harvest management procedures including: proper harvesting, shading and cooling products after harvest, sorting packing practices, and curing practices in the case of onions.
Production Practices Provide incentives for drip irrigation Adopt more rational and optimal use of agrochemicals (fertilizers and pesticides) Improve tree management: through proper pruning and tree canopy development; Improve harvesting practices: Improved and careful harvesting practices reducing fruit damage should be encouraged to avoid the induction of any physical damage.
Post Harvesting Improve on-farm sorting and grading: on-farm sorting practices need to be introduced to avoid small sized fruits which will not comply with EU standards. Introduce improving curing of onions: Curing of onion for 15 days which gave the best results should be introduced to farmers.
Marketing Support smallholder farmer associationsThe performance of such associations should be monitored and assistance should be given by a third party, like capable NGO, until they are able to function autonomously. Increase competitiveness through improved quality standards: The potential for Egyptian pomegranate in the EU market should be explored. The impediments to export can be classified as: 1) lack of information, 2) lack of technical support services and 3) lack of knowledge on preparation and handling the export produce.
Market Infrastructure Egypt should review the status of the major market infrastructure such as ports (particularly the Safaga port), airports and the cooling facilities needed for the exportation of fresh produce and horticulture
Main Points for Discussion Poverty measurements and monitoring poverty reduction, poverty mapping Knowledge transfer systems-agricultural services Role of rural institutions –farmers’ associations Finance- micro finance Marketing issues: Infrastructure Product quality standards Chemical residues