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Maize Value Chains in Nepal




D.B.Gurung*, D.B.KC**., G.O.Ferrara**., N.Gadal**., S.Pokhrel***., K.B.Koirala**.,
                     B.B.Hamal***., Y.R.Pandey* and R. R. Puri**
* Nepal Agricultural Research Council
***Department of Agriculture, DoA
**CIMMYT, South Asia Regional Office
                                                                            1
Background
• Maize second important food crop in Nepal
• Staple food for hill people (>14 million people &)
   44 districts food deficit )
• Very important for food security
• Contributes 2.5% in GDP, 7.5% in AGDP and 26%
  to the total edible food production
• Average per capita consumption is 45.5
  kg/calorie/year (it is more in hills-- vital for
  survival)
Area, Production and Productivity of Maize
               in Nepal 2010


                              Ecological Belts      Area      Share on Total
                              (Districts)        (876,000 ha)     Prodn
                                                               (1855000 mt)
                              Mountain (16)         20%                9.8%

                              Hill (39)             70%               70.1%

                              Terai (20)            10%               20.1%

                              Total (75)           100%              100.0%



Total production 1.85 million t
Average productivity 2.12 t ha-1                                       3
Area under maize, by            Maize area by OPVs
 growing season (2010)             and Hybrid (2010)
                               Hybrid
         Winter                 5%
          12%
Spring
 14%
                                             OPVs
                  Summer                     95%
                  74%



                                      Hybrids
                           •   Winter and spring in Terai
                           •   Summer in valley and Hills
Area (%) of local and improved maize varieties in eco-zones of
                         Nepal, 2010.
   120

                                         99
   100
           86             87
    80

    60                                                Improved
                                                      Local
    40

    20          14             13
                                              1
     0
           Mountain        Hills          Terai


                                                           5
Varietal Options for Different Environments (No)

                                             23
25



20



15
                    8                 7
10
                             6
          2
 5



 0




        High Hill Mid Hill   Terai   Denotified Total
Utilization of Maize
 • Grits, Chapati, Dhindo similar to Ugali, boiled, roasted and soup.
 • Popped maize is very popular for snacks, mostly in hills and
    rural areas.
Grits of both white and yellow types
 • OPVs are more common for making grits
 • Flour recovery is more in OPVs (45% White and 40% Yellow)

Ecological Production   Yield    Food Feed Indust   Poultry   Industri
  Belts      (mmt)      (t/ha)               rial    feed        al
(Districts)                                 Uses     13%        1%
Mountain      0.18               96%   4%     -
                         2.0
  (16)
 Hill (39)    1.30               95%   5%     -
                         2.2

Terai (20)    0.38               10%   80%   10%              Human
                         2.3                                   food
                                                               86%
                                                                         7
Value added maize products
Cornflakes         Popped corn




                                 8
Common Maize Value Chains in Nepal
• Maize seed value chain

• Maize food value chain

• Maize feed value chain

• Maize industrial value chain


                                     9
Maize Value Chain Actors
             Hills                             Terai
• Limited numbers of value chain      Many actors are involved in
  actors in grain marketing           Terai (input supply,
• Rural traders collect maize from    production, processing and
  large and small holder farmers      marketing etc.)
  and supply to the local traders
• Value addition by traders is less
  than 20%
• Actors mainly perform drying of
  grains and bulk packaging in
  sacks


                                                                    10
Total maize demand and its share in value
           chain in Nepal, 2010
              Feed                 Industry
            0.44 mmt               0.05 mmt
            (19.77%)                (2.33%)


   Food                                         Seed
 1.69 mmt                                     0.03 mmt
 (76.74%)       Total Quantity: 2.21 mmt      (1.16%)
                 (Production-1.86 mmt;
                    Import-0.35 mmt)


                                                         11
Maize Seed Value Chain

Consumer/Gro     12920 t      1088 t      190.4 t           82 t         2040 t                680 t     Support
wer
                                         Rs. 55/kg         Rs. 52/kg
                                                                                                         Pvt. Labs,
Trading,                               Agrovet         Seed Company                                      Private
                                                                                                 Rs.
and                                    190.4 t              82 t                                         sectors,
                                                                                                48/kg
Processing                                                                 Rs.
                                                                                                         MoAC,
                                        Rs.                               49/kg
                                                                                                         FIS, Pvt.
                                       47/kg            Rs.
                              Rs.                                                                        Sectors
                                                       47/kg
                             47/kg
                                                                        Agrovets         Seed Company
                           Cooperatives
                              1360 t                                      2040 t               680 t
             Rs. 40/Kg
                               Rs.                                          Rs.                   Rs.    SQCC,
                              40/kg                                        40/kg                 40/kg   RSTL,
                                                                                                         INGOs,
 Producer/P                                                                                              NGOs,
 rocessing/                Public Sector                                 Individual/Private Sector       Agrovets,
 Quality                      3.6%                    17,000 t                    96.4%                  Fis, Pvt
                                                                                                         Sector
 Control
                                                                                                          NGOs,
                                                                                                          INGOs,
Input                                                                                                     NARC
Supply                      Technology                                               Source Seed          DOA
                                                                                       (BS/FS)
                                                                                                          Pvt. Sector,
                                       Seed, Fertilizer,               Importer (Fertilizer,              Agrovets
                                         Pesticides,                      Chemicals)
Maize Food Value Chain
Consumers      1386 tt                                 280 tt                        24 tt      Enabling
                                                                                                Environment

                                                  Rs 18-20/Kg

                                                      Retailers                  Rs 15-16/Kg
                                                      279.8 tt

                                                  Rs 15-16/Kg                                     Fis,
  Trading       Rs 14/Kg                                                                          Private
                                                  Wholesalers                                     sectors.
                                                   304.2 tt

                                                      Rs 14/Kg
                                                                                                  Agrovets,
                                                                                                  Fis, Pvt
 Producer/P
                                                                                                  Sector,
 rocessing ,             Private Sector                1690 tt              Individual Farmer
 packaging                   (70%)                                                (30%)

                                                                                                   NGOs,
                                                                                                   INGOs,
                                                                                                   NARC
Input                    Technology                                                Seed            DOA

Supply
                                                                                                   Pvt. Sector,
                                  Seed, Fertilizer,               Importer (Fertilizer,            Agrovets
                                    Pesticides,                      Chemicals)
Maize Feed Value Chain
  Consumer                  15%                                        85%                   Enabling
                                                                                             Environment
                                                                              Rs. 33/Kg
Marketing,                     Rs 32/Kg                                                      FIs, Pvt.
Processing,                     Dealers (100%)                 Rs. 32/Kg         Retailers   Sectors,
Packaging                                                                                    Nepal
                               Rs.30 /Kg
Processing                                                                                   Electricity
                 132 tt                           308 tt                                     Authority



                Rs. 17-19/Kg                     Rs.21 /Kg
                                                                                              Fis,
                                                                                              Private
Marketing                                     Wholesalers                                     sectors.
                                                308 tt

                                                 Rs 17-19 /Kg
                                                                                               Agrovets,
Production                                                                                     Fis, Pvt
                    Private Sector               440 tt             Individual Farmer          Sector,
                                                                                                NGOs,
Seed &                                                                                          INGOs,
Technology               Technology                                        Improved Seed ,      NARC
Input                                                                         Agrovets          DOA
Supply
                                           Seed, Fertilizer,         Importer (Fertilizer,      Pvt. Sector,
Materials                                                                                       Agrovets
                                             Pesticides,                Chemicals)
Maize Industry Value Chain
  Consumer                   10%                                         90%                   Enabling
                                                                                               Environment

Marketing,                      Rs 168/Kg                                     Rs. 168/Kg
                                                                                               Fis, Pvt.
Processing,                     Dealers (100%)                  Rs. 148/Kg         Retailers   Sectors,
Packaging                                                                                      Nepal
                             Rs.135 /Kg
Processing                                                                                     Electricity
                   15 tt                           35 tt                                       Authority



                 Rs. 17-19/Kg                    Rs.21 /Kg
                                                                                                Fis,
                                                                                                Private
Marketing                                      Wholesalers                                      sectors.
                                                 35 tt

                                                 Rs 17-19 /Kg
                                                                                                 Agrovets,
Production                                                                                       Fis, Pvt
                    Private Sector               50 tt                 Individual Farmer         Sector,
                                                                                                  NGOs,
Seed &                                                                                            INGOs,
Technology            Technology                                             Improved Seed ,      NARC
Input                                                                           Agrovets          DOA
Supply
                                            Seed, Fertilizer,          Importer (Fertilizer,      Pvt. Sector,
Materials                                                                                         Agrovets
                                              Pesticides,                 Chemicals)
Constraints in Maize Value Chains
        Functions                               Constraints
1. Input supply level       Unorganized traders, Govt policies not sufficiently conducive,
                            quality is always questionable and curtailing

2. Producer level           Unavailability of required quantities of production inputs,
                            increasing high cost of inputs and less aware about quality of
                            inputs and technologies
                            Lack of supportive policies ( subsidy and crop insurance)
3. Processing level         Poor infrastructures and costly, Private sectors not very
                            interested to invest in agriculture, lack of supportive polices (
                            exemption of taxes for machineries)
4. Service provider level   Less funding in agriculture (3.15% of the total budget),
                            Services are more supply demand and weak linkages and
                            coordination among service providers
5. Consumer level           Poor marketing information , knowledge gap, weak
                            implementation consumer protection Act. No contract law in
                            the country for seed production, processing and marketing.
                            Not adequate education and awareness about consumption
                            of good and services
                                                                                            16
Way Forward
 Functions          Suggestions/Recommendations
1. Input supply     •   Quality products
                    •   Timely delivery services
                    •   Quality control mechanism
                    •   Friendly policies for market actors

2. Producer level   •   Subsidy on inputs
                    •   Provision of crop insurance
                    •   Soft loan and Credits
                    •   Capacity building
                    •   Contract system for assured marketing
                    •   Responsive extension services
                    •   Timely and efficient delivery services
                    •   Mechanization and subsidy on farm equipments and
                        tools
                    •   Market information on time
                    •   Promotion of hybrid maize varieties in Terai during
                        winter and summer in the hills to increase maize
                        production and to substitute the import
                                                                              17
Way Forward………
Functions                      Suggestions/Recommendations
3. Processing                  • Support in developing infrastructures both at
                                 community level and private sectors
                               • Credits and exemption of taxes on equipment and
                                 machineries
                               • Decentralized quality control system and establish
                                 equipped labs
4. Consumer level              • Effective implementation of consumer protection ACT.
                               • Formulation and implementation of Contract law
                               • Conduct awareness and promotional activities of
                                 goods
                               • Good product price through efficient and effective
                                 value chain system
                               • Access to market information system through media
                                 and communication
There should be functional linkages and sharing of information among the value
chain actors is crucial for effective marketing system of maize and maize products.
In addition Enabling environment is essential to facilitate the value chain system.
                                                                                  18
Thank you