Characterization of Mango Value Chain in Punjab

By Dr. Muhammad Sharif

Social Sciences Institute, NARC, PARC, Islamabad, 2009

Mango Economy of Pakistan,

2006-07 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%

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

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.

Survey Method
A team of social scientists and biological scientists with a

valuable inputs and assistance from various stakeholders

Thirty-four mango growers from seven villages (S = 14 and

L = 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 of mango supply chain.

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 life

mango is retailed in.

There are six types of mango retail markets namely

street vendors/hawkers (selling to 20% consumers), fruit shops (51%), Tuesday, Friday and Sunday bazars (25%), roadside stalls (3%), super markets (1%) and food service (1%).
A small proportion of mango (3%) are processed into

value added products as mango pulp which is used in canned mango, dried mango, drinks and ice cream.

Contd

Pakistan exported 5 percent of its mango production

in the fresh form.

During

the last Pakistani mango increase its total million in 1998-99 it is expected to coming years.

decade (1998-99 to 2006-07), industry has been able to triple mango export revenue US$ 6.4 to US$ 19.9 million in 2006-07 and continue further expansion in the

The

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

Mapping the mango value chain

Input provision
Post Harvest handling

Produ ction

Marketin g and Logistic

Retail

Consum ption

Seedlings, fertilizers, pesticides, labour and machinery

Planting and application of input use

Handling, sorting, packing

Loading, transporting , unloading, storing, auctioning, transporting to pack house, unloading, grading, repacking, precooling, loading, airport handling and custom clearance

Loading, transporting, unloading, sorting and selling

Consumption

Mapping value added throughout the in domestic retail mango value chain
Input Supplier Grow ers Contrac tor Commis sion Agent Wholes aler Retailer

Value

Rs.7.25/kg

Rs.7.25 Rs.10/kg

Rs.10 Rs.23/kg

Rs.23 Rs.24/kg

Rs.24 Rs.30/kg

Rs.30 Rs.40/kg

Value added

Rs.2.75/kg

Rs.13/kg

Rs.1/kg

Rs.6/kg

Rs.10/kg

Mapping value added throughout the mango export value chain to UK market
Input supply Grow ers Contrac tor Commi ssion Agent Exporte rs Importe rs UK Retail ers

Value

Rs.10

Rs.10 Rs.15/kg

Rs.15 Rs.24/kg

Rs.24 Rs.25/kg

Rs.25 Rs.120/kg

Rs.120 Rs.130/kg

Rs.130 Rs.230/kg

Value added

Rs.5/kg

Rs.9/kg

Rs.1/kg

Rs.95/kg

Rs.10/kg

Rs.100/kg

Profit Distribution Marketing Marginal Analysis

Rs./kg
Market agencies Sale price Absolute cash margin Marketing cost Net profit Percent profit

Producer Contractor Commission agent Wholesaler Retailer

10 23 30 40

10 12 1 6 10

7.25 2.75 5.5 6.5 0.5 0.5 2.0 4.0 2.5 7.5 75 67 50 54 28

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

Particulars First Year Mango Plantation Total Cost 2-6 year Total Cost 7-12 Years Total Cost 13-40 Years Present Worth of Cost Productivity 7-12 Years kg/plant Productivity 13-40 Years kg/plant Present Worth of Out put Net Present Worth Net Present Worth Per Year Small Farmer 16385 100707 170822 897776 204,469 82 132 205,769 1,300 32.50 Large Farmer 17635 111358 197605 972835 227,234 89 140 229,458 2,224 55.61

Cost per Kg for 7-12 years

Cost Per Kg for 13-40 years Average cost Rs./kg for 7-40 years

9.92
8.10 8.58

10.57
8.27

Competitiveness Issues of Mango Value Chain

1. Comparative input costs
Inputs
Land ($/m2) Capital (interest rate %) Labor ($/month)

Pakistan
17 10.65 173

Thailand
55 7 290

India
41 7.5 196

USA
80 5.25 4000

Power ($/Kwh)
Freight (40gt container $ to Japan)
CSF, 2007

0.09
1600

0.04
1340

0.08
900

0.06
800

Contd

2. Agricultural research and development No research and development facility for conducting research on controlled atmosphere storage and shipping of mango export.

No institution is working on the development cold chain aspects of mango export.

Limited research and development work done on mango is not properly disseminated to mango growers due to ineffective extension system.

Contd

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

Compliance: In 2004 Pakistan ranked 32nd in the number of countries with consignments rejected by the EU. Pesticide residues: Maximum residue levels (MRLs) are exceeded. Studies suggest serious misuse of pesticides. Traceability: Farm and mango market records are nonexistent. Such records are essential for mango exports to USA and Europe HACCP and GMP certifications: Some progress has been made with pack houses but it is limited. HACCP needs top be combined with Good Practices EuroGAP E-GAP: Certification is a focus for development especially in the mango industry. Post-harvest treatments: Specific post-harvest treatments are prescribed for mango exports. The industry is making some progress but facilities are generally inadequate and knowledge is lacking Pest risk assessment: Pakistan must be able to provide evidence of pest free areas

Contd

4. Quality and food safety issues Pakistan does not have adequate packing, grading and cold storage facilities. Pakistani mango is generally delivered in inferior and inconsistent quality which fetch lower price as global markets are more conscious about quality standards of fresh mango. Sustainability of mango export would be at the stake unless and until Pakistan effectively compliance to quality and safety standards The existing food laws are more relevant to processed products but their implementation is generally poor because of political pressures and weak institutions

Characterization of Mango Supply Chain in Pakistan

Issues, activities, crops/ product/ processes and intervention Major issues competitive Component of mango chain Input provision Production
Poor cultivation technology Low yields and returns Unreliable and poor quality

Post-harvest Handling/Processing
Poor storage and handling system Wastage and losses Complex and inefficient mango

Product manufacturing
Inability to predict or manage

Limited/poor access to quality farm inputs (Nursery seedling, fertilizer, pesticide, water, machinery, credit and extension

mango supply

marketing channels Small scale, disaggregated disorganized units Poor work practices and conditions in these units Post harvest/logistic/ Primary and secondary processing

and
bad

raw material supply Erratic supply of electricity and water Poor financing arrangements Poor technical choices and lack of innovation Quality and food safety is lacking Tertiary processing domestic market and export market Mango drinks and ice-cream

Value activities

adding Agro-industries Nursery industry, chemical industries, mechanical industries, institutional services industries
Development programme for high

Agriculture Horticultural and tree crops mango fruit tree

Skill development programs

Crop and products and processes Economic and market interventions

Storage, cooling, logistics, packing for domestic market, packing for export or pulping
Incentives for backward linkages and

Incentives

yielding nursery seedlings

Development programme for high

quality chemical inputs at lower price

on mechanized production practices and innovations Improved management of scarce water resources Ban on intercropping in mango orchard

Development

programme for ensuring equitable access of institutional services (credit and extension)

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 work condition in processing units Incentives for industry links

for backward linkages and integration Improve infrastructures Industrial loans and guaranties Links with R&D and foreign technology Standards and penalties for consumer health

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, poor

harvesting practices, ---- low productivity

Week financial farm performance: Low product prices, high

post 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 in

infrastructure, establishment and implementation of legislation for trade in Hort. Products

Conclusions
Low mango productivity and output (10.7 t/ha vs.

26.7 t/ha - yield gap of 16 t/ha with a value loss of US$ 740 million) Harvest losses of mango is 25% of the total harvest (0.42 mt with a value of loss to US$ 118 million) 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 profit margins Inadequate international market information

Contd

Urgent efforts are required for skilling mango

growers in modern production practices to narrow mango yield gap domestically as well as globally because the expected mango yields with the improved and modern management practices are 12-15 and 15-20 ton/ha.
Skilling mango growers and contractors in post-

harvest management can add US$ 118 million in the mango economy of the country sharing to overall economy of the country.
Pakistan needs to explore new mango export

markets. Moreover, the implementation of international compliances for mango quality, standards and safety can narrow down global mango price gap.