Nepal Apples

Evolution of the initiative

Towards a market development approach

Jumla and apples are synonymous in Nepal. Until the start of the pilot, interventions were mainly production oriented. According to the Jumla District Development Committee (DDC) household survey in 2008, around 10,000 households had apple orchards and were producing over 1,800 mt of apples, of which only 30% of the apple trees were at fruit bearing stage. Apple production is expected to rise significantly in the coming years; due to the local government policy of “one orchard per household”, stimulating an aggressive approach to the plantation of apple saplings. This has already led to a situation of production fairly exceeding sales; Jumla apples were sold at NPR 2/kg in the local market in Jumla in 2008.

Jumla declared itself as an organic district in 2007, and in 2009, the District Agriculture Development Office (DADO) initiated certification of Jumla apples for three villages. This period also witnessed increased awareness on nursery improvement, orchard management, training/pruning, grading, packaging and market linkages with wholesalers. The pilot adapted a market oriented approach and started working with agribusiness as an entry point for interventions. Because of this, considerable price increases have been realised (up to Nrs. 26-35 per kg for Grade A and Nrs. 22-24 for Grade B).

Towards a multi-stakeholder approach

Initially, the pilot focused on the commercial agreements between the agri-businesses and the co-operatives. The project was instrumental in supporting co-operatives to identify business partners, to make business deals, and to realise a supply arrangement through the District Cooperative Federation (DCF) – a coalition of nine co-operatives in Jumla. A link between the DCF and the Kathmandu based private company B.H. Enterprises was established. This company is involved with the wholesale distribution of Jumla apples in Kathmandu and based on the pilot would now like to increase its supply base from Jumla.

In the course of the project, the focus shifted towards a multi-stakeholder approach. The two agribusinesses were obviously key drivers and their deal with the District Co-operative Federation acted as the core of the business model. They guaranteed buybacks and were involved with crop monitoring, supply of packaging materials, and certification. The District Agriculture Development Office in collaboration with I/NGOs was instrumental in getting villages certified as organic and in building demand based technical and organisational capacities among apple producers. SNV, in collaboration with a local NGO facilitated market development via a number of interventions on the demand side, the supply side, transaction and at policy level.

Towards scaling up

Unmet market demand and production potential coupled with the commitment of the private sector and improving transportation infrastructure conditions provide a good basis for up-scaling the pilot initiative. Building on the pilot, the High Value Agriculture Project in hilly and mountainous areas is facilitating this in a follow up phase. BH Enterprises used to rely solely on Chinese markets for apple imports. However, after the project intervention, some part of its apple imports have been replaced by Jumla apples. As the demand for Jumla apples surpasses current supplies reaching the national market and road connectivity is improving, B.H. Enterprises and Organic World and Fair Future (OWF) are seeking to increase their supply base from Jumla.

The current business plans of BH Enterprises and OWF indicate fairly progressive and realistic targets on increasing the trade volume of Jumla apples. While BH Enterprises plans to market 200-500 mts of apples, OWF intends to gradually increase their Jumla apple transactions from 80 mts in 2012 to 150 mts in 2016. These two enterprises will thus increase their supply base from 400 farmers during the pilot phase to 3,000 farmers within a year from now. Furthermore, there is an emerging interest from other national and regional businesses to source apples from Jumla. In 2011, around 40 mt of Jumla apples were sourced by regional traders (in the districts of Nepalgunj and Surkhet). Further “crowding in” would widen the distribution network, increase sales and could cater for unmet consumer demand.