Tomato Value Chain Analysis Value Chain Analysis Value Chain

Document Sample
Tomato Value Chain Analysis Value Chain Analysis Value Chain Powered By Docstoc
					Tomato Value Chain Analysis

  Enhancing Farmer’s Profitability through
  Value Addition




                              Prepared By
            Syed Tamjid ur Rahman and Mahmud Hossain
      ChangeMaker: Society for Social and Economic Development
              House 8, Road 13 New, Suite F3 Dhanmondi
                       Dhaka 1209, Bangladesh
                   Email: info@changemaker-bd.org


                           Prepared For
                         Bearing Point Inc.
                       1679 International Drive
                       McLean, VA 22102, USA
August 24, 2005


Mr. M. A. Tim Canedo
Manager, Private Sector Development
Alternative Livelihoods Program – Eastern Region (ALP ER)
Angor Bagh, Jalalabad
Afghanistan


Dear Tim Canedo,

We are pleased to attach the report on “Tomato Value Chain Study: Enhancing the Profitability of the
Farmers in Afghanistan through Value Addition” as per the Terms of Reference and Contract made by
Bearing Point on July 2, 2005 under the USAID/DAI Prime Contract # GS-10-0359M, Order Number:
306-M-00-05-00515-00.

The report provides a comprehensive outline of the dynamics of the Tomato Subsector in the Nagrahar
Province, Eastern Region of Afghanistan and identifies key constraints and opportunities for potential
interventions for value addition in the subsector.

Farmers of Nangrahar Province show an increased interest in cash crop production, which has a
comparative economic advantage over the production of traditional subsistence crops. Tomato with
other high value cash crops has a substantial bearing in providing food security, creating alternative
livelihoods to poppy cultivation as well as supporting the rehabilitation of the rural economy of
Afghanistan. The study was geared toward involving the private sector in the value addition process of
the tomato subsector not only for the long term sustainability of interventions, but to also in developing
the economy for accelerated social and economic growth.

We believe the findings of the study will be useful for the ongoing program initiatives of Alternative
Livelihoods Program – Eastern Region (ALP E) undertaken by Development Alternatives, Inc., and
Bearing Point, Inc., in collaboration with USAID-Afghanistan.

Should you have any queries about the report, we would be only too happy to discuss them with you.

Finally, we would like to thank you, Bearing Point and DAI for giving us the opportunity to undertake this
study. We would be pleased to provide further assistance, should you require them, in your future
endeavors.

I look forward to your comments and feedback

Thank you


Sincerely yours


Syed Tamjid ur Rahman, Team Leader
Mahmud Hossain, Research Associate

ChangeMaker: Society for Social and Economic Development
House 8, Road 13 New, Suite F3, Dhanmondi
Dhaka 1209, Bangladesh
Email: info@changemaker-bd.org




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 2
 Table of Content

GLOSSARY AND TERMINOLOGIES USED ____________________________________________________________ 5
EXECUTIVE SUMMARY ____________________________________________________________________________ 6
BACKGROUND_____________________________________________________________________________________ 8
  SCOPE OF THE TASK __________________________________________________________________________________ 8
  OBJECTIVE: ________________________________________________________________________________________ 9
  METHODOLOGY OF THE STUDY ________________________________________________________________________ 10
    Sampling Framework _____________________________________________________________________________ 10
    Information Gathering ____________________________________________________________________________ 10
    Challenges: _____________________________________________________________________________________ 11
    Acknowledgements:_______________________________________________________________________________ 11
MARKET STATUS _________________________________________________________________________________ 13
  PRODUCT PROFILE __________________________________________________________________________________ 13
  NUMBER OF ENTERPRISES IN THE SUBSECTOR: ____________________________________________________________ 14
  LOCATION AND CLUSTERS: ___________________________________________________________________________ 15
  THE PRODUCTION PROCESS ___________________________________________________________________________ 16
  MARKET GROWTH AND TREND: _______________________________________________________________________ 19
    Customers: _____________________________________________________________________________________ 21
    Market Actor Profile: _____________________________________________________________________________ 21
    Degree of Vertical Integration: ______________________________________________________________________ 22
    Ease of Entry/Exit: _______________________________________________________________________________ 22
    Technology and Production Status: __________________________________________________________________ 22
    Product Characteristics: ___________________________________________________________________________ 23
    Economy of Scale:________________________________________________________________________________ 24
    Employment Characteristic_________________________________________________________________________ 24
      Size of Employment:_______________________________________________________________________________________24
      Types of Workers and Employee:_____________________________________________________________________________24
      Wages: _________________________________________________________________________________________________25
      Price and Quality Regulation: ________________________________________________________________________________25
VALUE CHAIN ANALYSIS__________________________________________________________________________ 26
  SUBSECTOR MAP ________________________________________________________________________________ 27
    Definition of Actors in the Map: _____________________________________________________________________ 29
    Large Farmer ___________________________________________________________________________________ 29
    Farmers in and Around Jalalabad ___________________________________________________________________ 29
    Farmers in Remote Areas __________________________________________________________________________ 30
    Farmers of Khogyani _____________________________________________________________________________ 30
    Tomato Export to Pakistan _________________________________________________________________________ 30
    Tomato Sale to other Regional Market ________________________________________________________________ 30
    Commercial Processors ___________________________________________________________________________ 30
    Tomato Retailers_________________________________________________________________________________ 31
SERVICE MARKET ________________________________________________________________________________ 32
  PRE-CULTIVATION SERVICES__________________________________________________________________________ 32
  CULTIVATION SERVICES _____________________________________________________________________________ 33
  HARVESTING AND POST-HARVESTING SERVICES___________________________________________________________ 33
  SUBSECTOR CONSTRAINTS ANALYSIS ____________________________________________________________ 34
  COMPETITIVE ANALYSIS _________________________________________________________________________ 36
  POLICY FRAMEWORK: _______________________________________________________________________________ 37


            CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 3
  SWOT ANALYSIS OF TOMATO INDUSTRY OF AFGHANISTAN__________________________________________________ 38
  STRENGTHS _______________________________________________________________________________________ 39
  WEAKNESSES______________________________________________________________________________________ 39
  OPPORTUNITIES ____________________________________________________________________________________ 39
  THREATS _________________________________________________________________________________________ 39
CONCLUSIONS AND RECOMMENDATIONS _________________________________________________________ 40
  POTENTIAL INTERVENTIONS: __________________________________________________________________________ 40
    Capacity Development on Improved Production Process __________________________________________________ 41
    Value Addition of Tomato __________________________________________________________________________ 41
    Backward and Forward Linkage: ____________________________________________________________________ 42
    Strengthening and Developing Effective Business Service Market ___________________________________________ 42
    Mainstreaming Gender in Tomato Production and Processing:_____________________________________________ 43
    Infrastructure Development: ________________________________________________________________________ 43
    Energizing the Association:_________________________________________________________________________ 43
    Policy Advocacy:_________________________________________________________________________________ 44
  TIME-LINE FOR INTERVENTION:________________________________________________________________________ 44
LIST OF ANNEX ___________________________________________________________________________________ 46
  ANNEX-1: DETAIL CONSTRAINTS AND OPPORTUNITIES MATRIX: ______________________________________________ 46
  ANNEX 2: LIST OF RESPONDENTS_______________________________________________________________________ 52
  ANNEX 3: KI INTERVIEW LIST _________________________________________________________________________ 53
  ANNEX 4: LIST OF SERVICE POVIDERS ___________________________________________________________________ 54
  ANNEX 5: FRESH TOMATO SELLERS ____________________________________________________________________ 54
  ANNEX 6: TOMATO INPUT SELLER S ____________________________________________________________________ 54
  ANNEX 7: VALUE CHAIN WORKSHOP PARTICIPANTS________________________________________________________ 54
  ANNEX 8: VALIDATION WORKSHOP PARTICIPANTS _________________________________________________________ 55
  ANNEX 9: STATEMENT OF WORK (TEAM LEADER) _________________________________________________________ 56
  ANNEX 10: STATEMENT OF WORK (RESEARCH ASSOCIATE) __________________________________________________ 57




            CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 4
Glossary and Terminologies Used

Terminology                           Description
Afghani                               Currency of Afghanistan
Agro-ecological Zone                  IThe greatest cultivated area
ALP                                   Alternative Livelihood Program
Bazaar                                Market
BDS                                   Business Development Services
Bed Preparation                       To prepare land for seedling
Biswa                                 100 sqmt
Canal                                 Small water channel for fields
CDIPP                                 Capacity Development on Improved Production Process
DAI                                   Development Alternative Inc
Dawa                                  Medicine
District                              Set of villages
ER                                    Eastern Region
FGD                                   Focus group discussion
Gharib                                Poor
Gol                                   Round
Harvesting                            Collection of crops
Hectare                               5 Jerib
Ijara                                 Lease/Rent
Input                                 Raw materials for a particular product
IS                                    Input Supply
Jerib                                  2000 sqmt
Kg                                    Kilogram
Khogyani Zone                         Zone comprising of four districts (Hisarak, Khogyani, Shirzad and Pachir Wagam)
KI                                    Key Informant
Large farmer                          Farmers who have more than 10 Jerib land
Local Trader                          Who buy things form field and sell it to trader and wholesaler
M/m                                   Million
MA                                    Market Access
Maldar                                Rich
Medium Farmer                         Farmers who have more than 2 and less than 10 jaribs of land
Pesticide Dose                        Prescribed amount of pesticide
PI                                    Potential Intervention
PP                                    Product Profile
Province                              Set of Districts
PSD                                   Private Sector Development
Roma                                  Tomato variety most prevalent in ER
Romayan                               Tomato
Sara                                  Fertilizer
Small farmer                          Farmers who have less than 2 Jerib land
SMEs                                  Small and Medium Enterprises
SP                                    Service Provider
SSMA                                  Subsector Market Assessment
Supply Chain                          A distribution channel which includes from input suppliers actor to consumers
SWOT                                  Strength, Weakness, Opportunity and Threat
T                                     Thousand
TMT                                   Thousand Metric Ton
Tokhum                                Seed
USAID                                 United States Agency for International Development
Value chain                           Identifying the value addition elements in the distribution channel




           CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION           PAGE: 5
 Foreword
                                                       Foreword
Tomato Subsector
Enhancing Farmers’ Profitability through Value Added Production

Executive Summary

        The tomato subsector plays an important role in the overall employment and income generation of the
        poor farm communities, in the Eastern Region of Afghanistan. The subsector has the potential to enter
        into the larger market economy, and is emerging as potentially a major income generator. This will be
        realized, provided the subsector is guided to conform to quality standards and employ efficient
        technologies for utilizing resources and effectively responding to needs of the market.

        It was argued that the local producers are not adequately meeting the needs of the market. The need
        for creating competitive advantage through value addition, backward and forward linkage with the wider
        markets and the need for increased capacity building of the producers and service providers was
        rationalized as the working strategy. Taking this framework, the study focused on viewing the
        competitive advantage of the subsector through value addition. This was done through interviews with
        relevant value chain members, stakeholders, the market actors and the service providers. During the
        process the central question was:


              Under which alternative market systems (local versus export, traditional versus more modern technologies) should
                   tomato value chain members operate to increase value-addition and increase competitive advantage?


        The assessment team identified the following related to tomatoes in tha Eastern Region:

            The tomato market is currently about US$3.1 million
            The subsector is growing at a rate of 8 to 10% every year
            More than 25% of fresh tomatoes are imported from Pakistan.
            The total employment in this sector is estimated to be around 20,000 that are directly involved in
            various form of activities like tomato production, trading and processing
            About 30% of direct employment of this subsector constitute women
            The tomato producers are catering to the needs of the country and are also exporting to Pakistan
            The export value of tomatoes is about US$150000.
            Most of the tomato producers are concentrated in Jalalabad and surrounding districts i.e., Behsud,
            Kama, Smar Khail as well as Khogyani region of Nangrahar Province.
            The total production of tomatoes in Nangrahar Province is about 4290 metric tons
            Lack of market and low price of tomato in the peak season are the two most crucial constraints of
            the tomato subsector expressed by the customers
            The tomato subsector is still at the developing stage, the local producers are starting to adopt new
            technologies for cultivation, farming practices, etc.
            The local producers feel that they lack knowledge and skills in producing quality tomatoes
            Almost 100% of the local producers expressed their desire and willingness to receive technical
            assistance and develop their capacities on improved farming techniques and increase their
            profitability


        CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                 PAGE: 6
    The local producers believe that linkage with forward and backward market can enhance their
    competitive advantage significantly
    Market expansion and value addition is considered is the critical factor for the growth of the
    subsector
    The local producers feel that cold storage facilities for preserving the tomatoes during peak season
    when the price is low would significantly improve their profitability
    Local processing of tomatoes (tomato paste, ketchup and juice or low cost sun-dry tomato) can
    significantly increase the demand for fresh tomatoes and can attract thousands of farmers to
    cultivate tomatoes and increase their livelihood
    Policy on tomato trade and import of agricultural inputs for local production is necessary to save the
    subsector

The following interventions were suggested by the assessment team:

    •     Capacity Development on Improved Production Process: Farmer’s knowledge and
          capacity on improved and scientific cultivation process such as soil testing, pest control, water
          management, harvesting and prost harvesting handling, etc.
    •     Value Addition of Tomato: To provide opportunities to the farmers to obtain relatively better
          price through storage of tomatoes during pick season when the price is low, as well as
          increase demand of tomatoes through setting up processing plants (ketchup, juice, paste) and
          sun-dry tomatoes
    •     Backward and Forward Linkage: Coordinating of markets from production to processors and
          from processors to final consumer.
    •     Strengthening and Developing Effective Business Service Market: Developing
          appropriate services to cater to the needs of the Value Chain members for increased
          productivity and profitability, i.e., packaging services - wooden crate, cultivation equipment
          services, pest control services, etc.
    •     Mainstreaming Gender in Tomato Production and Processing: A significant portion of
          women are engaged in both production and processing of tomato and tomato products, but
          they do not have adequate access to knowledge, information, market linkage, access to
          financial services for making their ventures profitable.
    •     Infrastructure Development: The farmers’ profitability decreases significantly due to lack of
          appropriate feeder road linking the farms with main access road and physical market places.
          This can decrease post harvest product loss and increase farmers profit from tomato cultivation
    •     Energizing the Associations: The associations of farmer is an outcome of natural demand
          for knowledge and experience sharing, further strengthening of these associations can
          increase various service provisions to the farmers and at the same time they can collectively
          bargain their interest with the traders groups and policy makers
    •     Policy Advocacy: Favorable policy can encourage engagement by private sector investors in
          value addition of agriculture. Appropriate taxation, support to local industry, creating provisions
          for smooth supply of utilities (mainly power), refining the regulatory framework to create an
          enabling environment for increased private sector investment in agricultural sector can
          increase the profitability of the farmers.

ALP-E can tap the opportunities to intervene in the area to increase the competitive advantage and
develop export potential as well as improve the economic benefits to farmers and SMEs engaged in the
production of tomatoes.




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 7
 Chapter

  1                                          Introduction


 Background

           This study was commissioned by BearingPoint and DAI, contractors for the Alternative
           Livelihood Program – Eastern Region (ALP-E), a USAID-Afghanistan initiative, which has a
           broad goal of developing viable small and medium sized, private sector enterprises in
           Afghanistan. ALP-E’s overarching objective is to “provide an approach designed to
           strengthen the private sector’s capacity to address the problem of illicit poppy cultivation
           and to promote improved economic opportunities and diverse regional economic growth.
           One of five major project components of the ALP-E is Private Sector Development (PSD),
           which is charged with contributing to the development of both agricultural (with the
           Agribusiness component) and non-agricultural sectors. One major effort of the PSD is to
           undertake assessments of chosen subsectors so as to better target relevant support. The
           strategy for doing so is to increase competitiveness, performance, and growth of the private
           sector businesses, which is expected to contribute to the growth and improvement in
           economic and social conditions. ALP-E intends to addresses the issue of market
           imperfections for the selected products/sectors by identifying and working with service
           providers who are currently offering or have potential to offer commercial services to
           businesses. ALP-E’s role is to assist the businesses as well as the service providers in
           developing their products and services, by providing technical assistance in their product
           and market development.

           Nangrahar Province, located in eastern Afghanistan, has a population of about 1.5 million
           and an area of 7,195 square miles. About 80% of the populations are directly dependent on
           agriculture for their livelihood. The agriculture production in the Eastern region is
           significantly high due to the land being conducive to agri-ecological environment, availability
           of both surface and underground water sources, and access to backward and forward
           market linkages. The eastern region produces more than 250 different varieties of
           agricultural crops ranging from vegetables, horticultural products, field crop, spices, etc. The
           primary sources of irrigation are springs (chena), canals (lakhti), shallow wells (kohee) and
           karezes. Studies and discussions with various key informants have shown that the Eastern
           Region (Nangrahar Province) of Afghanistan’s agricultural sector has both great potential
           and significant challenges. The agriculture sector in general is suffering from multifarious
           problems such as, lack of adequate supply of quality inputs, inadequate farming
           knowledge, rudimentary farming practices, lack of farm machinery and tools, insufficient
           information about markets, poor local capacity to provide necessary services to improve
           farmers efficiency and growth, poor linkage with adaptive research and extension, poor
           road system for transporting raw materials and agricultural products, etc.

Scope of the Task

           The scope of the study is limited to the tomato subsector under the broad domain of
           production and processing. For this study, the subsector is defined as clusters of products
           that follow a particular supply chain from the production to finished/processed goods to the

       CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION     PAGE: 8
         end consumer. For example, the inputs (seed, fertilizer, pesticide), farming, harvesting,
         post-harvesting, and marketing, etc.

         The study identified key constraints and opportunities of the supply chain actors of the
         tomato subsector as well as the dynamics of the value chain to identify the competitive
         advantage of the actors to increase their productivity and profitability tomato production,
         trading and processing. The SOW for this study is annexed to this report.

Objective:

         To objective of this assignment was to undertake a full subsector/market assessment
         (SS/MA) study of the tomato subsector in the Eastern region of Afghanistan and provide a
         comprehensive understanding of the entire value chain of tomato subsector. The primary
         objectives of the study are to identify the constraints of the subsector, understand the
         business service provisions in developing the value chain, and to guide the ALP-ER PSD
         Team in providing value-added support to the subsector for a more vibrant market
         environment.

         More specifically the study looked into the following 5 broad areas:

         Value Chain
             • Develop a subsector value chain map; identify the major players in the value chain
             • Identify the constrains and opportunities faced by the value chain members
             • Identify the competitive advantages/disadvantages of the subsector players –
                market access, technology/product development, management/organization, input
                supply (raw materials), finance, policy, operating environment/infrastructure, trade
                regime, etc.
             • Identify Strengths, Weaknesses, Opportunities and Threats (SWOT) of the sub-
                sector

         Market Conditions
            • Identify the present market conditions of the sub-sector – market size, key players,
                demand supply gap, pricing trends, imports and exports, distribution networks
            • Identify sector prospects and barriers to growth

         Business Development Services
            • Identify and prioritize business development services needed by the sub sector
            • Identify existing service providers and assess the services being provided by them
                to the subsector and their relationship with clients
            • Identify potential service providers and assess their ability and willingness to
                provide the needed/missing services

         Supply Chain
            • Develop a supply chain map of the subsector – both backward and forward
            • Identify major players in the supply chain
            • Identify the interrelationship of actors

         To achieve the above mentioned objectives, the study was divided into three primary
         activities 1) Information gathering, 2) Analysis of the information in light of the subsector
         dynamics, and 3) Presentation of key findings for taking appropriate interventions for the
         growth of the subsector. For information gathering interviews were conducted in Jalalabad,
         Behsud, Samrkhail, Kama, and Khogyani districts and interviewed the tomato producers,
         input suppliers, traders, wholesalers, exporters, service providers, etc.).


             CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 9
Methodology of the Study

         For the study a combination of field survey and literature review were conducted. The
         primary information served as the critical framework for analysis while the secondary
         information provided important inputs for understanding the context and rationality behind
         the status of subsector. This combination has provided rich context-bound information that
         lead to explaining the situation more concretely

         As a result, it was thought that a simple data-collecting instrument would neither reveal the
         true picture of the value addition and the dynamics nor would it demonstrate the true
         benefits of such services. On the other hand, it was also felt that the observation would also
         be difficult particularly with the limited time frame. As a result, both qualitative and
         quantitative investigation using projective technique was used. This has provided
         meaningful insights into how the producers, traders, and service providers perceive various
         issues and deal with specific business situations. This technique was chosen since in
         addition to quantitative information, it would enable the respondent to “project” subjective
         beliefs and feelings to a third party, or into a task situation. A structured format, therefore,
         was not used. Answers to a great extent were designed to understand and interpret the
         respondent’s mental profile.

         Sampling Framework
         For the study, a combination of both “Non-probabilistic Stratified Random Sampling” and
         “Cluster Sampling” techniques were used for collection of information. Since the universe is
         not known, the samples were drawn using a systematic pattern (i.e., every fourth enterprise
         on the left hand side) from an arbitrarily designated point within each sample area (block,
         road, etc.) Furthermore the clusters were identified based upon the closeness and
         remoteness of the producers or traders from the large markets and high tomato producing
         area. A combination of small, medium and large enterprises was selected to understand
         the true dynamics of the susbector.

         Along with the survey, four FGDs were be conducted with 8 to10 participants in each
         session for in-depth understanding on selected key issues of: production, marketing,
         trading, processing, customs, as well as constraints/opportunities and potential
         interventions to remove the constraints and take advantage of the opportunities.

         Information Gathering
         The data collecting techniques involved is provided below.
         1) Key Informant Interviews
         2) Questionnaires: semi-structured with probing guidelines
         3) FGD: to provide for qualitative information on critical issues of services
         4) Validation workshop: to validate the findings
         5) Assessment of the services and service providers

         The assessment team performed Key Informant interviews (Government, NGO, research
         Institutes, Traders, Universities, Practitioners, Processors, in Jalalabad and surrounding
         districts) and went through available secondary documents to develop quick mapping of the
         subsectors of Nangrahar Province and other parts of the country and their relative position
         and rank in the market. The samples where drawn from Jalalabad (large, medium and
         small producers, traders, input suppliers, processors); Samar Khil, Behsud, Kama and
         (focusing on producers and service providers).

         Information was collected on five main components, these are:



         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 10
    1. Key Informant Interviews: Key informants were identified and, using a
       standardized guide, interviewed in the target areas. The key informants provided a
       variety of information ranging from general socio-economic to specifics related to
       the tomato subsectors.
    2. Secondary Data: Attempt was made to               Actor                          Total
       collect relevant documentation related to         Producer (farmer)                 54
       the subsector and the target areas. This          Importer                           4
       proved to be a challenge of its own, as           Exporter                           3
       there was not sufficient written information      Wholesaler                         4
       available on the subsector                        Retailer                           4
    3. Subsector Survey: A total of 108                  Input Supplier                     6
       subsector actors were selected and were           Processor                          4
       interviewed,     using    a    standardized       Service Provider                   5
       guideline for interview. The table shows          Key Informant                     24
       the breakdown of respondents in the value                           Total          108
       chain.
    4. Focus Group Discussion and Validation Workshop with Subsector
       Representatives: Four farmer FGDs, one Value Chain FGD, and a Validation
       Workshop of subsector representatives were held during the study. The workshop
       was organized to achieve four primary objectives, 1) to understand the dynamics
       of the subsector 2) present the work that was undertaken and seek clarification on
       critical issues of the subsector, 3) to validate the findings, and 4) to explore ideas
       for interventions that addresses constraints and aide in the development of the
       value chain. The workshop provided certain clarity to the findings and also offered
       certain new information.

Challenges:
Although the assessment team completed the study as per the Terms or Reference
satisfactorily, nevertheless, the team faced a number of challenges to complete the study:

1. Although we could meet the necessary actors required for clear understanding the
   dynamics of the subsector and drawing conclusions, security issues have, to a certain
   degree, hampered the free exchange of thoughts through rapport building. The
   movement in the field, meeting with the subsector actors and other important key
   informants had to be arranged under secured situations.
2. The significant limitation faced by the team was difficulties in extracting appropriate
   historical data. Absence of reliable benchmark data and statistics on agriculture in
   general and tomato subsector in particular has made it extremely difficult to conduct
   market assessment. Determining the influence of the subsectors external environment
   on the project and its results to parts of the cause-effect relationship as well as on the
   different parts of the means-end chain of the subsector became extremely challenging
   due to lack of appropriate and reliable periodic data. As a result, personal judgment
   based on observation, extensive discussion and verification with various actors and
   key informants as well as past experience were given preference. Despite the
   constraints, care was given to make the entire exercise as objective and unbiased as
   possible

Acknowledgements:
This subsector market assessment report with the potential intervention design is the result
of a collaboration process undertaken by BearingPoint, DAI (Development Alternative Inc),
and the assessment team of ChangeMaker-Bangladesh

The study is a product of important inputs from a wide cross section of people. Without their
valuable contribution, it was practically impossible to understand and assess the true status

CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 11
of the subsector. These people are either directly or indirectly involved with the subsector or
are participants of the subsector. The study could not have achieved its desired targets
without the cooperation of the stakeholders, particularly the Government officials, NGO
leaders, the university professors, the business leaders, and the leaders of various
associations. We are extremely grateful to them for sharing valuable information about the
subsector.

The team would like to gratefully acknowledge the contributions of the various subsector
actors, particularly the producers/farmers who took great effort to share and demonstrate
their views and experiences. The ALP-E staff and particularly the PSD staff: “Dr. Emal
Arman” and “Mr. Irfanullah” Private Sector Specialists and “Mr. Noor Alam” Admin
Assistant/PSD are an outstanding team that provided invaluable services to the
assessment team during the entire period of the study. They worked relentlessly in fulfilling
our almost impossible task list and, at the same time, complied patiently to the frequent
changes in the plans due to security related hindrances. The assessment team would also
like to thank the Agriculture, Logistics, and ICT staff for extending their excellent
cooperation and assistance despite their being extremey busy. We would also like to thank
Mr. Jawed Ahmed for coordinating our logistics from Kabul.

Finally, the team is indebted to Mr. Tim Canedo, Manager, Private Sector Development,
USAID Afghanistan ALP-E for providing support and the opportunity to conduct the study.
The team would also like to thank both Bearing Point and DAI for their excellent
cooperation and assistance during the entire period of the study.




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 12
 Chapter

   2                                     Market Status


 Market Status

           The local tomato market of Afghanistan is dominated by Pakistan for both fresh and
           processed tomato. On an average more than 40% of fresh tomatoes are imported from
           Pakistan in various periods of the year. During the off season (roughly about three months
           December - February ) this import volume of fresh tomatoes increases to about 100%. A
           significant portion of this import is smuggled from Pakistan causing large discrepancies in
           the regular market mechanism. Apart from the tomatoes (fresh and processed), the local
           market is almost completely dependent on Pakistan for various production inputs such as
           seed, fertilizer, pesticides, packaging materials, etc.

Product Profile

           Tomatoes (rumiyan as they are called locally) are a
           warm season crop and are sensitive to frost. They
           are usually cultivated in sub-tropical and mild cold
                                                             0
           climatic regions and thrive well in temperature 10 C
                 0                                             0
           to 30 C with optimum range of temperature is 21 -
              0                                   0
           24 C, the mean temperature below 16 C and above
              0
           27 C are not desirable. The temperature affects the
           germination, crop standing and ultimately affects
           yield, quality and price. Afghanistan, because of its
           diversified land topography and agro-ecological
           conditions, has the advantage to produce tomato
           almost year-round in various provinces and districts.                     Picture 1: Roma Variety Tomato

           Tomatoes come in a number of varieties with highly standardized cultivation practices.
           Each variety has its own shape, color, size, timing of cultivation, duration of harvesting,
           yield, disease resistance, etc. In the Afghanistan
           market, there are mainly two varieties of tomatoes
           widely cultivated – Roma, and Kruz.

           With the rapid agricultural technology innovation,
           new varieties of tomato are now available in other
           countries which have significantly shortened the
           harvesting time cycle. The local producers are
           generally not aware of these varieties and as such
           they find it difficult to cope with this market shift and
           are increasingly losing market share to innovative
           varieties of Pakistani farmers.                                            Picture 2: Kruz Variety Tomato




           CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION          PAGE: 13
Number of Enterprises in the Subsector:

           There is no reliable estimation of the market size of tomatoes and tomato processed
           products because of the long war, there exists, no centralized database, no published
           statistical records, and poor coordination and exchange of information among the
           researchers. However, through interviews with the value chain members and the key
                                                                                 1
           informants it was estimated that there are about 20,000 farmers (large 10%) engaged in
           tomatoes production in Nangrahar province. Out of these 20,000 producers about 2,000
           are engaged in large scale commercial tomato cultivation. The annual production of tomato
                                                                                                 2
           in Nangrahar is approximately 4290 metric ton which is roughly about US$1.3 million . A
           large number of tomatoes are also imported from Pakistan by about 12 large importers.
           The annual import volume of tomatoes is approximately 3060 metric tons which is roughly
           about US$1 Million.

           The table below shows that 10 Importers of seed, 25 Importer of fertilizer, and 15 Importers
           of pesticide are dominating the inputs market in the eastern region. The rest of the inputs
           are directly imported by the farmers and small input traders. In the fresh tomato market,
           about 12 Importers of fresh tomatoes have a share of 80% of the total tomato imports from
           Pakistan. The rest (20%) is imported by small traders of tomatoes. While 12 exporters (the
           same trader engaged in import) exports about 75% of the total tomato export from eastern
           region. The rest 25% exports are handled by the farmers and small traders.

                                                                        No of                Market          Market Size
        Role                           Actors                         Enterprise             Share                (US$ )
                      Fresh Tomato Importer                                 12                 80%             2.6 Million
                      Tomato Seed Importer                                  10                 65%                     2.0
      Importer
                      Fertilizer Importer                                   25                 88%                     2.5
                      Pesticide Importer                                    15                 60%                     5.0
                      Large Farmers                                       2,200                11%                600000
       Local          Farmers in and around Jalalabad                     7,000                35%                670312
     Producer         Farmers in Remote Areas                             3,000                15%                200000
                      Farmers in Khogyani                                 8,000                40%                562500
      Exporter        Fresh Tomato                                          12                 75%                150000
   Table 1: Number of actors in the value chain and their market share



           The farmers in Khogyani and the farmers in and around Jalalabad dominate the production
           of local tomatoes (75% of the total production) in the eastern region.

           Apart from the fresh tomatoes mentioned above in the table, a small percentage of
           tomatoes are processed locally. Two fairly large companies (one government and one in
           the private sector) were engaged in processing of tomatoes locally with an installed
           capacity of 75 thousand metric tons per year. However, the private sector processing plant
           was closed down in early 2005 due to electricity and machinery problem. The government
           owned factory (although has primary focus on olive processing, pickles and oil), processes
           small amounts tomato juice for the local market in the eastern region (see Table 2 below).



           1
            Having more than 10 jaribs of land
           2
            Calculated at Afs15 per kg (weighted average figure of seasonal variation – early, mid and late) and converted at
           US$1 = Afs48

            CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                  PAGE: 14
               In addition to the above two large processors, there are also about 6 local small scale
               processing plants run by female entrepreneurs, but almost all these small processing plants
               are now closed due to shortage of working capital. These processing units were clustered
               in Jalalabad and had very weak linkages with supporting industries both backward (for
               tomato, packaging materials – bottles, labels, etc.) and forward linkages with markets.

                   Nangraher Pickle Factory                                   It may be mentioned that tomatoes are
Establishes                    Mid 80s by Government of Italy and             also processed by individual households
                               Russia                                         for home consumption. A fraction of these
Management                     Canal Directorate, Afghanistan
                               Government                                     home-made processed tomatoes are
Full Production Capacity       23.5 Metric Ton                                commercially marketed. These tomatoes
per day                                                                       are sun dried by the households through
Current Production per day     7.1 Metric Ton (All products)
Current Product line           Olive oil, Tomato juice, Olive, Fruit juice,
                                                                              traditional techniques during tomato
                               Ice bar.                                       season when the tomato supply is high
Current Operation per day      6 hours (8:00 am to 2:00 pm)                   and prices are low. This household
Current Tomato Processed       0.3 Metric Ton
per day
                                                                              processing is estimated to be about 10%
Backward Linkage               Self backward linkage (Raw material            of total tomato processing. It may also be
                               source from their own farm)                    noted that processed tomatoes (primarily
Forward linkage                Self forward linkage (sell through their       in the form of ketchup) are also being
                               own outlet)
Constraints                                                                   imported from Pakistan by the exact
        -Marketing            Bottle sourcing, Labeling, Packaging            import quantity is unknown.
        -Production           Technology, Cold store
        -Utilities            Electricity
        -Human Resource       Skilled technician                              The local market size of tomato is
Table 2: Nangarhar Pickle Factory at a glance                                 sufficient to draw the interest of private
                                                                              sector enterprises to engage in the value-
               addition activities in a profitable manner.

Location and Clusters:

               Most of the tomato producing farmers is concentrated in Khogyani, Behsud, Kama, Samar
               Khail districts and surrounding areas of Jalalabad city of Nangrahar Province. The
               producers in other areas are primarily concentrating on production of cucumber, onion, and
               other vegetables for local markets. These farmers produce very little (about 10-20% of their
               land) tomato. Khogyani is
               generally considered as the
               primary hub of tomato
               production in the province.
               The following chart shows the
               rank of districts in terms of
               tomato production volume.
               The surrounding areas of
               Jalalabad city and Behsud
               have strong backward and
               forward linkages as well as
               internal harmoniousness as
               well as internally generated
               important services at a
               reasonable cost giving them
               better competitive advantage
               than most of the producers in
               other districts.


                                                                                   Picture 3: Map of Nangarher Province with tomato
                                                                                   growing areas
               CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                 PAGE: 15
         The pie chart below shows the relative ranking of major tomato producing districts of
         Nangrahar Province. For each district the first number is the ranking and, separated by a
         coma, the percentage of total production of Nangrahar. It may be noted that Khogyani agro-
         ecological zone (which consists of 4 districts – Hisarak, Khogyani, Sherzad, and Pachir
         Wagam) is considered as the tomato hub of the eastern region, however, Khogyani district
                           th
         alone ranks at 5 place. It should also be noted that Behsud district often includes
         Jalalabad, but we have separated Jalalabad city in this calculation


                                                              Khuz kunar
                                                                3, 15%
        Hisarak                                                                                     Surkhroad
        *2, 20%                                                                                      4, 12%




                                                                                                              Khogyani
                                                                                                               *5, 10%

                                                                                                  Sherzad
            Behsud                                                                                 *6, 7%
            1, 25%                                                                 Batikot
                                                                                    7, 5%
                                                                            Jalalabad
                                                                              8, 3%
                                                                    Pachir wagam
                                                                       *9, 2%
                                                              Chaparhar
                                                               10, 1%




                   • Graph 1: Most Tomato Producing Districts of Eastern Region

The Production Process

         The tomatoes produced in the eastern region go through five basic operations – 1) seedling
         production, 2) bed preparation, 3) transplantation, 4) weeding/fertilization/pesticide/irrigation
         and 5) harvesting. Direct production of tomatoes from seed is rare in this region. Only two
         operations are generally mechanized bed-preparation and pesticide, mechanized irrigation
         is also rarely used. However, the small farmers use manual operation for the entire
         process.

         All the tomato producers in eastern region uses raw materials (seed, fertilizer, pesticide and
         to a large extent tools, equipment and machinery) that are imported from Pakistan. A flow
         diagram of production process is developed after a detailed interview with the producers.
         The bold line in the diagram represents the process that the majority of the producers
         follow. During the field investigation, it was observed that the farming process used by
         majority of the local producers defy any scientific or indigenous knowledge. The improved
         farm practices such as soil testing, soil moisture and temperature measurement, plant
         spacing, water management, pest control, etc., are severely lacking.




         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION              PAGE: 16
                 The following diagram shows the general steps followed by the farmers in tomato
                 production.


      Operations Main Functions                                       Specific Functions                              Support Service


                                                                      Picking the Tomato
                                                                                                                         Packaging


             HARVESTING

                                              Labor




FERTILIZATION (DAP & UREA) and
         PESTICIDES                                        Fertilizer and Pesticide use in the Land                         Spray
                                                                                                                         machine Rent




                                                                                                      Irrigation             Pump
                                                                                                                             Rent

              WEEDING
                                             Labors/Self




                                                                       Transplantation
         TRANSPLANTING




                                     Labor/Self                       Bed Preparation




                                                                                                 Plowing the land         Tractor Rent
             LAND
          PREPARATION


           SEEDLING
         PREPARATION

                                                                          Seedling


                                                      Diagram 1: Showing Production Process of Tomato




                 The subsector study attempted to reveal an accurate cost analysis in each activity related
                 to operation, inbound logistics, outbound logistics, marketing and sales and service.



                 CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION          PAGE: 17
                However, it was a challenge to collect all the relevant information because of lack of record
                keeping by the small farmers.

                The table below shows average cost of production per jarib (2000 square miters) land. The
                sales price was calculated based on weighted average of early, mid and late season price.
                The table shows that an average farmer can earn about 24 thousand Afghanis from
                cultivating tomatoes in one jarib land area by investing about 28 thousand Afghanis for
                about 2 to 3 months. However, the cost structure also shows that the farmers are spending
                a large amount of money on various services due to limited availability and access.

                                                       Cost of Production per Jereeb up to Market
                 A    Cost of Production                                        Cost Per Unit     Units               Requirement          Total
                 1    Land preparation (tractor)                                350 per hour        1     hours         2 times              700
                 2    Fertilizer DAP                                             24 per kg         28     kg            1 times              672
                 3    Fertilizer Urea                                            12 per kg         50     kg            1 times              600
                 4    Irrigation                                                150 per labor       1     day           5 times              750
                 5    Seed                                                      100 per400gm        1     day           1 days               100
                 6    Harvesting                                                100 per labor       2     days          6 times            1,200
                 7    Pesticide                                                 100 per bottle                          3 times              300
                 8    Labor (trasplanting, weeding)                             150 per labor       2     labor         4 days             1,200
                 B    Crates (packaging)                                         84 per 50kg       20     crates        1 time             1,680
                 C    Transport                                                  50 per crates     20     crates        1 time             1,000
                 Total cost of production (A+B+C)                                                                                          8,202

                 D    Production in quantity                                                                                  2,800   kg

                 E    Income                                                     10 per kg                           2,800   kg        28,000

                 Profit per Jereebs {E-(A+B+C)}                                                                                        19,798

                                                Table 3: Showing Cost of Production of Tomatoes in 1 Jarib Land

                The following graph shows the three most critical expenditures that a farmer incurs during
                production and marketing of tomatoes – these are packaging materials (wooden crates),
                labor for harvesting and transportation.




                               Transport                                   700

                     Crates (packaging)
                                                                                                                                              1680
Labor (trasplanting, weeding, harvesting)                    1200

                               Pesticide           300

                             Harvesting                                           1200

                                   Seed                100

                               Irrigation                750

                          Fertilizer Urea                600

                           Fertilizer DAP                   672
                                                             700
                                                         Graph 2: Three Most Critical Expenditures a Farmer Incurs
               Land preparation (tractor)

                                            -             2,000         4,000         6,000         8,000          10,000         12,000           14,000
                 CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                    PAGE: 18
         The cost of wooden crate is about 10% of the total
         production costs. The two most popular size crates are -
         14kg and 50kg. Presently the packaging materials
         (wooden crates) are primarily coming from Pakistan
         either new or used/recycled during the import of fruits
         from Pakistan. Only a fraction of them are produced
         locally from recycled wood. Developing provisions for
         sufficient service providers particularly on the packaging
         material is extremely critical.

         The manual harvesting of tomatoes is generally
         expensive, since in a season each plant needs to be
                                                                      Picture 4: Imported Crates of Tomato from Pakistan
         harvested 4 to 5 times, on an average, thus requiring
         large field worker numbers represneting about 8% of the
         total production cost. Creating provisions for mechanical technologies for harvesting
         tomatoes can significantly improve the farmer’s productivity and profitability.

         Poor availability and high cost of transportation is also contributing to low profitability of the
         farmers. Farmers have to pay about US$ 73 for every jarib of tomato production which is
                                            about 15% of the total cost.

                                               Apart from the above, generally the low productivity and
                                               profitability of the farmers is directly related to their lack of
                                               knowledge and access to information on improved
                                               cultivation process of tomatoes. This significantly affects
                                               on their sales revenue and profit. Farmer’s access to
                                               knowledge and information on new and existing
                                               technologies is critical in determining the profitability of
                                               cultivation. If the farmers can be empowered to become
                                               "knowledgeable farm entrepreneurs" using the latest
                                               available information and knowledge on improved and
                                               scientific cultivation practices, modern agricultural inputs
      Picture 5: A Local Crate Manufacturer
                                               and demand and supply conditions of output markets,
                                               they will gained the desired competitive advantage from
          farming. It is obvious that emerging as a "knowledge society" is a desirable goal for any
          society, as it is to aim for a situation in which farmers, along with everyone else in society,
          have access to the latest knowledge and techniques and can use them to improve their
          conditions.

Market Growth and Trend:

         It was calculated from the wholesalers, traders, retailers and producers that the overall local
         market for tomatoes is growing at a rate of 8-10% annually. This figure has been estimated
         from the change of sales of the wholesalers over the year and consolidating the figures of
         the key actors especially the retailers and importers of the tomato market. According to the
         key actors, the change of sales is due to: a) increase in population (migration from rural
         areas, b) increased income due to increased employment opportunities, c) increased social
         and economic activities due to development programs, and d) better road communication
         system both in urban and rural areas.

         Despite the growth, the trend analysis of market shows that the local producers of tomatoes
         are losing their market share gradually to the importers. The import volume has increased
         substantially in the last 3 years. Previously the imports are dominating the seasons when


          CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION       PAGE: 19
                       local tomatoes are not produced. This period is generally about 3 months. However, recent
                       trends show imported tomatoes are coming from Pakistan even during the local harvesting
                       season. It was also argued that the imported tomatoes are actually local tomatoes that
                       were purchased by Pakistani traders and kept in cold storage in Pakistan when the local
                       supply was high. The value chain members also stated that the local production could not
                       cope with the market demand due to various constraints, such as: a) low yield, b) increased
                       pest infestation, c) drought, etc.

                       The chart below shows the period of production and supply and its effect on price of
                       tomatoes. The chart also shows how the different tomato producing locations are catering
                       the market demand.
                       70

                       60
                       50

                       40
                       30

                       20
                       10

                        0
        Ave ra ge Price /Kg   20        35         45       60          15          10      5             5          10           10        15         15

        Months of Se a son    Ja n      Fe b      Ma r      Apr        Ma y        Jun      Jul         Aug          Se p         Oct      Nov         De c


        Supply of Toma to      Import from Pa kista n     Ja la la ba d a nd Surrounding          Khogya ni Fre sh                 Khogya ni Pre se rve d


% of Tota l Toma to Supply              25%                            35%                                                  40%

                                                           Ja la la ba d, Be sud, Sa ma r
          Re gion/Districts          Pa kista n             Kha il, Ka m a , La ghm a n,           Khogya ni, She rza d, Hisa ra k, Pa chir W a ga m
                                                                       Ba tikot


                                                         Graph 3: Tomato Producing Season and Its Affect on Price

                       The primarily reason for low price of local products, as found from the study, is excess
                       supply of tomato during the production season. Facilities for preserving the excess supply
                       during the production season can bring equilibrium in the market. The complaint of farmers
                       regarding low profitability is quite legitimate when linked with the increasing trend of
                       production and low return on investment because of the market imperfection. This works as
                       a downward spiral – “to keep the price of tomato competitive, the local producers tend to
                       use: a) cheaper, b) lower quality, and c) inadequate amount of inputs (seed, fertilizer and
                       pesticide) which greatly reduces yield and profitability”. This results in significant loss of
                       market share over time. The local producers have started experiencing high cost of
                       production due to:
                           1. increased price of inputs,
                           2. poor farming practices,
                           3. high cost of labor,
                           4. high price of packaging materials,
                           5. high transportation cost, etc.

                       All the above factors are prohibiting local producers from attaining desired economy of
                       scale to increase per unit cost of tomato. However, the large farmers due to their improved
                       backward and forward linkages can achieve better competitive advantage. This linkage has
                       made the large farmers gain substantial profit by collaborating directly with the tomato
                       traders and input supplier. The Pakistani trade network and better business ties with the
                       local tomato wholesalers through effective "Relationship Marketing Strategy" have given
                       them to access suppliers’ credit facilities and trade discounts from “bulk purchase” of inputs,
                       thus giving them a superior competitive advantage through cost leadership.

                        CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                                    PAGE: 20
                     Customers:
                     The primary consumers of tomatoes are households. Little information was found on
                     institutional customers of tomatoes. There was a lack of accurate information about the
                     number of customers of the subsector. However, it was estimated that the people,
                     particularly living in the Jalalabad city, are the main customers of the fresh tomatoes. The
                     demand for tomatoes in Jalalabad city has, reportedly been on the increase due to:

                     a)   change in the level of income of the people,
                     b)   increase in development and economic activities,
                     c)   consumption in hotels and restaurants, and
                     d)   increase in population (migration from the rural and other areas).

                     It is interesting to note that about 65 percent of the locally produced tomatoes are
                     consumed in Jalalabad.

                     The tomato buyers in the eastern province can be categorized in the following four groups:

                      Type of Buyers                                                                          Rate of Consumption
                                                                                                             (% of total production)
            1.     Households                                                                                                  60%
            2.     Household Processors (mostly for own consumption)                                                           29%
            3.     Institutions (hotels and restaurants)                                                                       10%
            4.     Commercial Processors                                                                                         1%
            Table 4: Customers And Tomato Consumption Rate


                     Market Actor Profile:

                     The following table shows the various actors in the value chain as well as key profile and
                     sales volume of business and their investment. The table generally provides analytical
                     framework on the entry and exit barriers of the actors in the value chain.

Actors                Profile                                                    Market Information                              Product              Client
     Retailer         Mainly tomato retail stores targeted to the end-user       N = 700 S = $ 2.3 million                       Tomato               End-user
                      They also sell different types of vegetables in            Medium to high Investment and working capital
                      different seasons. Most of the retail stores use push      I =$ 2142
                      carts and sells at street corners.
 Wholesaler cum       Mainly sells tomato to the retailers and often to the      N = 50, S = $ 1.1 million                       Tomato               Retailers
   Importer           end-users. Also import tomato from Pakistan. They          Medium to high Investment and working capital
                      also sell different vegetable items to the retailers and   I =$ 25000
                      end-user.
      Trader          Mainly exports and imports tomato from Pakistan.           N = 9, S = $ 1 million                          Tomato             Wholesaler &
                      They also supply tomatoes to different provinces and       Medium to big investment and working capital                         Retailer
                      districts. Some of the traders directly buys tomato        I = $ 270000
                      from the farmers and often pay advances to farmers,
   Local Trader       Mainly buys tomato from the farmers on credit and          N = 80, S = $ 0.5 million                       Tomato           Wholesalers and
 /Commissioning       sells it to the traders or wholesalers                     Medium to big investment and working capital                         trader
     Agents                                                                      I = $ 3000
 Tomato Producer      Grows tomato either on own land or often leases            N = 20,000, S = $ 20 million                    Tomato            Commissioning
                      land from large landowner. Sell directly to the            Medium to high investment and working capital                    agents, Traders,
                      wholesale market. Sometimes sells tomato from              I = $ 1000                                                       and Wholesalers
                      their field.
   Seed traders       Sells different types of seed for vegetables by            N = 25, S = $ 900000                            Seed             Farmers and local
                      importing them directly from Pakistan. They also sell      Medium to high investment and working capital                      small traders
                      seeds to small shops in other district towns.              I = $ 30000
 Pesticide Trader     Imports pesticides from Pakistan and sells to the          N = 70, S = $ 2.6 million                       Fertilizer and   Farmers and local
                      farmers as well as to small shops in other districts.      Medium to big investment and working capital    pesticide          small traders
                                                                                 I = $ 8000
 Fertilizer Trader    Imports fertilizer from Pakistan and sells to the          N = 100, S = $ 9 million                        Fertilizer and   Farmers and local
                      farmers and to small shops in other districts.             Medium to high investment and working capital   pesticide          small traders
                                                                                 I = $ 15000
Note: N = Number of enterprises, S = Sales Revenue, I = Average Investment


                     CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                                PAGE: 21
Degree of Vertical Integration:
The subsector has a mixed degree of vertical integration. The large farmers are integrated
backwards into the import of inputs and also forward integration up to marketing for their
tomatoes. They have developed separate market channel for their products, and have also
developed certain contracting facilities with local small and medium farmers. The large
farmers have their own tractors, irrigation equipments and spraying facilities which they
often rent-out to other smaller farmers at a price. The large farmers with strong vertical
integration have increased capital investment in higher technologies and have created
competitive differences both in terms of cost leadership and product differentiation. The
farmers in the Jalalabad surrounding areas and particularly in the border areas also have
developed a strong backward integration with the Pakistani input suppliers as well as
forward linkage with the wholesalers. These farmers also, to a certain extent, have
developed their own market channel; the rest of producers that are engaged solely in the
production of tomatoes and use the traders channel for selling their products. The majority
of the farmers, especially the remote and small farmers, are highly disintegrated having
only production facilities without any vertical integration and generally produce tomatoes on
rented land of the large farmers. They procure support facilities from other similar adjacent
enterprises in return of a service charge.

Ease of Entry/Exit:
New entrants in the subsector bring in new capacity, the desire to gain market share and,
often-substantial resources. The threat of entry into a subsector depends on the barriers to
entry that are present and reaction from existing competitors. The barriers can be any of
the following form;

    •     Economies of Scale: Economies of scale deter entry by forcing the entrant to
          come in at large scale and risk investment or enter in a small scale and accept a
          cost disadvantage.
    •     Product differentiation: Established enterprises have reputation and customer
          loyalties that stem from past trade practices. Differentiation creates a barrier by
          forcing entrants to spend heavily to overcome existing customer loyalties.
    •     Capital Requirements: The need to invest large financial resources in order to
          compete creates a barrier to entry.
    •     Sustaining Loss: Barrier to entry can be created by the capacity to sustain loss or
          low profits for a reasonable period by the competitors
    •     Access to Distribution Channels: To the extent that logical distribution channels
          for the product have already been served by established enterprises, the new
          enterprise must persuade the channels to accept its product through lower price
          which reduce profits.
    •     Government Policy: Licensing requirements.

The above mentioned barrier plays a critical role in the functioning of a healthy value chain.
The tomato value chain shows quite strong entry barriers in the form of oligopoly and
capital requirement in importing and exporting of tomatoes. This protects the positions and
profits of the existing importers, exporters and wholesalers/traders of tomato. Apart from
this no significant entry barrier was observed in any form for production and retailing.
Relative simpler entry barrier exists for processing or cold storage plants - with minimum
size in terms of capital outlay, technical know-how, and market integration.

Technology and Production Status:
Production technology used by the small farmers is not standardized and the rate of
adaptation of new technology is low. The majority of farmers use traditional farming


CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 22
practices with poor knowledge and skills about inputs, production and market interface
functions. The poor knowledge and information has also contributed to the poor productivity
of farm production. One of major factor limiting increase in production is high investment
and low return to the producers. Post harvest losses generally range from 25-40% or even
greater. The price of product decreases in addition to the hidden quality losses. These
losses bring low return to producers and traders. The quality of tomato starts deteriorating
right after harvest. Primary factors responsible for post-harvest losses are: poor pre-harvest
measures, such as adoption of poor production techniques (varieties with low shelf life,
imbalance use of nutrients, insect pest and disease infestation and a biotic stresses); low
tech harvesting procedures – non-application of pre-harvest recommended
treatments/practices, harvesting at improper times, and improper care during harvesting;
and post-harvest problems – non-removal of field heat, dumping produce, moisture
condensation causing pathogen infestation, packaging in bulk with out sorting and grading,
improper transportation and storage, and distant and time required for distribution and
consumer market.

The farmers have poor knowledge and awareness of the impact of the following on
germination of seed and yield of tomato:
a.   appropriate tillage,
b.   micro-nutrients,
c.   soil moisture,
d.   soil temperature,
e.   climatic temperature,
f.   sunshine,
g.   fog, mist and rain

Product Characteristics:
The tomato subsector has a number of highly standardized varieties. Because of their poor
knowledge and skill, the farmers generally can not tell much difference in these varieties
except for the shape and size of tomatoes. The different sources of seed either imported or
locally produced are generally the same with a slight difference in germination rate.

The following table shows the product characteristics of similar tomato varieties in a similar
agro-ecological environment in Pakistan. The tomato varieties which are produced by the
local farmers generally takes about 80-90 days to mature and yields about 3.5 metric ton
per jarib as oppose to 71 days in Pakistan with 7.25 metric tons of yield.

                                                                                                     Average
                        Days to         Days to        Days to               No. of
       Variety                                                                                          yield
                      flowering         fruit set      m aturity       fruits/plant
                                                                                                     (Mt/Jbs)
Rom a Local                     12             18               71                  34                   7.25
Chico III                       11             20               60                  35                   8.06
Rio Grande                      11             18               62                  16                   5.21


It may be noted here that the rapid agricultural innovation, bio-technology and new farming
process of tomatoes in Pakistan are actually:

a. shortening the period of maturity to about 55-60 days
b. improving yield of about 5kgs/plant, and
c. developing tomatoes that are more resistant to pest, drought, and temperature.



CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION              PAGE: 23
Since the local producers do not have adequate knowledge/information and access to
higher agricultural innovations, they find it extremely challenging to cope with this market
shift and are gradually losing market share and profitability.

Economy of Scale:
Economy of scale is a valuable concept for analyzing the competitive strength of producers
to compete in the market and make superior profit. Generally because of the large
operation, a larger producer can spread its fixed cost across greater number of units as
more are produced thus reduces the unit cost of each product. In the tomato sector, the
large farmers show substantial economy of scale of their farm operation, which the small
producers can’t achieve. As a result they lose competitive advantage. The fixed cost of
production is virtually equal for all farmers. The large farmers can substantially reduce the
variable costs by purchasing large quantities of inputs either directly from the importers or
importing by themselves and obtaining quantity discount. The large farmers often enjoy
credit facilities from the input traders and at the same time often receive advance money
from the tomato traders/wholesalers. Therefore, their cost of capital becomes much less
then small farmers. The small farmers can also avail this opportunity through collective
purchase and sales of their products and can gain nearly the same competitive advantage
as the large farmers.

Employment Characteristic

Size of Employment:
The small farmers, over and above their family labor employ about 5 daily farm laborers per
season. The relatively larger farmers employ around 10 persons. However, the number of
active large farmers is not more than 30%. The
wholesale shops engage about 3 to 4 employees.         Female Employment in Tomato
The wholesalers of tomato engage extra hand for                    Subsector
packing and unpacking tomatoes within the shop
premises. The large producers have about 10            About 30% of the direct employment
workers for the same function. The small farmers       comprises female. The primary
                                                       functions    are      typically    seed
generally harvest tomatoes by themselves. The          preservation, harvesting, washing,
total employment in this sector is estimated to be     packing, weeding, irrigation, etc.
around 20,000 that are directly involved in
producing tomatoes. Out of this 20,000 direct          Apart from this household tomato
employment about 30% are female. The                   processing (sun drying, juice making,
subsector employs about 100,000 people                 etc., is almost entirely done by
                                                       females
indirectly  through     input    selling,  trading,
exporting/importing, and providing various support
services. The farmers perform all the production and management functions. Very few
large farmers have assistants for other support such as accounting and bookkeeping.

Types of Workers and Employee:
Both skilled and unskilled workers were found in the industry. The unskilled workers are
generally employed as day laborer while the service providers have skilled helpers as
technicians and operators of farm machineries.

The importers and wholesalers engage agents to source and market their products. These
sales representatives generally have little or no formal education. Even the large
exporter/importer enterprises are generally owner operated with few assisting employees.




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 24
Wages:
The average wages of the daily farm labor is about Afghanis 150 (US$3) for a day. Workers
in the input retail stores are paid around US$50 per month and a farm technician/operator
earns about US$75 per month during the cultivation season.

Price and Quality Regulation:
Generally the price and quality regulations are absent in the tomato subsector. The large
traders due to their strong backward and forward network, influence the market to a large
extent. Although the tomato traders (importers and wholesalers) have their association, it is
basically non-functional because of internal rivalry and lack of adequate representation in
the market. It was found that mainly the small traders and a few trivial wholesalers have
membership with the association. As a result, there is virtually no price and quality
regulation.

For quality regulation of seeds, the seed testing laboratory is authorized to certify seed
imports and sales; however, due to resource limitations they can not play their desired role.
No regulatory bodies were identified for fertilizer and pesticide quality and price regulation.




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 25
    Chapter

      3                                 Value Chain Analysis


  Value Chain Analysis

                As mentioned earlier, the tomatoes produced in Afghanistan go through five basic
                operations – 1) seedling production, 2) bed preparation, 3) transplantation, 4) weeding/
                fertilization/ pesticide/ irrigation and 5) harvesting. Direct production of tomatoes from seed
                is rare. Only two operations are generally mechanized; bed-preparation, and application of
                pesticides. Mechanized irrigation is rarely used. The small farmers generally use manual
                operations for the entire process

                The inputs used for tomato production are almost entirely outsourced from Pakistan
                because of lack of local producer of these inputs. The subsector study tried to reveal the
                cost analysis in each activity related to operation, inbound logistics, outbound logistics,
                marketing and sales and service. However, it was found challenging to collect all the
                relevant information because of lack of record keeping by the value chain actors (especially
                producers). Extracting this information from the exporters and other relatively formalized
                producers was difficult as they consider this information to be their business secret.
                Because of this, the study team extrapolated this information through projective techniques.
                The analysis given below shows the consolidated information about local producers. It

                                    Labor     Seeds       Tractor            Spray      Water pump
Seed Store   Fertilizer 72%                                                 machine       71%                Labor   Transport       Packing
                                    44%       15%          41%
  18 %       Pesticide 10%                                                   29%                             20%       16%            44%




Input          Seedling        Land       Transplanting     Fertilizing &    Spraying       Irrigation   Weeding     Harvesting   Marketing
Sourcing         1%           Preparation       2%            Pesticide        1%               3%        3%           16%          61%
 1%                             5%                               7%


                shows that more than 77% of the retail price of their tomatoes goes to harvesting and post
                harvesting (packaging, transportation and labor for harvesting) activities. This reflects the
                lack of availability of appropriate services as well as knowledge/capacity of farmers in the
                process of value creation in the forward linkages. Regarding the backward linkage facilities,
                the farmers who import seed from Pakistan directly have around 48% of the total cost
                oattributed to their production. The input cost is about 15%-20% less when producers buy
                seed from local seed retailers or traders. The cost of total production process contributes
                more than 30%, which is significantly higher than local producers. These farmers can also
                have access to improved knowledge about application and farming processes through
                embedded services from the Pakistani traders which directly increases his competitive
                advantage from other peers.

                This is also true in the production process where the large farmers due to improved
                economy of scale can significantly increase their profitability. Since a part of the total
                production cost is fixed for almost all the farmers, the variable cost actually dictates the

                CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                    PAGE: 26
          profitability in relation to quantity sold. The farmers with better access to services and
          improved backward and forward linkages can reach breakeven point easily even at a lower
          price giving them a much larger margin of safety.

                     Commissioning            Trader 12%                        Wholesaler           Retailer
                        Agent                                                     29%                 39%
                        20%




                      Warehousing             Warehousing                      Warehousing        Warehousing
                        Transport               Transport                        Transport          Transport
                     Gross profit 10%       Gross profit 6.25%                Gross profit 15%   Gross profit 20%



          The above diagram shows the value addition and profit margin at different stage.

SUBSECTOR MAP

          Subsector map provides s graphic representation of the structure of the subsector showing
          how products flow through the primary system as well as alternative channels. The
          channels are generally vertical chain of enterprises that transforms raw materials and
          delivers them to consumers as finished goods. The map lists functions vertically along the
          left-hand side and placed the final markets across the top. The participants or actors of the
          value chain are designated by boxes.

          In the tomato subsector map, the channels are identified on the basis of core business unit,
          i.e., the supply, producing and distribution (input suppliers, producers and
          traders/importers/exporter) involving physical product flow from supplier to the end-user.

          In procurement of inputs the producers use different channels. In general, the more the
          units are integrated, the more competitive advantage they gain and more capital-intensive
          they are.


                           Legends
       Location                         Enterprises

                                                Enterprise boundary
          Assembly points

                                               Skipped or Implicit function



    Coordinating Mechanisms             Overlays
                                          N = Number of firms
          Sales of goods in market        S = Sales
                                          L = Employment
                                          V = Volume
          Contract sales                  O = Gearing ratio
                                          f = Female employment
                                          M = Gross Margin
          Subcontracted                   Y = Income




          CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION        PAGE: 27
                           Jalalabad Regional                                Other Regional                             Pakistan (US$225000
                           Market (US$2.4m                                   Markets (US$6m (9%)                        (10%)




    Retailing                                  Retailers in Jalalabad City
                                                N=700, V=5250mt, S=1.6m




   Processing                            Commercial Tomato                   Processed Tomato from                                       Cold Storage
                                          Processing Plant                 Pakistan and other countries                                   Services in
                                           N=10, S=125T                                                                                    Pakistan




Trading/Exporting                                                                                           Trader (Fruits and Fresh Vegetables)
                                                                                                                 N=12, V=35TMt, S=12m




  Wholesaling                                                                  Fruits and Vegetable Wholesale Market
                                                                                      N=200, V=116TMt, S=48m




                                                                                                                                                     Irrigation services
                                                Crate & Packaging




                                                                                                                                                       Cultivation and
                                                 service providers




                                                                                                                                                            N=100
 Local Trading                                                                          Local Traders/Commissioning
                                                       N=15




                                                                                                   Agents
                                                                                          N=120, V=20TMt, S=7m




    Farming               Large Farmer                      Farmers in and around            Farmers in Remote Areas             Farmers of Khogiani
                            N=2,200                                                         N=3,000, V=23TMt, S=7.2m
                                                                   Jalalabad                                                N=8,000, V=61.5TMt, S=19.2m
                            V=16TMt
                             S=5m                         N=7,000, V=54TMt, S=16.8m




                                                                                               Local Retailers (seed, fertilizer, pesticide)
                                                                                                             N=50, S=5m

 Input Retailing

                                                                              Retailers in Jalalabad (seed, fertilizer, pesticide) N=300, S=98m



  Input Trading                                                      Seed Traders                  Fertilizer Traders            Pesticide Traders
                                                                     N=10, S=2m                     N=25, S=120m                   N=15, S=5m



 Input Importing
                                                                                             Inputs from Pakistan




              CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                                                           PAGE: 28
Definition of Actors in the Map:
1. Input Importer: Large traders engaged in importing inputs (seed, fertilizer, pesticides,
   etc.) in bulk quantities
2. Input Trader: Large traders, generally wholesales, of inputs.
3. Input Retailers: Generally the small traders particularly in the district towns or remote
   areas retailing inputs o the producers. They generally buy their inputs from the
   wholesalers
4. Producers: Farmers engaged in production of tomatoes.
5. Local Trader: Local traders are directly involved in buying and selling tomatoes from
   different remote district towns or markets and sells to the wholesalers at a profit. They
   often work as a commissioning agent of the large wholesaler or exporters.
6. Wholesaler: Wholesalers deal with large volume of products either through local
   traders or farmers. They invest and transact large amount of money in their business
   and often control the market price.
7. Trader/Exporter: These are large traders mostly working for large forward markets.
   They may obtain their products from the wholesalers, farmers or local traders and even
   through their own commissioning agents to collect desired quantities of products.
   These traders often work as exporters and sell directly to foreign market traders and
   also play the role as commission agent for other forward markets.
8. Processor: Processors are engaged in creating value addition by convert tomatoes
   into juice, paste, ketchup, pickles or dry tomato for commercial sales
9. Retailer: Comparatively small business trader and buy and sale tomatoes in relatively
   smaller quantity and sells directly to the end user.

Large Farmer
This channel is dominated by the large farmers and represents about 11% of tomato
production. There are broadly two types of large farmers - the large tomato farmers with
backward and forward market integration and the large tomato farmers who work directly
with the traders. These large farmers can be considered as a complete distinctive group of
integrated producers. They generally collect their inputs directly from Pakistan, produce on
large lands areas and sell directly to the wholesale markets or exporters. Although there
are about 2,200 large farmers operating in this channel, about 60% of them are absentee
farmers and they lease out their lands to small farmers. The potential capacity from this
channel is about 16,000 metric tons of tomatoes which would be roughly about US$5
million. Generally this group of producers has a long history of tomato farming and invest
large sum of capital to get a relative economy of scale. They are, in fact, the market
leaders. They have their own agents to market their products to a wider market such as
other provinces, and even in Pakistan. The other non-integrated large farmers do not use
marketing agent but they sell their products to the wholesalers. The large farmers have
better competitive advantage in terms of cost leadership, product differentiation (improved
quality), productivity and profit. These farmers use improved inputs (generally seed and
pesticide) directly from Pakistan and have almost twice the yield than other farmers. These
farmers generally have their own tractors, irrigation devices, and tractor-trailers to supply in
different areas of the market and often lease/subcontracts their lands and rent out their
facilities.

Farmers in and Around Jalalabad
The farmers in and around Jalalabad enjoy different competitive advantage because of the
proximity and easy access to markets and other necessary business services, and also
have better access to market information. This is an extremely important channel dealing
with almost 35% of the total tomato production of the province with an approximate volume
of 54,000 metric tons of tomato worth US$16.8 million. The channel has about 7,000
producers of various sizes. Except for about 15% large producers, majority of them are
small farmers having 2 to 5 jaribs of land. These farmers have much better access to

CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 29
market and other services such tractors, sprayer, etc. Such facilities are also quite widely
available in the cluster. As a result, the producers in this channel enjoy much improved
profit margin (about 15-25% higher) then others. The per jarib yield of these farmers have
also been recorded higher (about 25%) then the remote farmers. This is primarily because
of access to improved services and knowledge. These groups are generally more focused
in production of tomatoes, from 60% to 80% of their land is under tomato cultivation.

Farmers in Remote Areas
The farmers especially in Lalpper, Nazyan, Achin and Deh Balal districts are categorized as
“remote area farmers” in this study. These farmers are comparatively disadvantaged due to
remoteness to market access, and unavailability of vital services and market linkages. The
knowledge and information is deplorably low regarding improved cultivation techniques,
technology, and quality inputs. About 3,000 producers operate in this channel with various
land-holding sizes – ranging from 150 jaribs (about 10-12%) to virtually landless (1 jarib or
less). The total supply of tomatoes is around 23,000 metric tons which is roughly about
15% amounting about US$7.2 million.

Farmers of Khogyani
Khogyani as the central hub of the tomato production, plays a critical role in the overall
tomato production and sales in the Nangrahar Province. About 8,000 farmers are engaged
in this channel producing about 1800 metric tons of tomato which is about 40% of the total
tomato production in the province - worth US$540000. As mentioned earlier the general
practice of the people here is to refer to Khogyani not as a district but a zone comprising
four districts - Hisarak, Khogyani, Sherzad, and Pachir Wagam. This zone despite
differences in land topography, different climatic conditions, and a large contribution to the
total tomato market, do not enjoy much comp`etitive advantage. The farmers of this area
hardly get any benefit of the early season market price, however, they do get some benefit
during the late season before the Pakistani products starts to enter the local market.
Because of the distance of backward and forward markets, the farmers also are at a
comparative disadvantaged compared to Jalalabad City, and Jalalabad surrounding area
farmers. The per jarib yield of Khogyani zone is slightly higher then Behsud and Jalalabad
surrounding area – about 10-12%.

Tomato Exports to Pakistan
About 20% of total production is exported to Pakistan through 12 traders. The large farmers
are generally more focused on selling to these traders/exporters for better price. About 10%
farmers in Jalalabad and surrounding areas directly sell their tomatoes to Pakistan for
better price. It may be noted that a large part of this is sent to Pakistani cold storage which
is imported back to Afghanistan during the lean season of tomato. These tomatoes are
potential candidates for local cold storage. This channel also imports about 3060 metric
tons of tomatoes from Pakistan worth roughly US$918000.

Tomato Sales to other Regional Market
It was found that a channel also works in selling tomatoes to other provincial cities of
Afghanistan especially Kabul. About 15% of local tomatoes worth US$0.1 million are sold to
other provincial cities primarily through 12 traders/exporters. This sale is gradually
increasing and is likely to increase substantially with the improvement of road
communication systems from Jalalabad to Kabul. It may be noted that a small quantity of
tomatoes are also brought from Kabul to Jalalabad to cater the premium tomato market.

Commercial Processors
There are roughly about 10 commercial processors working in Jalalabad. Out of these ten
two are fairly large. As mentioned earlier one large factory belongs to the government and

CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 30
the other large one was setup by private sector. Apart from these 2 large tomato enterprise
there are about 8 small enterprises scattered all over Jalalabad producing tomato juice.
These small enterprises are managed primarily by women entrepreneurs. Due to shortage
of working capital and appropriate market linkage many of these enterprises have been
closed. The total sale of processed tomatoes through this channel is approximately
US$225 thousand. It may be noted that a significant amount of processed tomatoes are
also imported from Pakistan. The amount and volume is unknown.

Tomato Retailers
This is an extremely important channel which works in making fresh tomatoes available to
the end customers, the households. They deal with approximately 5250 metric tons of
tomatoes both locally produced and imported. There are about 700 retailers scattered all
over Jalalabad city. There would probably be almost a similar number of local retailers in
other districts of Nangrahar province which was not included in the study. The retailers in
Jalalabad sell approximately US$2.3 million of fresh tomatoes to end customers, the
households. The households in Jalalabad city purchasing larger quantities of tomato also
access the wholesale market directly - however this sales volume is very little about 2%.




CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 31
 Chapter

   4                                      Service Market


 Service Market

           The subsector study identified a number of services used by the different producers and the
           status of these services as well as related sales by the actors of the tomato value chain. A
           number of large farmers offer their facilities (tractors, sprayers, water pumps) to the small
           producers in exchange of price. These services become available primarily because of the
           close clustered and intense internal harmony of the producers.

           The following services are provided in the following broad areas:

           1. Pre-cultivation and Cultivation Services
           2. Harvesting Services
           3. Post Harvesting and Marketing Services

Pre-Cultivation Services

           Knowledge and Information about New Seed Varieties and their Cultivation
           Techniques: This is an extremely critical area for increasing farmer’s productivity and
           profitability. However, adequate services are not available. The agricultural extension
           department as well as seed testing laboratory is, supposedly, the primary suppliers of this
           knowledge; however, due to limited resources as well as poor knowledge about improved
           farming techniques by the extension workers, the dissemination process is not at all
           functional. Moreover, the availability of such services from the seed testing laboratory only
           reaches a fraction of farmer’s who are near the urban or semi-urban areas. The farmer’s
           are not satisfied with the services. Another dissemination methods currently exist is radio
           which also has extremely limited coverage and utility. The radio programs provide overly
           generalized issues of farmers’ livelihood improvement rather than focusing on specific
           issues like pest control, farming techniques, market prices.
                                                                                                              3
           The majority of farmers get this information through “embedded services ” from the seed
           traders. However the quality of information is poor and the remote farmers get very little
           access to this information due to lack of knowledge by the local dealers. The farmers who
           purchase seeds directly from Pakistan (generally the large farmers) reported that they get
           update information from the seed dealers there.




           3
             Services that are generally not paid for directly by an enterprise – rather the cost is covered by the service provider
           through the profit margin of the primary product or service. This service actually helps the service provider to
           develop and attract large number of customers. Examples of “Embedded Services” are knowledge and information
           about pesticide application and dose provided by the inputs trader to farmers. Similarly providing access to markets,
           product development, quality management, provision of inputs and financial services can be embedded as well.

           CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                          PAGE: 32
          Very few NGOs such as IFHOPE, MADERA, ICARADA, Relief International, BRAC, etc.,
          are actively working on farmers’ capacity building on farm productivity through knowledge
          and information dissemination to the farmers.

Cultivation Services

          Knowledge and Information about Pesticide Dose and Pest Control: The absence
          of source of appropriate knowledge and information about pest control has also been
          reported as one of the critical problems faced by the farmers. The plant protection
          department is supposedly the primary supplier of this knowledge; however, due to limited
          resources the dissemination process is not at all functional. The majority of the farmers get
          this information through embedded services from the pesticide traders. However the quality
          of information is poor and the remote farmers get very little access to this information due to
          lack of knowledge on the part of the local dealers. The farmers who purchase pesticide
          directly from Pakistan (generally the large farmers) reported that they get improved
          information from the pesticide dealers there. It was reported that about 20 % – 40% of the
          products gets completely wasted due to non-availability of such services.

          Soil Testing: The soil testing facilities are completely non-existent; as a result, the farmers
          either use an excessive amount of fertilizer or inappropriate fertilizers. This significantly
          reduces yield and productivity of the farmers.

          Tractor for Cultivation: The cultivation is done by both powered equipment and manually
          (animal draft power). The use of tractors is much higher in most of the areas and
          particularly around Jalalabad. About 30% small farmers use animal draft power to cultivate
          their lands because of affordability. Tractor rent is about Afghanis 350 per hour around
          Jalalabad region, however, in remote areas a cost of Afghanis 400 – 450 is also been
          reported by the farmers. The price generally increases during the cultivation season due to
          added demand and short supply. The price may go high as much 400 to 500 Afghanis per
          hour. Availability of sufficient number of tractors, particularly in the remote areas was found
          to be quite acute.

          Sprayer: Majority of the farmers rely on rented spray equipment from the pesticide dealers
          or sprayer service providers. Sprayers are rented on hourly basis. The rate ranges from
          Afghanis 50 to 80. Both availability and access is a severe problem particularly in the
          remote areas. For example a farmer in Khogyani has to pay 4 hours price for a two hour
          actual spray because of travel time from Khogyani to Jalalabad and back to Jalalabad after
          spray. This substantially increases the cost of production and the same time farmer’s often
          ignores the prescribed number and frequency of spraying.

          Irrigation Pumps: This particular service is required by about 80% of the farmers
          generally who are beyond the coverage of irrigation canals or are situated far away from
          rivers or streams. Irrigation pumps are also rented on hourly basis and the rate varies from
          Afghanis 40 to 50 per hour. The farmers outside the coverage of irrigation canals reported
          both unavailability and inaccessibility of irrigation devises during peak season.

Harvesting and Post-Harvesting Services

          Packaging Materials: Availability and affordability of packaging materials are two
          extremely critical problems faced by all the farmers. The service market is not developed to
          provide value-added service to the SMEs. The quality of service is not only poor but also
          inadequate to serve the large number of SMEs. The service market players are focused on


          CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 33
                        relatively larger enterprises with long term arrangement. Lack of knowledge and skills as
                        well as rudimentary technologies are one of the prime constraints faced by the SMEs.

                        Transportation: The producers and traders have expressed their dissatisfaction regarding
                        the availability of transportation services particularly in the rural areas. The price of
                        transportation is significant and the quality of service is generally poor. Because of this both
                        the producers and the traders lose about 30%-40% due to not reaching the market in time.

                        Cold Storage: Cold storage facilities are seen as one of the critical factor in the overall
                        profitability of tomato production and trading. The excess supply of tomato during the peak
                        season can be stored and when the market price increases the products can be sold at the
                        relatively higher price. A large amount of tomatoes (about 10-12 thousand metric tons) are
                        transported to Pakistan simply to store surplus tomatoes of Afghanistan and bring them
                        back during the off season. Currently there is no single cold storage facility available in
                        Nangrahar Province for preservation of tomatoes. There was, however, a cold storage
                        facility found in Jalalabad city which is exclusively designed for storing bananas.

     SUBSECTOR CONSTRAINTS ANALYSIS

                        The Constraints and Opportunities were expressed by the various actors of the Tomato
                        Value Chain (input suppliers, producers, traders, wholesales, retailers) Key Informants
                        (related government officials, agriculture researchers, academicians, NGOs, practitioners)
                        during the tomato subsector study conducted in August 2005 and validated by the
                        representative members of the supply and value chain members on August 16, 2005

                        The constraints and opportunities were categorized under the following eight headings:

                               1.    Market Access
                               2.    Technology/Product Development
                               3.    Management/Organization
                               4.    Input Supply
                               5.    Finance
                               6.    Policy
                               7.    Operating Environment/Infrastructure
                               8.    Trade Associations

                        The following matrix shows an illustrative view of the constraints for the subsector, the
                        details matrix is provided as annex-1

    Constraints                                            Cause               Features of        Who         Potential                Existing Provider of
                                                                               constraints        is/are      Interventions            Services
                                                                                                  affected
1   Lack of knowledge about improved            • Lack of effort towards       • Increases cost   • All       • Provisions for         • Agricultural
    cultivation practices (soil testing, crop     continual development of       of production      farmers     capacity                 Extension department
    rotation, water management, weed              technology.                    by 30%                         development on         • NGO
    management, plant spacing, etc.,)           • Limited capacity of the      • Reduces yield                  improved cultivation   • Farmers’ association
    resulting in low productivity and poor        extension department           by 30%                         methods
    quality thus making tomato production       • Poor resource allocation                                    • Provisions for
    less attractive.                              for agricultural research.                                    service provisions
                                                • Lack of service providers                                     on soil testing
4   Lack of knowledge of tomato disease         • Poor knowledge of input      • Reduces yield    • All       • Provisions for         • Input suppliers
    and its protection results in poor yield      suppliers                      by 25%             farmers     developing             • Research Institute
    and less profit                             • Poor extension activities                                     knowledge and          • Agriculture
                                                                                                                awareness on tomato      University
                                                                                                                disease and            • Extension Department
                                                                                                                protection             • NGOs
6   Lack of availability and access to          • Requires substantial         • Increases cost   • Small     • Provisions for         • Machinery rental


                         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                     PAGE: 34
    cultivation technology (tractor,               investment                       of production        and         developing service         services providers
    irrigation equipments, weeder, spray         • Demand and supply of             by 20%               remote      providers for rental     • Large farmer
    machine, etc.) increases the rental fees       service is not known                                  farmers                              • NGOs
    or requires more manual labor thus
    increasing the cost of production and
    reduces profit of the producers

2   Lack of availability and access to           • Dependent on supply from       • Reduces yield      • Small     • Provisions for seed      • Seed testing
    quality inputs (particularly seed) results     Pakistan                         by 30%               and         testing facilities         laboratory
    in poor yield consequently per unit          • Erratic supply due to poor                            remote    • Provisions for           • NGOs
    production costs increase dramatically         market projection                                     farmers     farmer’s access to       • Seed traders
    making tomato production less                • Lack of financial capacity                                        credit
    profitable.                                    of the farmers to purchase                                      • Provisions for
                                                   quality seed                                                      strengthening seed
                                                 • Lack of knowledge of                                              supply chain
                                                   farmers about seed quality.
7   Lack of availability of quality              • Poor sources of raw            • About 50% of       • Small     • Provisions for           • Carpenters
    inexpensive packaging materials                materials                        tomatoes are         farmers     developing local         • Farmers’ association
    (wooden crates) increases cost and           • Crates are outsourced from       wasted during      • Farmers     packaging service
    wastages during transportation                 Pakistan                         transportation       in          providers
    resulting in lower profit.                   • Easy availability of             from remote          remote
                                                   recycled crates but are          places.              areas
                                                   generally poor quality
3   Lack of access to finance force the          • Non availability of formal     • Reduces            • Small     • Provisions for           • NGOs
    producers to sell their products in            financial institutes.            profitability by     farmers     financial services       • Local money lenders
    advance to traders at a lower price thus     • Lack of owners’ equity.          20%
    making tomato production less
    profitable
    Lack of policy for encouraging value-        • Poor representation of         • About 40%          • All       • Provisions for           • Trade association
    addition of agricultural products              trade association in policy      profitability is     farmers     adequate policy to       • Farmers’ association
    through processing, storage, etc.              making                           reduced                          encouraging value-       • NGOs
    resulting in poor private sector             • Poor policy formulating                                           addition of
    investment in this area consequently           structure                                                         agricultural products
    the farmers’ profitability reduces.                                                                              through processing,
                                                                                                                     storage,
    Lack of policy for tax incentives on         • Poor representation of         • Poor               • All       • Provisions adequate      • Trade association
    import of modern appropriate                   trade association in policy      competitive          farmers     policy for tax           • Farmers’ association
    agricultural machineries to increase           making                           advantage                        incentives on import     • NGOs
    productivity resulting in low                • Poor policy formulating                                           of modern
    competitiveness advantage in                   structure                                                         appropriate
    agriculture                                                                                                      agricultural
                                                                                                                     machineries
    Lack of appropriate policy for suitable      • Poor policy formulating        • About 20%          • Small     • Provisions for           • Farmers’ association
    agricultural credit facilities for             structure                        profitability is     farmers     appropriate policy       • NGOs
    increasing farm production resulting in      • Absence of farmers’              reduced                          for suitable
    poor productivity and low profitability        association participation in                                      agricultural credit
                                                   policy making                                                     facilities
1   Lack of adequate farmers’ association        • Lack of knowledge and          • About 80%          • Small     • Provisions for           • NGOs
    results in poor collective bargaining to       awareness regarding the          farmers are          and         adequate farmers’        • Farmers’ association
    safe guard their interest                      potential benefit                affected             remote      association
                                                                                                         farmers
1   Lack of adequate feeder road linking         • Absence of government          • About 30%          • All       • Provisions for           • Farmers’ association
    farms with markets resulting in high           priority                         wastage of           farmers     adequate feeder road     • NGOs
    cost, wastage of tomatoes resulting in       • Frequent flooding                tomatoes                         linking farms with
    low profitability.                                                                                               markets
2   Lack of cold storage facilities for          • Lack of local technical        • About 150%         • All       • Provisions for           • Private sector
    tomatoes results in compelling the             knowledge                        reduction of         farmers     sufficient cold
    producers to sell their products even at     • High investment cost             price from                       storage facilities for
    a lower price.                                                                  early season                     tomatoes
3   Lack of processing facilities for            • Lack of local technical        • About 50% of       • All       • Provisions for           • Private sector
    tomatoes results in lower capacity to          knowledge                        total                farmers     sufficient processing
    absorb excess supply thus reducing the       • High investment cost             production are                   plants for tomatoes
    price and poor profitability.                                                   sold at reduced
                                                                                    rate or
                                                                                    exported to
                                                                                    Pakistan




                         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                             PAGE: 35
COMPETITIVE ANALYSIS

       Every enterprise competing in a subsector faces competition. Competition involves not only
       rivalry among enterprises in the same trade group (producers, processors, etc.), but also
       among other actors of the subsector as well. Competition in an industry depends on five
       basic competitive forces:

       a.   Threat of entry from potential entrants.
       b.   Intensity of rivalry among existing competitors
       c.   Pressure from substitute products
       d.   Bargaining power of buyers
       e.   Bargaining power of suppliers

       The essence of formulating competitive strategy of a subsector is to relate an enterprise to
       the subsector in which it competes. The collective strength of the above-mentioned forces
       determines the ultimate profit potential in the subsector, i.e., long run return on invested
       capital. The goal of competitive strategy is to find a position in an industry where the
       enterprises can best defend itself from these forces or can influence them in its favor.

       Competition in a subsector works towards bringing down the enterprises rate of return on
       invested capital. The rivalry among competing sellers in the subsector is dominantly in
       between traders of local tomatoes and the importers of Pakistani tomatoes. The
       wholesalers dominate the overall tomato market while the imports are controlled by the
       large importers with extremely good network both in the eastern region and Pakistan. Both
       actors have almost equal strength of manipulating or controlling the market mechanism
       through controlling the price. Since the market is extremely price sensitive this creates not
       only entry barriers but drives the competitors away. Generally the importers take the
       advantages of the weak import regulation of tomatoes. At the same time smuggling of
       tomatoes through borders also adversely influences the local sales of tomatoes and
       intensifies the competitive environment.

       Despite the barriers, the entry of new traders in the tomato market was observed. Over the
       last five years about five to ten traders have started their operation while some traders of
       local tomatoes have shifted their businesses from tomato to fruits.

       The substitute of tomatoes, primarily the local sun dried tomatoes and tomato juice, are
       showing gradual increase in demand, although fresh tomato sales are still in a growing
       trend with an annual growth rate of 8-10%. The processors are constrained with erratic
       supply of electricity, poor marketing facilities, unavailability of packaging materials and
       shortage of working capital. Increasing trend of high price of fresh tomato and erratic price
       fluctuation is also particularly considered as threat for the processors.

       The competitive pressures stemming from supplier-seller collaboration and bargaining is
       different for different actors of the market. The large importers and large producers of
       tomatoes have better credit management with their foreign clients whereas the local small
       producers have to purchase all their raw materials in cash because of smaller quantity
       requirements. Although the small producers have some good collaboration with a number
       of service providers the adverse phenomenon for small producers is due to their low
       competitive advantage (low investment business size to ensure credibility) and low volume
       of purchase rate due to shortage of working capital. Whenasked about their willingness to
       purchase as a group, most would opt to purchase independently to maintain their business
       secrecy. According to them, individual requirement, and availability of money hinders group



        CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 36
         purchase. Nevertheless, this is an area where group purchase could be facilitated through
         special arrangement. The exporters have their own suppliers to procure their materials.

         The competitive pressures stemming from seller-buyer collaboration and bargaining is also
         different for different actors. The same phenomenon is present here. The importers have
         their own channel to market their products and they have better credit management with
         their retailers. In most cases they sale in cash to the retailers. But again an adverse
         situation is for the local producer to provide credit to the wholesalers. The study reveals that
         on the average it takes a month to recive money for products, they provide and they sell
         95% of their product in credit. These market dynamics are extremely important for
         designing intervention and providing the local small producers to a wider market.

Policy Framework:

         The agriculture sector in general and tomato subsector in particular has been a neglected
         area for long in the Eastern Region of Afghanistan. The subsector is considered as informal
         sector by many, including the government. As a result, the policy decisionmakers have not
         considered the issues of tomato subsector or even the agriculture sector as a whole. This
         lack of any policy environment makes it difficult for the entire agricultural sector and,
         particularly the tomato subsector, to develop beyond producers of simple raw product. It
         has also precluded the creation of institutions within the industry that will stimulate
         indigenous productive capacity and open the way for sustainable economic development.
         This report to a certain extent examined the interplay among the macro/global and
         subsector enterprises to determine the role they can play in the sustainable economic
         development of the people. It was identified that the subsector does not have a policy
         environment that would facilitate the creation of an enabling environment and provide
         sufficient encouragement and confidence to the private sector investors in creating value
         added businesses. Such encouragements would include: tax incentives on importing farm
         productivity machineries and processing machinery, cold storage facilities, industrial space,
         financial assistance, creating provisions for supply of power, provide security, human
         resource development, transportation, etc.

         Policy environment should also create provisions for adequate capitalization of the
         indigenous productive capacity, which is the synergy of knowledge, skills and technology to
         allow the domestic private sector enterprises and workers to design, produce, and sell
         goods and services in domestic and possibly in international markets as well. It is not only
         the ability to do what others do, but includes the ability to innovate and find competitive
         advantage. The basic foundation of indigenous capacity is the ability of the industry(s) to
         develop both backward and forward linkages. The policies for encouraging backward and
         forward linkages should address the factors that nurtured or hindered its development – this
         is extremely critical.

         The tomato subsector, despite various constraints and adverse policy framework continued
         to grow and contribute significantly to the overall economy. However, the following specific
         areas of policy regulation are critical and must be addressed:

         1. Guidelines and standards for importing and trading agricultural inputs (quality seed,
            expiry and validity dates, appropriate labeling in local language for easy understanding
            of the farmers, etc.)
         2. Testing and certification of agricultural inputs (seed, fertilizer, pesticides, etc.)
         3. Encouragement of private sector engagement in distribution of agriculture inputs
         4. Encouragement to import, assemble or production of low cost appropriate agricultural
            machineries, tools, and equipments for increasing farm productivity (Tractors, power-
            tiller, seed drills, planter, harvesters, sprayers, irrigation pumps, etc.)

         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 37
         5. Encouragement to import, assemble or produce low cost green houses to boost
            agricultural production
         6. Encouragement to import appropriate agricultural value addition machinery such as
            cold storage, processing plants, etc.
         7. Encouragement for private sector engagement in agricultural research and knowledge
            dissemination of improved, modern and scientific farming practices.
         8. Encouragement for setting up appropriate industries for packaging and transporting
            agricultural products both fresh and processed.


         The policy framework should also take into account the roles of large international players
         in tomato subsector and develop appropriate strategies to provide adequate protection to
         local industries.


SWOT Analysis of Tomato Industry of Afghanistan

         Strength, Weakness, Opportunities and Threat (SWOT) is a powerful tool used in
         developing strategies for intervention. The tool provides a framework for understanding
         controllable and non-controllable factors that the interventions should address for the entire
         value-chain. The critical issues of the SWOT are generally categorized into the following
         four broad categories:

         S - What are the subsectors internal Strengths?
         W - What are the subsectors internal Weaknesses?
         O - What external Opportunities might move the subsector forward?
         T - What external Threats might hold the subsector back?

         The typical assessments of subsector’s strengths and weaknesses as well as the
         opportunities and threats specific to each of the interventions consist of the following:

             •     Production system and delivery of products in the value chain
             •     quality of business service provisions
             •     competitive advantages of the value chain members
             •     market access, infrastructure, management information and financial systems
             •     policy environment.

         While designing the interventions, the focus is generally given on the exploitation of
         strengths rather than simply addressing on the weaknesses. In other words, the
         interventions are not only about addressing the constraints, but also nurturing the strength
         of the subsector.

         Similarly the opportunities and threats - the external trends that influence the subsector are
         also analyzed. The external opportunities and threats are usually categorized into political,
         economic, social, technological, demographic and legal forces. These external forces
         include such circumstances as changing business trends, increased competition, changing
         regulations, and so on. They can either help the subsector move forward (opportunities) or
         hold the subsector back (threats) -- but opportunities that are ignored can become threats,
         and threats that are dealt with appropriately can be turned into opportunities. The non-
         controllable factors are generally dealt through advocacy and networking to bring about
         changes in the policy framework.

         The following SWOT analysis of the tomato production and processing shows a number of
         Strengths and Opportunities for boosting value-adding interventions. During the designing

         CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 38
             of interventions adequate provisions needs to be created for addressing the weaknesses
             and threats for the growth of the subsector.

                Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis
                                              of
                       Tomato Production and Processing in Eastern Region
Strengths                                                        Weaknesses

•   Diversified land topography provides almost round the        •   Lack of knowledge of cultivation
    year production                                              •   Lack of market information
•   Large number of farmers involved in cultivation              •   Poor market access
•   Large production volume                                      •   High seasonal prices variation
•   High local demand of both fresh and processed tomato         •   High rate of wastage in transportation.
•   Large untapped market within Afghanistan.                    •   No storage facilities particularly during over supply
•   Profit from tomato production is relatively higher           •   No processing unit for surplus tomato production.
•   Local variety is popular and accepted by the consumer        •   Poor access to improved farming technology
•   Low cost of labor                                            •   Poor quality of input supply
                                                                 •   Poor and inefficient supply chain
                                                                 •   Land lock country
                                                                 •   Poor infrastructure and electricity supply
                                                                 •   Poor transportation system
                                                                 •   Lack of skilled people for the subsector
Opportunities                                                    Threats

•   High demand in for both domestic and export market           •    Absence of adequate trade policies
•   High demand for processed products such as paste,            •    Intense competition from neighboring countries
    pure, ketchup etc.                                           •    Political instability
•   Potential to employ large number of people
•   Higher yield through adoption of improve production
    technology
•   New markets development
•   Niche target markets
•   Backward and forward businesses development
•   Volumes, production, economies of scale




             CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION              PAGE: 39
 Chapter

   5                                         Conclusions


 Conclusions and Recommendations

           Cultivation of tomatoes in Afghanistan appears to have great potential and is a growing
           subsector in terms of development of value addition and market expansion. The market
           size has also expanded substantially over the last couple of years. Despite these
           encouragements the market is experiencing typical constraints of a growing and immature
           market. The tomato subsector shows the following syndromes:

               Increased price of major raw materials
               Severe price competition with imported products
               Limited value addition
               Supply and price variation due to seasonality of the product
               Poor productivity and profitability of the farmers
               Lack of information on market demand
               Strong market regime.

           To address these classic problems of agricultural commodity, the world today emphasizes
           value-added agriculture. Value addition of an agricultural commodity can be created in any
           of the following way:

               A change in the physical state or form (such as milling wheat into flour or making
               tomatoes into paste or ketchup).
               The production of agricultural commodity in a manner that enhances its value (such as
               organic tomatoes).
               The physical segregation for enhancement of the value/product differentiation (such as
               an identity preserved marketing system – tomatoes of Afghanistan)
               The storage of agricultural commodity so that it enhances value when the product is
               not available and market price is high (cold storage)
               Transporting agricultural products to places where the products are not available

           As a result of the change in physical state or the manner in which the agricultural
           commodity or product is produced and segregated, the customer base for the commodity
           or product is expanded and a greater portion of revenue derived from the marketing,
           processing or physical segregation is made available to the producer of the commodity or
           product

Potential Interventions:

           Based on the assessment and analysis of findings, especially the constraints faced by the
           actors of the supply chain the team tried to address the following questions through an
           analytic framework. Some of key questions are as follows:



           CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 40
    What is the likely effect of increased local production of tomatoes on producers?
    With potential for increased production what are the prospects in local tomato
    subsector for market expansion, product diversification, etc., taking the dynamic market
    conditions - changes in customer needs and taste, knowledge and capacity of the
    subsector, rate of technological adoption, local skills, etc.?
    Considering market expansion and increased production what would be the likely
    affects on highly price sensitive market and low disposable income of the people.
    What is the likely effect of increased coordination and harmony among the actors in
    quality confirmation and standardization on products? What are the anticipated effects
    in terms of variation in market standardization, prices and trade régime?
    As the local market transitions from limited to wider market driven incentives, how are
    services providers changing their role, and what new institutional support is needed to
    facilitate these changes?
    Under which alternative market systems (local versus export, traditional versus more
    modern technologies) tomato producers should adopt that would increase value-
    addition and increase competitive advantage?
    What forward and backward linkage would promote sustainable product and market
    diversification in the subsector and how can these be appraised in the absence or
    presence of functioning systems (business services, sub-contracting, etc)?

The analyses found strong arguments for selective interventions in tomato producing and
processing intensification. First, there is substantial scope for expanding the market.
Second, relatively lower costs of production give the local producers a strong advantage
over imports to cater the wider markets. Third, local producers possess unexploited natural
production advantages for tomatoes which can attract private sector investment. Fourth,
product standardization and quality confirmation can significantly increase the value-
addition and competitive advantage to local producers, and Fifth, the increased
coordination and harmony can minimize the internal rivalry and tap specialized
opportunities.

The following recommendations and interventions are proposed under broad category
based on the above analysis:

Capacity Development on Improved Production Process
During the field survey it was observed that the knowledge and information on quality
production of tomato is one of the critical constraint of the subsector that is can profoundly
improve the growth, profitability and income opportunities to a large number of farm
households who are engaged in the tomato cultivation and sales process. This capacity
development would primarily demand for exchange and dissemination of information and
knowledge to the subsector actors regarding:

          Improved farming techniques
          Use of appropriate doses of fertilizer and pesticide
          Soil, Fertilizer and Pest Management
          Importance of soil testing
          Quality seed production, preservation and use
          Improved harvesting and post harvesting techniques (including sorting, grading,
          packing and arrangement for safe transportation)

Value Addition of Tomato
Absence of value addition provisions of tomato is also critically affecting the growth,
profitability and income opportunities of a large number of farm households who are
engaged in the tomato cultivation and sales process. The primary value addition of
tomatoes can be done in two broad forms:

CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 41
    1. Processing: a) Ketchup, juice and paste making; b) sun-dry or dehydrated
       tomatoes
    2. Cold Storage

1. Processing plant can significantly benefit both the private sector owner and the
   farmers during the peak season, when the price of the tomatoes is low. Processing of
   tomatoes can be done in the following two forms:
   a) Processing of tomatoes to make ketchup, sauce, juice and paste: This is a
       viable project because of its significant demand particularly for juice and paste
       through a medium sized plant with possible options for scaling up.
   b) Processing of tomatoes through sun-drying: This can be done through women
       entrepreneurs who are already trained and are in business. There are about 300
       trained women working on production of tomato processing activities in a mini
       scale. The sun drying process does not require much investment except for
       equipment for quality control, compliance of sanitary and hygienic codes, and
       packaging machinery. The packing is generally done using heat sealable
       polyethylene bags.

2. Cold storage can take advantage of the low prices of tomato during the peak season
   and can provide an opportunity to benefit the farmers in getting relatively higher price
   and help develop community supported agriculture. It is felt that a number of relatively
   small sized cold storage positioned in high tomato growing locations, can have
   improved impact. It will reduce investment, increase competition thus reduce price and
   increase quality of service. Moreover, relatively smaller sized cold storages are easy to
   mange, power consumption would be lower, in emergency situations generated
   electricity can satisfactorily provide backup. The likely locations of these cold storages
   could be in Jalalabad, Behsud and Khogyani districts. The private sector investors are
   interested in investing in cold storage with assistance form ALP-E.

Backward and Forward Linkage:
It is important to develop the farmers access to backward (seed, fertilizer, pesticide and
other inputs) and forward (trading, wholesaling, export) markets for improving their
profitability. This can be done in any of the following ways:
1. ICT portal providing market information (price, demand and supply situation), name
      and address of service providers and other value chain actors and develop linkage
      among them. The portal can also assist in providing critical current issues affecting
      production and sales of tomatoes such as farming practices, pest infestation and
      measures to take, etc. The portal can seek advertisement from the various commercial
      service providers and value chain actors and can become sustainable.
2. Community Radio: This can be an effective way to reach large number of farmers at a
      significantly lower cost. This can be highly effective in the remote areas.
3. Farmer’s News Letter: The newsletter can be prepared by a combination of value chain
      actors such as agricultural graduates especially women to provide similar information
      and knowledge on a weekly basis. The newsletter can seek advertisement from the
      various commercial service providers and value chain actors and can become
      sustainable.
4. The farmer’s forum can also play an active role in sharing and exchanging critical
      backward and forward linkage information in collaboration with the various value chain
      actors and service providers. They can hold workshops or discussion meetings with
      these actors on weekly basis to update information and knowledge

Strengthening and Developing Effective Business Service Market
This is an extremely critical intervention that vcan result in increased farmer’s profitability. A
number of important business services such as soil testing, cultivation services, pest
management services, packaging material services, information services, financial


CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 42
services, transportation services, etc., needs to be strengthen and developed for desirable
growth of the subsector. Assistance is required for both product and market development
for these services to make it viable to commercially operate and earn profit for
sustainability. At the initial stage certain providers may require financial assistance to
procure equipments and machineries or upgrade their existing operation as well as need
capacity development.

    1. A group of soil testers can be developed who would, in turn, provide services to
       farmers by testing their soil and provide directions for fertilizers and micro-nutrients
       requirements, application methods and prescribed amount doses according to
       crop.
    2. Private sector investors can be encouraged to invest in cultivation equipments and
       lease these out to farmers at fees. Even the farmer’s associations can invest to
       earn revenue from the lease money for their sustainability of the association.
    3. Private sector investors can be encouraged to invest in pest management (spray
       service) and provide this service to the farmers for a fee.
    4. Private sector investors can be encouraged to invest in developing packing
       materials for both fresh tomatoes as well as processed materials (wooden crates,
       plastic, wire or cardboard crates, glass bottle manufacturing, plastic bottles, tetra
       packs, polyethylene packs, etc.) The wooden crates are extensively used for fresh
       tomatoes and fruits here. Generally they can sustain wear and tear of two to three
       seasons even considering the poor road conditions.

Mainstreaming Gender in Tomato Production and Processing:
Women plays an important role in the subsector however, their roles has not been
recognized. It is critically important to develop their capacities, knowledge and awareness
so that they can take a front seat as true entrepreneur. Some of the key activities could be:
          Develop women farmers’ group
          Actively link them with knowledge service providers (NGOs, universities, extension
          department, embedded services of large private sector enterprises)
          Link them with micro credit institutions
          Encourage them to improve their profile and visibility

Infrastructure Development:
The infrastructure development is primarily for development of feeder roads for linking the
farm with main access road to market or growth centers. Lack of these roads increases
cost for head load carrying and the same time increases post-harvesting loss due to poor
handling. Development of irrigation canals and culverts are important. The local farmer’s
associations are willing assist in the development process.

Energizing the Association:
A potential exists for strengthening the present association as well as developing new
producer’s fora to develop the entire subsector, particularly to integrate the small and
medium sized enterprises. The association can play a number of critical activities and can
work as the central hub for the improvement of the subsector.

1) Develop harmony, coordination and collaboration              particularly for knowledge,
   information and experience sharing among the farmers
2) Undertake/organize policy advocacy relating to issues affecting the productivity,
   profitability and growth as well issues related to access and availability of quality inputs,
   physical market, transportation, utilities, etc
3) Develop standards for “Good Agriculture Practices” and other quality, and food and
   sanitary code of conducts
4) Link farmers with inputs, technology, etc., as well as related service providers


CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 43
                 5) Link farmers with agriculture research institutions, extension departments
                 6) Organize capacity building programs based on the local needs of the farmers
                 7) Facilitate backward and forward linkage and also work on acquiring subcontracting
                       works from larger farmers.

                 Policy Advocacy:
                 Policy advocacy is required in the following areas:
                     1. Standardization (testing, certification) of imported agricultural inputs (seed,
                          fertilizer, pesticide)
                     2. Regulating trade (export and import) of tomato and tomato products
                     3. Coordination between agricultural research and extension
                     4. Encouraging private sector for investing in value addition enterprises for tomatoes
                     5. Incentives for importing value addition (cold storage, processing) machineries,
                          packaging materials and other necessary chemicals for tomato processing as well
                          as other modern agricultural machineries for increasing productivity of the value
                          chain members
                     6. Agricultural credit facilities for the value chain members

                 The policy issues needs to be demonstrated to the policy makers about its impact on the
                 growth of private sector and agriculture particularly on tomato production and sales and
                 affecting the poor farmers’ income potentials. This policy dialogues can be facilitated
                 through the farmers’ groups, trade associations, through concrete studies and examples.

Time-Line for Intervention:

                 The following action plan/time-line is provided with illustrative dates. The time line is
                 prepared for a time frame of one year of implementation. The key activities are broadly
                 categorized as, a) preparation and b) execution activities

                                       Time Line for Tomato Value Chain Intervention
Activity                                             Six Months                         Six Months               Descriptions
                                            1    2     3     4     5     6    7     8     9     10   11    12
Preparation Activity 1                                                                                           •     Selection of Facilitator
(Orientation and training on intervention                                                                        •     Orientation of
approach, methodology, goals,                                                                                          implementation team
strategies)
Preparation Activity 2                                                                                           •     High tomato producing
(Selection and prioritization of                                                                                       districts
intervention locations)                                                                                          •     Jalalabad city for backward
                                                                                                                       and forward linkages
Preparation Activity 3                                                                                           •     Farmer’s forum
(Developing Farmer’s Forum)                                                                                            development
                                                                                                                 •     Separate female farmers
                                                                                                                       groups developed
Preparation Activity 4                                                                                           •     Interventions prioritized and
(Prioritization of interventions and                                                                                   sequenced
finalization of approach)                                                                                        •     Approach (TA, Financial
                                                                                                                       Assistance amount and
                                                                                                                       mode of payment, etc
                                                                                                                       finalized)
Execution Activity 1                                                                                             •     Need assessment
Awareness and capacity development                                                                               •     Training kits developed and
issues finalized                                                                                                       translated
                                                                                                                 •     Awareness creation
                                                                                                                       strategies and tools
                                                                                                                       developed
Execution Activity 2                                                                                             •     Private sector investors
Value addition interventions plans                                                                                     finalized
finalized                                                                                                        •     Number of investor selected



                  CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                  PAGE: 44
                                                                                                               •     Area of investment (cold
                                                                                                                     storage/processing plant,
                                                                                                                     service provisions) finalized
Execution Activity 3                                                                                           •     Size, capacity, technology,
Technical and financial assessment of                                                                                investment requirement,
value addition (cold storage and                                                                                     machinery requirements,
processing plant) completed                                                                                          etc.
Execution Activity 4                                                                                           •     Production, harvesting and
Service provisions strengthened                                                                                      post harvesting services
                                                                                                               •     Crate developer
                                                                                                               •     Bottle manufacturer
                                                                                                               •     Printing and labeling
                                                                                                                     services
Execution Activity 5                                                                                           •     ICT portal development and
Backward and forward linkage for                                                                                     linked with farmers’ forum
producers and processors developed                                                                             •     Community radio
                                                                                                                     establishment
                                                                                                               •     Farmer’s newsletter
                                                                                                                     developed
Execution Activity 6                                                                                           •     Linkage with organizations
Gender mainstreaming activities                                                                                      working with Gender
established                                                                                                    •     Identification women
                                                                                                                     entrepreneurs
                                                                                                               •     Capacity development of
                                                                                                                     women entrepreneurs
Execution Activity 7                                                                                           •     Need assessment
Infrastructure development program                                                                             •     Types of infrastructure
undertaken                                                                                                           requirement finalized
                                                                                                               •     Number of culverts, feeder
                                                                                                                     roads, physical market
                                                                                                                     place developed
Execution Activity 8                                                                                           •     Appropriate capacity
The farmer’s associations and forums                                                                                 development issues
strengthen for advocacy, knowledge                                                                                   identified
sharing                                                                                                        •     Training manual developed
                                                                                                                     and translated
                                                                                                               •     Capacity development
                                                                                                                     program initiated
Execution Activity 9                                                                                           •     Policy issues finalized in
Policy Advocacy                                                                                                      association with trade
                                                                                                                     groups, investors and
                                                                                                                     producers
                                                                                                               •     Advocacy strategies
                                                                                                                     developed
                                                                                                               •     Advocacy materials
                                                                                                                     developed
                                                                                                               •     Policy makers integrated in
                                                                                                                     the program
Execution Activity 10                                                                                          •     Performance Monitoring
Monitoring and Evaluation                                                                                            Framework (PMF)
                                                                                                                     developed
                                                                                                               •     Baseline study completed at
                                                                                                                     the beginning for
                                                                                                                     benchmark
                                                                                                               •     Monitoring ToR developed
                                                                                                               •     Reporting guideline
                                                                                                                     developed
Execution Activity 11                                                                                          •     Documentation of
Project Experience Sharing Workshop                                                                                  experience learnt
organized                                                                                                      •     Case studies key learning
                                                                                                                     issues developed for
                                                                                                                     replication and scaling up
                                                                                                                     project

               A facilitator is required to coordinate and develop detail program activities of all of selected
               interventions. The facilitator will provide technical backstopping to the local team in fine
               tuning the activities and program intervention strategies.

                CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                 PAGE: 45
    Annexes


Annex-1: Detail Constraints and Opportunities Matrix:

I. MARKET ACCESS
     Constraints                               Cause            Features of                 Who is/are    Potential                  Existing
                                                                constraints                 affected      Interventions              Provider of
                                                                                            (Target)                                 Services
1    Lack of adequate market             • Poor information     • 80% small and remote      • Small       • Linkage with             • Intermediaries
     information results in poor           sharing facilities     farmers are affected        farmers       intermediaries           • Farmers
     decision of the farmers to          • No intermediate      • The price reduction       • Farmers     • Provisions of ICT
     harvest and select right market       market                 are more than 60%           in remote     for dissemination of
     consequently lower market           • Poor supply          • Poor decision of the        areas         market information
     price.                                channel                farmers regarding
                                                                  harvesting time
                                                                  (harvesting can be
                                                                  delayed 3-5 days)
                                                                • Poor decision of the
                                                                  farmers regarding
                                                                  selecting the right
                                                                  market (can sell to
                                                                  other Provincial and
                                                                  Pakistani market)
                                                                • Over supply in one
                                                                  market (mostly in
                                                                  Jalalabad market
2    Lack of sufficient physical         • Jalalabad being      • Jalalabad market          • Small       • Provisions for           • Market
     market place especially in            the primary            handles about 50%-          farmers       physical market            committees
     district towns forces the             commercial             60% of tomato             • Farmers       development
     farmers to take their product to      center                 production                  in remote
     only market in Jalalabad            • Trade satisfaction   • Accessing Jalalabad         areas
     making the competition                of people on           market by the remote
     intense and influences price          Jalalabad market       farmers is difficult
     due to over supply                    is high                and expensive
                                         • Can perform          • The long
                                           other transactions     transportation increase
                                                                  wastage
3    Lack of adequate internal road      • Lesser priority of   • Poor internal roads       • All         • Provisions for feeder    • NGOs
     facilities makes it difficult to      the government         from farm to main           farmers       road construction        • Local people
     transport the tomatoes from         • Inadequate             road
     farm to main road as a result         budget of            • Manual or head-load
     this increases wastage and            government             transportation
     increases cost thus lowers the      • Frequent flooding      increases cost and
     profit of the farmers.                                       wastage
4    Lack of cold storage facilities     • Lack of local        • More than 150%            • All         • Provisions for           • Private Sector
     forcing the farmers to sell their     technical              reduction from early        farmers       specialized multi-
     tomato even the price is lower        knowledge              season price                              chamber cold
     thus in increases the financial     • High investment      • Sold at below the cost                    storage facilities for
     loss of farmers                       cost                   price                                     tomato
5    Inadequate backward (for            • No intermediate      • Increases price of        • Small       • Provisions for           • Farmers’
     seed, fertilizer, pesticide,          market                 inputs by about 20%         farmers       increased backward         associations
     equipments, knowledge) and          • Poor supply          • Reduces profitability     • Farmers       and forward market       • Trade
     forward (traders, wholesalers,        channel                from sales of tomato        in remote     linkage                    associations
     retailers) linkage with farmers                              by 30%                      areas
     results in poor productivity
     and profitability thus
     discourages the farmers to
     grow tomato.
6    Poor market mechanism (lack         • Strong Market        • More than 150%            • Small       • Provisions for           • Intermediaries
     of information, single market,        regime                 reduction from early        farmers       increased market         • Farmers
     poor negotiation power of the       • Farmers are not        season price              • Farmers       information                associations


                  CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                           PAGE: 46
    farmers, etc.) encourages           united               • Sold at below the cost     in remote   • Provisions for          • Market
    exploitative tendency of the                               price                      areas         strengthening             committees
    traders thus discourages the                                                                        farmers’ association
    farmers to produce tomatoes.                                                                      • Provisions for
                                                                                                        market development
7   Lack of availability of quality   • Poor sources of      • About 50% of             • Small       • Provisions for          • Carpenters
    inexpensive packaging               raw materials          tomatoes are wasted        farmers       developing local        • Farmers’
    materials (wooden crates)         • Crates are             during transportation    • Farmers       packaging service         association
    increases cost and wastages         outsourced from        from remote places.        in remote     providers
    during transportation resulting     Pakistan                                          areas
    in lower profit.                  • Easy availability
                                        of recycled crates
                                        but are generally
                                        poor quality
II. TECHNOLOGY/ PRODUCT DEVELOPMENT
    Constraints                             Cause            Features of                Who is/are    Potential                 Existing
                                                             constraints                affected      Interventions             Provider of
                                                                                        (Target)                                Services
1   Lack of knowledge about           • Lack of effort       • Increases cost of        • All         • Provisions for          • Agricultural
    improved cultivation practices      towards continual      production by 30%          farmers       capacity                  Extension
    (soil testing, crop rotation,       development of       • Reduces yield by 30%                     development on            department
    water management, weed              technology.                                                     improved cultivation    • NGO
    management, plant spacing,        • Limited capacity                                                methods                 • Farmers’
    etc.,) resulting in low             of the extension                                              • Provisions for            association
    productivity and poor quality       department                                                      service provisions
    thus making tomato                • Poor resource                                                   on soil testing
    production less attractive.         allocation for
                                        agricultural
                                        research.
                                      • Lack of service
                                        providers
2   Lack of knowledge and             • Poor coordination    • Reduces productivity     • All         • Provisions for          • Research
    information on new and              among Research       • Increases cost of          farmers       increased                 Institute
    improved production                 Institute,             production by 20%                        information on new      • Agriculture
    technologies (planters,             Agriculture                                                     and improved              University
    harvesters, etc.) reduces           University, and                                                 production              • Extension
    productivity (yield) and            Extension                                                       technologies              Department
    quality of tomato resulting         Department                                                    • Provisions of           • NGOs
    higher cost of production and     • Absence of large                                                embedded services
    lower profit thus making            Ag machinery                                                    through machinery
    tomato production less              suppliers                                                       suppliers
    attractive to producers.




3   Lack of knowledge on high         • Poor coordination    • Reduces profitability    • All         • Provisions for          • Input suppliers
    yielding, pest resistant,           among Research         by 30%                     farmers       awareness building      • Research
    early/late/off season varieties     Institute,                                                      on high yielding,         Institute
    of tomatoes by the growers          Agriculture                                                     pest resistant,         • Agriculture
    results in lower productivity       University, and                                                 early/late/off season     University
    and profitability therefore         extension                                                       varieties of tomatoes   • Extension
    becomes less competitive to         department                                                    • Provisions for            Department
    imported tomatoes                 • Resource                                                        capacity building of    • NGOs
                                        limitation of                                                   input suppliers for
                                        extension                                                       embedded services
                                        department
4   Lack of knowledge of              • Poor coordination    • Reduces profitability    • All         • Provisions for          • Input suppliers
    appropriate application and         among Research         by 30%                     farmers       awareness building      • Research
    dosage of fertilizer and            Institute,           • Reduces yield by 40%                     on high yielding,         Institute
    pesticide use reduces               Agriculture                                                     pest resistant,         • Agriculture
    productivity resulting in poor      University, and                                                 early/late/off season     University
    profit.                             extension                                                       varieties of tomatoes   • Extension
                                        department                                                    • Provisions for            Department
                                      • Resource                                                        capacity building of    • NGOs
                                        limitation of                                                   input suppliers for
                                        extension                                                       embedded services



                 CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                       PAGE: 47
                                           department
5   Lack of adequate local               • No available          • Reduces profitability   • All         • Provisions for         • Indigenous
    expertise and skills on tomato         facilities              by 50%                    farmers       developing local         processing
    storage and processing               • Services are                                                    expertise and skills     groups
    technology is retarding the            outsourced from                                               • Provisions for         • Small women
    market growth consequently             Pakistan                                                        strengthening            entrepreneurs
    the farmers are deprived from        • No technical                                                    indigenous
    high income opportunities              institutions                                                    processing (sun
    from tomato production and                                                                             dried, juice making)
    are discouraged                                                                                      • Provisions for
                                                                                                           promoting
                                                                                                           commercialization
                                                                                                           of indigenous
                                                                                                           processing
III. MANAGEMENT/ORGANIZATION
    Constraints                      Cause                       Features of               Who is/are    Potential                Existing
                                                                 constraints               affected      Interventions            Provider of
                                                                                           (Target)                               Services
1   Lack of knowledge and            • Practice of               • Reduces productivity    • All         • Provisions for         • Research
    skills of commercial               subsistence                 by 30%                    farmers       developing               Institute
    farming resulting in poor          agriculture                                                         knowledge and          • Agriculture
    productivity and poor            • Lack of market                                                      awareness on             University
    profitability                    • Poor profitability                                                  commercial farming     • NGOs
                                                                                                         • Provisions for
                                                                                                           market development
2   Lack knowledge on                • Practice of               • Increases sense of      • All         • Provisions for         • NGOs
    appropriate record keeping         subsistence                 dissatisfaction           farmers       capacity
    (particularly cost of              agriculture               • Drop out from tomato                    development on cost
    various inputs, farming          • Illiteracy                  cultivation                             and profit
    harvesting, post harvesting      • Lack of awareness                                                   calculation and
    activities, etc. as well as                                                                            record keeping
    production, wastage
    figures) to determine
    profitability and
    competitive advantage
    resulting in poor
    satisfaction or higher
    expectation from
    production of tomatoes.


3   Lack of knowledge about          • Practice of               • Reduces yield by 25%    • Small and   • Provisions for         • Input suppliers
    tomato variety results in          subsistence                                           remote        developing             • Research
    poor yield and less profit         agriculture                                           farmers       knowledge and            Institute
                                     • Poor knowledge of                                                   awareness on tomato    • Agriculture
                                       input suppliers                                                     varieties                University
                                     • Poor extension                                                                             • Extension
                                       activities                                                                                   Department
                                                                                                                                  • NGOs
4   Lack of knowledge of             • Poor knowledge of         • Reduces yield by 25%    • All         • Provisions for         • Input suppliers
    tomato disease and its             input suppliers                                       farmers       developing             • Research
    protection results in poor       • Poor extension                                                      knowledge and            Institute
    yield and less profit              activities                                                          awareness on tomato    • Agriculture
                                                                                                           disease and              University
                                                                                                           protection             • Extension
                                                                                                                                    Department
                                                                                                                                  • NGOs
IV. INPUT SUPPLY
    Constraints                      Cause                       Features of               Who is/are    Potential                Existing
                                                                 constraints               affected      Interventions            Provider of
                                                                                           (Target)                               Services
1   Increased price of primary       • Dependent on supply       • Increases the cost of   • Small and   • Provisions for local   • Farmers
    inputs (seed, fertilizer)          from Pakistan               production by 25%         remote        seed production        • NGOs
    pushes the cost of               • Erratic supply due to                                 farmers     • Provisions for
    production higher making           poor market                                                         reducing transaction
    it less competitive against        projection                                                          cost of the traders
    inexpensive Pakistani            • High transaction cost
    tomatoes resulting in loss         (tax, toll, blockage of


                CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                          PAGE: 48
    and discouragement for             working capital,
    production.                        increased
                                       transportation cost)
2   Lack of availability and       •   Dependent on supply     • Reduces yield by 30%    • Small and   • Provisions for seed    • Seed testing
    access to quality inputs           from Pakistan                                       remote        testing facilities       laboratory
    (particularly seed) results    •   Erratic supply due to                               farmers     • Provisions for         • NGOs
    in poor yield consequently         poor market                                                       farmer’s access to     • Seed traders
    per unit production costs          projection                                                        credit
    increase dramatically          •   Lack of financial                                               • Provisions for
    making tomato production           capacity of the                                                   strengthening seed
    less profitable.                   farmers to purchase                                               supply chain
                                       quality seed
                                   •   Lack of knowledge of
                                       farmers about seed
                                       quality.
3   Lack of knowledge of           •   Inadequate              • Reduces yield by 30%    • Small and   • Provisions for         • Extension
    seed production and                knowledge about                                     remote        developing               department
    preservation by the                seed collection and                                 farmers       knowledge and          • NGOs
    farmers reduces                    preservation                                                      capacity to collect
    production yield                                                                                     and preserve seed
    consequently per unit
    production costs increase
    dramatically making
    tomato production less
    profitable.
6   Lack of availability and       • Requires substantial      • Increases cost of       • Small and   • Provisions for         • Machinery
    access to cultivation            investment                  production by 20%         remote        developing service       rental services
    technology (tractor,           • Demand and supply                                     farmers       providers for rental     providers
    irrigation equipments,           of service is not                                                                          • Large farmer
    weeder, spray machine,           known                                                                                      • NGOs
    etc.) increases the rental
    fees or requires more
    manual labor thus
    increasing the cost of
    production and reduces
    profit of the producers

V. FINANCE
    Constraints                    Cause                       Features of               Who is/are    Potential                Existing
                                                               constraints               affected      Interventions            Provider of
                                                                                         (Target)                               Services
1   Lack of access to finance      • Non availability of       • Reduces yield by 30%    • Small       • Provisions for         • Input suppliers
    for purchasing quality           formal financial                                      farmers       financial services       (credit)
    seed, adequate fertilization     institutes.                                                                                • NGOs
    and appropriate dose of        • Lack of owners’                                                                            • Local money
    pesticide application            equity.                                                                                      lenders
    results in lower yield and
    poor profitability.

2   Lack of access to finance      • Non availability of       • Reduces productivity    • Small       • Provisions for         • NGOs
    result in production of          formal financial            by 30%                    farmers       financial services     • Local money
    tomatoes in smaller land         institutes.                                                                                  lenders
    thus reducing the scope for    • Lack of owners’
    attaining economy of scale       equity.
    and competitive advantage
    for more profit.
3   Lack of access to finance      • Non availability of       • Reduces profitability   • Small       • Provisions for         • NGOs
    force the producers to sell      formal financial            by 20%                    farmers       financial services     • Local money
    their products in advance        institutes.                                                                                  lenders
    to traders at a lower price    • Lack of owners’
    thus making tomato               equity.
    production less profitable
4   Lack of access to finance      • Non availability of       • Increases cost of       • Small       • Provisions for         • NGOs
    forces the producers to          formal financial            capital by 30%            farmers       financial services     • Local money
    depend on money lenders          institutes.                                                                                  lenders
    and pay higher interest        • Lack of owners’
    rate/profit-sharing ratio        equity.
    thus making the cost of
    capital high which reduces


                CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                        PAGE: 49
    the profit
VI. POLICY
    Constraints                             Cause               Features of                  Who is/are    Potential                 Existing
                                                                constraints                  affected      Interventions             Provider of
                                                                                             (Target)                                Services
1   Lack of appropriate             • Lack of good              • Reduces profitability      • Small and   • Provisions for          • Seed testing lab
    enforcement of policy for         governance                  by 30%                       remote        enforcement of          • NGOs
    seed, fertilizer and            • Limited resources of                                     farmers       policy for seed,
    pesticide quality testing         seed testing lab                                                       fertilizer and
    and standard resulting in                                                                                pesticide quality
    increased supply of non-                                                                                 testing
    quality inputs in market
2   Lack of adequate policy         • Absence of farmers’       • About 35% of               • All         • Provisions for          • Trade
    for regulating the trade of       association                 tomatoes production          farmers       adequate policy for       Associations
    tomatoes with neighboring         participation in policy     are exported to            • Traders       regulating the trade
    countries (Pakistan and           making                      Pakistan                                   of tomatoes with
    Iran)                           • Poor representation of    • 40% of tomato                              neighboring
                                      trade association in        demands are met by                         countries
                                      policy making               Pakistan tomatoes
    Lack of adequate policy         • Poor policy               • Rate of research           • All         • Provisions for          • Research
    guidelines for coordination       formulating structure       adoption is slow             farmers       adequate policy           organizations
    between agricultural            • Absence of farmers’                                                    guidelines for          • Extension
    research and extension            association                                                            coordination              department
    results in slow adoption of       participation in policy                                                between agricultural    • Farmers’
    research results at the field     making                                                                 research and              association
    level consequently the                                                                                   extension results       • NGOs
    producers can not take
    advantage of the research
    results for profitable
    production process



    Lack of policy for              • Poor representation of    • About 40%                  • All         • Provisions for          • Trade
    encouraging value-                trade association in        profitability is reduced     farmers       adequate policy to        association
    addition of agricultural          policy making                                                          encouraging value-      • Farmers’
    products through                • Poor policy                                                            addition of               association
    processing, storage, etc.         formulating structure                                                  agricultural products   • NGOs
    resulting in poor private                                                                                through processing,
    sector investment in this                                                                                storage,
    area consequently the
    farmers’ profitability
    reduces.
    Lack of policy for tax          • Poor representation of    • Poor competitive           • All         • Provisions adequate     • Trade
    incentives on import of           trade association in        advantage                    farmers       policy for tax            association
    modern appropriate                policy making                                                          incentives on import    • Farmers’
    agricultural machineries to     • Poor policy                                                            of modern                 association
    increase productivity             formulating structure                                                  appropriate             • NGOs
    resulting in low                                                                                         agricultural
    competitiveness advantage                                                                                machineries
    in agriculture
    Lack of appropriate policy      • Poor policy               • About 20%                  • Small       • Provisions for          • Farmers’
    for suitable agricultural         formulating structure       profitability is reduced     farmers       appropriate policy        association
    credit facilities for           • Absence of farmers’                                                    for suitable            • NGOs
    increasing farm production        association                                                            agricultural credit
    resulting in poor                 participation in policy                                                facilities
    productivity and low              making
    profitability
VII. OPERATING ENVIRONMENT/INFRASTRUCTURE
    Constraints                             Cause               Features of                  Who is/are    Potential                 Existing
                                                                constraints                  affected      Interventions             Provider of
                                                                                             (Target)                                Services
1   Lack of adequate feeder         • Absence of                • About 30% wastage          • All         • Provisions for          • Farmers’
    road linking farms with           government priority         of tomatoes                  farmers       adequate feeder road      association
    markets resulting in high       • Frequent flooding                                                      linking farms with      • NGOs
    cost, wastage of tomatoes                                                                                markets
    resulting in low
    profitability.



                 CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                            PAGE: 50
2   Lack of cold storage           • Lack of local           • About 150%               • All         • Provisions for           • Private sector
    facilities for tomatoes          technical knowledge       reduction of price         farmers       sufficient cold
    results in compelling the      • High investment cost      from early season                        storage facilities for
    producers to sell their                                                                             tomatoes
    products even at a lower
    price.
3   Lack of processing             • Lack of local           • About 50% of total       • All         • Provisions for           • Private sector
    facilities for tomatoes          technical knowledge       production are sold at     farmers       sufficient processing
    results in lower capacity to   • High investment cost      reduced rate or                          plants for tomatoes
    absorb excess supply thus                                  exported to Pakistan
    reducing the price and
    poor profitability.
4   Lack of adequate supply        • Poor government         •                          •             •                          •
    and access to electricity        resources
    hinders value addition         • Poor private
    plants                           investment incentives
5   Lack of adequate and           • Lack of improved        • About 30% wastage        • All         • Provisions for           • Private sector
    appropriate transportation       road communication                                   farmers       adequate and
    facilities results in higher     system                                                             appropriate
    cost, high wastage thus                                                                             transportation
    reducing profitability                                                                              facilities
VIII. TRADE ASSOCIATIONS
    Constraints                            Cause             Features of                Who is/are    Potential                  Existing
                                                             constraints                affected      Interventions              Provider of
                                                                                        (Target)                                 Services
1   Lack of adequate farmers’      • Lack of knowledge       • About 80% farmers        • Small and   • Provisions for           • NGOs
    association results in poor      and awareness             are affected               remote        adequate farmers’        • Farmers’
    collective bargaining to         regarding the                                        farmers       association                association
    safe guard their interest        potential benefit




2   Lack of functional             • Lack of knowledge       • About 80% farmers        • All         • Provisions for           • NGOs
    farmers’ association results     and awareness             are affected               farmers       adequate functional      • Farmers’
    in lower sharing of              regarding the benefit                                              farmers’ association       association
    knowledge, information
    and experience resulting in
    poor productivity and
    profitability.




                CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                         PAGE: 51
Annex 2: List of Respondents

     SL.               Name                             Address                          Land Owner ship
     No.
1.         Askar Ismail                         Sammer Kheil                   Rental Land
2.         Abdul Wahab                          Sammer Kheil                   Rental Land
3.         Mohammadi gul                        Sammer Kheil                   Rental Land
4.         Mohammad Nazeer                      Sammer Kheil                   Land Owner
5.         Shir Gul                             Sammer Kheil                   Rental Land
6.         Naurooz                              Sammer Kheil                   Rental Land
7.         Mohammad Riaz                        Sammer Kheil                   Land Owner
8.         Mian Feroz                           Sammer Kheil                   Land Owner
9.         Abdul Meer                           Sammer Kheil                   Land Owner
           Abdul Meer Khan                      Sammer Kheil                   Land Owner
10.        Ghazi                                Sammer Kheil                   Rental Land
11.        Irfan                                Sammer Kheil                   Rental Land
12.        Hedyatullah                          Sammer Kheil                   Rental Land
13.        Mian Usman                           Sammer Kheil                   Land Owner and Rental Land
14.        Mahshallah                           Sammer Kheil                   Land Owner
15.        Hayat Gul                            Sammer Kheil                   Rental Land
16.        Akal Khan                            Sammer Kheil                   Rental Land
17.        Noor Agha                            Sammer Kheil                   Land Owner
18.        Faqeer Mohd                          Sammer Kheil                   Rental Land
19.        Gul Sher                             Behsood                        Land Owner and Rental Land
20.        Mohd Ismail                          Behsood                        Land Owner
21.        Safdar                               Behsood                        Rental Land
22.        Abdul Ahad                           Behsood                        Land Owner
23.        Ibrahim                              Behsood                        Land Owner
24.        Usman                                Behsood                        Rental Land
25.        Shah wali                            Behsood                        Land Owner
26.        Tajwar                               Behsood                        Rental land
27.        Gulam rabbani                        Behsood                        Land Owner
28.        Haji Alah Mohammad                   Behsood                        Land Owner and rental Land
29.        Shir Ahmad                           Behsood                        Land Owner and Rental Land
30.        Subhanullah                          Behsood                        Rental Land
31.        Niamatullah Malik                    Behsood                        Land Owner
32.        Shir Mohammad                        Behsood                        Land Owner
33.        Mir Wali                             Behsood                        Rental Land
34.        Mohammad Qasim                       Deh-Tahir                      Land Owner
35.        Mian Lal Qasim                       Deh-Ghazi                      Land Owner and Rental land
36.        Abdur Razzaq                         Deh-Tahir                      Land Owner
37.        Sijad                                Dargalhi                       Land Owner
38.        Yonus Khan                           Gushta                         Land Owner
39.        Abdu Mubin                           Deh-Tahir                      Land Owner and Rental Land
40.        Shir Mohammad                        Dargalhi                       Land Owner
41.        Abdul wahab                          Kamakhas                       Land Owner
42.        Malik Ewaz Khan                      Sangar Sari                    Land Owner and rental Land
43.        Subhanullah                          Arbapan                        Land Owner
44.        Irfan                                Gahi – Kaley                   Land Owner
45.        Habib ur Rahman                      Terakhil                       Land Owner and Rental land
46.        Abdul Jabbar                         Terakhil                       Land Owner
47.        Mir wais                             Terakhil                       Land Owner
48.        Mohammad Naeem                       Terakhil                       Land Owner and Rental land
49.        Imam Jan                             Terakhil                       Land Owner
50.        Agha Mohammad                        Terakhil                       Land Owner and Rental Land
51.        Shir Mohammad                        Terakhil                       Land Owner and Rental land


            CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 52
52.         Zahid                                 Khogyani                       Land Owner
53.         Mahsil Khan                           Khogyani                       Land Owner and Rental land



Annex 3: KI Interview List

SL     Name                   Designation                    Institution & Address                                 Actor Type
1.    Mr. Yousuf Alkozai      Private Agronomist             NDI, Mastufiat, Jalalabad                             Agronomist

2.    Abdul Latif             Head of Research and           Research and Investigation Department                 Agro Researcher
                              Investigation department       Toorkham Hada Jalalabad
3.    Ibrahim Painda          Head of libratory              Toorkham Hada, Jalalabad                              Technical
                                                                                                                   Assistant
4.    Faridullah              Technician of Laboratory       Toorkham Hada, Jalalabad                              Government
5.    Mr.Menhaj               Head of Agriculture            BRAC, Chashma-e-Khanjee, Jalalabad                    NGO Worker
                              section for BRAC
6.    Mr. Najeebullah         Agronomist of Agriculture      BRAC, Chashma-e-Khanjee, Jalalabad                    NOG Worker
                              section for BRAC
7.    Mr. Mahsal Khan         Head of Nangrahar              Director of Nangrahar Agriculture                     Agronomist
                              Agriculture department         Department Talashai Chow, Jalalabad
8.    Eng Abdul Ahmed         Agronomist of Agriculture      Talashai Chowk, Jalalabad city                        Agronomist
      Laghmani                Department Nan
9.    Eng Md. Sharif          Engineer                       Farmi Ghazi Abad Director Bati kot,                   Agronomist
                                                             Toorkham Road, Nangrahar
10. Eng.Said Ahmad            Head of Agriculture            IFHOPE, Talashai chowk, Jalalabad City                Engineer
    Mujadidi                  Section IFHOPE
11. Mr. Azad Khan             Project Coordinator            Madera International Bati kot, Toorkham               NGO Worker
                                                             Road, Nangrahar
12. Eng. Ziaullhaq            Plant Protection officer       A.D.N. Talashai Chowk Jalalabad City                  Plant Protection
                                                                                                                   Engineer
13. Eng.Said Raqeeb           Private Agronomist             Mastufiat Chowk, Jalalabad City                       Agronomist
14. Eng.Zulu Rahman           Head of Extension              Extension Department of Nangrahar                     Extension Expert
                              Department of Nangrahar        Talashai Chowk Jalalabad City
15. Abd Ghafar                Private Agronomist             Jalalabad City                                        Agronomist
    Kagawal
16. Prof.Tahir                Professor                      Nangrahar University Durunta, Jalalabad               Teacher
17. Prof Shir Ali Amn         Professor                      Nangrahar University Durunta, Jalalabad               Teacher
18. Eng Habibullah            Agronomist                     Canal Directorate Dosaraka, Jalalabad                 Agronomist
19. Eng Babrak                Agronomist of IFHOPE           IFHOPE Agriculture Section Gumrak,                    NGO Worker
                              agriculture section            Toorkham Road Jalalabad
20. Jem Darbal                Chief Director                 IFHOPE Toorkham Road, Jalalabad City                  NGO Worker
21. Prof.Asif Bawari          Professor                      Nangrahar University Durunta, Jalalabad               Teacher
22. Mohd Sadiq                Production Engineer            Zaituoon Factory Farmi Hada, Jalalabad                Engineer
                                                             City
23. Abdullah Niamat           Technical Manager              Zaitoon Factory, Jalalabad City                       Management
                                                                                                                   Expert
24. Imam Jan                  Production Manager             Zaitoon factory, Jalalabad City                       Production
                                                                                                                   Specialist
25. Ms Genevieve              Agri Business Manager          ALP                                                   Program
    Cahill                                                                                                         Facilitator




              CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION                PAGE: 53
Annex 4: List of Service Poviders

SL     Name                   Designation                    Institution & Address                                 Actor Type
1.    Zabullah                Officer                       Extension section of NAD Talashai Chowk,               Service Provider
                                                            Jalalabad City
2.    Said Inaam              Officer                       Extension section of NAD Talashai Chowk,               Service Provider
                                                            Jalalabad City
3.     Enq.Qasam              Officer                       Farmi Hada, Jalalabad City                             Service provider
4.    Ismail Hussain          Private Agronomist            Jalalabad city                                         Service Provider
5.    Hussain Imam Jan        Private Agronomist            Farmi Hada, Jalalabad City                             Service Provider



Annex 5: Fresh Tomato Sellers

SL.     Name                     Address                                                     Actor Type
No.
1.      Mr. Baryalay             General Vegetable market, Jalalabad city                    Vegetable Whole seller
2.      Hafta Gulalam            General Vegetable market, Jalalabad city                    Vegetable whole seller
3.      Faridullah               Electricity market ,Jalalabad city                          Vegetable Retailer
4.      Ahmad Shah               Electricity market, Jalalabad city                          Vegetable Retailer
5.      Mohd Sadiq               Electricity market, Jalalabad city                          Vegetable Retailer
6.      Abdullah Niamat          General Vegetable market, Jalalabad city                    Vegetable Trader
7.      Imam Jan                 General Vegetable market, Jalalabad city                    Vegetable Trader



Annex 6: Tomato Input Sellers

SL.    Name                      Address                                    Actor Type
No.
1.     MD. Ismail Hussain        Dand Ghara,Jalalabad city                  Seed Retailer
2.     Asif Alam                 Dand Ghara,Jalalabad city                  Seed Retailer and Importer
3.     Gul Wazeer                General Vegetable Market                   Fertilizer and Pesticide Retailer & Importer
4.     Farid Sartoor             Dand Ghara,Jalalabad city                  Fertilizer Retailer
5.     Mohd Ashraf               Dand Ghara,Jalalabad city                  Pesticide Retailer & Importer
6.     Mohd Agha                 Dand Ghara,Jalalabad city                  Fertilizer Retailer
7.     Gul Tahir Singh           Dand Ghara,Jalalabad city                  Seed Retailer
8.     Shah Ali                  Talasahi chowk, Jalalabad city             Fertilizer and Pesticide Retailer
9.     Aminullhaq                Dand Ghara,Jalalabad city                  Seed Retailer


Annex 7: Value Chain Workshop Participants
              Venue – ALP Office, Jalalabad, Nangrahar
              Date - August 13, 2005

SL.            Name                            Actor Type                                 Address                        Contact
No.                                                                                                                      Number
1.     Aqila                     Pickle making trainer                        Joy-Haft                                070633926
2.     Raeesa                    Pickle making trainer                        Joy-Haft                                079254218

              CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION               PAGE: 54
3.    Shapoor                     Admin Assistant                              In front of Spinghar Hotel             070628788
4.    Habibullah                  Member of planning and                       Farm-e-hada family                     070620909
                                  Engineering Department NVDA
5.    Eng. Moh Qasam              Director of NIA                              Chacknawry, Jalalabad                  079200600
6.    Haji Ainullah               Cool Storage                                 Jalalabad city                         070606804
7.    Haji Mushafar               Ice Producing and Cool storage               Torkham Hada, Jalalabad                070605243
8.    Haji Farooq                 Director of OFCC                             Torkham Bus Station                    079331549
9.    Dr.Mujib                    Admin of OFCC                                Torkham Bus Station                    070607765
10.   Dr.Minhajudin               R.S.S                                        BRAC                                   070602560
11.   Eng.Najibullah              Agronomist                                   BRAC                                   070613194
12.   Abdul Latif                 Gardner                                      ALP
13.   Dr. Mukhlis                 A.I.C.C Director                             In front of Spinghar Hotel             070600700


Annex 8: Validation Workshop Participants
            Venue – Seminar Hall, information Directorate, Jalalabad, Nangrahar
            Date - August 16, 2005

SL.            Name                        Designation                       Institution & Address                    Contact No
No.
1.    Mohamad Karim              Director of Agriculture                Market of Chemical Fertilizer,              070624339
                                 medicine and chemical                  Jalalabad city
                                 fertilizer importer Association
2.    Khan Mohamad               Operation Manager. ALP-ER                                                          079836450
3.    Huma                       Student                                Regishamurad khan,                          070623781
                                                                        Jalalabad city
4.    Aqila                      Teacher                                Joy, haft Jalalabad city                    070633926
5.    Shella                     Teacher                                Kabul Bust station, Jalalabad               070633855
                                                                        city
6.    Janat Khan                 Fruit Trader                           Fruit Market                                079362720
7.    Said Rahman                Fruit Trader                           Fruit Market                                079233744
8.    Obidullah                  Commission worker at Fruit             Fruit Market                                079287238
                                 Market
 9.   Moh. Agha                  Seeds shop                             Ahmadzai Market                             079338901
10.   Said Inaam                 Behsud District Governor               Third Region, Darbayan,                     070626252
                                                                        Jalalabad city
11.   Adul Latif                 Agriculturist                          Research Station, Shisham                   070636667
                                                                        Bagh, Jalalabad city
12.   Malik Nimatullah           Malik of Narishahi Village             Narishahi village, Behsud                   079171346
                                                                        district
13.   Azizullah                                                         Narishahi village, Behsud                   070607119
                                                                        district
14.   Haji Musafar               Owner of cold storage                  Torkham Bus station, Jalalbad               070605243
                                                                        city
15.   M.Qasam                    Director of NIA                        Chacknawri, Jalalabad city                  079210600
16.   Mujib Shirzad              Admin OFCC                             Jalalabad Market                            070607765
17.   Haji Ainullah              Owner of Banana Cold                   Fruit Market                                070606804
                                 Storage
18.   Ahmad Baig                 Deputy Director                        Surkhrud                                    079331540
19.   Pasarli Amiri              Responsible of Pakiza                  Second Region, Jalalabad city
                                 Limited
20.   Dr.Ajmal                   Member of Nangrahar                    Jalalabad Chemical Fertilizer               070617471
                                 Animal and Agriculture                 Market
                                 Medicine Association

               CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION               PAGE: 55
Annex 9: Statement of Work (Team Leader)

Position:                    Subsector/Market Assessment Team Leader

Level of Effort:             4 weeks

Period of Performance:       July 2005

Base of Operations:          Jalalabad

Number of Person days: 31 (includes travel)

I. Background
Development Alternatives, Inc. (DAI) and USAID executed the Afghanistan Alternative Livelihoods
Program (ALP) Task Order on February 15, 2005. The objective of this task order is to “provide an
approach designed to strengthen the Afghan government’s capacity to address the problem of illicit
poppy cultivation and to promote improved economic opportunities and diverse regional economic
growth through a program in the Eastern Region that are the mainstays of the opium economy.” One of
five major Project components is Private Sector Development (PSD), which is charged with contributing
to the development of both agricultural (with the Agribusiness component) and non-agricultural sectors.
One major effort of the PSD is to undertake assessments of chosen subsectors so as to better target
relevant support.

II. Purpose
To undertake a full subsector/market assessment (SS/MA) study of the tomato subsector in the environs
of the Eastern region of Afghanistan. The Consultant(s) will take an in-depth view of the sector focusing
on, 1) overall understanding of the market for the tomato crop, 2) a comprehensive view of the entire
value chain, identification of needed support to the subsector, utilization of business service provision in
developing SMEs of the subsector, and particular focus on the developing of processing businesses for
the subsector. The end result will guide the ALP-ER PSD Team in providing support to the subsector,
resulting in a more vibrant market environment with potential for increasing the employment at all levels
of the value chain.

III. Activities
      • Lead a team in accomplishing all tasks for this Tomato Subsector/Market Assessment
      • Meet with relevant staff of ALP-ER for initial briefing and work scheduling
      • Design tools relevant to the collection of data related to the tomato subsector
      • Conduct key informant interviews
      • Conduct data collection from producers, collectors, distributor, sellers and others in the tomato
           value chain, through surveys and/or focus group discussions
      • Compile information gathered, with analyses in a manner than can be presented to groups or
           individuals
      • Facilitate a validation workshop of representatives of all major players in the value chain
      • Undertake refined analyses of data and develop intervention design to include BDS provision
           and ways to expand productivity of demand-driven business development services
      • Provide a report on the outcomes of activities and recommendations
      • Debriefing with ALP-ER staff and staff of USAID as appropriate


IV. Outputs and Deliverables:
The Team Leader will be responsible for completing the following before leaving Afghanistan:




              CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 56
    1.        Develop tools and methodology for use in assessing the tomato subsector in the Eastern
              Region of Afghanistan
    2.        Interview key informants as suggested by ALP-ER PSD Team
    3.        Conduct surveys and/or focus group discussions to elicit relevant information from major
              players in the tomato value chain
    4.        Hold a validation workshop of representatives of the subsector and ALP-ER staff as
              relevant
    5.        Undertake analyses of all data collected
    6.        Design interventions based on data analysis
    7.        Written report of activities and recommendations
    8.        Debriefing with ALP-ER staff and others as deemed appropriate

V. Supervisory Responsibilities: For this assignment, the Team Leader will have direct supervisory
responsibility for the Research Associate and other SS/MA Team members.

The Team Leader will report directly to the Private Sector Development Manager of the ALP-ER.


Annex 10: Statement of Work (Research Associate)

Position:                    Subsector/Market Assessment Research Associate

Level of Effort:             4 weeks

Period of Performance:       July 2005

Base of Operations:          Jalalabad

Number of Person days: 31 (includes travel)


I. Background
Development Alternatives, Inc. (DAI) and USAID executed the Afghanistan Alternative Livelihoods
Program (ALP) Task Order on February 15, 2005. The objective of this task order is to “provide an
approach designed to strengthen the Afghan government’s capacity to address the problem of illicit
poppy cultivation and to promote improved economic opportunities and diverse regional economic
growth through a program in the Eastern Region that are the mainstays of the opium economy.” One of
five major Project components is Private Sector Development (PSD), which is charged with contributing
to the development of both agricultural (with the Agribusiness component) and non-agricultural sectors.
One major effort of the PSD is to undertake assessments of chosen subsectors so as to better target
relevant support.

II. Purpose
To undertake a full subsector/market assessment (SS/MA) study of the tomato subsector in the environs
of the Eastern region of Afghanistan. The Consultant(s) will take an indepth view of the sector focussing
on, 1) overall understanding of the market for the tomato crop, 2) a comprehensive view of the entire
value chain, identification of needed support to the subsector, utilization of business service provision in
developing SMEs of the subsector, and particular focus on the developing of processing businesses for
the subsector. The end result will guide the ALP-ER PSD Team in providing support to the subsector,
resulting in a more vibriant market environment with potential for increasing the employment at all levels
of thre value chain.

III. Activities
      • Assist the Team Leader in accomplishing all tasks for this Tomato Subsector/Market
           Assessment


              CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 57
    •   Meet with relevant staff of ALP-ER for initial briefing and work scheduling
    •   Assist in the design tools relevant to the collection of data related to the tomato subsector
    •   Conduct key informant interviews
    •   Conduct data collection from producers, collectors, distributor, sellers and others in the tomato
        value chain, through surveys and/or focus group discussions
    •   Compile information gathered, with analyses in a manner than can be presented to groups or
        individuals
    •   Co-facilitate (with Team Leader) a validation workshop of representatives of all major players in
        the value chain
    •   Assist in undertaking refined analyses of data and develop intervention design to include BDS
        provision and ways to expand productivity of demand-driven business development services
    •   With Team Leader, provide a report on the outcomes of activities and recommendations
    •   With Team Leader, provide a debriefing with ALP-ER staff and staff of USAID as appropriate

IV. Outputs and Deliverables:
The Research Associate, under the management of the Team Leader, will contribute to completing the
following before leaving Afghanistan:

        1.       Develop tools and methodology for use in assessing the tomato subsector in the
                 Eastern Region of Afghanistan
        2.       Interview key informants as suggested by ALP-ER PSD Team
        3.       Conduct surveys and/or focus group discussions to ellicit relevant information from
                 major players in the tomato value chain
        4.       Hold a validation workshop of representatives of the subsector and ALP-ER staff as
                 relevant
        5.       Undertake analyses of all data collected
        6.       Design interventions based on data analysis
        7.       Written report of activities and recommendations
        8.       Debriefing with ALP-ER staff and others as deemed appropriate

V. Supervisory Responsibilities: For this assignment, the Research Associate will have direct
supervisory responsibility for other local SS/MA Team members.

The Research Associate will report directly to the Team Leader, and to the Private Sector Development
Manager of the ALP-ER.




             CHANGEMAKER: TOMATO VALUE CHAIN ANALYSIS – ENHANCING FARMER’S PROFITABILITY THROUGH VALUE ADDITION   PAGE: 58