March 26, 2007
Improving apple cultivation and marketing
By Mauladad Khan, Faisal Abbas & Dr Khalid Mushtaq
PAKISTAN is blessed with diversity of soil and climatic conditions which are conducive to growing various crops, fruits and vegetables. The mountainous regions in the north-west of Punjab, North West Frontier Province (NWFP) and Balochistan are suitable for growing almost all temperate fruits.
Fruit production is not only a profitable enterprise for the growers but also a good source of foreign exchange for the country. Fruits are one of the richest sources of vitamins and minerals, which are essential for human health.
A rich production of fruits can pave the way for installation of processing industries and can ultimately lead to increased employment and promotion of exports of fruits and its products. But there are several hurdles in the efficient functioning of markets particularly agricultural commodity markets such as: lack of infrastructure, poor access to market information, restriction on movement of goods between regions and monopoly over distribution system and lack of regulatory framework for fixing prices.
It is not realised that rectification of market imperfections smoothens the way to attain markets efficiency, which in turn facilitate the attainment of agricultural development and equal distribution of income. Market infrastructure, transportation, communication, credit and storage are all together facilitating smooth functioning of markets.
Much emphasis is given to area and production of apple while relatively little is known about how price transmission takes place on the domestic apple markets. Such information is important for apple producers and other apple value chain role players since it affects their marketing decisions (buying and selling), which in turn affects decisions related to logistical matters and eventually profits realised.
In Pakistan, the area of apple orchards was 1,11,600 hectares with a total production of 35,1900 tones. Balochistan has the largest share with a production of 2,20,300 tones over an area of 1,01,900 hectares, followed by NWFP with production of 1,27,900 tones over an area of 9,200 hectares.
Area under apple cultivation was 3,100 and 800 hectares in 1971 in Balochistan and NWFP respectively while production for the said period was 22,400 and 9,600 tones respectively. The production of Balochistan increased to all time high and reached to 4,87,300 tones in 1999 followed by sharp decline in production due to drought. While area Balochistan (due to drought factor) also decreased and in 2002 it went down to 38,000 hectares, it got boost in 2005 and reached to 1,01,900 hectares. The yield decreased in the late 90s and reached all-time low to 2,162 kg per hectare in 2005.
The reasons, among others, for low yield of apple were severe drought in some years, post harvest losses, malfunctioning of markets, lack of information on the part of farmers and absence of incentive to producers. Apples produced in the country are used for fresh consumption, with only small quantities used for processing into its products such as apple juice, jelly or jam and/or other products.
In the countryââ¬â¢s apple-marketing system, producer receives a residual price determined after the harvest is sold in the primary market. Producerââ¬â¢s therefore, face significant price risk that limits their investment in variable and fixed inputs marketing. Most apples are sold through private marketing channels comprising a large number of small-scale brokers and merchants.
The marketing channels for apple common in Pakistan are;
1. ProducerPre-harvest contractorCommission agentWholesaler
RetailerConsumer.
2. ProducerCommission agentWholesalerRetailerConsumer.
About 80 per cent of apple producer market (sell) their produce through pre-harvest contractors. Twenty per cent farmers undertake self-marketing and get 12 per cent higher net margin than those marketing through pre-harvest contractor.
Growerââ¬â¢s price risk impedes marketing improvements. Apple produced in Balochistan and the NWFP is transported to Punjab and Sindhââ¬â¢s wholesale markets. The major infrastructural facilities in apple producing areas is missing while apple growerââ¬â¢s harvest and pack their crop and send it in 1-2 days by un-refrigerated truck to these markets, where the consignment is then handled and sold by a commission agent.
Growers have an option of selling at the prevailing market price or paying for storage in the hope for getting a higher price at a later time. When the produce is sold, all marketing costs, including transport, handling, and storage costs and the agentââ¬â¢s commission are deducted and a net price is paid to the grower.
Although it is typical for growers and agents to develop relationships involving credit and marketing advice, the marketing system places the bulk of the price risk on growers. This risk reduces incentives for growers to invest in improved production, harvest, and post-harvest practices.
Another common marketing channel involves growersââ¬â¢ selling their crop to a contractor prior to harvest, typically during the flowering stage when there is some information on overall crop size. The contractor, who may also be linked with agents or merchants in the wholesale market, then harvests and transports the crop to the market. This approach transfers some of the price risk to the contractor.
The major wholesale markets of fresh apple are Lahore, Faisalabad, Multan and Dera Ghazi Khan in Punjab, Karachi and Hyderabad in Sindh, Quetta and Peshawar in Balochistan and NWFP respectively. The marketing system works mostly in the same way. Growers or contractors in the producing areas transport shipments to commission agents in these markets and then receive a net price once the sale is completed. For smaller urban and regional markets, apples are purchased from wholesale traders and merchants of major urban centres.
Once they are turned over to the commission agent in the primary markets, apples typically move through several owners, including wholesaler, sub wholesaler and retailer before reaching the consumer. At each step in the marketing chain, the primary role of the intermediary is to arrange transport and handling, bring together sellers and buyers, and facilitate the financial transaction.
For most of the part, the post-harvest practices followed by growers and contractors are poor compared with those followed in the other major apple producing countries. Although there is some evidence of a few growersââ¬â¢ improving their practices (facilities) to take advantage of the emerging markets for higher quality products, the following practices characterise the marketing of most domestic apples:
Storage: Apples are ordinarily not stored in cold storages in the producing areas and not sold immediately by growers and those held for later sale by wholesale merchants may be stored in cold storages. Although high-quality cold storage exists in most major markets, apples that are stored are generally stored in cheaper facilities with less control over temperature and atmosphere destroying the quality of apple.
Grading: Most growers do not grade on farm and grading is not common in the marketing chain, although some growers, harvest contractors, and wholesalers grade apples based on either colour or size. Retailers may also sort out high and low quality fruits before sale. Price differences observed in primary and wholesale markets are primarily based on visual inspections of the boxes in the lots being traded.
Packaging: Packing sizes of boxes are roughly 15-20 kilograms. Different packing materials are used, including thin wooden crates with straw packing, corrugated cardboard boxes and trays of various qualities. Use of high-quality boxes and trays with sufficient rigidity to protect the fruit is limited. Overstuffed boxes containing significant quantity of bruised fruit are common and that also add to post harvest fruit losses.
Handling and Transport: With very few exceptions, domestic apples are transported throughout the country in un-refrigerated trucks over poor roads. It takes 1-3 days trip from Quetta and Sawat region to Lahore and Karachi. Trucks are often overloaded. In combination with poor quality packing materials, overloading damages the fruit during transportation. Lack of refrigeration, longer journey times and poor packaging reduces the quality of domestic apples available in more distant markets. For the improvement of apple production and marketing system in the country the following steps are suggested:
Fruit yield can be increased through use of modern orchard management practices, including improved moisture conservation and fertilizer application. Technologies such as use of clonal rootstocks, renewal pruning techniques, and micro-nutrient application also can improve yields. At present, however, these technologies are generally not used by growers.
Prices at apple markets are determined by auctions. However, at many places bargaining practices are not transparent. Construction of a well regulated fruit markets especially around apple producing areas may also be a good choice for better marketing information as well as avoiding malfunctioning and improving the yield.
The government should promote information and develop communication within markets. To accomplish better integrated markets, infrastructural facilities should be provided by the government to the targeted markets. The government should facilitate the environment that encourages the limited role of middlemen so that the producerââ¬â¢s risk can be avoided to get the higher yield.
http://www.dawn.com/2007/03/26/ebr6.htm
Improving apple cultivation and marketing
By Mauladad Khan, Faisal Abbas & Dr Khalid Mushtaq
PAKISTAN is blessed with diversity of soil and climatic conditions which are conducive to growing various crops, fruits and vegetables. The mountainous regions in the north-west of Punjab, North West Frontier Province (NWFP) and Balochistan are suitable for growing almost all temperate fruits.
Fruit production is not only a profitable enterprise for the growers but also a good source of foreign exchange for the country. Fruits are one of the richest sources of vitamins and minerals, which are essential for human health.
A rich production of fruits can pave the way for installation of processing industries and can ultimately lead to increased employment and promotion of exports of fruits and its products. But there are several hurdles in the efficient functioning of markets particularly agricultural commodity markets such as: lack of infrastructure, poor access to market information, restriction on movement of goods between regions and monopoly over distribution system and lack of regulatory framework for fixing prices.
It is not realised that rectification of market imperfections smoothens the way to attain markets efficiency, which in turn facilitate the attainment of agricultural development and equal distribution of income. Market infrastructure, transportation, communication, credit and storage are all together facilitating smooth functioning of markets.
Much emphasis is given to area and production of apple while relatively little is known about how price transmission takes place on the domestic apple markets. Such information is important for apple producers and other apple value chain role players since it affects their marketing decisions (buying and selling), which in turn affects decisions related to logistical matters and eventually profits realised.
In Pakistan, the area of apple orchards was 1,11,600 hectares with a total production of 35,1900 tones. Balochistan has the largest share with a production of 2,20,300 tones over an area of 1,01,900 hectares, followed by NWFP with production of 1,27,900 tones over an area of 9,200 hectares.
Area under apple cultivation was 3,100 and 800 hectares in 1971 in Balochistan and NWFP respectively while production for the said period was 22,400 and 9,600 tones respectively. The production of Balochistan increased to all time high and reached to 4,87,300 tones in 1999 followed by sharp decline in production due to drought. While area Balochistan (due to drought factor) also decreased and in 2002 it went down to 38,000 hectares, it got boost in 2005 and reached to 1,01,900 hectares. The yield decreased in the late 90s and reached all-time low to 2,162 kg per hectare in 2005.
The reasons, among others, for low yield of apple were severe drought in some years, post harvest losses, malfunctioning of markets, lack of information on the part of farmers and absence of incentive to producers. Apples produced in the country are used for fresh consumption, with only small quantities used for processing into its products such as apple juice, jelly or jam and/or other products.
In the countryââ¬â¢s apple-marketing system, producer receives a residual price determined after the harvest is sold in the primary market. Producerââ¬â¢s therefore, face significant price risk that limits their investment in variable and fixed inputs marketing. Most apples are sold through private marketing channels comprising a large number of small-scale brokers and merchants.
The marketing channels for apple common in Pakistan are;
1. ProducerPre-harvest contractorCommission agentWholesaler
RetailerConsumer.
2. ProducerCommission agentWholesalerRetailerConsumer.
About 80 per cent of apple producer market (sell) their produce through pre-harvest contractors. Twenty per cent farmers undertake self-marketing and get 12 per cent higher net margin than those marketing through pre-harvest contractor.
Growerââ¬â¢s price risk impedes marketing improvements. Apple produced in Balochistan and the NWFP is transported to Punjab and Sindhââ¬â¢s wholesale markets. The major infrastructural facilities in apple producing areas is missing while apple growerââ¬â¢s harvest and pack their crop and send it in 1-2 days by un-refrigerated truck to these markets, where the consignment is then handled and sold by a commission agent.
Growers have an option of selling at the prevailing market price or paying for storage in the hope for getting a higher price at a later time. When the produce is sold, all marketing costs, including transport, handling, and storage costs and the agentââ¬â¢s commission are deducted and a net price is paid to the grower.
Although it is typical for growers and agents to develop relationships involving credit and marketing advice, the marketing system places the bulk of the price risk on growers. This risk reduces incentives for growers to invest in improved production, harvest, and post-harvest practices.
Another common marketing channel involves growersââ¬â¢ selling their crop to a contractor prior to harvest, typically during the flowering stage when there is some information on overall crop size. The contractor, who may also be linked with agents or merchants in the wholesale market, then harvests and transports the crop to the market. This approach transfers some of the price risk to the contractor.
The major wholesale markets of fresh apple are Lahore, Faisalabad, Multan and Dera Ghazi Khan in Punjab, Karachi and Hyderabad in Sindh, Quetta and Peshawar in Balochistan and NWFP respectively. The marketing system works mostly in the same way. Growers or contractors in the producing areas transport shipments to commission agents in these markets and then receive a net price once the sale is completed. For smaller urban and regional markets, apples are purchased from wholesale traders and merchants of major urban centres.
Once they are turned over to the commission agent in the primary markets, apples typically move through several owners, including wholesaler, sub wholesaler and retailer before reaching the consumer. At each step in the marketing chain, the primary role of the intermediary is to arrange transport and handling, bring together sellers and buyers, and facilitate the financial transaction.
For most of the part, the post-harvest practices followed by growers and contractors are poor compared with those followed in the other major apple producing countries. Although there is some evidence of a few growersââ¬â¢ improving their practices (facilities) to take advantage of the emerging markets for higher quality products, the following practices characterise the marketing of most domestic apples:
Storage: Apples are ordinarily not stored in cold storages in the producing areas and not sold immediately by growers and those held for later sale by wholesale merchants may be stored in cold storages. Although high-quality cold storage exists in most major markets, apples that are stored are generally stored in cheaper facilities with less control over temperature and atmosphere destroying the quality of apple.
Grading: Most growers do not grade on farm and grading is not common in the marketing chain, although some growers, harvest contractors, and wholesalers grade apples based on either colour or size. Retailers may also sort out high and low quality fruits before sale. Price differences observed in primary and wholesale markets are primarily based on visual inspections of the boxes in the lots being traded.
Packaging: Packing sizes of boxes are roughly 15-20 kilograms. Different packing materials are used, including thin wooden crates with straw packing, corrugated cardboard boxes and trays of various qualities. Use of high-quality boxes and trays with sufficient rigidity to protect the fruit is limited. Overstuffed boxes containing significant quantity of bruised fruit are common and that also add to post harvest fruit losses.
Handling and Transport: With very few exceptions, domestic apples are transported throughout the country in un-refrigerated trucks over poor roads. It takes 1-3 days trip from Quetta and Sawat region to Lahore and Karachi. Trucks are often overloaded. In combination with poor quality packing materials, overloading damages the fruit during transportation. Lack of refrigeration, longer journey times and poor packaging reduces the quality of domestic apples available in more distant markets. For the improvement of apple production and marketing system in the country the following steps are suggested:
Fruit yield can be increased through use of modern orchard management practices, including improved moisture conservation and fertilizer application. Technologies such as use of clonal rootstocks, renewal pruning techniques, and micro-nutrient application also can improve yields. At present, however, these technologies are generally not used by growers.
Prices at apple markets are determined by auctions. However, at many places bargaining practices are not transparent. Construction of a well regulated fruit markets especially around apple producing areas may also be a good choice for better marketing information as well as avoiding malfunctioning and improving the yield.
The government should promote information and develop communication within markets. To accomplish better integrated markets, infrastructural facilities should be provided by the government to the targeted markets. The government should facilitate the environment that encourages the limited role of middlemen so that the producerââ¬â¢s risk can be avoided to get the higher yield.
http://www.dawn.com/2007/03/26/ebr6.htm
