Pact.gov.np

Glimpses of the Workshop
Today commercialization of agriculture is an inevitable reality throughout the whole world. There are a number of factors affecting the commercialization process in agriculture. Some of them could be named as rapid growth of economies in the developing and developed countries, introducing of new technologies, market expansion, market liberalization, urbanization, rapid increase of demand for food, decreasing of farming population, liberalized and open economic policies, bilateral and multilateral economic agreements and government agricultural policies. Commercialization in agriculture is not a new phenomenon and it is not a surprise to the Nepalese farming community. It has been one of the main components of agricultural development of Nepal since Agricultural Perspective Plan (1994/95- 2014/15). One of the prioritized outputs of APP is to promote high value crops. For this it has prioritized different crops for different ecological zones of the country: Terai, mid-hill and high-hills. Though APP has not focused coffee as one the high value crops, the subsequent agricultural policies and strategies have paved the way for the promotion of coffee as high value and exportable commodity. As Nepal is a mountainous country, coffee is the best suitable crop for mid-hills which has multiple advantages: can be grown in the steep hill without much care and has high premium price in niche markets. The ecological settings in the hills provide Nepalese coffee a unique opportunity to enter international specialty markets. It is grown in small family farms under shade with little or no external inputs used.
Though small in amount, the coffee could be an important occupation in the rural economics of Nepal with massive participation of marginalized, poor and down- trodden class of the rural communities in its farming. Additionally, it could be an important means for earning foreign currency and in maintaining a balance in the ecosystem.
Though the coffee industry has been growing fast, there are several problems. The main problem is market. Because of limited quantity, Nepalese coffee has not been able to influence in international market despite being unique in nature. Coffee being relatively a new crop for Nepal, there has been limited research or study on this crop. Resources are also lacking for certification of coffee as an organic product. Similar is the problem in quality, processing and handling. The workshop was organized to develop an understanding among public sector, non-governmental organization, private sector and donors regarding coffee sub- sector, analyze opportunities and constraints and develop common understanding for the development and promotion of Nepali coffee. I would like to thank representatives from the World Bank, Coffee and Tea Development Section of DOA, Trade Promotion Center, Agro Enterprise Center, National Tea and Coffee Development Board, Nepal Coffee Producers Association, District Coffee Producers Association, Coffee Promotion Program of Helvetas Nepal and professionals and practitioners dedicated to coffee sub-sector development for making the workshop a success.
Yogendra Kumar Karki Project for Agriculture Commercialization and Trade (PACT) Maharajgunj, Kathmandu, Nepal Table of Contents
FOREWORD i
ABBREVIATIONS AND ACRONYMS
BACKGROUND
REVIEW OF THE COFFEE SUB-SECTOR
WORKSHOP PAPERS
3.1 Importance of Coffee Sub-Sector Analysis
3.2 Present state of coffee production in
Nepal: Opportunities and Challenges
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3.4 Comments on "Export Potentials and
Constraints of Nepalese Coffee"
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3.6 Coffee Research and Development in Nepal
3.7 Comment on "Coffee Research and Development in Nepal"
3.8 Activities and achievements of COPP and
its present activities in support of the
commercialization of coffee sub-sector
MAJOR ISSUES AND QUERIES RAISED DURING FLOOR DISCUSSION
Annex 1: Schedule of Coffee Sub-Sector Workshop
Annex 2: List of Participants
Annex 3: Presentation Materials
ABBREVIATIONS AND ACRONYMS
Asian Development Bank Agro Enterprise Center Coffee Promotion Program Coffee and Tea Development Section District Agriculture Development Office District Coffee Producers' Association Department of Food Technology and Quality Control Department of Agriculture Federation of Nepal Chamber of Commerce and Industry Good Agriculture Practices Good Manufacturing Practices Government of Nepal Highland Coffee Promotion Company Limited International Coffee Organization International Federation for Organic Agriculture Movement Ministry of Agriculture Development Nepal Agriculture Research Council Nepal Coffee Producers' Association Nepal Organic Coffee Products National Tea & Coffee Development Board Project for Agriculture Commercialization and Trade Terms of References Village Development Committee 1.1 The Workshop
This report provides a short summary of the recent coffee sub-sector workshop
organized by the Project for Agriculture Commercialization and Trade (PACT) on 11 April 2011. The workshop was held in Gangjong Hotel, Kathmandu and attended by all key representative stakeholders involved in production, processing and marketing from the public (government), non-government and private sector. Participants from the Ministry of Agriculture Development, Department of Agriculture, Tea and Coffee Section, National Tea and Coffee Development Board, National and District Coffee Producers Association, Trade Promotion Centre, Agro Enterprise Centre (AEC) of the Federation of Nepalese Chambers of Commerce and Industries, and PACT attended the workshop. This report was designed primarily to identify potentialities and constraints towards the improvement of the competitiveness of small coffee farmers and formulate value chain development plan for commercialization of the coffee.
This report has been prepared for circulation to the participants but is also intended to serve as a resource for those interested in the workshop content and agencies involved in the production, processing and marketing of coffee in Nepal.
1.2 Project for Agriculture
Commercialization and Trade
The Project for Agriculture Commercialization and Trade (PACT) is a six-year project, of the Ministry of Agriculture Development, Government of Nepal (GoN) and is supported by the World Bank (WB). The grant agreement was signed between GoN and WB on 21 August 2009 and it became effective on 13 November 2009. The project is being implemented in 25 districts located in Central, Western, Mid- western and Far-western development regions of Nepal representing Mid-hills and Terai regions. The project districts are: The Project District Kavre Palanchok, Kathmandu, Lalitpur, Dhading, Chitwan, Bara, Parsa, Rautahat, Kaski, Syangja, Palpa, Nawalparasi, Kailali, Kanchanpur Sarlahi, Mahottari, Dhanusha The overall objective of the project is to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains. It intends to achieve above objectives by:(i) helping farmer groups and cooperatives engage in profitable market- oriented production and improved access to markets through the provision of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders and, (iii) reducing existing obstacles to agriculture cultivation provides 4.33 times higher net return and food trade thereby increasing the ability than maize, 3.30 times higher net return than millet of farmers and agribusiness to respond to and 1.87 times higher net return than maize and Sanitary and Phyto-sanitary (SPS) measures millet combined, per unit land. Those figures would and food-quality standards to meet domestic be much higher if coffee is intercropped with ginger and international market requirements.
and with banana as double purpose tree: fruits The project has three components:
and shade. Internal rate of return of coffee orchard are estimated at 19 percent, 26.9 percent and 32.5 COMPONENT 1: Agriculture and Rural percent for coffee alone, coffee with ginger and
Business Development. The objective of this coffee with banana, respectively assuming a 30
component is to enable farmers to engage in years average life of orchard. Another advantage of profitable market-oriented production and to coffee farming is employment generation. Coffee promote partnerships and market linkages with cherry picking coincides with a season when there is other value chain participants and agribusinesses. minimal demand of labor for other crops, providing The component helps agro-enterprises, commodity additional job not only to the concerned farmers but associations, cooperatives, registered farmer groups/ also to marginal farmers and land less laborers.
organizations and technology and service providers The PACT has included coffee as its one of the to actively engage in the development of commodity thematic area starting from the first tranche of value chains by partially financing demand-driven competitive grant. Among the 48 sub-projects investment proposals through competitive matching receiving competitive grant under the first tranche, five (more than 10%) were for the promotion of COMPONENT 2: Support for Sanitary and coffee at different levels.
Phyto-sanitary (SPS) Facilities and Food 1.4 Objectives of the Workshop
Quality Management. The objective of this
component is to strengthen the efficiency and The main objective of the workshop was to develop effectiveness of SPS in order to reduce existing an understanding among the different stakeholders obstacles to agricultural and food trade. It also including public sector, non-governmental aims to support the private sector's efforts to gain organization, private sector and donors working market advantage through improved food quality in coffee sub-sector; analyze opportunities and management. It provides critical backing to the value constraints for the development; and promotion of chain investments being supported by Component 1 Nepali coffee. Specific objectives were: and other related projects by Development Partners. This component is implemented through three line to provide opportunities and platform for departments of the MOAC namely, Department improving value chain linkages among coffee of Food Technology and Quality Control (DFTQC), producers, processors, traders and other Department of Livestock Services (DLS), and Department of Agriculture (DOA) and the private to analyze the potentials, constraints and possible strategies for the sub-sector COMPONENT 3: Project Management and
Monitoring and Evaluation. The objective of
to explore opportunities for the improvement this component is to support a Project Management of the competitiveness of small coffee Team (PMT). Activities carried out for overall project management, monitoring and evaluation and to explore how the PACT can help the coffee reporting are financed under this component. stakeholders involved in different stages of 1.3 Importance of Coffee in Nepal
development/promotion of Nepali coffee. 1.5 Workshop Participants
A large part of land located in the mid hills of Nepal with an altitude of between 800-1600 meter above Mr. Nathu Prasad Chaudhary, Secretary, Ministry of sea level, is suitable for coffee cultivation. Available Agriculture Development chaired the entire workshop. information suggests that coffee cultivation is much In the beginning of the workshop, project director, more remunerative than the traditional crops being PACT explained the project itself, objectives of the cultivated in the rainfed upland of mid-hill. Coffee workshop and expected outputs. A total of six papers were presented in the workshop covering Research and 1.6 Organization of the proceedings
Development, policy issues, stakeholders, production to marketing and export of coffee. Brief presentation was Brief introduction of the Project for Agriculture also made by District Coffee Producers Associations and Commercialization and Trade, its objectives, scope, PACT's competitive grant recipients.
coverage; and objective of the workshop are given in Chapter 1. A review of the Nepalese coffee sub-sector is Representatives from different ministry, departments, in Chapter 2 and the workshop papers are compiled in programs of the government of Nepal, National Chapter 3. The papers are included either in English or Tea and Coffee Development Board, Tea and Coffee Nepali, as received from the authors. The PACT requested Development Section, Trade and Export Promotion commentators to provide comments on each of the Center, Agro Enterprise Center, Coffee promotion papers in writing. Received comments are placed after Program of Helvetas Nepal, Nepal Coffee Producers the main paper. Major points raised by the participants Association, District Coffee Producers Associations, including suggestions from the chairperson of the and Private companies participated in the workshop. workshop are compiled in Chapter 4. Finally, Workshop schedule, participants and presentation materials used by the authors are placed in Annexes.
2. REVIEW OF THE COFFEE SUB-SECTOR
Kamal R. Paudyal 1
2.1 Background
Coffee is an important high value commodity and a popular beverage. Over 2.25
billion cups of coffee are consumed in the world every day. One of the good things about coffee is that over 90% of its production takes place in the developing countries, while consumption takes place mainly in the developed/industrialized countries. Worldwide, 25 million small producers rely on coffee for a living. In Brazil alone, where almost a third of the world's coffee is produced, over 5 million people are employed in the cultivation and harvesting of over 3 billion coffee plants. In Nepal there are about 28 thousand farmers growing coffee in 40 mid-hill districts. However, organized coffee farming under Nepal Coffee Producers Association (NCPA) is reported in 14 districts only. Its cultivation is more labor-intensive than most of the alternative crops grown on same land: providing additional employment opportunities to rural populace.
More than 150 million Americans (18 and older) drink coffee on a daily basis, with 65 percent of them consuming their hot beverage in the morning. Average coffee consumption is more than 100 liters per capita in US. Though coffee is not traditional drink of average Nepalese, it is becoming popular drink in Nepal in recent past. According to a survey (COPP 2010) consumption of coffee increased from 156 mt in 2006 to 384 mt in 2010: around 146 percent increase in three year. This quantity converted to drink represents only about three cups of coffee per 2.2 History
The botanical evidence indicates that the history of the coffee bean began on the
plateaus of central Ethiopia from where it was taken to Yemen and cultivated since the 6th century. Gradually coffee cultivation wandered east and west, eventually forming a belt roughly bounded by the tropics of Cancer and Capricorn. Growing regions typically offer moderate sunshine and rain, steady temperatures around 20oC and rich, porous soil (http://www.coffeeresearch.org/coffee/history.htm). Consumption of coffee also started in Arabian Peninsula, where it was commercially roasted, boiled and prepared ‘Gahwa' meaning beverage made from plant from eleventh century. A history of coffee origin, including the legend of Kaldi the Shepherd, and other activities are listed in Annex II.1.
In Nepal, coffee plantation is relatively new practice. Initially coffee was promoted by some projects and I/NGOs as a soil management for control of soil erosion and other environmental protection practices. This practice led the farmers regard coffee as an easy to grow, and less demanding crop cultivated on marginal upland conditions. After understanding its real importance farmers realized that it needs better management to maintain the quality of the coffee produced.
According to available sources, a hermit, Mr Hira Giri, had brought some seeds of coffee from Sindu Province of Myanmar (earlier called Burma) and had planted in Aapchour of Gulmi District for the first time in Nepal in the year 1938 1 Dr. Kamal Raj Paudyal is Value Chain Development Specialist in Project for Agriculture Commercialization and Trade, Kathmandu. [email protected] AD (1995BS). Since then it spread from one farmer certification guidelines. The National Tea and Coffee to another as a curiosity plant for three decades Development Board (NTCDB) and NCPA have guided without external intervention. The first intervention the farmers not to grow coffee at less than 800 meter from public sector was recorded when Agriculture altitude. Many of the coffee growing areas also get Development Bank imported coffee seeds and cool wind from Himalayas that help produce superior distributed to interested farmers for growing as cash quality. As a genuine process of promoting Nepalese crop. First commercial nursery was established by coffee the Government of Nepal (GoN) has approved an innovative farmer in Aanpchaur village of Gulmi Nepali Coffee Logo (Figure 1) and awarded to three district in 1981. Similarly, distribution of coffee traders that meet the set standards. However, serious plants at subsidized prices was first initiated by Tinau concerns have been raised by the people involved in Watershed Project in 1982. coffee business regarding the enforcement of the Initially, coffee seeds were roasted and grinded implementation guidelines until proper monitoring at household level using traditional technology. mechanism is put in place. Processing of coffee at larger scale started with 2.4 Advantages of Coffee in
establishment of coffee mill at Manigram village of Rupandehi district in 1983.
The government established Tea and Coffee Coffee has been predominantly planted in upland Development Section under Fruit Development area as an additional /extra crop without disturbing Directorate of the Department of Agriculture in the existing cropping system and on steep hillsides 1993 to coordinate the coffee development in the where other crops do not perform well. In such country. National Tea and Coffee Development cases, next best alternative use of the land is forage Board was also established under the National Tea production or grazing. In the recent past, farmers and Coffee Development Board Act (1993). In 1994, have also started growing coffee in Bari (rainfed export of Nepali coffee was recorded first time with upland) where maize could be grown in rainy season. dry processed green beans to Japan. Brief historical This means maize alone or maize followed by millet/ events of coffee sub-sector in Nepal are listed in wheat are the next best alternative crop of coffee. Comparative advantages of coffee cultivation vis-a- vis competing crops are discussed in the following 2.4.1 Land Productivity
FiguRe 1: Nepal Coffee Logo
Coffee plants start bearing fruit from the fourth year of plantation and provide full scale production from its 7th to 30th year. A sample survey conducted in Sindhupalchok district in 2009 reported that average annual cost of coffee cultivation was Rs 43,833 per ha and gross return was 78,023 per ha meaning a net return of Rs 34,190 per ha per annum2 (COPP 2009). As discussed earlier, coffee is planted on marginal uplands where single crop of maize and in few cases second crop of millet planted. The study reported that annual net return from maize cultivation was Rs 7,890 per ha per annum and it was Rs 10,368 per 2.3 Specialty of Nepali coffee
ha per annum from millet cultivation. From these figures it can be seen that net return from coffee Nepalese coffee cultivation practice is environmental cultivation is 4.33 times higher than maize, 3.30 times friendly and free of harmful pesticides. It is bird- higher than millet and 1.87 times higher than maize friendly as it is shade-grown coffee where natural followed by millet cultivation. Comparative benefits shade (canopy trees) is used to shelter coffee plants of coffee, coffee with Banana, coffee with ginger, during parts of the growing season. Nepalese coffee maize, and millet cultivation are depicted in Table 1.
is Organic, grown without the use of potentially harmful artificial pesticides or fertilizers under strict 2 Average of costs and returns for 30 years.
It is estimated that one can earn a net benefit of Rs Table 1:
151,431 per ha after discounting the future value Comparison of net returns from at 10% over a period of 30 years if only coffee is coffee and its alternative crops cultivated on unused land. Similarly, if ginger is cultivated as intercrop with coffee Net Present Value Net returns compared to (NPV) at 10 % increases to Rs 206,884 per ha and if banana is cultivated with coffee it increases to Rs 380,068 per ha over a period of 30 years. The IRR is estimated at 19%, 26.9% and 32.5% respectively, with coffee alone, coffee+ginger and coffee+banana cultivation. Benefit cost ratio is 1.5, 1.6 and 1.9, respectively, with coffee alone, coffee+ginger and coffee+banana cultivation. All the investments are recovered in 7.5 years if only coffee is cultivated, in 6.2 years if coffee and ginger is cultivated and in 5.3 Source: COPP 2009. years if coffee and banana is cultivated (Table 2) 2.4.2 Returns over investment
An estimation of the benefit of coffee cultivation replacing other crops is provided in Table 2. Annual Because there is no production from coffee net benefit from the crop being replaced by coffee plantation until third year and less than optimum is subtracted from annual benefit from coffee to yield up to sixth year, simple average figures are not estimate those indicators. Estimates of the financial enough to judge the additional income derived from indicators in the case of coffee replacing maize and coffee production compared to traditional crops. millets are presented in column 4 and 5 of Table 2 Therefore, payback period and discounted indicators which shows that it takes 10 years to recover all of the of profitability measurements such as Net Present investments if coffee replaces millet. Payback period, Value (NPV), Benefit Cost (BC) Ratio and Internal Rate however, would reduce to 8.1 years and 6.2 years if of Return (IRR) are calculated to estimate the level of coffee+ginger and coffee+banana are cultivated on additional income derived from coffee cultivation the land being used to cultivate millet. compared to traditional crops.
Table 2: Indicators of Rate of Returns from Coffee Cultivation on land used
for different purposes Payback period (years) NPV @ 10% (Rs/ha) Coffee + (Ginger first four years) Payback period (years) NPV @ 10% (Rs/ha) Payback period (years) NPV @ 10% (Rs/ha) Source: Base data from COPP 2009. 3. Coffee intercropped for the first four years of plantation only. Based on a survey conducted in Gulmi and Kavre 2.5 Production and Marketing
districts Kattel (2009) estimated that coffee accounts for 13.4 percent of total income of coffee farmers, 2.5.1 Area and Production
on an average. The author describes this income as 3-Dimensional because it comes from three different There are two main varieties of coffee being outputs of coffee farming: 8.1 percent from coffee in cultivated: Arabica and Robusta. Arabica coffee terms of fresh cherry, 3.3 percent from shade trees trees are more delicate, must be grown at higher in terms of fruit, fodder and/or firewood and 2.1 elevations4, and yield fewer beans per tree per percent from intercrops such as ginger, turmeric and growing season. Robusta coffee trees are much hardier, may be grown at lower elevations, and have a high bean yield. Of the two, Arabica beget the 2.4.3 Employment Generation
better beans - and about 70 percent of the harvest in the world. The harsher Robusta tree account for Coffee is a much more labor-intensive crop than about 30 percent of the world's production and are alternative crops of the same regions such as maize, used for "mainstream" (lower quality) coffee blends millet and wheat as it is not subject to automation and requires constant attention. Most of the html). Arabica is being cultivated in Nepal because of employment is generated during harvesting season, its quality as demanded by specialty market. mid-December to end of February in the Nepalese context, when there are very little agricultural Coffee can be commercially produced in many parts related activities to be performed in other crop of the country. However, there is great potentiality sector. Nursery management, pit digging, filling and in mid hills region for organic coffee production as planting are other activities that provide employment it has got suitable climate, topography, soil, relative to rural populace.
humidity, temperature and rainfall for Arabica coffee. Some Districts like Gulmi, Palpa, Argakhanchi, It provides additional employment not only to the Lalitpur,Tanahu, Kavrepalanchok, Sindhupalchowk, concerned farmer but also to those that are not Lamjung, Kaski, Gorkha, Syangja, Parbat, Baglung are involved in coffee cultivation, especially landless and successfully growing and producing Coffee. Similarly, marginal farmers. This is important at the present coffee is being cultivated in other 26 districts of mid- context as the industrial growth is disappointing and hill region of Nepal (http://www. teacoffee.gov.np/ youths have to resort on foreign employment.
index about coffee.php). Table 3: Area and Production of Coffee in Nepal, 2009/10
Source: National Tea and Coffee Development Board, 2068 (page 66) 4. In Nepal, mid-hill locations with an altitude of 800 to 1500 meters above sea level are considered suitable for organic coffee cultivation.
In 2009/10 a total of 1,630 ha of land was planted with the village level. Pulping is done within 24 hours of coffee and production was recorded at 343 mt green picking the cherry. After pulping, fermentation is beans. The low yield rate was because large parts of required to remove mucilage from parchment. The coffee plants are young (less than five years of age) parchment is then fermented for 24 to 48 hours, that have not started bearing fruit or are producing depending upon temperature of the location, in small quantity. Syangja district had the largest area plastic drums or plastic bags. Timing of fermentation under coffee (230 ha) that produced over 47.2 mt is very important as less than enough fermentation green beans in 2009/10 (Table-3). results in mucilage remaining on parchment and more fermentation results in foul smell. The wet 2.5.2 Processing and Marketing
parchment is then washed 3 to 4 times manually to remove mucilage completely. It is dried for several In Nepal, wet processing technique is used to process days until moisture content drops to 11 to 13% (refer coffee cherry to beans, except in a few cases where Figure 2 for processes and recovery rates). The dried either farmers are too far from pulping facility or they parchment is stored or sold to traders or District try to use rejected cherry (those that float on normal Cooperative Union/Federation that have hulling water). Four steps are followed in processing cherry facility. Most of the export of coffee from Nepal is in to parchment at the village level.
term of green bean that is produced by hulling the Ripe fresh cherry are put into water and those that float are rejected. Rest of the cherry are pulped Nepali coffee had a long way to travel from a means using manual or semi-manual pulping machine, at FiguRe 2: Wet Processing Process and Average Recovery of Coffee
100 kg Fresh Cherry 54 kg Parchment+Mucilage Fermentation & Washing 23 kg dry parchment 18.5 kg green beans 1.5 kg green beans for local 16.5 kg green beans for export market (Rs. 500-600/kg) (1) Process and product - Dhungana, GP, 2068, COFFEE PRASODHAN PRABIDHI, in Tea-Coffee Smarika-2068, National Tea and Coffee Development Board, (2) Values estimated based on consultation with key informants. coffee. The US, Japan, South Korea, Canada, UAE and European countries are the major buyers of Nepali FiguRe 3: Trend of Coffee
Export from Nepal According to a recent report of Nepali daily, export of green beans to third country touched 120 mt marks in the first 8 months of current fiscal year 2010/11. This quantity is at par with last year's total export. It is expected that total export in the current fiscal year will be more than 150 mt5. Coffee export also has been contributor of foreign currency. Value of coffee export was worth about 40 million Rupees in 2006/07. Value of export in recent years is, however, 1995/96 1997/98 1999/00 2001/02 2003/04 2005/06 2007/08 2009/10 Despite increasing production of coffee in Nepal import of the same has not been declining in the of soil conservation plant, to traditionally processed past. This may be due to the lack of information and household drinks to international market as specialty adequate publicity about Nepali coffee and the taste coffee. According to NTCDB record about 5 mt coffee preference for the imported instant coffee: almost all was exported in 1995/96 which declined to 4 mt and the coffee that is imported to Nepal is instant type. 2 mt in subsequent year. Export increased to 3 ton One of the reasons of increased consumption of in 1998/99 and continued increasing with a record Nepali coffee in domestic market is due to foreigners export of 120 mt in 2009/10 (Figure 3). preferring filter coffee than the instant (Kattel, 2009). Coffee stakeholders estimate that about 65 percent 2.6 Major Stakeholders
of coffee produced in Nepal is exported. However, official record shows that about 36 to 53% of total Nepal Coffee Producers' Association (NCPA) record green beans were exported in last three years. Table shows that 27,730 farmers are cultivating coffee in 4 shows time series data on production and trade of Nepal, only a few of them in commercial Table 4: Production and Trade of Coffee in Nepal
Dry cherry Production (mt) Parchment Production (mt) Green Bean Export (mt) Source: National Tea and Coffee Development Board, 2068 (page 65) 5. The Kathmandu Post, June 14, 2011.
scale. Majority (90%) of those coffee farmers are Tea Development Section (CTDS) under the Fruit associated with DCPA. Scattered settlements, Development Directorate of the Department of inaccessibility of the specific locations and very small Agriculture, National Tea and Coffee Development scale (less than 50 plants) are some of the reasons Board (NTCDB), Nepal Coffee Producers' Association that 2,750 coffee farmers have not joined the DCPA. (NCPA), Coffee Promotion Program of Helvetas Nepal Apart from growers there are several individual have been assisting coffee production and trade in and organizations involved in coffee value chain, domestic and export markets. At the district level especially in trading, processing and export. Of the there are 14 District Coffee Producers Associations eleven institutions involved in coffee processing and more are under process of registration. Each of and trade, two are cooperatives and remaining 9 those institutions is involved in promotion and/or are registered as companies. Four of them supply value addition in coffee sub-sector. Functions within to domestic market and to exporters while six of the coffee value chain, actors involved in different them export coffee in addition to supply to domestic stages and enablers are depicted in Figure 4. markets. A list of registered coffee processor and traders can be found in Annex II.3. The Coffee and FiguRe 4: Simplified Value Chain Map of Nepali Coffee
Source: Mapped based on interaction with concerned stakeholders. Though Nepal has initiated organic production program, quantity is very small to compete into Experts working in coffee sub-sector opine that there international market. In many instances traders is substantial scope of increasing organic coffee complain that they were not able to sell in production in the country. A GIS database developed international market due to limited consignment or with PACT initiation shows that out of 9,108 ha land paid higher prices due to air transport. suitable for coffee cultivation in Kavrepalanchok district, only 112 ha is planted to coffee at present. There is almost no or negligible Research and This clearly means that coffee area can be increased Development (R&D) works done in coffee in Nepal. It by more than 80 times in the district. Though, there is not properly known about which variety is suitable has not been detailed survey of potential coffee area, for certain altitude, aspect and soil type. White the example of Kavrepalanchok districts seems to stem Borer has been a serious threat to increase the be true for most of the coffee producing district as production as many coffee plantations have been well. Assuming five percent of the potential land can wiped out due to its attack. There is no sufficient be brought under coffee in near future, area under technical manpower to tackle such problems.
coffee can be increased to 6500 ha in 5-6 years from 2.9 Possible intervention areas:
1630 ha in 2009/10. Experience has proved that coffee cultivation is much Past experience of coffee development in Nepal more remunerative that traditional crops. A farmer shows that this sub-sector requires multi-dimensional can earn 4.3 times more than maize cultivation development plan to harness the potentials. and 3.3 times more than millet cultivation from Following are some of the major programs that will coffee. Employment generation and environmental yield desirable results.
protection are other obvious benefits from coffee. 2.9.1 Research and development
Marketing of organic coffee has not been a problem in the past which can be seen from growing quantity A well equipped research center need to be of export every year. There is also large scope of established within coffee growing region. Major import substitution as Nepal has been spending 54 research thrust need to be on identification/ to 84 million Rupees for import of coffee in the recent development of varieties suitable for different altitude, aspects and soil types. Appropriate method Nepal can greatly benefit from increasing organic for white grub and other pest control is urgently farming practices as the country does not produce required. Research is also required on most suitable chemical fertilizer. Very small quantity expensive types of shade trees, spacing, and other agronomic imported fertilizer is being used in cultivation of other crops. Hard earned currency can, therefore, be saved and utilized for other development purposes 2.9.2 Increased size of orchard
if organic coffee replaces existing cereal crop Most of the coffee production takes place in small-scale orchards. This practice makes organic 2.8 Constraints
certification not only expensive but also almost impossible in some cases. Small holding of the Despite Nepalese farmers accepting coffee as high farmers and their immediate need of food crops value agricultural commodity, commercialization prevents them to bring all of their land under coffee has not been happened in its real sense. Most of cultivation. There are two options to tackle this the coffee production takes place in small plots, problem: one, that some sort of alternative means of involving large number of small farmers resulting in livelihoods be provide until coffee starts bearing fruit scattered plants along large geographic area. Being in its full swing, and two, expand coffee production marginal and small farmer his/her first priority goes to remote inner parts of rural area with provision of to crops that provide return in shortest possible time. extended road infrastructure. As coffee production at full scale starts from 5th to 6th year, poor farmers cannot wait without any 2.9.3 Organic certification and
alternative sources of livelihood.
Nepali coffee has also faced problem to maintain its Part of the certification process is internal control inherent quality due to poor processing facilities. system. Farmers need to be trained on this practice. Pulping, fermentation and drying facilities at farmers' Arrangement is also required to recruit technicians field level are poor.
who will regularly visit the farmers to provide much needed technical help. In national level, an accredited their own and are not abided by the set standards. certifying institution should be developed and/ They are also vulnerable in marketing of their or strengthened. A system of branding specialty product.
coffee is also required to sustain the export market. Coffee production increased by almost 12 times in One of the examples is separate treatment of coffee the last one decade. Similar is the case of export. It has produced in certain altitudes.
been one of the major sources of foreign exchange 2.9.4 Infrastructure and Mechanization
earnings. In the domestic front, consumption of Nepali ground coffee is not catching up fast mainly Coffee being relatively new comer in Nepalese due to lack of awareness of the benefits from organic agriculture, it is lacking in infrastructure. Often the coffee and habit of consuming tea and instant coffee. quality is deteriorated in the absence of appropriate Concerned authorities need to give attention on this drying and storage facility. Similarly, quality also matter for two reasons: first, it saves hard earned deteriorates as parchments from different small foreign currency being spent on instant coffee pulping centers (mostly using manually operated import and second, we cannot always depend on pulper) are mixed to make sizable amount. A few foreign market for our products.
better quality and larger scale processing facility will Coffee cultivation is much more remunerative be great help to this sector.
compared to traditional crops such as maize and 2.10 Summary and Conclusion
millets. It provides 4.3 times higher net return than maize, 3.3 times higher net return than millet Entered in to Nepal without fanfare by a hermit, cultivation and 1.9 times higher net return than coffee passed several stages from interesting plant, maize and millet combined. Those figures would be soil conserving plant etc. to commercially viable high much higher if coffee is intercropped with ginger value agricultural commodity. Its specialty of being as intercrop and banana as double purpose plant: organic, Himalayan, and high altitude has attracted fruits and shade. Internal rate of return of coffee attention of international market. Contribution of orchard are estimated at 19 percent, 26.9 percent NCPA, DCPA and coffee farmers and traders has and 32.5 percent for coffee alone, coffee+ginger and been commendable. The government of Nepal has coffee+banana, respectively assuming a 30 years approved Nepali coffee logo and awarded to three average life of orchard. Since these estimates are traders in 2010. However, there are bigger efforts based on average figures derived from a survey of required to maintain the prestige of Nepali coffee. farmers including small-scale that kept less than 50 plants, the benefit from commercial orchard would Despite Nepalese farmers accepting coffee as high be higher. Another advantage of coffee farming value agricultural commodity, commercialization has is employment generation. Coffee cherry picking not been done in its real sense. Most of the coffee coincides with a season when there is minimal production takes place in small plots, involving large demand of labor for other crops, providing additional number of small farmers. Almost 90 percent of those job not only to the concerned farmers but also to farmers are organized in to groups and cooperatives marginal farmers and land less laborers. and are registered to DCPA and Department of Cooperative, respectively. NCPA in consultation with In the background of obvious comparative advantage NTCDB and COPP of Helvetas Nepal have developed of coffee cultivation and growing international and enforced the standards to be maintained in demand of specialty organic Nepali coffee, it is high organic coffee production. Remaining 10 percent time to consider commercialization of this high value coffee farmers are continuing coffee production on commodity from all sectors including government, donors, investors and coffee stakeholders.
annex ii.1: World Coffee History
First known discovery of coffee berries. Legend of goat herder Kaldi of Ethiopia who notices goats are friskier after eating red berries of a local shrub. Experiments with the berries himself and begins to feel happier.
The first coffee trees are cultivated on the Arabian peninsula. Coffee is first roasted and boiled by Arabs making "qahwa" --- a beverage made from plants.
The world's first coffee shop opens in Constantinople. It is followed by the establishment of two coffee houses in 1554.
Coffee enters Europe through the port of Venice. The first coffeehouse opens in Italy in 1654.
Coffee is introduced to the New World by Captain John Smith, founder of Virginia at Jamestown. Some Canadian histori- ans claim it arrived in previously settled Canada.
The first coffeehouse opens in England. Coffeehouses are called "penny universities" (a penny is charged for admission and a cup of coffee). Edward Lloyd's coffeehouse opens in 1688. It eventually becomes Lloyd's of London, the world's best known insurance company. The word "TIPS" is coined in an English coffee house: A sign reading "To Insure Prompt Service" (TIPS) was place by a cup. Those desiring prompt service and better seating threw a coin into a tin.
The opening of the first Parisian cafe dedicated to serving coffee. In 1713, King Louis XIV is presented with a coffee tree. It is believed that sugar was first used as an additive in his court.
The first coffeehouse opens in Vienna. The Turks, defeated in battle, leave sacks of coffee behind.
The Dutch become the first to transport and cultivate coffee commercially. Coffee is smuggled out of the Arab port of Mocha and transported to Ceylon and East Indies for cultivation.
The first coffeehouse opens in Berlin.
Coffee Plants are introduced in the Americas for cultivation. Gabriel de Clieu, a French naval officer, transports a seedling to Martinique. By 1777, 1920 million coffee plants are cultivated on the island.
The Brazilian coffee industry gets its start from seedlings smuggled out of Paris.
One of Europe's first coffeehouses, Cafe Greco, opens in Rome. By 1763, Venice has over 2,000 coffee shops The prototype of the first espresso machine is created in France.
A process of using natural gas and hot air becomes the most popular method of roasting coffee.
Kaffeeklatsch, afternoon coffee, becomes popular in Germany.
The first commercial espresso machine is manufactured in Italy.
The invention of the worlds first drip coffeemaker. Melitta Bentz makes a filter using blotting paper.
Dr. Ernest Illy develops the first automatic espresso machine.
Nescafé instant coffee is invented by the Nestlé company as it assists the Brazilian government in solving its coffee surplus problem.
Achilles Gaggia perfects the espresso machine with a piston that creates a high pressure extraction to produce a thick Caffè Carissimi Canada, a network of espresso service providers is formed in Canada, modeled after a visit to Franco Carissimi (roaster and equipment manufacturer) in Bergamo Italy. It becomes the fastest growing network of private and independent super automatic machines providers in Canada.
Coffee is the world's most popular beverage. More than 400 billion cups are consumed each year. It is a world commod- ity that is second only to oil.
annex ii.2: History of development of Coffee Sub-sector
Introduction of coffee in Anpchaur, Gulmi district by Mr. Hira Giri from Myanmar.
Seeds from India were distributed by ADB/N in Gulmi, Palpa and Arghakhanchi.
Import of seed from India for distribution.
Initiation of commercial coffee production and nursery establishment at commercial scale. First commercial nursery established by Pareshwor Kharal in Aanpchaur, Gulmi.
First sapling distribution at subsidized rate in Palpa by Tinau Watershed Project of the then SATA Nepal Coffee Company (NeCCo), first coffee mill in Nepal, established in Manigram, Rupandehi.
Establishment of Coffee Development Centre in Aanpchaur, Gulmi.
Ghimire Nursery and Coffe Production Centre initiated organic coffee production in Palpla, Madan Pokhara.
Group of farmers organized in Madan Pokhara, Palpa and formed Coffee Producer Group Madan Pokhara. (30 Kartik) Registration of Nepal Coffee Producers Association Palpa in Palpa district.
Formation of district committee of the coffee producers association (DCCPA) in SyangjaEstablishment of Tea and Coffee Development Section under the Fruit Development Directorate of the Department of Agriculture Tea Development Corporation was reorganized into the National Board, coffee was also incorporated and the board renamed as National Tea and Coffee Development Board under the National Tea and Coffee Development Board Act 2049 (1993).
District Coffee Producers' Association (DCPA) Kavre registered with District Administrative Office (DAO).
Formation of DCCPA in Gulmi.
First recorded export of green beans (dry processed) by ECM (coffee collected from NeCCO) to Japan. Establishment of Nepal Organic Products in Palpa.
Establishment of Plantec IncorporatedDCPA Kaski registered with DAO.
Establishment of Regional office of NTCDB in Palpa.
LISP, in collaboration with coffee producers association, initiated coffee related activities in Palpa Establishment of Everest Coffee Mill in Kavre.
Organic Certification of coffee under District Cooperative Federation, Gulmi.
First training on organic coffee production (one week long training attended by Leader Farmers from Gorkha, Lamjung, Palpa, Gulmi, Syangja, Kavre, Kaski and Baglung) organized at Madanpokhara, Palpa. NCPA Palpa decided to go organic with the consent of the coffee producers.
Formation of Central Committee of Nepal Coffee Producers Association (NCPA).
Registration of NCPA as a central association of the coffee producers.
DCCPA Sindhupalchowk formed.
SSMP in collaboration with NCPA initiated coffee related activities in Syangja, Parbat, Kavre and SindhupalchowkIntroduction of wet processing technology (11 pulpers from India) by AEC DCCPA Parbat formedDCCPA Gulmi formed.
Establishment of Highland Coffee Promotion Company in Kathmandu.
Multi stakeholder workshop to explore the potential role of SDC for coffee promotion in Nepal.
Initiation of coffee FFS in Palpa, Parbat, Syangja, Kavre and Sindhupalchowk (LISP/NCPA)Initiation of Farmer to Farmer Program in Syangja (Winrock/NCPA/DADO).
Registration of DCPA Kavre renewed with District Administrative Office (Chaitra 2058).
Registration of DCPA Syangja with District Administrative Office (Chaitra 2058).
First recorded export of wet processed green beans (estate coffee) by Plantec to UK NTCDB for the first time fixed dry cherry price based on the quality (three grades) of dry cherries.
Introduction of wooden Hand-pulpers from Indonesia by Holland Coffee Inc.
DCPA Lalitpur (Magh 2060), Parbat (Magh 2060), Palpa (Magh 2060), Gulmi (Chitra 2060), Sindhupalchowk (Chaitra 2060), Lamjung, Gorkha, Tanahu, Arghakhanchi registered with respective DAOs.
Coffee policy implementedNCPA registered as the federation of DCPAs.
Tea and Coffee Development Section was reorganized with increased program thrust on coffee and additional man- First training on internal control system and Internal Inspection conducted at Gulmi by CoPP/HN in collaboration with Nepal Coffee Logo approved by the Government of Nepal Nepal Coffee Logo awarded to three traders.
Source: Office record of Coffee Promotion Program, Helvetas Nepal annex ii.3: Major Coffee Processors and Traders of Nepal, 2009
Export and Domes- Incorporated (P) regional sales) and Ltd., Kathmandu, Mount Everest Su- Nepal. URL: www.
preme (for export) Export and Domes- tive Federation Ltd., Coffee Coffee Purification Centre , Johang, GulmiRoyal Everest Coffee Everest Filter Coffee Export & Domestic 977-1-4280258, Fax: information@ever- Mills, Keshar Mahal, (Roaster & Brewer) Kathmandu, NepalHighland Coffee Export and Domes- Mr. Krishna Ghimire Promotion Co. Ltd., 977-1-6220474, Fax: info@highlandcof- Narephant, Kotesh- 21037, Kathmandu, NepalBuddha Organic Export and Domes- Dhruba Raj B.K.
Coffee Industries P. Ltd., Kirtipur-2, Kathmandu, NepalKathmandu Interna- Himalayan Java Domestic (Brewer) Mr. Gagan Pradhan tional Coffee House, Kathmandu, NepalNepal Organic Domestic (Roaster & Mrs. Shanti Devi Coffee Products, Palpa, NepalHigh Mountain Or- Domestic (Roaster) Min Raj and Ramesh 9841411344 ganic Coffee (P) Ltd., Bhaisepati, Saibu-3, Domestic (Roaster) ism Private Ltd., Pokhara, Nepal Gaurishankar Gaurishankar Coffee Roaster & Brewer Yet Raj Timilsina Industry, Panchkhal, KavreCoffee Cooperative Lalitpur coffee, Export and Domes- Mr. Balbahadur KC Source: Office record of Coffee Promotion Program, Helvetas, Nepal References
Dhungana, GP, 2068, COFFEE PRASODHAN PRABIDHI, in Tea-Coffee Smarika-2068,
National Tea and Coffee Development Board, Kathmandu.
Coffee Promotion Program 2011. Annual Plan 2011. CoPP, Helvetas, Kathmandu.
Coffee Promotion Program 2010. Annual Report 2010. CoPP, Helvetas, Kathmandu.
Agribusiness Promotion and Market Development Directorate, 2010. Cost of Productionand and Marketing Margin of Cereals, Cash crops, Vegetable & Spices Crops, Nepal. DOA, Kathmandu.
Agri-business Promotion & Marketing Development Directorate, 2009. Agricultural Marketing Information Bulletin, Special Issue-2009. APMDD, DOA, Kathmandu.
Agri-business Promotion & Statistic Division, 2010. Statistical Information on Nepalese Agriculture 2009/10. APSD, MOAC, Kathamndu.
National Tea and Coffee Development Board, 2009. Strategic Plan for Moving Forward Nepal's Coffee Sector for 2009 to 2011. NTCDB, Kathmandu.
COPP, 2010, A Study of Domestic Coffee Market in Nepal, Report prepared by Ashok Poudyal and Rajendra Pandit for Coffee Promotion Program, Helvetas, Nepal, COPP, 2009. A Study on Production Cost and Margins of Coffee in Sindhupalchok District, Report prepared by KR Kandel for Coffee Promotion Program (COPP), Helvetas Nepal, Kathmandu.
Kattel, RR, 2009. The impact of coffee production on Nepali smallholders in the value chain, MSc thesis submitted to Leibniz University, Hannover, Germany.
Websites
http://en.wikipedia.org/wiki/ economics of coffee
3. WORKSHOP PAPERS
3.1 Importance of Coffee Sub-Sector Analysis
Yogendra K. Karki6
Coffee in Nepal
The importance of agriculture sector in Nepal is reflected by its 35% share to national GDP and absorption of 66% labor force. This sector has been, however, characterized by traditional subsistence orientated farming. Around 47% households have less than 0.5 ha of lands (CBS, 2006). The subsistence orientation of Nepalese farming practice also limited contribution to income growth and poverty reduction. The situation is changing slowly after Agriculture Perspective Plan (APP 1994/95-2014/15) strategy and importance given to commercialization of high value crops by the periodic plans implemented after APP. Coffee is one of the new comers in the list of high value crops. It is being cultivated in 40 mid-hill districts and also slowly expanding to other mid-hill districts recently (Figure1). FiguRe 1: Major Coffee Producing
Latest available data shows that 1,650 ha of land was planted with coffee producing 308 mt of green beans in 2009/10. District wise data on coffee area and production is compiled in Table 1.
With the existence of favorable climatic condition together with characteristics of coffee plants that grow well on rainfed uplands less suitable to other crops, the smallholder farmers are being positively attracted toward coffee farming in Nepal. Coffee provides 5 times more income than that of maize and millets and 2-3 times 6. Mr. Yogendra Kumar Karki is the Project Director, Project for Agriculture Commercialization and Trade, Kathmandu, Nepal. Table 1: Area and Production of Coffee in Nepal
24.6 Sindhupalchok 9.5 Kavrepalanchok 4.0 Other Districts Source: National Tea and Coffee Development Board, 2069 (Page 79) more yield than that of any other cash crop (Kattel, poor smallholder farmers, coffee has become source 2009). As a result, the area of coffee in Nepal has been of cash income to fulfill the household requirement. increasing. As per official statistics, the area under Present trend to expansion in farmers' level shows coffee was 220 ha in 1995/96 which increased to that coffee could be one of the high value agricultural 1650 ha in 2010/11. Similarly, the production of coffee produce as a niche product for export. The trend of increased several times since then (NTCDB, 2011). export has been very impressive. The total export of The ecological settings in the Himalayan hills provide coffee from Nepal increased to 120 MT in 2009/10 Nepalese coffee a unique opportunity to enter from 5 MT in 1995/96. Coffee has huge opportunity to international specialty markets. Nepali coffee has been export in international market, which would provide exported as high altitude grown coffee produced by higher economic benefit to the smallholder. resource poor smallholders under organic conditions. However, there is a lack of sufficient market information, However, coffee being relatively new crop the entire quality improvement and value additional scheme sub-sector chain from certified organic production, in Nepali coffee sub-sector. The farmers do not have through quality processing and handling, to domestic adequate opportunities to add value. Due to the and international marketing is yet to be established scattered and remote area of coffee plantation and also insufficient processing facilities, the marketing of Since coffee in Nepal is planted mostly by resource coffee is not within the control of farmers. FiguRe 2: Sales of Nepali Coffee in Domestic and International Market Year
2006 to 2010 (in mt) International Market Source : Coffee Promotion Programme, Helvetas, 2010 Because coffee is relatively new crop, its trade has not been as common as other crops. A few traders have FiguRe 4: The Basic Model of
established linkages with importers in destination Porter's Value Chain countries. Farmers have very few choices of outlets. Even for local markets it is not easy for commoners to enter into market as it needs specific handling/ Firm Infrastructure processing techniques to maintain the quality. As a Human Resource Management result large volume of coffee is being imported for domestic consumption (Figure 3).
Technical Development FiguRe 3: Sources of domestic
coffee consumption of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activated it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. Source : Coffee Promotion Programme, Helvetas, 2010 The importance of value chain analysis is that it can Though the coffee industry has been growing fast, help to assess costs in production /marketing chain that there are several problems. The main problem is might be reduced or impacted by a change in one of market. Because of limited quantity Nepalese coffee the chain's processes. By comparing value chain of the has not been able to influence in international market competitors, one can often find the areas or links of the despite being unique in nature. It is very important to chain where others might be more efficient than him understand the stakeholders and their value addition that points the direction for improvement.
activities to improve the performance of the sub- Structure of Coffee Value Chain in Nepal
Value Chain Concept and its Importance
Nepal Coffee Producers Association (NCPA) is an umbrella organization of coffee producers. There The value chain concept was developed and are 14 District Coffee Producers Association (DCPA) popularized in 1985 by Michael Porter in "Competitive associated with NCPA. The NCPA record shows that Advantage," a seminal work on the implementation 27,730 farmers are cultivating coffee in Nepal, only of competitive strategy to achieve superior business a few of them in commercial scale. Majority (90%) performance. Porter (1998) suggested that a set of of those coffee farmers are associated with DCPA. interrelated generic activities, primary and Support Scattered settlements, inaccessibility of the specific activities, (Figure 4) within the organization add value locations and very small scale (less than 50 plants) to the service and product that the organization prevented the rest of the farmers to join DCPA. Apart from growers there are several individual The value chain describes the full range of activities, and organizations involved in coffee value chain, which are required to bring a product or service especially in trading, processing and export. The from conception, through the different phases of Coffee and Tea Development Section (CTDS) under production (involving a combination of physical the Fruit Development Directorate of the Department transformation and the input of various producer of Agriculture, National Tea and Coffee Development services), delivery to the final consumer, and final Board (NTCDB), Nepal Coffee Producers' Association disposal after use (Kaplinsky & Morris, 2001).
(NCPA), Coffee Promotion Program of Helvetas Nepal have been assisting coffee production and trade in This idea was built upon the insight that an domestic and export organization is more than a random compilation markets. At the district level there are 14 District Coffee Producers Association and more are under process of registration. Each of those institutions is involved in promotion and/or value addition in coffee sub-sector through different functions as depicted in Figure 5. FiguRe 5: Coffee Stakeholders and their Major Functions
Source: CoPP, 2011 NTCDB, 2009. Strategic Plan for Moving Forward Nepal's Coffee Sector for 2009 to 2011, National Tea CBS, 2006, Statistical Year Book of Nepal, Central and Coffee Development Board, Kathmandu.
Bureau of Statistics, Thapathali, Kathmandu. Kaplinsky, R. and Morris M. 2001. A Handbook for CoPP 2011. Annual Plan 2011. Coffee Promotion Value Chain Research, Report prepared for IDRC.
Program, Helvetas, Kathmandu.
Kattel, RR, 2009. The impact of coffee production on CoPP, 2010. Annual Report 2010. Coffee Promotion Nepali smallholders in the value chain, MSc thesis Progra,m Helvetas, Kathmandu.
submitted to Leibniz University, Hannover, Germany.
Agri-business Promotion & Statistic Division, 2010. Porter, ME, 1998. Competitive Advantage: Creating Statistical Information on Nepalese Agriculture and Sustaining Superior Performance. Free Press New 2009/10. APSD, MOAC, Kathamndu.
3.2 Present state of coffee production in
Nepal: Opportunities and Challenges
bhola Kumar Shrestha 7
Abstract
Coffee, the second largest commodity next to petroleum traded in the world
market is produced in more than 100 countries. Total production in the world was 128.2 million bags in 2008 ( www.ico.org). Brazil is the world leader in production and America in consumption. Coffee, entered Nepal from Burma in 1939 has been extended to about 40 districts in the mid hills of Nepal with significant potential as export commodity. More than 25000 small growers have been involved in coffee cultivation in about 1630 ha with 343 tons of green bean production in the year 2010. The export of Nepali coffee is in an increasing trend. Importers consider it as a specialty product and demand outstrips supplies. Nepali coffee has specialty quality potential as good as Mexican coffee. Cup testing result showed 82-86 percent specialty quality. Lack of human resources and problems due to diseases such as white stem borer are the area to improve for coffee sub sector development.
Introduction
Coffee, the second largest commodity next to petroleum traded in the world
market is produced in more than 100 countries. Of the four main species of coffee, (Arabica, Robusta, Liberica and Excelsa), only Arabica (Coffee Arabica) Production by type and Robusta (Coffee canephor) are in consumption where Arabica has 62 percent share in world production. Arabica is the only species grown in Nepal.
Coffee was brought into Nepal by a Monk in around 1939 after almost 14 centuries of its discovery in the world in Ethiopia, Africa. Among the various cash corps cultivated in Nepal, coffee is a high value cash crop commercially grown in the country with environmental importance. Though it is extended to around 40 districts of the mid hill regions of Nepal, 23 districts are growing it on commercial basis. Major coffee producing districts are given in the table below. Nepal's Main Coffee Growing Region Ilam, Udayapur, Sankhuwasabha, Okhaldhunga Nuwakot, Rasuwa, Ramechhap Arghakhanchi, Gulmi, Palpa, Shyangja, Kaski, Baglung, Parbat, Myagdi, Tanahun, Lamjung, Gorkha Among them the top seven district in production of dry parchment on the basis of 2009/10 harvest are presented in the table below. The table below shows that 7 Technical Officer, National Tea and Coffee Development Board, New Baneswar, Kathmandu,Nepal, [email protected] Sangjya is the leading district in case of production, Nearly all coffee is grown by small holders. The and area but Kaski leads in regards of number of number of growers in 2006 was 12000 which has coffee growers. Lalitpur has fairly big coffee farmers increased to 25000 growers as of 2010. The area of with an average production of 56.2 Kg green bean coffee plantation is in increasing trend per grower. Palpa, Gulmi were the district to initiate coffee production but still lack behind in production.
Parchment Production (ton) Coffee Plantation Which in 2006 was 1285 ha has reached 1630 hectares in 2010 which indicates an annual rate of increase is about 15 percent. Similarly the production of dry parchment was 256 ton in 2006 which has increased to 429 ton of dry parchment ( 343 ton Green bean) in 2009/10. There is about 25 percent annual rate of increase in production.
Area Green Bean (GB) Market for Nepali coffee has increased both in Netherlands, Canada, Belgium are the major countries domestic and international level. Coffee green where coffee is being exported. At this point, Korea bean exported in 2005/06 was 1525 Bag (60Kg/ Bag) is the leading buyer, followed by Japan. Around 60 which in 2009/10 increased to 1867 Bags.
percent of the production is exported. Sales in the domestic market are also increasing and the present sale is about 40 % of the total production. There are Coffee Export (Bag) six companies including cooperatives exporting coffee to different destinations. There is a great potentiality for specialty coffee cultivation in the mid hills of Nepal due to suitable climate, topography, soil structure, relative humidity; temperature and rainfall, The ecological settings in the Himalayan hills provide Nepalese coffee an exceptional opportunity to enter international specialty markets. The Specialty coffee is categorized as organic, High Altitude Grown, One variety, Estate Coffee and De-caffeinated. Nepali coffee consists of all the characters (Organic practice, only Arabica). Some specialty coffee known in the world is listed below: Jamaican Blue mountain Nepali coffee has been exported to more than 15 Tanjanian Pea Berry countries. Export destinations have been increasing Hawain Kona Coffee every year. Japan, Korea, the USA, Germany, the Ethiopian Yarga Chaphe Table below shows an overview of the major export destinations with tentative volume by the company.
Nepali coffee is considered specialty coffee grown in The government policy is also positive towards higher altitude away from the main coffee growing organic production practices for which the National Capricorn and cancer belts (above 23degree Guideline for organic agriculture production and latitude) of the world. One of the international processing 2064 (Amendment 2065) has been buyers disclosed that he is paying almost 50 percent approved. The government has also allocated budget premium price just for origin for Nepali coffee. Nepali for organic certification and organic fertilizers.
coffee stands at 40 -50 percent of specialty coffee Coffee involves many steps to bring in to final cup standard which can be upgraded to a level of about stage (Seed to Cup), thus, creates employment. It 80 percent. The team also tested the Nepali coffee also helps in the promotion of agro-ecotourism, and was found Specialty Quality potential as good import substitution and GDP contribution through as Mexican (NTCGDA, 2005). This has been proved with many test results that showed 82-86 percent specialty quality in cup testing. Moreover the coffee cultivation practices currently used is 70 – 80 percent organic (NTCGDA, 2005). There are many challenges in commercialization of There are strong organized groups of producers at coffee. Some of them are list below: The demand village, districts and national level with more than exceeds the supply: the major coffee traders in the 25000 coffee growers. The coffee enterprise has also country reported that there is increased demand been initiated at different levels with strong network of Nepali coffee in the international market but between producers and traders. In addition there the production volume is very small. It is grown as are many stakeholders (I/NGOs, NTCDB, CTD etc) a subsidiary crop in the marginal land sometimes supporting in the promotion of coffee production, as curiosity plant The table below shows that 81 processing and marketing. Certification Body at percent of the growers has less than 100 plants and local level has already been providing their services produce about 400 Kg of fresh cherry or less than 80 on organic certification of coffee for international Kg of Green Beans and only one percent grower have market. NTCDB has developed 3 years Coffee more than 500 plants. Thus, increased production to Development Strategic Plan in collaboration with meet the demand needs a strong strategy to expand all stakeholders. NTCDB has also developed and coffee in all possible plantation sites including distributed Nepal Coffee LOGO for quality assurance community forest.
Opportunities for the Development of Nepal's Coffee Sub-Sector Potential in International markets: 1500 tons Growing demand for Nepal Coffee Potential in domestic markets: 500 tons Organic and Fair Trade Speciality markets Increasing food securing livelihoods of small-holders Defined areas of origin branding Existing government policies on Employment opportunities Favourable conditions organic agriculture for expanding organic coffee production Agro-ecological conditions favourable for organic production Producers in favour of going organic Import substitution (Current value of imports 50 millions NRs or around 0.75 million USD) Size of coffee <50 51-100 1 0 1 - >500 Big Farmers in Lalitpur – 12 percent; Gulmi, Palpa, Sangjya, Kaski and Kavre – 1 percent Maintenance of quality: Nepalese coffee, though consists of specialty quality, has faced problem to maintain its inherent quality due to poor processing facilities. Pulping, fermentation and drying facilities at farmers' field level would greatly help maintain Delay in payment: Farmers were reluctant to increase the quality. Many countries have shifted from the plantation as they need to wait more than six conventional coffee to organic production practices month to get the payment for the coffee cherry. with huge government support. Though Nepal has Creation of Coffee development fund could be initiated organic support program, it is very small to helpful to encourage small farmers to increase the compete in the international market.
Limited technical manpower: There is shortage of Lack of required coordination: There are many technical manpower to support coffee. Technical organizations working for coffee with little or paper knowledge required for production, harvesting, coordination which need to establish a functional value addition etc is limited which has hampered the coordination to bring a synergy in coffee sub sector entire coffee sector. Limited research and development activities: There Diseases: Coffee White Stem Borer has become a are very limited research initiatives on coffee variety, serious threat to increase the production as many fertility and many others for which NARC and other coffee plantations have been wiped out due to its related organisations role has to be increased.
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8 lgb]{zs, Jofkf/ tyf lgsf;L k j4{g s]Gb 3.4 Comments on "Export Potentials and
Constraints of Nepalese Coffee"
Kamal Raj gautam9
First off all I will like to thank PACT team for providing me the opportunity to participate in this valuable coffee sub-sector workshop for Nepal. I hope while participating in this event will enhance my knowledge in this sub sector. Here I have tried to analyze the paper in the context of value chain as an actor-oriented approach and is highly effective in tracing product flows, showing the value- adding stages, identifying key actors in the chain and assessing the relationships among them.
The paper presented by the writer even though the title is not the same as provided for him, but during his presentation he has justified why he has refined the title on which I'm convinced. Considering this basic constraint the specific findings and comments are:Mr. Nepal has clearly mentioned the role of Coffee in the world market and in Nepalese context due to exposure of Nepalese people with out-side world; its internal consumption is also in increasing trend. By stating this point he is trying to indicate the increment in the internal demand as well as international market. In the same way he has tried to identify the factors playing role for the attraction of pesticide free coffee i.e. organic coffee demand. Here, I think he has presented the strength of Nepalese coffee product which is one of the major aspects of the coffee sub-sector. In the same way he has presented the environmental and health issues crucial for increasing the demand of coffee in internal and external markets. By analyzing these aspects author has tried to show the opportunities for Nepalese coffee. In this context if he had added the different stakeholder i.e. Local/Sub-national/National supporting institutions that play key role for its production and promotion including the coffee farmers and nurseries then it would have added value to his paper.
In the aspect of trader, there is an encouraging level of traders' interest and participation despite limited effort to promote export. If he had analyzed the weakness of Nepalese coffee industry, it might have provided crucial points to support trade facilitation for the end markets. Whereas in this regard he has tried to mention quantity, production – quality, primary-secondary processing- well managed promotion activities in world market, Trade –guaranteed qualitative and quantitative supply as of importing countries demand, End Markets as sub-sector analysis. Thus, I think paper presenter has tried to analyses the coffee sub-sector as aimed by the project for its promotion.
Lastly I would like to thank paper writer for his effort to present such an informative and synthesized paper.
9 Programme Director, Agribusiness Promotion and Market Development Directorate, Department of Agriculture, Harihar Bhawan, Lalitpur, Nepal, [email protected] 3.5 skmL If]qdf ;+nUg ;/f]sf/jfnfx? / o;sf]
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ls;fgsf] ;+:yfut ;+/rgf h:t} ufpF ufpFdf ;d'x ;d'x– and Plantation in Different Years ;d'xaf6 lhNnf ;+3 (DCPA) lhNnf ;+3 ;xsf/L pBf]uLx? ldn]/ s]Gb df dxf;+3 (NCPA) sf] ;+:yfut ;+/rgf Production Parchemoant lgdf{0f u/L Joj:yLt skmL Joj;fodf kl/0ft eof] . Area (Ha) (Mt.) Dry Cherry ;+:yfut ljsf; k ljlw ljsf; lglt tyf ;DaGw ljsf; / ahf/Ls/0fn] Joj:yfklso ljsf;sf] cjwf/0ffaf6 skmL Joj;fo Joj:yLt x'g uPsf] 5 . ls;fgx?df O{dfGbf/Ltf / d]xg]tsf] k ltkmn, g]kfn ;/sf/sf] ;sf/fTds b[li6, slkm ljsf; jf]8{sf] e"ldsfn] /fli6«o skmL lglt @) ! lg:sf;g eO{ slkm lglt sfof{Gjog lgb]{lzsf @) & cg';f/ ut dfu{ @) & df /fli6«o skmL nf]uf] -k lts lrGx_ k fKt eO{ ;fj{hlgs ePsf] / g]kfnsf tLg pBf]un] g]kfn slkm Joj;foL dxf;+3sf] l;kmf/L;df jf]8{af6 nf]uf] k fKt u/]sf 5g . eg] cGo pBf]ux? klg qmdzM k s[ofdf cfO{ ;s]sf 5g . skmL ls;fgsf] ;+:yf (NCPA) sf df}h'bf !%@ hgf skmL k fljlws -h]=l6=P_ dWo] #@ hgfnfO{ CTEVT åf/f L2 -h]=6L=P_ sf] kl/Iffsf] Joj:yf u/fO{ @( hgf bIf k fljlws pQL0f u/L NCPA cGtu{t k fljlws ;ldlt dfkm{t skmL If]qdf sfo{/t 5g . afFsL k fljlwsnfO{ CTEVT af6 qmdzM l:sn6]:6sf] Joj:yf u/fO{ bIf k fljlws agfpb} nUg] ; f]tM NCPA Table 2: Coffee Plantation Area &
Production 2009/10 (2066/67) ;j}eGbf a9L cS;Lhg h]g]/]6 ug]{ lkknsf] ?vnfO{ dflgG5 , Tof] h:t} skmLsf ?vaf6 cS;Lhg h]g]/]6 x'G5 . h:t} ! x]S6/ skmLsf] ju}rfaf6 k ltlbg *@ kf}08 cS;Lhg h]g]/]6 ub{5 . To;}n] jftfj/0f cg's'n, u Lg8n/, hnjfo" kl/jt{g cg's"n e"ldsf, sfj{g Jofkf/ /fi6«nfO{ 7"nf] of]ubfg k'/ ofpg] . cGt/fli6«o jhf/df skmL kf/vLx?df ljlzi7 :jfb / k sf/sf] skmL vfg] k rng j9 bf] 5 . hdfO{sfsf] æANo" dfp06]g skmLÆ sf] :yflkt jhf/nfO{ æg]kfnL skmLn] cg';/0f ug{' kg]{ cj:yf oxfsf] ljz]if k sf/sf] lEfGg xfjfkfgL lxdfn, e"–w/ftnsf cj;/ ;[hgf ePsf] 5 .
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• pTkfbg If]qlj:tf/, k zf]wg, cg'udg • Organic dn÷ljiffbLsf] Joj:yf • ICS (cfGt/Ls lgoGq0f k 0ffnL_ cuf{gLs ;l6{lkms];g • g;{/L k df0fLs/0f / /lh:6«];gsf] Joj:yf • prfO{ kNkLË s]Gb k ljlwsf] Joj:yf • :6]l/h, kNkLË u'0f:t/ -kNk/ ;+rfns_ lj?jfnfO{ vfBtTJf Joj:yfkg cg'udg • ;+sng tyf e08f/0f Joj:yf Table 3: Export and Import of
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3.6 Coffee Research and Development in Nepal
Ram bahadur KC and Krishna bahadur Thapa 11
Coffee (Coffea spp) is newly introduced crop for Nepal. According to past evidence Sadhu Hira Giri introduced and propagated some seeds of coffee in Gulmi Anapchaur in 1938 (1995 BS). It means Gulmi was first avenue district of coffee plantation in Nepal. It is cash crop that is grown commercially in 23 districts. Most of the coffee grown area are confined in Western and Central Development Region mid hills of Nepal. Botanically, coffee is a perennial shrub which belongs to the genus Coffea of the family Rubiaceae. There are more than 70 species under the genus Coffea, most of which are native of Africa (Coffee guide, 2000). However, four species under Coffea are economically important. These are arabica, liberica, excelsa and canephora (robusta). The Most popular coffee species grown in Nepal is Coffea Arabica which accepted as high quality coffee in the world. It is tetraploid species with 2n=44 chromosomes and self fertile in nature (Coffee guide, 2000). Different varieties/ collection of Coffea arabica are collected and cultivated in Nepal so far has beeb n presented in Table 4.
Potentiality of Coffee in Nepal
Coffee is second largest traded commodity of world after petroleum products.
Climatically and geo-physically the coffee grown at higher altitude (more than 800 m) with cool climate is recognized as specialty coffee in the world. Nepal has special production niche as it poses 42% of land lies in mid hill situation (Manandhar and Shakya, 1996). Climate, soil and altitude are the major factor to grow the production of quality coffee. Furthermore, unemployment is the main constrain in rural areas. So coffee farming would be the potential alternative way to mitigate such problem. The demand of organically grown coffee product is increasing day by day in national and international market. It is reported as environment/bird friendly plant which helps to reduce soil erosion and fit in three tier plantation Coffee Development Process at a glance
In the beginning coffee was introduced firstly in 1938 (1995 BS) In 2042, establishment of Coffee Development Center for work carried out coffee development and training Establishment of Nepal Coffee Company in 1983 (2040 BS), at Manigram, Coffee growing got accelerated when coffee grower established the ‘Nepal Coffee Producer Association' (NCPA) in 1992 (2048)BS National Tea and Coffee Development Board was established in 1993 (2050 BS) for coffee promotion in Nepal Formulation and Implementation of National Coffee Policy was in 2003 11 Senior scientist, ARS (Hort.) Malepatan, Pokhara An experiment entitled ‘Development Table 1: Distribution of coffee
of Improved and Sustainable Package of growing areas in Nepal Production Technology for Commercialization of Coffee Cultivation' was started in ARS, Malepatan during the FY 2060/61. 1st category (>100 ha)
3rd catagori (>25 ha)
Similarly in 2062 BS another research project on coffee entitled ‘Selection of Suitable Genotypes of Variety grown under different Organic Means' for better quality coffee production was initiated at ARS, Malepatan condition in collaboration between NARC 118 4th catagori (<25 ha) Other research activities on progress under ARS (Hort), Malepatan 2nd catagori (>50 ha) Varietal physio-morphological characterization of coffee Varietal evaluation in different elevation (800, 1000, 1200, 1400 masl) 80 Other districts are Shade management on coffee Collection, conservation and evaluation of 1650 Ramechhap, Ilam coffee genotypes Study on quality brandy preparation from Involve farm family fresh cherry pulp Coffee Research in Nepal
Designing of low cost parchment drying By the directive of late king Birendra, Coffee Development Center was established in Technical backstopping to the clients 2042 at Anapchaur VDC of for the purpose of research and training on coffee.
Coffee varieties were introduced from Research Findings so far
International Coffee Research Center, Brazil at ARS, Malepatan during the FY 2051/52 1. Performance evaluation of coffee geno-
by LARC (Now RARS, Lumle). Varieties types in Western hills of Nepal
were Bourbon Amarillo, Bourbon Vermelo, Catimore, Catuai Amarillo, Catuai Vermello, Super imposed experiment was conducted at ARS Catura Amarillo, Catura Vermello Mundo Malepatan in eight years old orchard under Siris Novo (Chaudhary 2009). (Albizia sp.) shade condition. Experiment was laid out in RCB design replicated three times. The highest Some seeds of coffee varieties such as ‘Pacas', mean marketable fresh cherry yield (4.32 kg /plant) ‘Tekisic', ‘Pacamara', ‘Catisic' was introduced produced by genotypes ‘Caturra Amarillo' followed by from L-Salvadeur and distributed to different Bourbon Vermelo (4.18 kg/plant). In case of caffeine agri-farms by Winrock International in 2054 percent genotype Mundo Novo contained higher caffeine (1.578%) and the lowest in Caturra Amarrillo In 2061 NARC, DOA, Nepal Tree Crop Global Development Alliance and Winrock 2. Development of improved and sustaina-
International planted coffee varieties to study ble package of production technology for
varietal performance in Panchkhal farm. commercialization of coffee cultivation
Study in relation to coffee entitled ‘Development of Eco-friendly Management In coffee, the combination of double dose of farmyard Practices for Coffee Stem Borer' was carried manure (@10 t ha-1) and single dose of chemical out by the ARS Malepatan during FY 2064/65 fertilizer (NPK @ 100:30:60 kg ha-1, respectively) found and 2065/66.
to be most suited to grasp the higher yield of fresh Source: NTCDB cherry (988.2 kg ha-1) of coffee as compared to either 5. Varietal physio-morphological
single dose of farmyard manure only or chemical fertilizer only. For physio-morphological and genetically variability The maximum yield of fresh cherry (1228.45 kg ha-1) to evaluate varietal similarities and dissimilarities was observed in variety ‘Yellow Caturra' and followed characterization (both quantitative and qualitative) by ‘Selection-10' (758.80 kg ha-1).
was initiated in some varieties/collections at ARS, 3. Selection of suitable variety of coffee
grown under different organic means for
6. Varietal evaluation in different eleva-
better quality and production at
tions (800, 1000, 1200, 1400 masl)
Different varieties/collections are cultivated by many This project was started in collaboration between farmers in different part of the country. However ARS, Malepatan and NTCDB, Regional Office at suitable cultivar for specific location is not identified Malepatan during Mangsir 2062 BS. The finding of so far. In Nepal several cultivars are available and the is presented in Table 2 4. Loss assessment survey and pest status
Table 3: Different locations of
monitoring in Syangja and Kaski district
coffee plantation under ARS, command area White stem borer is very challenging coffee insect now a days in Nepal. Usually orchard over six to seven Altitude Location years old, poor shade management and careless condition are found more conducive to the insects. 850 Lewade, kaski Following observations were concluded from the conduction of the survey in the following sites. 900-1100 Dhikurpokhari, At Bahakot, Syangja (1100-1300m), mostly 1200 Bhadaure Tamangi, 3-4 years old orchard were observed free from white stember borer (WSB).
At Karendada, Syangja (1100m), the plant lost from the insect was observed to be farmers themselves have been cultivating saplings varieties distributed by the nursery grower in their There was about 20 per cent plant loss due locality. Therefore different varieties/collections of to WSB at Malunga, Syangja (700 m). coffee have been planted in different locations of the In kaski - Deep, Puranchaur, Begnas area no western mid hills to identify suitable cultivar of better infestation was observed quality and production.
Insect traps installed by Nepal-SIMI in Arjun Chaupari and Malunga Syangja found ineffective to trap the adult WSB.
Table 2: Fresh cherry yield of coffee (kg ha-1), 2066 (4th year plant age)
Pig litter @ 10 t ha-1 M. oilcake @2.5 t ha-1 Poultry manure @ 5 t ha-1 Note: 1= Maximum value, 2=Second higher value, L= Minimum value, GM= grand mean 7. Shade Management on Coffee
clean them and dry them to obtain the marketable products, green or clean coffee. According to Wrigley Coffee is shade loving plant. It requires at least 60% 1988, the harvested fruit of Arabica coffee consists shade for better quality and production. In Pokhara, winter temperature during December-January drops 39 percent pulp, 17 percent mucilage, 7 percent down to 3-4 0C and frost appears occasionally. An parchment husk, 37 percent of green bean experiment showed that in this situation the survival rate of coffee planted under non shade condition was The following activities were carried out at the observed to be almost nil. When two or more different Station for postharvest processing of coffee. plant species were grown in same land there will be competition in so many growth factors. Therefore, it Study on quality of coffee brandy prepared
is important to study about the suitable shade tree from fresh coffee cherry pulp
for better coffee production at ARS Malepatan under Last year (2066), coffee Brandy was prepared from mid hill domain of western hills of Nepal. Following fresh cherry pulp and its contents analyzed. The shade provider plants trees are planted for the content of pH, alcohol, amyl alcohol (higher alcohol) purpose such as Litchi (Litchi sinensis), Epil-Epil, Siris total solid, lead, copper, iron, and methanol on (Albizia sp), Macadamianut (Macadamia sps), Pumelo Brandy was tested. Among them methanol content (Citrus grandis Osbeck), Guava (Psidium guajava).
was <0.01 and lead was 0.77 mg/l. Both need to be 7. Collection, Conservation and Evaluation
free for human consumption, so this product was of Coffee Genotypes
not recommended for human use. It was doubt on contamination from materials used during As a leading centre of coffee research system under preparation. In this year the coffee Brandy was NARC, ARS, Malepatan collected and maintained prepared with high precaution and will be analyzed for confirmation to human use. Similarly a local type plastic solar dryer was designed and developed by Table 4: Collection of coffee
the Station. It helps to dry the parchment in faster genotypes in ARS, (Hort.) Malepatan, Pokhara rate than the normal sun drying in winter and may help in maintaining the quality of the product.
Arghakhanchi Local Bourbon Amarillo, ARS (Hort.) is publishing research findings regularly on coffee to share ideas and views among the Annual Technical Report 2007/08 Annual Technical Report 2008/09 Annual Technical Reports 2009/10 Selection of suitable variety of coffee grown under different organic means for better quality and production at Malpatan condition. Annual progress report (I, II, III, IV) from FY 2006/07 to 2009/010. Jointly published by ARS (Hort.) and NTCDB.
following genotypes at the station for further research and together maintained a field gene Research Attempt coffee farming. 2067. bank. Station requested all concerned stakeholders Published by NARC/ARS (Horticulture), involved in coffee promotion in Nepal to provide Malepatan, Pokhara (Nepali version).
coffee genotypes available them to ARS, Malepatan to conserve as a future assets.
8. Postharvest study on coffee
The coffee cherry as it is harvested cannot be used. It is necessary to remove the beans from the cherries, References:
Chaudhary J.N., Y. R. Bhusal, C. Adhikari andR.P. Yadav. 2009. Performance evaluation of
coffee genotypes in western hills of Nepal. Proceedings of the "Fifth National Seminar on Horticulture held on 9th – 10th June, 2008 at Kathmandu, jointly published by NAST, NARC and NHS. Coffee Guide. 2000. Central Coffee Research Institute, Coffee Research Station, Chikmaglur, Karnataka, India. Manandhar D. N. and Deep M. Shakya. 1996. Climate and Crops of Nepal. NARC. Swiss Agency for Development and Cooperation , Nepal.
Thapa, K.B. ; R.B KC, Y. R. Bhusal, and Pathak, H.P 2009. Effect of different organic and inorganic fertilizer combinations on plant growth of coffee. Proceedings of the "Fifth National Seminar on Horticulture held on 9th – 10th June, 2008 at Kathmandu, jointly published by NAST, NARC and NHS. Thapa, K.B., R.B KC, R. Chaudhary, Y.R. Bhusal, and D.D. Paudel 2010, Selection of suitable variety of coffee grown under different organic means for better quality and production at Malepatan condition. Annual progress report (IV), FY 2009/010, jointly published by ARS (Hort.), NARC and NTCDB, Regional Office, Malepatan, Pokhara.
Thapa, K.B., RB KC, and D.D. Paudel. 2067. Attempt on Coffee Research. NARC/ARS (Horticulture), Malepatan, Pokhara. Thapa, K.B., RB KC, and D.D. Paudel 2067. Researc attempts on coffee farming NARC/ ARS (Horticulture), Malepatan, Pokhara. Wrigley G. 1988. Coffee. John Wiley and Sons Inc. New York, USA.
3.7 Comment on "Coffee Research and Development
in Nepal"
Surendra P Rijal 12
This paper on coffee research and development covers many aspects of coffee research and development history of coffee, involvement of farm families, area, production, processing, varietals trials in different elevations, publications on coffee. We have to appreciate the efforts made by Malepatan based research on coffee and the other line agencies including private sectors. With limited budget and infrastructures like laboratory facilities, this much output is appreciable.
As coffee is a new technology for Nepal, the key persons involved in coffee research and development still lack basic exposure on coffee research made so far by the developed countries. Such exposure can guide key people in the right way while formulating the research and development program on coffee. No one from the research center nor from Coffee & Tea Development Section have any Indian or foreign exposure on coffee Our coffee is organic coffee and therefore we should be able to recommend organic ways to supply fertilizers for coffee. In Indian conditions, 6000 kg fresh cherry give 1000 kg green bean which is extracted In India. It was found that for every 6,000 kg of ripe coffee cherry (1 MT of green bean) removed from the plants, approximately 40 kg nitrogen (N), 2.2 kg phosphorus (P) and 53 kg potassium (K) must be replaced yearly. (www.fao.org/docrep/008/ae938e/ae938e00.htm). The byproduct like coffee pulp can be good source of organic fertilizer. We cannot rely on Indian or other organic fertilizer without authorized tests. To ensure good coffee production, reliable supply of organic fertilizer must be ensured. Our research must take this point into consideration. Strong integration of livestock with coffee is essential to ensure organic fertilizer for coffee plant.
Coffee is shade loving plant; there are many shades that are in practice in Nepal and other countries. The shade should be friendly to coffee and income generating. There are two types of shade a) Temporary b) Permanent. Our research has to emphasis on finding which particular shade for any specific elevation and posture will be economically good. We can review Indian and Myanmar practices and replicate them in our conditions. World's most costly coffee is from blue mountain of Jamaica. There is a coffee variety named Blue Mountain. We have to keep in mind on such things while selecting coffee variety. In coffee, cup quality is more important than quantity. In yellow catura of coffee, two picking is sufficient to harvest coffee, tekasic may need four pickings. We have to judge them from labor cost point of view. Performance of the variety may not be always true for all areas; the pacamara (most popular variety of Alsalvador) is poor for soil condition of Pokhara. 12S CT D O, CTDS.
6. If coffee failing to comply with the above standards is identified through the normal course of trade, Single variety, single estate grown, organically importing members shall endeavor to notify the grown, decaffeinated coffee, high elevation coffee ICO of such shipments. As an example of what is fetch better price in the international market. Our meant by 'equivalent', 20 broken beans shall be research and development must take these points considered as equal to 1 defect rather than 5 broken into consideration. Myanmar is entertaining such beans per defect in the case of coffees containing standards for quality improvement on coffee. Our large numbers of broken beans arising naturally, as research and development should take these points a feature of a particular cultivar. Such coffees shall be into consideration. How far we can practice them? clearly identified by a specific grade nomenclature.
How far our manpower and laboratory facility permit them to practice? These points are in floor for E. Measures for controlling the application
of the standards in exporting Member coun-
A. Minimum standards for exportable coffee
7. Each exporting Member shall develop and 1. Exporting Members shall not export coffee that: implement national measures which ensure that (a) for Arabica, has in excess of 86 defects per 300 no exports of green coffee fail to meet exportable g sample (New York green coffee classification/ Brazilian method, or equivalent); and, for Robusta, 8. Exporting Members shall also endeavor to ensure has in excess of 150 defects per 300 g (Vietnam, that sub-standard green coffee is not included in Indonesia, or equivalent); the manufacture of processed coffee (roasted and (b) for both Arabica and Robusta, has a moisture soluble) that is exported.
content below 8 percent or in excess of 12.5 percent, measured using the ISO 6673 method.
F Other measures
2. Where moisture percentages below 12.5 percent are currently being achieved, members shall endeavor to ensure that these are maintained or 9. Members shall seek immediately to identify sources of external finance from appropriate 3. Exceptions to the 12.5 percent maximum moisture institutions for studies and measures that support content shall be permitted for specialty coffees that the implementation of the program and, in particular, traditionally have high moisture content, e.g. Indian efforts to identify and put into practice cost-effective Monsoonal coffees. Such coffees shall be clearly alternative uses for coffee of non- exportable quality.
identified by a specific grade nomenclature.
B. Certificates of Origin
10. All coffee supplied for export shall be labeled to 4. Exporting members shall only issue ICO Certificates indicate that it is coffee as defined in Articles 2 and 36 of Origin for consignments of coffee of the International Coffee Agreement 2001. Coffee by-products shall be labeled as such.
that meet both the minimum defect and moisture C. Cooperation by importing Members in
11. Members shall report to the Council on the measures they have taken to implement this Resolution and inform the Council of any difficulties 5. Importing members shall make their best in this connection. If such be the case the Council, if endeavors to support the objectives of the Program.
so requested by a Member, may agree to give that Member time to resolve such difficulties.
D. Measures to be taken in cases of non-
3.8 Activities and achievements of COPP and
its present activities in support of the
commercialization of coffee sub-sector
Prachanda Man Shrestha13 , badri Prasad bastakoti14
This paper presents a short overview of the efforts made by Coffee promotion Program (CoPP) Helvetas Nepal for the commercialization of coffee sub sector in Nepal. Also, the paper highlights the key achievements, opportunities and problems faced by this sub sector. Among various potential cash crops for commercialization by small holder farmers in the mountains, coffee has proven to have a great potential to provide farmers a good on-farm employment and income generation opportunities, and is well adapted to the climatic conditions especially in the mid-hills at the altitude range of 800 m to 1600 m for production of superior quality highland specialty coffee. The ease of production of coffee and low input requirements means that even marginal lands are suitable for the cultivation of coffee and even small holder farmers can grow coffee in their existing farming systems with additional benefit of soil conservation and positive environmental impact.
Despite these benefits, coffee has so far received little attention from Government and other development agencies. There is no clear policy support for the production, processing and marketing of coffee in the country. However, there have been fragmented efforts to support the coffee sub-sector by motivating farmers to grow coffee for domestic as well as international market. The major bottleneck in the promotion of coffee in Nepal is the lack of resources to continue the coffee promotion programme in the expanded area and continue the initiatives of Helvetas Nepal to strengthen the producers' association to produce and market the coffee certified as organic and fair-trade and to establish the coffee sub-sector approach through the coordination. There is also need to support the government develop human resources and improve collaboration and coordination among coffee stakeholders including traders.
According to National Tea and Coffee Development Board (NTCDB) there are 32 districts producing coffee where production data is available. Fourteen districts have established District Coffee Producer Association (DCPA) to support coffee producer groups in the areas of technology dissemination and organizational capacity building. Five Coffee Cooperative Unions (CCU) have been established in Lalitpur, Syangja, Gorkha, Lamjung and Tanahu. CCUs are the federations of primary coffee cooperatives (PCC) at the village level with the defined role of collecting coffee from the farmers and processing it to produce dry parchment. Similarly, CCU's role is to collect dry parchment from the PCCs and depending on the capacity, either process it to make green bean for marketing or supply dry parchment to the traders.
It is anticipated that Project for Agriculture Commercialization & Trade (PACT) will have significant role in developing the coffee sub-sector since the project has included coffee as one of the major commodities for intervention.
Role of Helvetas in Coffee Sub-Sector DevelopmentRealizing the need of systematic support on coffee production, processing, marketing and organizational capacity building of the producer groups and their associations to develop sustainable coffee value chain for the benefit of 13 Team Leader, Coffee Promotion Programme, Helvetas Nepal14 Senior Programme Officer, Coffee Promotion Programme, Helvetas Nepal the small holder farmers, Helvetas Nepal has been implementing Coffee Promotion Programme since Coffee in CoPP Target Districts then and now The programme established a system of group approach for coffee production and processing at the village level and disseminated organic production Number of Coffee Producer and processing technology for the production of high quality coffee. Number of CPG Member The Government, and more specifically the Ministry of Agriculture Development (MoAC) and the Tea Area Under Coffee (hectare) and Coffee Development Board (NTCDB) have Area Under Coffee Within CPGs NA recognized the potential role of coffee for improving the livelihood of many smallholder farmers and for Coffee Production (metric ton) developing a new cash crop that can fetch foreign Coffee Production Within CPG currency significantly. Over the past years the Total Coffee Sales in Domestic Government has cooperated closely with Helvetas Market (metric ton) in the development of the coffee sub-sector. With Total Coffee Sales in Interna- the support from Helvetas the Board established tional Market (mt) the Coffee Sub-Sector Working Group bringing Productivity (kg/ha green together the key stakeholders such as the Ministry of Agriculture Development, the National Agricultural Number of Primary Coffee Research Council, representatives of the group of coffee traders, representatives of producers. In 2008 Number of District Level Coffee None the Working Group developed strategies for the Cooperative Unions development of the coffee sector.
Number of Cooperative The Coffee Promotion Programme (CoPP) has been able to disseminate organic coffee production and packaging. Established linkage with fair-trade processing technology to the small holder farmers to buyers. First shipment by coffee producers' capacitate them for conversion to organic production cooperative sent in 2010 and processing. The producers' associations at Number of Primary Coffee Cooperatives the district and central level are strengthened and registered increased from 21 to 36 and formation of cooperatives are on going task with the members with 1000 to 1741 in 2009 and 2010 Associations' own initiative for marketing of coffee to benefit the producer members.
Drafted operating manual for organic operator on organic production and certification of coffee grown by smallholder Establishment of a Coffee Sub-Sector Working Group farmer groups in Nepal Development of a strategic plan for the sub- Traceability system for organic coffee sector by the Working Group handling developed and piloted Total production of coffee green beans in nine CoPP districts increased from 191 mt Opportunities for Coffee in Nepal
in 2009 to 247 mt in 2010. Where as, coffee High quality coffee can be produced in Nepal production within the coffee producer groups increased from 156 mt in 2009 to 218 Generates significant income for farm household (upland) Percentage of wet processed coffee increased Organic production methods compatible from 90% in 2008/09 to 93% in 2009/10, thus with existing farming practices (No yield increasing the quality of coffee.
reduction in conversion) Farmers' cooperative of Lalitpur established Easy integration of coffee into existing central processing unit with facilities of hulling, grading, roasting, grinding and Coffee producers are organized at village, district and central level At processor/trader level:
Existing trade relationships with international Quality management and monitoring buyers, long term trading relationships with systems are very weak. Fair Trade buyers in Europe / Korea Communication between traders and Several certifying agencies active in Nepal: NASAA, One Cert, Cert All, Ecocert.
Lack of institutionalized collection and supply Many stakeholders in organic coffee Quality management and monitoring Producer groups/associations; Processor/ systems do not exist/Nepal coffee logo traders; INGOs/NGOs, GOs, World Bank National Organic Standard developed and At sub-sector level:
Lack of coordination and collaboration Government fund available for external among stakeholders inspection and organic certificate Systems still lacking to actively manage the Nepal coffee logo approved and awarded to reputation of Nepali coffee in international three processor/traders speciality markets Major problems in coffee sub-sector
Facilitation and support for close collaboration between smallholder farmers, At producer level:
processors, traders and regulators still weak. Mandates and lead functions need to be Initially coffee introduced as a crop suitable for marginal uplands for soil conservation; Weak research in development of organic Effective and sustainable support for coffee production and processing smallholders still weak: technologies. In addition, there lacks structures which can facilitate to ensure Expand coffee production; quality systems e.g. cup testing laboratory, Produce the quality and quantity of coffee standard regulation and trade promotion which the market demands Lack of organic regulation: all coffee No incentive to farmers for production of produced in Nepal sold as organic in the organic and better quality coffee (price Late payments to producers by traders Impact of PACT could be significant when Producer groups do not have expertise PACT interventions use the base already to establish and manage internal control developed by CoPP systems ICS) for organic certification of Develop and establish systems to ensure the reputation of Nepali coffee in international Government support on organic certification speciality markets (Nepal coffee logo).
not targeted to small farmers (Subsidy for organic certification provided only for Allocate fund for research and development external inspection not for ICS); of organic coffee production and processing Groups lack the capacity to link and deal with markets which are beyond their local level Establish cup testing facilities at coffee cooperative union level Equipment support (hulling and roasting) Provide support to improve pulping and from PACT if provided, should go with long storage facilities.
term vision after analyzing the present Need more bilateral interactions between Provide support on area expansion to PACT consultants and CoPP personnel commercialize coffee production.
If PACT supports new districts outside Provide support to set up ICS and present coffee producing districts, support certification of producer groups.
should continue for at least five years.
Supply chain structure for institutionalized collection and supply of coffee 4. MAJOR ISSUES AND QUERIES RAISED
DURING FLOOR DISCUSSION
Ms. Jiwan Prabha Lama, DFTQC 1. There should be a study to find out shelf life of green beans2. Coffee quality standards are prepared, but need to be harmonized3. Need to follow Good Agricultural Practices (GAP) Mr. Badri Prasad Bastakoti, CoPP, Helvetas 1. Major problems in coffee production and marketing are lack of working capital. No need of subsidy if working capital is supplied easily from Mr. Binayak Kumar Misra 1. Allow coffee cultivation in community forests2. Need to work on value addition3. PACT should work in the districts that are not included by other I/NGO or 4. Financing institutions should supply loan to coffee farmers at reasonable 5. Trade mark is provided to NCPA. It is OK for the time being6. Every effort on coffee need to carry with harmonization with NTCDP7. Coffee development Fund should be established Mr. Gopi Prasad Dhungana, NCPA 1. Need to maintain revolving fund 2. There are many institutions involved such as HELVETAS, NTCDP, NCP, NARC, DOA and others without proper coordination.
Mr. Hem Raj Regmi, MOAC 1. Make a high level team to prepare long term vision in this sector Mr. Haribabu Tiwari, MOAC 1. Need to analyze value addition and comparative advantage of coffee Vs other crops before promoting it 2. In many instances coffee can be grown in marginal lands and provide employments: good alternate to those going abroad for employment 3. Irrigation should be arranged through rain harvesting4. Coffee cultivation should be consolidated in bigger blocks rather than scattered in different places.
Dr. Bhabeswor Pangeni, Highland Coffe 1. Government should arrange proper coordination2. Some companies eg. Highland Coffee have started cultivation on leased land which should be promoted 3. Altitude should be considered in coffee cultivation, plant die after a few years if cultivated in low altitude 4. Payment issue (delayed payment to farmers by traders) is a issue of past, now there is no such issue 5. Coffee starts production from 6th year, full payback in 15 years and continues economic production up to 50 years 6. Research should come up with the best varieties of coffee for different altitude and micro-climates 7. Disseminate technology of cultivating multiple cropping (multi storey farming) with coffee : shading trees, coffee, under crops Mr. Durga Prashad Uprety, Agricultural Product Export Promotion Center 1. Government has already allocated fund for certification which can be partly used for Internal Control System (ICS) of coffee production Mr. Shyam Bhandari, Nepal Coffee Producers Association 1. No real effort has been made to commercialize coffee production: most of the past efforts were concentrated on employment and income generation of Dalit, Janjati and deprived communities 2. Single institute should be coordinating the coffee production/trade related Mr. Purna Chhetri, World Bank 1. Ethiopia is the country that competes directly with Nepal: need to study 2. Special attention required in market promotion3. Politics should not destroy the quality of coffee Ms. Gayatri Acharya, World Bank 1. Observe what other countries with similar condition are doing?2. Raise the number of opportunities to every stakeholders3. United coordinated effort are required4. Continue this type of interaction among the stakeholders Mr. Nathu P. Chaudhari, Secretary, MOAC 1. Lack sufficient area coverage and production technologies2. Lack of quality assurance is the major problem3. Note that only 2% of the marketed product is organic certified in the world4. More certifying agencies are required to cover all products5. Don't always promote large farmers: small farmers can be organized for larger quantity production 6. Government will continue all the effort made by I/NGOs and PACT after they cease to continue 7. Coordination/collaboration required among GON, private sector, public sector and NGOs.
8. Promote bio-technology, bio-pesticide and appropriate technology 5. ANNEXES
Annex 1: Schedule of Coffee Sub-Sector Workshop
Date : 11 April 2011 (2067/12/28, Monday)
Venue : GANGZONG Hotel, Lazimpat, Kathmandu
Time : 9:00 - 14:00
Chair Person: Mr Nathu Prasad Chaudhary, Secretary, MOAC
Chairing of the Workshop: Mr. N.P. Chaudhary, Secretary, MOAC Welcome and Importance of Value Chain in Coffee Sub-Sector Analysis, Mr Yogen- dra Kumar Karki, Project Director, Project for Agricultural commercialization and Opportunities and Challenges of Coffee Production and Marketing in PACT Districts, DCPA Lalitpur, Syangja, Kaski and Kavre. Ms. Maya Tiwari, District Coffee Producers Association (DCPA), Syangja Activities and achievements of Coffee Promotion Project and its present activities in support of the commercialization of coffee sub-sector, Mr. Prachand Man Shres- tha, Coffee Promotion Program (COPP), Helvetas Nepal Comments by: Mr. Dhakeswor Ghimire, Nepal Organic Coffee Product….
Actors and stakeholders involved in coffee sub-sector and their roles in commer- cial production of coffee, Mr Shyam Bhandari, Nepal Coffee Producers Association Comments by: Mr Binaya Mishra, Coffee Sub-sector Specialist, Tea and Coffee Development Board (NTCDB) Present State of Coffee Production in Nepal: Opportunities and Challenges in Com- mercialization of Coffee sub-sector, Bhola Kumar Shrestha, NTCDB Comments by: Dr. Pradip Maharjan, Agro Enterprise Center (AEC), Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Marketing of Coffee in Nepal with focus on Import and Export Market, Mr. Vimal Nepal, Trade Promotion Centre (TPC).
Comment: Mr Kamal Gautam, Agribusiness Promotion and Marketing Directorate Research and Development in Coffee Sub-sector, Ram Bahadur KC, Nepal Agricul- tural Research Council (NARC) Comment: Mr. Surendra Rijal, Tea and Coffee Development Section, Department of Agriculture (DOA) Summary and conclusions, Dr Kamal Raj Paudyal, PACT Comments and suggestions from the floor Jiwan Prabha Lama, DFTQC Badri Prasad Bastakoti, COPP, Helvetas, Binayak Kumar Misra, Tea and Coffee Development Board Gopi Prasad Dhungana, NCPA Mr. Hem Raj Regmi, MOAC Mr. Haribabu Tiwari, MOAC Dr. Bhabeshwor Pangeni, High Land Coffee Mr. Durga Prashad Uprety, Agri-Commodity Export Promotion Program Mr. Shyam P. Bhandari, NCPA Mr. Purna Chhetri, Worldbank Few Words: Ms Gayatri Acharya, Senior Economist, World Bank Vote of Thanks, Dr. Ram Kumar Mandal, PACT Remarks from the Chairperson and Closing Annex 2: List of Participants
Nathu Prasad Chudhari Ministry of Agriculture & Cooperatives Senior Rural Development Officer Surendra Prashad Rijal Senior C.T.D.Officer Coffee & Tea Dev.section,Kritipur Govt. Prog. Dev. Specialist Program director Fruit Dev. Directorate Manager Agi.&Income Generation Education for Income Generation,Winrock Gopi Prashad Dhungana General Secretary.
Dhakeswar Ghimere Shyam Prashad Bhandari Narayan Prashad Dahal Dr. Kamal R. Paudyal VC Development Specialist Dr. BIRENDRA BIR BASNYAT Monitoring and Evaluation Specialist Bhola Kumar Shrestha Technical officer National Tea & Coffee Dev. Board Om Nath Adhikari Agri-business Promotion and Market- ing Development Directorate Durga Prashad Uprety Agri-Commodity Export Promotion Kulchandra Adhikari Program Director Dr. Punya Prashad Regmi Bharat Bahadur Karki Prem Prashad Dhungana Procurement Specialist Dr. Hari Babu Tiwari Ministry of Agriculture Dr. Bhaveshwar Pangeni Highland Coffee Promotionco.Ltd.ktm.
Prachand Man Shretha Badri Prashad Bastakoti Ram Bahadur K.C.
NARC, ARS,Malepatan Janak Raj Sapkota Hari Bahadur Bohora Mount Digit Technology Shekhar Singh Thapa Mount Digit Technology Netra Bahadur Bhandari Agri-Extension Officer Market Research & Statistics Mng. Prog. 9841572079 Lakshan Kumar Pokhrel Bhagirath Acharya Procurement Assistant Dharma Laxmi Shrestha Asdministrative Officer Deep Narayan Gupta Computer Operator Dr.RAM KUMAR MANDAL Computer Operator Progress Magazine Govinda Chimauriya Trade Promotion Center Annex 3: Presentation Materials
1. Introduction and Objectives
Mr. Yogendra Kumar Karki, Project Director, PaCT
2. Present State of Coffee Production in Nepal
Mr. bhola Kumar Shrestha, Technical Officer, nTCDb
3. Export scenario of Nepal Coffee
Mr. bimal nepal, Director, TePC
4. Actors and Stakeholders in Coffee Sub-sector
Mr. Shyam P. bhandari, Chair person, nCPa
5. Opportunities and Challenges in Coffee Production
Mrs. Maya Tiwari, DCPa, Syangja
6. Research and Development in Coffee Sub-sector
Mr. Ram bahadur KC, naRC
7. Activities and achievements of CoPP and its present activities in support of
the commercialization of coffee sub-sector
Mr. Prachanda Man shrestha, CoPP, Helvetas
The Coffee
Government of Nepal Ministry of Agriculture Development Project for Agriculture Commercialization and Trade
Sallaghari, Maharajgunj, Kathmandu, Nepal Phone: +977-1-4017765 Fax: +977-1-4373236 Web site: www.pact.gov.np, Email: [email protected]

Source: http://pact.gov.np/docs/publication/Proceeding%20of%20Coffee%20Sub%20Sector.pdf