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Economic Development and Opportunity

Spicing Up the Deal- Cardamom and Ginger (CaGi)

Duration:
September 2008 - August 2010
Donors:
Artemis Great Kindrochit Quadrathalon (AGKQ), Small Change
Region:
East
Beneficiaries reached:
1,101 households (7,150 people)
Amount:
£ 125,650 (converted to $225,000 due to varying exchange rates during the project period)
Sectors:
Economic Development and Opportunity
Partners:
Large Cardamom Entrepreneurs' Association of Nepal; Nepal Ginger Producers and Traders Association; Sri Srijana Youth Club; District Agriculture Development Offices; District Chamber of Commerce and Industry (CCI); Cardamom Development Center; Rampur Agriculture Institute


The Challenge

Beneficiary farmers planting gingerBeneficiary farmers planting ginger

The agriculture sector employs over 70% of Nepal's economically active population - particularly lower income households in rural areas - yet contributes only 39.2% of GDP (Gross Domestic Product). Traditional, low-yielding cultivation methods, fragmented agricultural land holdings, lack of knowledge, and inadequate availability of improved technologies have resulted in low agricultural and labor productivity, which in turn have limited the commercial success of the sector despite Nepal's geo-climatic advantages.




The cultivation of high-value spice crops such as cardamom and ginger has been increasing in Nepal, particularly on marginal lands. Unfortunately, farmers have received relatively low prices for their products from intermediaries due to inferior product quality and disorganized, undifferentiated marketing strategies. These challenges have been aggravated by remoteness, social exclusion, lack of access to information, and disorganization across the entire cardamom and ginger industries.



The Opportunity: Strengthening the Value Chain of High Impact Commodities

Dried large cardamomDried large cardamom

In the Dhankuta, llam and Panchthar districts of Eastern Nepal, Mercy Corps had worked with partners to improve the value chains of two "high-impact commodities" - cardamom and ginger - along Nepal's Mechi and Koshi economic corridors. Cardamom and ginger are important commodities for Nepal's economy: they are cultivated by a high number of smallholder farmers, many of whom are members of traditionally disadvantaged groups; have substantial profit potential, particularly for premium varieties; and, can be farmed in an environmentally sustainable manner. Furthermore, these commodities also have potential for significant contributions to the national economy and/or foreign exchange earnings due to its high demands in export markets in general and the Indian market in particular.


At the production level: Increasing farmers' collective bargaining power

Mercy Corps and its partners worked with 38 cardamom farmers' groups and 42 ginger farmers' groups to strengthen their organizational capacity; improve business skills; improve technical practices in the areas of varietal selection, cultivation, disease management, and post-harvest handling; and, forge links with traders, wholesalers and exporters by facilitating collective marketing, information sharing, and contract farming. To promote premium product quality, Mercy Corps encouraged cardamom farmer groups to improve primary processing functions such as grading and small-batch drying; and, encouraged ginger farmers to utilize low-fiber seed varieties, low-cost storage techniques, and enhanced post-harvest handling techniques. Disease management training was provided for farmers of both crops, both to reduce farmer risk and ensure product quality. Capacity building of input suppliers, combined with 'seed banking' arrangements, were also incorporated. Finally, Mercy Corps worked with a micro-finance institution to link CaGi farmers groups to improved agricultural savings and loan products.

Cardamom farmers negotiating for premium price with trader in Phidim bazarCardamom farmers negotiating for premium price with trader in Phidim bazar
Beneficiary farmers holding the cardamom grading sievesBeneficiary farmers holding the cardamom grading sieves


At the trade level: Increasing collective marketing and facilitating the creation of an enabling environment

Mercy Corps facilitated interaction between stakeholders at various levels - farmers, traders, wholesalers, exporters, government representatives, members of the local and national media, and local NGOs - to improve negotiation, coordination, and communication between these value chain actors. Specifically, Mercy Corps worked with trade associations so that actors could collaborate to address issues that affect the entire value chain. Mercy Corps facilitated the formation of the Large Cardamom Entrepreneurs' Association of Nepal (LCEAN) under a pilot project in December 2007. During the project period, Mercy Corps continued to support the Association's effort to gain wider representation, advocate for improved trade conditions, standardize grades and sales practices, and improve links with key export markets. Similarly, Mercy Corps worked with the Nepal Ginger Producers and Traders Association (NGPTA) to promote premium quality ginger, initiate links with export markets, and advocate for reduced barriers to trade. During the project period, these partnerships resulted in the abolition of the Fawa system, which required farmers to provide 41 kilograms of cardamom for every 40 kilograms sold; led to the reduction of various ginger and cardamom trade taxes levied by identity-based movements in the East; and, supported ongoing efforts to develop Codes of Conduct (for ginger and cardamom) and industry-wide grading standards (for cardamom).



Cardamom farmers heading towards Phidim bazar to sell thier cardamomCardamom farmers heading towards Phidim bazar to sell thier cardamom
Ginger packed in plastic crates -ready to be transported to marketsGinger packed in plastic crates -ready to be transported to markets


During the project period, following achievements were made: