Cardamom Farming in Nepal

Introduction: Large Cardamom (Amomum subulatum Roxb.) or Alainchi in Nepali, is a perennial herbaceous plant with subterranean rhizomes that give rise to several leafy shoots and panicles. Large cardamom was introduced into Ilam (Nepal) in 1865 AD, nearly 143 years ago by Nepalese laborers from Sikkim. Its commercial cultivation started in Ilam much later in around 1953 AD only. The establishment of Cardamom Development Centre at Fikkal in this district in 1975 paved the way for the development of this crop.

Most of the cardamom producing areas is located in  Ilam, Panchthar, Taplejung, Sankhuwasabha, Terhathum, Bhojpur and Dhankuta districts. While the area has expanded to include more than 37 districts covering all development regions of the country.  Today, Nepal is the top producer of large cardamom followed by India and Bhutan (Large cardamom is produced by only these three countries). In 2012, Nepal  exported 5902 mt. ton of large cardamom worth Rs. 3,892,651,271.

Production: Cardamom is generally reproduced by vegetative propagation using suckers.  Economic yield starts from 3rd years onward after planting and its optimal yield period is 8-10 years. The total life span of Cardamom plants is about 20-25 years.There are sixteen varieties of Cardamom in the world. Among them five types of Large Cardamom are in farming practices across Nepal-Ramsey, Golsey, Sawney, Chibesey, and Dammersey. Although it varies from place to place, and variety to variety, about 26 kg of Cardamom (dry) is produced from 500 sq m (a ropani) of land.

Harvesting: The yield starts from 3rd years onward after planting. Fruit is ripened during August to November. Harvesting is done with the help of mechanical instruments e.g. knife. After harvesting, Cardamom capsules are separated manually by hands. The harvested fruits are processed mainly using traditional or improved drying technology (bhatty). The existing traditional practice of curing and drying the Cardamom is age-old types, where the capsules are dried by direct heating in the traditional bhatty. Under this system the Cardamom comes in direct contact with smoke and turns the capsule to dark brown black color with a smoky smell. To reduce smoke and produce light purple capsules, improved bhatties are being introduced.

Drying and Curing: After 18 to 24 hours of drying, the capsules are removed. But the total time of drying varies depending on factors such as fire management, initial moisture content of the capsules,weather condition and bhatty structures. There is no clear indicator to decide if the drying process is complete or not. In some cases, the capsules are either over-dried or under-dried at the same condition of fire and weather. Sometimes the farmers feel that the product is over-dried and they sprinkle water to increase weight. This practice leads to difficulty in maintaining consistent quality. In Taplejung district, there is a provision of premium price for improved bhatty products but prices also vary depending on tail-cut, moisture content, color and the level of dryness.

Packaging of cardamom: There is no specialized packaging and handling systems. Cardamoms are packed in jute sacks with capacity of 40 to 100 Kg. The packaging practices, however, differ with the intended duration of stocking.

• If the storage period less than 15 days, cardamom is packed in jute bags and left unstitched.
• If the storage period is more than 15 days, it is packed in jute bags with plastic sheet lining.
• If the storage period is more than one month, it is stored in bulk and is covered by Hessian sheets.

Marketing Channel: Cardamom makes its more than 90% of its sales to India without value addition. The Large Cardamom produced in is exclusively sold to Indian markets (Siliguri). Delhi and Amritsar are the potential markets in . After reaching India, the large cardamom are value added and sorted to export abroad. The typical market channel is:

Collector – District Traders – Regional Trader – Indian Traders  – Export to third countries

Market price of Cardamom:

The market price however is greatly influenced by the following major quality considerations:

• Size – the bigger the size of the capsules, the higher the price obtained. No grading is in vogue at present and mixing of all sizes and different cultivars is quite common.
• Color – more prices are offered to the capsules having a light pink color in international markets.
• Moisture contents – the products with high moisture fetch comparatively low price. The  moist capsules are also subject to easy fungal infection.

Cost of Cardamom at various market channels:

Farmers		Local Traders		Wholesaler		Exporter
Item	Cost	Item	Cost	Item	Cost	Item	Cost
Production Costs		Assembling Costs		Assembling cost		Assembling cost
Seed materials	8.63	Cleaning/Sorting	0.25	Sorting/Tail cutting	3.00	Cleaning/ Sorting	1.50
Fuel Wood	4.00	Packaging (in jute bags)	0.14	O'head Cost	2.00	O'head Cost	1.00
Labor	55.98
Others	3.43
Total Production Costs	72.04	Acquisition Cost	195.00	Acquisition Cost	210	Acquisition Cost	225
		Transfer Costs	0.75	Trucking Costs	1.04	Trucking Costs	0.71
Post Production Costs	1.50	Total Assembling Costs	196.14	Total Assembling Costs	216	Total Assembling Costs	228
Miscellaneous	0	Miscellaneous	0	DDC  & other tax	4.57	DDC & other tax/levy	5.00
Total Farm Level Cost	73.54	Total Trading Cost	196.14	Total Wholesale Level Cost	221	Total Export Level Cost	233
Losses	9.75	Losses	4.88	Losses	3.21	Losses	1.61
Margin	111.71	Margin	8.98	Margin	1.18	Margin	15.18
Avg Farm gate Price	195	Assembler level price	210	Wholesale level price	225	Wholesale level price	250

Export Figure:

S.N.	Country	Unit	Quantity	Value(NRS)
1	India	Kg.	5879702	3875674562
2	U.A.E.	Kg.	18000	15501059
3	Canada	Kg.	1000	1177650
4	China P. R.	Kg.	3000	240000
5	Nicaragua	Kg.	50	58000
Total			5901752	3892651271

From Date: January 2012 - December 2012

Production Yield (at farm level):

Country Average: 0.61 mt/ha; 30kg per ropani

Production Cost (Per Ropani): 73.50 * 30 = 2205

Sales Price: 195 * 30 = 5850

Profit per ropani: 5850-2205 = Rs. 3645

The Product HS Code of Large Cardamom is 09083010

The Product HS Code of Small Cardamom is 09083090

For more information visit these pages:

http://www.agripricenepal.com/newsdoc/20090716150653.pdf

http://www.cadp.gov.np/Document_Uploads/Reports/dd1d5812506492836355.pdf

http://www.snvworld.org/en/regions/asia/publications?filter=agriculture

http://208.67.23.5/~itsoftc/projects/tepc/

Develop a Business Model For your Business

Writing an effective business plan requires a well defined business model. Here is a business model canvas worksheet that I use to generate the business model at my work.

Download the canvas by clicking: Click Here

Read the detailed business model generation canvas at: link

Issue Trees: Best place to begin the consulting

Consulting staffs can be sub divided into three groups on the grounds of responsibility they carry:

Finder: They basically look at the business, find out the naked eye problems, and talk to the organization in regard of the consulting service and convince them that the consulting service will make the business better. They are the bringers of the business and have a big picture of the company who is seeking the service.

Minder: They are the manager of the consulting service. They develop frameworks; build hypothesis and plan on how to move things ahead. They are responsible for the strategy development and management of the project.

Grinder: They are the doers of the project who actually collect data, make charts, analyze them and present their findings to the minder of the project. They move within the organization and deal with the management, employees, customers, and stakeholders to get to know what is happening in real. They are the one to test and find “what worked/ what didn’t worked & what works/what doesn’t works”.

As a minder/ grinder consultant, you are going to take charge of a business that is messed up from every angle. There are issues/conflicts in almost every step in the value-chain. So, where to begin? Here I suggest, begin with building the issue trees.

Issue trees breakdown the activities in an organization/ business aura and structure the ‘big-picture scenario’ that consulting works on. Issue trees are the collection of issues and sub breaking of those issues with a working hypothesis. As the finder of the project got basic ideas about the company, sit with the minder of the consulting project to discuss key issues happening in and around the organization. Together, then develop issue trees to make the consulting road-map. The Issues trees can be built on two aspects:

1. Diagnostic issue trees: Diagnostic issue trees are focused on finding out what key thing is happening in the business and what are the possible causes of it. It deals with the key constraints of the business and build out hypothesis on what may have led it to happen. Diagnostic issue trees are developed with a “Why” question and branches/sub- branches with the same.
   
   
2. Solution issue trees: Solution issue trees are focused on finding out what key thing is happening in the business and what may be the possible remedies for it. It deals with key constraints of the business and build up hypothesis on what can be the probable solution. Solution issue trees are developed with a “How” question and branches/ sub-branches with the same.

As suggested by MECE McKinsey consulting model, while developing the issue trees, look at the issues in a Mutually Exclusive way and then in a Collectively Exhaustive way to find out the problem. Once you have the clearly defined sets of problems look forward for the data gathering to get more insights.