Livelihood diagnosis and value chain analysis:Options for enhancing and

monitoring development impact

IFAD/ICARDA Knowledge Exchange Workshop

26 – 29 October 2009 

Knowledge and Technology Exchange for Enhanced Quality of

IFAD/ICARDA Operations in the NENA region

Presented by Aden A Aw-Hassan

Non-farm Livelihoods Strategies

Migration:

• Permanent: importance of remittances

• Seasonal: off-farm income

• Off-farm income = 48%

25 207

31

9

8

0

10

20

30

40

50

60

Countries outside Syria

National Local

% o

ff-f

arm

inco

me

Agriculture Non agriculture

Sources of off-farm income

Productive Asset-based Household Typologies

9 5

239

8476

28

15 9

719

2913

8276

5048

153

0

10

20

30

40

50

60

70

80

90

100

110

Farming Herding No off farmwork

Off farmwork

Off farmwork

No off farmwork

Labourers Agriculturalists Pastoralist

% in

co

me

Crops* Off farm work Animal p. Fattening

Income Source as Indicator of Poverty

Per capita income (USD/a day)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Farming Herding No offfarm work

Off farmwork

Off farmwork

No offfarm work

Labourers Agriculturalists Pastoralist

El Bab Syria 2007

Average relative importance of different income sources at village level

Agricultural income(on-farm/ownproduction)Off-farm-income(agriultural wagelabour(domestic))

Off-farm-income (non-agriultural wagelabour(domestic))Off-farm-income(abroad wage labour)

Livelihood Typologies and Income Sources

Income source

Specialized crop farmers

Crop farmer with livestock

Crop farmers with off-farm labor

Livestock keeper

Livestock keeper with crops

Pure Laborers

Laborers with crops

Laborers with livestock

% from off-farm activities

3 6 33 3 5 96 63 63

% from crop farming

94 64 59 2 28 7 30 8

% from livestock 3 30 7 95 67 3 4 29

Share in sample 18 % 6 % 14 % 2 % 3 % 35 % 16 % 6 %

Stunting (Height for Age): Example of a non-monetary measure

Stunting

02.3

1

22.8

17.3

12.5

18.9

28.3

12.5

21.0823

12.5

0

5

10

15

20

25

30

35

Irrigated Barley/Livestock Olive/Fruit tree Urban

Boys (under 10) Girls (under 10) Total

ICARDA

Role of Local Institutions: Farmer associations

Two valleys;• Taddarine has paved road which

stimulated development of apple cultivation and allowed traders to come, compete & offer good price for apple.

• Anougal has no paved road, difficult to access, apple not well developed, thus few traders go to buy fruits on trees, and monopolize on apple trade.But Abougal farmers has strong cooperative which enabed to develp profitable dairy cow production and get high income from this activity

• The dairy cooperativehas now 120 members and increased the milk that is marketed through the cooperative from 1800 liters in 1993 to 30,000 liters in 2004

• The overall income of the two communities are now comparable.

• It is not clear why the coperative did not extend its success to apple.

Poverty Outreach of Micro-credit in Jebel Al Hoss

Interest rates of different credit sources

Source of creditAverage annual interest

rate (%)

Formal 5.3

Informal 50.3

Informal (without credits from relatives or friends)

76.6

Sanduq 12 – 18

informal credit sources are more flexible, have no waiting period, do not ask for guarantors and give higher loan amounts than informal

Sources of Agricultural Finance

8

16 17

6

12

3

10

3

17

10

4

3

0

5

10

15

20

25

30

35

40

Crops and trees Livestock Farm equipment Non-agricultural Consumption

% l

oan

sInformal Formal Sanduq

• Sources: 59% informal, 17% formal, 24% Sanduq

• Many rural houseless are investing in their productive assets

• There is potential, but limited by high capital cost

Main Point about Micro-finance

• There is a substantial demand for rural credit, which traditional systems (formal and informal) are unable to meet. More flexible, innovative methods are needed.

• The sanadiq experience has shown that households are investing borrowed funds to build assets, e.g. new agricultural technologies to enhance productivity.

• Wider availability of credit could bring about an agricultural revolution in the dry areas, if properly designed and sustainably managed.

Technology diffusion

Adoption Lag of Modern Wheat Varieties 2007/08

0

10

20

30

40

50

60

70

2005-2006 2006-2007 2007-2008

Sham 1

Sham 3

Sham 5

0

10

20

30

40

50

60

70

80

90

2005-2006 2006-2007 2007-2008

Sham 2

Sham 4

Sham 6

Sham 8

Sham 10

• Older varieties cham3 (1987) and Cham 6 (1991) are the dominant varieties planted by farmers• The newer varieties of cham5 (1994) and cham8 (2000) have low but increasing adoption levels • The most modern varieties of cham7 (2004) and cham10 (2004) are not available to farmers yet

Durum Bread

% area % area

Distribution of Human Poverty in

Sudan (2006)

• Composite index of deprivation in survival (life expectancy), deprivation in knowledge, and deprivation in material well being measured by access to services (UNDP 1997).

• Based on data from two national surveys; The 2000 Multiple Indicators

Clusters Survey (MICS) The 2006 Health Survey (SH).

Sudan’s Average Rainfall Distribution (mm)

0 - 24

25 - 74

75 - 124

125 - 224

225 - 274

275 - 374

375 - 474

475 - 724

725 - 974

975 - 1474

No Dat

Value Chain analysis

Main Idea behind VCA Approach(Andrew W. Shepherd, FAO, 2007)

• Increased role of supermarkets

• Increased coordinated links between farmers, processors, retailers and others.

• Greater income-driven demand for high value products such as meat, dairy products and fruits and vegetables, and healthy foods, medicinal & herbal plants, etc.

• Increased attention on quality and safety

Small holder farmers Large farmers

Traders /intermediariesLocal market/ retailers

ExportersProcessors

Fresh: wholesale, retailers, shops; hotels Supermarkets

Domestic consumers International consumer

Value chain: Conceptual framework

Institutions, policies, government regulations, etc

Canned food

ACTIVITIES

BY

STAGE

&

ACTOR

L

INKAGES&POWER

Value Chain Analysis

• Movement of products through successive stages

• Transactions through the chain actors- producers, traders, processors, retailers, etc.

• Money and information exchanged, and

• Progressive addition of value along the chain

• The ‘rules of the game’ – laws, regulations, policies and other institutional elements

• The support services, which form the environment where all activities take place

Criteria for Selecting Crops:

• Suitability of their production by smallholders,

• Potential for export

• Their potential to contribute to poverty alleviation and

• Their link to IFAD ongoing projects in both countries.

• There is gap in market research

0

100

200

300

400

500

600

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Year

($/t

)

Farm Wsale Retail Export

Source: CAPMAS

Price trends of Pomegranate and Onions

0

50

100

150

200

250

300

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year

($/t

)

Farm Wsale Retail Export

Source: CAPMAS

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Year

Pri

ce In

dic

es (

bas

ed o

n 1

996)

Pomegranate Price Onion Price

176

214

9-20

-50

0

50

100

150

200

250

1999-2003 2003-2007

Year

% in

crea

se P

rice

Pomegranate

Onion

Price % increase

1995-1999

1999-2003

2003-2007

Pomegranate 0 176 214Onion 0 -20 9

y = -3.0351x2 + 62.183x - 56.9

R2 = 0.6295

y = -4.8951x2 + 87.769x + 646.82

R2 = 0.1646

0

200

400

600

800

1000

1200

1400

1600

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Years

Qu

an

tity

(0

00

's t

)

Exports Domestic Consumption

Poly. (Exports) Poly. (Domestic Consumption )

Source: CAPMAS

y = 0.2623x2 - 2.7503x + 6.1006

R2 = 0.8026

y = 0.1314x2 - 1.1077x + 25.239

R2 = 0.6905

-5

0

5

10

15

20

25

30

35

40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Qu

an

tity

(0

00

's t

)

Domestic Consumption Exports

Poly. (Exports) Poly. (Domestic Consumption)

Domestic Consumption and Export Trends of Onion and Pomegranate in Egypt

1.5

2

2.5

3

3.5

4

4.5

2002 2003 2004 2005 2006

Years

Are

a (

10

00

fe

dd

an

)

15

17

19

21

23

25

27

29

31

33

Pro

du

cti

on

(1

00

0 t

on

)

Total Area (1000 Fed)

Production ('000 t)

Poly. (Production ('000 t))

Poly. (Total Area (1000 Fed))

Pomegranate / Onion Cultivated Area and Production

Pomegranate

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

6.5

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Years

Are

a (

10

00

fe

dd

an

)

Area Poly. (Area)

Onion

1.5

21.5

41.5

61.5

81.5

101.5

121.5

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Years

Are

a (

10

00

fe

dd

an

)

Area Poly. (Area)

1.5

2

2.5

3

3.5

4

4.5

2002 2003 2004 2005 2006

Years

Are

a (

10

00

fe

dd

an

)

15

17

19

21

23

25

27

29

31

33

Pro

du

cti

on

(1

00

0 t

on

)

Total Area (1000 Fed)

Production ('000 t)

Poly. (Production ('000 t))

Poly. (Total Area (1000 Fed))

Pomegranate / Onion Cultivated Area and Production

Pomegranate

0

5

10

15

20

25

30

35

40

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Years

Are

a (

10

00

fe

dd

an

)

Production Poly. (Production)

Onion

0

200

400

600

800

1000

1200

1400

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Years

Are

a (

10

00

fe

dd

an

)

Production Poly. (Production )

Pomegranate Area and Production in Assiut Governorate

Pomegranate Area and Production in Assiut Governorate

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2002 2003 2004 2005 2006

To

tal

Are

a (

10

00

Fe

d)

Source: MALR.See Table (12): Pomegranate Area and Production in Assiut Governorate

Importance of Exports for Pomegranate and

OnionPomegranate:• Export share of production was stagnant or in

decline in the 1990s, but sharply increased since 2003, reaching 20% in 2006

• Export growth is result of to strong export demand for pomegranate; this will continue given the growing consumer awareness.

• Egypt can increase its market shares in the markets where it has competitive advantage

Onions:• Exports has declined in the 90s, but recovered later

& peaked in 2003 reaching over 45% of production, then dropped in the following year, then again recovered in 2006 at 27%.

• It appears the domestic demand is becoming stronger contributor to onion growth in Egypt.

Pomegranate

54 4

3 3

12

1

6

1716

20

0

5

10

15

20

25

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Ex

po

rt s

ah

re o

f p

rod

uc

tio

n (

%)

Export

Onion

2326 27

12

19

26

39

47

37

23

27

0

5

10

15

20

25

30

35

40

45

50

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Years

Ex

po

rt s

ah

re o

f p

rod

uc

tio

n (

%) Export

Importance of the Main Onion Market for Egyptian Exports

• The Egyptian exports is not diversified enough.

• It relies on one major market-Saudi Arabia

• More effort is needed to diversify exports

Onion

1.7

1.8

2.7

3.2

3.6

4.6

15.1

67.3

0 10 20 30 40 50 60 70 80

Romania

Germany

Netherlands

Italy

Greece

Great Britain

Russian Federation

Saudi Arabia

Quantities (%)

Shares of Exports and Values of Main Onion Market

Importance of the Main Onion Market for Egyptian Exports

MarketsQuantities in

% Price $/TExport

values in %

Saudi Arabia 67.3 129.9 50.4

Russian Federation 15.1 151.5 13.2

Great Britain 4.6 419.9 11.2

Greece 3.6 232.1 4.8

Italy 3.2 120.9 2.2

Netherlands 2.7 475.1 7.5

Germany 1.8 648.2 6.9

Romania 1.7 394.6 3.9

Total 100 173.4 100

Exporters Estimate of the Shares of their Onion Exports to Different Markets 2008

Survey

• The reported increase of share of exports to Eastern Europe could be a reflection of new market for Egypt or only specific to the sample of exporters surveyed

Onion 65

25

10

0

10

20

30

40

50

60

70

Eastern Europe Arab Markets Austria

Qu

na

tity

(%

)

• Egypt dominates the markets of Lebanon, Saudi Arabia and Greece (holding 40-70% market share).

• Has modest share in Jordan and Romanian (13%-below 20%)

• Egypt has increased its market shares in Saudi Arabia, Russia, the Netherlands, UK and, Germany, but decreased its share in the Lebanon market.

Onion Average 1996-2006

0.24

0.64

1.9

2.37

3.56

4.55

12.77

18.87

38.74

52.16

71.87

0 10 20 30 40 50 60 70 80

Belgium

Germany

England

Netherlands

Russia

Italy

Romania

Jordan

Greece

Saudi Arabia

Lebanon

share (%)Onion 1996,2006

54

60

30

13

0.3

2

2.5

0.5

0.1

0.1

0.02

32

17

14

9

6

4

4

3

3

0.3

35

0 10 20 30 40 50 60 70

Lebanon

Saudi Arabia

Greece

Romania

Netherlands

Jordan

Italy

England

Russia

Germany

Belgium

share (%)

1996

2006

Egypt’s Market Share of Onion Export

Markets

Egypt’s Market Shares of Pomegranate Export Markets• Egypt has respectable share of the Saudi market (22%)

• Has modest share in the Lithuanian market

• Egypt’s market shares in all these market has rapidly grown recently,

• The highest growth was in Russia, Lithuania, and the Netherlands markets.

Pomegranate Average 2002-2006

1.302

1.3128

10.828

21.934

0 5 10 15 20 25

Netherlands

Russia

Lithuania

Saudi

share (%)Pomegranate

1996,2006

13.99

0.07

0.003

0.43

19.9

18.01

3.98

2.86

0 5 10 15 20 25

Saudi

Lithuania

Russia

Netherlands

share (%)

2002 2006

Export Markets for Pomegranate

Export markets Sales quantity Average price

(%) (LE/T)

Eastern Europe 70 9 000

Rest of Europe 10 7 800

Arab Markets 20 6 000

All 100 8 280

Competitiveness of Egypt in Onion export markets

ranked Egypt’s market shareRank Market Stronger competitors Weaker competitors

1 Saudi Arabia Turkey Yemen, India, Turkey and Lebanon

2 Greece Turkey Germany, India and the Netherlands

3 Romanian France, the Netherlands, Austria and Germany

 

4 Italy None Poland, Turkey, the Netherlands and Austria

5 Russia None Netherlands, China, Kazakhstan and Tajikistan

6 The Netherlands Zealand, Poland and Belgium

Spain

7 UK none Netherlands, Spain and New Zealand

8 German Spain, Netherlands, New Zealand and Argentina

none

Competitiveness of Egypt in Pomegranate Export Markets Ranked Egypt’s Market Share

Rank Market Stronger competitors Weaker competitors

1 Saudi Arabia Lebanon Yemen, India, and Syria

2 Lithuania   Spain, Netherlands and Turkey

3 Russia Azerbaijan, Uzbekistan, Iran, Tajikistan, Spain, and

Turkey

 

4 The Netherlands

Spain and Belgium France and Malaysia

Pomegranate

59.9

26.4

10

3.7

0

10

20

30

40

50

60

70

WholesaleMarkets

Exporters Wholesalers Local traders

Buyer

Pe

rce

nt

Sa

les

(%

)

Farmers Market Channels of Pomegranate

1304 LE/t

2691 LE/t

1308 LE/t957 LE/t

Exporters’ Procurement of Pomegranate

• Over halve of the surveys farmers sell through agreed contracts

• But sell only 18% through contracts mainly to exporters due to stringent standards

• farmers’ complains about their relationship with traders including:

delayed payments, high rates of rejected

products due to poor quality, and

traders’ occasional noncompliance with agreements

Pomegranate

40

10

50

0

10

20

30

40

50

60

Advanced Contractswith farmers

Farm (at time of need) Middlemen

Sa

les

qu

an

tity

(%

)

2099 LE/t

2691 LE/t

2350 LE/t

Onion

65

20

5 5 5

0

10

20

30

40

50

60

70

Wholesaler -farm

WholesaleMarket

Kelala totraders*

Retailer (atfarm gate)

Factory(Processor)

Sa

he

s o

f S

ale

s (

%)

1000 LE/t

1100 LE/t

700 LE/t1050 LE/t 1250 LE/t

Farmers Market Channels: The case of Onions in Egypt• Farmers marketing channel of choice

is farm gate sales to wholesalers and other traders

• Second most common channel is sales at the wholesale market with LE100/t higher price

• Sales to traders of the crop in-field (kelala) is less important (5%) but with lowest price practiced by farmers who are in dire need of cash.

• Sales to processors is low but gives the highest prices

• Greater linkage of farmers to market points with highest prices is the goal of value chain analysis

Importance for Rural Employment

CommodityShare of

operational expenditure (%)

Gender & labor

Source of labor (%)

  Inputs Labor Male Female Family Hired

Pomegranate

51 49 97 3 2 98

Market Infrastructure

• Egypt has reasonably good road and rail network,

• But there is still general poor marketing infrastructure in Upper Egypt

• Airport cooling facilities at local airports and improvements in Safaga port could enhance access of Upper Egypt products to international markets.

• Upper Egypt has particular advantage in climate, water resource and relatively cheep labor that gives a competitive advantage to produce and export these commodities. But this advantage can be severely eroded by poor marketing infrastructure.

Product Quality

• Pesticide residuals were found to be the most important factor for rejecting pomegranate shipments.

• About 80% of the surveyed farmers consider it as the most important constraint to export.

• This study shows that in both onion and pomegranate, farmers do not practice rational use of pesticides and chemical fertilizers, and they are not fully aware of the relationship between product quality and farming practices.

• Adopting good practices is complicated by the fact that different markets have different standards and what is not sold in one market may be sold in another market, albeit at lower prices

Pomegranate prices:

High quality 1700 LE/t

Low quality 1070 LE/t

Quality of Agro-chemicals

• An important factor affecting farmers’ use of inputs is related to the availability of inputs when needed and the quality of inputs.

• The surveyed farmers complained about both quality of chemicals provided by traders and their availability in the quantity needed.

• The findings point out that input supply is not any more only about increasing production but, even more importantly, it is also about producing a product with right characteristics that is demanded by the market.

Post Harvest Management

• A number of malpractices or lack of information and awareness in post harvest handling of the products are identified. For example,

Fruit picking is done by twisting and sometimes strongly pulling, without any tools. This could damage the fruits as well as the trees.

Unsuitable packing of piling approximately 85 fruits in a container compressing over each other; causing mechanical damages such as cuts, bruises and pressure damage.

Similarly, farmers practice less efficient curing of onions.

• These practices lead to losses that can be avoided by following specific and simple post-harvest management procedures including:

proper harvesting,

shading and

cooling products after harvest,

sorting

packing practices, and

curing practices in the case of onions.

Production Practices

• Provide incentives for drip irrigation

• Adopt more rational and optimal use of agrochemicals (fertilizers and pesticides)

• Improve tree management: through proper pruning and tree canopy development;

• Improve harvesting practices: Improved and careful harvesting practices reducing fruit damage should be encouraged to avoid the induction of any physical damage.

Post Harvesting

• Improve on-farm sorting and grading: on-farm sorting practices need to be introduced to avoid small sized fruits which will not comply with EU standards.

• Introduce improving curing of onions: Curing of onion for 15 days which gave the best results should be introduced to farmers.

Marketing

• Support smallholder farmer associationsThe performance of such associations should be monitored and assistance should be given by a third party, like capable NGO, until they are able to function autonomously.

• Increase competitiveness through improved quality standards: The potential for Egyptian pomegranate in the EU market should be explored. The impediments to export can be classified as:

1) lack of information,

2) lack of technical support services and

3) lack of knowledge on preparation and handling the export produce.

Market Infrastructure

Egypt should review the status of the major market infrastructure such as ports (particularly the Safaga port), airports and the cooling facilities needed for the exportation of fresh produce and horticulture

Main Points for Discussion

• Poverty measurements and monitoring poverty reduction, poverty mapping

• Knowledge transfer systems-agricultural services

• Role of rural institutions –farmers’ associations

• Finance- micro finance

• Marketing issues:

Infrastructure

Product quality standards

Chemical residues