Nut Feasibility Study for Crescent Trade - Samuel...

Final Report – October 2011

“Samuel Hall” – Research & Strategy – Qala-e-Fatullah Street # 5, Kabul, AFGHANISTAN

Nut Feasibility Study for Crescent Trade Commissioned by ASMED

Crescent Trade / ASMED | Feasibility Study | Final Report 2

Executive Summary This research on Afghanistan’s nut value chains aimed to assess the feasibility of Crescent Trade investing in a nut processing facility in Afghanistan to produce around 2,000mt of export-quality nuts per year. The research involved sending teams to nut markets in Kabul, Herat, Mazaar-e Sharif, Ghazni and New Delhi, together with a wide-ranging literature review and many key informant interviews. The report concludes that there are sufficient volumes of almonds and pistachios traded in Afghanistan’s markets to make such a facility feasible from a production perspective. It is recommended that Crescent Trade focuses on trading soft-shell Sattarbai almonds together with kernels from Shokorbai hard-shell almonds. If a good purchase price can be obtained, there is potential to expand the product range to include pistachio kernels, which could gain high market prices when peeled. Walnuts and pine nuts may be added to the product mix, but the limited availability of these nuts and market concentrations will mean these products will only be a small part of the business, and will only be accessible once the business is well established. The recommended export market the Indian retail market, as Afghan nut products already obtain good prices there and the phytosanitary requirements are not high enough to be a barrier to entry. Indian retail chains, which are rapidly expanding, should be a top priority to sign contracts with. To process 2,000mt of nuts per year will require investment in at least an almond shelling machine, a retail packing machine, and as the business develops, shelling machines for other nut types and possibly a laser sorter. However, failures of other agro-industrialization projects in Afghanistan have shown the risks of trying to install high-technology equipment in Afghanistan. It is recommended to pursue a cautious approach to industrialization that minimizes the level of technology in Afghanistan. This could involve installing low technology Chinese or Iranian shelling and bulk packing equipment in Afghanistan and complementing this with a second facility in Dubai or India, where the higher technology equipment like the laser sorter and retail packing equipment could be located. A business model that slowly increases volumes to the target 2,000mt per year over a period of three years is recommended. All the developed industrial parks in Afghanistan are full, which mean Crescent Trade would have to rent commercially, or use Chamber of Commerce industrial parks, which are rather more expensive and less well developed. A site of 2,500m2 would be required by the third year of operations. Working capital requirements are significant, and Crescent Trade must ready $2.5m for nut purchases in the first year. To capture the full retail value of the product, contract or consignment-basis export modality will be required, which will necessitate very strong Afghan and Indian business partners. Entering into the market alone would probably cause other traders to shut off supply and demand. Mazaar-e Sharif is the best location in terms of proximity to nut supplies, safety, service availability, and access to uncorrupt export gates. It is recommended that Crescent Trade exports from Mazaar-e Sharif to India via Turkmenistan to avoid the unpredictability and corruption of the Pakistan border crossings. A half-completed nut processing facility in Mazaar-e Sharif was assessed for suitability. At 5,500m2, the plot is generous in size, but the rehabilitation costs are estimated to exceed $250,000. Crescent Trade must view other industrial locations in Mazaar-e Sharif and evaluate rehabilitation costs and leases for each site before making a final location decision. Finally, a financial assessment of the business described above was performed, which showed that selling 2,000mt per year of premium almonds and pistachios in the Indian retail market could generate at least $0.33m profit each year on around $36m of revenues, returning the $1m initial equipment investment in around seven years.


Table of Contents

EXECUTIVE SUMMARY .......................................................................................................................2

TABLE OF CONTENTS ..........................................................................................................................3

1. MARKET ASSESSMENT ....................................................................................................................5

1.1 ALMONDS .............................................................................................................................6 1.2 PISTACHIOS .......................................................................................................................... 17 1.3 WALNUTS ............................................................................................................................ 23 2.4 PINE NUTS ........................................................................................................................... 28

2. TECHNICAL ASSESSMENT .............................................................................................................. 32

2.1 SHELLING PROCESS ................................................................................................................ 32 2.2 POST-SHELLING PROCESS ......................................................................................................... 34 2.3 CURRENT AGRO-INDUSTRIAL INITIATIVES .................................................................................... 37 2.4 EQUIPMENT REQUIREMENTS .................................................................................................... 43

3. OPERATIONAL ASSESSMENT ......................................................................................................... 54

3.1 REGULATORY ENVIRONMENTS .................................................................................................. 54 3.2 OBTAINING LAND .................................................................................................................. 56 3.3 WORKING CAPITAL AND INVESTMENT CAPITAL ............................................................................. 58 3.4 EXPORT MODALITIES .............................................................................................................. 59 3.5 TRANSPORTATION ................................................................................................................. 60 3.6 PRODUCT SAFETY .................................................................................................................. 63 3.7 LABOUR REQUIREMENTS ......................................................................................................... 65

4. EVALUATION ................................................................................................................................ 66

4.1 MARKET EVALUATION ............................................................................................................ 66 4.2 TECHNICAL EVALUATION ......................................................................................................... 70 4.3 OPERATIONAL EVALUATION ..................................................................................................... 71 4.4 FINANCIAL EVALUATION .......................................................................................................... 78

5. CONCLUSIONS AND RECOMMENDATIONS .................................................................................... 81


Introduction

Crescent Trade is a Dubai and New York based firm seeking to establish a processing facility for the sorting, grading, roasting, and packaging of dry fruits and nuts in Afghanistan, with the objective of helping Afghan farmers retain and achieve the full export value of these products. For the past twelve months, Crescent Trade has conducted market research and built relationships with the trading communities in Kabul and Dubai as well with international buyers (Middle East and India/China). The venture has reached a stage where dedicated research in Afghanistan is necessary to confirm and fine-tune their assumptions and build on the relationships they have established with local traders and suppliers. They have requested that ASMED (Afghanistan Small and Medium Enterprise Development) provide assistance to facilitate their investment in a value-added production line in Afghanistan. ASMED will provide an Afghan business-consulting firm to conduct a detailed study of the viability of establishing this facility, help identify local sources and partners, and provide in-country logistical support. ASMED commissioned Samuel Hall Consulting to provide market research and logistical support to Crescent Trade. For this research, Samuel Hall agro-industrial experts conducted a wide-ranging review of the literature surrounding tree nut production in Afghanistan and previous nut processing initiatives. Field trips to understand the nut market dynamics and initiatives were undertaken in the Kabul, Mazaar, Herat, Parwan and Ghazni nut markets, and a total of 38 small and large nut traders and exporters were interviewed using an in-depth questionnaire. Also, numerous initiatives in the dried fruit and nut sector were researched, particularly the GIZ almond initiatives in Uruzgan and Mazaar-e Sharif, and the Kabul and Mazaar-e Sharif almond associations, the MRRD/ASAP almond initiative in Mazaar-e Sharif, and visits were undertaken to the Tabasom raisin processing factory in Kabul to understand the issues related to operating modern food processing facilities in Afghanistan. As India was felt to be a promising market from an early stage, research was also conducted with importers, traders and wholesalers in Delhi and Mumbai nuts markets to understand the demand dynamics and import regulations. A detailed study was also undertaken done on the fiscal frameworks surrounding import and export of nut products and processing equipment and supplies. This report proceeds as follows: in Section Four, there is a market assessment that examines the supply and demand of Afghanistan’s major nut products, which are pistachios, almonds, walnuts and pine nuts. This section identifies the major growing areas, the typical volumes and varieties produced, the major trading hubs, and the export destinations and volumes. Section Five is a technical assessment that examines the equipment requirements for sorting, grading, roasting and packaging these nuts. In Section Six there is an operational assessment, which examines operational issues such as the regulatory environment, operational modes, transportation and labour and certification requirements. In Section Seven, an evaluation of the market, technical and operational variables is performed, which leads to a range of models for the new business structure that are then financially evaluated to assess their business viability. Section Eight concludes by outlining the recommended business model.

Samuel Hall Consulting is grateful to all the traders, association members and technical experts who were interviewed as part of this research.


1 Market Assessment

In British India, Afghan tree nuts were traded through Peshawar to the wider Indian sub-continent, where they gained a reputation for having excellent quality and taste. In spite of the 1947 partition and numerous regional conflicts, Afghanistan’s almonds, pistachios, walnuts and pine nuts are still highly acclaimed in both India and Pakistan, and increasingly in the Middle East, and today are a lucrative export product, contributing on average $90m annually to the Afghan economy.1 High demand for Afghan nuts at national and international levels varieties make nuts Afghanistan’s second largest exported agricultural product after raisins. Information from farmers, traders and exporters indicates that over 70% of the Afghan nuts qualify for export markets, though strong domestic consumption means rather less than this is actually exported. As a matter of comparison, no more than 20% of fresh fruits produced in Afghanistan qualify for export markets. This market assessment will focus mainly on almonds and pistachio, the two nuts with both high value and high volume, with shorter assessments of walnuts and pine nuts, which are of rather smaller traded volumes. Figure 2 shows export prices of Afghan nuts in 2010; note the figures for soft in-shell almonds and pine nuts are very low, possibly due to the widespread practice of underbilling.2

Figure 1: Afghanistan’s tree nut production

Figure 2: Average export value of Afghanistan’s tree nuts, from official data

3

1 Average of 2008, 2009 and 2010 data, Ministry of Economy (2010). Weight is in-shell equivalent.

2 Soft-in shell almonds should obtain at least $4/kg, if not around $7.5/kg.

3 Ministry of Economy (2010)

70000, 46%

61000, 40%

15500, 10%5000, 4%

Nut Production (mt/yr)

Almond

Pistachio

Walnut

Pine Nuts

7.4

2.9

1.5

5.1

1.2

10.1

6.1

-

2.0

4.0

6.0

8.0

10.0

12.0

Almond kernel

Soft in-shell almonds

Hard in-shell almond

Walnut kernels

In-shell walnut

Pistachio kernels

Pine nuts

US$

/kg

Export prices of Afghan tree nuts ($/kg)


1.1 Almonds

1.1.1 Almond Supply

Volumes

Afghanistan produces around 70,000mt/yr of almonds, making almonds Afghanistan’s largest nut crop. Around 18,000mt/yr (in-shell equivalent) of these almonds are exported with a value of around $50m,4 meaning almonds are Afghanistan’s largest agricultural export by weight and total earnings.

Growing Regions

Afghanistan’s almonds are mainly produced in the Central Region (48%), the Northern Region (29%), and the Western and Southern Regions (10% each), as shown in the Figure 3 below. The Central Region of Afghanistan is the biggest almond production regions, with Ghazni one of the largest almond producing provinces in Afghanistan. The Central Region is responsible for 50% of the production of Afghanistan (35,000mt/yr). However, some varieties produced in the Central Region are not commercially demanded for exports. The Northern Region has Balkh, Samangan, Sar-e Pul and Kunduz provinces as main producing provinces, accounting for approximately 30% the total production of Afghanistan (21,000mt/yr). The Northern Region grows the majority of the varieties with high commercial demand, particularly the large softer shelled varieties. The Southern Region produces mainly hard and medium-hard shell almonds are predominantly produced in the Southern Region, with Uruzgan as the main production center accounting for around 20,000mt/yr. Helmand and Farah produce small quantities. Herat and Farah provinces in the Western Region and Laghman province in the Eastern Region both produce approximately 10% of the almonds produced in Afghanistan.

Figure 3: Estimates of almond production in Afghanistan.

5 (Note color scheme is relative to each nut)

4 Average of 2008, 2009 and 2010 data, Ministry of Economy (2010)

5 Derived from NAIS (2008), Altai Consulting (2010), Samuel Hall field research (2011)


Varieties

Afghan almonds belong to one of two fundamental classes: soft-shell almonds (badam-e-kaghaz, lit. paper almond) and hard/medium-shell almonds (badam-e-sangi, lit. stone almond). Both hard and soft-shell classes are composed of several types, and each type often has multiple varieties. For example, within the class of soft shell almonds is a popular type called Sattarbai, and there are numerous varieties of Sattarbai, such as Sattarbai Sufi, Sattarbai Guldar and Sattarbai Mamakhail. There are around 14 types of national and international commercial relevance, and the Perennial Horticulture Development Program (PDHP) has categorized around 90 native varieties of almonds.6 However, in spite of such classification efforts, almond nomenclature in Afghanistan is extremely confused, with the same types and varieties on different markets frequently trading under different names according to their province of origin, their quality or size. Soft-shell Almonds. These almonds are considered the best almonds in Afghanistan and their price is higher compared to the hard/medium-shell ones. It is estimated that this type of almond represents around 25% of the total production. A key selling point of soft-shell almonds is that they can be shelled by hand, and as such are only sold in-shell. The kernel of soft-shell almonds is heavier than the shell and in average the total weight proportion is 68% kernel and 32% shell. Soft-shell almonds do not have bitter varieties and are principally produced in the Northern Region. Soft-shell almonds correspond mostly to five well-known and demanded varieties, Sattarbai, Qambari, Belabai, Kaghazi and Katmal. Sattarbai and Qaharbai are the predominant soft-shell almond types exported, although smaller volumes of Belabai, Kaghazi and Katmal are also exported. India and Pakistan are the main buyers of Sattarbai almonds. Certain varieties of Sattarbai are of globally unique quality and can obtain prices of up to $12/kg. Even lower quality Sattarbai have an easy access to regional markets (mostly India and Pakistan) thanks to their excellent flavor, good shape and size, and low bitter almond count. Figure 4 on the left shows three samples of Sattarbai almonds bought in Mazaar (top quality shown on the left), Kabul and Herat, showing the significant variations in size – and expectations of what Sattarbai should look like – between the varieties. Note that the Sattarbai kernel is similar in all cases. On the right is a typical Kaghazi almond from Herat, showing its much smaller size compared to Sattarbai type.

Figure 4: Sattarbai almonds bought from three different markets (left) and Kaghazi almonds (right)

6 For detailed varietal information, please see the PDHP Germplasm database, which has a complete study about the physical

characteristics of Afghan almond varieties (kernel/nut ratio, shell hardness, and color, kernel weight, shape and colors, etc.). See: http://afghanistanhorticulture.org

http://afghanistanhorticulture.org/


Hard/Medium-shell Almonds. Around 75% of the almonds produced in Afghanistan are hard/medium-shell. Hard-shell almonds are often shelled in Afghanistan. The average ratio kernel to shell ratio for this class of almonds is typically around 45% kernel and 55% shell, however, there are differences in the ratio depending on the variety. If the tree growing the hard almond has been poorly grafted, then there is a chance that bitter almonds will be produced from the tree. Unfortunately, these bitter almonds look identical to the sweet almonds, and are often mixed with sweet ones during the harvesting phase. It is then near-impossible to isolate them at the time sorting/grading time and the only way to eliminate this problem is to work with the farmers to replant the bitter-producing trees. Hard/medium-shell almond types are produced all over Afghanistan, but principally in the Central and Southern Regions. Commercial medium-shell varieties are Abdul Wahidi, Khayruddini, Ghorbandi (Ghorbandi need not come from the district of the same name), and harder-shell types include Murawaji, Sangaki (these two types are also very similar), Qaharbai and Shokorbai. The Abdul Wahidi, Qambari and Ghorbandi types are the in-shell export leaders to India. Around 50% of the hard-shell almonds arriving to Kabul nuts export market correspond to these types and they are supplied mainly by Balkh, Samangan, Ghazni and Parwan provinces. The kernel trade shells mainly hard-shell almonds, however, the best almonds for kernel are not the same types that are best for in-shell export. The top kernels for export come from Qaharbai, Shokorbai, and Ghorbandi types. Qaharbai kernels are popular as they have a very long shape, and Shokorbai are also favored because the kernels are of very standard size. In spite of higher margins obtainable by shelling almonds, the in-shell trade continues because either exporters believe the almonds are better preserved on their journey to India in-shell, farmers are worried of exposing the low quality of the kernels, or because Indian traders want to capture the value-added from shelling.

Figure 5: Abdul Wahidi almonds from Mazaar (left) and Herat (right)

It is common for traders to send their hard/medium-shell nuts to families of friends or employees for the women to shell the almonds at a rate around 6 cents/kg (3Afs/kg). As a bonus the families keep the shells (which can be used as bokhari fuel). The hardest almonds, Sangaki, must be soaked in water for several hours before shelling, which is believed to stain the kernel. The traders do not add much premium for shelled almonds above the average $3-4 for soft shelled almonds. The 5-10% of cracked almonds are readily sold for around $3/kg to local sweet manufacturers (specifically for sherpaz, an Afghan sweet). Sangaki and Murawaji types have an important presence in the market, but they command lower prices compared to Abdul Wahidi and Ghorbandi as they are often smaller and appear rather more varied in size and probably variety. However, after shelling, the larger kernels are often of export quality, but still do not match the uniformity of the American Nonpareil kernels. See Figure 6 and Figure 7. The smaller kernels from these types are usually sold on the domestic markets for eating with Afghan dishes.


Figure 6: A handful of Sangaki almonds from Herat (left) which liberate Sangaki kernels (right)

Figure 7: American Nonpareil kernels for Indian consumers

Supply Dynamics

There are five regional almond markets in Afghanistan: Kandahar, Ghazni, Kabul, Mazaar-e Sharif and Herat. All except Kandahar were visited as part of this research. Kabul. The Kabul almond market appears to be the largest in Afghanistan both in traded volume and export volumes, and there are estimated to be around one hundred traders on the four markets. The traded volume of almonds is estimated at 26,000mt/yr. The nut market consists of three smaller wholesale markets, all of which are involved in almond exports. The Kabul market trades in all nut varieties, but the largest volumes are almonds followed by pistachio and walnuts. Californian almonds are also widely available on the Kabul market, and are cheap and popular. See Figure 10, which shows approximate traded volumes on each of these regional markets. These diagrams should be regarded as illustrative only, because they do not show the many provincial and district nut markets, which to varying extents supply the regional markets, but also directly supply domestic demand. The Kabul market is mainly a transit hub for production from other regions such as Balkh and Ghazni, where Afghan traders hand over consignments to Pakistani or Indian exporters or commission agents, who then deal with the export process. In general, this means that traders in Kabul and the other provincial markets have little visibility over the supply chain after it leaves Kabul. Kabul is the primary location in Afghanistan for exporters to Pakistan and India to conduct business and organize their shipments, and only a few large Afghan traders export themselves. Around 9,000mt/yr of almonds is shipped from Kabul. All Kabul-based exporters and traders export by road via Torkham. In common with other markets, most of the trade is in sacks of between 70kg, although some traders reported an


increase in 10kg cartons of almonds trading on the market (this was also noted in a positive way in India). Kandahar. The Kandahar almond market was not visited in this survey, but was estimated by Altai (2010) to have a trading volume of around 22,000mt/yr. The almonds available in Kandahar are thought to be rather similar to Ghazni, with a higher proportion of hard-shell almonds like Sangaki. Around 9,000mt/yr of almonds are exported to Pakistan and India by truck, via Spin Boldak.

Figure 8: The Kandahar almond market

7 Ghazni. The nut wholesale market in Ghazni was estimated by the research team to be the second largest trading market in Afghanistan, with a trading volume around 21,000mt/yr. The market mainly trades in almonds, and to a lesser extent walnuts. The almond market is co-located with the dried fruits market, and absorbs almonds from Ghazni province (Jaghouri, Naveh, Vaghaz and Gilan districts), 50% of the Dai Kundi production, and in all likelihood, a proportion of the Uruzgan production (a province that Altai (2010) showed was also a large regional producer).The market in Ghazni was reported to be free from cartels or trader intimidation. Like the other regional markets, Ghazni traders collect their almonds and other nuts from provincial and district traders and sell them on mainly to Kabul-based traders. Thus, the market does not export directly in any significant volume, and almost all production is sold to Kabul (and a small volume to Herat-based traders via Kandahar). Types appear to be weighted in favor of hard-shell almonds, like Sangaki and Murawaji. Traders reported that their bitter almonds were sold separately. Prices were reported to be lower in Ghazni than in other nut markets. Mazaar-e Sharif. The nut wholesale market in Mazaar-e Sharif is the largest nut market in the north of Afghanistan and likely the fourth largest in Afghanistan. The almond trading volume in this market was estimated at 2,200mt/yr, split between around 20 active traders, at the top end trading around 100mt/yr, and at the small end trading less than 15mt/yr.8 There are other smaller provincial and district almond markets too, in Samangan and Kunduz, but much of the Mazaar-e Sharif production comes from them. The market is a modern, new facility supported by ASMED, IDEA-NEW and GIZ, and trades a variety of nuts and dried fruits, although trading is dominated by almonds. The market absorbs almond production from the Northern Region (Balkh, Samangan and Kunduz), and sells both to India and

7 Image credit: Altai Consulting (2009)

8 All volumes and prices should be regarded as estimates derived from a rapid assessment, rather than reliable data obtained

from a comprehensive value chain assessment.

Almonds on the dried fruit wholesale market, Kandahar – Sept 2009


Pakistan via Kabul and Torkham. The market in Mazaar-e Sharif was not seen to be unduly affected by insecurity, and was seen to be free and competitive. No traders reported that their export partners demanded checks for bitter almonds.

Figure 9: Mazaar-e Sharif almond market in August 2011

Herat. The nut wholesale market in Herat is the largest nut market in the west of Afghanistan, but smaller than the other markets in terms of almonds, where the trading volume is estimated at 500mt/yr. It is a distributed market, with traders scattered over many locations in the city. The majority of the market is trading pistachio (from Darvazeh-e Khushk), and almonds and walnuts are traded in much smaller volumes from other locations (Darvazeh-e Malik and Darvazeh-e Kandahar). Traders claimed that there were no bitter kernels in the Sangaki kernels that were on sale; however, a quick taste test found an unacceptably high proportion of bitter almonds, which does not give confidence in traders’ quality claims. Compared to Mazaar-e Sharif nut wholesale market, where donors have supported creation of a trader association and funded construction of a new market, Herat’s nut industry has had little attention. Around 200mt/yr (mainly of kernels, in-shell equivalent weight) is exported via Islam Qala to Iran, Turkey and India. In general, the larger traders in these markets are less mobile than the smaller ones, and collect around 70% of their almonds from the farmers or traders visiting the market. Smaller traders reach out into other provincial centers and district centers to pick up almonds from local collectors and traders. It is rare for traders in these regional to interact directly with the farmers. None interacted directly with farmers unless the farmers came into the Mazaar-e Sharif market to deliver almonds; one farmer would typically deliver 1mt to the market.


Figure 10: Estimated traded and exported volumes in Afghanistan’s regional almond markets

9

Prices

The data shown in Figure 11, which for comparative purposes was collected from one large trader in Kabul in September 2011, shows the variation in prices both between and within the products. Soft-shell almonds are sold for between $4 and $11/kg, hard-shell almonds between $1.5 and $3/kg, and kernels between $5 and $11. In spite of the high prices, profit margins from purely collecting and trading almonds in their various forms are very low, often <2% for soft-shell types and kernels and up to 6% for lower quality hard types. The difference in price between hard-shell almonds sold in-shell and kernels liberated from hard-shell almonds is around $6/kg, giving an indication of the much better margins that can be obtained by buying good-quality hard-shell almonds (like Shokorbai type) and performing the shelling operation.

9 Derived from Samuel Hall field research (2011), Ministry of Economy (2010)

Balkh2,000mt/yr

Torkham

Spin Boldak

Islam Qala

Kabul26,000mt/yr

Ghazni21,000mt/yr

Kandahar22,000mt/yr

Herat500mt/yr

To Turkey, India, Iran, 200mt/yr

To Pakistan and India9,000mt/yr


Circles represent traded volumes on the regional almond markets (including domestic consumption, exported and transit weights)Weights include in-shell equivalent of kernel trade

Majority of production is transferred

Minority of production is transferred

Almond Trading Dynamics


Figure 11: 2011 prices for almonds from Dr. Darullah, a big trader on the Kabul Dara Market

0

2

4

6

8

10

12

Start Middle End Start Middle End Start Middle End

Best soft-shell: Satarbai

Average soft-shell: Qambari

Average medium-shell: Khayruddini

US$

/kg

Afghan trader's margin ($/kg)

Afghan trader's purchase price ($/kg)

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5


Best hard-shell: Abdul Wahidi

Average hard-shell: Murawaji

Lowest hard-shell: Ghorbandi

US$

/kg



0

2

4

6

8

10

12

14


Best kernel: Qaharbai Average kernel: Shokorbai

Lowest kernel: Ghorbandi

US$

/kg




1.1.2 Almond Demand

Around 25% of Afghanistan’s almond production appears to be exported (although the real figure may be rather higher, as these are official export figures, and it is possible some almonds may be exported unregistered via smaller border crossings). The main demand for Afghan almonds is thus domestic, however, of the exports, 73% are exported to Pakistan, 26% to India, and <1% to Turkey, Iran and Iraq. A proportion of the Pakistan exports are likely re-exported to other destinations after processing in Pakistan.

Figure 12: Consumption of Afghanistan’s almond production (left) and export destinations (right)

10

Overall, the export market strongly demands kernels, which make up around half of Afghanistan’s almond exports. Around 28% of the export market is for soft-shell types and 21% for hard-shell types. Exports from Herat, destined mainly for Turkey, are 84% kernel, and just 4% hard-shell types. Exports to the east, to Pakistan and India, are around 48% kernel and 25% soft-shell.

Figure 13: Condition of Afghanistan’s annual almond exports

11

Samuel Hall conducted research in the Delhi Dried Fruit and Nuts Market (the largest such market in India) to understand the demand for Afghan products better. Three types of traders dealing in Afghan nuts were interviewed: Importing commission agents, who had offices in Afghanistan and sold the product to wholesalers in Delhi, wholesale traders, and retailers. Some of the wholesale traders also had retail premises. Afghan kernels are very popular, and are marketed as ‘Ghorbandi’, a name that today represents any Afghan kernels from Abdul Wahidi, Ghorbandi or Sangaki types. The kernels that are sold

10

Annual Production figures from NAIS (2008), exports averaged over three years, Ministry of Economy (2010). Weights are in-shell equivalents. 11

Exports averaged over three years, Ministry of Economy (2010)

51700, 74%

18300, 26%

Almond production of 70000mt/yr

Domestically consumed

Exported13325,

73%

4794, 26%

134, 1% 28, 0%

Almond exports (mt/yr)

Pakistan

India

Turkey

Others

5054, 28%

3815, 21%

9426, 51%

Almond exports (mt)

In-shell almond -soft shell

In-shell almond -hard shell

Kernel


on the Indian market are fairly regular in size and color, but significant variation in shape appears to be acceptable. See Figure 14, which shows good quality Afghan ‘Ghorbandi’ almonds (likely from Qaharbai or Shokorbai type) on sale in New Delhi in 250g packs.

Figure 14: Afghan ‘Ghorbandi’ almonds on sale in New Delhi

American kernels make up around 70% of the Indian kernel market, Iranian kernels around 15%, and Afghan kernels around 15%, with both Afghan and Iranian kernels obtaining much higher prices. However, in September 2011, at the start of both the new Afghan almond season and India’s festival season (which accounts for 70% of all India’s annual nut consumption), Afghan almonds were struggling to make it through to India due to export issues in Pakistan, and were felt to be losing market share to Iranian Maamra almonds, which have long thin kernels and are very popular.

Prices

Figure 15 below shows average wholesale prices for different almond products in the Delhi wholesale market. The most expensive variety is the Maamra kernel from Iran, which only the very best sorted Qaharbai kernels could hope to compete with. Afghan kernels obtain prices roughly equivalent to the American kernels, suggesting that with increased sorting and improved packaging there would be an opportunity to increase the price. In the soft-shell category there is little available to compete with Afghan almonds. The soft-shell almonds retail for over $18, which gives an impressive 11% markup on the wholesale price. The kernels have retail margins less than 7%.


Figure 15: Almond prices in India in 2011

Trading Dynamics

The four main markets for all nut types in India are Delhi (north), Calcutta (east), Mumbai (west) and Bangalore/Chennai (south), though Delhi and Mumbai dominate. The majority of Afghan nuts come into India through the Wagah border and into the Dried Fruit and Nuts Market in Delhi via Amritsar. From the east of Afghanistan, the road route is quicker than exporting by sea to Mumbai port (providing the border crossings are trouble-free), and the product is believed by traders to arrive in a fresher condition. Nuts from other countries (particularly America, Iran and Australia) come into India by sea to Mumbai, from where they are distributed to the other trading centers. These dynamics are the same for all nuts.

9.2

29.9

16.5

8.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

American kernels (Nonpareil variety)

Iranian kernels (Maamra variety)

Afghan soft in-shell (Sattarbai variety)

Afghan kernels ('Ghorbandi' variety)

US$

/kg

Start-of-season almond prices in New Delhi wholesale nuts market, 2011 ($/kg)


1.2 Pistachios

1.2.1 Pistachio Supply

Volumes

Afghanistan produces around 60,000mt/yr of pistachios, making pistachios Afghanistan’s second largest nut crop. According to the Ministry of Economy, around 9% (in-shell equivalent) are exported with a value of $25m,12 showing that the pistachio trade is extremely high value and could be extremely lucrative if the export volumes could be increased.

Growing Regions

Pistachios are mainly produced in the Western Region (60%), with Badghis province by far the largest producing region in Afghanistan. The remaining 40% is from the Northern Region, with Balkh and Samangan significant producers. See Figure 16. Badakshan is famous for larger varieties of pistachio.

Figure 16: Estimates of pistachio production in Afghanistan

13

12

Average of 2008, 2009 and 2010 data, Ministry of Economy (2010) Likely an underestimation. 13

Derived from NAIS (2008), Altai Consulting (2010), Samuel Hall field research (2011)


Varieties

Afghan pistachios are classified in different ways according to their markets. In Herat, pistachios are available in three full main forms: open in-shell pistachio (Khandan-e safid, lit. mouth open), closed shell pistachio (Korak, lit. mouth closed), and closed shell pistachio with dried skin (Pushdara, lit. with skin; also called Shuli). Pistachio kernels are also sold (Maghz-e korak, lit. kernel of the ‘mouth closed’ pistachio), which are produced by shelling either shelled Korak or Pushdara.14 In Mazaar-e Sharif, the pistachios are of slightly different variety, and are classified as either Mazaar green or Mazaar red. They are mainly sold in kernel form, with the green pistachio kernels slightly lighter color than their Herat Korak equivalents. Mazaar red pistachio kernels are a local variation that obtains slightly lower prices than the Mazaar green. In the Kabul market, Mazaar green kernels are widely available, but the premium kernels are from Badakshan.

Figure 17: Closed shell Korak (left) and Pushdara (right) pistachios from Badghis, middle quality

Figure 18: A handful of open in-shell Khandan-e safid pistachios from Badghis, for the domestic market

Most of the open in-shell pistachios and pistachio kernels available in the Afghan market are small as they are grown wild rather than in formal (government regulated) pistachio orchards as they were before the jihad. Additionally, Afghan pistachio kernels are produced by manually breaking open small, Korak or Pushdara, which yields small kernels with a lot of fragments. This size limitations are likely responsible for lower levels of export than would be expected.

14

It is industry practice to only produce kernels from closed shell pistachios with a process called Mechanical Opening (MO), as open in-shell pistachios are often worth more in that form, provided their size and quality is good. This does not appear to be the case in Afghanistan as the small open-in shell pistachios do not exceed the kernel price on wholesale markets.


The international pistachio kernel trade is dominated by Green Peeled Pistachio Kernels (GPPK). These are kernels that are picked early so they still have lots of chlorophyll in them that are then blanched to remove the peel. GPKK are often used in the top-quality confectionery industry, where size is not a big issue but color is important. In Afghanistan, the Korak pistachios are picked early, but none are exported peeled. A blanching test conducted by Samuel Hall shows that there is significant potential to improve the export value of Afghan kernels, as their color is excellent by international standards. See Figure 19.

Figure 19: Typical Korak kernels from Badghis (left), and blanched to produce GPPK (right)

There is some domestic trade in kernels too, though open in-shell Khandan-e safid are the most popular on the domestic market as they can be opened by hand easily and eaten as a snack. However, Iranian Khandan-e Safid are also imported into the Afghan domestic market where they have a better reputation for size. Traders in Herat paid for the shelling of the Korak and Pushdara nuts themselves before selling the consignments onto larger traders and exporters. The shelling of pistachios appears to be rather tougher work than for almonds or walnuts, and traders pay around 30 cents/kg for local families for the shelling.

Supply Dynamics

There are three main pistachio markets in Afghanistan, Herat, Kabul, Mazaar-e Sharif and Badghis, of which two were visited: Kabul and Herat. Kabul. Kabul acts as a trading hub, absorbing production from Badakshan, Takhar, Samangan and Balkh, and to a smaller extent, from Herat. In Kabul, pistachios are transferred to over to larger traders and exporting commission agents, giving a trading volume of around 5,300mt/yr. Around 2,800mt/yr is sent from Kabul to Pakistan and India via Torkham (the official figures appear to be a significant underestimation, as traders reported the nuts were ‘smuggled’ across the border). In Kabul, trade is dominated by one firm, Mohammad Yusuf and sons, based in the Dara market. As with Herat, pistachio kernel trade is done mainly in 70kg sacks. No traders in either market reported that taxation or security issues were significantly affecting their businesses. Herat. The Herat pistachio market is the second largest in Afghanistan, trading around 5,000mt/yr (kernel weight). It absorbs production from the Badghis market and the traders interviewed thought that a large majority of the pistachio on the Herat market was from there. From Herat, traders export around 3,200mt of pistachio kernel to India and Pakistan, using equally the Torkham border (via


Kandahar and Kabul) or the Spin Boldak border (via Kandahar) depending on the destination and trading agreements. Pistachio destined for Quetta, for example, will route through Spin Boldak. The market also accepts large quantities of Khandan-e Safid from Iran, for domestic consumption. Kabul traders estimated 95% of the domestic Afghan pistachio market was in Iranian pistachios, which were thought to be better quality in-shell. Few of the traders exported themselves, preferring to transfer their pistachio kernels to larger, Kabul-based traders or foreign commission agents. One trader, Haji Ghulam Ahmed, had invested in a pistachio-shelling machine, yet a lack of electricity in Herat meant the machine was unused.

Figure 20: Estimated traded and exported volumes in Afghanistan’s regional pistachio markets

15

Prices

Unlike other nuts, where trade is conducted in Afganis, the pistachio trade works in US Dollars. The large pistachio kernels from Badakshan obtained the highest prices on the wholesale markets, with a start of season price of $23/kg. The standard pistachio kernels (Korek or Mazaar Green pistachios) obtained early season prices of $19-$21/kg depending on quality.16 See Figure 21. Red pistachios obtained slightly lower prices, starting at around $17/mt. Khandan-e Safid pistachios obtained $9/kg on the domestic

15

Derived from Samuel Hall field research (2011), Ministry of Economy (2010) 16

If this price seems high: as a reference wholesale green pistachio kernels are trading in the UK for between $20 and $40/kg, depending on origin

Balkh200mt/yr

Torkham

Spin Boldak

Kabul5,300mt/yr

Herat5,000mt/yr



Circles represent traded volumes on the regional pistachio markets (including domestically consumed, exported and transit weights)Kernel weight



Pistachio Trading Dynamics

Badghis2,500mt/yr

Islam Qala

Pistachio from Iran


market. The remarkable profit margins from the pistachio trade can be seen evaluating the input to the kernel trade, which are Pushdara pistachios. They are extremely cheap to buy from the farms (around $2/kg), and while there is a small cost to break them (represented as the ‘margin’ for Pushdara in Figure 21), the kernels sell to the provincial and regional traders for high prices. Unlike other nuts, the shelling is nearly always done at the farm level, which means it may be hard to purchase large quantities of in-shell pistachio at the market level, as farmers are well aware of the huge value of their product (whether good relationships can be established at the farm level will have to be determined once operations begin). Also unlike other nuts, where prices for almonds and walnuts which rise over the trading year, except for the really best quality pistachio kernels, which maintain their price through the year, the prices fall substantially over the course of the trading year. Pistachio prices and farm to trader margins are by far the highest seen for any nut types traded on the market. The high prices at start of the season means farmers often bring their pistachios in to the market before they are ripe, and means the government tries (and largely fails) to regulate the start-date of the season.

Figure 21: Pistachio prices in the two main pistachio markets, obtained in July 2011

17

1.2.2 Pistachio Demand

Around 9% of Afghanistan’s pistachio production is exported according to official figures. The main demand for Afghan pistachios is from the domestic market, but after this, 80% of the exports are destined for Indian, and 20% for Pakistan. Overall, the Indian and Pakistani markets demand that Afghan pistachios are sold as kernel. There is no market in India for Afghan open in-shell pistachios, and Ministry of Economy data suggests 100% of Afghan pistachios are exported in kernel form. These kernels are bought by the food industry and households for making confectionery. Roasted and salted in-shell pistachios are sold in India in large volumes as snacks, but the supply is dominated by Iranian and Californian imports, with which Afghan in-shell pistachios would struggle to compete for size and quality.

17

For kernels, prices adjusted for shell wastage on input price (55% kernel: shell ratio used)

0

5

10

15

20

25

30

Star

t

Mid

dle

End

Star

t

Mid

dle

End

Star

t

Mid

dle

End

Star

t

Mid

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End

Star

t

Mid

dle

End

Star

t

Mid

dle

End

Badakshan kernel

Mazaar Red kernel

Mazaar Green kernel

Korek kernel (Herat)

Khandan-e Safid (Herat)

Pushdara (Herat)

US$

/kg




Figure 22: Consumption of Afghanistan’s annual pistachio production (left) and export destination (right)

18

Prices

On the New Delhi market, which is the largest market for exported Afghan pistachios, Korak kernels obtain a price of around $29/kg for wholesale and $31/kg for retail. Badakshani kernels, which are larger than those produced in Herat, obtain prices at the top of this scale and are probably the highest priced kernels available in India. Mazaar green kernels obtain between $20/kg for wholesale and $23/kg for retail, which gives an excellent potential margin of 17% that has potential to increase even further if the kernels were peeled. The widely available Iranian open in-shell roasted (and sometimes salted) pistachios are typically sold for $14/kg wholesale and $15/kg for retail.

Figure 23: High-quality Afghan unpeeled pistachio kernels on sale in New Delhi

18

Annual Production figures from NAIS (2008, exports averaged over three years, Ministry of Economy (2010). In-shell equivalent; exports equivalent to 3,200mt/yr of kernels)

55554, 91%

5796, 9%

Pistachio production of 61,000mt (mt/yr)


Exported4637, 80%

1159, 20%

Pistachio exports (mt/yr)

India

Pakistan


1.3 Walnuts

1.3.1 Walnut Supply

Volumes

Afghanistan produces around 15,500mt/yr of walnuts, making walnuts Afghanistan’s third largest nut crop. According to the Ministry of Economy, around 52% of the walnuts (in shell equivalent) are exported with a value of $5m,19 meaning this nut has the lowest value/kg of any of the nuts evaluated.

Growing Regions

Farah province in the Western Region is responsible for around 66% of Afghanistan’s production, and the Northern Region produces around 18%, with Sar-e Pul district producing large quantities. The remainder are grown in the central region in mountainous, well irrigated valleys typical of the terrain around Kapisa and Parwan provinces.

Figure 24: Estimates of walnut production in Afghanistan.


19

Average of 2008, 2009 and 2010 data, Ministry of Economy (2010) Likely an underestimation. 20

Derived from NAIS (2008), Altai Consulting (2010), Samuel Hall field research (2011)


Varieties

Afghanistan cultivates several varieties of the Persian (English) Walnut. There are two main varieties apparent on the Afghan markets. The first is a large walnut with a larger yellow kernel (‘zard’, lit. yellow) in Kabul, and ‘Mazaari’ in the North. The second is a smaller walnut with a slightly smaller whiter kernel of which there are two varieties, a thicker shelled variety and a thinner shelled variety. The thinner shelled variety can (just) be broken by hand. The smaller walnut is called ‘safid’ (lit. ‘white’) in Kabul, ‘Takhari’ in Mazaar, and ‘Korek’ in Herat and Ghazni. The thinner shelled versions are known as ‘Kaghazi’ (lit. paper), however, Kaghazi walnuts are only available in very small quantities and are predominantly sold on the domestic market. Traders interviewed in Mazaar-e Sharif and Kabul did not worry unduly about the differences between the walnuts. Both larger and smaller walnuts can be shelled for export, and the variations in kernel color and size do not appear to matter to the export market as they obtain the same prices. Indeed, nearly all the walnut export trade is in kernels.

Figure 25: Handful of white walnuts and hand-shelled kernels from Kabul traders

Market Dynamics

There are probably five or six major walnut markets in Afghanistan, in Kabul, Nijrab, Mazaar-e Sharif, Ghazni, Herat and Farah, of which four were visited for this research: Kabul, Mazaar-e Sharif, Ghazni and Herat. Farah. With the majority of production occurring in Farah, it would seem logical that a market exists there, but as it is far from major population centers the produce is likely transferred to other markets such as Herat or Ghazni (although no traders there reported buying any produce from Farah: this will have to be investigated further if walnuts are recommended to pursue in large volumes). Kabul. The next largest market is Kabul, trading an estimated 5,000mt/yr and exporting an estimated 4,700mt/yr primarily to Pakistan and India, but also transferring some walnuts to Balkh for re-export


from there. 85% of the exports from Kabul go by Torkham, but around 15% are transferred to Herat (via Kandahar) for export to Iran and Turkey. Kapisa. Traders estimated that Nijrab in Kapisa was a large market (potentially supplying 70% of the Kabul market). Balkh. This market trades around 2,600mt/yr and exports a high percentage of this to Iran, Turkey and Iraq via the Aqina border crossing to Turkmenistan. The largest almond trader in Mazaar-e Sharif, Jamshid Rahmin, was interviewed in the Kefiyat Bazaar and he estimated around 30% of the Mazaar-e Sharif traded volume came from the Kabul market. Ramin does not sell any unshelled walnuts, and pays families 5 cents/kg to shell them. As a large trader, he has no contact with the farmers, but interacts with traders in the surrounding District Centres, and Kabul traders. Ramin exports in 10kg cardboard boxes, using the Turkmenistan route. Ghazni. This is a smaller market absorbing around 1,400mt/yr walnuts from the surrounding districts. Few walnuts are shelled here, either as they are softer varieties, or because they are sent to Kabul, and as walnuts are fragile, it may be preferred to shell as close to the final export packaging process as possible. Herat. The smallest market visited, trading around 1,000mt/yr of walnuts and exporting nearly all of that to Turkey, India and Iran. Traders there collect walnuts from Ghor and Badghis provinces. Some traders used Islam Qala borders for their exports, and others Turghundi.

Figure 26: Estimated traded and exported volumes in Afghanistan’s regional walnut markets

21

21

Derived from Samuel Hall field research (2011), Ministry of Economy (2010)

Balkh2,600mt/yr

TorkhamIslam Qala

Aqina

Kabul/Kapisa5,000mt/yr

Ghazni1,400mt/yr

Herat1,000mt/yr

To Turkey, India, Iran 1,000mt/yr


Circles represent traded volumes on the regional walnut markets (including domestically consumed, exported and transit weights)Weights include in-shell equivalents



Walnut Trading Dynamics

To Iran, Turkey, Iraq2,400mt/yr

Farahunknown

Turghundi


Prices

The walnut kernels obtain a wholesale price of between $5 and $7/kg, with the price rising through the trading year. White and yellow kernels obtain roughly the same price. Full walnuts obtain a wholesale price of around $1.5/kg, and these in-shell prices are rather more static through the year. See Figure 27. The chart also gives an indication of the significant margins obtained simply from aggregating and reselling whole nuts or kernels, and the potential margins gained by purchasing whole nuts and shelling them.

Figure 27: Walnut prices for kernels and whole walnuts

22

1.3.2 Walnut Demand

Around 52% of Afghanistan’s walnut production is exported according to official figures. The main demand for Afghan walnuts is from India (31%), Pakistan (27%), Iraq (27%) and the remainder is exported to Turkey and Iran. See Figure 28.

Figure 28: Consumption of Afghanistan’s annual walnut production (left) and export destination (right)

23

22

For kernels, prices adjusted for shell wastage on input price (55% kernel: shell ratio used) 23


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Start Middle End Start Middle End

Kernels (average white and yellow) Shells (average white and yellow)

US$

/kg



7425, 48%

8075, 52%

Walnut production of 15,500mt/yr


Exported

2535, 31%

2165, 27%

2154, 27%

788, 10%

429, 5%

Walnut Exports (mt/yr)

India

Pakistan

Iraq

Turkey

Iran


Overall, the export market strongly demands kernels, and just 27% of Afghanistan’s walnuts are exported in-shell. See Figure 29. Markets to the west of Afghanistan, like Iraq and Iran tend to demand 100% kernels. Research in the Delhi Dried Fruit and Nuts Market showed that Afghan walnuts had a good reputation for being ‘crunchy’, which was preferred to softer American imports. Afghan walnuts are perceived to have very similar characteristics to the Indian walnut, and as such, Afghan walnuts compete directly with Indian walnuts and struggle to get a price premium. However, as Indian walnut supply is limited, and demand is rising for walnuts (thanks in part to the recently published papers in India that acclaim the health benefits of walnuts), there is opportunity for increased supply of Afghan kernels.

Figure 29: Condition of Afghanistan’s walnut exports

24

Prices

Indian and Afghan walnut kernels are regarded as comparable by the Indian consumer, and as such half-walnuts obtain a similar price of between $12 and $13/kg in Delhi, depending on the ‘crunchiness’ and the level of breakage.

24

Annual Production figures from NAIS (2008, exports averaged over three years, Ministry of Economy (2010).

2168, 27%

5907, 73%

Walnut Exports (mt/yr)

In-shell walnut

Walnut kernel


1.4 Pine Nuts

1.4.1 Pine Nut Supply

Volumes

Afghanistan produces a very small quantity of pine nuts, estimated at 5,000mt/yr.25Although data on pine nuts is scarce, it is estimated that around 20% of the pine nuts are exported for a value of around $6m, which makes pine nuts the highest value nut in Afghanistan.26

Growing Regions

Pine nuts grow in mountainous areas above 2000m. Thus most of the 5,000mt/yr production is concentrated in the Eastern Region of the country, particularly the southern districts of Nangarhar, and the mountains in Laghman, Nuristan and Kapisa (unfortunately, all the highly insecure areas). Unlike almonds or walnuts production, pine nuts are not cultivated but grow wild in the mountains, and at harvest time, the nuts are foraged often by village children. Village traders gradually accumulate small volumes together before handing on to provincial traders.

Figure 30: Estimates of pine nut production in Afghanistan.


25

Roots of Peace (2006) estimates between 1,000 and 5,000mt/yr. 26

Extrapolation of average of 2008, 2009 and 2010 data, Ministry of Economy (2010) 27

Derived from Roots of Peace (2006)


Varieties

There is only one variety of pine nut in Afghanistan, produced by the Chilgoza Pine tree. These nuts are white and slender. The international standard variety, often grown in northeast Asia, is from the Korean Pine tree, and the nuts are yellower and fatter in shape. See Figure 31. Almost all pine nuts sold in and exported from Afghanistan are in-shell and fresh. Pine nut kernels go rancid in just a few days when exposed to the air or high temperatures, thus traders like to roast the nuts in shell as quickly as possible. This is unlike the other nuts, where only a small proportion of the kernels are roasted before eating. The pine nuts are either fully roasted for immediate retail, or partially roasted for longer-term storage.

Figure 31: Afghan pine nuts (left), and the global standard pine nut from the Korean Pine tree (right)

28

Market Dynamics

The major pine nut market is Jalalabad, with a traded volume of around 5,000mt/yr. There are only a small number of traders in this market, with Roots of Peace estimating the majority of the official export trade is held with one exporting company, Hajji Badam Dried Fruits and Nuts. There is also an unofficial trade, where Afghan agents work directly for Peshawar-based traders and the nuts go directly from the districts to Peshawar. They are roasted in Peshawar alongside pine nuts from the northern areas of Pakistan (which are of the same variety as Afghan pine nuts). There are some wood-burning nut roasters in Jalalabad, however the process is basic and is and likely just for the domestic markets.

28

Image credit: Roots of Peace (2006)


Figure 32: Estimated traded and exported volumes in Afghanistan’s pine nut markets

29

Prices

Roots of Peace estimates a wholesale price in Jalalabad of around $4.5/kg, although recent the Ministry of Economy data suggests the price is in the region of $6-$8/kg.

1.4.2 Pine Nut Demand

Estimates suggest 20% of Afghanistan’s pine nuts production is exported. The vast majority goes to Pakistan, from where they are exported to China, India and the UAE, however, as late as 2008, 600mt/yr was exported directly to China, and small quantities (<5mt/yr) as far afield as Germany, Canada and the UK. Official export figures show a dramatic slump in exports from nearly 1000mt in 2008 to just 40mt in 2010. It is unlikely exports have dropped that significantly, but the data collection associated with this product has deteriorated, or exports are not declared as they cross the porous Afghan-Pakistan border.

29

Derived from Roots of Peace (2006), NAIS (2008), Ministry of Economy (2010)

TorkhamJalalabad

up to 5,000mt/yrTo Peshawar (for roasting)950mt/yrDirect to China, India, KSA50mt

Circle represents traded volume in the major pine nut market(including domestically consumed, exported and transit weights)Weights include in-shell equivalent of kernel trade

Pine Nut Trading Dynamics


Figure 33: Consumption of Afghanistan’s annual pine nut production

30

In India, Afghan pine nuts compete with Indian and Iranian pine nuts. The majority is sold fully roasted, and on the Delhi market it was estimated that 70% are sold in-shell, and 30% shelled.

Prices

In the main trading season (between October and February, as the nuts do not keep well), retail prices are typically between $22 and $31/kg in-shell, and up to $40/kg shelled.

Figure 34: In-shell, roasted pine nuts on sale in Delhi nuts market, September 2011

30


4010, 80%

990, 20%

Pine nut production of 5,000mt/yr


Exported


2 Technical Assessment

2.1 Shelling Process

All nuts follow the same basic process from tree to kernel as shown in Figure 35.

Figure 35: Basic shelling process

Decortication involves the removal of the green hull, and in Afghanistan this is performed at the farm level as farmers use the hull of the walnut, almond and pistachio nuts to feed their animals. In more advanced industries, decortication is performed by a machine decorticator preceded by a heavy-duty debris removing machine. Grading involves the sorting of nuts into different types, varieties and qualities and removing obviously contaminated or bad nuts. This is often performed at the farm and trader levels. It is common to see traders (or their boys) grading sacks of almonds in the market on the floor. Sizing is an optional process. Here, the nuts are sorted into categories of different size, each category having 2mm different width or length from the next category. It can be performed manually or mechanically, vibrating the nuts through grids or sieves with different sizes of perforation, though few traders in Afghanistan were seen to perform this task. Sizing is essential predecessor to mechanical shelling, else the machine will break an unacceptable proportion of the nuts. Pine nuts finish the basic process here, as they go rancid quickly when shelled. Shelling is also an optional process depending on the trading agreement. It can be performed manually or mechanically, passing the nuts through rollers that are adjustable for the size of input nut. In Afghanistan, the vast majority of nuts are shelled manually by women with hammers, apart from one machine installed in Uruzgan (see below). Internationally, mechanized shelling is standard, although in Afghanistan’s primary export markets (India and Pakistan), roughly 50% of the nuts are still be hand shelled. The shelling in Afghanistan is often performed for free, as the shells are given the women involved where they are used for fuel or animal bedding.

Decortication

Manual, done at

farm level

Grading

Manual, done at

trader levelstorage

Sizingstorage

Shellingstorage

Separating

Hulls

Sold for animal feed

Very small nuts

removed

Input

Harvested

Nuts

Output

Kernels

Shell

Sold for fuel/

animal bedding

Bad, mis-shapen,

irregular variety

nuts removed

Unshelled nuts

Pine nuts bypass

shelling process

Output

Sized

shells

Almonds, pistachios, walnuts

and pine nutsAlmond, pistachio

and walnut kernels

Input

and

Output

Mandatory Step Optional StepWaste/ secondary

product


Figure 36: Women breaking almonds in Kandahar

Separating involves removing the shell from the kernels. When done by machine, this involves a complex system of vibrating the nuts and blowing away the shells, and depends on a precise calibration of the machine to cope with the particular kernel weight. Storage of the nut products occurs at various stages in the process, particularly between the farm and the trader (where the nuts might sit in a local trader’s house for a few weeks, until enough are collected to transport to market), and for up to a season in the trader’s premises. It is vital that the conditions of nut storage are cool and dry to prevent toxin or microbe development. For this reason, international warehouses suggest fumigating incoming nuts and storing them in individual containers to minimize cross-contamination. Cool and dry storage will also be needed after grading as the shelling machine will only be run in batches.

Figure 37: Incoming almond separation

31

31

Image credit: Roots of Peace (2006)


2.2 Post-shelling Process

Post shelling, there are a variety of optional value-added processes, as shown in Figure 38.

Figure 38: Post- shelling processing

Roasting involves passing almond kernels, open-in shell pistachios and pine nuts through a roasting oven in a controlled manner (e.g., 160°C for 20 minutes for almonds). Cheaper roasting ovens typically operate in a batch manner, allowing different products to be placed in the heated vessel for a certain period of time. More expensive ovens are in-line. In Afghanistan, pine nuts are the only nuts that appear to be roasted prior to export, but this is done in a rudimentary fashion with a wood burning oven. Salting and flavoring involves tumbling the kernels through brine or flavor solutions. This can be done manually or by passing the kernels through a rotary drum containing a brine or spice solutions. Blanching pistachio kernels and brushing off the peel produces GPKK. Cleaning, inspecting and sorting can either be manual, using either a static sorting table or conveyor belt, or mechanically augmented with laser scanners that detect color variations and smaller defects. The most advanced scanners can identify and reject nuts with biological contamination such as aflatoxin.

Blanch

Salt or flavour

Apportion

Pistachio

kernels

Final

productWalnut

kernels

Roast

Air clean,

final defect check

and color sort

Metal check

(X-ray)

Almond

kernels, pine

nuts,

pistachio

open-in shell

Bad, mis-shapen,

irregular variety

nuts removed

Protective, retail

or transport

packaging

Input

and

Output

Mandatory Step Optional StepWaste/ secondary

product

Sterilize


Figure 39: Manual almond inspection in Kandahar (left) and semi-manual almond inspection in the US (right)

32

Metal checking involves passing the product through an X-ray machine to identify any metal particles in the final product. Sterilizing the product is a requirement of many importing countries (including US almonds coming into India), which often involves fumigating the almonds with phosphene (or similar) to kill any remaining moulds on the product just prior to packing. Apportioning involves measuring the product to the customers’ requirements, whether retail or wholesale. Packing can be done in a variety of ways. For wholesale or bulk transportation, Afghanistan’s almonds and pistachios (kernels and full nuts) are usually traded in sacks of around 80kg, and walnut kernels in cartons of 10kg lined with plastic bags (as the walnut kernels are notably more fragile than the other kernels). However, the international wholesale market is demanding improved packaging, particularly 5kg, 10kg or even 20kg vacuum packs that can support shelf lives of up to two years. For the domestic markets in Afghanistan, India and the UAE, nuts are often (re) packed in 100g, 250g, 500g and 1kg retail packs. In Afghanistan, this is most commonly done by hand using semi-manual electric sealing machines on branded bags (see Figure 40).

Figure 40: Afghan packaging: 80kg sack of almonds for bulk export (left), bagging Afghan almonds in stand-up

pouches for domestic and Indian markets (center), and typical Afghan packaging seen on reel (right)33

32

Image credit: Roots of Peace (2006) 33

Image credit (right): GIZ


Figure 41: International packaging; 10kg vacuum packed bags of kernels for wholesale (left), palletized 10kg

boxes of almond kernels also for wholesale (right) 34

Finally, it should be noted that for specific nut industries, there are highly advanced machines that have been developed for particular tasks. For example, in the pistachio industry, machines have been developed to mechanically open closed pistachios such that they resemble naturally open pistachios. These technologies have been designed to maximize revenues in cost-pressured industries, a situation which Afghanistan is not yet in. Thus, for the purposes of this report, only the basic equipment required for start-up are explored, and more advanced equipment can be evaluated in later stages of the project.

34

Image credits: left: http://www.california-almonds.com, Roots of Peace (2006)

http://www.california-almonds.com/


2.3 Current Agro-industrial Initiatives

Before options for different types of nut processing equipment are presented below, it is instructive to assess the successes and failures of several recent donor-supported and private-sector initiatives that have tried to introduce food processing equipment into Afghanistan.

2.3.1 Donor or donor-supported initiatives

GIZ Uruzgan

GIZ’s Uruzgan Provincial Development Program (UPDP) has installed an almond grading, shelling and sorting machine in Chora, Uruzgan. The machine can handle around 4000mt/day, but so far has been used for far smaller amounts. The machine chosen was a Chinese model, the Qaiopai TFXZ500 – I, which retails for around $20,000 FOB Dalian, China (the newer model, the TFXZ500–II, with improved separation, retails for $31,000 FOB China). UPDP program directors visited China for training and testing with Afghan almonds and found that with adjustments, the machine performed acceptably with the mix from Uruzgan. The main adjustments required were use of 7 grading sizes to cope with the Afghan mix, which required three grading sheets in series (normally just one or two are used if almond sizes are more consistent), which produced almonds in the fractions shown below. See Figure 42 and Figure 43. The chart shows that of the ungraded almonds put into the machine, around 30% are commercially usable (those shells > 15mm in width that produce a marketable kernel). The machine will not shell almonds <13mm in width. The machine required some adjustments to get it working properly, but is now thought to be a useful asset, and indeed, the only machine successfully working in Afghanistan.

Figure 42: Fractions after sorting Afghan almonds in Uruzgan by width

35

35

Interviews with GIZ project manager

0%

5%

10%

15%

20%

25%

<13mm 13-14mm 14-15mm 15-16mm 16-18mm 18-20mm >20mm

% o

f in

ou

t al

mo

nd

s

Fractions after sorting, of Uruzgan Sangaki almonds (%), by width


Figure 43: A TFXZ500 grading screens (left), shelling unit (centre), and sorting unit (right)

36

Overall, GIZ in Uruzgan found the shelling equipment worked best with hard shell types, with an average width 16-21mm, length 29-30mm, with a price not exceeding $1.7/kg, and with incoming batches with similar characteristics must be no less than 90mt, else the machine rearrangements are too frequent to make production viable.

Figure 44: Testing the grading screens with Afghan almonds in China

37

Roots of Peace (ROP) in Mazaar-e Sharif

ROP started a joint venture with DFPA and USAID’s Accelerating Sustainable Agriculture Program (ASAP) to build a nut processing facility in Mazaar-e Sharif, whereby traders at the DFPA would purchase a plot of land and build the facility, and ROP would install the nut processing equipment. However, while the factory was built, the American-manufactured equipment purchased by ROP was tested in Kabul and was found to break around 15% of the kernels, and the DFPA rejected the machine. The relationship then collapsed and the facility was transferred to In fact, three machines were purchased, at a cost of $120,000 each, but they faced three main problems:

a) The multi-stage grading screens were not suitable for Afghan almonds, causing unacceptable levels of kernel breakage

b) The post-shelling screen did not sort the unshelled kernels from the shells c) The aspirator that should have sucked away the shell sucked away many kernels due to their

low weight

36

Image credit: Qaiopai Company. See www.qiaopai.com 37

Image credit: GIZ

http://www.qiaopai.com/


These machines are now in storage in Mir Bacha Kot in Shomali, and no attempts have been made to alter the machine. There are suggestions that a UV sterilizer purchased as part of the package is working and is used, but no further evidence could be obtained of this. The factory is still thought to be empty.

GIZ in Mazaar-e Sharif

GIZ have been the most active donor for the nut value chain in Mazaar-e Sharif. In 2008 GIZ formed the Dried Fruits Processing Association of Mazaar-e Sharif (DFPA), under the leadership of Ahmad Javid (son of a large trader), which started off with 60 members from the market. This number has fallen to around 25 members as traders have pulled out when they were asked to make investments for facilities and equipment (the investment requested was around $5000). GIZ has supported the construction of the processing facility, and it is currently used for sorting and packaging dried fruit and nuts (almonds and pistachio), cleaning cumin, and cutting licorice root since August 2011. There have been trial exports to Indian from this facility. It is not clear if there are any more plans to try and install a nut shelling machine.

Figure 45: GIZ’s new nut processing facility in the Mazaar-e Sharif Industrial Park

In 2009 GIZ focused on the supply-end of the value chain, and in 2010 on interventions in the trading and processing activities. In 2010 GIZ purchased an automated nut packaging machine for producing 500g retail packs for the use of DFPA members at a cost of $40,000. This machine is installed in the underground warehouse in the market. Two similar machines are installed in Badakshan and Kunduz. The machines were purchased from India, though they were installed with no technical support, and none are currently working, in spite of local efforts to fix the problem with the bag heat sealing system. The Indian manufacturers (UFLEX) will not visit Kabul after the Indian guesthouse attack in 2010. GIZ has plans to send several DFPA members and a local engineer to India for training (as of September 2011).


Figure 46: GIZ’s UFLEX packaging machine in Mazaar-e Sharif almond market

GIZ had also considered investing in a nut shelling machine, and had got as far as sending 50kg of almonds to India along with a DFPA member (Hajji Nasir) for testing. Members of DFPA (and their counterparts in Badakshan and Kunduz) were preparing to invest in a machine, but were once again unimpressed with the shelling performance and the high damage rate, and abandoned the idea. However, the failure of the Indian machine to perform was more likely due to the lack of any prior grading of the almonds before pouring them into the shelling machine. This basic overlooking of a fundamental step in the mechanized shelling process is indicative of the very low understanding of the mechanized shelling process by Afghan traders. Unlike the mechanized raisin cleaning process, which is well known to many traders, the mechanized nut process appears to be completely alien to most traders. It will remain alien until someone (most likely to be a private investor) manages to demonstrate a machine processing substantial volumes of nuts. The shelling machine tested in India was at the very bottom of the market costing just $5000 - consider the Uruzgan machine cost $25,000 and the Roots of Peace machines purchased several years ago cost over $120,000. This very possibly this contributed to the poor results. GIZ in Mazaar–e Sharif were unaware that GIZ in Uruzgan (GIZ-UPDP) had invested in a Chinese machine that has shown reasonable performance over the last year. Thus, the popular belief among traders is that Afghan nuts cannot be mechanically shelling because of the inherently wide variations in size and range of varieties compared with the uniform Californian kernels the machines are designed for. It is commonly claimed that in Balkh there are 35 common varieties that are all mixed together, and GIZ suggested that success in Uruzgan was probably due to a much lower number of varieties in the south, which could be more readily sorted. After seeing the varieties available in the market, this appears to be more of an excuse to maintain the status-quo rather than a genuine barrier. GIZ has had success in encouraging traders to sort almonds by variety, and it appears to be possible to buy substantial quantities of 90% pure-by-variety almonds in the market. However, whether a mix of Mazaar-e Sharif hard-shelled almond varieties, scattered with a few soft-shelled almonds can be successfully mechanically graded and shelled must be rigorously tested prior to any equipment purchase.


Finally, it should be noted that ties to current low-cost shelling arrangements form a substantial barrier for traders to invest in, or hire, shelling machines. Most traders in Mazaar-e Sharif had heard about shelling machines, but all believed them to be useless: only one pistachio trader said he would be interested if the breakage rate was lower than by hand, and the cost was under 30 cents/kg. Thus, unless cost and quality advantages from mechanized shelling are demonstrably clear to traders in the market, it is unlikely that traders would alter their current practices.

Tabasom Raisin Factory in Kabul

The Tabasom Factory is a raisin processing factory in the Bagrami Industrial Estate to the east of Kabul. By a long way, it is the most advanced raisin factory in Afghanistan, using a European laser sorting system and X-ray metal detectors. New Argentinean equipment will be installed shortly. This processing plant has been financed with the owners’ own resources and has received some USAID support with technical assistance. Tabasom brought foreign technicians to Kabul to train its Afghan staff, and whenever new equipment is purchased, Tabasom requests from the supplying company a training plan to ensure Afghan workers will be able to keep running and maintaining the equipment. However, this has at times been problematic as visas have been hard to obtain, though Turkish companies appear to be willing to send technicians to support the facility. Currently, Tabasom is trying set up their processing system in line with Good Manufacturing Practices (GMP) and Hazard and Critical Control Points (HACCP) to prevent contamination of raisins and ensure safety and quality; however, obtaining valid ISO certification is problematic it appears the nearest (non-rubber stamp) certification body is in India. See later sections for practical steps for GMP/HACCP. Aside from the Omaid Bahar juice factory in Kabul, Tabasom is the first major plant to try and adopt these quality standards, which are key to accessing more discerning markets than the typical Russian, Pakistani or Indian dried fruit markets. In a recent interview with the manager of Tabasom, the following problems were identified with the food industry in Afghanistan: these are just as applicable to the nut industry as for raisins.

There is a complete lack of a traceability system to identify products with potential or real contamination.

There is a lack of laboratories in Kabul to analyze and test pesticides residue contamination, aflatoxin and bacterial contamination. Tabasom has installed a laboratory (but it did not appear used in the recent visit).

Raisins supplied by farmers are very dirty. Tabasom is one of the few raisins processing plants that have a double washing system in the processing line. Raisins in Afghanistan need to be washed twice and sometimes even three times.

Generating sufficient working capital is a constraint for the business.


Figure 47: Tabasom’s sorting process (left), X-ray checking of boxed raisins (centre) climate controlled

warehousing (right).38

2.3.2 Private initiatives

There are several private nut processing initiatives that new investors need to be aware of, as they will be strong competition for supply and markets. The Sabed Saqib Company is one of the largest nuts trading companies in Afghanistan and has facilities in Kabul and Mazaar-e Sharif. Nuts are still shelled by hand, but the company has invested in an $80,000 packaging machine (believed to be in Mazaar-e Sharif) larger than the GTZ packaging machine shown above. This company trades in a wide range of products, as an advisor to the company said that ‘to make it work, you can’t just do almonds.’ Hajji Hassan is another trader with land in the Mazaar Industrial park (bought with USAID support) from where he collects and ships melons. Together with a group of traders, this Kabul-based trader had also planned to invest in an almond shelling facility (and rumor has it, a salting line, too), and got as far as building the basic infrastructure of a site in the ACCI-side of the Mazaar-e Sharif Goremar Industrial Park before the project collapsed (reasons unclear). The investors in the project, Afghan Growth Finance LLC, hold the site as collateral, and are keen to sell the site. It is believed was the owner of the industrial park in the, which reportedly has now defaulted to Afghan Growth Finance LLC. Hajji Ehsan is yet another trader with plans to invest in a fruits and nuts facility on the Mazaar Industrial Park. He planned to start last year, but to date (September 2011), has still not completed acquisition of the land.

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Image credits: www.tabasom.co

http://www.tabasom.co/


2.4 Equipment Requirements

There are several equipment options for the mechanized process outlined above. Equipment should be chosen based on the following criteria:

Type capability

Processing capability

Size requirements

Technology level

Operability in Afghanistan

2.4.1 Type Capability

Certain processes are common to all types of nut the factory might want to process, but others are better performed by a unique piece of equipment.

Common Processes

Providing the equipment has capacity to process the volumes required, the following processes can share the same equipment:

Roasting - batch

Blanching - batch

Salting or flavoring - batch

Inspecting - process

X-raying - process

Fumigating batch

Apportioning - process

Packing - process The batch processes will all require set-up according to the product on offer, e.g., roasting almonds will require a different temperature profile compared with roasting pistachios. Other processes, like X-ray, will not change and the plant can be arranged so all products flow through the X-ray bay.

Unique Processes

Sizing

Shelling

Sorting These processes are recommended to be unique. While the grids could be changed on the sizing tables between almond, walnut and pistachio, this would take considerable time, and it is better to have dedicated sizing bays for each nut. Similarly, multi-nut shelling equipment is available on the market, but is typically a high cost, high-specification plant, or a cheap system that is a poor compromise for one of the nuts. For example, a machine designed to shell almonds can often shell walnuts, but will produce only ¼ walnuts, which would not be competitive.


2.4.2 Processing Capability

Crescent Trade estimate they would like to produce around 2,000mt/yr of high-quality products. In an effort to place a maximum size on the facility required, it will be assumed first that all of this volume will be in almond kernels produced from hard-shell almonds. Based on a 70% rejection rate as found by GIZ Uruzgan, this would require an input of 13,000mt/yr of hard-shell almonds. This is felt to be a rather conservative estimate, and if traders can be relied upon to provide only larger almonds, and the rejection rate is around 40%, the input requirements may be assumed to be 7,000mt/yr. This would require a shelling machine (which shall be assumed for now to be the pacemaker process) with a capacity of around 3.5mt/hr.39 Considering the output is unlikely to be 100% almond kernels, and production is unlikely to hit this figure within the first two years of operation, this figure is an overestimation, but it starts to give some direction to the mechanization requirements for the plant:

High-technology and high-capacity equipment designed for US producers can typically shell around 3.5mt/hr of one type of nut, so one of these machines would be adequate per nut type. However, there would likely be significant excess capacity if multiple machines were purchased to process different nut types.

Lower-technology equipment can typically only process smaller volumes. At the very bottom of the market, machines can shell 0.3mt/hr, and at the top end around 2mt/hr. Thus where one or two of the larger machines might be required, if the cheaper machines were purchased, a whole array of between six and twelve machines might well be needed to meet the final production volumes. However, the benefits of purchasing multiple machines might become evident through the ability to process more types of nut more quickly.

2.4.3 Plot Requirements

The smallest low-technology line (0.3mt/hr machine) occupies a factory space of 20x3x2m (including access space), and thus an array of say, twelve of these machines would require a floor space of around 700m2. The higher-end low technology machines processing up to 2mt/hr would occupy a factory space of 26x9x7m (including access space) and would require around 230m2, and the largest US machines processing up to 3.5mt/hr would require 16x14x9m of factory spaces translating to around 230m2 of floor space. Thus it can be seen the larger machines are much more economical with the floor space requirement than an array of smaller machines, though the 9m height of the largest machines could pose a problem for some of the older warehousing facilities available in Afghanistan. Processing other types of nut would also require floor space, though it is unlikely that the production volumes of the other types of nut would demand machines of a similar size to the primary almond shelling machine. However, the biggest requirement on space is not the processing equipment but the inbound storage. If it is assumed the annual input requirement of 7,000mt is required to be accumulated in one period, then this is estimated to require a floor space of around 3,500m2 if the incoming sacks of almonds are stacked 3m high. In addition, buffer storage will be required in the factory to take account of the seven grades of almond produced, which is estimated at 300m2 (considering one week of almond output is around 80mt and an area enough to store seven weekly supplies will be needed). Other processes such as roasting, blanching, inspecting, packing are less space-dependent, and are expected to take around 500m2. Outbound storage requirements will be small, and assuming that the 16mt/day output will be consolidated into container shipments every 1-2 days, the area required for outbound storage is around 100m2. A small office space and workers’ facilities will be required too. Thus, the maximum factory requirements for the Year Three operation envisaged by Crescent Trade, including maneuvering space 39

Assuming 11 operational months per year, 22 days a month, 8 hours per day.


for trucks, is around 5,500m2 (around 75x75m). This is likely too large for start-up operations, but steps can be taken to reduce the footprint substantially by altering the product mix and purchasing mode.

2.4.4 Industrialization models

The equipment used at each of the stages defines the overall level of technology of the process: The high-technology model. This model would use high-specification US or European equipment for the sizing, shelling, separating, inspecting, apportioning and packing processes. Conveyance processes would also be mechanized. Other batch processes such as roasting and blanching and flavoring benefit less from higher technology and these equipments will be assumed of lower technology (see next model). High-specification nut shelling equipment is capable of large volumes (up to 10mt/hour in some cases), but is space consuming and very expensive. See the integrated walnut shelling line manufactured by industry leader Borell shown in Figure 48 below.

Figure 48: A typical high-technology almond processing line

40

40

Image credit: jborrell.com


This type of equipment would be used with several laser sorting systems to reject damaged, undersized or discolored nuts along with undesired debris. Two such laser sorting systems are in use in the Tabasom factory in Afghanistan, and the industry leader, Best Sorting, recommended that the Helius 640 free-fall sorter would be workable in a facility processing a variety of nuts. This machine can process up to 2mt/hr, thus one would adequately meet the output of premium kernels. While the laser sorter could be adjusted quickly to sort each nut type, the shelling machine would have to be dedicated for each nut type.

Figure 49: Best Sorting’s Helius scanner working with Afghan raisins (left), and the complete Helius 640 free-fall

sorter (right)41

The sorted nuts would then be packed using an in-line automated apportioning and packaging system. Filling of ‘stand-up pouches’ of sizes from 100g to 1kg is can be done with automatic equipment that apportions, fills, nitrogen flushes and heat seals the packs (a variety of pack designs can be used in most equipment). This type of machine would require a vacuum pump and nitrogen supply to work. The manufacturer most often used in India is UFLEX (the same company who supplied GIZ in Mazaar-e Sharif), and their PFS range can handle up to 50 stand-up pouches per hour, which at either pouch size would adequately meet the estimated Year Three throughput of around 20kg of exportable product per hour. Wholesale packing in 20kg vacuum packs would necessitate a semi-manual vacuum bagging machine; UFLEX’s VNS range is commonly used for this type of process. See Figure 50 below.

41

Image credit: Best Sorting


Figure 50: UFLEX’s PFS station rotary packing machine for retail packing nuts (left), a typical 120g ‘stand-up

pouch’ output from the machine, and a UFLEX VNS wholesale vacuum packing machine (right)42

Capital Expenditure

Depending on the equipment procured, a dedicated almond grading, shelling and sorting line of the volumes required could be up to $500,000 for the integrated machine seen above. The laser sorter is estimated at $300,000, the automated retail bagging machine as described above would cost around $120,000, and the wholesale vacuum packing machine around $16,000. Conveyance systems would be an additional cost for this high-technology model, and when the other process components are considered such as roasting, salting and X-raying are considered the capital investment would approach $1m. To process other nuts such as pistachio and walnut, additional shelling machines would be required, though machines of smaller capacity could be considered.

42

Image credit: UFLEX

Strengths Weaknesses

Support production of a range of top-quality products

Enables access to overseas western markets (providing the GMP/HACCP system can be certified)

Would be the #1 nuts processor in Afghanistan and gain marketing advantage as a result

Would be supplying high-technology packaging into India, so would be perceived as a market leader

Commissioning and operating complex equipment in Afghanistan is high risk both in terms of operating the equipment and the longer-term security situation

Many equipment manufacturers do not wish to send technicians to Afghanistan

Opportunities Threats

Elements of the processing system would be in place to start processing dried fruits with only minor adjustments to the processing equipment

Other traders might view the new venture as a serious threat and make moves to shut it down


The Afghanistan low-technology model. This model relies heavily on manual processes except where technology offers a key quality advantage. Where technology is used, for example in the nut sizing, shelling and separating processes, the equipment chosen is simple and of low-technology. Thus, many processes, including dehulling, grading, cleaning, defect checking, color sorting, conveying and bulk and retail packaging are all done manually or semi-manually (the packing process may be assisted with machines to support vacuum sealing or heat sealing of bags). Within the low-technology model, there are a variety of options for the key piece of equipment, which is the sizing, shelling and separating equipment. As with high technology equipment, it is recommended to purchase equipment dedicated to each nut type. At the very bottom end of the market are simple manual machines like the type invested in occasionally by individual traders in Afghanistan, but these machines cannot process the volumes required, not are the kernel breakage rates particularly good. The next level up is represented by the Chinese machine of the type purchased by GIZ in Uruzgan (see above), of which different versions are available to shell almonds, pistachios and walnuts. From GIZ feedback on the almond cracking machine, this particular Chinese manufacturer has delivered a robust, capable and cheap machines that appears to be fairly well suited to Afghan almonds, although its processing capacity of 0.3mt/hr is rather low compared to the eventual, overall processing capacity of 3.6mt/hr. At the top end of the low-technology range are Indian, Turkish and Iranian machines, which typically process between 0.5mt/hr and 2mt/hr of each nut type, which would match the required output much better considering perhaps two or three such machines would be required for each nut type.

Figure 51: A high-end low-technology almond shelling line offered by TabrizKar

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Roasting, salting and blanching equipment is fairly simple technology, and it is recommended for both high and low-technology options to stay with cheap equipment, particularly as demand for roasted and salted products is currently uncertain. There are many Chinese manufacturers supplying such equipment at the very low end of the market, and as expected, Iranian, Indian and Turkish manufacturers too in the middle of the market.

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Image credit: www.tabrizkar.com

http://www.tabrizkar.com/


In the low-technology model, the inspection and packing processes are manual, whereby groups of women are equipped with long sorting tables and the nuts are manually picked over before they are weighed using scales and poured into bags. This process currently happens in Afghanistan, and apparently can meet Indian retail requirements, as Figure 40 shows women in Kandahar packing for Indian retail markets. The bags can be sealed with support of a simple bag sealing machine as shown in Figure 52. If wholesale vacuum packs are to be produced, the semi-manual machine shown in Figure 50 could be used.

Capital Expenditure

The Qaiopai Chinese machine costs around $30,000 and the rather more capable Iranian machines cost between $80,000 to $210,000 for capacities of 0.5mt/hr and 2mt/hr respectively. The equivalent Turkish machines are perhaps 30% more expensive than the Iranian machines, and roasting and blanching equipment could be purchased from Chinese or Iranian manufacturers for around $50,000 altogether. Together with costs for sorting tables, weighing and bagging equipment, the low technology option would require capital expenditure between $100,000 and $250,000 for one nut type. Finally, the option of purchasing one (or more) of the three Roots of Peace almond shelling machines could be investigated, but it is not clear how much rework would be required on the machines to make them process Afghan almonds.


Reliable processing based on lessons learned in GIZ Uruzgan

Easier to commission, operate and repair equipment than more complex machinery

Produces nuts that would be acceptable to the existing Afghan markets

System might be perceived as low-threat to existing traders

Provides employment to the community

Factory would struggle to produce nuts of the right sorting consistency and quality to be able to export to western markets, even if the GMP/HACCP system was in place

Machinery may be less reliable than better-engineered western equivalents


Using lower cost equipment could enable a wider range of products to be produced from the start, as more equipment could be afforded

Quality and consistency of output may only be marginally better than the fully-manual model, thus the product might not be able to attract the prices needed to recover the investment


The manual model. The manual model would involve setting up a processing facility in much the same way current traders do, whereby a large warehouse is employed along with a large number of staff sorting, shelling and packing almonds manually. To produce volumes of 2,000mt/yr around 600 staff would be required. The manual process would be supported with static sorting tables and appropriate numbers of weighing scales and a bag heat sealer as shown in Figure 52. The capital expenditure would be extremely low could well be under $20,000.


Very low investment costs means very low risk

Proven method

High-quality results in some cases (particularly walnuts)

High flexibility in product mixes

The workforce potential is almost endless (unskilled women);

Hiring women from neighboring areas could strengthen the social acceptability of the factory (hence its security);

USAID (or other donors’) vocational training programs would probably be strongly interested in an initiative that generates additional income for unskilled women.

No distinguishing product features


Could rapidly add new products with minimal training and investment

Would be directly competing with existing traders for markets

Figure 52: Emplex’s MPS 6100 semi-automated bag sealer (left) can produce retail packs like this 200g bag of

almonds (packed in Dubai for Indian consumers), without nitrogen flushing (right).


The distributed facility model. This model would mix components from the high-technology model and the low-technology model with the objective of achieving a top-quality product with minimum risk to the investment. This would mean only low technology equipment is placed in Afghanistan, and the higher-technology laser sorting systems and retail packing machines could be installed in a more favorable operating location, probably closer to the home markets. This would mean Afghanistan uses low-technology grading, shelling and sorting, roasting and flavoring machines, with basic manual quality sorting and vacuum wholesale packing. The wholesale vacuum packs would then be sent to a second location overseas (India or Dubai, for example), where they can be stored until they are required, and then opened, laser sorted, and packed in the retail packs. It could be considered to send all of the processing overseas, but that would incur significant costs in transporting the shells, which are around 50% of the weight of the product. There is of course a cost incurred here transporting bad kernels, but if a rigorous manual sorting process is conducted in Afghanistan before vacuum packing, then this can be kept to a minimum. Similarly, there is a cost incurred by operating two facilities, but if the second location is operated on a lean model, it would not need to be a large facility.

Capital Expenditure

The equipment based in Afghanistan would cost up to $250,000, and the sorting, packing and conveyance equipment based overseas could cost up to $400,000, bringing the total investment to around $0.6m. To process other nuts such as pistachio and walnut, additional shelling machines would be required in Afghanistan, though machines of smaller capacity could be considered.


Support production of a range of top-quality products while minimizing risk in Afghanistan

Enables access to overseas western markets (providing the GMP/HACCP system can be certified)

Could be flexible as sorting system might only be used for those markets that demand rigorous sorting, but all would pass through the retail packing machine

Would not be recognized as #1 producer in Afghanistan and might lose marketing advantage as a result

Two facilities would have to be operated, increasing overheads

Wastage of packaging materials


Could combine with small warehousing in the country of operation to buffer against export problems in Afghanistan, and to ensure product can meet the market’s peak periods

Could install equipment in low-tax areas


2.4.5 Operability in Afghanistan

The final criteria for evaluating equipment must be the ability for the equipment to operate successfully in Afghanistan. This depends on choosing a design of inherently low complexity that has been rigorously tested with Afghan products, which can be installed and commissioned by the vendor, and easily repaired by Afghan technicians with readily available spare parts. Unless there is an experienced team in Afghanistan, in situations where the vendor is not prepared to visit Afghanistan to commission and troubleshoot the machine, the vendor should not be short-listed. The $50,000 GIZ packing machine that sits unused in Mazaar-e Sharif and the three Californian almond shelling machines bought for $360,000 that failed to crack Afghan almonds are testimonies to poor vendor and equipment selection. It is highly unlikely that Western manufacturers themselves would visit Afghanistan to commission the equipment, particularly so given the worsening security prognosis. However, some manufacturers like Best Sorting sub-contract to Turkish or Pakistani technicians who are happy (for now) to visit Afghanistan to commission and maintain the equipment, though interviews with the managers at Tabasom suggests visas have been problematic in this regard. Indian companies appear reluctant to visit Afghanistan, particularly following the attacks on Indian guest houses and the Indian Embassy in Kabul. This is one major reason why the GIZ machine was never commissioned, though correspondence with the manufacturer indicates some flexibility in this position. Most Chinese manufacturers refuse to visit Afghanistan, though the GIZ machine in Uruzgan was largely successfully commissioned (albeit with some persistent problems in the separating stage) due to the simplicity of the machine and extensive practical testing in China. The Iranian company contacted was happy to visit Afghanistan, and the common language would be a clear advantage for commissioning and training.


3 Operational Assessment

3.1 Regulatory Environments

3.1.1 Afghanistan

There is no excise or export duties applied to fruits and nuts in Afghanistan, though at the Aqina border traders reported paying a customs clearance and handling charge of $300 per consignment. Import duty for machinery and equipment in Afghanistan is between 4% and 5%.44 Plastic bags, carton boxes, pallets and other packing/packaging material is 2.5%. When goods are imported to Afghanistan there are two other charges besides the import duty to clear the cargo at Custom House. These are: taxes and Red Crescent fee. Taxes are charged at 4% of the CIF value of the cargo plus the Import Duty, and Red Crescent tax is charged at 2% of the Import Duty value. Consider the example below for a shelling machine imported CIF to Torkham border:

Example of Duties on $80,000 imported shelling machine Rate USD

Invoice Value 80,000

Import Duty 4% 3,200

Taxes (on invoice value + import duty value) 4% 3,328

Red Crescent Tax (on import duty) 2% 64

Total Customs Duties 6,592

Total Customs Duties as % of invoice 8.2%

The Afghanistan Chamber of Commerce and Industry appears to be powerful in Kabul. Several weeks ago, the ACCI dictated there would be a ban on exports to Pakistan, and traders had to comply. Afghan traders in Kabul had little idea of the real impact on their businesses of worsening Afghanistan-Pakistan trade relations, as most simply supply nuts to agents of Pakistani and Indian traders based in Kabul.

3.1.2 India

Import duties are applied by receiving countries, though Afghan traders generally have very little visibility over them. Pakistan is thought to apply these taxes fairly irregularly. A more detailed study of Indian import duties was undertaken. In general, most imported nuts have an import duty set at 4% of their import value (based around the minimum value listed), with all almond products having an additional $0.4/kg levied. The table below shows that almonds in particular are heavily taxed by India, with up to $1/kg of import duties to be expected for kernels. Pistachio kernels are taxed surprisingly less, considering their higher relative value. 45 Indian data for walnuts was unavailable, but other walnut traders interviewed reported import duties of $1.2/kg for Iran and $2.7/kg for Turkey.

44

Specifically, roasting machines 4%, weighing machinery 4%, shelling machines 4% and spare parts 5%, laser sorting machines 4%. 45

Data from: Concessional duty under AIPTA notification No. 76/2003


3.1.3 Dubai

Compared with India, the United Arab Emirates (UAE) has a favorable taxation regime, but rather more stringent paperwork requirements. Dubai has no import or export duties on dried fruit and nuts, nor are there any special duties levied on Afghan products. As expected, however, there are customs clearance and handling charges, on average around $580/container (the rate depends on the product and the weight). A variety of documentation is required for import into the UAE, including a valid trade license (registered with the local municipality and the local Chamber of Commerce), a Delivery Order (or airwaybill, depending on the transport mode), a commercial invoice, a packing list, a Certificate of Origin (that must be certified by the UAE Embassy in Afghanistan), a Health Certificate and a Customs Bill of Entry. The UAE does not appear to require a Phytosanitary Certificate for incoming products, and Afghanistan has a track record of exporting dried fruit and nuts ($11m in 2008) to the UAE which has been achieved in spite of a weak phytosanitary checking regime in Afghanistan. The UAE’s labeling requirements are also stringent, and all labels must contain the product name and brand, the ingredients in descending order of proportion with any allergens highlighted, any additives, net weight or volume, production and expiry dates, country of origin and the manufacturer/exporter’s name and address in Arabic at minimum. These requirements are why items are often repacked or relabeled in for the UAE market.

Indian CodeMinimum value for

calculating duty ($/kg)

Approximate

duty($/kg)

Hard in-shell O80211.00 1.8 0.5

Soft in-shell O80211.00 4.9 0.6

Kernels O80212.00 6.5 1.0

Kernels (whole) O80250.00 9.0 0.4

Kernel (broken) O80250.00 6.9 0.3

Roasted open in-shell O80250.00 4.3 0.2

Semi Roasted O81340.94 15.0 0.6

Fully Roasted O81340.94 15.0 0.6

Kernels O81340.94 20.0 0.8

Imported Product

Almond

Pistachio

Pine Nut


3.2 Obtaining Land

The Afghanistan Investment Support Agency (AISA) confirmed that there are no remaining plots in AISA’S Kabul or Mazaar-e Sharif Industrial Parks (Bagrami and Goremar Industrial Parks respectively); furthermore, Phase 2 of Kabul’s Industrial Park, which has not yet started construction, is fully booked. However, land is available in the Kandahar Industrial Park and AISA are very keen to attract investors. To obtain plots of land, AISA requires that the company registers in Afghanistan and supplies a copy of the business plan to AISA. This requirement has often discouraged exporters from obtaining AISA land as they believe that government will know all their financial movements and try and charge more taxes. However, in Afghanistan, companies do not need to be registered with AISA to export or import goods, and only need to get their export-import license with the Ministry of Commerce, which is the mode of business most exporters use. The Kandahar option has been discounted for safety reasons that would make the supply chain extremely difficult to manage; however, it should be noted that AISA is offering a very attractive deal to potential investors. The Kandahar Industrial park is located very close to the airbase and has several undeveloped but fully-serviced plots available for around $87,000 for a seven year lease,46 which is believed to be significantly cheaper than comparable plots would be in Kabul or Mazaar-e Sharif. The Afghanistan Chamber of Commerce and Industry (ACCI) also operates an industrial park in Mazaar-e Sharif that is adjacent to the AISA park, though the site is largely undeveloped and lacks all services, and the roadmap for installing the services is less than clear. A half-developed site for a nut processing facility is located in this park (see later section). In spite of a shortage of AISA/ACCI Industrial Park plots, warehousing should not be too difficult to find in Kabul or Mazaar-e Sharif, particularly around the Jalalabad Road area of Kabul, where a large number of almost defunct raisin processing plants exist that could be purchased or rented. While leasing these older facilities might not be conducive to modern food processing hygiene requirements (see later section), for the start-up phase such a facility might be adequate.

46

The land is priced at $18/m2, with a minimum plot of 4700m

2, and a 3% annual maintenance charge.


3.3 Working Capital and Investment Capital

The main problem identified by all exporters, and which will affect this venture in a similar manner is lack of working capital. Working capital is needed to enable traders to buy products at lower prices during the production season when prices are typically lower47 (although, for storage reasons it may not be possible to buy the year’s production in one time period). Consider that to purchase four months of hard-shell almond stock for the first year, when production is very low (see model in ‎4.3.2), will require in the region of $400,000. The problem is exacerbated by two reasons, firstly that the nut seasons are close together, which means that in an ideal situation, most of the purchasing will occur in just one quarter of the year. See the table below. Secondly, the high value of the shipments and likely delays in receiving payment from exported goods (particularly if there are border issues) can present cash-flow problems. For example, a truck load of approximately 16mt of almonds is worth around $100,000, and for pistachios this is even higher at around $270,000.

Month JUL AUG SEP OCT NOV

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Almond

Pistachio

Pine Nut

Walnut

Table 3: Nut harvesting calendar

The second problem addressed by exporters was the lack of investment capital for building their own processing plants. Banks charge high interest rates (no less than 10%) and the cost of private land is very high, making investments prohibitively expensive for all but the largest traders.

47

Not seen in pistachio markets, where prices often decrease through the year.


3.4 Export Modalities

There are two main export modalities in operation in Afghanistan:

Commission basis. Afghan exporters send the product to an importing commission agent, who is located in the receiving country. The commission agent will get paid only once the product is sold. The Afghan exporter will deduct a commission fee between 6%-9% from the sale price and keep the remainder. All related costs (transportation from origin to final destination, custom charges, handling.etc) are the Afghan exporter’s responsibility. However, the Afghan exporter often sends the commission agent a forward payment so he can organize the transportation from the border to the final destination market, and pay for any customs charges and handling. Often the Afghan exporter (or his local agent) travels to the market in the receiving country to ensure that the product is sold in the proper manner. Consignment basis. In this export mode, the Afghan trader (or sometimes, farmer) sells a full consignment to the importer based on an agreed price. Between 20% and 50% of the payment is made from the importer to the trader at some time up front depending on the particular negotiation (in some cases, the payment may be sufficiently in advance to be called forward contracting). Once the goods have been cleared from customs department in the receiving country, handed over to the agent of the importer (often a clearing agent) and the quality of the consignment has been verified, the final payment will be made. Often, however, quality of Afghan exports is so poor that the importer demands a thorough examination of the product, which can delay the payment by up to 60 days. This mode is very common in Afghanistan, and the importer bears all the responsibility for transportation, handling charges and duties from the point of sale. Thus, many Afghan farmers and traders have very little understanding of the true costs associated with exporting. For exports to India, it is common for trade conducted through banks and more formal institutions to be underbilled, and the balances are paid through informal and untraceable systems like hawala (an ancient trust-based money transfer system in use in Southeast Asia, Central Asia and the Middle East). In order to maximize value, it is recommended that Crescent Trade pursues the commission-based approach in the first years, whereby a strong partnership is developed with partners in the target market who can sell to the major retail outlets. Pursuing a consignment-based approach would likely lean towards bulk wholesale exports, thus hiding the retail value from Crescent Trade.


3.5 Transportation

Afghanistan is a lock-down country that has to use (when not exporting by air) neighboring countries’ ports and roads to be able to export and reach international final destination markets. Usually, the export road/gate chosen by exporters is directly related to the location of their processing facilities. Processing facilities are usually located at places where there is a continuous flow/supply of raw material and enough security to have the investment protected. Here are the most common export routes used by Afghan exporters:

3.5.1 Land and Sea

Through Pakistan. Traditionally, Pakistan has been the main export gate for Afghanistan through Afghan-Pakistani cross border points of Torkham (Nangarhar province) and Spin Boldak (Kandahar province). Products from Southern and Central Regions use these routes:

Kandahar Spin Boldak Quetta Wagah Border Amritsar, India

Kandahar Spin Boldak Quetta Karachi India, EU, Others

Kabul/others Torkham Peshawar Wagah Amritsar, India

Kabul/others Torkham Peshawar Karachi India, EU, Others Through Iran. Iran has always been a traditional export gate for Afghan products targeting Asian and European markets through the cross-border point of Islam Qala (Herat province). Products from the Western region usually leave the country through these routes:

Herat Islam Qala Bandar-Abbas Port Dubai, EU, Others Herat Islam Qala Iran main land Turkey Europe

Through Turkmenistan. Turkmenistan is becoming a new export gate for Afghanistan through the cross border points of Turghundi (Herat province) and Aqina (Farah province). Afghan export products originated in the Western and Northern regions leave Afghanistan through these routes:

Herat Turghundi Turkmenistan main land Russia, Europe

Mazaar-e Sharif Aqina Turkmenistan Bandar Abbas (Iran) World


Figure 53: Main land crossings for Afghanistan’s nuts

From Kabul and Kandahar, trade in nuts and dried fruit through to India and Pakistan uses 9-12mt trucks, which make their way from to Delhi in around a week to ten days. There is typically a cross-docking process at the border where boxes are unloaded and transferred between Pakistani and Indian-registered vehicles. For dried fruits and pine-nuts, the prolonged exposure to high temperatures can be problematic; but for other nut kernels this is not a major issue. Containers are rarely used on the land crossings. From Mazaar-e Sharif, while some traders send their products down to Kabul, other traders prefer to send their products to Iran via Turkmenistan. This is in preference to hauling the products inside Afghanistan towards Islam Qala, which is very expensive due to the incomplete (and dangerous) road network in the northwest of Afghanistan. To inform this aspect of the study, the owner of Mazaar-e Sharif’s largest logistics company was interviewed. The Tajzada Transportation Group has transported goods (including dried fruits and nuts) between India, Iran, Turkey, Dubai, Afghanistan and Tajikistan for 25 years. His main hauling route is Mazaar-e Sharif through to Dubai (Jebel Ali port) via Turkmenistan (Aqina border) and Iran (Bandar-e Abbas port). The manager cited push and pull reasons: the road from Mazaar-e Sharif to Islam Qala is slow, dangerous, and very expensive, whereas the roads in Turkmenistan are reported to be in good condition, fuel is cheap, and there are rarely issues at the borders. Afghanistan’s relations with Turkmenistan are fairly stable and certainly not anywhere near as volatile as the relations with Pakistan. In addition, the Mazaar-e Sharif – Turkmenistan - Iran - Dubai route offers competitive prices (at least in the medium term) as many of the containers travelling this route are empty ISAF containers. Tajzada owns around 190 trucks, the majority of which are dual-registered in Afghanistan and Turkmenistan or Turkey. For Indian markets, Tajzada strongly recommended shipping through Bandar-e Abbas and

Torkham

Spin Boldak

Islam Qala

Turghundi

Aqina

To Peshawar, and then to Islamabad, Wagah, Karachi port

To Quetta , and then to Wagah, Karachi port

To Tehran, and then to Baghdad, Bandar-e Abbas

To Tehran, and then to Baghdad, Bandar-e Abbas


avoiding Pakistan, where transit times of up to three months between Karachi and Mazaar-e Sharif have been reported. Overall, Tajzada were offering, inclusive of all customs fees and handling charges:

$2700 per 18mt container, for a one week shipment Mazaar-e Sharif to Bandar-e Abbas

$4600 per 18mt container, for a two week shipment Mazaar-e Sharif to India.

Figure 54: 12mt trucks importing goods into India via the Wagah border (left), 40 foot (18mt) dry standard

container on Turkmenistan-registered trucks in Mazaar-e Sharif (right)

Quote from an International Technical Expert “While the trade dispute between Afghanistan and Pakistan was not perceived to be a major issue by Afghan traders, this is only because Afghan traders have very little visibility of the export process. All indications show that exports through Pakistan are currently highly problematic, and this could be a serious risk when supplying time-sensitive clients”.

3.5.2 Air exports

Ariana and Air India provide cargo space on their commercial flights to export Afghan products. However, the cargo capacity of these airlines together is only around 4mt per day, which would only just cover production in the early stages. Air India has six direct flights per week Delhi-Kabul-Delhi and Ariana flies daily between Kabul and Dubai. There are several cargo airplanes arriving to Kabul every day, however, these aircraft typically leave empty due to worries about drug smuggling.


3.6 Product Safety

Afghanistan does not rigorously enforce any hygiene or food standards for the domestic market. However, other countries receiving Afghanistan’s food products often do require a degree of certification. At minimum, this is a Certificate of Origin, which is currently issued by the Afghan Chamber of Commerce (‘Form A’). Some markets require Phytosanitary Certificates issued by the Ministry of Agriculture; however, only one trader out of the 38 interviewed in this research had ever heard of the form, and he used it for trading sesame seeds to Iraq, but was extremely doubtful whether the phytosanitary test listed on the form had actually been performed by the Ministry of Agriculture. It is also doubtful how rigorously the incoming markets enforce their own regulations. The Indian Government demands that incoming almonds are fumigated by phosphene, yet no trader or importer had heard of this process.48 The Indian Government’s Quarantine Department is believed to perform fumigation at the port of entry if random sampling of consignments highlights a biological risk. However, India’s Quarantine Department is much more focused on dealing with phytosanitary risks from fresh fruit imports rather than dry fruit and nut imports. In particular, Afghan pomegranates have been problematic as the pomegranates are packed in hay rather than shredded paper, which often contains pests and occasionally is used as a method to smuggle drugs. Research at Wagah border showed that as long as the nut consignment had a Certificate of Origin and a Phytosanitary Certificate, there were rarely problems importing nuts into India. Either way, aflatoxin is not an issue in the Indian markets and there have been no outbreaks in recent years. In the UAE the situation is the same (note, however, that neither the UAE or Indian governments release such information). Whether or not the Afghan Government certificate is demanded, for its own integrity Crescent Trade will want to regularly test samples of incoming and outgoing product for aflatoxin and other microbiological contamination, which will require development of a small laboratory. The same laboratory will be used for testing bitterness levels of potential stock. For the western markets, which are more stringent on food quality and safety, exporters will nearly always have to prove the production site was compliant with GMP/HACCP, the principles of which are certified by ISO 22000. The importer may also require the farm is compliant with Good Agricultural Practices (‘GlobalGAP’). ROP compiled a manual for nut processing facilities in Afghanistan, which outlined the principles of GMP and HACCP.49 In brief, GMP concerns the underlying factory structures that enable HACCP to work; particularly ensuring the factory is designed with food security in mind. This includes ensuring the factory is built of non-toxic materials, has surfaces that are easily cleanable, has adequate sewage and sanitation facilities, potable water, filtered air, no rodents, and standard operating procedures (SOPs) enforced to ensure a cleaning regime. HACCP ensures that correct hygiene procedures are followed at a series of critical points in the production process that have a high risk of contaminating the product. ROP suggest that in a nuts processing facility in Afghanistan, the appropriate critical steps are likely to be:

Step 1: Receiving raw materials in the bulk storage bins at the plant

Step 2: Fumigation of raw materials to kill insects and molds prior to processing

Step 3: Storage of fumigated raw materials in the processing area

Step 4: Hulling and shelling of the almonds to remove the kernels

48

PLANT QUARANTINE ORDER (REGULATION OF IMPORT INTO INDIA), 2003, Schedule 6, Item 615 49

GMP and HACCP for Tree Nuts and Dried Fruit Processing Plants in Afghanistan by Roots of Peace


Step 5: Sizing and sifting of kernels for grading

Step 6: Pass through magnets to remove magnetic materials

Step 7: Initial quality check to observe any visible defects

Step 8: Quality control tests for moisture, density, oil content and bitterness

Step 9: Pass through metal detector to isolate magnetic and non-magnetic materials

Step 10: Final quality check for physical, chemical and sensory tests

Step 11: Bagging and boxing of kernels

Step 12: Random batch tests of packaged products for quality assurance

Step 13: Final fumigation to avoid any recontamination with insects and molds

Step 14: Storage of finished packaged products in a cool dry place

Step 15: Shipping of products in bags, boxes and large containers with batch control for any recall of product from the market

Implementing GMP/HACCP is difficult and costly both in terms of factory design and staff training, but it unlocks western markets. No factory in Afghanistan complies yet with GMP/HACCP (not least because it is difficult to get inspectors to visit Afghanistan), but Tabasom is the most advanced, and has recently installed hi-tech UV foot and finger sanitizers as a step towards compliance. Crescent Trade will have to make a business decision about whether GMP/HACCP certification is something the business wants to pursue in the medium term.


3.7 Labour Requirements

The labour requirements will depend upon the level of technology pursued. A high-technology model will require younger, IT-literate technicians to operate the laser-sorting devices, which have complex computer interfaces (see Figure 55). There will be a requirement for a very strong production manager to schedule production (particularly with batch operations to produce roasted, salted products) and enforce SOPs. There will need to be a highly capable engineering manager who will be trained on the particularities of each piece of equipment, and who must be able to fit or even fashion spare parts if necessary.

Figure 55: Laser sorting system operating interface

50

Because many of the processes will still be manual (such as shifting and emptying sacks), a team of laborers will be needed, and in every model, production line staff (men towards the heavier end of the production line and women towards the packing end of the line) will be required to keep the almonds moving through the machines. Three or four production staff would be required per shelling machine, and two or three staff for other processes such as roasting, salting and packing. The inspection lines may well require up to twenty women, depending on the quality of the checking required. The fully manual model would perhaps require several hundred manual breakers to match the output of the low-technology shelling machine. Outside of the production process, a strong purchasing manager who can negotiate lower purchase prices and schedules in the top three markets (Kabul, Ghazni and Mazaar-e Sharif) will be required, together with a sales team to manage clients, logistics and export certificates.

50

Image credit: Best Sorting


4 Evaluation

4.1 Market Evaluation

4.1.1 Product Mix

The potential products that Crescent Trade could deliver are presented below: Product Supply Demand Competition Margin Potential Conclusion

Soft-shell almonds

Production of around 5,000mt/yr in-shell from northern areas is sufficient to obtain supply

Demand is very strong, particularly in India.

Almond market has perhaps 5 dominating traders and several hundred smaller traders. Room for new entrant.

High for well-selected and packaged varieties

Opportunity for Crescent Trade from Year 1.

Hard-shell almonds

Production of around 52,000mt/yr in-shell from across Afghanistan is sufficient to obtain supply

Demand is fair in India, Pakistan but mainly for shelling to sell kernel.


Low, especially with cost of shipping shell

Avoid.

Almond kernels

Production of around 52,000mt/yr in-shell from across Afghanistan is sufficient to obtain supply

Demand is very strong, particularly in India. Demand for roasted, salted and flavored kernels will have to be developed.


High for well-selected longer kernel varieties

Opportunity for Crescent Trade from Year 1, adding roasting, salting and flavoring in Year 2.

In-shell pistachio

Very little supply in size required

Demand is very strong, particularly in India and Pakistan

Iranian pistachio dominates the in-shell market

High, particularly for roasted, salted varieties

Avoid.

Pistachio kernel

Production of around 60,000mt/yr in-shell equivalent is sufficient to obtain supply

Demand is very strong, particularly in India and Pakistan

Pistachio kernel market is highly concentrated, particularly in Kabul

Very high for GPPK

Opportunity for Crescent Trade in Year 3.

In-shell walnut

The 15,000mt production is highly controlled by existing

Weak demand. The markets demand kernels.

Walnut kernel market is highly concentrated

Low, especially with cost of shipping shell

Avoid.


suppliers

Walnut kernel

The 15,000mt production is highly controlled by existing suppliers

Demand is strong, particularly in India, Iraq, Turkey

Walnut kernel market is highly concentrated

Fair margins if machine shelled walnuts can compete with hand-shelled

Opportunity for Crescent Trade in Year 3.

Pine nuts 5,000mt/yr production is sufficient to obtain a small supply

Demand is strong, particularly in China and India

Pine nut market is highly concentrated

Good margins for well-roasted product

Opportunity for Crescent Trade in a Year 3 or to augment product range in a small way earlier

The key to success, according to GIZ almond experts, is to start small to minimize market disturbances. Thus, it is recommended to introduce products in a staged form, focusing mainly on premium fresh soft-shelled almonds and premium fresh almond kernels in Year One, and slowly adding to the product range. An advisor to a large Afghan fruits and nuts trader reminded that ‘the problem is, you can’t make it work with just almonds. You have to do something else too.’ Expanding the product range from just almonds also expands the supplier pool that is used, reduces dependency on one product, and reduces dominance in one sector that may be perceived as threatening by existing suppliers. After the third year, depending on the success of the business, other products (such as dried fruits or berries) could be investigated.

Figure 56: Proposed business phases

The premium products should be supplied as much as possible to the final retail market in retail packaging in order to capture as much of the value chain as possible, and leverage the utility of any advanced sorting processes that have been invested in. Some products, particularly peeled kernels, should be targeted at the high-quality confectionery industry which would make better use of the product than the home consumer. Note that production of premium products will also generate a variety of lower-grade products, however selective the incoming supply chain. For example, in Year One, sub-standard soft-shell almonds will be available to sell as kernels alongside small, misshapen or cracked kernels rejected from the shelling/sorting process. These kernels would be best utilized in the local cake or biscuit industries, and may well make up between 30 and 60% of the factory output depending on the quality of the incoming supply and the efficiency of the machines.

YEAR 1

Premium fresh soft-shell almonds

Premium fresh almond kernels

+ Food-industry kernels

YEAR 2

As Year 1 plus:

Roasted, salted and flavored

almond kernels

GPKK


YEAR 3

As Year 2 plus:

Walnut kernels

Roasted pine nuts



4.1.2 Volumes

The target volume for Year Three is 2,000mt of high quality output. A cautious approach to building up the business is recommended whereby new products are introduced slowly over the three year period. It is recommended that in Year One, small volumes of around 100mt each of premium soft-shell almonds and premium kernels are produced, as shown in Figure 57.

Figure 57: Suggested volume mixes for the first three years of operation

4.1.3 Markets

In this research, it was seen that Afghanistan exports mainly to India and Pakistan, and smaller volumes are exported to Turkey, Iran and the Middle East. India is the logical target market for Crescent Trade for the first two or three years of operation, and could easily absorb all the production. Once a stable business and good reputation has developed there, this is probably the right opportunity to install technology that will allow access to other markets that have more stringent quality requirements, particularly the Middle East (mainly Gulf markets) and western markets (Europe, US). For the almond products, retail chains are logical targets for Crescent Trade, as they are expanding fast in India and would be a way to gain quick geographical coverage and gain access to the wealthier consumers who would be willing to pay higher prices for top-quality nuts and good packaging. For the pistachio kernels, top quality sweet manufacturers such as Haldiram’s and Bikanerwala would be good targets. The strategic positioning of India as a target market for Crescent Trade is summed up in the SWOT table below:

100 250500

100

200

500

100

300

100

400

200100

133

433

1333

0

500

1000

1500

2000

2500

3000

3500

Year 1 Year 2 Year 3

mt/

yr

Food-industry grade products

Roasted Pine nuts

Premium walnut kernels

Premium GPKK

Premium almond kernels - roasted

&/or salted, flavoured

Premium almonds kernels - fresh

Premium soft-shell almonds



Afghanistan’s nuts are well known in India for their taste, organic nature and nutritional value

Afghanistan’s nuts often receive higher premiums in India than nuts from other origins

Quality/phytosanitary requirements are not so stringent to be a barrier to entry

India is accessible by two main routes from Afghanistan (via Pakistan and Iran)

India’s 50,000mt/yr demand for nuts is easily large enough to absorb Crescent Trade’s target 2,000mt/yr production volumes

Indian demand is growing

Afghan products hold a favorable but weakening position on the market as irregular supply means market share is lost to Iranian and American nuts

Afghan traders have strong control over the market which would mean entry would require strong Afghan and Indian partners


Good opportunities to improve packaging and quality of product, to become a genuine market leading brand

A range of complementary products could be investigated in time, including dried raisins, mulberries

Drugs trafficking across the border, often using consignments of other products, is always a threat to operations

Afghan traders might take strong action to protect their market share


4.2 Technical Evaluation

4.2.1 Technology Model

Given the prevailing security climate, the lowest risk option for setting up such a facility is to minimize the amount of equipment positioned in Afghanistan, and minimize the complexity of that equipment so that once it is commissioned, it can be operated and maintained by Afghans even in a worst-case ‘total isolation’ situation. It does not require too much imagination to envisage a rapidly worsening security situation following the withdrawal of international forces after 2014, which might not affect the nut exports, but would likely reduce the willingness of international technicians to travel to the facility and troubleshoot the equipment and reduce availability of spare parts. A cautious approach to building up the capability and capacity of the facility is proposed, in line with the approach to introducing new products over the three-year period.

4.2.2 Equipment Requirements

It is recommended to procure low-technology equipment for the Afghan facility. This type of equipment will not only be operational rather faster than a complex plant, but will also dramatically reduce the financial risk if the security situation worsens to a significant degree. There are two possible approaches. The cautious approach would be to purchase a Chinese almond grading, shelling and sorting machine of the type used by GIZ, as in the first year, between 300mt and 700mt will need to be shelled to produce the 100mt of premium kernels, which is within the machine capacity of 580mt/yr. However, assuming the capacity rises according to the plan, the capacity of this machine would be rapidly overtaken, and a decision would have to be taken half-way through Year One to purchase several more of these machines, or invest in a larger machine. The less cautious option would involve installing a low-technology machine from the outset that is sized according to predicted Year Three output of 1,000mt/yr of premium kernels. The Iranian machine with a nominal processing ability of 3000mt/yr would suffice, though for the first two years much of the equipment capacity would be unused. In either case, the shelling machine will be coupled with a 20kg vacuum packing machine designed to pack the nuts for shipment and storage in the second facility overseas. This second facility will be located in a favorable environment and would operate an advanced laser sorter and retail packing machine to sort and pack nuts for more demanding markets like India (and the Middle East, if the business performs well). Dubai could be a good location for this facility, as industrial facilities are widely available, there are good shipping and air links, and the tax regime for import and export of goods is favorable. This facility would likely be developed in the second year of operation, once Afghanistan has proven its ability to deliver substantial volumes of high quality products, and Crescent Trade has won a market base in India that can fund the expansion to more stringent markets. Laser sorting is not immediately necessary in India, but would be a way to consolidate the position as a quality leader in the second year of operations. In Year Two, more equipment will need to be purchased, including a pistachio shelling machine, a blanching machine, and the roasting oven and salting and flavoring drums. In Year Three, a small walnut shelling machine should be added, and if smaller Chinese machines were purchased, additional capacity might have to be added here.


4.3 Operational Evaluation

4.3.1 Facilities Requirements

It was suggested earlier that the largest facility required would be 5,500m2. The majority of this is taken up with storage of incoming and graded almonds. The space requirement can be substantially reduced if the almonds are purchased not in one batch per year, but in two or three batches, giving a facility size of around 2,500m2 required for Year Three. This would incur additional costs as the nut supply would become more expensive, however, the facility could be substantially smaller and cheaper to lease. In Year One, only around 1,000m2 would be needed, meaning there is also an option to start the business in temporary facilities and expand into more permanent facilities if the business is a success in Year One. Depending on the site chosen, there may be investments required to the site to make it suitable for food processing. In the first years, when Indian markets will be targeted, it will not be necessary to meet international standards for the facility (see below), however, at minimum, some work may be required to improve the climate control, improve the toilet and sewerage facilities, and ensure the facility is well sealed against dust and rodents. If the business wants to pursue more stringent markets, then additional cost will be incurred to bring the site up to international standards. The site in Mazaar-e Sharif is of a good size for operations in Year Three, but will require significant development to bring all or part of it up to operational standards (see below).

4.3.2 Purchasing Model

It is envisaged that in Year One, the entire supply of hard and soft-shell almonds are secured in one purchase: the volume is small enough that this is achievable by purchasing from a small group of traders in the market. The almonds should be carefully checked before purchasing, and a random sample taken before to check varietal purity, size consistency (against the criteria defined above) and contamination. For Year Two, the almonds should be purchased in several lots throughout the year to keep the storage requirements low and ease the working capital needs. Providing the almond criteria are known, the purchasing manager will be able to buy from several different markets (particularly Mazaar-e Sharif, Kabul and Ghazni) to keep the market distortions low. In the longer term, the purchasing manager must aim to purchase lower down in the supply chain: if deals can be struck not with regional traders but with district traders, then the margins and supply security will be greater. This, however, will not be achieved instantly, as other traders have built relationships up over many years.

4.3.3 Location Factors

Five key factors should be taken into account to decide the location of the processing plant: Proximity to supply. One of the most important factors to be considered when making an investment decision is the availability of raw material supply in the accessible neighborhood of the plant. The proximity of the industry to a supply region/center will imply transportation cost savings, opportunistic supply of raw material, direct linkages to producers/regional traders and, less risk for buyers and sellers to lose products due to security reasons, accidents and predatory ‘middle-men’.


Taking into consideration the almond supply chain, two main regions produce over 75% of the almonds of the country, which are the Northern Region (controlled by the Mazaar-e Sharif almonds market) and the Central Region (controlled by the Kabul almonds market) Considering the dominant product of the venture will be almonds, both Kabul and Mazaar-e-Sharif fulfill the first criterion, particularly Mazaar-e Sharif for soft-shell varieties. For pistachios, Herat and Kabul are the major markets, but as pistachios will be a lesser product of the factory, this supply is less of an influence on the final decision. Security. Security is probably the most important factor to take into consideration as it can strongly impact the physical security of both staff and infrastructure. Kabul, Mazaar-e-Sharif and Herat are among the safest cities in Afghanistan, and farmers/traders usually bring their product to the nut markets without significant security concerns. Both cities thus fulfill the second criterion. Ghazni and Kandahar, however, are unsafe, and it would be a struggle to ever visit the markets and the farmers.

Proximity to export gates. Remote places with no real access to national or regional markets should not be considered by investors. Logistics and transportation facilities are key components to have competitive prices and succeed in exporting dry fruits and nuts. Both Kabul and Mazaar-e-Sharif have solid export gates through Pakistan and India (via Torkham), and Turkey, Iran and the Middle East (via Turkmenistan or Iran). Transportation costs from Mazaar-e-Sharif to Dubai through Turkmenistan are cheaper than Kabul to Dubai through Karachi, Pakistan. Turkmenistan transit offers more security than Pakistan transit. Both cities then meet the third criterion. Export gate reliability. It is imperative that when the product arrives at the export gate, it can pass through with a minimum of delay. While nuts are not perishable items, nonetheless, in a competitive market, traders need assurances that products will arrive on time. Research in India showed traders’ frustrations that Afghan products had not managed to get to India before the start of the festival season due to transit problems in Pakistan. Spin Boldak border (servicing Kandahar and Ghazni) is notoriously corrupt and dependent on personal connections to export items speedily. Also, problems could be encountered cross-shipping as Afghan trucks are not readily allowed into Pakistan (this may change with the new trade agreement, but this could take some time before it becomes the norm). Torkham border, near Kabul, suffers from a surprising level of corruption, and research showed that even some of the biggest fruit and nuts traders on occasion have to go down to the border to ‘encourage’ their shipments through by offering payments (often an amount of the product being shipped). Smaller traders would struggle even more. The northern crossings like Turghundi and Aqina were reported by experts to be much less political and thus much more reliable.

Service reliability. Electricity and basic service infrastructures are usually investments made by the national or regional governments due to their high cost. Both AISA and ACCI are usually associated (with the support of USAID, GTZ, etc.) to promote such necessary and complex industrial areas. The lack of these services would imply a high private investment that could jeopardize the feasibility of a project. The existence of these services at a determined place could directly impact the final decision regarding the location of the plant. Kabul and Mazaar-e-Sharif both have well-serviced AISA Industrial Parks (Bagrami and Goremar parks, respectively); however, plots are not available on either (not even in Phase 2 of the Bagrami Park). Thus,


land would either have to be purchased on the ACCI industrial park (see Hajji Hassan’s factory, below), or purchased privately e.g., on Jalalabad road.

4.3.4 Recommended Location

Criteria/City Almond Supply

Security Accessible export gates

Export gate reliability

Service availability

Total

Herat 2 1 1 1 1 6

Ghazni 1 2 2 2 2 9

Kabul 1 1 1 2 1 6

Mazaar-e-Sharif 1 1 1 1 1 5

Kandahar 2 2 1 2 2 9

Thus, the best location for the business is Mazaar-e Sharif, followed by Kabul. The final decision will be influenced by the availability of land plots in each location and the target market.

4.3.5 Assessment of Hajji Hassan’s Nut Processing Site in Mazaar-e Sharif

Hajji Hassan’s nut processing facility is located in the Mazaar-e Sharif New Industrial Park, around 10km to the east of the city. The park is divided between AISA and the ACCI management, and the AISA half of the park (where the GIZ warehouse is located) is clearly better developed than the ACCI half, where Hajji Hassan’s facility is located. The only other major operator in this part of the park is a large salt factory that has invested $4m processing equipment, which suggests that other industrialists have confidence in the long-term future of the park. However, there is much to be done to improve the services and conditions of the park: there is no city power provided as yet (power would have to be purchased from the salt factory, which has paid for a private line from the Afghanistan grid), no roads, no water, and no site security. The environment is also extremely dusty which may pose particular concerns for the food processing industry. The facility itself is in a 74x74m (5400m2) plot, with a four sheds of total 1740m2 arranged a U-shape. The plant is only partially finished, requiring concrete flooring, interior and exterior plastering, doors and windows, electric supply, generator, 100m deep well, office spaces, and at minimum a gravel access road, to bring the plant to an standard where machinery could be installed. The cost of this work was estimated by a large Mazaar construction company (Fazal Fikri Company) at $270,000.


Figure 58: Site layout (left) and first hanger (10m x 40m) with concrete floor (right)

Figure 59: Main hanger (10m x 60m) with half-prepared floor (left) and adjacent salt works (right)

The manager of the adjacent salt factory was briefly interviewed. He was satisfied with the level of support from the ACCI, and after six months of operating had no complaints about the location. There was no problem hiring staff at the industrial park as the owners had hired a car to shuttle professional staff from the city each day, and the workers lived on site in the week. However, the factory has clearly had to invest heavily outside of any ACCI investments, as demonstrated by the investment made in a 200m well, the electricity line and the access road. However, the investments in the salt factory indicate that the park is gaining momentum over the old industrial park (near the silo).


4.3.6 Influence of Insecurity on Operational Location

Kabul

Kabul hosts the seat of government, the headquarters of ISAF, foreign representations, international organisations and NGOs as well as a concentration of the country’s elite. Significant efforts by both international and national security agencies have been dedicated to limiting any insurgent operations in Kabul city itself. However, the inherent challenges of securing a city of up to 5 million people together with a host of other factors have meant that regular and high profile attacks have become part of the security landscape. For the past three years, high profile attacks have taken place approximately once every six weeks and have been largely confined to government, international military and foreign embassy targets. Foreign representations and guest houses have been deliberately attacked either for being aligned with the government or the international military presence, or simply due to regional rivalries as several attacks on Indian compounds have illustrated. The criminal presence is arguably a greater threat in Kabul due to the presence of criminal gangs and the ease of procuring weapons. Although the Afghan National Security Forces (ANSF) have attempted to clamp down on kidnappings, well-organized gangs continue to abduct wealthy Afghan businessmen for profit, although it should be noted that the kidnapping of internationals remains extremely rare. The same gangs or organized groups are also often involved in other illicit activities including extortion and smuggling, however again, the issue primarily concerns Afghan businesses rather than international entities. Bagrami district, to the east of the city, is part of Kabul province and hosts a large industrial park of the same name accommodating both national and international companies. Similar to other surrounding districts of Kabul City, including Chahar Asyab, Deh Sabz, Musayi, Paghman and Surobi, occasional arrest operations are undertaken by ISAF/ANSF as the districts of Kabul to the south and east are often used as logistics hubs for attacks within Kabul City of for small scale operations in some of the districts. However, these operations have had a negligible effect on operations within the Bagrami industrial area.

Balkh

The city of Mazaar-e Sharif has traditionally been viewed as the capital of the north due to its strategic importance and economic activity, predicated on trade. In 2008, the ISAF northern supply route became operational, which led to a gradual increase in logistics companies in Mazaar-e Sharif and convoys along the Mazaar-e Sharif to Kabul Road and the Mazaar-e Sharif to Shibirghan and Maymana road to the west. The increase in logistics convoys for the military most likely contributed, along with several other factors, to an increase in insurgent activity in the north of the country and in Balkh, specifically the districts of Chimtal and Chahar Boldak – along the main Mazaar-e Sharif to Shibirghan and Maymana road. Mazaar-e Sharif is perceived as a relatively safe city, especially in comparison to southern and eastern cities. A gradual increase in IED attacks against ANSF in the city and the killing of seven UN workers during a violent demonstration against the burning of the Quran in Florida at the beginning of April 2011, however have led to concerns of a possible deterioration in the security environment. That said, the security incidents primarily target ANSF and ISAF with occasional incidents of factional violence and personal disputes though these incidents have little impact on economic activity and Mazaar-e Sharif’s position as a transport hub.


Atta Mohammed Noor, the governor of Balkh province since 2004, remains a very influential regional figure. Often at odds with President Karzai, he has been able to carve out a support base in the north, partly aided by Jamiat-e Islami – a former Mujahideen faction – but also due to his personal influence. He reportedly maintains controlling interests in several construction and logistics companies and had been credited with maintaining stability across the province, although recent insecurity has led to questions about the competence of ANSF and the governor more broadly.

4.3.7 Influence of Insecurity on the Supply Chain

While security in Kabul and Mazaar-e Sharif is relatively good compared with Kandahar or Ghazni, insecurity still has the potential to indirectly affect the proposed venture by causing delays in the supply chain to and from the processing facility. The primary risks occur at three stages in the supply chain: insecurity at the farm stage, insecurity in the transportation between the farms and the provincial or regional traders, and finally the transportation across international borders that introduces a level of political risk. At the farm-level, traders in the regional centers indicated that farmers face difficulties in harvesting the nuts on time due to insecurity. The harvest period (between July and October) coincides with what has been labeled the ‘fighting season,’ and in districts including Gulistan, Farah, and Chimtal, Balkh, this has limited the ability of farmers to access their fields, although this is not a widespread phenomenon. Of greater impact is the inability of traders to access the more remote and insecure areas leading to lower prices for farmers due to a lower number of traders. The insecurity can also delay traders visiting the district centers or known local contacts and thereby negatively impact on the quality, if the product cannot get to market. Low prices for farmers and delayed deliveries appeared to be widespread as interviewees confirmed in Charikar, Ghazni, Herat, Kabul and Mazaar-e Sharif. Transporting the product between the farm gate and the provincial or regional traders involves a risk of predatory actors along the roads. While the nut cargoes are neither politically sensitive or perishable, prevailing insecurity can impair the responsiveness of the supply chain. Beyond the aforementioned risk to traders accessing farmers and district markets in insecure areas is the difficulty of transporting money for any ‘cash on delivery’ transactions due the criminal threat. Vehicles transporting nuts can also be liable to pay taxes to local insurgents or local criminals in the more remote areas and arbitrary ‘official’ taxes at police checkpoints. Traders in all areas reported an increase in such taxes adding to the costs of transport. Several traders in Kabul stated that they were unwilling to ‘invest’ in the more insecure areas due to the increased transportation costs associated with the insecurity. Traders from Charikar, the capital of Parwan located 90 minutes north of Kabul, report that they no long have access to their previous markets in the Ghorband Valley, forty-five minutes to the west of Charikar. This section will briefly discuss the international borders of Torkham in Nangarhar, and Aqina in Farah province, which is popularly used by exporters in Mazaar-e Sharif. Torkham, located in the east of the country, is Afghanistan’s busiest border crossing with Pakistan, located approximately four hours from Kabul. The crossing therefore attracts exporters from the Eastern Region (mainly via Kabul) as well as the Northern Region of the country, due to good road links through Peshawar to the port of Karachi or the Indian border crossing at Wagah. In 2010, Afghanistan and Pakistan signed the Trade and Transit Agreement (APTTA) allowing for, among other points, Afghan trucks to transport Afghan products to Pakistani ports and also to the Indian border, and for Pakistani trucks to transport Pakistani goods through Afghanistan to Central Asia. In early summer 2011 delays to implementing the APTTA led to


thousands of containers originating from Afghanistan being blocked in Pakistani customs for several weeks, severely affecting the perishable goods trade. Pakistani traders have experienced similar problems and the implementation of the APTTA appears as it will be further delayed to allow for the clearance of existing stockpiles of containers and avoid some of the more onerous obligations of the APTTA. The main premise for the delays in implementation is the issue of bank guarantees for goods destined for Afghanistan to ensure that the goods are not smuggled back into Pakistan.51 The Torkham border has also been closed for several days to ISAF civilian trucking in September 2008 and in October 2010 following US attacks that inflamed tensions within Pakistan, forcing a government response.52 Civilian trucks and tankers destined for ISAF bases have also been attacked on numerous occasions inside Pakistan, although commercial traffic remains unaffected. The Aqina (Imam Nazar) border crossing in Faryab province in the northwest of Afghanistan is located in a relatively stable area. Afghan Turkmen comprise the majority of the population in the immediate area with the closest provincial capitals of Shibergan in Jawzjan and Maymana in Faryab resident to primarily Afghan Uzbeks. Although parts of Faryab and Jawzjan are susceptible to insurgent attacks, commercial traffic, similar to Torkham is not directly targeted. Turkmenistan currently supplies both electricity and water to its southern neighbor and the two countries generally enjoy cordial relations, limiting the possibility of politically inspired border closings. Aqina is three hours from Mazaar-e Sharif via the national highway, with only the districts of Chimtal and Chahar Boldak in Balkh representing a higher threat in the evenings from temporary criminal and insurgent checkpoints, which generally do not affect commercial traffic.

51

Reuters, ‘Afghanistan, Pakistan agree to implement transit trade accord,’ 11 June 2011, available at: http://www.reuters.com/article/2011/06/11/us-pakistan-afghanistan-trade-idUSTRE75A0UN20110611 52

Roggio, Bill, ‘Pakistan closes Torkham border crossing, shuts down NATO's supply line,’ The Long War Journal, 6 September 2008, available at: http://www.longwarjournal.org/archives/2008/09/pakistan_closes_tork.php#ixzz1Y0zX8yB3 See also: Lawrence, Quill, ‘Afghan-Pakistan Border Blocks NATO, Not Taliban,’ National Public Radio, 8 October 2010, available at: http://www.npr.org/templates/story/story.php?storyId=130430854

http://www.reuters.com/article/2011/06/11/us-pakistan-afghanistan-trade-idUSTRE75A0UN20110611

http://www.longwarjournal.org/archives/2008/09/pakistan_closes_tork.php#ixzz1Y0zX8yB3

http://www.npr.org/templates/story/story.php?storyId=130430854


4.4 Financial Evaluation

A simple model was constructed to predict the financial returns with the high-technology, low-technology, manual and distributed facility models as outlined above. The model includes estimates for expenses (including land lease, facilities preparation, capital expenditure, maintenance, salaries, overheads, nut purchases and logistics) and balances this against income from premium, food industry grade nuts and shell sales. The facility is assumed to be the Hajji Hassan facility in Mazaar-e Sharif, which is estimated would cost around $20,000 per year to lease and around $270,000 to rehabilitate to food processing standards. For the distributed facility model, it is estimated that another facility in Dubai has been leased at $20,000 per year with a one-off $100,000 rehabilitation cost. The capital expenditure figures assume one-off cash payments according to the estimates per model outlined above. These figures are all estimates, but the model has not shown to be particularly sensitive to this type of costs. The model assumes that all exports are through Turkmenistan using dry containers, and for the distributed facility model, an extra $1000 has been added to the cost of shipping to cover two handling charges in Dubai. Import duty rates are the current Indian government duties (except for walnut, which was not available, but the Iranian figure has been substituted). The purchase prices used are mid-season Afghan trader purchase prices, which were chosen with good quality and conservatism in mind; for example, the pistachio purchasing price has been set at $19,000/mt which was the traders’ selling price in Herat. As the report has shown, pistachios are available at farm level for prices a tenth of this, but in the first years these unshelled pistachios are likely out of reach due to protected forward contracting. A strong sales manager might be able to significantly reduce these purchase prices. The sale prices used are mid-season Indian retail market prices derived from the September 2011 study in New Delhi.

4.4.1 Steady State Return

In Year Four of the model, once the facilities are fully equipped and there is no capital expenditure, the sale of 2,000mt of mixed premium nuts generates around $36m per year, which is the same for each equipment option. The cost of buying these nuts is around $33m per year, so it can be seen instantly that the margins available are extremely small and the need to lower the purchase price and not buy at market prices is substantial. Earlier, a product mix was suggested that focused heavily on kernels from hard-shell almonds and soft-shell almonds, with smaller quantities of peeled pistachio kernels, and rather smaller quantities of walnuts and pine nuts. That product mix was not derived from any profit equations, but instead tried to represent what would be easiest to obtain in the markets considering the concentration of trade for each nut type. Applying this mix to the model generates costs and revenues as shown in Figure 60, which assumes that sales from food-grade kernels are assumed to be all associated with the hard-shell almond revenue stream.


Figure 60: Product breakdown by costs of nut purchases and revenues from nut sales

This diagram shows overall that the fundamental margin is very slim at around 8%, before any transformation costs. Soft shell almonds can be seen to generate proportionally more revenue than their cost would indicate, as do pine nuts and walnuts, which suggests firstly that the business needs a diversified product stream to maintain margins, and secondly that it would be good to increase production of these products. The hard-shell almond value stream has a much smaller margin, but still generates profit when the sale of food-grade products (which are mostly sub-quality kernels from hard-shell almonds) is included. The sale of food-industry grade products is a vital contributor to revenue, particularly when margins are tight. Pistachios, when purchased in-shell at $19/kg and sold at $23/kg as kernels, struggle to make a profit. Great care must be taken to obtain a better purchase price, and also to obtain larger kernels that can obtain prices around $30 on the Indian retail market. Examination of the model also shows it is highly sensitive to the ratio of premium kernel: incoming shell. The results presented assume a 40% acceptance rate, which is thought to be realistic. At a 30% acceptance rate (which was seen by GIZ in Uruzgan in the early phases), the hard-shell almond value stream would struggle to break even in steady state. Thus, it is imperative the business works hard only to purchase the hard-shell almonds which meet the exact criteria, and test incoming batches regularly. Pistachio kernels are much less sensitive to rejection rates as they are traditionally sold in a broken form for the high-end food processing industry, as are walnuts due to their greater incoming size uniformity.

4.4.2 Industrialization Models

Each industrialization model performs rather differently as Figure 61 and Figure 62 show. The high-technology model has very large cash outflows in the first two years as the business invests in advanced machinery, but by the third year the business reaches a steady state of around $450,000 annual profit, which takes the high-technology model around seven years to return the investments.

$6,516,000$9,150,000

$10,000,000

$11,852,250

$15,200,000$9,200,000

$560,000 $2,400,000

$600,000 $3,100,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Costs Revenues

Pine nuts

In-shell walnuts/kernels

In-shell pistachios/kernels

Hard-shell almonds/kernels

Soft-shell almonds


The low-technology model performs the best of all the models, and reaches a steady state of just over $450,000 annual profit (slightly more than the high technology model due to lower equipment maintenance costs etc), and returns the investment in five years. The manual model performs very badly, and, while the cash flows in the early years are low due to very low equipment costs, the cost of paying for the small army of women to crack the nuts is substantial, wipes out any profit margins and the model shows the manual option fails to ever generate a profit. The distributed facility model performs similarly to the high-technology model, although the main cash outflow is pushed into the second year, and the steady state profits are rather lower at around $330,000, due to higher transportation costs which means the business would only just return the investment in seven years. Of course, the final selection of the appropriate model should be balanced against other factors like the risk of the investment, not just the predicted financial returns.

Figure 61: Annual returns over seven years for the four industrial models

Figure 62: Cumulative returns over seven years for the four industrial models

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Annual Returns (US$)

High technology model Low technology model

Manual model Distributed facility model

-$2,000,000

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Cumulative Return (US$)

High technology model Low technology model

Manual model Distributed facility model


5 Conclusions and Recommendations

This research on Afghanistan’s nut value chains aimed to assess the feasibility of Crescent Trade investing in a nut processing facility in Afghanistan to produce around 2,000mt of export-quality nuts per year. The research involved sending teams to nut markets in Kabul, Herat, Mazaar-e Sharif, Ghazni and New Delhi, together with a wide-ranging literature review and several key informant interviews. Market assessment: The first component of the research assessed the nut market dynamics in Afghanistan. The growing areas and production volumes of Afghanistan’s main tree nut crops were estimated, the main markets were identified, and the volume and destination of nut products traded on these markets was identified. This section concludes that:

There are sufficient volumes of almonds and pistachios traded in Afghanistan’s markets to create a facility producing 2,000mt/yr of products without significantly distorting the industry’s existing dynamics, which could threaten new entrants

In the almond value chain, it is recommended to focus on two product streams; the highest quality soft-shell almonds called Sattarbai, and the premium kernels of the Shokorbai hard-shell almonds

In the pistachio value chain, it is recommended to focus on only the green peeled pistachio kernel (GPPK). Afghan open-in shell pistachios could not compete against larger Iranian varieties. Peeling the kernel would likely further increase their value and give a market advantage, as no other trader performs this task, and Afghan kernels have excellent color characteristics that would be highly desirable especially to the high-end confectionery industry

Afghanistan’s walnut trade is highly concentrated with just a few large traders, and the pine nut trade is centered on just a few mountainous regions, which means the volumes are extremely small. Additionally, the pine nut trade occurs in areas deeply affected by the insurgency. All of these reasons together mean that walnuts and pine nuts should not be a key focus of the business in the first years

The major export destinations for Afghanistan’s tree nuts are India and Pakistan. This research concludes that Indian retail chains (like Haldiran’s or Bikanerwala) are the most promising target market for Crescent Trade, as the Indian retail market is easily large enough to absorb 2,000mt/yr of quality product, has no real phytosanitary barriers, and pays high prices for Afghan products. In addition, there is felt to be a niche for well packaged and branded products in the Indian retail market. In time, once the business has proved that it can deliver high quality products to the schedules required, other more demanding markets like the Middle East can be investigated.

Technical assessment: The second component of the research assessed the technical requirements of a nut processing facility. The basic nut shelling process was outlined, together with post-shelling and value adding options such as roasting, salting and packing. The section was also informed by reviewing other private sector and donor agro-industrial initiatives, and concludes that:

The main lesson to learn from other projects is that the testing of the machines with Afghan almonds before purchasing is critical. Failures of other agro-industrial initiatives to account for the unique Afghan situation have led to generation of significant distrust of process mechanization among Afghan traders, and loss of several seasons of potential output that in situations where the business was not underwritten by donors would have led to large financial


loss. In particular, one donor wasted $360,000 on advanced almond shelling equipment in Afghanistan only to fail to account for peculiarities of Afghan almonds, which led to the collapse of the project. Other agro-industrial projects have been beset by part cannibalism, shortage of spare parts, and visa restrictions on technical experts

An approach that minimizes the level of technology in Afghanistan is recommended. This means installing low technology shelling and bulk packaging equipment in Afghanistan and distributing the higher-technology laser sorting and retail packing equipment to another facility in another country such as Dubai, where the security situation and accessibility is better. The confluence of increasing insecurity, reluctance of manufacturers to visit Afghanistan, poor availability of spare parts, and a harsh operating environment means that operation of high technology equipment in Afghanistan is extremely risky, and where possible, processes in Afghanistan should be made simple enough that they can operate in the worst case scenario in ‘total isolation’

Depending on the risk appetite, two classes of low-technology equipment could work. The first would be to use an array of low capacity cheap Chinese shelling machines that have been proven in the south of Afghanistan, and the second would be to use a more capable Iranian, Turkish or Indian machine that is simple to operate but still represents value for money. The latter would have to be tested by shipping over 100kg of almonds to the manufacturers. Almonds would be manually conveyed through the facility, and packed in bulk vacuum packs for shipment to the second facility, where they would be unpacked, scanned by a Helius laser sorter, and repacked in a retail packaging machine. There are many packaging machine manufacturers; details of a leading Indian manufacturer are discussed in the main body of the report

Other auxiliary batch processes like salting and roasting can be achieved by low-technology Chinese, Iranian or Indian equipment.

Operational assessment: The third component of the research assessed the operational requirements of a new facility in terms of land, finance, export model, partnerships, legislative environment, transport and certification. The section concludes that:

All the developed (AISA) industrial parks in Afghanistan are full, which means the facility will have to site at a rather less well developed Chamber of Commerce site, or rent a private plot. By purchasing the nuts in several batches through the season, the facility requirements can be limited to around 2,500m2 for full-scale operations.

Working capital is often a constraint to Afghan traders, and might well be for Crescent Trade. Consider that in the first year of operation, when only a fraction of the intended 2,000mt is produced, around $2.5m is required in working capital

To capture the full retail value of the product, contract or consignment-basis export modalities will be required, which will necessitate very strong Afghan and Indian business partners. While partnering with associations might help secure cheaper supply rather than buying at market rates, associations can be fickle: the questionable commitment of the Mazaar-e Sharif Dried Fruits and Nuts Association to deliver their part of GIZ’s investment and seeing the Roots of Peace almond shelling project through to success should be noted. Entering into the market alone would probably cause other traders to shut off supply and demand, and an Western advisor to some of the largest Afghan nut traders recommended in strong terms partnering with leading nut exporters to prevent this happening

The high risk of delays at the Afghanistan-Pakistan and Pakistan-Indian borders could cause shortages and loss of market share to Iranian and American products, which is particularly dangerous if Crescent Trade aim to set up larger deals with retail chains. Thus, it is


recommended to use the northern export route to India through Turkmenistan and Iran rather than the route through Pakistan

Obtaining GMP/HACCP certifications is not easy, and will take several years of demonstrated adherence to standard operating procedures before they are awarded. GMP/HACCP is not necessary for the start-up phase of the business, while the target market is India. Other than obtaining a Certificate of Origin from the Afghan Government, there are few food hygiene barriers to entry.

Evaluation: In the evaluation section, all the variables presented in the market, technical and operational assessments were evaluated to produce the recommended approach that has been outlined above. Once a clearer picture of the facility had emerged, possible locations were evaluated using a multi-criteria system that evaluated safety of each location as well as proximity to supply, proximity to export gates, corruption of each export gate, and services in each location. Once a location had been decided upon, a financial model was built to evaluate the facility’s financial viability in the mode of operation recommended above. This section concludes that:

Mazaar-e Sharif was felt to be the optimal location, followed by Kabul. The half-completed nuts processing facility in Mazaar-e Sharif was visited as part of the study, and it is estimated that the rehabilitation of the facility could cost up to $270,000. This cost would have to be evaluated against the cost of renting and rehabilitating other sites in the city

The distributed facility approach at its steady state could generate at least $0.33m profit each year on around $36m of revenues, returning the $1m initial capital investment in around seven years. With a lower purchasing price, the returns could rise significantly. Other models that do not use laser scanning systems (which are not required by the Indian markets) give higher profits and quicker returns on the investment, but may not allow such ready expansion into more stringent and lucrative markets like the Middle East or Europe.

Focus group with nut traders in Ghazni, July 25, 2011


Nut Feasibility Study for Crescent Trade – Annexes Appendix A: Common Afghan Almond Types

Class Type Value Remarks Growing regions

Soft Sattarbai High Excellent for kernel market. Excellent international reputation. Large production in relatively safe provinces.

Balkh, Samangan, and Kunduz

Soft Kafmal Medium Some of export quality. Kandahar, Uruzgan

Soft Kaghazi Medium Some of export quality. Kandahar, Kunar, Laghman, Nangarhar, Parwan, Ghazni

Soft Belabai High Excellent for whole nut markets. No international outreach despite its excellent quality.

Balkh and Samangan

Medium Abdul Wahidi and Ghorbandi

Medium

Excellent for kernel markets. Large volumes, good international reputation, strong existing demand in India, Pakistan and Middle East.

Balkh, Samangan, Sar-e-Pul, and Kunduz, Parwan

Medium Khairodini High Good for whole nut markets. Strong demand in Asia and Middle East and promising potential.

Balkh, Samangan, Sar-e-Pul, and Kunduz

Hard Murawaji Low Lower quality, mixed varieties and sizes, but sorted kernels can be exported.

Balkh, Kunduz, Ghazni, Parwan

Hard Sangaki Low Lower quality, mixed varieties and sizes, but sorted kernels can be exported.

Kandahar, Uruzgan, Parwan, Ghazni

Hard Shokorbai High Good quality, regular-shaped kernels, desired by export markets.

Samangan

Hard Qaharbai High Good for whole nut markets. Recent and growing demand in Central Asia and Middle East.

Balkh, Samangan, Sar-e Pul, and Kunduz

Hard Qambari High

Strong potential for whole nut markets. Excellent taste, no bitterness. No international outreach despite its excellent quality.

Balkh, Samangan, Sar-e Pul, and Kunduz

Appendix B: Financial Model

Financial Feasibility - High Technology Model

Income (USD)

Premium soft-shell almonds 100mt @ $18,300/mt 1,830,000.00 250mt @ $18,300/mt 4,575,000.00 500mt @ $18,300/mt 9,150,000.00

Premium almond kernels (all varieties) 100mt @ $9,400/mt 940,000.00 300mt @ $9,400/mt 2,820,000.00 800mt @ $9,400/mt 7,520,000.00

Premium GPKK 0.00 100mt @ $23,000/kg 2,300,000.00 400mt @ $23,000/mt 9,200,000.00

Premium walnut kernels 0.00 0.00 200mt @ $12,000/mt 2,400,000.00

Roasted Pine nuts 0.00 0.00 100mt @ $31,000/mt 3,100,000.00

Food-industry grade products 133mt @ $3,250/mt 432,250.00 433mt @ $3,250/mt 1,407,250.00 1333mt @ $3,250/mt 4,332,250.00

Shells Shells estimated $270/mt for fuel 110mt @ $270/mt 29,700.00 220mt @ 270/mt 59,400.00 700mt @ 270/mt 189,000.00

TOTAL INCOME 3,231,950.00 TOTAL INCOME 11,161,650.00 TOTAL INCOME 35,891,250.00

Expenses (USD)

Land Lease Rough estimation based on AISA discussion 20,000.00 20,000.00 20,000.00

Facilities Preparation Estimate from Hajji Hassan facil ity 270,000.00 0.00 0.00

Facilities Maintenance At 5% of original value after Year 1 0.00 13,500.00 13,500.00

Capital Expenditure Integrated almond system with laser sorting and packing 1,000,000.00 Pistachio line, roaster, blancher 200,000.00 Walnut line 120,000.00

Equipment Maintenance At 5% of original value after Year 1 0.00 50,000.00 60,000.00

Salaries Local functional management 6 staff x $1,000/month 72,000.00 6 staff x $1,000/month 72,000.00 10 staff x $1,000/month 120,000.00

Production technicians 10 staff x $100/month 12,000.00 15 staff x $100/month 18,000.00 30 staff x $100/month 36,000.00

Sorting and shelling staff 2 staff x $80/month 1,920.00 4 staff x $80/month 3,840.00 8 staff x $80/month 7,680.00

Overheads Estimate $2000 pcm for services 24,000.00 $2500 pcm for services 30,000.00 $4000 pcm for services 48,000.00

Nut purchases Soft-shell almonds 120mt @ $10,860/mt 1,303,200.00 300mt @ $10,860/mt 3,258,000.00 600mt @ $10,860/mt 6,516,000.00

Hard-shell almonds 500mt @ $2,500/mt 1,250,000.00 1500mt @ $2,500/mt 3,750,000.00 4000mt @ $2,500/mt 10,000,000.00

In-shell pistachios 0.00 200mt @ $19,000/mt 3,800,000.00 800mt @ $19,000/mt 15,200,000.00

In-shell walnuts 0.00 0.00 400mt @ $1,400/mt 560,000.00

Pine nuts 0.00 0.00 100mt @ $6,000/mt 600,000.00

Inbound Logistics Container for pistachio from Herat to Mazaar 0.00 11 @ 2000/ctr 22,000.00 44 @ 2000/ctr 88,000.00

Packaging Vacuum Packs at $1/pack 10,000 vacuum bags 10,000.00 32,500 vacuum bags 32,500.00 100,000 vacuum bags 100,000.00

Outbound Logistics Container to Mumbai from Mazaar via Bandar Abbas 11 containers @ $4,600/ctr 50,600.00 36 containers @ $4,600/ctr 165,600.00 111 containers @ $4,600/ctr 510,600.00

Almond import duties (India) Soft in-shell almonds $600/mt, almonds kernels $1000/mt 200mt almonds in total 160,000.00 550mt almonds in total 450,000.00 1300mt almonds in total 1,100,000.00

Pistacho import duties (India) Kernels $400/mt 0.00 100mt pistachio in total 40,000.00 400mt pistachio in total 160,000.00

Walnut import duties (India) Walnut kernels $1200/mt estimated 0.00 0.00 200mt walnuts in total 240,000.00

Pine nuts import duties (India) Pine nuts roasted in shell $600/kg 0.00 0.00 100mt pine nuts in total 60,000.00

TOTAL EXPENSES 4,173,720.00 TOTAL EXPENSES 11,925,440.00 TOTAL EXPENSES 35,559,780.00

YEAR 1 GRAND TOTAL -941,770.00 YEAR 2 GRAND TOTAL -763,790.00 YEAR 3 GRAND TOTAL 331,470.00

ACCUMULATED TOTALS -941,770.00 -1,705,560.00 -1,374,090.00

Year One Year Two Year Three


Financial Feasibility - LowTechnology Model

Income (USD)









Expenses (USD)




Capital Expenditure Iranian shelling machine and semi-manual retail packaging 250,000.00 Pistachio line, roaster, blancher 200,000.00 Walnut line 120,000.00










Pine nuts 0.00 0.00 100mt @ $6,000/mt 600,000.00









YEAR 1 GRAND TOTAL -199,450.00 YEAR 2 GRAND TOTAL -724,370.00 YEAR 3 GRAND TOTAL 338,250.00

ACCUMULATED TOTALS -199,450.00 -923,820.00 -585,570.00



Financial Feasibility - Manual Model

Income (USD)









Expenses (USD)




Capital Expenditure No equipment except semi-manual packing 20,000.00 Roaster, Blancher 50,000.00 0.00










Pine nuts 0.00 0.00 100mt @ $6,000/mt 600,000.00









YEAR 1 GRAND TOTAL -11,450.00 YEAR 2 GRAND TOTAL -746,950.00 YEAR 3 GRAND TOTAL -36,350.00

ACCUMULATED TOTALS -11,450.00 -758,400.00 -794,750.00



Financial Feasibility - Distributed Facility Model

Income (USD)









Expenses (USD)


Facilities Preparation Estimate from Hajji Hassan facil ity Afghanistan facil ity 270,000.00 Second facil ity 50,000.00 0.00


Capital Expenditure Iranian shelling machine and semi-manual retail packaging 250,000.00 laser sorter, packing machine, pistachio shelling, roaster, blancher600,000.00 Walnut line 120,000.00










Pine nuts 0.00 0.00 100mt @ $6,000/mt 600,000.00



Outbound Logistics Container to Mumbai from Mazaar via Bandar Abbas and second location11 containers @ $5,600/ctr 61,600.00 36 containers @ $5,600/ctr 201,600.00 111 containers @ $5,600/ctr 621,600.00






YEAR 1 GRAND TOTAL -210,450.00 YEAR 2 GRAND TOTAL -1,238,050.00 YEAR 3 GRAND TOTAL 213,550.00

ACCUMULATED TOTALS -210,450.00 -1,448,500.00 -1,234,950.00


Contacts:

Hervé NICOLLE Partner

Samuel Hall Strategy Kabul: +93 796 60 60 28 Paris: +33 666 48 88 32 [email protected]

Nassim MAJIDI Partner

Samuel Hall Strategy Kabul: +93 797 978 206 Paris: +33 660 548 625 [email protected]

Please visit us at www.samuelhall.org

mailto:[email protected]

mailto:[email protected]

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