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High-value Agriculture: Incomes, Employment Creation and Social Stability
By Luke A. Colavito 1
Coffee producer (above) and nursery entrepreneur (inset). Catalyzed through the USAID supported Coffee Development Alliance (GDA, 2002-2007) a specialty coffee industry has been established in Nepal. The GDA is a public-private partnership that includes government agencies, the private sector, and development organizations.

Specialty exports have gone from negligible in 2002 to 90 tons in 2006 and an estimated 150 tons in 2007, valued at nearly $600,000. Coffee farmers have gone from 3,500 in 2002 to over 16,000 currently. It is estimated that 350 full time equivalent jobs were created by the industry in 2006. Specialty coffee has potential to dramatically expand.
Introduction
The on-going peace process has created strong expectations that new job opportunities will become available. If these expectations are not met this will contribute to social instability. Agriculture is not seen as an attractive sector for jobs.

However, the agriculture sector is one where we have many cost effective opportunities to (1) dramatically increase on- farm income, (2) create jobs in the value chain, and (3) create secondary jobs through spending of increased farmer income.

Governance and Jobs
There is currently an emphasis on governance in new development programs. However, the experience of Winrock, IDE, and our partners is that governance programs without economic components lack support in rural communities2. And in fact agricultural development requires building local economic institutions around which governance efforts can be focused3. A lack of grass roots economic institutions has constrained agricultural development and resulted in an underinvestment in commercializing smallholder agriculture. This in turn is a major cause of low incomes, one of the drivers of instability in rural Nepal.

Opportunities in High-Value Agriculture
Even today the majority of smallholder producers are subsistence oriented. This has contributed to a lack of attraction to agriculture. However, recent experience from USAID programs (implemented Winrock, IDE, and partners), government, and others has shown the potential for smallholder commercialization to increase on-farm incomes and generate employment. Commercial crops generate dramatically more jobs because they require, purchased inputs, technical services, marketing, and processing. There are a wide range of commodities with tremendous potential including: Horticulture (vegetables, fruits, spices), Non Timber Forrest Products, Tea, Coffee, livestock, Fisheries, Dairy and others.

Value Chain Approach - The Nepal SIMI example
The Nepal Smallholder Irrigation Market Initiative (2003-2007) is a USAID supported project implemented by Winrock, IDE, CEAPRED, SAPPROS, and AEC that is promoting micro-irrigation for high-value vegetable crops through a value-chain approach. The basic elements of the SIMI value-chain approach are

  • Subsector Analysis (SSA) to identify constraints and interventions
  • Building capacity of agro input suppliers for appropriate inputs and embedded training services to smallholders
  • Develop enterprises and market channels to aggregate smallholder produce
  • Direct training and market development for early adopting smallholders
  • Public Private Partnership with the government for public goods. Public goods include investment in infrastructure (marketing, water development, transportation, etc...), research and extension of knowledge, training, and policy and creation of an enabling environment.
SIMI working closely with GoN and partners has facilitated over 42,000 households to adopt micro irrigation increasing annual incomes by $200 per year. Based on conservative estimation SIMI has also generated 8,200 full time equivalent jobs. These include 1,500 jobs created through farmer demand for micro irrigation equipment, agricultural inputs and services, and for marketing and processing services. An additional 6,700 jobs have been created through the secondary impact of farmers buying goods and services with their increased farm incomes3. In total SIMI has directly reach 54,000 HHs (320,000 people) at a cost per beneficiary of $79.

Recommendations
Winrock, IDE, and Partners are seeking to increase the employment impact of agricultural programs and to increase prioritization of high-value agriculture. To accomplish this we recommend the appointment of a committee through the SIMI Advisory Body that would include government, the private sector, and development organizations to:

  • To carefully document job potential and achieved job creation through agriculture
  • Make recommendations to improve inclusion of agricultural jobs for youth, women, and disadvantaged groups
  • Make recommendations to increase the jobs impact of agricultural programs
  • Consultants would be tasked and managed through the committee and linked to government, the private sector, and development partners
Additional recommendations include:

  • Focus on high-value commercial agriculture that creates jobs for input supply, technical services, marketing, and processing
  • Make recommendations to improve training and development programs to take advantage of high-value commodity opportunities
  • Develop public private partnership mechanisms to make for more effective project implementation and job creation
  • Develop export markets for high-value commodities and overcome SPS and phyto sanitary issues for exports

1. Luke A. Colavito, PhD, Winrock International, Agriculture Program Coordinator - South Asia and USAID Nepal Smallholder Irrigation Market Initiative Team Leader.

2. Direct partners include CEAPRED, SAPPROS, AEC, Lotus, IGD, ANSAB, and district based NGOs

3. Local institutions include farmer groups and apex organizations, agricultural and financial cooperatives, water user groups, business associations, and marketing and planning committees (MPCs) that setup up high-value collection and processing centers and that represent smallholders to traders, government, and the development programs.

4. This estimation is based on a cumulative farm income increase of $15.2 million, project expenditure over 3 years of 4.1 million, a very conservative income multiplier of 1.8 leading to an additional increase of $12 million in income. An average wage figure of Rs. 2,500 per month was used to estimate the number of jobs created.
 
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