Horticulture. Systemic Change Pathways. October MDF Pakistan Version 1

Transcription

1 Horticulture Systemic Change Pathways October 2015 MDF Pakistan Version 1

2 Summary MDF Pakistan Country Strategy Poverty In Pakistan an estimated 45% of the population is poor. Poverty levels vary widely between geographic regions and between rural and urban environments. Poverty incidence is high in rural areas and extremely high in remote rural areas. 60% of the rural population is dependent on agriculture and 80% of farmers are small or landless. There is a need to improve connection between rural producers and developing markets to improve rural household incomes. While incidence is lower in urban areas, numbers are high and growing due to rural to urban population drift. Poor in urban areas work in informal supply chain activities and there is need to develop more formal employment opportunities. The poor in both rural and urban areas are vulnerable to climatic and economic shocks. There is a need to improve the resilience of poor households. Economy Pakistan has a two tier economy. At one level there are large, listed and private companies that are well-integrated into the economy and participate in both domestic and export markets. The second level is the large traditional economy populated by an enormous number of small to medium enterprises serving the domestic market. Pakistan has a trade deficit of USD 22 billion mainly driven by energy imports. GDP growth has averaged 3.9% over the past five years, significantly below similarly developing economies in the region. Whilst manufacturing has seen above average growth; the agriculture sector growth has been below average. Foreign Direct Investment (FDI) has declined due to perceived high security risk. Agriculture is a backbone for the economy providing employment for 43% of the population and accounting for 21% of GDP. There is growth in manufacturing, urban services and in agricultural value addition but local ancillary services and supply chains remain underdeveloped. The agriculture sector is poorly connected to innovation, information and high-quality demand in the cities and overseas. Capital and connections are concentrated in the hands of few, limiting the ability of new entrepreneurs and regional entrepreneurs to fill the gap in the country economic fabric and improve its overall competitiveness. Economic growth is impacted by imported fuel costs, poor power infrastructure and a high international perception of security risk.

3 MDF Focus in Pakistan Development challenges in Pakistan include: Development of formal distribution networks and supply chains that reach small farmers and distant regions and improve the connection between farmers and customers in Pakistan and international markets. Improving export competitiveness through establishing production inputs and services and product and process innovation to meet international standards. Supporting expansion of small, innovative and regional business ventures to scale up and broaden the entrepreneurial base of the Pakistani economy. Increasing the engagement of women in the economy through improved access to information and services and development of employment opportunities. To address these challenges MDF considers Dairy and Meat, Leather and Horticulture sectors to be effective vehicles for change and will focus on; Agricultural sectors that have the potential to connect rural and regional households to demand in cities and overseas; focus on an urban sector that allows poor workers to acquire skills and offers opportunities for women. Horticulture offers opportunities to exploit specific agro-climatic advantages of (mainly borderland) regions to supply Pakistan or the world market; there is a strong focus on establishing better connections and regional entrepreneurship, processing and value addition. Better access to inputs and information on the one hand, and innovations in supply chains on the other will allow small dairy and meat farmers (mainly in Punjab and Sindh) to become more productive and commercially oriented; for this local and innovate entrepreneurs will have to work alongside established players. Making retail ready finished leather goods more internationally competitive with improvements in product innovation, process innovation and the availability of ancillary services; it also allows workers to gain skills and increase wages in time and offers opportunities for women. Partnerships that help to increase the reach and scale of rural value chains and information channels, that help diversity local services, foster new entrepreneurship and reduce the cost of doing business in Pakistan. Women s Economic Empowerment (WEE) Poor women in most rural areas participate in economic activities within the household especially in relation to expenditure decisions and provision of on-farm labour. Their participation visibility depends on social and cultural aspects of the area. In some conservative areas, despite the household being poor, women participate to a lesser extent. In more liberal areas, women are 2 Market Development Facility

4 greater economic actors even working as lead farmers. In this complex environment MDF will look at each of the partnerships through the lens of the WEE framework. Alignment with Government of Pakistan The Government of Pakistan s Vision 2025 includes achieving sustained growth in agriculture through various interventions in production and pre and post harvesting. Private sector and entrepreneurialled growth, gender empowerment, investment, innovation, and capacity building through training and skills development are also emphasised in Vision MDF s sectors and focus in Pakistan are aligned with Vision However on ground business environment is complicated by devolvement of power to provincial and local public sector actors particularly in relation to agricultural policy development and implementation. Note on Systemic Change Areas Pakistan is a big country with a big economy and a vast number of businesses with whom MDF can potentially connect. However only a limited number of businesses provide national coverage and MDF will need to work with regional operators and with businesses interested in growing towards providing national coverage. Larger businesses are principally interested in exporting, supplying products to national level value chains, and providing products and services to large customers. While agricultural production volumes are concentrated in a large number of small farmers these farmers are disconnected from both the product markets and the supply of services and inputs. Finding the right companies to engage in entrepreneurial activity in product value chains and the supply of services and inputs will require working with a range of partners and through these activities MDF will learn more about the sectors and how to engage in development activities that flow down to small farmers. This will of necessity involve a learning period and will be impacted by seasonal supply cycles. Therefore it is expected that achieving significant outcomes from interventions in the dairy, meat and horticulture sector will require a timeline of 8-10 years. Systemic change in horticulture has been captured in two broad pathways. As experience is gained over time we may discover that in each region there is much more to be done, hence change pathways may develop specific to regions. Interventions to expand economic activity in the leather sector, which is not impacted by seasonal supply cycles, are expected to be somewhat easier to both implement and to measure and it would be expected that significant outcomes could therefore be seen in a shorter period such as 5-7 years. Pakistan commenced intervention activity in 2014 and therefore the timeline to make significant impact is expected to go out towards In the short term it is considered that MDF will need to double activities to make the significant gains outlined in this document. This document has been prepared on the basis of limited observation of outcomes from the current intervention portfolio and as such should be seen as a living document which may change direction and impact projection as knowledge and experience of outcomes from on-ground experience improves.

5 The MDF Framework for Defining and Populating Pathways to Systemic Change The systemic change pathway explained Competitiveness and change in sectors do not depend only on the actions of MDF. Sectors are complex and are influenced by a wide variety of factors such as global markets, changes in the policy and regulatory environment, the availability and quality of infrastructure, the cultural context and the environment. Some changes introduced by MDF will catch on quickly; others have faced barriers and moved slowly or not at all. MDF must be able to define which change areas it needs to focus on to make growth more robust and inclusive and then monitor progress towards achieving the quality of change that can be called systemic. For this purpose MDF developed its Systemic Change Framework as outlined in the figure below. This framework is applied separately to each key strategic change that MDF aims to foster within a sector or market system. The annexes to this Strategic Guidance Note provide a detailed example of how the framework is applied in Fiji. 4 Market Development Facility

6 MDF Systemic Change Pathway

7 Application of MDF s Systemic Change Framework requires a deep understanding of a sector as well as experience working with market players to address constraints to pro-poor growth. The first step in applying the Framework is to develop an inclusive, pro-poor growth strategy for each sector. This sector strategy is typically based in on an Inclusive Analysis of Growth, Poverty and Gender at the sector level combined with a Household Level Analysis of Poverty and Gender Dynamics and defines a vision for inclusive growth as well key constraint areas to inclusive growth. MDF will then proceed to launch partnerships aimed at reducing the constraints identified and unlocking inclusive growth. At the same time, MDF uses the framework outlined above to further define its strategic intent for a sector, as accurately as possible given that it will learn more from implementation about what is really needed and realistically feasible. Please refer to MDF s Strategic Guidance Note on Systemic Change which shows how an inclusive sector growth strategy (for the Horticulture sector in Fiji) feeds into the country strategy, and how systemic change areas support the inclusive sector growth strategy. As mentioned, for each systemic change area, MDF applies the systemic change framework; the introductory section justifies the rationale for identifying the systemic change. Importantly, in time, based on the experience gained from implementing the first partnerships within a sector, it becomes clearer which systemic changes the programme should focus on. As the programme discovers more through implementing its partnerships within the sectors, it becomes clear that some constraint areas appear to be dimensions of, or seem to coalesce around more deepseated problems. MDF then develops a better idea of which changes the market is ready for, and which changes requires more innovative approaches address the problems. Through the interplay between traction gained through partnerships and strategic intent, emerges firmer systemic change areas, which then become the compass for programme implementation in the sector. This typically happens around two years into implementation as the first batch of partnerships start to yield results. To help define (and manage, monitor and communicate) the dimensions of change that deserve to be labelled systemic, MDF asks two fundamental questions: 1) are there appropriate incentives for market players to interact with poor people and to continue, expand and adapt the new business model; and 2) is the adoption and adaptation of the new business model continuing to serve the interests of poor men and women? For each question it has defined three key parameters. The table below reiterates these questions and briefly defines the parameters related to this. It should be noted that the first three parameters refer to the strength of the business case underpinning the change, and other three parameters refer to the beneficiaries of the change. Together they define the quality of change as well as the scale of change, making it truly systemic.

8 Parameters with Systemic Change Framework Questions Parameters Definitions Are there appropriate incentives for the market players that interact with poor people to continue, expand and adapt the new business model? Is the adoption and adaptation of the new business model continuing to serve the interests of poor people? Autonomy Sustainability Resilience Inclusiveness Scale Women s Economic Empowerment Independent action by businesses or other market players to adopt and/or improve a business model promoted by the programme. The extent to which the business model promoted by the programme is sustainable and/or profitable. The extent to which the market system supporting the business model can adapt to stay competitive, take advantage of new opportunities and recover from adverse shocks. The extent and depth to which the business model as practiced by market players includes and benefits the target group The proportion of the potential target group that gets the goods, services and/or jobs promoted by the programme. The extent to which the business model includes and benefits women with respect to income, access to opportunities, access to assets, life chances, jobs, manageable workloads and decision making power. Then, by asking these two questions using these six parameters, the framework seeks the programme to define a beginning state for each parameter. This is the state of the sector or market system at the start of the implementation process ( at the beginning of the pathway to systemic change ). Once the programme is being implemented it defines the key market or regulatory gaps it seeks to address to make the market system work better. 2 Market Development Facility

9 This is followed by a description of the end state for the same parameter. It outlines how the programme wants to see the market system work. If this state is achieved, the work is done. The end state should be defined as per market needs to work well. Therefore it may occur that the programme defines an end state that it cannot achieve given its current resources and implementation window (contract duration). This makes the Systemic Change Framework a management tool not only for the programme, but also for its investors. It starts to define the total potential, the total need and the total time and resourcing required to meet those needs. As mentioned, the space between the beginning state and end state is the gap in the market system that needs to be filled, the pathway to systemic change that needs to be populated. MDF identifies four stages of progression along this pathway, captured for each parameter. These stages are initial, intermediate, advanced and matured. In time, MDF will make progress against these parameters, but not at an equal pace (there may be very inclusive partnerships that lack scale and to some extent resilience, and partnerships that are strong on autonomy and scale, but less on WEE). Each partnership design needs to be strong and sustainable enough to be considered for co-investment by MDF, but no partnership is perfect. By managing its portfolio MDF will ensure quality of change at scale in a systemic manner. Nevertheless, MDF does not expect that all changes will reach the same level of institutionalisation in the market system within the life of the programme. Some changes may only reach an initial or intermediate level of systemic change, while others may reach an advanced or matured level of change. Using the knowledge and understanding gained from several years of experience, MDF can project the level of systemic change it expects to catalyse two years beyond the life of the programme. 1 MDF assesses the progress of systemic change against these projections and analyses why change is happening faster or slower than expected. This helps the programme to better understand market dynamics and adjust its strategies appropriately. Finally, for each parameter, MDF will describe the beginning state and end state of where it is situated in moving forward along the pathway to achieve systemic change. This helps the reader understand how far MDF has progressed in terms of achieving its strategy objective, with whom (which partners), and why. As implementation and insight progresses, MDF periodically updates these stories (as well as, if needed, the desired end state ). 1 The processes of change that MDF catalyses during the programme will continue beyond the end of the programme. MDF uses the DCED recommended two years post programme timescale for its projections.

10 Horticulture Sector MDF Sector Statement The Horticulture Sector covers the cultivation, harvest, post-harvest handling, processing and packaging of fruits, vegetables and root crops including fresh and processed produce for both domestic and export markets. MDF aims to improve the connectivity to markets and product quality to service the discerning consumer segment of the domestic market and take advantage of export opportunities. While endeavouring to improve conditions for fruit and vegetable farmers in relevant production areas across Pakistan, MDF will also focus on improving farmer outcomes in remote areas e.g. Gilgit Baltistan, Khyber Pakhtunkhwa and Balochistan. The Horticulture Market Scale, Constraints and Opportunities Horticulture makes up 12% of agricultural GDP representing a wide diversity of products sourced from specific geographic/climatic zones. The majority of Pakistan s production of fruits and vegetables is sold and consumed in the domestic market. Approximately 8% is exported and less than 3% is processed. Demand for horticulture produce has been on the rise over the last two decades on the back of population growth and increasing income levels. Production has increased from approximately 13 million tonnes in 2000 to over 16 million tonnes in 2012 but this has not kept pace with growth in local demand. Imports have risen from 250,000 tonnes in 2004 to over 650,000 tonnes in There is a significant demand supply gap particularly for vegetables. While the traditional informal pathways to market are large, they are extremely difficult to influence. There is emerging growth for fruit and vegetable production to supply quality consumer products to middle-class customers shopping at newly developing retail formats, and for export markets looking to source diversified products. Balochistan, Sindh, Khyber Pakhtunkhwa (KPK), Gilgit-Baltistan (GB) and Punjab all have unique agroclimatic belts. In some cases, quality and value are represented by an ability to produce certified organic produce for export. In other cases, quality and value are linked to an ability to produce for the domestic market at times when other geographical areas are not producing due to seasonal differences. In some areas, this will mean that opportunities lie in partnering with companies able to open up export channels and in other instances, opportunities lie in partnering with agro-input companies and other sources of inputs and information to influence the cultivation techniques applied by farmers. Big agriculture is involved in production of mangoes and kinnows which are a significant component of horticultural exports. While large farms provide seasonal employment, there is limited opportunity for smallholder farmers to connect and supply produce for export due to fruit quality 4 Market Development Facility

11 and logistics. Large numbers of smallholder farms maintain small orchards and sales of produce to the domestic market make a once-a-year contribution to household income. Vegetable production involves a large number of smallholder farmers, generally close to urban areas due to short production cycles, access to market and the ability to regularly contribute to household income (several crops a year). Smallholder farmers are disconnected from market access, inputs, information and finance associated with quality produce. Increased production and improved connection to markets will assist to make fruit and vegetable farming more rewarding and resilient. Cultivation improvement, post-harvest handling and further processing into retail ready products is virtually absent, particularly for medium and small holder farmers. Further growth potential lies in increasing access to the developing market opportunities through knowledge to improve production quality and quantity, improved access to inputs, post-harvest handling and transportation, packing and processing, extended seasons and new vegetable varieties. The Position of Poor in the Sector Agriculture provides employment to 45% of the labour force. About 60% of the population living in rural areas is directly or indirectly involved with agriculture for earning livelihood. Horticultural production is widely dispersed by geographic locations and potential for pro-poor growth varies by crop and by type of farmer. Growth in productivity of chilies can be beneficial to small farmers (i.e. those who own and grow chilies on their small pieces of land, or those who work as sharecroppers on larger land holdings) who strive to get better incomes from their crops. Similarly, there is scope for increasing incomes of farmers in remote regions such as Gilgit Baltistan through their seasonal products including apricot, apple, cherry and mulberry crops. Horticulture can be a key to poverty eradication as it has more income from farm unit area and it attracts small farmers as it is labour intensive, has short cycles for vegetables; and potential to provide stable source of income and food security for the household. Horticultural production creates employment opportunities ranging from production tasks such as sowing, weeding, watering and applying pesticides and fertilizers to post-harvest tasks including harvesting, grading, sorting and further processing tasks including packaging, drying pulping etc. While most of these tasks are seasonal, there is supplementary income opportunity for poor rural households. The Position of Women in the Sector Women are actively involved across Pakistan in horticultural support activities such as sowing, planting, picking, sorting, grading, storing and working in niche processing industries. Participation by women in agriculture has increased by 1.4 percent between 2008 and 2011.

12 In some rural areas women have a tradition of active involvement in market transactions as an example in Gilgit Baltistan the majority of fruit farmers are women who both work on the land and sell the produce into the market. In other areas such as regions of KPK and Balochistan, women have very little involvement in either support or market activities related to horticulture due to the strong conservative and religious traditions. In horticultural areas in Sindh and Punjab, women provide support activities for household production and are also actively engaged on a seasonal basis by larger farms. While seasonal, this income is an important supplement to household income. The pivotal contribution of women in the horticulture sector often goes unrecognised by both active participants and observers. Where women are employed, they are generally paid less than male workers. In some areas, women are not directly involved in economic transactions but have some influence in household expenditure decision making processes. Systemic Changes in Horticulture Based on these constraints and opportunities, MDF has identified two pathways for systemic change in Horticulture: 1. Agro-input providers adopt innovative approaches to distribute and retail inputs, services and information to reach more small-holder fruit and vegetable farmers. 2. Exporters and processors invest in supply chain development to source and deliver fresh and processed fruit and fruit products targeted at premium domestic and export markets with a particular focus at sourcing from small-holder farmers in remote regions. MDF has only been operating in the complex environment of Pakistan horticulture for two years. The team has a good understanding of the fruits sector in remote regions and specific vegetable crops in defined regions. MDF knowledge across horticulture will expand as partnerships and activities are implemented. This is likely to necessitate review and recasting of strategy and strategic change as time progresses particularly in relation to regional vegetable production. 6 Market Development Facility

13 Systemic Change Statement 1 Agro-input providers adopt innovative approaches to distribute and retail inputs, services and information to reach more small-holder fruit and vegetable farmers. Background ( before picture ) Agricultural developments have been focused on few specific crops, with key service providers catering to only big agriculture (large kinnow and mango commercial farms) resulting in limited benefits being trickled down to small horticulture farmers. Considerable formal and rural input suppliers and service providers exist but their reach is concentrated in regions with high population densities (Punjab and Sindh), leaving other regions trailing behind. There is a lack of players interested in investing in reaching the highly untapped potential market of small horticulture farmers. In the traditional supply chain, the arthi has a high degree of market control which is essentially established through financing arrangements which provide farmers with horticultural inputs. The delivery of inputs and services under such arrangements are influenced by the strength of the arthis connection with the input suppliers and the arthis ability to extract margin. The arthis are essentially interested in providing finance to capture production and sale of products which yield higher margins rather than improving or increasing production. Inputs supplied by them can be adulterated and knowledge provided on production improvement is limited. Despite having huge reach, arthis have little incentive in promoting improvements in cultivation techniques. The public sector at federal and provincial levels provides some extension and R&D services but these seldom reach down to the grass root issues faced by smaller scale fruit and vegetable farmers. Complicated and lengthy approval and registration processes for horticultural inputs discourages private sector investment in the area. Anticipated end picture (when markets work well) Multiple formal and informal channels supply a range of quality inputs (e.g. including seeds, fertilizer, water, crop protection systems, farming tools and infrastructure) to fruit and vegetable farmers across regions. Inputs and information is provided both through the traditional arthi network and through direct delivery to farmers with embedded services supported by produce wholesalers, processors and retailers looking to source fit for purpose products. Business membership organisations involving input suppliers, traders, retailers and farmers engage with provincial and national government agencies to accurately reflect the needs of the horticulture sector.

14 The public sector receives improved information on the status of the fruit and vegetable supply chain and as a result, improves business environment and supports appropriate R&D to provide sound advice to input and service providers and farmers. Private and public sector enterprises deliver information to horticulture farmers using a full spectrum of media and ICT delivery systems to provide practical and applicable solutions. Expected Pathway to Systemic Change (like number, types and focus of partnerships) MDF aims to work with a balanced portfolio of 23 partnerships addressing farm inputs, service providers, supply chain enterprises and information providers to create systemic change in fruit and vegetable horticulture. Ten partnerships with both national and regional service providers (seven in vegetable belts close to urban cities and three in remote fruit production centres) to provide quality horticultural inputs (e.g. seeds, crop protection, fertilizer, micro-nutrients, etc.) Five partnerships with both national and regional suppliers of farm implements and horticultural systems (e.g. irrigation, crop housing systems, crop preparation tools, harvesting tools, etc.) Five partnerships supporting delivery of timely and up-to-date information from government and other research stations to small holder horticulture farmers (e.g. through traditional and new media, ICT, direct marketing, etc.) Three partnerships supporting business membership organisations to provide guidance to the public sector on the needs of the Pakistani horticulture sector. MDF recognises the challenges associated with provision of finance to horticulture farmers. Where partnerships have an opportunity to improve access to finance by linking off takers with financial products, this aspect will be embedded within relevant partnership agreements. Women s Economic Empowerment A Household Level Analysis of Poverty and Gender Dynamics was conducted in rural areas in mid The rural study addresses poverty and gender dynamics in regions where MDF currently has horticulture activities. Most members of the household often share farming activities in Pakistan. Women are actively involved in the horticulture sector and their presence can be observed across a number of farming activities which include but are not limited to planting, weeding, harvesting, sorting, grading and drying. The level of engagement on women varies widely between regions and even within regions. As farmer yields increase as a result of better access to quality inputs and information on input use, this will result in an increase in income and employment opportunities for women. Women will also 8 Market Development Facility

15 directly benefit as a result of improved access to inputs and information using innovative ICT and media channels. The increased yield leads to an increased income. In addition to this, women are better equipped to contribute to agricultural decision making as a result of more information on quality input use. The increased workload associated with greater on-farm activities or employment opportunities is addressed by access to labour saving technologies and yield enhancing inputs, giving a greater return on effort. The complex structure in Pakistan provides many socio-cultural challenges to integrate women. For instance, in some regions as household incomes rise, women may stop working. For this reason, the role of women will be assessed at a regional level to address more specific challenges. Results in time Over 8 to 10 years MDF Pakistan aims through its partnerships to improve access to inputs and information and reach 85,000 farmers and small micro enterprises (involved in in distribution, wholesaling and trading of inputs) with 75% beneficiaries from Khyber Pakhtunkhwa, Balochistan, Sindh and Punjab. MDF further aims to create up to 1000 FTEs across input and information supply and farming enterprises. It has proved difficult to establish numbers of fruit and vegetable farmers in Pakistan, however it is considered that when outcomes of partnerships are shown to be successful, this is highly likely to result in substantial copying and crowding. Women in horticulture sector will benefit from increased household income, more employment opportunities in harvest activities and improved access to horticultural information resulting in more effective decision making processes within households. Feasibility, Efficiency and Risks Experience to date by the MDF team in Pakistan indicates that there is a sufficient body of potential partners interested in establishing networks to get inputs and knowledge to horticulture farmers. There is a need in horticulture to identify crops with regional opportunities. While the focus for fruits has been identified as GB, KPK and Balochistan, with vegetables opportunities will be more specific crops recognising that the biggest vegetable belts exist in Sindh, Balochistan and South Punjab. There are several risks in this systemic change pathway: There are security and access risks associated with conducting activities in GB, KPK and Balochistan. MDF has appointed locally positioned field research resources of to assist in identifying, managing and monitoring partnerships. Strong uptake of inputs encourages third parties to deliver adulterated and poor quality inputs. MDF will encourage partnerships where packaging integrity passes through to the user.

16 The influence of the arthi over input supply overrides the uptake of good quality inputs. MDF will encourage partners to involve arthis in the distribution, wholesaling and supply of inputs as well as direct sales mechanisms. Information systems will assist farmers to demand good quality inputs. There is potential for climate and crop disease to have a serious negative impact on fruit and vegetable production. Improved access to information and inputs will assist to control disease outbreaks and make farmers more resilient in the event of flood or drought. 10 Market Development Facility

17 Systemic Change Statement 2 Exporters and processors invest in supply chain development to source and deliver fresh and processed produce targeted at premium domestic and export markets with a particular focus at sourcing fruit from small-holder farmers in remote regions. Background ( before picture ) In remote regions there is a disconnection between producers and end markets which results in farm produce not being recovered from the field and low attention being paid to harvest quality produce. This particularly relates to fruits in remote regions (GB, KPK, Balochistan). As a result, produce never leaves farms and not enough incentive exists for farmers to reinvest and improve quality of their products as per market requisites. While produce in these remote areas generally complies with organic farming principles little is made of this embedded opportunity. There are several emerging enterprises (mainly in GB and some in KPK and Balochistan) beginning to recover and process a variety of fruit (including apricots, apples, cherries, persimmon, mulberries, dates etc.). Post-harvest sorting, grading and storage and delivery logistics are poorly developed resulting in product value loss and product quality not matching market expectation. Domestic processors such as Nestle exist but are unable to source quality local raw materials due to inconsistent and low quality supply. There is a lack of certifications and export readiness enabling more fruits to meet international standards. Investment in infrastructure to address post-harvest handling and provide adequate facilities (storage, packaging, transportation etc.) for increased value-addition is minimal. While the public sector including NGOs are involved in providing training to farmers, this tends to be localised (e.g. AKRSP in GB and Chitral) and crop specific and there is limited assistance provided to private sector enterprises involved in collecting, storage, processing and supplying products to emerging domestic retail and export. The focus remains on major fruit exports of the country. Anticipated end picture (when markets work well) Markets are more accessible because of increased access to certifications and investments in meeting market standards. Fruit producers in remote regions are connected to domestic and export markets through enterprises that collect, grade and process produce into a variety of retail ready fresh and shelf stable products. A variety of horticulture products are able to be handled, sorted, graded, packaged and stored postharvest. Product is able to be graded appropriate to end market expectations. Demand for fruit in remote regions has increased to the extent that farmers invest in expanding and diversifying their plantings.

18 Produce purchasers clearly communicate their quality and specification requirements to farmers and link with input providers to further increase production. The public sector including business membership organisations focus on improving exports of fruits other than kinnow and mango, enabling more remote producers to benefit from enhanced market connectivity. Expected Pathway to Systemic Change (like number, types and focus of partnerships) MDF aims to work with a balanced portfolio of 20 partnerships with collectors, post-harvest operators, processors and exporters to drive systemic change in links between producers and markets. Through these partnerships MDF aims to reach horticulture farmers (mainly fruit producers) located in GB, KPK and Balochistan. Ten partnerships (five in GB, three in KPK, two in Balochistan) supporting exporters to develop markets and comply with market and customer specifications (including organic, Fairtrade, HACCP, ISO, etc.). Five partnerships with processors (three for direct export and two for supplying to larger processors) to improve processing techniques including drying, pulping and further processing to produce shelf stable/retail ready products. Three partnerships with service providers supporting post-harvest handling, sorting, grading, storage and packaging. Two partnerships to improve logistic facilities for better access to growing markets (local truckers, air-freight and shipping) MDF recognises there are significant challenges associated with improving access to finance for horticulture farmers. Where partnerships involved in systemic change associated with processing or exporting have an opportunity to improve access to finance, this will be embedded within the partnership agreement. Women s Economic Empowerment A Household Level Analysis of Poverty and Gender Dynamics was conducted in rural areas in mid which illustrates the impact of WEE in different regions. For this systemic change pathway, it is expected majority of women will benefit in remote fruit production centres of GB and to a lesser extent in KPK and Balochistan. In Pakistan, due to socio-cultural barriers, improved decision making and increased incomes, may have different results as per regional context but the general understanding is that women are involved in decision making consultations within a household, making it essential for them to have access to appropriate information so as to influence the dialogue around expenditures. 12 Market Development Facility

19 In GB, women are more actively involved in farming activities. Hence, if a GB based apricots processor invests and secures machinery, which results in increase the efficiency to his processing cycle, it will allow the company to processes higher volumes of dried apricots to serve the unmet demand. Women farmers will likely benefit through increase in apricots sales, given their direct involvement in trade activities in the region. In GB this systemic pathway is expected to result in significant women s participation both in farming and post-harvest. Somewhat ironically activities in some parts of KPK will have almost zero women participation. Women s involvement will result in increased household income from selling more fruit, increased employment as post-harvest seasonal labour and access to improved marketing information and decision making through increased negotiation power as a result of being more connected to formal buyers and networks. Results in time Over 8 to 10 years this systemic change would be expected to reach less farmers per partnership than other systemic changes due to the focus being in poor, remote and less densely populated communities. The expectation would be that the partnerships would result in sound income growth. In other words this systemic change would focus on depth of benefit rather than reach. Nevertheless, we would expect to directly and indirectly reach in the region of 13,000 horticulture farmers in remote and vulnerable areas of Pakistan and create in excess of 200 FTEs in post-harvest and processing operations. It would be expected that partnerships in GB would result in significant women s participation in all farm and post-harvest activities. Initial partnerships demonstrate 90% women s involvement as female farmers and employees in processing facilities in GB. Feasibility, Efficiency and Risks Experience to date by the MDF team in Pakistan indicates that there is a growing body of potential partners interested in developing post-harvest and processing activities with view to delivering products to export and high end domestic markets. There are several risks in this systemic change pathway: There are security and access risks associated with conducting activities in GB, KPK and Balochistan. MDF has appointed locally positioned field research resources to assist in identifying, managing and monitoring partnerships. Local resources know the area better and would be able to better assess opportunities and identify potential collaborations. Rapid recognition of end market opportunity may result in an influx of exporters and traders that could potentially lead to pressure on end market prices and undermine the systemic change viability. In the remote regions, MDF will be aware of the need to consider the potential for competitive pressure and market cannibalisation.

20 Reputational risk associated with a rogue exporter misrepresenting product which as a result reduces customer confidence and sales from reputable suppliers. MDF will work with processors and exporters to assist them to implement rigorous customer compliance requirements. There is potential for climate and crop disease to have a serious negative impact on fruit and vegetable production including undermining organic certification. In high altitude areas crop disease and pest risk is lower. By improving incomes through increased harvest recovery and sale of better quality fruit, farmers will be more resilient to the impact of climatic and disease disasters. 14 Market Development Facility