Enterprising Ladakh Prosperity, Youth Enterprise and Cultural Values in Peripheral Regions

Working Paper No 1

Agriculture & Agribusiness

by

Ankush Sabharwal Atul Singh

Center for Development of Corporate Citizenship

S P Jain Institute of Management & Research Mumbai

July 2005

Ladakh Autonomous Hill Development Council, Leh Druk Pema Karpo Educational Society

Drukpa Trust

in association with SECMOL

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Preface This Working Paper was prepared as part of an 18-month project entitled ‘Enterprising Ladakh’. The Paper seeks to identify economic opportunities available to Ladakhis – especially young Ladakhis - in local, national and international markets. The findings will be discussed at a Workshop in Leh in July 2005, with the objective of identifying economic activities that Ladakhis themselves consider feasible, acceptable and appropriate within Ladakhi society and values. Subsequently, the project team will scope the skills and attributes required to access the preferred market opportunities, while the final stage of the project will outline a new school curriculum to impart enterprise-related skills and motivation to young Ladakhis, alongside traditional teaching of cultural and ecological values.

‘Enterprising Ladakh’ is a project being conducted by the Ladakh Autonomous Hill Development Council (LAHDC), Leh, Druk Pema Karpo Educational Society and Drukpa Trust, in association with SECMOL. The findings set out in this Working Paper are the work of Ankush Sabharwal and Atul Singh of the Center for Development of Corporate Citizenship, S P Jain Institute of Management & Research, Mumbai. The work was carried out under the supervision of Professor Jiban Mukhopadyay, Professor M. S. Rao and Professor Nirja Mattoo (Chair of the Centre for Development of Corporate Citizenship). You are kindly invited to communicate your views on this Working Paper to the project team:

Project Coordinator 'Enterprising Ladakh'

Hemis Complex, Zangsti Leh, Ladakh -194 101

Phone: +91 94191 77536; 252 133 enterprisingladakh@rediffmail.com

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This document has been produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of Ladakh Autonomous Hill Development Council, Druk Pema Karpo Educational Society and Drukpa Trust, and can under no circumstances be regarded as reflecting the position of the European Union.

TABLE OF CONTENTS

Executive Summary ........................................................................................... 4 1 Agriculture & Agribusiness: The Current Position............................................ 5

1.1 Agricultural Issues..................................................................................... 6 1.2 Comparative Advantage of Ladakh region................................................ 8 1.3 SWOT Analysis of Fruits........................................................................... 8 1.4 SWOT Analysis of Vegetables.................................................................. 9 1.5 SWOT Analysis of Grains & Cereals....................................................... 10 2.1 Linking the Vision with Strategy .............................................................. 11 2.2 Value Addition Analysis for Apricot Products (Oil and Dried Apricot)...... 12 2.3 Value Addition Analysis: Seabuckthorn .................................................. 13 2.4 Estimation of Capital Investments Required, and Profits from Small Scale Processing Units........................................................................................... 15 2.5 Recommendations for Encouraging Entrepreneurship in Food Processing...................................................................................................................... 18

3 An Approach to Bridging the Gaps in Agribusiness and Food Processing .... 20 3.1 Food Parks ............................................................................................. 20 3.2 Process of Setting up Clusters................................................................ 22 3.3 Marketing ................................................................................................ 25 3.4 Bridging the Education, Training and Information Gap ........................... 26

4 Organic Agriculture........................................................................................ 27 4.1 Identification of gaps............................................................................... 27 4.2 Approaches to Bridging the Gaps in Organic Produce Certification and Marketing ...................................................................................................... 28

ANNEXURES................................................................................................... 30 Annexure I Demand by the Army.................................................................. 30 Annexure II Comparative Economics of Vegetables vs. Food Grains........... 31

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Annexure III Guidelines For Setting Up Of Unit Under Fruit Products Order 32

Executive Summary Ladakhi Agricultural System - Present Status

Ladakhi agriculture is primarily subsistent in nature. Perhaps, as we obtained in our field trips and from general observation, it is better to call it self-sufficient and self-contained rather than subsistent. Ladakhis grow and consume their own grains, cereals and vegetables, prepare their own manure, seeds and other agricultural inputs, rear their own animals and prepare their own farms in a well integrated, coordinated and balanced form of agriculture that has evolved in response to agri-climatic conditions unique in India. However, as Ladakh opens up to the world, its ancient and reliable agricultural system faces disruption and agriculture takes back seat to fast growing sectors like tourism. The youth of Ladakh today see agriculture as an un-remunerative, laborious, thankless activity and leave the farms for urban areas. Our aim has been to highlight the economic and social potential of farming as a commercial, yet non-exploitative activity in tune with the ethos that makes Ladakh unique.

The focus of this report

Our work was primarily based on understanding the market potential of the sector and devising a plan to tap it. The scope of agriculture encompasses horticulture (production of fruits and vegetables), production of cereals and grains like wheat, millets, rice, production/collection of medicinal and aromatic plants (MAPs), collection of wild berries and fruits like Seabuckthorn, and the further processing and value addition to these inputs. We isolated areas from these that have the maximum potential for entrepreneurial activities and for increasing the value accruing to farmers, finding food processing in general and Seabuckthorn & Apricot products in particular to be the best for efforts on the short term. Seabuckthorn in particular holds high promise for revenue generation, to the tune of Rs. 300 million built up over 5 years.

We also find that finance, infrastructure, FPO certification and marketing form a vicious circle that very few entrepreneurs can break, based on extensive interviews and discussions with current and aspiring entrepreneurs, NGOs, government officials and farmers.

The outcome of the study

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Based on our analysis of this sector, we recommend two interventions viz. developing small scale food processing clusters, with common facilities like testing, power generation, water and sewage treatment, packaging and storage; and establishing an autonomous agribusiness and agri-products marketing board. These interventions are specifically aimed at breaking the vicious circle, by facilitating entrepreneurship and cooperative activities in the nascent food processing industry. We also propose the community based organic certification model for increasing the economic viability of small and marginal farming activities by promoting organic agriculture, and increasing the food security and self-sufficiency in terms of fruit and vegetable production by developing its commercial viability

1 Agriculture & Agribusiness: The Current Position Agriculture forms the foundation of Ladakh’s culture and social structure, though its significance as an employment and revenue generator has been declining. The number of cultivators as percentage of the population has decreased over the decades from 65.1% in 1971 to 58.5% in 1981, falling to just 37.6% in 2001, even though it has increased in absolute numbers. The major crops are:

• Grains & cereals: Wheat, millets, barley

• Fruits & berries: Apples, Apricots, Peaches, Grapes, and

Seabuckthorn

• Medical and Aromatic Plants

• Vegetables: Turnip, Cauliflowers, Peas, Cabbage, and Tomatoes

• Potatoes and other tubers: Potatoes, Yams While agriculture accounts for a healthy chunk of employment, its contribution to the economy is estimated at an insignificant 1-2% in monetary terms. This is because of its subsistence/non-commercial nature and lack of value addition. While Indian agriculture as a whole suffers from the fact that only 2% of the total produce is processed and over 50% of the horticultural produce lost due to spoilage, improper storage and transportation, the figure is judged to be worse for Ladakh at least in terms of processing. The agricultural season in Ladakh is limited to four months out of the twelve due to the climatic conditions. While the season has been extended to five months with the use of greenhouses, their use remains non-commercial and small scale. There are no green vegetables or fruits available during the major part of the year, and canned vegetables, tomato purees (both imported) and dried produce are used during the winter. The sector is partly organised. There are 79 primary agricultural societies, 8 sales and services societies, and 6 marketing societies as of 2002-03. The growth rate has been slow/stagnant in all three sections. In agriculture, apart from four marketing cooperatives supplying vegetables to the armed forces, there is only one cooperative working on Seabuckthorn collection and processing. Initiatives like osmotic dehydration of apricots and its marketing and Seabuckthorn processing are partially/fully under the LAHDC. The major part of agricultural produce is consumed internally/sold on an individual basis, mainly by women selling their produce in markets. In conversations with office bearers in the agricultural sector, it emerges that the system of wholesalers buying produce in bulk from the villages, and then retailing/reselling to retailers in the market is non-existent/incipient due to certain socio-cultural factors.

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Efforts to organise apricot drying and marketing have been successful on a small scale, but need to be scaled up to meet internal and external demand. The disorganised nature of the sector and adherence to certain inefficient production and processing techniques implies that 40-60% of the apricot production is wasted. The apricot production that is processed (sun dried) is prone to spoilage due to incorrect picking methods, unhygienic and non-controlled drying procedures. Also, 80-90% of the possibly exploitable Seabuckthorn production is lost. In a recent trial production of 500 MT of Seabuckthorn, the pulp sold for Rs. 6.5 million, with a net profit of Rs. 1.2 million. Potential in processed fruits, vegetables and MAPs remains unfulfilled

The fragmented land holding pattern makes it difficult to introduce modern mechanized agriculture practices, however, small farming equipment such as winnowing machines and power tillers are becoming popular due to subsidies. LAHDC and the Central Government subsidise agricultural loans, equipment, seeds, greenhouses and solar pumps for irrigation. Bank deposits are growing at a healthy rate in Ladakh. The increasing savings rates imply a higher availability of funds for agriculture/food processing units. However, the C/D (credit-to-deposit) ratio is an abysmally low 11%, and of this, the primary sector that includes agriculture (2.3% of loans advanced) & small-scale industries (3.5%) forms just 5.8% of total loans advanced. This is reflected in the fact that the number of food processing units registered with the DIC (District Industries Commission), with only 9 units registered over the past decade.

1.1 Agricultural Issues Growing dependence on non-traditional food crops: Traditional high protein and nutritive content cereals like millet, barley and native grains are being replaced by wheat and rice, encouraged by the highly subsidised public distribution system. As rice is non-cultivable in Ladakh given agri-climatic and soil conditions and other resource constraints, the Ladakhi economy is steadily growing dependant on imports from the plains. Locally grown wheat and barley is non-competitive with mass-produced monoculture crops from the plains of India.

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Loss of traditional techniques of agriculture and biodiversity: the growing preference for non-traditional crops and increasing pressure to commercialise hitherto subsistence means of agriculture is gradually leading to the erosion of traditional organic techniques of agriculture. The replacement of locally-adapted, hardy and low resource intensive cereals by wheat and rice can lead to a possible loss of biodiversity and extinction of valuable components of the gene-pool.

Unreasonable demands on resources: Crops from the plains are resource-intensive and place unreasonable demands on the limited capacity of the Ladakhi soil and water resources. This leads to loss of soil fertility, and water shortages, and growing dependence on expensive and harmful agricultural inputs like chemical fertilizers and pesticides. Social impact: With growing dependence on external inputs, low incentive to grow crops coupled with high expenses, and loss of markets to imports, has forced a breakdown of the traditional system of a farming-based economy and communal labour. It has also led to the migration of farmers, mostly youth, to cities like Leh, where they work in tourism-related activities, increasing pressures on the urban area.

Problems faced by Agriculture in Ladakh Human Resources: There is a reducing interest shown by educated Ladakhi youth in non-remunerative, subsistence agriculture, resulting in abandonment of agriculture at many farms. The alternative to agriculture, the tourism business, is highly lucrative and relatively effortless (This point emerged consistently in surveys and focus group discussions held with students at school and college level). There is also a marked preference for government and army jobs, which has shifted a large part of the young male population away from the farms. Lack of Value Addition in Agriculture: Agricultural production is still stuck at the primary production level. A negligible percentage of the agricultural produce is actually processed further and value added to achieve a higher realisation. Thus, in most cases, agriculture is not a revenue generator, just a subsistence tool fast being replaced by other, cheaper sources of agri-produce, such as the PDS and imports. Traditional methods non-competitive: In comparison with the large-scale monoculture methods from the plains, the small scale, labour intensive, diversified agricultural production methods are expensive and unable to meet food grain, pulse or vegetable demand. Thus subsidised grains from the PDS are more economical for the farmer. Fields are not abandoned due to social reasons, but effectively grain production ceases. Climatic conditions: These limit the growing season to three to four months out of the entire year. Hence production is limited and cannot meet the year-round demand. Fresh vegetables and fruits are available for only an extremely limited period despite extension of the growing period to 5 months by the usage of greenhouses. The climate is cold and dry for the major part of the year. Logistics: Ladakh is fairly distant from the major markets (the Metros); road access is blocked for 7 months of the year and is subject to the vagaries of the weather. The air linkage is limited and expensive. For example, it is almost two days by road to New Delhi (provided weather conditions permit). This makes logistics a major challenge when it comes to accessing the New Delhi market, as most fresh vegetables and fruits undergo a drastic temperature change over this distance. Transportation problems also raise logistical costs.

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1.2 Comparative Advantage of Ladakh region Ladakhi agriculture enjoys comparative advantage broadly in the following three categories:

a) Growing season: the Ladakhi summer allows farmers to grow fruits and vegetables when the rest of India cannot. This provides the farmers with an opportunity to sell off-season vegetables and fruits with virtually no competition except from cold-storage/processed products.

b) Organic Agricultural tradition: while other regions may have to go through a time-consuming and expensive transition to organic agriculture, Ladakh’s tradition of organic techniques gives it an advantage.

c) Disease/pest free environment: this translates into disease-free seeds and planting material for export, low/no pesticide costs and high yields under correct conditions.

This comparative advantage can further be drilled down to specific verticals by doing a SWOT analysis (Strengths/Weaknesses/Opportunities/Threats).

1.3 SWOT Analysis of Fruits

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Strength a) Unique, high value products like

Seabuckthorn and Apricot b) Peak season that coincides with off-

season for fruits in the rest of India c) Organic means of cultivation that reduce

input costs d) Relatively low demand for water and

fertilizers, natural or chemical e) High value Seabuckthorn available for

free, with no cultivation costs f) Presence of world class research

institute like FRL

Weakness a) Scattered production which makes

consolidation of produce for marketing/processing a challenge

b) Logistics issues in delivering product to the rest of the country

c) Absence of qualified food technologists, which makes processing possibly non-standard and deprives entrepreneurs of technical support

d) Absence of marketing mechanism and expertise

Opportunity a) Possibility of obtaining organic

certification which can overcome the transportation cost problem by justifying a price premium

b) Number of educated youth who can be trained in food processing and be attracted by the high margins

c) Possibility of substituting imports of Afghani dried apricot with locally processed apricot

d) Greater availability of loans and technical support as micro-finance and SHG projects are implemented

Threat a) Cheap, bulk imports of Seabuckthorn

products from China b) Opening up of agricultural sector under

WTO norms may encourage substitute imports

c) Longer incubation period for fruit cultivation projects may deter farmers

d) States like Uttaranchal, HP may gain first mover advantage by producing similar products due to similar agri-climatic conditions in certain areas

Recommendation: • Immediate action in promoting small-scale food processing units,

especially apricots, tomato puree and Seabuckthorn. • Long-term aim of organic certification and extension of fruit growing

areas into command areas of new irrigation projects. • In the long term, establishing supply chain for fruit sales to northern

states of India. 1.4 SWOT Analysis of Vegetables

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Strength a) Hardy, cold resistant varieties of

vegetables available which enable cultivation in severe agri-climatic conditions

b) Off-season cultivation compared to rest of India

c) Organic cultivation methods make it possible to achieve premium prices in external markets

d) Overall cold, dry climate enable storage and transportation for longer periods of time, without the expense of refrigerated transport.

Weakness a) So far, bulk production not possible due

to resource and labour restrictions b) Substitutes for off-season vegetables

esp. potatoes available through cold storages in the plains

c) Excess production during peak summer season, but lack of proper storage facilities for catering to winter demand

d) Absence of organic certification mechanism

e) Weak, non-standardised and small scale vegetable processing capabilities

f) High cost external labour for working fields in absence of local labor

Opportunity a) Obtaining organic certification for farm

produce, and catering to vast Indian and foreign market for fresh/processed organic vegetables

b) Climate ideal for production of high quality European/continental vegetables which can be import substitutes

c) Dry, virus and fungi free climate ideal for production of high quality disease free vegetable seeds and other planting material

d) Concurrent use of fast maturing less hardy vegetable varieties in greenhouses, and later maturing, hardy, local vegetable varieties outside in open fields to effectively obtain double cropping

e) Planting vegetables demanded by armed forces using agri-climate suitable vegetables identified and developed by FRL, to fulfill demand.

f) Combining distinctive agricultural practices, organic nature and tourist appeal into agri-tourism modeled on communes in Israel, and Australia

Threat a) Abandoning of farming vegetables by

youth due to labour-intensive nature of vegetable cultivation

b) Losing advantage in growing Indian organic market due to first mover advantage and logistically advantageous location of Uttaranchal and other states

c) Reducing water resources as glaciers recede and snowfall lessens

Recommendations: • Long term: Community-based Organic Certification, vegetable exports to

northern India markets • Short term: Commercial greenhouses for fulfilling local and army

demand: See Annexure I for army demands and Annexure II for comparative economics of vegetables and food grains

1.5 SWOT Analysis of Grains & Cereals

Strength a) Highly nutritious, high fibre grains part of

the dietary tradition. These are increasingly being recognised in many parts of India and abroad, and the effect may percolate down to Ladakh

b) Strong cultural compulsion to cultivate own grains which prevents people from abandoning fields despite absence of economic viability

Weakness a) Economic non-viability in face of

subsidized grains from plains and PDS b) Changing food habits which are not in

favour of barley and millet c) Fragmented nature of land holdings that

makes large scale, viable production impossible

d) Movement away from agriculture by youth

Opportunity

a) Catering to health conscious tourists with mixed/whole grain bakery products

b) Development and promotion of lighter, more ‘modern’ products from traditional grains like millet biscuits, roast barley breakfast cereal, flavored tsampa etc.

c) Growing improved, high yield grain varieties that make cultivation viable

d) Crossbreeding traditional hardy varieties with high-yield varieties and growing/selling same

Threat a) Total dependence on imported food

grains that adversely impacts food security and leads to a monetary drain from Ladakh

b) Loss of biodiversity and natural gene bank due to extinction of hardy, disease resistant grain varieties

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Recommendation: This sector is influenced most severely by Central Government policies on procurement and distribution through the Public Distribution System. Hence it is out of our powers to recommend any interventions here.

2 The Ladakh 2025 Vision Document

To follow the change with continuity but without compromising on its identity, the Ladakh Autonomous Hill Development Council (LAHDC) has come out with "Ladakh 2025 Vision Document" which emphasises the need to integrate old with new and deal with the problem of decline in its resources. The Vision statement envisages that Ladakh will emerge as the country's best model of hill area development in a challenging environment, with its sustainability embedded in ecological protection, crucial heritage and human development. The vision for the agricultural sector wants to overcome all the barriers like lack of adequate irrigation, depletion of water resources, neglected pastures, coupled with small agricultural holdings etc. that have made the agricultural profession non-remunerative. Some of the salient points mentioned in the Vision are:

• Promotion of traditional Ladakhi agriculture while making judicious use of already scarce resources to achieve best possible productivity

• Value addition to the local produce through food processing • Making organic agriculture a profitable venture by exploring external

markets for the local produce • Venturing into more profitable areas like horticulture etc. without

jeopardizing the food security in the area.

2.1 Linking the Vision with Strategy The above areas are among the many mentioned in the document. The approach was to isolate areas that could yield benefits to Ladakh. The focus areas were decided after a 10-day research period where the potential impact of intervention in the areas was judged. Food processing was found to be one area which filled the need gap of the farmers, entrepreneurs and the local economy in a profitable manner, and one that could initiate the process of entrepreneurial activities by demonstrating immediate and visible benefits to all involved. Successful activities in this area are especially feasible due to a greater level of awareness, wider need-gap, a demonstrated local and tourist market both during tourist season and in the off-season, and the relatively lower gestation period for projects. The projects are also scalable and benefit the farmers directly, and provide opportunities for educated youth.

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Organic Certification is a longer-term objective, requiring three years and greater levels of commitment and expense, and also a certain maturation in the market for the produce in India. While plans for other areas like greenhouse agriculture, natural dye production and aromatic oil extraction have been

developed too, they have not been included in this document due to limitation on space. The linking was done on the basis of impact analysis, and the strategy was developed on the basis of the gaps identified through interactions with the stakeholders at all levels. The recommendations are aimed specifically at bridging these gaps and achieving the twin aims of entrepreneurship development and the objectives set forward in the Vision Document. Areas Recommended for Immediate Action Of all the opportunities identified in the agricultural and agribusiness sector in Ladakh, two areas in particular have been identified as where action can yield significant results, and where immediate action is recommended. These are processed Seabuckthorn and Apricot products. Other areas suffer from lack of capacity and requirements for long-term investments, and uncertain market conditions given the lack of market research. Both of these, however, are proven in the internal market (mainly tourists) and suffer from the lack of domestic production capacity, quality standards, proper packaging and concerted marketing efforts. Both have abundant, cheap raw material that is currently not being utilised to any significant level/value addition. The following value-addition analysis was carried out for these products. 2.2 Value Addition Analysis for Apricot Products (Oil and Dried

Apricot)

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Apricot Drying and Oil Extraction Value Chain

Dried Apricot (Nut Removed)250 MT

Avg Price per Kg- Rs. 120Total Value Rs. 30 million

Apricot Oil40 MT

Avg Price Per Kg- Rs. 400Total Value Rs. 16 million

Apricot Kernel72 MT

Apricot Nut Shell178 MT

Apricot Nut250 MT

Dried Apricot500 MT

Fresh Apricot2500 MT

Avg. Price Per Kg- Rs 15Total Value- Rs 37.5 million

The above analysis on yield proportions is based on averaging the estimates made by farmers and entrepreneurs, as no data were available through official/published sources. Seeing that a large proportion of the apricot production (40-60% by various estimates) goes to waste due to various reasons, significant value can accrue to farmers who sell/process excess production of apricot, especially as the process is non-capital intensive. 2.3 Value Addition Analysis: Seabuckthorn

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Analysis of Value Addition in Processing of Seabuckthorn

Fresh Seabuckthorn Berry yields the following 1.6 Kg a) Pulp 1 Kg b) Seed and Skin 0.6 kg Pulp Oil content at 5% of fresh berry weight .08 Kg Seed Oil Content at 10% of fresh berry weight 0.16 Kg Total Oil content 0.24 Kg Pulp Processing Input Qty Per Unit Cost (Rs.) Total Cost (Rs) Fresh Seabuckthorn Berry 1.6 Kg 15 24 Seabuckthorn Pulp from Berry 1 Kg 24 Sugar 7 Kg 16 112 Water 7 Litres 1 7 Juice 8 Litres 143 Packaging 200 ml plastic bottles with printed labels 40 Nos. 6 240 Packaging Subtotal 240 Transportation In cardboard cartons 40 Nos. 1 40 Transportation Subtotal 40 Power, Labor and Administrative Charges Taken as lump sum 10 PLA Subtotal 10

Total Cost of Production 433 Selling Price 40 Nos. 20 800 Less: Retailers Margin @ 20% 40 Nos. 4 160 Less: Cost of Production 433 Net Profit 207

Apart from the value addition of 1.6 kg of Seabuckthorn worth Rs. 24 into Juice worth Rs. 800 with a net profit of Rs. 207:

• Seabuckthorn Oil has a selling price of Rs. 8000/litre in the market. Assuming 75% recovery of oil, the content in the 1.6 Kg berry is worth Rs. 1440.

• Similarly, Seabuckthorn Berry skins and leaves, which have a high content of flavonoids, sell as Herbal Tea for Rs 500/kg with marginal processing, and as amchur (sour, dried mango powder, used as a flavooring agent) substitutes.

Thus, 1.6 Kg of fresh Seabuckthorn berry can be value added into products worth more than Rs. 2500. The total estimated production of Seabuckthorn in Ladakh is put at 5000 MT (from remote-sensing data analysed by the Field Research Laboratory, DRDO, Ministry of Defense)

Total Estimated Yield of Seabuckthorn in Ladakh (MT) 5000Assuming 50% is recoverable (due to accessibility and logistics) 2500Assuming 20% wastage and spoilage of berries in transit and in processing 2000Total Worth of Seabuckthorn Juice and Oil from above (in Rs) 3,125,000,000

• That is, the total value of the juice and oil from Seabuckthorn with the above assumptions is more than Rs. 3000 million i.e. more than Rs 3 billion.

• While this is possible only with massive efforts from the LAHDC and others, significant investments and highly efficient production and marketing efforts, as a short-term measure (over next 5 years) it is feasible to achieve at least 10% of this i.e. Rs. 300 million through progressive addition of capacity (small-scale units).

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• As a case in point, China is currently producing USD 36 million (approximately Rs. 1.5 billion) worth of Seabuckthorn products.

2.4 Estimation of Capital Investments Required, and Profits from

Small Scale Processing Units The next step was to analyse the amount of investment required by the average entrepreneur to set up a small unit manufacturing Apricot jam and Seabuckthorn juice. This was done with inputs from the District Industries Commission and extensive interviews with entrepreneurs and non-governmental organisations. The following is the estimate of setting up a unit with the capacity to produce 3000 bottles (500 grams each) of Apricot Jam, 2000 bottles (200 ml each) of Seabuckthorn juice and small quantities of apricot oil & juice.

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Budget for setting up Apricot Jam & Seabuckthorn Juice Production Unit at Leh-Ladakh

Qty. 1 Land and Building 4750002 Machinery and Equipment 1) Pulping Machine 1 33000 2) Fruit Crushing Machine 1 30000 3) Juice Extraction Press 1 17000 4) Boiler and Steam Jacket 1 90000 5) Head Bottle Sealing Machine 1 19000 6) Cap Sealing Machine 1 5000 7) Crown Corking Machine 1 56000 8) Peeling Set 1 2000 Machinery & Equipment Subtotal 252000 3 Generating Set 1 75000 4 Lab/Testing Equipment 1 20000 5 Installation, Transportation & Taxes 50000 Infrastructure Subtotal 397000 6 Staff (Per Month) Nos. Supervisor (by owner) 1 6000 Skilled Labor 1 5000 Semi skilled 3 7500 Helper 1 2000 Total Staff Expenses Per Month 14500

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7 Raw Materials Apricot 2200 Kg@ Rs 15/Kg 33000 Seabuckthorn 10000 Kg@ Rs 15/Kg 150000 Sugar 4000 Kg@ Rs. 16/Kg 64000 Preservatives 1000 Raw Material Expenses Per Month 248000 8 Fuel 5000 9 Other Expenses a) Transportation 2500 b) Packaging @ Rs. 8 per bottle jam and Rs. 6/juice 107500 c) Electricity 1000 c) Pre Operative Expenses 6000

10 Working Capital Requirements (PM) a) Staff & Labor 14500 b) Raw Materials 248000 c) Other Expenses 117000 Total Working Capital Requirements (PM) 379500

11 Total Capital Investment a) Building 475000 b) Machinery and Equipment 397000 c) Working Capital 379500 Total Capital Investment 1251500

12 Cost of Production Per Month a) Interest on Capital Investment 12515 b) Depreciation on Plant and Machinery @1% 3970 c) Working Capital for 1 month 379500 Total COP per month 395985

13 Expected Sales Per Month a) Jam (sales @ Rs. 50/ 500 gm bottle) 150000 b) Seabuckthorn Juice (sales @ Rs. 20/200 ml bottle) 200000 c) Apricot Oil (sales @ Rs. 400/lt) 50000 d) Apricot Juice (sales @ Rs 20/200 ml bottle) 25000 Expected Sales Per Month 425000

14 Expected Profit (PM) (Sales less WC) 29015

• Thus, a unit set up with the following specifications and production can potentially make a profit of almost Rs. 30,000 a month.

• The District Industries Commission offers 100% subsidy on the generating set, and 25% subsidy on the land and machinery for such units. Hence the capital investment requirements reduce by a major amount.

The table below indicates prices of some processed fruit products in the Ladakhi & New Delhi market.

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Indicative Prices of Existing Processed Fruit Products

Product, SKU, Brand Price/Unit

Seabuckthorn Juice (200 ml)- Sindhu Farm Products Rs. 20

Leh Berry' Juice (1 lt. Tetrapak)- Ladakh Foods Limited (Institutional Sale) Rs. 42

Seabuckthorn Jam (500 gm)-Sindhu, Lampa Rs. 50

Seabuckthorn Squash (1 lt.)- Navdanya (Labeled Organic) Rs. 110

Apricot Jam (500 gm)-Sindhu, Lampa Rs. 50

Dried Apricot (1 Kg) Rs. 70

Dried Apricot (200 gm), Osmotically Processed (Trial Sales) Rs. 100-110

Apricot Juice (200 ml)- Appela Rs. 20

Apple Juice (200 ml)- Appela Rs. 20

Strawberry Jam (Various sources, artificial flavor to natural berries) Rs. 50- Rs 70

Apricot Oil (200 ml)- Navdanya (labeled organic) Rs. 83

2.5 Recommendations for Encouraging Entrepreneurship in Food

Processing Identification of Gaps After numerous and extensive interactions with current and would-be entrepreneurs, farmers, government functionaries, students & cooperatives, the following gaps were identified: Finance: Setting up an economically viable food-processing unit requires significant financial commitment (see annexure for project budget for setting up a food processing unit) over the entire incubation period of the project, and working capital commitments far in excess of what an entrepreneur would require for most alternative businesses (i.e. tour operations in Ladakh). Most of this investment has to be made prior to getting FPO certification. It was observed that there tends to be a vicious circle that most entrepreneurs are unable to break: for setting up the infrastructure required as a prerequisite (see annexure for synopsis of FPO requirements and certification fees schedule) for FPO certification, the entrepreneur requires a loan, while the assurance of getting the FPO is central to the business plan and project report that the entrepreneur must submit to the banks as part pf the loan process. Thus as long there is no certainty of obtaining the certification, banks are hesitant to lend, and it is virtually impossible for the entrepreneur to obtain the certification without the loan for setting up the infrastructure. FPO certification: Essential for manufacturers of fruit products, the FPO licensing process is rigorous and includes periodic inspections of the infrastructure and the production and testing facilities of the unit. As mentioned above, the prerequisites for certification require significant investment. Moreover, most entrepreneurs are unaware of the process and require technical guidance through the procedure. FPO certification was mentioned as the second most important challenge after financing. See Annexure I for detailed FPO guidelines on setting up units. Packaging: From discussions with entrepreneurs about the break-up of production costs, it emerged that packaging constituted between 20 to 30% of the price of the product. For example, for a jam jar retailing for Rs. 50 in the market, the cost of the bottle and label worked out to be Rs. 10-12 and for a Rs. 20 bottle of Seabuckthorn juice, the cost of packaging was Rs. 6. This ties up a large proportion of the working capital as the bottles are sourced from New Delhi and have to be paid in advance. One entrepreneur described his production as being limited entirely by what he could pay out in advance for the bottles and packaging material. Secondly, these bottles (jam) are not reused and hence are a sunk cost for the manufacturer. Thirdly, the entrepreneur lacks economies of scale because the size of his orders is much smaller compared to large-scale manufacturers from the plains.

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The vicious circle can be represented as: Marketing: Even after the above three hurdles are overcome, the concern of the entrepreneur remains marketing the product. The population of Leh is small (approximately 120,000) and dispersed (2 persons per km sq.). Most of the population grows and consumes its own food products. The only significant population concentration is at Leh city with a population of around 20,000, which swells by an average of 36,000 due to tourist arrivals during the peak tourist season. Most of these tourists are willing to try out the jams and juices that are the specialty of Ladakh. Thus for most entrepreneurs, tourists are the main target market. However, due to logistical difficulties, unfamiliarity with the market structure, lack of marketing expertise and contacts, and improper packaging, most entrepreneurs remain restricted to Leh, and cannot venture to demand centres like New Delhi or Chandigarh.

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Infrastructure

Marketing

Finance

FPO

Certification

Entrepreneur

On the basis of these gaps, and keeping in mind the characteristics and problems of Ladakhi agriculture as set forward before, we decided that the following approach to solving the problem would be a viable method of filling in the gaps and encouraging entrepreneurs to set up agribusiness ventures and boost the flagging fortunes of agriculture in Ladakh.

3 An Approach to Bridging the Gaps in Agribusiness and Food Processing The proposed approach has two angles of attack on the defined problem

• Setting up small-scale food parks based on the cluster concept of industries at village, block and zone levels, and leasing out the set-up units and facilities to entrepreneurs and cooperatives.

• Setting up Central Board of Agribusiness and Marketing which looks after the aspects of marketing, external linkages, technical assistance, facilitation of certification and financial assistance.

3.1 Food Parks The concept of small-scale food parks or clusters of agri-processing units is aimed at plugging some of the major need-gaps in entrepreneurship in Ladakh. Internationally, the current thinking is that a cluster of industrial units should be set up in a region so that they can share the same infrastructural facilities. This creates external economies of scale, bringing down the cost of infrastructure per unit, and enables the units to avail of facilities that they, individually, would have found uneconomic and expensive to set up, run and maintain. While food parks are being set up on a mega scale in the rest of India, with investment running in to the thousands of millions of rupees, downscaling the concept to a size more appropriate to the situation in Ladakh can help entrepreneurs and cooperatives immensely. The proposal is for setting up clusters of units with common facilities like testing and laboratory infrastructure, water treatment and heating, waste and sewage disposal facilities, controlled atmosphere storage, power generation, and packaging. The infrastructure will be set up by the LAHDC and the DIC by involving local builders and contractors for construction, in consultation with entrepreneurs, cooperatives, and with the guidance of CFTRI & FRL; in strict conformance with the requirements of FPO/other certifications for such infrastructural facilities. Under the Tenth Plan Schemes for Food Processing Industries set forward by the Ministry of Food Processing Industries, the Ministry funds “33.33% of the project cost in Difficult Areas (this includes J&K state) subject to a maximum of Rs. 4 crores for provision of common facilities like cold storage, food testing and analysis laboratory, effluent treatment plant, common processing facilities, power, water supply, etc.”

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The units will then be long term-leased or sold to entrepreneurs and cooperatives depending on their preference and financial capacity.

Personnel from a new Ladakh Board for Agribusiness and Marketing will run the common facilities, or these again will be let to entrepreneurs who have the requisite qualifications, under the supervision of the Board. It will be essential for all units set up in the cluster to, if relevant, obtain FPO/AGMARK certification. This is because the cluster or industrial unit has been set up with one of the aims being to overcome certification-specific hurdles. Testing and Laboratory Infrastructure: This is one of the most important requirements of setting up an FPO certified unit. Most entrepreneurs find that setting up the testing laboratory and manning it with qualified personnel is a challenge; and they lack the expertise to do it themselves. Common testing facilities will allow them enjoy the benefits with shared, and hence lower, expenses. This will also facilitate certification. The common laboratory will have the requisite testing equipment and trained personnel and will perform testing and quality control activities in keeping with FPO specifications, on payment of nominal fees per test. Under the Tenth Plan Scheme for Food Processing Industries under the Ministry of Food Processing Industries, GOI, the MFPI funds the entire capital expenditure (as grant-in-aid) for setting up a Quality Control Lab Packaging: Due to the typically small scale of operations, most entrepreneurs and cooperatives lack the finance and economies of scale for setting up a viable packaging facility that provides cheap, hygienic and standardized packaging. Setting up a small bottling plant, for example, will serve units manufacturing apricot, Seabuckthorn and other juices, tomato sauce and puree, and even apricot oil. With a common, standard-sized glass bottle, each cluster can achieve a degree of economy of scale, and flexibility in maintaining inventory. That is, units can trade inventory according to their requirements. Similarly, standard plastic packaging equipment can be set up at the cluster. The MPFI provides “25% of the total cost of plant and machinery and technical civil work in General Areas and 33.33% in Difficult Areas subject to maximum of Rs. 2 crores for establishing packaging centre independently and in food parks if the packaging centre is not already a part of the common facilities” as grant in aid Building and Land: these account for a major chunk of the project expenses. The FPO and other certifications have specified certain minimum requirements that do not match with traditional Ladakhi building techniques. For example, Ladakhi buildings are low roofed, do not have strong cross ventilation, and in most cases, piped running water supplies due to the cold climatic conditions, whereas FPO requires a high roofed building with good cross-ventilation and running water supplies. The industrial cluster will be built to conform to these requirements, removing a major hurdle to certification.

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Finance: Space in the premises of the food park will be term-leased/sold to entrepreneurs and cooperatives depending on their willingness and ability to pay. The provision of ready infrastructure and shared facilities on annual lease payments will substantially reduce the financial burden (interest and principal payments can be diverted towards working capital) on the entrepreneur and obviate the need to take heavy, expensive loans from banks. This provision of the food parks should make them very attractive to people who have held back from setting up food/fruit processing units because of the financial burden.

Power: While the use of generators for electricity is heavily subsidised by the DIC and the LAHDC, the high running costs and problems of availability of diesel in remote areas is a problem faced by all potential entrepreneurs. The food park will have a single large generator with an electricity supply sufficient for the requirements of the processing units. The electricity consumption by the various units will be metered and the fuel and maintenance costs will be amortised among the units proportionally. During the off-season i.e. winter, the generator can be used for supplying electricity to the nearby village dwellings. In the case of multipurpose projects like the Igoo-Phey Irrigation Project, where there is provision for hydroelectricity generation as well, this problem is not much of an issue. Setting up micro-hydel projects in villages/village clusters is a viable alternative. Water Supply and Treatment, Sewage Treatment: Food processing activities require, under the FPO regime, a permanent and 24*7 running supply for treated water conforming to set standards. Such a supply is an expensive proposition for individuals. The same is the case for sewage treatment set-ups. Having common facilities on both these fronts will benefit the units by reducing their capital investments, maintenance and running charges; concurrently preserving the delicate Ladakhi environment around them. Logistics: Instead of individually approaching transporters and incurring uneconomical less than Full Truck Loads (FTL), the units at the Food Parks will be able to club together loads to achieve FTL, saving on transportation expenses. Transportation is one of the major expenses incurred by any industry in Ladakh due to the tough terrain and weather conditions, and villages are far flung and scattered. This makes logistics one of the major challenges.

3.2 Process of Setting up Clusters The food processing clusters can be set up at three levels: the village/village cluster level, the block level, and at the central level. The process and rationale is as follows: I Identification of clusters of villages/hamlets with sufficient production/surplus of agricultural produce such as apricot, Seabuckthorn, tomatoes, peas etc & setting up of village/village cluster level food processing centres with basic infrastructure leased to entrepreneur/cooperatives. The level of facilities provided would be dependant on the amount of produce that can be processed i.e. on the economies of scale. Packaging will depend on economy of scale, requirement and perishable nature. In the case of highly perishable, bulk products requiring greater level of facilities and packaging, such as Seabuckthorn juice (which has to be processed within a few hours of harvesting), the pulp can be processed at this level and sold to cooperatives/entrepreneurs at the block level. Thus, the unit at the block level will procure Seabuckthorn pulp in bulk from various such clusters and process it in large, economic quantities with proper packaging.

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II Block level Food Parks: These will have common infrastructure (generator, solar water heating/treatment, sewage & waste disposal, testing equipment and laboratory, communications), packaging (partially or fully processed produce) unit and logistic facilities again, but have a higher level and capacity compared to the previous level. Fully/Partially/un-processed produce from the village cluster level will be fully processed and packaged at this level. III Ladakh Agribusiness and Marketing Board (LAMB): This, the highest level, will have centres at Leh and Nubra, the two central areas with access to the greatest amount of agricultural produce and the requisite logistical facilities and connectivity. These centres, run by the Board, will have mass-packaging facilities and possibly processing facilities for capital-intensive activities such as apricot and Seabuckthorn oil extraction plants (the former costing Rs. 30 million). A Tetrapak plant costing the same can be used for multiple purposes such as packaging apricot and Seabuckthorn oil, juices, sauce and puree etc. Thus for such plants, the other centres will serve as feeders: e.g. for Seabuckthorn, the skins and seeds gathered from the village and block level centres can be processed in bulk and hence economic quantities at a oil extraction press/solvent based extraction plant at Leh or Nubra. It will carry out final packaging of products, labeling, marketing, and, depending on the feasibility, set up and operate a Tetrapak/apricot oil plant.

Macro Structure of Model

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Village/Village Cluster Level Village/Village Cluster Level

Block Level Food ProcessingIndustries Cluster

Village/Village Cluster Level Village/Village Cluster Level

Block Level Food ProcessingIndustries Cluster

Central Agribusiness & Marketing BoardCenters: Leh, Khaltsi, Nubra Valley

Villagers, Entrepreneurs & Cooperatives

Schematic Representation of Cluster Industries

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3.3 Marketing Universally, the question of marketing the agricultural produce was mentioned as the major downstream challenge. This was observed at all levels: it was raised as an issue by students at a Focus Group Discussion held at the only college in Leh, by would-be and current entrepreneurs, by farmers and by government officials at the Agricultural and Horticultural Departments and by Self Help Group members at the various villages visited. The Ladakhi market, as mentioned before, has the characteristic of being limited in size and in operation to just the four summer months of the year, and the climate means that the area is cut off from the rest of India (road links) for almost 7 months of the year. Secondly, the average Ladakhi entrepreneur has no linkage with the market outside Ladakh. Combined with the lack of marketing expertise, small scale of operations and financial constraints, the average entrepreneur or cooperative finds itself ill-equipped to handle the crucial task of branding, distributing and selling its products. This is despite the presence of some unique products like top quality apricots and Seabuckthorn, and the off-season advantage. Seeing the necessity of establishing a market linkage and of branding and promoting Ladakhi produce in an organised, focused and profitable manner, the second part of the recommendation proposes the creation of a Ladakh Board for Agribusiness and Marketing on a Ladakh-wide level. The proposed Board should be autonomous/semiautonomous and run by professional managers and marketing professionals who are paid on the basis of their performance. The model to be followed can be the Himachal Pradesh Horticultural Produce Marketing and Processing Corporation Ltd. (HPMC). The main purpose of the Board will be to plug the gaps previously identified on an institutional level. The Board will be responsible for branding and marketing the agricultural produce of Ladakh on a Ladakh-wide and national basis, maintaining linkages with the agricultural produce marketing boards of other states and bodies like HPMC and KVIC, technical and research institutions like the FRL, CFTRI, and bodies like APEDA, technical guidance and facilitation of certification, ensuring quality standards are met at all levels in the value chain, and financial assistance. For marketing purposes, the proposed Board will set up outlets at all the major tourist areas in Ladakh and ensure distribution through retail/cooperative outlets. Advantages of the System

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• This system is characterised by a great degree of flexibility offered to the entrepreneur/cooperative. At each level, the entrepreneur or the cooperative has the independence to sell the fully/partially processed,

bulk or packaged product to the Ladakh Agribusiness and Marketing Board or any other party. The options are:

• They can sell the fully packaged and branded product to the LAMB for selling through its outlets in Ladakh and for exports out of Ladakh

• They can sell the partially processed produce to the LAMB and the LAMB will fully process it, package and market it under its umbrella brand

• They can be totally independent of the Board and sell the produce under their own brand and through their own distribution network.

• This kind of independence and flexibility offered to the entrepreneur/cooperative gives space to all risk profiles and the freedom of choice reduces the problem of corruption, and government inefficiency.

• It also avoids the formation of government monopoly and creates a competitive business landscape that can foster entrepreneurs while providing them with the basic infrastructure necessary for their ventures.

• The combination of the food park concept and LAMB can be successful in plugging the gaps that were identified at the beginning of the section.

3.4 Bridging the Education, Training and Information Gap While a number of business plans have been made detailing what it takes to set up and run an agribusiness venture, and the LAHDC, JKIDC and the government have a number of schemes aimed specifically at promoting entrepreneurial and cooperative activities in this sector, most of the people interviewed turned out to be unaware of these efforts to help them. This gap was very glaring especially among the students just about to graduate from the degree college at Leh, all of whom showed a definite preference for ‘government jobs’ because they felt that agribusiness was not profitable business and that the government had done nothing for to make it profitable a) Dissemination of Information: One of the main activities of LAMB will be the dissemination of information about agribusiness opportunities in the area. This will include training camps, and the publication and distribution of handbooks on business opportunities, food processing and agricultural techniques in the local language i.e. in Ladakhi and in Urdu.

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b) Setting up Food Processing/Technology Training Centres & introducing FT/P courses in Polytechnic: As specified in the FPO guidelines, the supervision of processing and production activities at FPO certified units have to be undertaken by a person who has a basic “B.Sc. degree with Chemistry/Agriculture as one of the subjects or a Diploma or a certificate in fruit preservation or a course of at least 3 months duration from a recognised institution”. Currently entrepreneurs interested in food processing have to attend courses in Srinagar/Jammu for six months, incurring the expenditure of studies and stay away from home, as well as miss out on earning for this period.

• Hence it is recommended that a food processing/food technology course be introduced at the local Polytechnic, or, a Food Processing and Training Centre (FPTC) be set up for which grants-in-aid are available from the Central Government under the Tenth Plan schemes for promoting food-processing industries. Courses may be full/part time to allow students to attend courses along with work or college.

• Another option is to set up an adjunct for Food Processing Training to the existing degree college. Under the Tenth Plan Schemes, grants up to Rs. 5 million would be provided to institutions such as colleges, universities, and technical institutions etc. for the creation of infrastructural facilities like a library, laboratory, pilot plants etc., for running degree/diploma courses and training programs including extension services for food processing.

• A multi-product line FPTC set up under such schemes is eligible for Rs. 0.75 million for fixed capital costs and Rs. 0.2 million as revolving fund, as Rs. 50,000 as expenses for training at the CFTRI. As these centres are expected to be self-sufficient financially by selling products processed in the pilot plants, they will not be a financial burden on the LAHDC. At least two of these centres can be set up at Leh and at Nubra with trainees encouraged to set up units at the food parks and to work at the LAMB processing and packaging units

4 Organic Agriculture

4.1 Identification of gaps

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As mentioned beforehand, Organic Agriculture is the way forward for most of the small and marginal farmers of the region, and for upcoming entrepreneurs. Most of the Ladakhi farmers lack the resources to go in for organic certification as the process is time consuming (up to 3 years) and expensive (from Rs. 20,000 to Rs. 30,000 for small farmers). Secondly, organic certification involves the application of certain techniques and adoption of certain practices that require education and training that again they lack. Thirdly, marketing remains a major concern, as the local market does not provide the market premium.

Comparison between Traditional & Present-day Organic Agriculture

Characteristics Traditional Agriculture Present-Day Organic Agriculture

Basic objective Subsistence Commercial as Well Irrigation Primarily Rain-fed Any Area

Cropping Intensity Low High

Varieties Low Genetic Yield Potential High Yield Potential

Risk from Diseases, Pests and Abiotic

Stresses

Low because of Genetic Heterogenity

Very Low due to Ideal Microbial Balance in the

Soil Varietal Purity Low Concern High Concern Productivity Low High

Inputs Low Low Certification of Produce Not Required Required

Marketing Less Concern No concern

4.2 Approaches to Bridging the Gaps in Organic Produce

Certification and Marketing Possibly the best approach to overcoming part of the above gaps is Community Based Certification facilitated by an Organic Board set up as an autonomous/semi autonomous body by the LAHDC, with the help of APEDA which provides accreditation to Organic Certification bodies. Process of Community Based Certification Identification of Clusters: In Ladakh, this will involve identifying pockets of agriculture in the region which have not used agrochemicals at all during the past 3-5 years, and if possible, areas that have never used agrochemicals. This is essential to make the certification process as low cost and short duration as possible. Generally this exercise is carried out through secondary data collection, field visits and discussions with stakeholders i.e. the farmers and the potential consumers. It should be possible to develop market linkages at this point in time by contacting major clients such as supermarkets stocking organic produce (e.g. FoodWorld), understanding their requirements and focusing on areas that produce fruits and vegetables that have a major demand. The size of the clusters depends on the volumes and range of each farm produce required by the clients, if the Organic Board has identified the clients. The identification of clusters can take up to 1-3 months time.

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Enrollment & Registration of the Farmers: This will involve enrolling farmers by developing and allotting micro-plans for each of them on an individual basis. These micro-plans will consist of a feasibility study of the organic conversion, a

list of the required produce and the product mix. Once sufficient enrolled they will be registered with the Organic Board. Imparting Training in Organic Farming Practices: At this stage the scientists and staff at Organic Board will evolve the complete package of practices for organic production in the identified clusters based on soil tests, water samples etc. The Organic Board will train the farmers in the techniques and skills essential for adhering to organic principles. This will cover the three-year (or less) transition period. During this period the village clusters will continue to grow produce in accordance with organic principle, and the board will provide the logistics for market access. The Organic Board will provide assistance and training in

• Conducting tests of the soil and water

• Preparing the land for organic farming

• Preparation/procurement of planting material

• Planting as per the organic norms

• Preparation of biodynamic fertilizers and other inputs like bio-pesticides etc.

• Guiding the farmers in constructing farm sheds, cattle sheds, storage house as per organic standards

• Weeding Operations

• Harvesting and storage Certification: After the transition period, the Organic Board will facilitate community-based certification to the village/village clusters as Organic Farming Zones (OFZs) by helping in inspection and certification of these organic clusters by internationally accredited certification agencies. The Board will continue to offer technical services and guidance as well as continue to monitor the agricultural practices of the OFZs. Marketing: The LAMB will undertake the process of marketing the produce of the OFZs, initially to the tourists and in later stages to the external (rest of India) market. It will link up with APEDA for exports, and with other marketing bodies including supermarkets for marketing the produce.

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Export Market: The Organic agricultural export market is one of the major drivers of greening of agriculture in India. The current production of organic crops is around 14,000 tons. Out of this production, tea and rice contributes around 24% each, fruits and vegetables combine makes 17% of this total production. From India around 11,925 tons of organic products are exported, that make around 85% of total organic crop production. Major export markets for Indian producers are Australia, Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Singapore, South Africa, Saudi Arabia, UAE, UK, and USA.

ANNEXURES Annexure 1: Demand by the Army

CMS Cauli-flower

Green Peas Cabbage Carrot Tomatoes

(Red) Tomatoes

(Green) Apples (Tha)

Apple (Mongol) Apricot Potato Onion

Leh 18500 23000 33000 41000 20000 19300 5000 19000 9000 750000 85000 Nimoo 9500 15500 13000 10000 11000 9000 4000 8000 8000 313000 30000

Chorbat 5000 2000 5500 1500 13000 1500 2000 0 3000 32000 5000 Kharu 17000 21000 35000 27000 11000 8000 7000 0 0 310000 45000 Nubra 35000 11500 52000 24500 8500 11000 5000 0 4000 190000 13000 Total

Quantity 85000 73000 138500 104000 63500 48800 23000 27000 24000 1595000 178000

Army Rate

(Rs./Kg) 15.25 18.25 11.24 12.24 18.20 16.25 18.05 18.05 10.85 10.70 14.81

Total Value 1296250 1332250 1556740 1272960 1155700 793000 415150 487350 260400 17066500 2636180

CMS: Cooperative Marketing Society

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Annexure II Comparative Economics of Vegetables vs. Food Grains

Yield (Tons/ha) Avg. Market Price (Rs.) Realization (in

1000 Rs/ha)

Wheat 1.2 10 12 Barley 1.4 7.8 11

Potatoes 8.11 11 89 Cabbage 12 15 180

Cauliflower 10 20 200 Radish/Turnip 10 20 200

Carrot 8 15 120 Peas 10 25 250

Tomatoes 10 20 200 Leafy Vegetables 7 30 210

Onions 5 20 100

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Annexure III Guidelines For Setting Up Of Unit Under Fruit Products

Order No person shall carry on the business of a manufacture of fruit products including synthetic syrups, synthetic vinegar and aerated sweetened beverages except under and in accordance with the terms of an effective license granted to him under FPO. Category-wise area requirement, annual production limit and license fee for one terms or part thereof (Ref. Clause 5(2) and part I (B) of the Second Schedule of Fruit Products Order, 1955

Category

For manufacturing

premises (In Sq. meters)

For storage

and office

purpose (In sq.

meters)

License fees for

one term or part thereof

Annual production permissible per calendar year

Home scale `B’ 25 25 Rs.100/- Up to 10 M.T.

Cottage scale 60 60 Rs.250/- Above 10 M.T. but less

than 50 M.T.

Small scale `A’ 100 100 Rs.400/-

Above 50 M.T. but less than 100 M.T. with

installed capacity not exceeding 1 M.T. /day.

Small scale `B’ 150 150 Rs.600/-

Below 250 M.T. with installed capacity not exceeding 2 M.T. per

day.

Large scale 300 300 Rs.1500/

Above 250 M.T. with installed capacity

exceeding 2 M.T. per day.

Note:

• Area occupied by machinery shall not be more than 50% of the manufacturing area.

• The minimum height of the factory premises under Home Scale `B’ and Cottage Scale categories is 10 feet and for small scale & large-scale categories 14 feet.

Every manufacturer shall manufacture fruit products in conformity with the sanitary requirements and appropriate standards of quality and composition specified in the Second Schedule of FPO.

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The Second Schedule Part 1(a): Sanitary requirements of a factory of fruit products

• The Premises shall be adequately lighted, ventilated & cleaned by white washing/color washing or oil painting.

• Windows & all openings shall be well screened with wire-mesh & the doors fitted with automatic closing springs, roof shall be permanent, floor cemented.

• The equipments and the factory shall not be used for manufacture of repugnant products like fish, meat, eggs etc. However, permission may be granted as a special case if arrangements are made for disinfection of premises after changing from meat products to fruit products (one month idle gap will be required for changeover).

• The premises shall be located in a sanitary place with open surroundings, preferably in industrial area/estates. The premises shall not be used as or communicated directly with residence.

• Adequate arrangements for cleaning equipments, machinery, containers tables and raw materials shall be provided.

• Copper brass or iron equipments, containers or vessels are not permitted, in the preparation, packing or storage of fruit products, only aluminum, stainless steel, glass or tins equipment are allowed.

• The water used shall be potable and shall be got examined chemically and bacteriologically by a public Health Laboratory (if no municipal water is available at the premises). The water sample should be drawn for such examination by the public Health Authority of the area where the premises is located or should be drawn in the presence of the above authority. Free flowing tap water of 1 kilolitre per day shall be made available.

• Adequate drainage system and provisions for disposal of refuse shall be made.

• Sufficient number of latrine & urinals shall be provided for workers.

• Wherever cooking is done on open fire, proper outlets for so smoke/steam etc. like chimney, exhaust fan etc. shall be provided.

• The workers engaged in the factory shall be healthy and shall be medically examined, inoculated and vaccinated whenever required.

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• The workers shall be provided with aprons, head-wars gloves etc. and shall be personally neat and tidy.

Part 1(B): Qualifications of technical staff Production shall be supervised by a person possessing one of the following qualifications: Small scale:

• B.Sc. with Chemistry/Agriculture as one of the subjects.

• A Diploma or a certificate in fruit preservation or a course of at least 3 months duration from a recognized institution.

Large scale:

• B.Sc. (Tech.) with Food Technology/Chemical Engineering with at least one year experience in fruit preservation factory.

• B.Sc. with CFTRI Diploma or Diploma of Kalamassery (Kerala Government) Polytechnic.

• B.Sc. with Chemistry/Agriculture with three years experience in fruit preservation factory.

Minimum equipments & machinery for unit operation

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1. Washing of raw materials

Rectangular tanks with false bottom of not less than 20 gallons capacity

2. Washing of bottles 1. Tanks having not less than 40 gallons capacity.

2. Bottle washing machine, brushes (*machine, rack, trolley).

3. Buckets (* Sterilizing tanks).

3. Preparation of Fruit / Vegetables

1. 2-1/2 Ft. high table with aluminum/ steel top having area not less than 20 Sq. ft.

2. Not less than 12 trays. 3. Stainless steel knives. 4. Equipment for blanching

4. Juicing, pulping & Mixing

1. Juice extractor of basket press 2. (* pulping machine/hydraulic press). 3. Steel sieve. 4. Vessels of not less than 100 litres

capacity.

5. Processing 1. Furnace/Gas stoves (* Boiler) 2. Vessels/Steam jacket kettle.

4. Ladle. 5. Thermometer, hydrometer 6. (Refractometer) 7. Sensitive balance for weighing

chemicals, color etc.

6. Fermentation Barrels/Carboys/Earthen jars.

7. Filling & sealing 1. Mugs/Funnels (* Filling machine). 2. Crown cork machine/R.O. sealing

machine. 3. Weighing balance.

8. Exhausting, Processing for cans & bottles.

1. Tanks with crates/Exhaust Box. 2. Double Seamer/Semi-automatic

cans sealer. 3. Cooling tanks with crates/cranes. 4. Pressure cooker/retorts/sterilizing

equipments. 5. Incubator/pressure can tester. 6. * Pasteurizer.

9. Carbonation or aeration

Power driver aerated machine or semi- automatic aerating and sealing machine.

Note - * required for Small Scale and Large Scale units only.

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