GOVERNMENT OF PAKISTAN PLANNING COMMISSION PC-1I FORM (SURVEY AND FEASIBILITY STUDIES)

MODERNIZATION / REHABILITATION AND ESTABLISHMENT OF INDUSTRIAL UNITS IN RURAL AREAS OF SINDH (AGRO BASED CLUSTER DEVELOPMENT OF SMALL AND MEDIUM ENTERPRIZES)

I)

NAME BY WHICH FEASIBILITY WILL BE IDENTIFIED

Agro based Clusters in Sindh for the following clusters. S. No. 1. 2. 3. 3. 4. 5. 6. 7. 8. Clusters Mango Mango Mango Rice Milling Red Chilies Dates Cotton Ginning Guava Vegetable Processing City/Cities Hyderabad Mirpurkhas Sanghar Larkana Kunri Khairpur Ghotki, Sanghar Larkana Nawabshah, Tando Allahyar, Mirpurkahs

II)

ADMINISTRATIVE AUTHORITIES RESPONSIBLE FOR A. Sponsoring

P & D Department, Govt of Sindh

B. Execution
SMEDA

III)

DETAILS OF SURVEY / FEASIBILITY STUDY

The concept of cluster development is based on effective networking thus building on collective efficiencies within the cluster and among cluster stakeholders i.e. the enterprises located in the cluster, their associations, trade bodies, vendors etc. The cluster development approach is based on the basic rationale that since the issues and problems faced by enterprises falling in a particular cluster are common therefore the remedial and developmental initiatives and programs may be formulated, designed and implemented more effectively to achieve a set of developmental goals and objectives. Instead of applying an umbrella strategy for development at macro or national level, integrated approach based on a focused strategy is applied for the development of a particular cluster.

A. General description and justification 1. Rice Cluster Larkana

1.1 Cluster Brief Rice is consumed as a major food item after wheat and is third largest crop after wheat and cotton by acreage. It is annually cultivated on an area of around 5 million acres. The crop occupies about 10% of the total cropped area. Annual rice production averaged at 4.75 million tones in 2004-5. It accounts for 17% of value added by major crops. Punjab is the leading producer of rice in the country. It accounts for 59.5% of the total production the next leading province is Sindh it accounts 29.5%. The remaining provinces NWFP and Balochistan contribute 11% of the total production. On the world level, Pakistan ranks 14th in rice production. It is the 6th largest exporter of rice, holding 6% share in rice export of the world. Rice export was around 2 million tones in 20045.Pakistan Basmati rice has been a favorite among international rice buyers. Rice Crop in Sindh has been grown since centuries as its cultivation dates back even before the civilization of Moen-e-jo- Daro. There was substantial area of 487 thousand hectares under rice cultivation even before the barrages the area further increased with the opening of barrages in 1932 and reached at 704 thousands hectares in 1998 and produced 1.5million tons paddy.In Sindh Rice is cultivated in two different geographical areas i.e Northern or upper Sindh (comprising Larkana, Qamber-Shahdadkot, Shikarpur, Jacobabad, Kashmore and Dadu Districts) and Southern or Lower Sindh (comprising Thatta, Badin, and Tando Mohammad Khan Districts. There are approximately 850 Rice Mills are working in Sindh-Balochistan and approximately 700 are working in Sindh to process the paddy among 700 rice mills 300 are in Larkana and Kamber Shahdadkot 1.2 History and Background Before the 1978 there were old iron hullers for the husking in Larkana but in the mid 90s Sheller were introduced then soon after Rubber polisher SM 18 were introduced to achieve high yield and know one Silky/water polisher is installed in Larkana. Perhaps first is Northern Sindh. Mostly millers in cluster have outdated units hardly few has SM18 rubber polisher. More then 60 percent millers are un-educated and almost 95% doesnt know what is happening in international market or interest in international market. If we compare existing cluster set-up with Japan, China and Thailand cluster machinery is out dated. 1.3 Defining the Products Larkana rice cluster is famous for its IRRI production it can be broadly categorized into following segments: IRRI-6 IRRI-9

DR-82 Broken-rice

1.4 Geographical Location The Larkanas rice cluster is highly decentralized and varied in terms of size and location. The small and unorganized units are located in surroundings of city like Kamber, MiroKhan, Dokri, Naudero and Ratodero while large and medium organized units are located within the city area of Larkana and Shahdadkot. 1.5 Core Cluster Actors The Rice Millers Association of Larkana and Sindh Balochistan Rice Millers Association is core cluster actor. The major highlights of Larkanas rice milling cluster is as follows: Table: Larkanas ri9ce milling Cluster Number of Units Approximately 300units - 200 Large and Medium units - 100 Small units -Employing approximately 1800 permanent employees -Employing approximately 6000 seasonal employees 6,36,932 tons Approx. Rs. 750 million

Employment Generated

Paddy Production (unmilled) Total Investment

All of 300 units in the cluster are member of Sindh Balochistan Rice Millers Association. The 900 members of Association is producing 2.4 million tones of rice out of which 1.8 million ton is exported in current year which has current value of 1.3 billion USD. 1.6 Analysis of Business Operations Production Processes Human beings cannot consume Paddy in its raw form. It needs to be suitably processed for obtaining rice. Rice milling is the process, which helps in removal of hulls and barns from paddy grains to produce polished rice. Rice forms the basic primary processed product obtained from paddy and this is further processed for obtaining various secondary and tertiary products. Milling process of paddy starts when the paddy is brought from fields and gathered in an open space of milling area where it is gathered for drying and is placed in an open place till it achieve desire moisture level. Then paddy is brought and placed in a ware house where it is processed into following stages:

Cleaning: Removes foreign objects, such as hey, stone, tree stump, from the paddy. Hulling: Rubs excessive husks off cleaned paddy. On removed, brown rice is separated from the husks though ventilation process and mechanical equipment leaving pure brown rice available for milling. Milling: The milling, or whitening, stage removes the bran layer from brown rice. The modern multi-break, vertical whiteners use both abrasion and friction to gently and efficiently convert brown rice to milled white kernels. The bran layer is by air ventilation, which sucks in the brand layer process usually takes 2 to 3 cycles, depending on the required milling degree. Polishing: Smoothing and brightening a surface of rice grain by a roll or series of rolls. Grading: Separates milled rice (mixture of different sizes: Whole grain, head rice, and broken rice) by a sieve grader include several sizing techniques. Sorting: Removes rice defects, such as discolorations, yellows, immature (green), chalky, peck, seeds, red rice, glass, stones. Add value to white rice, parboiled rice to ensure that only the cleanest rice is passed. Pack / Storage: The finished rice will be packed and stored in individual bags, according to its grade, and the rice is ready for delivery to customers

Analysis of Business Operation

Raw Material The main raw material which is paddy is normally purchased from local growers and some time from wholesalers or money lenders. Both these raw material suppliers are located within the cluster as Larkana is famous for its paddy production. The millers within the cluster purchases the raw material directly from growers, moneylenders and

some time from wholesalers on cash which usually borrow from banks during the season as a working capital. Technology Technology is rapidly changing in all spheres of life these days but rice millers in the cluster are unwilling to adopt modern technology perhaps they are always in profits except few years back. Before the 1978 there were old iron hullers for the husking in Larkana but in the mid 90s Sheller were introduced then soon after Rubber polisher SM 18 were introduced to achieve high yield and know one Silky/water polisher is installed in Larkana. Perhaps first is Northern Sindh. Mostly millers in cluster have outdated units hardly few has SM18 rubber polisher. More then 60 percent millers are un-educated and almost 95% doesnt know what is happening in international market or interest in international market. If we compare existing cluster set-up with Japan, China and Thailand cluster machinery is out dated. Even above mentioned constraints few millers have intention in milling up-gradation. Due to that interest one parboiled unit is in pipeline and one polisher is installed in the cluster. But slowly and reluctantly millers are up-grading their existing infrastructure but that is also with out date d units. Market Analysis Milled rice is usually directly sold to the traders and to exporters through the brokers. Some millers are also directly involved in the export of milled rice. Institutional Setup Entrepreneurs Associations Sindh Balochistan Rice Millers Association Larkana Chamber of Commerce and Industry (LCCI) Support Service Providers Importer of Machineries. Local Manufacturers of Machineries. Suppliers of Machinery Items. Financial Institutions Private Business Development Service (BDS) Providers Number of Private BDS providers in the cluster are offering their services to the cluster.. The BDS providers in the areas of technology, product standardization and latest milling units are the main requirement of the cluster.

Banks and Financial Institutions Larkana is adequately covered by nationalized and private sector banks and financial institutions. The credit needs of the cluster are sufficiently met by these institutions. The banks and financial institutions are willing to finance the cluster in working capital as well as capital financing. Banks usually prefer the working finance as it is seasonal and will be returned within the eith months time period. Only issue is that the financing rate in Pakistan is very high, due to this reason millers take it at very high rates. So there are no issues with respect to financing in rice milling cluster of Larkana. 1.7 SWOT Analysis The SWOT analysis of the cluster will be useful for clean understanding of the capabilities of the cluster to face the challenge a head.. Strength: Easy availability of paddy. Easy availability of fuel (diesel). Easy availability of Machinery and maintenance. Easy availability of labor force. High capacity for investment of entrepreneur. Exposure to export market. Encouraging Industries policy of Govt. Good transport facilities. High demand in local and international market.

Weaknesses: Low level of education. Non availability of quality paddy. Un-willingness to use moisture meters. High broken percentage. Low milling yield. Un-hygienic conditions within milling process. Low level of modernization and up gradation technology. Lack of marketing awareness. Lack of common facility within the cluster.

Opportunities: Up gradation due to involvement of different stake holders. Improvement in quality and high milling yield. Increasing demand of milled rice in world market. Demand for low price.

Threats: Quality requirement of international market (e.g. Aflatoxin). Supply of mix-up verities. Rejection of product by exporters.

1.8 Investment Opportunities

As rice is major staple food item after wheat and has huge potential in local and international market specially concerned with current demand in world market has created opportunity for investment in the cluster as already there is huge gap within the cluster for modern units. Parboiled & Drying Plants Silky Polishers Modern Rice Milling Unit Chip board factory for reaming of paddy PROPOSED PLAN: Considering the potential of the cluster it is proposed to make the intervention in the cluster by up-grading the existing infrastructure of rice processing units. In first phase, services of consultant are required for detailed study and in second phase, a piolat project may be initiated. Basis of Selection of processing unit: The processing unit would be selected on following grounds Mill owner willing to contribute in up gradation cost Mill owner willing to extend support and cooperate in unit up-gradation

Mill owner willing to contribute his time with consultant and SMEDA team during the study/up-gradation phase Commitment and cooperation with P&D and SMEDA in future, e.g. if P&D and SMEDA takes a delegation for visit(s) for demonstration purposes. The mill owner should preferably a member of the Sindh-Balochistan Rice Millers Association but having rice mill in Sindh province. Services Required The services of a consultant will be required for the following: To conduct the technical analysis of rice processing unit cluster To recommend the alternatives for up gradation

To prepare a comprehensive Technical Report To monitor and supervise the up-gradation process

Expected Benefits: The project upon completion is expected to deliver the following benefits: i. Low broken percentage ii. High yield iii. Polished grain iv. Lower production cost v. Safety for workers(lungs problem0 vi. Introduction of new technology and opening up new doors of innovation. vii. On the whole development

2. Mango-Cluster Profile
2.1 Cluster Brief Mirpur Khas Mirpur Khas meaning the land of the highest mirs is a city located in the province of Sindh in Pakistan. It is the fourth largest city in the province with an estimated population of 124,371 (1981). Its soil is fertile and the city is much known for its mango produce. The city seeks pleasure in declaring having 250 different varieties of mangoes, of which the most famous variety is the Sindhri Aam literally the mango from Sindh. The city boasts its mango products at an annual harvest festival Mango Festival showcasing its world-renowned produce. 2.2 Defining the Product Mangoes belong to the genus Mangifera, consisting of numerous species of tropical fruiting trees in the flowering plant family Anacardiaceae. The mango is indigenous to the Indian subcontinent and Southeast Asia. Cultivated in many tropical regions and distributed widely in the world, mango is one of the most popularly exploited fruits for food, juice, flavor, fragrance and color. Mango, a national fruit, has varieties like Anwar Ratole, Began Phali, Chaunsa, Dusheri, Fajri, Fazli, Gulab Khasa, Jannat-ul-Firdos, Lab-e-Mashooq, Langra, Neelum, Saleh Bhai, Sindhri, Siroli, Summer Behist Chaunsa, Swarnarika, Zafran etc.

2.3 Geographical Location The mangoes cluster is scattered in District Mirpur Khas in areas like Sindhri, Digri, Kot Ghulam Muhammad and some other areas like Hyderabad, Tando Allah Yar as well.

2.4 Core Cluster Actors No of Mango Growers There are almost 1000 + Mango growers in Mirpur Khas who are classified as small, medium or large growers with respect to their land holding: Large Growers having 20 + acres; Medium Growers having 10 20 acres Small Growers having less than 10 acres

Major Actor of the Cluster 2.4.1.1.1 2.4.1.1.2 2.4.1.1.3 Employment Figure N/A Total Production (If Available) Mangoes are grown on an area of 50 thousand hectares with production of 353.4 thousand tones, with an average yield of 6.97 tons per hectare (Sindh Agriculture Department Statistics). Sindh is the major producer of Mangoes followed by Punjab. Capacity utilization (If Can be Worked Out) N/A Other cluster Actors (suppliers: seeds, fertilizers, pesticides etc) The other actors in mangoes cluster working in Mirpur Khas and other areas are as follows: Muhammad Anwar Gondal Imdad Nizamani Umar Bughio

Bayer Crop Sciences Novartis (Crop Division) Engro Fertilizers Fauji Fertilizers Target Zarai Markaz Naya Savera etc

2.5 Analysis of Business Operation Production Operation/Process 1. Apply farm yard manure at the rate of 10-30 kg per young plant and 80 to 100 kg per full grown tree. 2. Apply 3-4 kg SSP, 2-3 kg Potassium Sulphate and 2-3 kg Urea before flowering (Dec to Jan). 3. Apply a further 2-3 kg Urea after fruit setting in two equal doses (Mar/Apr). Pruning: Mango usually assumes a graceful dome shape shading the main trunk. No pruning is practiced however, annually after fruit harvest diseased, dried, broken branches and those touching the ground should be pruned off. To rejuvenate the orchard after every 3-4 years it is advisable that 15-20% of old wood should be removed. Harvesting Picking should be done when the fruit is fully developed and mature. Natural drop of the fruit is the main indication that the fruit is ready for picking. Different varieties in different areas ripe at different times. In Sindh, mango varieties start ripening from May to June. Expected yields vary from 40 to 100 kg per tree.

Analysis of Mango Business Operations Nursery Preparation

Transplantation

Watering

Harvesting

Delivery to Markets

Packaging

Post Harvest - Handling

List of Raw Material Seeds Fertilizer Farm manure Pesticides etc

Technology Status The growers are still using the same old fashioned methods of growing mangoes. However, with the passage of time; tractors, laser levelers and other modern farm machinery has made its way in the cluster. But, only large farm holders take the benefit of it. Marketing The growers of mangoes give the orchards to the contractors on contract basis per acre, usually for tenure of 3 5 years. The growers, after giving the orchard on contract, is least bothered about the conditions of the farm. He is only concerned with the money paid by the contractor. The contractor does every possible effort to utilize the orchard and in doing so there is no concern of quality, proper picking and packaging of mangoes. He wants to get the mangoes to the market as soon as possible. Financing Most of the growers dont consider financing from banks as a source of credit for their business operations. Institutional Setup Associations Mango Growers Association, Kunri Address: President: 2.6 Govt. Support Institutions The public sector institutions working for this cluster are as follows: Mirpur Khas Mr. Muhammad Anwar Gondal

Agriculture Extension Department Agriculture Research Department Agriculture Engineering Department NPIW (National Program for Improvement of Watercourses) SMEDA TDAP PHDEB ASF etc

2.7 Training institutes The only training and support institute for the Mango cluster is the Sindh Horticulture Research Institute located at Mirpur Khas. The main collaboration of SHRI is conducting the annual mango festival in the month of June every year.

2.8 Financial Institutes N/A Private BDS Providers Private companies, both national and multinational, provide on-farm BDS services to growers. These companies are as follows: o o o o o o Bayer Crop Sciences Novartis (Crop Division) Engro Fertilizers Fauji Fertilizers Target Zarai Markaz Naya Savera etc

2.9 SWOT Analysis Strengths Pakistans biggest cluster of mango production Favorable environmental conditions Easily available farm land

Weaknesses Low literacy rate in majority of mango growers Lack of modern agricultural practices Mismanagement of farm land (dependant upon the Farm Manager)

Lethargic behavior of employees towards farm work

Opportunities Threats Shortage of Water Fruit Fly problem Rising local and international consumption and exports of mango from Pakistan Increased margin for growers; provided demand and supply gap in both national and international markets Export markets are open in post WTO era

2.10 INVESTMENT OPPORTUNITIES Some viable investment opportunities for mango cluster are as follows: Mango Hot Dip Processing Plant Mango Pulp Processing Plant Production of Value added products like syrup, pickle, squash and juices etc.

3 Red Chilies Cluster Kunri

3.1 Cluster Brief Kunri Kunri is a small town located in the Sindh province in the southern part of Pakistan. It is about 200 kilometers from Hyderabad. It has a population of about 300, 000 people composed of mostly Muslims; however there is a large Christian and Hindu minority as well. The large population of Christians and Hindus, unique to Pakistan, came about because many people decided not move to India during the 1947 Partition of India. Kunri's economy is mostly agricultural. The region produces many different types of crops, including red chilies, cotton, and mangos. By far, the most popular crop in Kunri is the red chili, which sustains the financial structure of the town. This city is located in the tail region of the Indus River, causing a lack of water throughout the year. The chili cluster of Kunri is said to be established way back in 1950s when Mr. Ganga Raam brought seeds of Red Chilies from Habibabad, Qusoor (Punjab) to Kunri.

3.2 Defining the Product The chili pepper, a hotly pungent variety of Capsicum was first cultivated by the people of Central and South America in around 3000BC. Columbus brought seeds back to Europe in 1493, and from there it has spread to the cuisines of the entire world. The pre-Hispanic Americans believed the chili to contain medicinal qualities and modern science has confirmed the nutritional values, containing high levels of vitamins A and C, along with vitamins E and B1-3. 3.3 Geographical Location The red chilies cluster is scattered District Umerkot in areas like Kunri, Jhuddo, Bustan and some other areas like Mirpur Khas, Badin, Tando Muhammad Khan as well. 3.4 Core Cluster Actors Red Chilies Growers There are almost 500 + red chili growers in Kunri who are classified as small, medium or large growers with respect to their land holding: Large Growers having 20 + acres; they are 15 % of the Kunri chili cluster Medium Growers having 10 20 acres; they are the 60 % of Kunri chili cluster Small Growers having less than 10 acres; almost 25 % of Kunri chili cluster

Major Actor of the Cluster (Top 3-5 Players) Miyan Muhammad Saleem Mr. Ghulam Akbar Dars Dr. Narayan Das Ch. Zahir Arain etc Employment Figure The approximate total employment generation through this cluster is 12000 households (as 1 acre operations are carried out by one family). Total Production Chilies are grown on an area of 38.4 thousand hectares with production of 90.4 thousand tones, with an average yield of 1.7 tons per hectare with 1.5 per cent share in the GDP. Sindh is the major producer of chilies followed

by Punjab and Balochistan. Pakistan earned Rs1.127 billion during 20032004 by exporting red chili powder, whereas, export earnings from all fruits were Rs 5.912 billion during the same period. This reveals the potential of this non-staple crop. Despite its importance the yield has declined from 86.5 (1994-95) to 55.8 thousand tons (2003-04). Other cluster Actors (suppliers: seeds, fertilizers, pesticides etc) The other actors in red chilies cluster working in kunri and other areas are as follows: Bayer Crop Sciences Novartis (Crop Division) Engro Fertilizers Fauji Fertilizers Target Zarai Markaz Naya Savera etc

3.5 Analysis of Business Operation Production Operation/Process Chilies are grown on soils with light sands to well drained clay. Silt and clay loam soils are better, while water-logged and alkali is not suitable. Soils selected are prepared thoroughly for getting good yields. As roots of chilies go one foot deep, therefore, deep plowing is necessary. Two plowing with mould board plow followed by global plow are done, leveling the soil for even distribution of water and fertilizer. About 30-40 cart loads of well rotten farm yard manure per acre are added one month before transplanting chilies. Chilies require warm and humid climate for growth and dry weather during maturity. The crop comes up well in tropical and sub-tropical regions but it has a wide range of adaptability and can withstand heat and moderate cold. It can be grown over a wide range of altitudes from sea level up to nearly 2,100 meters. Heavy rainfall leads to rotting of the crop. Unfavorable temperatures lead to bud blossom and fruit drops. Nurseries are raised on well prepared one meter wide and three meters long strip. Before broadcasting the seeds, straws or farm yard manure is burned on the strips after which seeds are broadcast and pressed in the soil and covered with a thin layer of soil. These are then covered with layers of straws supported by wooden sticks with water application in the morning and evening till the seeds germinate. After germination straw is removed

and water is applied after every 4-5 days. Within six weeks seedlings become ready for transplantation. After land preparation, ridges of one and half foot high and wide are prepared. Transplanting is done on both sides of the ridges and distance between each plant is maintained at one and a half foot. Care is taken to avoid plants on both sides of ridges to face each other as this leads to dense plant population causing hindrances in weeding, harvesting, spraying etc. Transplanting is preferable done in the evening, because in morning seedlings can not withstand noon temperatures. After transplantation two watering are applied so that plants develop roots. Subsequent irrigation is applied as per climatic conditions of the area in which the chilies are being cultivated. Recommended fertilizer dose for chilies is one bag of DAP and one of potassium sulphate before sowing, and two to three bags of urea, one bag is applied after 20 days of transplanting and the second at flowering stage, and third, if necessary, at fruit setting. For checking weeds it is necessary that first inter-culturing is completed within one month after transplanting. Three to four inter-culturing are necessary for controlling the weeds. At flowering stage, earthling up is recommended which helps in the growth and development of the crop. It prevents the crop from lodging.

Analysis of Red Chilies Business Operations

Nursery Preparation

Transplantation

Watering

Harvesting

Delivery to Chilies Market, Kunri

Packaging

Post Harvest - Handling *

List of Raw Material Seeds Fertilizer

Farm manure Pesticides etc

Technology Status The growers are still using the same old fashioned methods of growing red chilies. However, with the passage of time; tractors, laser levelers and other modern farm machinery has made its way in the cluster. But, only large farm holders take the benefit of it. Marketing The growers of red chilies sold all their produce in the local grain market of kunri city. They have no separate arrangements or marketing channels. Financing Most of the growers dont consider financing from banks as a source of credit for their business operations. Small and medium mainly get credit from traders in grain market. Institutional Setup Associations Red Chilies Growers Association, Kunri Address: President: General Secretary: Opposite Post Office, Kunri Mr. Miyan Saleem Mr. Muhammad Zahir Arain

Due to the crisis of 2005, Red Chilies Growers Association was formed in October 2005 by Mr. Miyan Saleem, Mr. Zahir Arain, Dr. Narayan Daas, Mr. Ghulam Akbar Darss, Dr. Noor Ali Shah and other progressive chili growers. Mr. Miyan Saleem took the oath as its first President and since then he and his team has been working for the growth and development of Chilies Cluster in Kunri. Red Chilies Merchants Association, Kunri Address: President: General Secretary: Grain Market, Kunri Mr. Abdullah Memon Mr. Musawwar Ahmed

Red Chilies Merchants Association was formed way back in 1975 by the merchants of Kunri Chilies Market. The association has a total of 40

members out of which 30 members are active. The association charges Rs. 1,000 as the membership fee. Besides that, it also runs an annual association fund which Re. 1 on every bag of chilies sold the Kunri Chilies Market. Govt. Support Institutions The public sector institutions working for this cluster are as follows: Agriculture Extension Department Agriculture Research Department Agriculture Engineering Department NPIW (National Program for Improvement of Watercourses) SMEDA TDAP ASF etc

Training institutes The only training and support institute for the red chilies cluster is the Red Chilies Research Station located at Dadro near Kunri. The station provides basic seeds and expert information on growing of red chilies to growers. Financial Institutes There are about 3 financial institutions in Kunri which are providing financing mainly to medium and large farm owners i.e. MCB Bank, NBP and NIB (formerly PICIC). Private BDS Providers Private companies, both national and multinational, provide on-farm BDS services to growers. These companies are as follows: o o o o o o Bayer Crop Sciences Novartis (Crop Division) Engro Fertilizers Fauji Fertilizers Target Zarai Markaz Naya Savera etc

3.6 SWOT Analysis Strengths One of Asias biggest market of Chilies Trade

Easily available seed Easily available farm land

Weaknesses Low literacy rate in majority of chilies growers Lack of modern agricultural practices Mismanagement of farm land (dependant upon the Farm Manager) Lethargic behavior of employees towards farm work

Opportunities Threats Shortage of Water Aflatoxin Disease which has restricted entry in export markets Phytophthora Disease which causes the rot of plant and decreased yield Lack of suitable infrastructure in Kunri Strong linkage between chili growers and chili traders, Kunri Rising local and international consumption and sales of chilies Increased margin for growers; provided demand and supply gap in both national and international markets Export markets are open in post WTO era

3.9 Investment Opportunities Some viable investment opportunities for red chilies cluster are as follows: Red Chilies Dehydration Plant Cold Storage Facility Spice (Ground Red Chilies) Manufacturing Facility etc

4. Dates Cluster Khairpur

Pakistans diverse climatic condition provides an opportunity of growing Dates in the Sindh, Balochistan and NWFP provinces. Turbat, Panjgoor, Khairpur and Dera Ismail Khan are the major dates growing regions in the country. Pakistans commercially important Date varieties include Aseel, Karbala, Fasli and Kupro of Sindh; Muzawati, Begum Jangi, Jaan Swore, Kehraba and Rabai of Balochistan; Dhakki and Gulistan of NWFP and a seedless variety of Punjab. Pakistan produces over 500,000 tones of Dates on a total area of 82,000 hectares every year. 80.0% of the total Dates produced, approximately 400,000 tones are grown in Districts Turbat, Khairpur and Panjgoor. Almost 32% of Pakistans Dates produce come from Khairpur District. Pakistan is the fourth largest exporter of dates and dry dates after Tunisia, Iran and Israel with an export volume of around 103,000 tones at a value of US$ 37.6 million. Data analysis shows export of fresh dates fetches a better price in the international markets than dried dates. The analysis of Pakistans dates export reveals that fresh dates constitute only 10% of export volume and 2-3% of total annual production of dates. Pakistan received an average price of Rs.21 per kg for dried dates and Rs.27 per kg for fresh dates. This translates to the fact that there is a huge potential for fresh dates exports, keeping in view the opportunities in value addition. Our country has the capacity to supply quality dry dates as well as fully processed high quality dates in various styles, shapes and forms, which include pitted/ un-pitted whole dates, pressed date bricks, date chops, date paste in bulk and small small boxes/jars. The Date harvest season begins in the middle of July and ends in September. After harvest dates in Pakistan are cured for eight to fifteen days in the sun on straw mats in open grounds and alongside roads and highways. The fruit gets contaminated with moulds and bacteria. Color loss, broken skin, sunburn, blemishes, insect infestation, inclusion of foreign matter and growth of mold further damages the fruit and reduce its trade value. By the time the dates reach processing units, only a very small quantity remains fit for export and meet international SPS requirements. A study was conducted in 2007 to find ways to contain this acute problem and to prepare a sizeable quantity of dates fit for exports. Interaction with growers, traders, processors, exporters, academia and other stakeholders revealed that there is considerable room for process control in dates pre-processing and curing. Analysis identified the following process improvements Proper picking Introduction of Improved sun drying techniques Introduction of mechanical curing/drying Modern storage systems

Prompt curing of dates using mechanical techniques after harvesting, taking moisture levels to 20-30%, is the best way of preventing the production and spread of moulds bacteria and other inclusions and the removal of pesticide residues. The proposed intervention will help in minimizing the direct losses to growers and traders and prepare quality dates for exports. The quantities of premium quality produce can be increased exponentially by adopting and promoting mechanical dates processing. 4.1 Project Objectives: Introduce & demonstrate mechanical processing / dehydration of Dates Improve quality of fresh and dried dates Increase profitability of date farmers by minimizing wastage during monsoon season

By introducing mechanical dehydration technology the project mainly aims to enhance the quality of fresh or dried dates and increase the profitability of growers by providing a prompt drying solution during the monsoon season when harvesting is at its peak. The common facility center shall also be used by local growers and/or traders to get other agricultural products like onions and garlic dehydrated during offseason. Due to non availability of adequate dehydration / drying and storage facilities a huge part of the produce goes to waste every year. Wastage is estimated to be as high as 30% - 35%. Although the food processing industry of Pakistan has made some headway but still has weak impact on agriculture. The scenario of post-harvest processing of dates and spice crops is not encouraging in our country. Reliable and unified methods of post harvest handling, processing and storage are lacking and prevailing methods are not that promising. This ultimately leads to: Unhealthy produce High wastage quantum Rejection from export market Low selling prices As dates, onions and garlic are primarily food items, the need for clean and bacteriafree products is important. Importing countries are increasingly applying stringent Phyto-Sanitary Regulations on these products. It is, therefore, imperative that the government takes immediate steps to upgrade the quality of these products through the adoption of modern and innovative techniques such as mechanical dehydration. In effect, quality assurance needs to commence at the farm level and follow through to exports.

4.2 Linkage Between Proposed Project and Sector Objectives: Improve Quality of Product Prompt mechanical curing of dates to pidh stage will prevent defects of the fruits, including color loss, broken skin, sunburn, blemishes, insect infestation, inclusion foreign matter, pesticide residues, mold and decay. The process will improve the quality of fresh dates by preserving their natural color and other physical attributes. Enhance Competitiveness of Local Industry and Export Development The proposed project aims to enhance the competitiveness of the local industry by helping them produce premium quality fresh dates, with minimal bacteria and mould concentration acceptable in the international market, free from insect infestation, sunburn and other blemishes. Most importantly the project aims to reduce the crop wastage that has a direct effect on their profitability. Mechanical dehydration will open avenues for export of value added agro-based products from Pakistan. Promote Growth of Engineering Design and Consultancy Indigenous dehydration machinery shall be employed by the project. The venture has been carefully envisaged to promote the growth of engineering design and

consultancy in the country.

Business and Cluster Development in Rural Economy The establishment of this model facility is intended to encourage the private sector to establish modern processing units of their own. This will in turn increase the volume of exportable fresh dates. The premium that can be obtained by preserving the color, physical attributes, minimizing the toxins levels and preventing inclusions and inset infestations is incentive enough to introduce and promote this promising agroprocessing technology. Further, the project is strategically proposed to be located at Khairpur to enhance activities in the non-farm sector of the rural economy and promote rural industrialization. 4.3 Description and Technical Parameters Keeping in view the available types of dates and stock conditions it is assumed that the plant proposed for establishment in Khairpur should be meant for processing of all varieties of date. The project is proposed to adopt mechanical drying techniques, which will reduce the moisture content of the fresh dung to 20% within 6 8 hours. The project also proposes to dehydrate onions and garlic. For processing, dates will be transferred from storage area through a feeding line elevator and automatically dumped over a shaker for preliminary washing. Then washed dates would be loaded on trays for drying in the mechanical dehydrators where hot air will be supplied to remove excess water. Processed dates containing 20% moisture will be conveyed to the finished goods storage area for packing and transportation. The plant will run on two shift basis and will have the provision for future capacity expansion.

The facility will also have storage areas for raw material input, finished fresh/dried products. 90 people will be hired by the project in various departments on contract and daily wages. This project will serve as a common facility center for the local growers/traders, providing mechanical processing services at minimal charges.

4.5 Project Justification and Opportunity Rationale: Pakistan has the capacity to supply fully processed premium quality dates in various styles, shapes and forms, which include pitted/ un-pitted whole dates, pressed date bricks, date chops, date paste in bulk as well as ready-to-distribute small boxes/jars. While export of fresh dates fetches a better price in the international markets than dried dates, the analysis of Pakistans dates export reveals that fresh dates constitute only 10% of export volume and 2-3% of total annual production of dates. International demand of fresh dates presents an excellent opportunity for Pakistani traders to increase their share in global trade. After harvest dates in Pakistan are cured for eight to fifteen days in the sun on straw mats in open grounds and alongside roads and highways. The fruit gets contaminated with moulds and bacteria. Color loss, broken skin, sunburn, blemishes, insect infestation, inclusion of foreign matter and growth of mold further damages the fruit and reduce its trade value. By the time the dates reach processing units, only a very small quantity remains fit for export and meet international SPS requirements. The establishment of the proposed project is expected to solve the following issues: Export Issues: In the year 2005-06 Pakistan exported around 10,000 tones of fresh dates. However, technical measures such as food quality and Sanitary and Phytosanitary (SPS) requirements under WTO regime impede trade of fresh dates as well as other agricultural products. Pakistan, as a result, is inherently unable to export fresh processed dates to a majority of Countries because of the aforementioned contaminations and fruit damage. There is a need of a Government intervention to resolve the problem in the dates clusters to open up avenues for our traders. Rural Economy: At present, the dates growers profit little from the sales of their produce. Better quality produce will bring in better prices, thereby, benefiting the farmer. The premium is estimated to be between Rs. 5 7.5 per kg. Setting up a dates processing plant at Khairpur, in close proximity of date farms, will provide direct and indirect employment opportunities to the local people and facilitate rural industrialization. In order to make this project viable and profitable, it was decided that garlic and onions be dried at this plant too. There is a high demand for dried or powdered garlic and onions in the international market and dehydrating them at the plant at Khairpur will prove highly beneficial.

4.6 Investment Issues: Modern mechanical dates processing plants are beyond the investment capabilities of SMEs in this sector. The Government may take an initiative to establish the aforementioned as common facility center as a demonstration unit for private sector investor to replicate based on its success. The proposed project will be the first of its kind to provide curing and drying services to the dates and spices sector. Around 150 -200 small growers will directly benefit from the project during the date season each year. The crop damages caused to these farmers due to monsoon rains will be reduced by 30 -35% and increase in volume of premium quality fresh/dry dates. Khairpur is an agricultural area and populous district with all utility services like water, road, drainage network, electricity and gas supply in the area. An acceptable quality of water is available at average depth below the ground level. Freshwater for cleaning and washing of dates can be made available by using an electric pump. All other energy sources/fuel like wood, kerosene oil and gas are generally available in the district. 37 date processing plants become operational in the district during the date season. These plants are currently buying raw material partially from the Date farms in Khairpur District and Sukkur. Quality dates can be supplied to these processing plants from the centre which in turn will prepare a sizable volume of quality fresh dates for exports. 4.7 Market Analysis for Dates Dates (Arabic: Tamr) have been a staple food of the Middle East for thousands of years. They are believed to have originated around the Persian Gulf, and have been cultivated since ancient times from Mesopotamia to prehistoric Egypt, possibly as early as 4000 BC. There is archaeological evidence of date cultivation in eastern Arabia in 6000 BC (Alvarez-Mon 2006). In later times, Arabs spread dates around South & South East Asia, northern Africa, and Spain. Dates were introduced into Mexico and California by the Spaniards by 1765, around Mission San Ignacio. Three main cultivars of dates exist; soft, semi-dry and dry depending on the glucose, sucrose and fructose content. Most of the commercial plantations use cuttings of heavily cropping cultivars. There are around 40-50 important culivars grown in various parts of the world. Date fruit appears in different sizes, shapes and color. The main quality parameters shape, size, taste, texture, pit/date ratio and uniformity in colour and size of the fruit. Other parameters from the point of view of traders, processors and exporters may also be moisture, sugar and fibre content, defects of the fruits, which may include discoloration, broken skin, sunburn, blemishes, shrivel, deformity etc. and presence of insect infestation, foreign matter, pesticide residues, mold and decay. Pakistan has immense potential to grow and export dates required by various markets around the world. There are more than 100 varieties of dates palm in Pakistan, among

them the popular varieties are: Aseel, Zahidi, Fasli, Maazwati, Dhakki, Kharbalian, Begum Jangi, Dagh, Goakna, Tota, Karwan, Hillavi, Khudrawi and Mozawati.

4.8 Supply and Demand Dynamics Pakistan produced 426,000 tones of dates in 2006-07 and exported around 104,000 tones of dry/fresh dates to India, Nepal, Bangladesh in Asia and USA, UK, Canada in Europe and North America. Area under cultivation during the year 2006-07 was almost 85,000 hectares which is an increase of 3.2% from 82,000 hectare from the previous year. However a steady decrease in yield during the last few years is causing prices in the local market to increase. A steady demand of dry dates from India which constitutes 90% of Pakistan export is encouraging growers to increase plantations. Heavy monsoon rains during the last two years have been responsible for a decline in production in Balochistan, which is reflected in chart below.1

Area and Production of Dates in Pakistan

700000 600000

Area (Hectares) Production (Tons)

500000 400000 300000 200000 100000 0

1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Table: 9.1

Year Area (hectares) Production (Tons)

The production of dates in 2007 waned by 20 to 25 percent. This is mainly because of heavy monsoon rainfalls. About 30 to 35 percent of the crop is estimated to have been damaged due to heavy rains in the major growing regions of Sindh and Balochistan. Dates production in Sindh stood at 201,020 tonnes in 2006-07 compared to 318,232 tonnes in 2004-05. In Pakistan, dates are grown in all four provinces. District

Economic Trade and Investment Wing, MINFAL

Province-wise Date Production in Pakistan Year 2006-07

NWFP 2%

Punjab 10%

Balochistan Sindh
Balochistan 40%

NWFP Punjab

Sindh 48%

Khairpur in Sindh is the largest producer of dates in Pakistan which contributes about 39% of the total Date production. Almost 50% of dates are grown in Sindh. 2 Sindh and Balochistan are the major dates producing provinces in Pakistan. The major Dates growing districts in Sindh are Khairpur and Sukkur. Sukkur is the biggest Dates market in Pakistan contributing 80% of the total traded volume.

District-Wise Production of Dates in Sindh in 2006-07

Ghotki, 4% Sukkur, 12%

Shikarpur, 1%

Larkana, 1% Others, 1%

Khairpur Sukkur Ghotki Shikarpur Larkana Others

Khairpur, 81%

Economic Trade and Investment Wing, MINFAL Fruit, vegetable and condiments statistics of Pakistan 2006-07, MINFAL (Economic Wing)

4.9 Dates Trade There is a high demand for fresh dates in the international market. Although the local market is relatively indifferent to the defects of the fruits, which may include discoloration, broken skin, sunburn, blemishes, shrivel, deformity etc. and presence of insect infestation, foreign matter, pesticide residues, mold and decay, but major food processors are wiling to pay a slightly higher price for defects free product, as they can recover their costs through exports. Pakistans dates exports are currently on the rise and dates exports from the country are mostly to India, Bangladesh, Nepal, USA, UK and Canada. However these exports mainly consist of dry dates, which fetch a low price. Many avenues are still closed for our exports. High food prices are estimated to continue in the next few years which are going to push the prices of dates upwards. The international trading scenario in the next few years is in favor of Pakistani dates traders provided that they maintain the quality of product.
Table: 9.5
Dates Export from Pakistan
Value 120,000 100,000 80,000 60,000 40,000 20,000 2003 2004 Year Exported Value Exported Quantity 2005 2006

* Source: Pakistan Revenue Automation Limited, PRAL.

In the domestic market dates prices are going to open at their all time high this season, around Rs. 55-60 per kg. Traders and growers are expected to build inventories. High prices in the local and international market as well as crop loss due to rain will compel and encourage growers and traders to process or dehydrate Dates at the proposed dates processing facility.

Quantity (Tons) (US$ '000)

B. Implementation period
Time required for the completion of survey / feasibility study would be 5 months i.e. November 2008 to March 2009. Following is the tentative activity schedule for each cluster. Rice Cluster- Larkana Activities
1 2 3 4 5 6 7 8 9 10

Weeks
11 12 13 14 15 16 17 18 19 20

Approval of PC-II Release of Funds Preparation of TOR of consultants Approval of TOR Advertisement in the Press Receipt of bids Scrutiny of bids Selection of Consultant Approval by competent authority Issuance of offer letter Agreement with consultant Joining of consultant Cluster Visits / Meetings & Analysis Seminars / Workshops Final Report

Mango Clusters-Hyderabad and Mirpurkhas Activities Weeks

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Approval of PC-II Release of Funds Preparation of TOR of consultants Approval of TOR Advertisement in the Press Receipt of bids Scrutiny of bids Selection of Consultant Approval by competent authority Issuance of offer letter Agreement with consultant Joining of consultant Cluster Visits / Meetings & Analysis Seminars / Workshops Final Report

Vegetable Processing Nawabshah, Tando Allahyar, Mirpurkhas Activities Weeks

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Approval of PC-II Release of Funds Preparation of TOR of consultants Approval of TOR Advertisement in the Press Receipt of bids Scrutiny of bids Selection of Consultant Approval by competent authority Issuance of offer letter Agreement with consultant Joining of consultant Cluster Visits / Meetings & Analysis Seminars / Workshops Final Report

Activities

Cotton Ginning Ghotki and Sanghar Weeks

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Approval of PC-II Release of Funds Preparation of TOR of consultants Approval of TOR Advertisement in the Press Receipt of bids Scrutiny of bids Selection of Consultant Approval by competent authority Issuance of offer letter Agreement with consultant Joining of consultant Cluster Visits / Meetings & Analysis Seminars / Workshops Final Report

Red Chilies- Kunri Activities

Approval of PC-II Release of Funds Cluster visits/meetings Advertisement Seminar/Workshop Final Report

Weeks 1 2 3 4 5 6 7 8 9 10

Dates Cluster- Khairpur Activities

Approval of PC-II Release of Funds Cluster visits/meetings Advertisement Seminar/Workshop Final Report

Weeks 1 2 3 4 5 6 7 8 9 10

Guava Cluster- Larkana Activities

Approval of PC-II Release of Funds Cluster visits/meetings Advertisement Seminar/Workshop Final Report

Weeks 1 2 3 4 5 6 7 8 9 10

C.

Year wise estimated cost

Rs. 18.5 Million will be required for the survey / feasibility, seminars and workshops for all the three clusters. Clusters Rice Larkana Cotton Ginning Vegetable Processing Mango Hyderabad Mango - Mirpurkhas Mango - Sanghar Red Chillies Kunri Dates-Khairpure Guava Total Estimated Cost (Rs. in Mn) 3.0 2.5 2.5 2.0 2.0 2.0 1.5 1.5 1.5 18.5

D.

Manpower requirements

Two persons from P & D, One person from SMEDA will directly involve in this project. Other persons may be deputed from the respective departments as required to oversee this project.

Financial plan (For Rice)

Sr. No 1 2 3 4 5 6 7 8 9 10 Consultants Cluster Visits / Meetings Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons) Banners Stationary Info Packs Memento(s) Programs Advertisement for hiring of consultants (English & Urdu) Cost (Rs.) 120,000 2,000,000 100,000 100,000 30,000 50,000 10,000 40,000 40,000 10,000

11

Miscellaneous (At least 20 % of Total Cost) Total

500,000 3,000,000

Financial plan (Cotton Ginning)

Sr. No 1 2 3 4 5 6 7 8 9 10 11 Consultants Cluster Visits / Meetings Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons) Banners Stationary Info Packs Memento(s) Miscellaneous (At least 20 % of Total Cost) Total Programs Advertisement for hiring of consultants (English & Urdu) Cost (Rs.) 100,000 1,800,000 100,000 100,000 30,000 50,000 20,000 50,000 40,000 10,000 200,000 2,500,000

Financial plan (Vegetable Processing)

Sr. No 1 2 3 4 5 6 7 Consultants Cluster Visits / Meetings Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons) Banners Programs Advertisement for hiring of consultants (English & Urdu) Cost (Rs.) 100,000 1,800,000 100,000 100,000 30,000 50,000 20,000

8 9 10 11

Stationary Info Packs Memento(s) Miscellaneous (At least 20 % of Total Cost) Total

50,000 40,000 10,000 200,000 2,500,000

Financial plan For Each Mango Clusters: Hyderabad, Mirpurkhas and Sanghar
Sr. No 1 2 3 4 5 6 7 8 9 10 11 Consultants Cluster Visits / Meetings Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons) Banners Stationary Info Packs Memento(s) Miscellaneous (At least 20 % of Total Cost) Total Programs Advertisement for hiring of consultants (English & Urdu) Cost (Rs.) 100,000 1,300,000 100,000 100,000 30,000 50,000 20,000 50,000 40,000 10,000 200,000 2,000,000

Financial plan (For Each Red Chillies & Dates Clusters)

Sr. No 3 4 5 6

Programs Cluster Visits / Meetings / Workshops Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons)

Cost (Rs.) 1,000,000 140,000 20,000 50,000

7 8 9 10 11

Banners Stationary Info Packs Memento(s) Miscellaneous (At least 20 % of Total Cost) Total

10,000 10,000 10,000 10,000 250,000 1,500,000

Financial plan (For Guava)

Sr. No 3 4 5 6 7 8 9 10 11

Programs Cluster Visits / Meetings / Workshops Advertisement (2 Newspaper, English & Urdu) Venue Lunch (100 Persons) Banners Stationary Info Packs Memento(s) Miscellaneous (At least 20 % of Total Cost) Total

Cost (Rs.) 1,000,000 140,000 20,000 50,000 10,000 10,000 10,000 10,000 250,000 1,500,000

IV

EXPECTED OUTCOME OF THE SURVEY FEASIBILITY

STUDY AND DETAILS OF PROJECTS LIKELY TO BE SUBMITTED AFTER THE SURVEY.

a. Preparation of feasibility studies for relevant SME projects b. Validation / Preparation of diagnostic study conducted by SMEDA c. Meetings with relevant stakeholders like farmers, growers, traders, manufacturers / processor, exporters, Government organizations, relevant associations and trade bodies etc. d. Review of Project reports prepared by SMEDA and modifies the project reports as per requirement. e. Identification of cluster projects in the context of Public-Private-Partnership (PPP) mechanism. f. Recommend pilot projects / CFCs to be carried out by Government of Sindh. g. Preparation of comprehensive report and presentations (presentation will be presented at seminar while report will be shared with the participants) h. Consultant will moderate and record the proceedings of the seminar. i. Consultant will prepare and present the final report.

_____________________ Prepared by: Nawab Pirzada, Assistant Chief (Industries) Planning & Development Deptt:

_______________________ Checked by: Bisharat Ahmed Channa Chief (Industries) Planning & Development Deptt:

___________________________ Approved by: Mohammad Ali Khaskhely Secretary (Planning) Planning & Development Deptt: Government of Sindh