The U.S.-Pakistan Partnership for Agricultural Market Development (AMD) activity in Pakistan is a USAID funded activity implemented by CNFA with the goal of supporting the development of Pakistan’s commercial agriculture, particularly through improving the ability of Pakistan’s agriculture and livestock sectors to meet both international and domestic demand and requirements in targeted product lines in citrus, mango, high value/off season vegetables and livestock. AMD envisions transforming the four targeted product lines into efficient, private sector-led value chains that deliver competitive products to domestic and export markets. AMD’s targeted training, matching grants, and technical assistance will leverage private sector investment and encourage innovation. Together, these approaches will support upgrading, streamline supply chains, optimize profit margins, increase participation of women entrepreneurs, and ultimately make Pakistani meat, HV/OSV, citrus and mango more profitable and more competitive.
In Pakistan, Sindh has been the major producer of chilies, followed by Punjab and Baluchistan. According to the Pakistan Crop Reporting Services Statistics, in the year 2011-12 Pakistan produced 40,414 tons of red chilies on around 24,776 hectares, out of which Sindh had a production share of about 24,113 tons from an area of 13,853 thousand hectares, with an average yield of 1.74 tons per hectare. In Sindh, a small town of Kunri, once called the “chili capital of Asia” alone produces 55% of the province’s entire produce. Other cultivation hubs are Mirpur Khas, Sanghar, Badin, Tando Muhammad Khan, Khairpur, Shikarpur, and Ghotki. The main varieties from Kunri are desi, mexi, and nageena while talhari, a winter variety, comes from Badin.
The varieties grown in Pakistan are of high quality but the country has realized only a fraction of its potential as a producer of red chilies. Sindh in particular, has recorded a decrease in chili production from its record high level in the year 2009-10. According to the Pakistan Crop Reporting Services Statistics, Sindh production in 2011-12 was only 21% as compared to total production of around 188,859 tons in 2009-10 on 74,784 hectares. Pakistani red chilies fetch lower prices than the Indian varieties, despite the market attesting to being of better quality & flavor. The decrease in production is attributed to improper harvest techniques, handling, drying and post-harvest handling.
The dried chili industry in Pakistan has previously been one of the major success stories for smallholders in semi-arid areas under low-tech irrigation. Smallholders often lack the means to improve their crops with modern methods, and dried chilies have added to their annual income. However, during the past 10 years, food safety regulations have come into play in international markets with the result of limiting the participation of Pakistani dried chilies.
The drastic decline is associated with one specific problem: Aspergillus infection in chili and the subsequent poisonous fungal metabolites generally called aflatoxins. Most export markets have specific threshold limits for aflatoxin toxicity. Around 35% of the rejections of chili exports were solely due to excessive levels of aflatoxins found in the chili from Pakistan. After the initial setback, exporters and processors, as well as national agricultural research institutions, worked hard to solve this complicated issue. The menace of aflatoxins can be brought under control through a mix of good agricultural practices and proper harvest and post-harvest management.
To provide an alternative market and confront the issue of aflatoxin in chilies and other horticulture products produced in Pakistan, AMD proposes to mobilize private sector investment in either the commercial production of chili paste or the commercial extraction of oleoresins from fresh products with a critical focus on chilies. In order to equip the Pakistani Chili industry and provide an alternate viable business solution. Supporting investments in establishing commercial processing of chilies will help streamline the supply chain, optimize profit margins, possibly increase participation of women entrepreneurs, and ultimately make Pakistani vegetable sector more profitable and more competitive.
Oleoresins are extracted natural aromatic liquid containing essential oils and resin. They are the concentrated liquid form of the spice/herbs/plants and reproduce the character of the respective spice and spice oil fully. They are obtained by the solvent extraction of the powdered dried spices with the subsequent removal of solvent or through the super critical CO2 extraction method. Oleoresins are highly concentrated and hence provide a very economical method of flavoring products. They are also easier to control for quality, cleaner than the equivalent ground spices and are more stable when heated. The main products in a spice oleoresin plant are oleoresins of chili, pepper, ginger and turmeric. The co-products are the corresponding spice oils, which are widely used in food and pharmaceutical industries.
Oleoresins provide a more complete flavor profile than essential oils. Further advantages are the concentration at source of the product and the minimizing of color losses (capsanthin breakdown). The color loss in paprika oleoresin is reduced to approximately 1-2 % per year only as opposed to 2-4 % per month in compressed whole pods and up to 5 % per month in paprika powder. These color losses are caused by oxidation and are greatly influenced by exposure to oxygen, light and heat.
Chili paste is a value addition normally for B & C grades of chili sorted out from the fresh and dried chili packing process. The lower grade chilies are processed through a grinding and milling process, then adding water and boiling the mix to a concentrate without losing thearoma and flavor of the natural hot chili peppers. Chili paste is a condiment that adds spice and flavor to a sundry of food products, from Asian recipes to Western favorites.
Seeking out and understanding sustainable and rewarding markets for the value-added oleoresin and chili paste will be critical towards realizing the full potential of the new product. Therefore, a thorough understanding of the international oleoresin and chili paste market place will be necessary to identify suitable market positioning and price points.
Objective of the Technical Assistance
The objective of this consultancy is to conduct detailed primary and secondary research on oleoresin and chili paste export markets. The scope of work of the consultant would entail analysis and recommendations for high potential market destinations, based on empirical evidence, stakeholder consultation and industry insights.
The Associate STTAs tasks will include but not be limited to:
· Conduct a thorough literature review of existing reports and market studies relating to chili oleoresinmarkets;
· Schedule assignment orientation meetings with relevant AMD product-line specialist, Value Chain Director and Chief TechnicalAdvisor
· Draft the research design, identifying kay primary and secondary data sources and collectionmethodology
· Research reputable trade data repositories and extract oleoresin and chili paste market information and conduct analysis, identifying major varieties, market shares, growth trends, niches, major players etc.
· Conduct interviews with key industry players and identify product quality parametersand potential placement on the value spectrum in the internationalmarket
· Identify tariff and non-tariff barriers for leading export destinations for processed chili products
· Identify prevailing practices relating to product packaging and supply chain management for commercial trade of chili oleoresin and chilipaste
· Conduct a SWOT analysis in light of the research and empirical evidence gathered under the assignmentscope
· Identify top five potential export competitors for Pakistani chili oleoresin, chili paste based on current and proposedvarieties;
· Identify top five export markets for Pakistani chili oleoresin, chilipaste;
· Provide product demand estimate and growthforecast
· Provide indicative unit value for the respective destination markets
I. Draft research methodology and reportoutline;
II. Chili oleoresin and chili paste trade data for past five years, complete with analytics in excel;
III. Final report on market assessment of both chili pepper oleoresin and chili pepper paste, covering:
b. Chili varieties
d. Major players
f. Market niches
g. Tariff and non-tariff barriers
h. Leading importing businesses
i. Packaging andlogistics
j. Recommendations on priority markets, product positioning and pricing