Competitiveness of banana value chain along Hetauda-Dumkibas road corridor, Nepal: An eclectic approach

Abstract

Government of Nepal has announced a super-zone of banana in Chitwan district and a block in Nawalparasi East district to enhance productivity and commercialization of banana subsector in the Hetauda-Dumkibas road corridor. This study is the first of its kind to analyze the competitive position of banana value chains in the corridor. Using the literature review approach, the paper generated a conceptual framework to assess competitiveness of value chain. A total of 160 producers, 22 traders, 3 wholesale commission agents and 10 agrovets were selected using stratified random sampling method. The pretested semi-structured questionnaires surveys, focused group discussions and key informant interviews were conducted to collect primary data and analyzed using STATA and MS Excel. The study revealed two value chain streams in the corridor- one in Chitwan district and another in Nawalparasi East district. Most of the structure indicators were found similar for both value chain streams. Banana market was monopolistically competitive along both chains. Producers of Chitwan district were more competitive than Nawalparasi East because of their higher benefit cost ratio and higher farm gate price for fingers. The reasons for this were relatively better institutional set up contributing to extension, insurance and training services, and better technological adoption rate in Chitwan district. In addition, the chain stream of Nawalparasi East had relatively lower marketing cost and higher market margin, market efficiency and value addition. The reasons for this were shorter chains and low level of transportation cost. Thus, policy efforts to strengthen local institutions providing extension, training, insurances, market information and credits are recommended to improve the performance of the value chain. In addition, encouraging processing and value addition of bananas should be of concern to development practitioners and policy makers.