Part 2: Export Potential to Nepal

 

Nepal

 

     Nepal is in South Asia.  It is a landlocked country between India and China.  Nepal has diverse topography, with mountains, hills, and terai (Goldstein et al., 1983).  Its population depends on a variety of agriculture.  Some crops grown in Nepal are barley, potato, wheat, rice, millet, and maize (Belbase & Grabowski, 1985).  According to FAO, 2015 following the earthquake in Nepal this April, farmers are in need of immediate grain storage capacity.  It is tremendously important for farmers to be able to store their crops well, so that they may use and sell them at appropriate times.  MiniBulk Agricultural Bags can be a part of the solution by supplying bags at competitive prices. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                         Figure 5: Map of Nepal in South Asia (Cacahuate, 2008,

                                                                   Retrieved from https://commons.wikimedia.org/wiki/File:Map_of_South_Asia.png)

 

 

 

 

 

 

Nepal’s Needs and Bag Benefits

 

     When possible, selectively breeding seed from a previous season can be advantageous and cost-effective for a Nepalese farmer (IRIN, 2012).  Paying for new seed each season is a consistent expense.  Buying hybrid seeds from an international source every growing season can make a farmer intensely dependent on this resource, and may push out indigenous crops (IRIN, 2012).  It can be dangerous to lose indigenous crops and farming systems, as imported stock may not survive natural disasters that indigenous plants would persist through.  Depending on where the seeds are coming from, the varieties available may not be well-adapted to a farmer’s specific climate.  For example, rice seed imported from a very wet area of China may not produce optimal yields in a Nepalese farmer’s field that happens to have trouble retaining moisture.  However, the farmer might have another option.  Instead of paying for new seed each growing period, farmers can produce a variety adapted to their specific location.  Selecting for better crops involves taking seeds from plants that grew the best in a certain area, and planting those seeds the next year (Schlege, 2009).  With simple seed cleaning, drying, and proper storage, seeds may be planted the next year with good chance of germination success (Pleasant, 2006).  Farmers may also selectively breed their plants to select for the best traits (Schlege, 2009).  They can use the pollen from one desirable plant to fertilize another desirable plant’s flower, and produce seeds (Schlege, 2009).  The goal is for the next generation of plants to have as desirable or more desirable traits than their parents (Schlege, 2009).  For example, ear and tassel bags may be used to selectively breed maize (Hallauer et al.,1988).  When so much effort is put into preparing those seeds for planting, it is essential to make sure they last until then next season.  MiniBulk’s agricultural bags help optimize the conditions for storing that seed for future germination.  This is especially significant in Nepal right now, because they must be able to plant new crops to supply food in the coming seasons.

     It’s also important to be able to store food simply for later consumption.  The crop yield needs to subsist farmers’ families until the next harvest (Rockefeller, 1969).  Any seed that is being sold is very important for a family’s income (Rockefeller, 1969).  If seed does not keep for very long, a farmer must sell it early after harvest, when supply is higher than demand.  It’s optimal to sell when demand for a product is high, and supply is low (Taverner, 2015).  If a farmer is able to use agricultural storage bags to extend the life of their grain, they are at an advantage.  They can then choose to sell the grain when economic supply is low, and prices are high.  MiniBulk Agricultural Bags can be a part of the solution by supplying bags at competitive prices.  What seems like a simple bag is really an opportunity for greater food security and greater economic security.

 

 

 

 

 

Transportation

 

     MiniBulk bags forego many barriers to import by not being composed of plant, animal, or biohazardous material.  The fact that this product doesn’t require refrigeration or stringent timelines leaves transportation options fairly open, and the mode of transport may be chosen based on the current economic situation.  This helps reduce costs over time, and decreases the imminent impact of fluctuating fuel prices on cost of the final product. 

     These bags may be transported from Toronto to Kathmandu by a cargo company such as A1 Freight Forwarding (2015).  They would be driven on a transport truck from Toronto to the Port of Montreal.  From there, they may be shipped to the Port of Kolkata in India.  There are alternate routes, such as trucking bags from the Calgary warehouse to Port Metro Vancouver, and shipping from there.  However, the cost of trucking the product from the warehouse to the coast would be greater than the shorter trip in Eastern Ontario.  Driving from Calgary to Vancouver covers approximately 972.5 km, while the trip from Toronto to Montreal is only about 541.2 km (Google Maps, 2015).  Since Nepal is a land-locked nation, docking in the Port of Kolkata would be followed by another truck trip to Kathmandu (A1 Freight Forwarding, 2015).  A1 Freight Forwarding provides both truck and ship transportation.  Their trucking arrangements cover both the trip from Toronto to the Port of Montreal, and from the Port of Kolkata to Kathmandu.  Trips may be booked over telephone by calling 1-800-280-0277, or booked online at http://www.a1freightforwarding.com/.  Once in Kathmandu, the product may be distributed to customers through existing agricultural supply networks, such as National Biosolutions Nepal (National Biosolutions Nepal, 2015).  They may be contacted via telephone at 977-984-746-0634.  This makes it easier to integrate the product into society, as it will be supplied to farmers by people who they already are obtaining agricultural products from.  The whole trip would take approximately 32 days (Cargo Router, 2014).  As mentioned, this time frame is no issue, due to the durability of the polypropylene product.

 

 

 

 

 

Trade Documentation

 

     As for the legalities of export and import, the documentation is less severe because no biological materials are being traded.  The standard Canadian export permits must be completed.  They may be accessed via http://www.tradecommissioner.gc.ca/eng/step7.jsp (Canadian Trade Commissioner Service, 2015).  Documentation for import to Nepal may be accessed through Nepal’s Ministry of Finance’s Department of Customs via http://www.customs.gov.np/en/.  The Department of Customs will tax the imported materials (Government of Nepal, 2015).

 

 

 

 

Nepalese Buyers

 

     MiniBulk agricultural bags can be beneficial to a variety of farmers.  The subsistence farmer must keep his seed safely for future planting and for his family to consume (Rockefeller, 1969).  Smaller versions of the agricultural bag will be more attractive to him.  Small farmers in a community may also group together.  They can pool their resources to purchase large bags to share, or buy smaller bags in bulk and split them between themselves.  Larger, more commercial farmers will also utilize agricultural bags.  It is very important to store their large quantities of grain safely.  They may be interested in the larger versions of the agricultural bags.  The optional heavy-duty straps may be valuable to them, as the heavy bags may be picked up using a forklift in transport to a market (MiniBulk, 2015).  MiniBulk’s option to print logos on bags may also be advantageous to these farmers, as they can support a professional marketing strategy (MiniBulk, 2015).  Wholesalers can also make use of agricultural bags to collect, transport, and sell grain.  They may use large bags to combine large amounts of grain, or use them to place smaller bags into.  Applying logos may also be beneficial to these wholesalers over time (MiniBulk, 2015).

 

 

 

 

 

Competition

 

     The small farmers may find it reasonable to attain their small bags for around $1 (Raizada, 2015b).  To make this possible, it is important for suppliers to keep the transport and trade costs at a minimum by selling in bulk and transporting overseas when fuel costs are low.  The larger-scale farmers may find it unreliable that the large bags around $10 have such an ability to fluctuate in price.  There will be steadier pricing from companies on the same continent, which use their own raw material of oil by-products to produce the bags.  For example, China shares a border with Nepal.  They would have minimal freight transportation costs as an exporter in comparison to Canada.  This reduction in cost would flow down to the farmers.  This gives Asian companies a large advantage over MiniBulk, BAG Supplies Canada Ltd., and other North American companies.  Although MiniBulk’s product is so customizable, farmers may access products that serve their needs for a lower price.  Similar bags which hold up to a tonne of product may sell for as little as $1 per bag on Alibaba from China, while it may cost up to $10 coming from Canada (Alibaba, 2015).  Another reason for this price difference is the availability of cheap labour (Chan, 2003).  Even though MiniBulk’s product may currently be more specialized to meet a farmer’s needs, and can have similar pricing at certain times of the year, the whole unreliability of the final price of the product makes it insensible to import large quantities on a regular basis.  China-based companies like Linyi Huailiang Plastic Co., Ltd. (2015) may make even more customization choices in the future, for a lower cost.  Asian countries also have shorter delivery times because they are so much closer to the destination.  If the trade with Canada is done only when the final price point is low, then MiniBulk bags could be part of a beneficial exchange.  However, the benefits are thus limited.

           

 

 

 

 

Analysis of Negative Impacts

 

     Since Nepal is in such a great need for agricultural storage equipment, there is not foreseeable harm done to Nepalese people by the import of this product (FAO, 2015).  Whether it is coming from Canada, China, India, or another country, these bags will make positive impacts on the Nepalese economy through their supply chain.  Giving farmers the ability to keep their grain and sell it more effectively will also have long-term economic benefits, as the farmers reuse the bags over years (MiniBulk, 2015).  Ultimately, the major factor to encourage the import of this product is the positive impact it can have on food security.

 

 

 

 

 

 

Government Initiatives

 

     As can be seen in Table 1, Nepal’s capital share of agricultural expenditures is 46% (Lowder et al., 2012).  This is slightly higher than the simple average of 42% for the low- and middle-income countries studied (Lowder et al., 2012).  There are significant governmental investments already being made in Nepal’s agriculture.  Agricultural storage bags supply an opportunity for noteworthy further investment.

 

                                            Table 1: Found in Who invests in agriculture and how much? (Lowder, S.K., Carisma, B., & Skoet, J, 2012,

                                                             ESA Working paper No. 12-09. Retrieved from http://www.fao.org/3/a-ap854e.pdf)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     If MiniBulk or another Canadian agricultural bag supplier is chosen to help implement the use of these bags, it may be incorporated into the SAK Nepal bilateral trade initiative.  This project stimulates both the Canadian and Nepalese economies, as useful and beneficial foods and technologies are traded between the two countries with an agricultural focus (Raizada, 2015a).