Case Holder:
Hamid Sadat Water and Beverage Production Company

Contact details

Email: hamidsaadat08@gmail.com

Water and Beverage production – Grape Juice

Promotion of Youth Employment in Fragile Settings

Background & Context

Grapes play an important role in the economy of Afghanistan and have been cultivated for centuries. Unfortunately, the vast majority of grapes are grown on earthen mounds, resulting in poor quality and high losses due to disorders and pests. Afghan grapes are well known in the region and offer promising sources of revenue for exporters.

More grapes are grown in Afghanistan than any other fruits, comprising nearly half of the total fruits produced, thereby playing an important role in the agricultural economy. Each year grapes are exported (both fresh and dried) to countries such as Pakistan, India, England, Japan, Russia, Germany, France, the UAE and Central Asia. Grapes in Afghanistan are consumed fresh, dried and in the form of grape juice. Grapes are grown in nearly every part of the country, with commercial production in the provinces of Kabul, Parwan, Kapisa, Kandahar, Helmand, Jawzjan, Herat and Ghazni. The total area of grapevine cultivation in Afghanistan is estimated at more than 62,000 hectares with a total annual production of more than 610,000 metric tons1 . Average farm yields are approximately 9,800 kg/ha.

***

The Problem

The R2J Market System Analysis for the Grape and Raisin Sector  (MSA Oct-2015) estimated 5000 farmers as being involved in grape farming in Samangan and Balkh provinces. The Feroz Nakchir and Hazrat Sultan districts of Samangan province as well as the Balkh and Dawlat Abad  districts of Balkh province are well-known areas for grape production.

The main negative outcome impact to grape farmers is low income from grape orchards. This is due to several underlying constraints which hinder the good performances of this sector. One of the issues identified was the lack of value addition to grapes as post-harvest processing in this sector. Currently the fresh grapes produced in Feroz Nakchir, which are of the high quality Taifi and Hussain grape strain, are exported to regional markets (Pakistan, India, etc.) and sold at low prices during the grape season. Afghanistan imports various kinds of grape juices from Iran, Turkey and Pakistan which are of relatively low quality and are highly priced.

Objective

The overall objective of this intervention was to create alternative markets and improve access of the grape farmers to high-paying markets through grape juice processing as a new value added product in the country. There were several beverage manufacturing factories operating in the country, especially in Mazar, but they did not have the facilities to process grapes into juice. A local processing company would be assisted in enhancing its capacity to produce good quality grape juice.    This local value addition would offer an added incentive to local farmers/collectors to produce more and earn more from the selling of grapes to a local processor.

Value Proposition & Activities

The pilot project was carried out for four months, from October 2106 to January  2017. From Oct 21 till Nov 27, HSWC purchased and processed about 79 tons (78,950 kg) of grapes from farmers via the middle-men with the total amount of 2,052,700 Afs ($31,102). Out of this amount, 1,973,750 Afs ($29,905) was paid to the farmers and 78,950 Afs ($1,196) received by middle-men as their commission and wages. A further 2.2 tons (2,200 kg) of grapes were purchased from Mazar markets as the company received juice orders from the wholesalers and the grapes were not available from farmers.

During the mentioned period, HSWBC produced and sold 15,951 packages (1 package is 12 bottles) of grape juice (191,412 bottles)  According to the supply records of the company, the grape juice marketed successfully to wholesalers and retailers in three provinces in the North  – Balkh, Jowzjan and Faryab districts. One package (12 bottles) of grape juice is sold at 230 Afs ($3.5) or 19.2 Afs/bottle ($0.30).. In total, the company earned 286,972 Afs ($4,348) as net cash income out of this business. During this pilot phase, 3 company workers worked for 3 months on a monthly salary and 6 workers worked (3 men 3 women) as daily workers for one month. In terms of capacity building, during this pilot phase 3 workers were trained in grape juice processing by the visiting consultant. This is a valuable human resource that the company can draw on as needed.

Learning & Results

The middle-men are very happy with this new initiative and saw  it as a serious business for themselves as well as for the others in the value chain. They received the wages on time in cash, and supported their businesses with extra subsistence.

The wholesalers in Mazar markets were very happy with this initiative and proposed further improvements in grape juice processing (e.g. packaging, labeling, etc.). They prefer local products to be promoted as being of good quality and meeting international standards. They earned about 287,118 Afs ($4,285) from buying and selling HSWBC Company grape juice.

After the pilot the company continued to produce grape juice and by the end of 2017 the intervention had produced the expected results as follows:

  • Additional $14,160 income created for 1,100 farmers
  • Sustainable improved jobs created for 143 market players (118 farmers, 25 transporters)
  • 124 new jobs created for at least 5 months (9 middle, 45 company level workers,  women and men, and 70 grape collecting workers)
  • Additional $12,313 income created for middlemen
  • Additional $44,22 income created for the processing company
  • Additional $38,787 income created for wholesalers
  • Additional $113,489 income created for retailers
  • Additional $66,866 income created for workers/labourers
  • Improved technical know- how for 3 skilled workers at the company.
  • 1100 farmers trained in post-harvest handling issues.

Conclusion & any future variation

This initiative created a positive impact on the grape market system, facilitating a demand-driven model among the market players: grape producers, collectors and HSWBC. As a result of this initiative 1) the income of the farmers as well as the collectors has increased through higher prices for the grapes supplied to HSWBC for processing; 2) it paved the way to involving more skilled and non-skilled labourers bringing better jobs and work opportunities to farm and non-farm workers, including poor women and men and migrants.

The project has also discussed with other companies interested in and willing to invest in grape juice processing and production, with plans to diversify and promote new grape products such as grape jam, grape concentrates, etc.