final evaluation report olive oil - gs & rm

Italian Agency for Development Cooperation (AICS)

Italian Ministry of Foreign Affairs and International Cooperation (MAECI)

APPRAISAL OF PAKISTANI OLIVE OIL VALUE CHAIN

Key Findings and Recommendations

Final Report

Evaluation team: Giuliano Soncini, Evaluation expert Riccardo Montanari, Agribusiness expert

Islamabad August 2016

Giuliano Soncini Riccardo Montanari 2

Table of Content

Acronyms

I Executive Summary 5 II Introduction 10 III Background and context 12 IV Results achieved in the olive-oil supply and value chain 17

V The reviewed SWOT analysis 20

VI Completeness, adequacy and relevance of information on cultivation techniques,

production costs, organoleptic characteristics of the final product and the related market prices in order to identify the intervention guidelines of the Italian Cooperation VI - i Cultivation techniques 21 VI - ii Production costs 23 VI - iii Organoleptic characteristics of olive oil 26 VI - iv Market prices 26

VII Systematisation of lessons learned on previous experiences from the olive oil projects financed by PIDSA 30 VII - i Agronomic and technical perspective 31 VII - ii Processing/milling facilities perspective 32 VII - iii Capacity building perspective 33 VII - iv Market perspective 33 VII - v Political perspective 34

VIII The survey’s results concerning the draft of the action plan focussed on training

needs of all the stakeholders of the olive oil sector, including, but not limited, the quality aspects of production and 4Ps marketing mix (product, price, place and promotion) 36

IX Consistency of Italian public and/or private partners to be involved in specific

bilateral cooperation programs 37 X The solidity and reliability of the key institution/bodies identified as agents of

development of olive oil sector in Pakistan, with particular attention to the following: i) entity that might be involved in public - private partnerships, ii) initiatives that may represent an added value for olive oil supply and value chain to be eventually co-founded the Italian government and iii) initiatives that can increase the profitability and sustainability of on-going public investment.

37


XI The results, in terms of participation and awareness, of the attendance of three

seminars/workshops in which it has been illustrated the guidelines for the development of the olive oil industry and the groundwork for drawing up a proposal of a strategic National Plan for the Development of Olive Oil Sector.

38 XII Conclusions and Recommendations XII - i Conclusions 39 XII - ii Recommendations XII - ii - a Policy 42 XII - ii - b Projects 43 XIII Lessons Learned 44

Annexes 1. Giuliano Soncini and Riccardo Montanari Terms of Reference 45 2. List of documents and other reference materials consulted by the evaluators 51 3. Terms of Reference for Agribusiness Supply and Value chains 53


Acronyms AICS Italian Agency for the Development Cooperation DGCS General Directorate for the Development Cooperation (now AICS) EAD Economic Affairs Division FAO Food and Agriculture Organization FATA Federally Administered Tribal Areas GoP Government of Pakistan IAO Istituto Agronomico per l’Oltremare - Agronomic Institute for the

Overseas MAE-DGCS Italian Ministry of Foreign Affairs - General Directorate for the

Development Cooperation (now MAECI-AICS) MAECI Italian Ministry of Foreign Affairs and International Cooperation MFS&R Ministry of Food Security & Research MPDR Ministry of Planning, Development & Reform NARC National Agricultural Research Council NWFP North Western Frontier Provinces PARC Pakistan Agricultural Research Centre PBS Pakistan Bureau of Statistics PEEP Punjab Enabling Environment Project PERI Punjab Economic Research Institute (public body within the Government

of the Punjab) PIDSA Pakistan Italian Debt Swap Agreement PODB Pakistan Oil Development Board PPAF Pakistan Poverty Alleviation Fund SWOT Strength Weakness Opportunities and Threats TVET Technical and Vocational Education and Training


I Executive summary (main findings and recommendations) The Olive oil value chain has been supported by the Italian Cooperation since 1986 with the project Research & Development Project for Vegetables, Olives, Citrus and Deciduous Fruit Crops (Punjab, NWFP, Baluchistan and at NARC Islamabad). Several other projects followed:

- Promotion of production and commercialization of Olive oil in Pakistan; - Technical assistance and support to line ministries in the agricultural sector with

emphasis on olive production - Afghanistan, Nepal and Pakistan - AFNEPAK, and - Promotion of olive cultivation for economic development and poverty alleviation within

PIDSA programme. The upcoming Professional Capacity Building and Extension in Agriculture – TVET could also have an important component related to the Olive oil value chain. Since the year 2000, several other projects have been funded by the Government of Pakistan and more recently by the Provincial Governments, showing the great interest in developing the Olive oil sector. There are several reasons that make the olive oil value chain important for Pakistan:

- the import of edible oils is currently reaching 2.150.000 tons/year and the national production is of 910.000 tons/year;

- the total value of imported edible oils in Pakistan is often reported as the second highest value, 1,62 Billion € (2,05 Billion USD) after oil import for energy, transportation and industrial purposes, (estimated in 13,5 Billion € - 15 Billion USD - in 2014-2015);

- Olive trees could grow in marginal areas where no other crops could grow, therefore not competing for land with current agricultural systems;

- planted olive trees and natural forests of wild olives contribute to land protection and improve microclimate locally;

- Olive oil and table olives could contribute to food security and poverty reduction. The Italian Cooperation fielded a support mission from 12/05 to 03/07/2016 composed by Mr Leonetti, Mr Valle and Mr Vannini to advise on the advancement of the olive oil value chain. Mr Giuliano Soncini, senior evaluator, and Mr Riccardo Montanari, agribusiness expert, were requested by AICS Islamabad to perform an overall assessment of the olive value chain and produce the current report, capitalising on the results and recommendations of the other MAECI mission. The evaluators were in Pakistan from 27/06 to 30/07/2016 (Soncini) to 10/08 (Montanari) and also performed the ex-post evaluation of the IAO - Swat Valley fruit projects, phase I and II. The Leonetti - Valle assessment has been integrated with an overall analysis of the supply and value chains, new estimates of production and sales costs, identification of possible typologies of producers, SWOT analysis. Details are in the ToR, in Annexe 1.


The main findings for the edible oil market are as follows:

a. the edible oil trade and consumption in Pakistan is covered by: i. import of several types of edible oils (palm, soya bean, sunflower and other edible

oils); ii. national production;

b. the import of edible oils is 95 % low-priced palm oil, which is in part further processed,

hydrogenated, and marketed as vegetable ghee; c. the national production of edible oil is mainly constituted by cottonseed oil, also a low

price commodity;

d. Desi ghee and butter (from buffaloes, cows) also satisfy part of the edible fats national market. The country production is comparable in size to the production of edible oils (0,68 Million tons ghee, 0,91 Million tons edible oils). Around 70% is for self-consumption by “subsistence” and “nearly subsistence” farming rural population;

e. national production of Olive oil is difficult to assess because of absence of monitoring

systems set up by projects in the past and also because of logistical reasons: dispersion of planted sites, distances, accessibility, leading to an overall and high cost of information collection;

f. currently commercialised Olive oil is almost totally imported. Although some quantities could be small-scale productions for self-consumption and remain “invisible” in statistics, the current estimates for national production report 5 - 6 t/year. The internal market of olive oil is currently satisfied by the imports of 1 300 t/year and has a potential absorption of 2 500 t/year;

g. the experts estimate that the internal market of olive oil, in the next future, could be covered at around 70 % by national production, around 1 800 t/year; while the remaining 30 % would likely remain a niche market, with very high quality/high price imported oil. Although the marketed quantities of olive oil appear to be small, the value and market price per kg is several times higher than other edible oils. Currently, the internal market of edible oils is largely covered by products that have a retail price of 1/6 or less compared to imported olive oil;

h. a careful measurements campaign and an assessment of production costs and margin, generating real field conditions figures are strongly needed. It is not advisable to rely on estimates, projections; ranges produced starting from published data and extrapolations from other areas;

i. estimates done during this evaluation, conservative and more realistic than figures often found, show that a more careful approach to new projects procedures and communication should be adopted. Olive oil is a mature sector in world economy where Pakistan is entering and still tuning the several stages of the value chain. It must be clear that planning should be done on long-term basis and benchmarks to be reached could help the whole process;


j. the expectations grew enormously, and the risk of deception has to be avoided,

clarifying the range of interventions and which reasonable objectives can be achieved; The emerging, identified technical options for planted olive tree products are:

1. Mixed marginal orchards. These are small scale production units on marginal lands. Olives are for direct processing as table olives/pickles/oil and self-consumption or local market. It encompasses the poorest segments of the rural population. Costs per kg of product are higher because of the small scale. The investment seems not to be profitable;

2. Smallholder and family producers. Medium/small scale production of olive oil

for self-consumption and/or sale, if logistical infrastructure is there, such as grinding mills, roads, transportation, etc. Production costs are midway between the marginal orchards and the commercial farms. The investment seems able to produce some net profit;

3. Large scale commercial estates. Such farms are to be established, although the

process started. The olive oil production aiming at the internal market first and even export in the sub region if costs are competitive and other conditions arise. Production costs are the lowest, compared to the other types identified. There is a probability to produce net margin from the investment;

The existence of large wild olive trees forests create some opportunities:

1. Grafting/top working to produce commercial quality olives; 2. Harvest of wild olives for processing/oil extraction for human

consumption/cosmetics production; 3. Soil protection, erosion control, carving wood, landscape value.

The analysis of concluded or on-going projects, implemented up to now in Pakistan on the olive value chain, lead to the following conclusions:

a- The Olive oil value chain, although not the most difficult in tree products, is anyway requiring the availability of information, knowledge, practical skills and considerable overall attention to details in planning and implementation, this, in order to became viable and explicate the potential that has been initially recognised in it;

b. This potential has led in the past to several projects and investments, at National,

Provincial and International co-operation level;

c. New funds will be invested in support to this value chain, again, at National, Provincial and International co-operation level (examples: the TVET programme funded by the Italian Cooperation, the PEEP program funded by USAID, etc.);

d. The fact that the activity involves products for human consumption requires attention to safety/health issues (e.g.: treatments with insecticides, fungicides, processing, conservation, etc.);


e. Overall information on projects’ activities and results is of difficult access. The

baseline information, other primary data, figures to draw conclusions and lessons resulting from field activities, required to decision-making and to guide upcoming projects, are scattered and often contradictory;

f. Many figures are recurrent in reports and papers, however the original primary data is often unclear. Calculations in plans and estimates are frequently offering a range. The evaluation team found several questionable figures that may lead to unrealistic forecasts1. This point is specifically addressed in the recommendations;

g. The emphasis on evidence-based decision-making currently necessary for governments and organizations puts a greater focus on reliable figures and statistics. The role of measuring and monitoring activities, results and progress towards development goals and targets is fundamental;

h. It is unclear if a proper system of monitoring and evaluation was set up and is still working, which type of information was/is collected, if it is standardised and, finally, if collected figures are processed;

i. The numerous projects implemented since 1986 have established an estimate of at least 2500 - 3000 ha of olive trees plantations (GoP-PSDP, PARC-PIDSA projects alone respectively1180 ha and 1816 ha);

j. These plantations are likely to yield olives in commercial quantities starting from 2017. It is the right time to set up the necessary steps (harvest, transport, milling, storage, packaging, marketing, etc.) to further foster the value chain, including extraction plants (mills and related infrastructure) and, finally, produce commercialisation;

k. In this complex and rapidly evolving context, with activities planned at National, Provincial and International co-operation level (MAECI-AICS, USAID, JICA), it is of high priority to formalise the National Compliance Governance Framework for Olive oil value chain;

l. The need to set up a national framework for olive-oil value chain was identified by the technical mission of Mr Luciano Leonetti, Mr Stefano Valle and Mr Andrea Vannini, 05-06/2016. This proposal is strongly supported by the evaluation mission team and further developed in the recommendations;

m. The risk of not having such a framework is that several components of the value chain are in some cases lacking or developed in isolation, dispersed and do not benefit of existing knowledge and past experiences. The involved sectors span from sapling production/import, to cultivars choice, plantations, phyto-sanitary aspects, pest control, harvest, processing options, commercialisation, quality standards, legal issues, monitoring, research, etc.

1 E.g.: figures on olive production per plant, % of extracted oil from olives, prices for produce.


The recommendations for future orientation and follow-up action to Donor and Government includes: Policy recommendations are aligned and in support of the proposals by Leonetti/Valle/Vannini mission 05-06/2016. a) It is fully recognised the need to develop a National Compliance Governance Framework for Olive oil supply and value chain. This is necessary to allow National bodies to maintain a level of control in the value chain governance and have new activities, rapidly increasing in number, in a clear framework, favouring an ordered growth of Olive oil sector’s development and commercial projects. b) The second recommendation is to set up Olive Oil Units at the Ministry of Food Security and research/Agriculture, in close liaison with the Ministry of Plan, with policy preparation support and technical roles (Olive oil Act and National Olive oil Plan). This also in order to centralise existing information on past and new projects, focusing on technical issues. Although it could already be difficult to assess the hundreds of sites and activities set up in more than 10 years, it is definitely possible to select the best clusters/sites and initially concentrate efforts on these. c) The third recommendation is the urgency to clarify and fill normative gaps in order to obtain a legal framework covering sectors like recognition and registration of cultivars introduced in the Country, possible new varieties, regulations for the propagation of olive trees, import of saplings, certification of nurseries able to sell disease free and genetically identified plants. It emerged that with the current legislation, although plants are regularly produced in nurseries, it is illegal to do this. It is clearly unreasonable - and enormously risky - to depend on import of plants to develop an olive tree value chain. It is strongly advisable to become member of the International Olive Council, (IOC). d) Subventions are strongly recommended in order to favour the initial small scale and marginal land farms set up and the subsequent acquisition of agricultural inputs, fertilisers, drip irrigation systems, etc. It has to be stressed that if the Rural development approach (see section VII) is privileged, then planting on marginal lands could be much less productive, as it has emerged that irrigation is necessary in order to have a constant production. For what concerns the implementation of existing or new projects, the recommendations are as follows: e) Establish a system of monitoring and primary data collection at field level, often very different from research station conditions. Because of logistic costs for field trips, innovative ideas for figure transmission should be explored (e.g.: mobile phone and communication networks/sms, etc. Digital images of plants, fruits, parasites, disease attacks could be sent in many cases via mobile network, samples could be stored and periodically collected). This activity could be combined with the following point f). f) Establish a small network of “model farms”, true “pilot sites”, based on existing interventions and capitalising on investments done in the past by several projects on olive tree


culture 2. Objective of these sites (1 or 2 per province, strategically located) is to produce reliable figures for agronomical parameters and have demonstrations sites where conduct trainings and hands-on seminars for producers. The essential information needed is in field conditions, not research station, where other activities should be carried on. The main primary information required is about plants/ha, plant survival rate, kg of olives produced per plant/ha, olive oil extraction rate %, kg/ha oil production, (organoleptic quality of oil/acidity), farm gate sale price for olive oil and table olives, best adapted and productive cultivars. For each cultural operation costs and hours of work for the various activities: land preparation/ploughing/soil management, fertilisation (organic/chemical), irrigation, pruning, weeding, pest and diseases management, harvesting, transport, milling, storage, packaging. The lessons learned during the assessment are, in extreme synthesis, that the Olive oil value chain is extremely interesting for Pakistan if seen and clearly set in the correct perspective. Information sometimes freely circulated or poorly presented, without the support of correct figures, might mislead and create wrong expectations. The marketed quantities of palm, cottonseed, rapeseed, sunflower, soybean, canola oil, etc. imported or locally produced in Pakistan, without overlooking at ghee made in rural areas for self-consumption are such, that olive oil is realistically not able to substitute imports, from the 2.177.300 tons registered for 2010-2011 by the Pakistan Bureau of Statistics and steadily increasing. The mid-term realistic objective could be to produce a national product that can compete in quality and price with imported olive oils, currently mainly from Spain, and gain a substantial part of the internal market. The potential absorption for olive oil in Pakistan has been estimated in 2500 tons/year. The current traded local production is almost negligible, with 5-6 tons/year, although an unknown quantity is likely to be self-consumed and not appear in statistics. Olive trees planted in the past years are starting now to produce olives in sizeable quantities, so there is ample space, and urgent need, to set up the National Framework that would regulate and structure the internal production sector/value chain. It must be stressed the importance of accurate assessments of the quality, origin, certification of plants propagated in Registered nurseries. The National Framework for olive tree culture and the Legal Framework are essential steps in this direction. Future activities on Olive trees should be more careful to avoid a piecemeal approach often criticised in the past for food value chains and, again, the foreseen National framework could be a huge and important change. Capitalise on past experiences is necessary and to have field collection of reliable data is mandatory to keep the complex olive tree value chain on track.

2 Three main types have been generally internationally recognised: 1) Traditional marginal orchards; 2) Semi-intensive orchards; 3) High density orchards. The suitable model for Pakistan conditions should be investigated.


II Introduction The general aim of this report is to review and to evaluate the main findings and results achieved by the previous and on-going projects co-founded by the Italian Government, concerning the opportunity/possibility to promote the domestic production of olive oil through the cultivation of olive trees, in order to reduce the expenditure for edible oil importation and recover the non and under-utilized marginal lands accessible to small holders producers. The report is utilising an evaluation framework/model utilized by the United Nations and European Commission, in order to adopt a standard methodology. This framework has already been applied to project evaluations in Pakistan in the past and could be utilised for other evaluations of rural development projects in the country. In this report, however, the framework has been modified to satisfy the specific requests of the AICS and the fact that is not evaluating a single project, but is assessing several activities and projects that were active in the olive-oil value chain. In detail, it will be evaluated:

The SWOT analysis results regarding the olive oil supply and value chain in order to identify constraints and opportunities for the development of above mentioned sector;

Completeness, adequacy and relevance of information on cultivation techniques,

production costs, organoleptic characteristics of the final product and the related market prices in order to identify the intervention guidelines of the Italian Cooperation programs on olive oil supply and value chain (PIDSA, PPAF and TVET);

Systematization of lessons learned on previous experiences from the olive oil projects

financed by PIDSA; The survey results concerning the draft of the action plan focussed on training needs of

all the stakeholders of the olive oil sector, including, but not limited, the quality aspects of production and 4Ps marketing mix (product, price, place and promotion);

Consistency of Italian public and/or private partners to be involved in specific bilateral

cooperation programs; The solidity and reliability of the key institution/bodies identified as agents of

development of olive oil sector in Pakistan, with particular attention to the following: i) the entities that might be involved in public - private partnerships; ii) initiatives that may represent an added value for olive oil supply and value chain to be eventually co-founded the Italian Government; and iii) initiatives that can increase the profitability and sustainability of on-going public investment;

The results, in terms of participation and awareness, of the attendance of three seminars/workshops in which it has been illustrated the guidelines for the development of the olive oil industry and the groundwork for drawing up a proposal of a strategic National Plan for the Development of Olive Oil Sector.


The report was developed by the evaluators interviewing a team of three olive oil sector experts during their mission in Pakistan on behalf of the AICS, Mr Luciano Leonetti, Agro-economist, expert in agricultural supply and value chain, Mr Stefano Valle, Forester, expert in rural development and former Italian co-director of AFNEPAK project and Professor Andrea Vannini, Agronomist-phytopathologist, at the University of Tuscia - Agricultural Sciences. Furthermore, it was possible to organize an in depth meeting with Mr Riaz Alam, Senior Scientific Officer of Olive Research and Development Institute at PARC. Other sources of information were several documents listed is in Annex 2 and visits to local retail markets in order to collect selling prices of edible and olive oil. The mission comprises:

Mr Giuliano Soncini, team leader, senior evaluation expert of rural development projects, and

Mr Riccardo Montanari, senior expert in agribusiness, planning, management, monitoring and evaluation of rural development projects and farm management.

Terms of reference for the evaluation are in Annex 1. Mission members are independent and thus they did not have any previous direct involvement with the project either with regard to its formulation and/or implementation. The mission is fully responsible for its independent report, which may not necessarily reflect the views of the Italian and/or Pakistani Government. The report is completed, to the extent possible, in the country and the findings and recommendations fully discussed with all concerned parties and wherever possible consensus achieved. The mission members wish to thank all the persons met by the mission, who were most helpful in answering our questions and who provided us with great courtesy and hospitality. III Background and context The edible oils production in Pakistan do not cover the enormous and ever increasing 3 request for the various fats constituting the total internal consumption. The internal market is satisfied only with the import of several products, spanning from low price palm oil, to soya bean and other vegetable oils, to better quality, higher price olive oil. In urban areas and in certain segments of the Pakistani population the use of olive oil is highly esteemed because of cultural and religious reasons, olive trees are considered blessed trees and olive oil was recognised as a cure for 70 diseases.

3 Since the early ’90ies the increase of edible fats was calculated around 8% per year.


More recently, olive oil consumption is growing in wellbeing conscious urban context for health reasons: because of its high content of monounsaturated fats, antioxidants, absence of cholesterol, etc. This increase in consumption is in spite of its much higher price compared to other vegetable oils and animal fats. Retail price of mixed vegetable oils, sunflower, canola, etc. is around 150 Pkr/l (1,27 €/l), while imported extra virgin olive oil is over 1 000 Pkr/l (8,5€/l). To fully understand the importance of the edible oil sector, it is useful to know that the total value of imported edible oils in Pakistan is often reported as the second highest value, 1,62 Billion € (2,05 Billion USD 4) after oil import for energy, transportation and industrial purposes, estimated in 13,5 Billion € (15 Billion USD) in 2014-2015. Although olive oil constitutes only a minimal fraction of the edible oil market, it is the most expensive product per kg. The value of imported olive oil is estimated in 3,1 Million € in 2014-2015 (3,5 Million USD). The edible oil import was Government regulated up to 2005, then liberalised, tariffs and duties eliminated. No subsidies are currently foreseen in support to the olive oil production, although investments in projects to develop the sector are significant. Pakistan Bureau of Statistics and FAO figures for 2010-2011 show edible oil imports of 2,15 Million tons and a national production of 0,91 Million tons (70,5%-29,5%).

Figure 1. Edible Oil Import/National Production (2010-2011)

Of these immense quantities, palm oil constitutes about 90% of imports, while national production of cottonseed oil constitutes 46 %, sunflower oil 19 % and rapeseed-mustard oil 35 %. Part of palm oil is further processed into vegetable ghee.

4 Exchange rate 06/2012 €/USD = 0,79

29,5

70,5

Nationalproduction

Imported


Figure 2. Edible oils import and national production (2010-2011)

It is also necessary to mention that Pakistan has a national production of butter and ghee (desi ghee) from buffalo and cow milk that is considerable in size, compared to the national production of edible oils: FAO figures for 2010-2011 report 0,66 Million tons butter and ghee, compared to 0,91 Million tons of edible oils locally produced. The national production contributes to satisfy the edible fats needs at Country level. Desi ghee is estimated being consumed by the 70% of the production units classified in the “subsistence” or “nearly subsistence” range, with 1-7 cattle heads in rural areas5. In recent years statistics show a decrease in butter production, because of an increase in request for fresh milk from the market. The ghee production at rural level/self consumption is still considerable. The following figure summarises the total availability of edible fats and oils and their origin, National production (orange shades) or imports (blue shades). (Sources FAO, PBS, IAO publications).

5 More recent figures show a steady decrease in production, the issue needs to follow up as has implications on available edible fats to rural people.

- 200,0 400,0 600,0 800,0

1.000,0 1.200,0 1.400,0 1.600,0 1.800,0 2.000,0


Figure 2. Total edible fats, import and National production (2010-2011; tons). Olive oil is represented by the small fraction indicated with 1.300 tons. Importing edible oil is currently unavoidable, seen the national consumption of at least 2,75 Million tons. Import of edible oils is draining Pakistan of valuable financial resources in foreign currencies; any effort to reduce imports has to be considered as relevant. However, the huge differences in quantities and prices of the various edible oils, nationally produced or imported, need to be seen in the right perspective and context, as the decision to direct energies in a specific sector instead of another, even within the same wider edible oil area, can move important financial resources and efforts. It appears clear that taking the right decision needs a careful understanding of the whole edible oils and fats sector. In spite of the complex background, difficulties and lengthy process that the olive tree value chain development could experience, a major point in favour of it is that olive tree is the only edible oil producing species that can be grown on marginal lands, not competing with any other cash crop in Pakistan. The development of the “Olive-oil value chain”, while not considered by the experts the most difficult, still is very complex and each step requires knowledge, skills and experience. Furthermore, being related to production of food for human consumption, it requires compliance to quality/hygienic standards, established and recognised nationally and internationally.

1.951.100

157.200 66.400

1.300

659.916

422.900

314.685

172.117

Palm Imported

Other Imported

Soyabean Imported

Olive Imported

Butter and ghee National

Cottonseed National

Rapeseed-mustard National

Sunflower National


In the following table are summarised the main projects on the olive oil value chain that have been established in Pakistan, both at Central and at Provincial level. Table 1. Olive trees/oil related Projects

Name Years Implementing Agency

Founded by Total Budget

Research & Development Project for Vegetables, Olives, Citrus and Deciduous Fruit Crops (Punjab, NWFP, Baluchistan and at NARC Islamabad)

1986 - 1993 Agrotech, NARC

Italian Cooperation

3,6 M €

Accelerated Promotion of Olive Cultivation in NWFP and Potohar

2000 - 2004 GoP 0,5 M €

Rapid conversion of wild olives into bearing species

2004 - 2008 GoP 3,7 M €

New Plantation of Olive in NWFP, Potohar and Baluchistan and maintenance of olive orchards

2005 - 2010 PODB GoP 0,5 M €

Development of research Facility Olive Model Farm Sangbhatti).

2005 - 2011 GoP 0,5 M €

Promotion of production and commercialization of olive oil in Pakistan

2007 - 2009 IAO/PODB Italian Cooperation

0,8 M €

Technical assistance and support to line ministries in the agricultural sector with emphasis on olive production - Afghanistan, Nepal and Pakistan – AFNEPAK Regional project (Currently suspended)

2010 - 2016 IAO/PODB/PARC

Italian Cooperation

2,4 M €

Promotion of olive cultivation for economic development and poverty alleviation

2012 - 2016 PARC (former applicant was PODB)

GoP/Italy PIDSA

3,2 M €

Promotion of Olive Cultivation on Commercial Scale in Pakistan

2014 - 2019 PARC and Provincial Govs.

GoP 20 M €

Olive sector Development in the Potohar Region

2016 - PEEP USAID 0,8 M €

Professional Capacity Building and Extension in Agriculture - TVET

2017 - Italian Cooperation

20 M €


It has to be noted that Pakistan has large extensions of natural forests of wild olive trees (Olea cuspidata, Olea ferruginea). The presence of this species has been considered important and a specific project has been set up to make them productive with grafts of fruit bearing varieties of Olea europaea. The occurrence of these wild forests has an important meaning also in term of land use, microclimate influence, soil protection from heath and erosion, landscape and possible harvest and processing of the wild fruits. The first formal tries of olive trees introduction in Pakistan can be dated back in 1986 with an Italian Co-operation funded project. The trees that were planted at the time could be now considered almost at the end of their best productive cycle and could have been, or still be, a very useful source of information on suitability and adaptation to local condition of imported cultivars from Italy, Spain and Turkey. The many projects on olive production show the complexity of setting up a whole new value chain and even if the cultivation of olive trees is not the most difficult one, considered that the variables involved are numerous and up to now there is not clear-cut evidence and a defined path to be followed. Involving a tree culture, the olive value chain is requesting long periods of care before being able of drawing conclusions, the activities set up in the past and the trees planted are now getting in production. It is urgent to define the national framework and possibly protocols to collect, systematise and analyse the information already available and what is likely to be collected in the next years. Failing this analysis could bring to loss of valuable information and more and more difficulties in the next future as an increasingly diversified context is going to develop, with National, Provincial, bilateral cooperation projects and investments moving in many diverse directions. IV Results achieved in the olive-oil supply and value chain Aware of the extreme burden of the bill for edible oils importation in the balance of payments (around € 1,62 Billion in 2014 - 2015), since 2000s the Government of Pakistan has supported several development projects with the aims to promote and/or increase the domestic production of edible oils through the cultivation of palm, sunflower, rapeseed and olive. The Italian Government has recently supported said efforts co-founding 3 main initiatives, concentrating on the olive oil value chain, as follows:

Promotion of production and commercialization of the olive oil in Pakistan jointly implemented by IAO and PODB (2007 - 2009, budget € 0,8 Million);

Technical assistance and support to line ministries in the agriculture sector with

emphasis on olive production- Afghanistan, Nepal and Pakistan - AFNEPAK jointly implemented by IAO and PARC (2012 – 2016, phasing-out, suspended in Pakistan, budget € 2,4 Million);


Promotion of Olive cultivation for economic development and poverty alleviation implemented by PARC with financial assistance of Pakistan Italian Debt Swap Agreement (PIDSA) (2012 - 2016, on-going, budget € 3,2 Million).

The main outputs of the project Promotion of production and commercialization of the olive oil in Pakistan, ended in 2009, were:

a) The execution of training sessions on different subjects (nursery, technique of cultivation, post-harvest processes, oil quality, etc.);

b) The establishment of one commercial scale oil mill at ARI in Tarnab (Khyber Pakhtunkhwa) and other 8 small mills;

c) The cultivation of experimental 10 field plots (of one hectare each) in order to evaluate the adaption of the newly imported cultivars from the Mediterranean region;

d) In order to identify the suitable surface where the olive’s trees could adapt and grow, a Geographic Information System (GIS) study has been executed, identifying an area of 0,88 Million hectares suitable for olive cultivation, mainly located in Khyber Pakhtunkhwa, Baluchistan and FATA;

e) A market analysis and evaluation of olive oil supply and value chain has been conducted as an initial tool, useful to foresee possible scenarios of olive oil production and market in Pakistan.

The main results achieved by the project Technical assistance and support to line Ministries in the agriculture sector with emphasis on olive production- Afghanistan, Nepal and Pakistan – AFNEPAK, (suspended in Pakistan, still active in Nepal), were:

a) The publication of an updated GIS report at District level, whose output was the identification a surface of around 15 Million hectares suitable for the cultivation of olive trees mainly located in Baluchistan (10 Million), in Khyber Pakhtunkhwa (3 Million), in Potohar Punjab (0,9 Million) and FATA (0,8 Million);

b) The release of a market analysis for the value chain and the olive oil consumption in Pakistan, crucial issue to identify the dynamics of the diffusion and market of olive oil;

c) The execution of training session of master trainers on various topics (using GPS and data management, applied modern agronomy techniques for olive tree growing and production, harvesting and post-harvesting techniques, olive milling machinery management, nursery management, oil quality testing);

d) Furthermore, 14 olive farmer associations have been established (3 in Punjab, 3 in Khyber Pakhtunkhwa, 3 in FATA and 5 in Baluchistan) for the joint management of cultural techniques and mills and for the organization of transport of ripe olives to be processed for oil.

Currently, PARC is executing the project Promotion of Olive Cultivation for Economic Development and Poverty Alleviation. Up to now, the main achievements were:

a) Plantation of 1.816 hectares of olive trees in Punjab (525 ha), Khyber Pakhtunkhwa (469 ha), FATA (354 ha) and Baluchistan (468 ha);

b) Continuous supply of technical support for the rehabilitation and maintenance of 9 olive progeny gardens / plant mother orchards, representing the key sources for the supply of reliable bud material/pool of germplasm for the production of selected and pathogens free cultivars;


c) Establishment and management of nurseries for plant propagation. Around 670.000 indigenous plants were propagated through cutting and air layering methods in 6 locations, large numbers of saplings still have to be transplanted;

d) Establishment of demonstration trials in more than 100 locations in different areas of Pakistan in order to evaluate the adaptability and productivity of different cultivars;

e) Developing and recording of complete data/information of 500 maps/polygons of 500 orchards planted under the project on Google Earth;

f) Execution of several practical trainings (air layering techniques and management, olive production technology, oil extraction, nursery establishment, cultivar propagation technologies, integrated pest management in olive, scope and economics of olive, olive post-harvest technology and oil extraction processing, etc.). More of 500 people benefitted from the capacity building program;

g) Confirmation that the olive oil produced in Pakistan is in line with international standards, according to chemical analysis locally done;

h) According to a survey performed in May 2016 on 80 orchards visited (around 900 ha, with a total number of plants of around 87.000), the rate of success was 80%.

It must be underlined that recently the Government of Pakistan has approved an important national project Promotion of Olive Cultivation on Commercial Scale in Pakistan, executed by PARC, through Provincial Governments with a total budget around € 20 Millions. The project will have a duration of five years (2014-2019) and is expected r to plant 20.000 ha of olive trees. Until now, the main achievements of the project are:

a) The plantation of 1.165 hectares of olive trees; b) The propagation of 3,5 Millions plants; and c) The establishment of drip irrigation systems on 11 hectares.


V The reviewed SWOT analysis

In the following table is shown a SWOT analysis deriving from the information gathered by the evaluation mission:

STRENGTHS WEAKNESSES

I. Suitable areas for olive oil production are vast (over 15 Million hectares).

II. Possibility to increase the productivity

(yield/ha).

III. Increasing public/private investments addressed to the sector (from growing to consumption).

IV. Governmental support to Olive-oil supply

and value chain

V. Some capacity and infrastructure to produce seedlings already existing.

VI. Already established plantations once in

production could cover the current consumption of olive oil in Pakistan.

VII. Processing capacity is exceeding present

production, if it not considers the geographic distribution of mills facilities.

I. Few reliable local data, not yet organized and

systematized on cultivation techniques, cultivars performances, olive oil costs of production.

II. Insufficient know-how and inadequate

awareness concerning olive oil marketing/selling dynamics.

III. No functional certification system

concerning plants propagation complying with international standards.

IV. Lack of key legislation concerning

traceability, labelling, regulatory framework on quality requirements and food safety, development policy, production and marketing regulations (an Olive Oil Act).

OPPORTUNITIES THREATS

I. Market niche in expansion / positive trend of demand of olive oil*.

II. Medium and long-term support from

international donors.

III. Rural development policy options for the introduction of the olive oil supply and value chain in some of the poorest Districts of the country.

IV. Waste/marginal lands (more than 7 million

hectares) where cash crops cannot be cultivated could be successfully planted with olive trees.

I. Lack of experience in dynamic growers’

associations

II. The domestic crushing and distribution sectors finds more attractive to import edible oil rather than crushing/distributing locally produced oil seeds.

III. In 2005 the government facilitated imports

by eliminating tariffs and duties on all oilseeds.

*It is estimated that the edible oil requirement will increase by 6% to 8% per annum in next ten years.


VI Completeness, adequacy and relevance of information on cultivation

techniques, production costs, organoleptic characteristics of the final product and the related market prices in order to identify the intervention guidelines of the Italian Cooperation programs on olive oil supply and value chain (PIDSA, PPAF and TVET)

VI – i Cultivation techniques

It has to be noted that the available information produced by past and on-going projects, documents and reports is not complete, well organized and systematized and, sometimes, contradictory. It is not available a complete, clear, local handbook with technical production specifications, neither for plant propagation/nursery, management/mother orchards nor for olive plantation. Concerning soil and climate requirements, the information gathered in 2015, using a Geographic Information System analysis, identified the areas suitable for the olive plantation based on topography (elevation, slope), weather conditions (average monthly, min/max temperatures, chilling hours, annual rainfall) and land cover. The data reveal that Pakistan has around 15 Million hectares (150.000 km2) suitable for olive trees cultivation. Therefore, finding a suitable environment for olive trees cultivation does not represent a major constraint for the development and production of olive oil in Pakistan.

The current surface cultivated with olive trees is between 2.500 and 3.000 hectares. Around 90% of planted trees are still too young to produce olives, as they have been planted between 2013 and 2015. Currently, the domestic production of olive oil is around 6 tons per year, originated from around 75 tons of olives, applying a conversion rate around 8% (according to the latest survey, published by PERI, PARC and IAO in April 2016, the current olive oil extraction rate is esteemed to be around 8%, with a great potential to grow up to 15%). The known cultivars for oil production introduced in Pakistan are: Arbequina, Arbosana, Barnea (dual-purpose cultivar), Biancolilla, Coratina, Frantoio, Gemlik, Leccino, Koroneiki, Moraiolo, Pendolino. The known cultivars for table olives introduced in Pakistan are: Ascolana tenera, Manzanilla, Kalamata, Nocellara del Belice, Sevillana, Uslu. It is possible that other cultivars have been introduced and may emerge from fieldwork and literature. Self-pollinated varieties are encouraged.


Tree planting densities range from 100 (mixed - marginal olive orchards) up to 400 (intensive orchards, commercial-size farms) per hectare. It is estimated that around 275 plants/hectare could be an adequate investment for small holders, in districts with good production potential. The estimated average production of olives per plant (from the 6th year since the transplant – maturity fruiting) fluctuates from 12 kg up to 20 kg. Therefore, the average production of olives per hectare ranges from 1.200 kg up to 8.000 kg, with an estimated range of olive oil extracted from 96 kg up to 1200 kg, applying a range of extraction rate between 8% and 15%. In districts with good production potential, for small holders, it appears reasonable/consistent to obtain an average production of olives around 15 kg/plant and, applying an average extraction rate of around 12%, an average production of olive oil equal to 1,80 kg/plant. It means, with an investment of 275 plants per hectare, a production of 4.125 kg/ha of olives and 495 kg/ha of oil. These estimates are based on a conservative approach/scenario (low productivity and low conversion rate), with a potential margin of growth.

Although Olive is a hardy tree, it requires land preparation, timely irrigation (drip irrigation system is the most adequate), fertilizers, pests and diseases management.

According to latest publication issued by PERI, PARC and IAO in April 2016 and “Road Map for PPAF to promote olive value chain in Pakistan” report written by and independent olive oil expert on June 2016 and submitted to PPAF, the main constrains of olive cultivation are the lack/shortage of water and accordingly high irrigation water cost, followed by non-compatibility of plant varieties with the local climate/environment, difficulties in process of extraction and long distance between farm and currently installed mills plants/oil extraction facilities, resulting in an increase of transportation cost and post-harvest losses.

According to the market analysis and evaluation of olive oil supply and value chain publication issued by IAO – MAE in 2008, it has been estimated a requirement of labour/manpower for

Mixed (marginal orchards)

Smallholders(in suitable and high

potential areas)

Intensive orchards(commercial-sized

farms)

Density (trees/ha) 100 275 400Olives production per tree (kg/tree) 12 15 20Olives total production (kg/ha) 1200 4125 8000Oil extraction rate (%) 8% 12% 15%Oil total production (Kg/ha) 96 495 1200Avarage olive oil price at farm gate (€/kg)* 2,38 2,38 2,38Oil total gross marketable production (€/ha) 228 1178 2856* avarage 2015 import price


cultivating 1 hectare of olive equal to around 225 hours/year/ha. This figure seems consistent with the local reality for intensive orchards/commercial-sized farms, while the estimated requirement in terms of labour/manpower for mixed - marginal oil orchards is around 140 hours/year/ha.

VI – ii Production costs Again, the available information produced by past and on-going projects’ documents and reports is not complete, properly organized and systematized and, sometimes, contradictory. A standard productions cost specifications for local conditions field handbook is not available. However, based of available information, the evaluation mission estimated that, at maturity/fruiting time, an average cost of olive production between 250 €/ha (0,20 € per kg of olives) for mixed - marginal olive orchards and 980 €/ha (0,12 € per kg of olives) for intensive olive orchards/commercial-sized farms. In districts with good production potential, for small holders it appears reasonable/consistent an average olive cost of production of around 590 €/ha (0,14 € per kg of olives). Concerning the processing cost, it was estimated by the assessment published by IAO – MAE in 2008 a cost equal to 0,6 € per kg of oil, that seems coherent with local conditions and comparable with processing costs in Italy (around 0,7 – 0,9 € per kg of oil). The transportation cost was estimated by the evaluators as equal to 0,03 € per kg of olives. Finally, the total average cost of production of 1 hectare of olive (including processing and transportation costs) rises from 330 €/ha for mixed marginal olive orchards up to 2.050 €/ha for intensive olive orchards. The total estimated cost of production incurred by small holders in suitable environment is equal to 990 €/ha. The analysis showed that for intensive orchards (commercial sized - specialized farms) the cost for producing 1 kg of olive is equal to 0,26 €/kg, corresponding to a cost of 1,58 €/kg for producing 1 kg of oil (including family labour). Mixed marginal orchards (farms with low level of specialization and mechanization, late precocity) produce 1 kg of olive with a cost equal to 0,28 €/kg, equivalent to a cost of 3,46 €/kg for producing 1 kg of oil. In districts with suitable and favorable environment, the estimated small holders cost of production of 1 kg of olive amounts to 0,24 €/kg, equivalent to a cost of 2,00 €/kg for producing 1 kg of oil. In the following chart it is shown the comparison between revenues and total production costs per kg of olive oil produced, and the average international market price of imported olive oil:


In the following charts they are shown the comparison between revenues and total production costs per hectare:

2,38 2,54

1,190,81

0,32

0,21

0,17

0,60

0,60

0,60

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

avarage 2015 importing price

(€/Kg)

Mixed marginalorchards

Smallholders (insuitable and highpotential areas)

Intensiveorchards

(commercial-sizedfarms)

€

processing cost

transportation cost

production cost

revenue per kg of oil

228

1178

2856

332

989

2042

0

500

1000

1500

2000

2500

3000

Mixed marginal orchards Smallholders (in suitableand high potential areas)

Intensive orchards(commercial-sized farms)

€

gross marketable production total production costs


In the following charts are shown the comparisons of Gross marketable production and, details of Production, Transportation and Processing costs for the 3 types of exploitations identified:

According to the latest publication on market analysis for value chain and olive oil consumption in Pakistan issued by PERI, PARC and IAO in April 2016, the major costs for cultivating olive trees is the irrigation, with an impact on the total cost of production between 30% - 40%.

228 244

31

57

0

50

100

150

200

250

300

350

€

Mixed (marginal orchards)

gross marketable production production cost transportation cost processing cost

1178

588

105

296

0

200

400

600

800

1000

1200

1400

€

Smallholders (in suitable and high potential areas)


2856

976

204

862

0

500

1000

1500

2000

2500

3000

€

Intensive orchards (commercial-sized farms)



VI – iii Organoleptic characteristics of olive oil

Concerning olive oil organoleptic chemical qualities, the information gathered do not allow the evaluators to assess whether the characteristic of olive oil produced in Pakistan are comparable and reached the same standards of the olive oil originating from the main exporters (Spain, Italy and Turkey), even if in the project Promotion of Olive cultivation on commercial scale in Pakistan is stated that “the olive oil produced in Pakistan was got analyzed and it was found at par with international standards”. In bibliography was found a paper 6 concerning the quality of oil extracted from wild olives originating from Pakistan: the fruits from wild olive trees Olea ferruginea Royle, locally known as Kahu, were collected from different locations in Pakistan (i.e. Bhara Kahu, Kotli Sattian and Dir Swat); whereas a reference sample of a local variety (Zaitoon II) Olea europaea. was collected from Barani Agricultural Research Institute, Chakwal (BARIC) for comparison. The milling and analyses were done after 3 days of storage in the labs of the University Institute of Biochemistry and Biotechnology PMAS, Arid Agriculture University Rawalpindi. The results were showing a potentially interesting produce, although “…Particular attention should be given to the enhancement of quality with regard to the optimal ripening degree of olives and storage conditions before milling: the application of these practices should avoid the sensory defects and allow for better control of hydrolytic and oxidative modifications…”. The fruit of this tree is currently not being utilized for any useful purpose.

VI – iv Market prices The currently available olive-oil supply and value chain assessments need to be updated and completed with more accurate details on storage, transportation, processing and marketing, in order to accurately identify the possible trend of selling prices at farm gate and at retail level, the profit margins, the price structure and cost drivers for the involved stakeholders (input suppliers, nursery developers, producers, transporters, traders, wholesalers, retailers, processors, exporters, etc.). Terms of Reference for agribusiness supply and value chain are presented in Annex 3. With reference to the market price dynamics, it is worth underlining that the current local production of olive oil is around 6 tons per year and, according to the latest survey, published by PERI, PARC and IAO in April 2016, all the farmers who have sold olive oil were not satisfied with the retail sale price (between 9 and 10 €/kg). Their point of view is that olive cultivation imposes high costs to be incurred in the first five years without producing any income, high irrigation water cost, high cost of transportation and post-harvested losses resulting in low extraction rate and low oil quality. 6 Characterization of olive oil obtained from wild olive trees (Olea ferruginea Royle) in Pakistan. Pervez Anwar, Alessandra Bendini, Muhammad Gulfraz, Rahmatullah Qureshi, Enrico Valli, Giuseppe Di Lecce, S.M. Saqlan Naqvi, Tullia Gallina Toschi; Food Research International, Volume 54, Issue 2, December 2013, Pages 1965–1971.


About 70% of farmers have used their extracted olive oil for self-consumption. The import of olive oil is about 1.300 tons per year with a cost of € 3,1 million (0,16% of edible oil import bill), equivalent to 2,38 € per kg of imported olive oil. Assuming 2,38 € per kg of imported olive oil, it would represent the sale price at the farm gate unchangeable by farmers. It seems adequate to conclude that:

1) Commercial sized - specialized farms could produce net profit from the plantation;

2) Small holder target group is also able to produce in a profitable way (a little higher than its break-even point) even if with a reduced net profitability margin;

3) For mixed/marginal orchards, the investment seems not to be profitable/economically viable.

For the 2 latter target groups, the evaluators’ opinion is that there is a potential to increase the gross marketable production, enhancing the yield per hectare and the extraction rate, through an improvement of cultural and processing techniques. The current olive oil market in Pakistan is very limited and almost insignificant compared to the whole size of the edible oils market. Orchards are not yet in production and there are very few industrial mill facilities. The entire supply and value chain is mainly represented by importers, distributers and retailers. The olive oil is utilized not only for cooking, but also for cosmetic and health purposes. Even if Pakistan people have changed their diet preferences from animal fats to vegetable fats (vegetable ghee) and even to healthier products (canola and sunflower oils), there is lack of awareness concerning the difference between extra virgin olive oil, olive oil and pomace oil. The major reason for not using olive oil for a large part of the Pakistani population seems to be the high retail price, compared to other edible oils and vegetable ghee. The market segment, to which the national olive production could focus, might be the richest part of the Pakistani population (1% of the whole population of Pakistan). This segment seems not to be saturated, yet, representing therefore an opportunity of growth. According to the information collected, interviewing a team of three Italian olive oil sector experts during their mission in Pakistan for the AICS, and the information reported in the survey “Edible Oils in Pakistan” published by IAO – MAE in 2008, it has been estimated that


during the next years there will be an increase of domestic demand/consumption of olive oil from 1300 tons up to at least 2500 tons/year. This demand increase must be matched by raising the local production and through an aggressive advertising campaign supporting the national production of olive oil. In conclusion, a sustainable and profitable olive oil business could be developed in Pakistan provided that the domestic olive oil production will enter into the market priced at cost no higher than the current and future international imported oil price (currently 2,38 €/kg of olive oil). Great care must be given to ensure that the quality of domestic olive oil be superior, if compared to the imported one. Therefore, some stricter regulations concerning quality oil production must be put in place and enforced in order to allow the local farmers to fairly compete with imported products. According to “Edible oils in Pakistan - An overview with a focus on olive oil” report published by IAO – MAE and statistics issued by FAO and Government of Pakistan Federal Bureau of Statistics, the main edible oil imported in Pakistan is palm oil (kg 1,9 billion, representing the 90% of edible oils imported in 2010 – 2011, latest data available), while the main oilseed crop domestically cultivated is cotton. Its production represents around 50% of locally produced oilseeds and it is utilized, together with rapeseed, mainly for vegetable ghee production. For edible oil purposes, 2 main kinds of oils were domestically produced: sunflower and canola oils, while the cultivation of palm and soybean oils productions are not material. The cost for importing 1 kg of palm oil is 0,76 €/kg, while the cost for producing or importing 1 kg of sunflower and/or canola oils are quite comparable and around 0,90 €/kg. Even less expensive appears the cost of production of 1 kg of vegetable ghee (0,50 €/kg). Finally, the average retail price of palm, sunflower and canola oils rises to 1,3 €/kg, while the average retail price of vegetable ghee amounts to 1,10 €/kg. The olive oil is sold between 9 and 10 €/kg.


In the following chart, the comparisons between importing and at retail prices for different edible oils can be appreciated: Import prices

Retail prices

In consideration of what previously shown and focusing on retail selling prices, the evaluation mission believe that domestic olive oil production can represent an economically viable alternative only to replace the imported olive oil, but cannot represent a substitute product for the other kinds of cheaper imported edible oils and a mean to significantly reduce the edible oil import bill.

0,50

0,76

0,90

0,90

2,38

0,00 0,50 1,00 1,50 2,00 2,50

vegetable ghee production cost

palm oil importing price

sunflower oil importing/production price

canola oil importing/production price

olive oil importing price

€/kg

1,10

1,30

9,00

0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 10,00

vegetable ghee price at retail stage

average edible oils price at retail stage

olive oil price at retail stage

€/kg


VII Systematization of lessons learned on previous experiences from the

Olive Oil projects financed by PIDSA What is emerging from the current review is that there is no clear information or reports showing previous impact evaluations or assessments.

The economics of the of olive oil supply and value chain were often incomplete, inconsistent and mostly deriving from projections and extrapolation based on information deriving from different context. In this conditions the risk of overall too optimistic figures is high.

Being a relatively new sector for Pakistan a certain level of risk should be taken in account.

However, the need to have a realistic perspective and avoid excessive expectations is considered a priority.

A good example of the risk of not showing information in the right perspective is the size of the market of edible oils and the minimal percentage that olive oil play in the whole picture:

Imported edible oils 2.150.000 tons

Imported olive oil 1.300 tons

Current known olive oil production 6 tons

In spite of this, the evaluation mission considers the olive-oil value chain worth to investing in and stresses the need of reliable figures deriving from field measures and not only from projections, where too many variables are subject to influence the results. Detailed recommendations are presented in Section XII. According to information shown in several Pakistan Agricultural Research Council (PARC) reports (2013 - 3rd semester report, 2014 - 5th semester report and 2015 - 7th semester report) in the Promotion of Olive Cultivation for Economic Development and Poverty Alleviation project and Road Map for PPAF to promote olive value chain in Pakistan report, written by an independent olive oil expert on June 2016 and submitted to PPAF, the main issues observed during the field visit to check the performance and adaptability of trials, nursery production and plantation on farm lands in Baluchistan, Khyber Pakhtunkhwa and FATA were: a. Free grazing damaged the olive trees; b. Insufficient supply of certified/registered, high quality, disease free seedlings; c. Pits prepared for olive plants were too small (the roots could not grow properly and the

plants remained weak); d. Absence of tutors, causing trunks bent; e. Non application of fertilizers, generating weak plants;


f. Lack of proper pests control (pre-harvest losses due to pests were considered one of the main constrains for low productivity of olive orchards);

g. Improper pruning practices, causing unbalanced growing; h. Non adequate irrigation system utilized (flood system) which damaged the plants because

excess of water; i. Mortality rate mainly due to lack of irrigation (shortage of irrigation water); j. Improper harvesting techniques and post-harvest handling; k. Difficult access to processing facilities (mills were not close to growers); l. Unavailability of proper bottles for oil storage. All the surveys and assessments, based on the field visits, show that, even if there is a lack of knowledge and limited experience in the cultivation of olives and in the milling activities, an improvement of productivity and oil quality could be reached. Under a strictly production point of view, these are the keys, very high priorities to convince the small farming olive growers to remain active in the sector and a precondition for having olive production providing a consistent and profitable additional source of income. In the following sections the evaluation mission tried to describe a comprehensive, holistic and strategic approach that should be adopted for a correct development of the olive oil sector, involving all the stakeholders.

VII – i Agronomic and technical perspective Under a strictly agronomic and technical point of view, the evaluators would like to emphasize some lessons and recommendations learned from the past and on-going projects that should be taken in account in future development of the olive oil sector in Pakistan: a. To multiply high quality seedlings is needed the establishment of mother plants

orchards/nurseries, producing plants following scientific protocols and according to international standards;

b. Start the process of registration and certification of cultivars; c. It is needed the identification of unknown fruiting olive cultivars through DNA fingerprint,

this in order to assess the best suitable and productive varieties to be propagated;

d. For high elevation areas (from 1500-1800 m asl) the most suitable olive cultivars seem to be Arbequina, Arbosana and Coratina;

e. For low elevation areas (from 800-1400 m asl) the cultivars Frantoio, Gemlik, Koroneiki, Leccino and Pendolino appear more suitable and recommended;


f. The use of self-pollinating cultivars seems more effective compared to plantations

requiring pollinators;

g. The practice of top working on wild olive trees seems feasible only if it is carried out on private land and properly managed through pruning and nutrient supply;

h. Fencing is recommended in case of free grazing livestock and small ruminants damaging

the olive trees;

i. Intercropping could be a viable solution during the first 4 – 5 years of plantation, when the trees are too young to produce olives;

j. The installation of drip irrigation systems for an efficient use of water in areas with acute

water shortage is a must to assure a sustainable and economically viable cultivation;

k. The provision and installation of solar panels for irrigation systems (drip or tube-wells) could represent a solution to persistent grid power cuts that cause water shortages at critical growth stages;

l. Harvesting at optimum maturity stage in order to improve oil quality and quantity is

required.

VII – ii Processing/milling facilities perspective

With reference to the processing/milling facilities, the following points have to be highlighted:

a. Farmers are concerned about the processing of the olives, as the olive plants are approaching the production stage;

b. The distance between plantations and mills facilities seem to be one of the main

constrain to be solved to increase the oil quality. Transport to the oil mill has to be done in the shortest possible time (ideally within 4 hours after harvest), to avoid the beginning of the oxidation processes. Therefore, mills must be located close to the orchards; olives have to be crushed within 1 day from harvest, if properly stored;

c. Existing plantations (between 2.500 and 3.000 hectares) could produce, over next five years, 10.000 tons/year of olives that need to be crushed in very short time;

d. The current milling capacity is totally insufficient to crush the reported expected quantities of olives within the correct delay;

e. Even if the previous projects provided some processing facilities of various capacity (1

commercial oil mill - 500 kg/hour and 8 smaller ones), establishments of on-farm olive oil extraction units and mobile extraction units must be foreseen;

f. Installation of table olive processing units must be expected;


g. A public/private partnership scheme of extraction units’ ownership and management must be analysed and implemented.

VII – iii Capacity building perspective

The past experiences in olive cultivation show that:

a. The knowledge concerning olive oil propagation, cultivation, processing and marketing techniques are still inadequate. Capacity building programmes are needed trough field training sessions, adopting the “learning by doing” methodology, establishing a small network of “model successful farms – pilot sites”, focusing on:

- Correct growing procedures; - Organisation, management and record keeping 7; - Improved understanding of the market requirements (both at consumer and

regulations level); - Dissemination of the improved practices,

b. To guarantee a high level of olive production per tree, it is recommended that regular

trainings to famers are provided by field agricultural extension officers (updating and reminding technical issues);

c. Provide training on oil mill maintenance and oil mill technicians;

d. It is advisable to supply tailor made training programs for all decision-makers of the olive oil value chain: from Ministry's level to Federals, Provincials and Districts levels;

e. Consider the creation of a Made in Italy technical assistance facility, in close connection with MNFS&R and NARC/PARC local staff, to build capacities at all stages of the olive oil Supply and Value chain. Involving Italian expertise in Research & development, in producing, processing and marketing, particularly for certified, organic and ultra-premium extra virgin olive oil.

VII – iv Market perspective The current Pakistani olive oil and table olives markets are quite small. A great effort should be done in analysing, evaluating and setting up national guidelines, in order to pilot the sector toward a sustainable and profitable condition. The domestic market will compete against the most experienced European countries, where customers are more exigent regarding quality. Some points must be highlighted, as follows:

a. The pricing aspects will have to be carefully studied. Resources need to be allocated, in order to analyse in depth, the aspects (branding, promotion, advertising) that play an essential role at retailer/consumer level. A monitoring system of the economics of the

7 Alphabetisation could be an issue in some cases.


value chain must be established and implemented, including the involvement of international and national centres of excellence in commercial Research & Development;

b. According to the market analysis and evaluation of the olive oil Supply and Value

chain, document issued by IAO – MAE in 2008, the share of the added value recognised to distributors is around 77%, while the rest of the benefits goes to the supply chain outside Pakistan; The domestic olive oil value chain must consider that distributors are likely to buy a quota of olive oil from national growers if the quality and price is equivalent to the one of imported olive oil. This means that the quota of added value that remains in the hands of growers (23%) must be sufficient to cover all the production costs (including transportation and processing) and to generate some minimum net profit to farmers;

c. Trading between growers and millers should occur without middlemen in order to avoid useless intermediaries’ costs along the supply chain. Growers must be able to deal directly with the millers and with the distributors, creating a short value chain;

d. If the private sector is investing in the establishment of commercial size plantations, the promotion and diffusion of olive oil cultivation can receive a boost. Large farms owners could create their own processing plants for oil extraction and product development. Large farms could provide employment to people in the area and probably favouring the availability of services concerning milling and trade to small holder farmers, from purchase of produced olives to milling for a fee;

e. A sustainable alternative, with favourable effects on food security and/or additional sources of income for small holders in marginal areas, could be to use part of the olive harvest to produce table olives or pickles. Small-scale/house level production of table olives for local market requires less investment and is technologically less intensive than olive oil production 8. Furthermore, there is the opportunity to involve women in processing olives for sale at home.

VII – v Political perspective The Pakistan Government current policy concerning the olive oil sector is mainly focusing on:

- Promotion of olives plantation on marginal lands in order to replace more demanding crops in areas affected by limited or overexploited natural resources;

- Insuring food security for small holders farmers, through olive oil/table olives production for self-consumption;

- Enhancing poverty alleviation through the production of olive oil/table olives as an additional source of income;

- Reducing the expenditure for edible oil imports.

8 Water, salt and proper packaging are anyway needed.


To reach such ambitious objectives, the olive sector must continue to benefit of the strong commitment by the Government. The Italian Agency for Development Cooperation requested the evaluation mission to provide information on the olive-oil value chain and the same information could be useful in negotiations with the Pakistan Government. In the following points are presented the main findings:

a. It was noticed a lack of coordination between all the stakeholders involved in the olive oil development sector that is increasingly complex, it includes Central and Provincial Governments, private sector, bilateral cooperation.

The lack of governance of so many investments and projects could lead to:

- An unclear overall sector logic; - A loss of the strategic vision - A piecemeal approach, resulting in a waste of time and resources in activities that can

be overlapping or even pull in opposite directions.

b. It is needed the establishment of a single steering instrument of governance and linkage with institutions for the development of Pakistan olive oil sector, composed by all the stakeholders and with all the competencies.

c. The main gaps in the olive oil supply and value chain to be addressed are the Legal

framework and regulations concerning labelling, origin, traceability, varieties propagation, registration and certification, quality and food safety issues, by-products management, marketing and commercialization.

d. It is strongly recommended the creation of 2 Olive-Oil Units within the Ministry of

Agriculture and/or Ministry of Plan:

- The first could be responsible for legal, regulatory and international standards compliance issues, in charge of drafting the key legislation and normative framework (Olive Act);

- The second could be responsible for all technical and agronomic issues (production related).

e. In the light of the international and domestic market dynamics, the strategic vision

should be pondered. The olive-oil sector could be developed by distinguishing two different targets and approaches:

Commodity development approach. To be implemented in the most suitable areas for olive cultivation, where it is possible to find skilled farmers with business abilities, pioneering spirit, good knowledge of farm management, availability of capital and land. These agricultural entrepreneurs could represent agro-food operators driving the industry and producing for urban markets in order to compete with imported olive oil;


Rural development approach. More suitable to marginal and less developed areas where olive oil and table olives are not consumed because of high costs and not affordable by the smallholders. The aim of this approach is to improve food security and provide additional source of income among rural population in poor areas. The smallholders could address their production of olive oil and table olives to local markets and self-consumption.

The two approaches can be partially conflicting; however, one does not exclude the other. It is advisable to start aiming at setting up a system where success is clear and therefore attract other stakeholders.

f. With the objectives of enhancing poverty alleviation efforts amid smallholders, giving a further boost to the olive oil production and making the sector sustainable and economically viable on the long-term, the Pakistan Government is recommended to consider the opportunity of providing smallholders farming with subsidies, this in order to:

i. Facilitate the supply of agricultural inputs;

ii. Favour the purchase of drip irrigation systems;

iii. Allow the acquisition of solar panels to feed the irrigation systems;

iv. Stabilise and control oil-milling costs.

g. Finally, in order to create the conditions for propagating certified seedling, according to international standards and to avoid the need of importing certified seedling from abroad, the Pakistan Government is strongly recommended to become member of the International Olive Council, (IOC), an intergovernmental institution specialized in olive oil and table olives trade commodities in the world.

VIII The survey’s results concerning the draft of the action plan focused on training needs of all the stakeholders of the olive oil sector, including, but not limited, the quality aspects of production and 4ps marketing mix (product, price, place and promotion)

At the time of the evaluation mission the survey related to training needs was not available. The analysis of the training needs of all the stakeholders in the olive oil sector have been presented in Section VII – iii Capacity building.

IX Consistency of Italian public and/or private partners to be involved in specific bilateral cooperation programs

Two projects related to olive oil supply and value chains have as implementing partners the IAO (Istituto Agronomico per l’Oltremare) a technical body linked to the Italian Ministry of Foreign Affairs, which funded both projects.


The project Promotion of the Production and Marketing of Olive Oil implemented in 2007-2009, funded by the Italian cooperation had a total budget of 0,8 M €. The regional project AFNEPAK, had a total budget of 2,4 M €. The Pakistan component is currently suspended. The IAO was also running 2 successive projects in Swat Valley, on fruit selection and marketing. The outcomes of the 2 projects, objects of a specific evaluation exercise by the same Evaluation team in 06-07/2016 are not particularly impressive, with several components not achieving the expected results. Other public and private partners could be: - Università degli Studi della Tuscia in Viterbo, is already involved in projects on the olive

oil value chain. It is a possible public partner to be involved in the future bilateral cooperation programs, because its background and specific previous experiences in olive oil researches and development in Italy, Nepal and Pakistan.

- ISMEA (Istituto di Servizi per il Mercato Agricolo Alimentare), public body within the Italian Ministry of Agricultural, Food and Forestry Policies,

- Coldiretti, trade union organization. With a million and a half members, it is the main organization of farmers at national and European level.

- Genagricola SpA, an agricultural-food holding owned by Gruppo Generali Assicurazioni

- Development Solutions Associates (DSA) Center. Research think-tank, registered as an NGO in Albania in 2006 with experience in chain analysis of olive oil and table olives.

X The solidity and reliability of the key institution/bodies identified as agents of development of olive oil sector in Pakistan, with particular attention to the following: i) entity that might be involved in public - private partnerships, ii) initiatives that may represent an added value for olive oil supply and value chain to be eventually co-founded the Italian government and iii) initiatives that can increase the profitability and sustainability of on-going public investment

According to the Promotion of Olive Cultivation on Commercial Scale in Pakistan, a national project recently approved by the Government of Pakistan, Islamabad NARC/PARC play the leading role in the development of the supply and value chain. The Agricultural Research Institutes (ARI) of Barani and Tarnab have been declared centres of excellence for olive. Other main agents of development already identified by the project are: - Arid Agriculture University (Rawalpindi);

- National Horticulture and Tea Research Centre (Shinkiari);

- Agricultural Research Institute of Sariab (Quetta);


- Baluchistan Agricultural Research & Development Centre;

- Agriculture Extension Department of Azad Jammu & Kashmir.

The evaluators did not have the possibility and time to meet staffs of the said Institutions/Bodies (located in the areas suitable for olive trees growth in several Provinces), therefore do not have enough information to express an opinion on them. The visits and meetings held at PARC in Islamabad were showing an institution with a good potential. The involvement of National bodies is absolutely necessary, and the experience show that National structures are often sufficiently staffed, but are lacking funds to set up research activities or run projects independently. International institutions with the needed capacities and know-how have conversely higher running costs; require international staff deployment (the security situation in Pakistan is still an issue), more difficulties in field movement and work. A compromise, where International reliable institutions, with a solid background and experience in International Cooperation - and showing an impeccable delivery record – have to be selected. The initiatives that may represent an added value for olive oil supply and value chain and can increase the profitability and sustainability of on-going public investment, to be eventually co-founded by the Italian Government, have been illustrated in Section VI. A point that need to be clear is that periodic, short term missions of International institutions can work if the project document is robust, clear, with a Logical framework that specifies what has to be done and how, still allowing flexibility (Adaptive management approach) and clearly provides for internal monitoring and external evaluation.

XI The results, in terms of participation and awareness, of the attendance of three seminars/workshops in which it has been illustrated the guidelines for the development of the olive oil industry and the groundwork for drawing up a proposal of a strategic national plan for the development of olive oil sector

During their mission in Pakistan on behalf of the AICS, the Italian experts, Mr Luciano Leonetti and Mr Stefano Valle, outlined and showed to Ministry of Planning, Development and Reform, PERI and PIDSA officers some presentations on the following two main subjects: - Scaling up pilot initiatives into a National Olive Plan

• Prospects for Italian contribution to development of the extended supply chain; • Extended supply chain analysis - Policy brief;

- Situation and Prospect for the Olive Supply Chain

• Priority actions for intervention and proposed Italian contribution;


• PIDSA and other related Italian facilities and projects; • TVET in the wider intervention framework.

The evaluation mission did not have information concerning participation and awareness of the audience. However, the level of Pakistani staff attending the seminars was high, showing once more the interest in the olive value chain by the Government. XII Conclusions and recommendations

XII – i Conclusions

The analysis of the available documentation and interviews are leading to the following conclusions. For the edible oil market:

a. The edible oil trade and consumption in Pakistan is covered by: i. Import of several types of edible oils (palm, soya bean, sunflower and other edible

oils); ii. National production;

b. The import of edible oils is 95 % low-priced palm oil, which is in part further processed,

hydrogenated, and marketed as vegetable ghee; c. The national production of edible oil is mainly constituted by cottonseed oil, also a low

price commodity;

d. Desi ghee and butter (from buffaloes, cows) also satisfy part of the edible fats national market. The country production is comparable in size to the production of edible oils (0,68 Million tons ghee, 0,91 Million tons edible oils). Around 70% is for self-consumption by “subsistence” and “nearly subsistence” farming rural population;

e. Currently, the internal market of edible oils is largely covered by products that have a retail price of 1/6 or less compared to imported olive oil;

f. National production of olive oil is difficult to assess because of absence of monitoring systems set up by projects in the past and also because of logistical reasons: dispersion of planted sites, distances, accessibility, leading to an overall and high cost of information collection;

g. Currently commercialised olive oil is almost totally imported. Although some quantities could be small-scale productions for self-consumption and remain “invisible” in statistics, the current estimates for national production report 5-6 t/year;

h. The internal market of olive oil is currently satisfied by the imports of 1 300 t/year and has a potential absorption of 2 500 t/year (0,09 % of total edible oils consumption);

i. Experts estimates that the internal market of olive oil, in the next future, could be covered at around 70 % by national production, around 1 800 t/year; while the


remaining 30 % would likely remain a niche market, with very high quality/high price imported oil;

j. Although the marketed quantities of olive oil appear to be small, the value and market price is several times higher than other edible oils;

k. A careful measurements campaign and an assessment of production costs and margin, generating real field conditions figures are strongly needed. It is not advisable to rely on estimates, projections; ranges produced starting from published data and extrapolations from other areas;

l. Estimates done during this evaluation, conservative and more realistic than figures often found, show that a more careful approach to new projects procedures and communication should be adopted. Olive oil is a mature sector in world economy where Pakistan is entering and still tuning the several stages of the value chain. It must be clear that planning should be done on long-term basis and benchmarks to be reached could help the whole process;

m. The expectations grew enormously, and the risk of deception has to be avoided, clarifying the range of interventions and which reasonable objectives can be achieved;

n. One of the major points to support the olive tree value chain is that it is the only edible oil producing species that can grow on marginal lands, not competing for land with other cash crops in Pakistan;

o. The emerging, identified technical options for planted olive tree products are:

1. Mixed marginal orchards. These are small scale production units on marginal lands. Olives are for direct processing as table olives/pickles/oil and self-consumption or local market. It encompasses the poorest segments of the rural population. Costs per kg of product are higher because of the small scale. The investment seems not to be profitable;

2. Smallholder and family producers. Medium/small scale production of olive oil for self-consumption and/or sale, if logistical infrastructure is there, such as grinding mills, roads, transportation, etc. Production costs are midway between the marginal orchards and the commercial farms. The investment seems able to produce some net profit;

3. Large scale commercial estates. Such farms are to be established, although the process started. The olive oil production aiming at the internal market first and even export in the sub region if costs are competitive and other conditions arise. Production costs are the lowest, compared to the other types identified. There is a probability to produce net margin from the investment;

p. Wild olive trees forests options are:

i. Grafting/top working to produce commercial quality olives (then, options are the same as planted olive trees);

ii. Harvest of wild olives for processing/oil extraction for human consumption/cosmetics production;

iii. Soil protection, erosion control, carving wood, landscape value.


The analysis of recent projects, concluded or on-going, implemented up to now in Pakistan on the olive value chain, lead to the following conclusions:

a. The olive value chain, although not the most difficult in tree products, is anyway requiring the availability of information, knowledge, practical skills and considerable overall attention to details in planning and implementation, this, in order to became viable and explicate the potential that has been initially recognised in it;

b. This potential has led in the past to several projects and investments, at National,

Provincial and International co-operation level;

c. New funds will be invested in support to this value chain, again, at National, Provincial and International co-operation level (examples: the TVET programme funded by the Italian Cooperation, the PEEP program funded by USAID, etc.);

d. The fact that the activity involves products for human consumption requires attention to safety/health issues (e.g.: treatments with insecticides, fungicides, processing, conservation, etc.);

e. Overall information on projects’ activities and results is of difficult access. The baseline information, other primary data, figures to draw conclusions and lessons resulting from field activities, required to decision-making and to guide upcoming projects, are scattered and often contradictory;

f. Many figures are recurrent in reports and papers, however the original primary data is often unclear. Calculations in plans and estimates are frequently offering a range. The evaluation team found several questionable figures that may lead to unrealistic forecasts9. This point is specifically addressed in the recommendations;

g. The emphasis on evidence-based decision-making currently necessary for governments and organizations puts a greater focus on reliable figures and statistics. The role of measuring and monitoring activities, results and progress towards development goals and targets is fundamental;

h. It is unclear if a proper system of monitoring and evaluation was set up and is still working, which type of information was/is collected, if it is standardised and, finally, if collected figures are processed;

i. The numerous projects implemented since 1986 have established an estimate of at least 2500-3000 ha of olive trees plantations (GoP-PSDP, PARC-PIDSA projects alone respectively1180 ha 1816 ha);

j. These plantations are likely to yield olives in commercial quantities starting from 2017. It is the right time to set up the necessary steps (harvest, transport, milling, storage,

9 E.g.: figures on olive production per plant, % of extracted oil from olives, prices for produce.


packaging, marketing, etc.) to further foster the value chain, including extraction plants (mills and related infrastructure) and, finally, produce commercialisation;

k. In this complex and rapidly evolving context, with activities planned at National, Provincial and International co-operation level (MAECI-AICS, USAID, JICA), it is of high priority to formalise the National Compliance Governance Framework for olive oil value chain;

l. The need to set up a national framework for olive-oil value chain was identified by the technical mission of Mr Luciano Leonetti, Mr Stefano Valle and Mr Andrea Vannini, 05-06/2016. This proposal is strongly supported by the evaluation mission team and further developed in the recommendations;

m. The risk of not having such a framework is that several components of the value chain are in some cases lacking or developed in isolation, dispersed and do not benefit of existing knowledge and past experiences. The involved sectors span from sapling production/import, to cultivars choice, plantations, phyto-sanitary aspects, pest control, harvest, processing options, commercialisation, quality standards, legal issues, monitoring, research, etc.

XII – ii Recommendations

XII – ii – a Policy Policy recommendations are aligned and in support of the proposals by Leonetti/Valle/Vannini mission 05-06/2016. a) It is fully recognised the need to develop a National Compliance Governance Framework for olive-oil supply and value chain. This is necessary to allow National bodies to maintain a level of control in the value chain governance and have new activities, rapidly increasing in number, in a clear framework, favouring an ordered growth of olive-oil sector’s development and commercial projects. b) The second recommendation is to set up Olive-Oil Units at the Ministry of Food Security and research/Agriculture, in close liaison with the Ministry of Plan, with policy preparation support and technical roles (Olive-oil Act and National Olive-oil Plan). This also in order to centralise existing information on past and new projects, focusing on technical issues. Although it could already be difficult to assess the hundreds of sites and activities set up in more than 10 years, it is definitely possible to select the best clusters/sites and initially concentrate efforts on these. c) The third recommendation is the urgency to clarify and fill normative gaps in order to obtain a legal framework covering sectors like recognition and registration of cultivars introduced in the Country, possible new varieties, regulations for the propagation of olive trees, import of saplings, certification of nurseries able to sell disease free and genetically identified plants. It emerged that with the current legislation, although plants are regularly produced in nurseries, it is illegal to do this. It is clearly unreasonable - and enormously risky - to depend


on import of plants to develop an olive tree value chain. It is strongly advisable to became member of the International Olive Council, (IOC). d) Subventions are strongly recommended in order to favour the initial small scale and marginal land farms set up and the subsequent acquisition of agricultural inputs, fertilisers, drip irrigation systems, etc. It has to be stressed that if the Rural development approach (see Section VII) is privileged, then planting on marginal lands could be much less productive, as it has emerged that irrigation is necessary in order to have a constant production.

XII – ii – b Projects

For what concerns the implementation of existing or new projects the recommendations are the following: e) Establish a system of monitoring and primary data collection at field level, often very different from research station conditions. Because of logistic costs for field trips, innovative ideas for figure transmission should be explored (e.g.: mobile phone and communication networks/SMS, etc. Digital images of plants, fruits, parasites, disease attacks could be sent in many cases via mobile network, samples could be stored and periodically collected). This activity could be combined with the following point f). f) Establish a small network of “model farms”, true “pilot sites”, based on existing interventions and capitalising on investments done in the past by several projects on olive tree culture 10. Objective of these sites (1 or 2 per Province, strategically located) is to produce reliable figures for agronomical parameters and have demonstrations sites where conduct trainings and hands-on seminars for producers. The essential information needed is in field conditions, not research station, where other activities should be carried on. The main primary information required is about plants/ha, plant survival rate, kg of olives produced per plant/ha, olive oil extraction rate %, kg/ha oil production, (organoleptic quality of oil/acidity), farm gate sale price for olive oil and table olives, best adapted and productive cultivars. For each cultural operation costs and hours of work for the various activities: land preparation/ploughing/soil management, fertilisation (organic/chemical), irrigation, pruning, weeding, pest and diseases management, harvesting, transport, milling, storage, packaging.

XIII Lessons Learned

The Olive oil value chain is extremely interesting for Pakistan if seen and clearly set in the correct perspective. Information sometimes freely circulated or poorly presented, without the support of correct figures, might mislead and create wrong expectations. The marketed quantities of palm, cottonseed, rapeseed, sunflower, soybean, canola oil, etc. imported or locally produced in Pakistan, without overlooking at ghee made in rural areas for self-consumption are such, that olive oil is realistically not able to substitute imports, from the 2.177.300 tons registered for 2010-2011 by the Pakistan Bureau of Statistics and steadily increasing.

10 Three main types have been generally internationally recognised: 1) Traditional marginal orchards; 2) Semi-intensive orchards; 3) High density orchards. The suitable model for Pakistan conditions should be investigated.


The mid-term realistic objective could be to produce a national product that can compete in quality and price with imported olive oils, currently mainly from Spain, and gain a substantial part of the internal market. The potential absorption for olive oil in Pakistan has been estimated in 2500 tons/year. The current traded local production is almost negligible, with 5-6 tons/year, although an unknown quantity is likely to be self-consumed and not appear in statistics. Olive trees planted in the past years are starting now to produce olives in sizeable quantities, so there is ample space, and urgent need, to set up the National Framework that would regulate and structure the internal production sector/value chain. Retail and import costs of edible oils, both imported and national production, are up to 6-7 times lower than imported olive oil. Purchasing power of average Pakistani people will probably continue to direct choices towards the less expensive products. Even if health benefits and better overall quality is acknowledged to olive oil, price will lead for a wide section of the population. It must be stressed the importance of accurate assessments of the quality, origin, certification of plants propagated in Registered nurseries. The National Framework for olive tree culture and the Legal Framework are essential steps in this direction. Future activities on Olive trees should be more careful to avoid a piecemeal approach often criticised in the past for food value chains and, again, the foreseen National framework could be a huge and important change. Capitalise on past experiences is necessary and to have field collection of reliable data is mandatory to keep the complex olive tree value chain on track.


Annex 1 – Terms of Reference of Giuliano Soncini


Annex 1 – Terms of Reference of Riccardo Montanari


Annex 2 - List of documents and other reference materials consulted by the evaluators

Anwar P., Bendini A., Gulfraz M., Qureshi R., Valli E., Di Lecce G., Saqlan Naqvi S.M., Gallina Toschi T., 2013/12 Characterization of olive oil obtained from wild olive trees (Olea ferruginea Royle) in Pakistan. Food Research International, Volume 54, Issue 2, Pages 1965–1971. Awan A. A., 2016, Draft submitted to Pakistan Poverty Alleviation Fund (PPAF) - Road Map for PPAF to promote olive value chain in Pakistan, Islamabad, June 2016 Carbonari F., 2016, Piano di settore olivicolo-oleario, ISMEA - Istituto di Servizi per il Mercato Agricolo Alimentare, July 2012 Del Cima R., Urbano F., 2008, Selection of suitable areas for olive growing in Pakistan, Agenzia Italiana per la Cooperazione allo Sviluppo (AICS), Ministero degli Affari Esteri, Istituto Agronomico per l’Oltremare, Florence, June 2008 Giordani E., Ottanelli A., 2015, Olive oil: insights into the production chains, Department of Agri-Food and Environmental Science Section of Woody Plants - University of Florence - Italy, Islamabad, October 2015 Idris G., 2009, Edible Oil Sector in Pakistan, Pakistan Oilseeed Development Board (PODB), Florence, September 2009 International Olive Council, 2015, International olive oil production costs study, October 2015 Leonetti L., Stefanllari A., Imami D., 2008, Report on food chain analysis of olive oil and table olives in Albania, Development Solutions Associates, September 2008 Leonetti L., Valle S., 2016, Rapporto di Missione Brevissima (12 maggio - 3 luglio 2016), Titolo del Progetto: Promotion of Olive Cultivation for Economic Development and Poverty Alleviation, Pakistan - Italy Debt-for-Development Swap (PIDSA), Agenzia Italiana per la Cooperazione allo Sviluppo (AICS), Ministero degli Affari Esteri e della Cooperazione Internazionale (MAECI), Islamabad, August 2016 Leonetti L., Valle S., 2016, Situation and Prospect for the Olive Supply Chain - Situation, Priority Actions for Intervention and Proposed Italian Contribution, Agenzia Italiana per la Cooperazione allo Sviluppo (AICS), Ministero degli Affari Esteri e della Cooperazione Internazionale (MAECI), Islamabad, June 2016 Leonetti L., Valle S., 2016, Situation and Prospect for the Olive Supply Chain - PIDSA and other related Italian facilities and projects, Agenzia Italiana per la Cooperazione allo Sviluppo (AICS), Ministero degli Affari Esteri e della Cooperazione Internazionale (MAECI), Islamabad, June 2016 Leonetti L., Valle S., 2016, Situation and Prospect for the Olive Supply Chain - TVET in the wider intervention framework, Agenzia Italiana per la Cooperazione allo Sviluppo (AICS), Ministero degli Affari Esteri e della Cooperazione Internazionale (MAECI), Islamabad, June 2016 Memon N. A, 2012, Edible oil - Tops food imports, Islamabad, August 2012 Ministero delle Politiche Agricole Alimentari e Forestali, Piano di settore olivicolo-oleario, March 2016


Ministry of National Food Security & Research, 2016, Promotion of olive cultivation on commercial scale in Pakistan, Islamabad, 2016 Morelli G., 2008, Edible oils in Pakistan – An overview with a focus on Olive Oil, Ministero degli Affari Esteri, Istituto Agronomico per l’Oltremare, Florence, December 2008 Olive Field Inspection Report, 2016, Promotion of Olive Cultivation for Economic Development and Poverty Alleviation, May 2016 Pakistan Agricultural Research Council (PARC), 2015, Concept note of olive situation in Pakistan, Technical assistance and support to line ministries in the agriculture sector with emphasis on olive production - Afghanistan, Nepal and Pakistan, Islamabad, 2015 Pakistan Agricultural Research Council (PARC), 2015, Fifth Semester Progress Report (July to December-2014), Promotion of olive cultivation for economic development and poverty alleviation, Cooperazione Italiana allo Sviluppo, Ambasciata d’Italia, Islamabad, December 2014 Pakistan Agricultural Research Council (PARC), 2015, Technical Progress Report AFNEPAK (December, 2014 – May, 2015) - Technical assistance and support to line ministries in the agriculture sector with emphasis on olive production - Afghanistan, Nepal and Pakistan, Istituto Agronomico per l’Oltremare, Ambasciata d’Italia, Islamabad, 2015 Pakistan Agricultural Research Council (PARC), 2015, Technical Progress Report AFNEPAK (June – September, 2015) - Technical assistance and support to line ministries in the agriculture sector with emphasis on olive production - Afghanistan, Nepal and Pakistan, Istituto Agronomico per l’Oltremare, Ambasciata d’Italia, Islamabad, 2015 Pakistan Agricultural Research Council (PARC), 2015, Third Semester Progress Report (July to December-2013), Promotion of olive cultivation for economic development and poverty alleviation, Cooperazione Italiana allo Sviluppo, Ambasciata d’Italia, Islamabad, December 2013 Pakistan Agricultural Rsearch Council (PARC), 2015, Seventh Semester Progress Report (July- December, 2015), Promotion of olive cultivation for economic development and poverty alleviation, Cooperazione Italiana allo Sviluppo, Ambasciata d’Italia, Islamabad, December 2015 Tahir M. A., Anwar M., 2016, Market Analysis for Value Chain and Olive Oil Consumption in Pakistan, Punjab Economic Research Institute (PERI) & Pakistan Agricultural Research Council (PARC), Islamabad, April 2016 Zaidi S. A. J., Cheema N. M., Awan F. K., Identification of the Olive Potential Areas in Pakistan Using Geo-Informatics, Olive Research and Development, Institute, National Agricultural Research Centre Islamabad, 2015


Annex 3 - Terms of Reference for Olive Oil Supply and Value Chains

Terms of Reference for Olive Oil Supply and Value Chains

The Italian Agency for Development Cooperation (AICS) is seeking a team of consultants to assess the Olive Oil supply and value chains in Pakistan and to provide AICS with an evaluation of potential investments in Olive Oil sector within the rural development programs, financed by the Italian Ministry of Foreign Affairs and International Cooperation (MAECI). This study is expected to commence in …………. 201…… and will be completed by ………., 201…...

1. Studies Titles: Olive Oil Supply and Value Chains Study 2. Background: Six (6) performance analysis will be carried on:

1) Net present value analysis;

2) Internal rate of return analysis;

3) Cost/benefit analysis;

4) Break-even point analysis;

5) Sensitivity analysis;

6) Land benefit analysis.

Furthermore, the team of consultants will perform a specific study on:

- Historical productivity data per crop (yield/ha);

- Traditional cultural techniques per crop;

- Historical crop prices at farm gate (€/kg);

- Historical crop prices at retailer finale stage (€/kg);

- Detailed historical data concerning the costs of production per crop (€/ha and €/kg);

- Historical data concerning the net income of farmers;

- The eventual number of full-time equivalent jobs (FTE) created within the supply and value chains for an increase in volume sales and/or market prices;

- The eventual income/revenue growth rate for beneficiaries.

Finally, the major leverage points for supply and value chains development and market opportunities as basis for better livelihoods of stakeholders (i.e. producers/small holders) will be identified. 3. Deliverables of the study 3.1 Domestic supply (official production data, evaluation of available statistics, appraisal of total supply and demand, appraisal of urban and rural demand, international trades and supply balance, import flows, prices, seasonality of imports, export flows, destination of exports, trade balance and comment to international trades), 3.2 P&L account (€/ha, €/plant and €/kg) - farm production costs and output Revenues for sales (density - trees/ha, production per plant - Kg/tree, production per ha - kg/ha) (average prices at farm gate): Subsidies


Variables costs

- Tillage operations - Fertilizers and distribution - Pesticides and distribution - Weeding (chemical weeding, manual weeding) - Pruning and thinning (mechanical pruning, manual pruning) - Irrigation - Harvesting (mechanical harvesting, manual harvesting) - Transportation - Processing - Fuel - Energy

Value added Manpower Family manpower Hired workers Social charges Gross margin Fix costs Depreciation Administrative costs Interests on current assets Operating income (before taxes) Taxes Net operating income 3.3 Production calendar 3.4 Processing facilities 3.5 Processing costs 3.6 Main distribution channels 3.7 SWOT analysis 3.8 Define and document the supply and value chains of Olive Oil Key Questions:

- How are the Olive Oil supply and value chains structured? - Who are the different actors involved in the Olive Oil supply and value chains and what are their

functions? - How do the different Olive Oil varieties reach different destinations such as “mandis”, retailers, and

export locations from farm gates? - What are the critical factors that influence the flow of Olive Oil from farm gate to other destinations? - What type of assistance and related achievements the Government of Pakistan has provided in each step

of the supply and value chains? - What were the major challenges in each step of the supply and value chains?


3.9 Acquire information on the distribution of economic gains across the selected supply and value chains by various players Key Questions:

- What were the profit margins, price structure, and cost drivers for the Olive Oil stakeholders? (Including input suppliers, nursery developers, producers, transporters, traders, wholesalers, retailers, processors, exporters, etc.)

- What is the increment in sales at farmer level to intermediaries and to local market and from intermediaries to exporters?

- How much labor is required at each step and function of the supply and value chain? - What are the market share – costs and margins – for market participants (wholesalers, traders and

middlemen) in Olive Oil sector? - What are the marketing channels of Olive Oil sector per variety and geographic location? - What is the increment in the price of a metric ton from sales at farmer level to intermediaries and to local

market and also from intermediaries to exporters for Olive Oil sector? 3.10 Determine specific environment constraints that impact the Olive Oil Supply and Value chains especially with regard to sales Key Questions:

- What are some of the most important enabling environment constraints that hamper growth in sales in the Olive Oil value chain (e.g.: input supplies, lack of knowledge and skills, infrastructure facilities, market dynamics, government policies)?

3.11 provide practical and realistic recommendations on how modification in the Olive Oil supply and value chains can create greater impact in generating sales and creating employment and/or increasing revenues of the producers/small farmers 5 Duty of the team of consultants The team of consultants will focus on the Olive Oil production within the provinces of ………………….. . The team will work from field offices/external site locations (as required) in the provinces but may require frequent travel to other cities and/or countryside in order to interact with a wide range of project beneficiaries, farmers, transporters, processors, and marketing agents to analyze the complete supply and value chains. The team will submit detailed work plans and time table before starting the field work. If it requested, the team will provide brief written updates on the study process. The team of consultants will submit the final study evaluation report in English language after receiving the feedback from the AICS. 6 Key Personal/Management & Team Composition The team of consultants will include:

- One team leader (Masters in Agriculture Economics, PhD Preferred) with minimum 5 years of experience in supply and value chains analysis and evaluation. Demonstrated experience of conducting impact assessment related to agriculture

- ……… team members (Masters in Economics/MBA, Business Development/Financial Accounting, Masters in Agriculture Economics). At least three years of relevant experience.

7 Reporting Line: The consultants will report to ……………………………………………….. 8 Duration of the assignment The assignment will have a maximum time length of ……… months

final evaluation report olive oil - gs & rm

Documents