Commercialization of Value Chains

Sub-component 1.1: Commercialization of Selected Value Chains

 Agriculture is most significant sector of Nepali Economy but is marked by very high degree of subsistence in nature and very low level of production and commercialization. Every 3 out of 4 persons in rural areas depend on agriculture for their livelihoods. There exists a high potential for development of rural agriculture through commercialization through increased productivity by means of

  • Increased market oriented production,
  • Value addition,
  • Equitable distribution of benefits, and
  • Employment generation in rural areas.

This sub-component 1.1: Commercialization of Selected Value Chains of the Component 1: The Value Chain of the UNNATI Programme aims to develop four value chains, namely,

  • Tea (Orthodox),
  • Ginger,
  • Dairy and
  • Cardamom (Large)

As an opening portfolio, UNNATI Programme selected orthodox tea, dairy and ginger as three commodities for promotion of their value chain and it included cardamom as fourth commodity from the second year of the Programme. The value chains had been selected on the basis of 8 main criteria, like national priority, contribution to economic growth, employment generation, women’s role, geographical coverage, scope of intervention with impact/value addition, environmental issues and experience of development partners.

The strategic focus of the sub-component of the Programme is on private sector development in compliance with DANIDA/Government of Nepals’ strategy for support to growth and employment. The private sectors are beneficiaries and also implementing partners. The sub component has a budget of 9.5 million USD (65 million DKK) over the five years.

 Implementation Modality

The overall implementation of the sub-component 1.1 is managed by a Management Contractor (MC), FCG Sweden (the new face of ORGUT and SIPU International) with the Ministry of Agricultural Development (MoAD).

The implementation of various activities is done by MC through service providers to create opportunities for further development of the value chains. There are 3 types of service providers namely;

  • Private Service providers such as private firms, cooperatives, input suppliers, processers/factories and traders, exporters etc.
  • Public Service providers like District Agricultural Development Offices, District Livestock Service Offices, National Tea and Coffee Development Board, Cardamom Development Centre, NARC, Regional Laboratories, Commodity Programmes and other government agencies.
  • Civil society service providers such as Commodity associations, Business associations etc.

The support modalities for implementation of the activities of the sub-component are mainly provided through the following implementation modalities.

  • UNNATI Challenge fund: The fund has two windows namely Value Chain Window (VCW) and Market Infrastructure Window (MIW). The VCW is to support the ability of agribusinesses to overcome the obstacles identified within the selected value chains and is a cost sharing facility designed to provide entrepreneurs, cooperatives and others to develop their own enterprise/organization and contribute to development of the value chains. The MIW is a similar funding mechanism to support public/ private actors to invest in agriculture related market infrastructure i.e. collections centres, storage facilities, market place facilities, small scale irrigations etc.
  • Technical Assistance (TA): The TA support modality has been created for entering into Memoranda of Understanding (MoU) with the Government organizations like DADOs, DLSOs, NTCDB, RFQTC, RSTL, RLTSC, NSCDP, CDC, NARC etc. The expertise of these organizations will be used for capacity development of value chain actors. Additionally, TA is also been provisioned for other service providers such as commodity associations, private consultants etc.

The Programme applies a “theory of change” as shown in the figure below, in which the programme interventions contribute through a series of intermediate changes, to sustainable inclusive growth. 

Geographical Coverage

The Programme focuses 7 hill districts of Mechi an Koshi zones, namely, Taplejung, Panchthar, Ilam, Sankhuwasabha, Bhojpur, Terhathum and Dhankuta. In addition to these districts, the Programme has activities at Regional and National scale, benifiting value chain entrepreneurs especially small holder farmers in the programme area.  MC has a Liaison office in Dharan and 7 district offices in each of the Programme districts.

The target groups for the Sub Component are:

  • Commercial, semi-commercial and subsistence farmers with the potential of becoming commercial actors in the selected value chains. Households with marginalized land and land-less small holder farmers will also be assisted by availing employment opportunities that will be generated in the value chains.
  • Farmer associations, cooperatives, and producers associations.
  • Private sector enterprises involved in production, processing/value adding and marketing of products; production and supply of packaging materials (tea, ginger, dairy products and cardamom).


Outputs of Sub-Component 1.1

The expected outputs of the selected value chains are as following:

Tea Value Chain

Output 1: Farmers increase yields and quality of green tea

Output 2: Organic certification leads to higher prices

Output 3: Processers get better quality tea

Output 4: Processers improve quality of processed tea

Output 5: Orthodox tea exporters increase exports


Ginger Value Chain

Output 1: Farmers increase yields

Output 2: Farmers get higher prices for ginger

Output 3: Quality of ginger to market improves

Output 4: Processers increase value added from ginger

Output 5: Traders get higher prices


Dairy Value Chain

Output 1: Farmers increase milk yields and quality

Output 2: Dairies get better quality milk

Output 3: Small Dairies increase productivity

Output 4: Dairies increase value added and sell more


Cardamom Value Chain

Output 1: Farmers increase cardamom productivity through quality inputs and capacity development

Output 2: Farmers/traders improve quality of product through improved processing

Output 3: Traders increase value addition and international marketing.



Team Leader- Mr. Niklas Herrmann

MC Office, Dharan, Sunsari


Contact Number: +977 9852062231