1 gap analysis report of the seabuckthorn value chain1

Result of Gap analysis beyond the organic Seabuckthorn value chain

Dr.Ichinkhorloo National Consultant, TCP/MON/3503 1). Introduction of seabuckthorn in Mongolia Mongolia is at the fifth place by its natural wild and cultivated seabuckthorn resource in the world. For long time, berry and other raw materials of seabuckthorn were used for food, medicine, beauty, animal fodder, fertilizer and nature protection and it is a valuable plant. It contains plant oil, which has its peculiarity, in high amount in juice, caul and seed. Furthermore it contains more than 10 types of vitamins like as C, A, K, E, B, P; amino acids and minerals. Many products are produced from seabuckthorn juice and oil such as antioxidants, omega-3 and omega -7 and there are used for rehabilitating of cancer, vascular disease and alimentary system disease; for treating congelation and scorch; for producing medicine, which protects from X-ray and ultraviolet radiation, broadly.

Since 2010, Mongolian government gave an exclusive significance to this fruit and approved “Seabuckthorn program�. As a current situation, natural wild seabuckthorn field amount is approximately 13500 hectares in five aimag1s such as Govi-Altai, Selenge, Zavkhan, Khovd and Uvs; cultivated field amount is 6000 hectares in Central region and Khangai region Mongolia.

Mongolian National Association of Seabuckthorn Growers and Producers (MNASGP) was established in 2007, it has about 150 member seabuckthorn grower individuals, companies and processing factories. Currently, this association is rearranged has new name Mongolian National Association of Fruit and Berry.

Since 2014, MNASGP is implementing Seabuckthorn Cluster Initiative project in collaboration with its three member organizations such as Kharkhorin LLC (a grower with 600 hectare seabuckthorn plantation), University of Science and technology (science organization) and Eco-Erdene LLC (a processing company). Aim of this project is to create activity coherence between organizations and eliminate the gaps.

Since 2014, International Fund for Agricultural Development (IFAD) is implementing project on Seabuckthorn value chain development in five aimags such as Arkhangai, Bulgan, Govi-Altai, Khentii and Khuvsgul. Trainings were organized and credits were given to the seabuckthorn grower individuals, herder groups and cooperatives.

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An administrative unit of Mongolia

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Mongolian National Chamber of Commerce and Industry (MNCCI) has initiated Organic Mongolia Program and implementing the program since 2009. MNCCI’s invoked the organizations to raise their social responsibility therefore big entities like as “Khas bank”, Petrovis LLC, NTV, Max group, Kapital bank, Bishrelt holding LLC are financing the program. Within the frame of the program trainings on production technology, brand development and marketing were organized, regularly. Every year the program is giving credit to agricultural producers 550 million MNT, 30% of which was given to individual seabuckthorn growers and cooperatives. The approximate sum of the given credit seabuckthorn growers for is 825 million MNT in last six years.

MNCCI is developed regulation for “Giving right of using certified organic product’s label” in 2012. This regulation includes subchapters of pursuing a right of using “Made in organic Mongolia” eco-label, criteria for organic crop production, but there is no special subchapter for fruit berries. Now MNCCI is complying with its second modified version, which was approved in 2014.

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2). Gaps in Seabuckthorn value chain

Growing

Processing

Harvesting/ Storing

• Land √1 • Pure variety sappling ?2 • Data base ?

• Irrigation equipment ?

• Fertilizer √ • Pest ?

• Disease √ • Fence -?

• Bird and natural enemies ?

• Seasonal supply of raw material ?

• Raw material scarcity ?

• Mixture of varieties?

• Juice√ • Pulp oil√ • Seed oil ?

• Capsule technology?

• Drying technology ?

• Packaging ?

• Sequestration of bioactive components?

• Storage for raw material and products?

• Containers ?

• Mixture of varieties ?

• Harvesting equipment?

• Storage with cooling system?

• Transportatio n?

Marketing

• Quality and standard ?

• Branding ?

• Geographical indication √ • Governmental procurement ?

• Subsidy ?

• Organic certification?

• Irregular supply of products?

• √1 - non problematic issue • ?2 – issues with gap

There are some gaps in each step of seabuckthorn value chain.

1. Growing: In favor of Mongolian Seabuckthorn program seabuckthorn plantation field is growing. Plantation field and harvested yield amount is shown below.

I6000

5639

5000

3887

4506.7

Plantation field, hec

4904

4000 3000 2000

2401.7 1556

1000

384.1

599

1043

881

1733.5 1422

Yield, hec

0 2009

2010

2011

2012

2013

2014

- Issuance of a land for growing seabuckthorn in rural area is not a problem.

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- Recognizing of a pure variety sapling is an issue; this is due to lack of knowledge for multiplication of seabuckthorn. Now few companies are doing the pure variety seabuckthorn saplings (Polivit LLC, and Kharkhorin LLC etc.). Those companies have contract with MoFA for contributing saplings.

Within the frame of Seabuckthorn program of the Mongolian Government gave as a credit to individuals and companies 2636,0 thousand saplings with cost of 5,7 billion MNT (for 2111 hec), 2.4 billion MNT for establishing seabuckthorn plantations, storage with cooling system with cost of 1,0 billion MNT. Also the Seabuckthorn program spent 220,0 million MNT for seabuckthorn related research between 2011 and 2015.

Table 1. Seabuckthorn sapling amount of the MoFA Year Sapling in thousand piece Field, hec

2010

2011

206.0 165

810.0 650

2012 850.0 680

2013-2015 Total 770.0 616

2636.0 2111

Scientists and MNAGP is recommending to grow pure variety for instance single Chyiskaya, Vitaminnaya, etc. otherwise growers will face problems later during harvesting and processing. In the seabuckthorn big plantations variety plots should be separated from each other.

But mistakes of mixing varieties during the sapling multiplication and planting will cause problem for harvesting and processing.

Saplings’ nursery field

Seabuckthorn softwood multiplication

1 pure variety sapling costs 2100-2500MNT. Some local people and middle man offer cheap saplings. But the growers buy and grow them. Consequence reveals later‌ 4

- Data base for pure variety, growing, multiplication, processing, marketing even for human resource is necessary. Local government of Food and agriculture collects information but it is incomplete. MNASGP had conducted seabuckthorn market survey and collected data of plantation and processing in 2013, but the figures were really different (higher) than the MoFA’s data.

- Irrigation equipment is an issue for the growers. Drip irrigation system can’t provide sufficient amount of water to the seabuckthorn. As the seabuckthorn bushes are grown and getting ageing their water requirement increases gradually. Therefore specialists recommend having ditch irrigation or pipe irrigation system. Installation of pipe irrigation system is expensive for the growers.

- Livestock manure, microorganism containing liquid bio-fertilizers are used for seabuckthorn fertilization, those fertilizers are permitted fertilizers for organic fruit and berry husbandry.

- Pest - seabuckthorn fly (Rhagoletis batava Kol.) is the main pest for seabuckthorn. This pest is mainly distributed in natural wild seabuckthorn in western part of Mongolia Uvs, Khovd and Govi-Altai aimags. This fly infests seabuckthorn plantations some dry years. In case of severe infestation growers use chemical pesticide. But there is one alternative bio-pesticide entonem, which is produced in Russia, it is available in Mongolia.

- Mongolia has 66 million livestock; therefore it is impossible to grow fruit and berries without fence. Seabuckthorn is good feed for livestock and natural wild animals. Especially its root has nodules of nitrogen bacteria (Azotobacter), which is delicious fodder for rabbits and other rodents. Growers are constructing fences with locally available materials. For bigger plantation wire fence with protection from rabbits and other rodents is needed, which requires an investment.

- Birds like as crow and pie are feed by seabuckthorn berry. Growers are possibly trying to protect the yield from the birds but the method has less effective.

Effective bird scarer modern smart equipment (gas canons, noise maker etc.) is necessary for seabuckthorn in each size of plantations to protect the yield.

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2. Harvesting: Harvesting is conducting manually or using crimper (tweezers), or

-

clipping the branches. Some seabuckthorn variety has thorns. One good hard working person can harvest maximum up to 25kg seabuckthorn berry per a day only, this is yield of only one adult bush (7-12 year old bush). Due to the lack of effective harvesting equipment, seabuckthorn growers can harvest only one third of total seabuckthorn berry yield, currently.

There are two main harvesting time periods, first one is from 20 August to 20 September – during this period people can pick the berries; second one is 10 November to 10 December – in this period berries will get frozen and people can shake the bush for letting to fall down the berries. But until this period bird can eat off the berries and day and night temperature difference reaches up to 30 OC. Therefore berries lose their moisture and its sugar content reduces, acidity and oil content goes up, this is inappropriate property for juice production.

Containers (for food use) for harvesting and big containers transporting seabuckthorn harvest are in scarce in Mongolia. Iron vessel is inappropriate for seabuckthorn harvesting and storing, because of the acidity of berries.

Containers, which are used for seabuckthorn -

Harvested berries should be kept in cool storages and transported vehicle with coolers. All growers don’t have sufficient storages with cooling system and vehicle with coolers. Therefore the growers transport to the processing factory just after harvesting.

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3. Processing: Products, which are produced from seabuckthorn are shown in the next page. Due to lack of technological knowhow and equipment only juice, pulp oil, jam, sauce is producing in Mongolia.

- The pulp oil segregation technology is ineffective technology oil outcrop is only 0.2-0.7% from 1 ton (juice outcrop is 60-70%). There is modern technology for pulp oil segregation its oil outcrop is 16%. But the equipment is expensive.

- Introducing of capsule technology of seabuckthorn oil, segregation of Omega 7 and other bioactive components, juice drying technology and other modern technologies are necessary for creating value for seabuckthorn.

- Packaging is an issue for all type of products.

- Storage of raw material and processed products is necessary.

Seabuckthorn products

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4. Marketing: Quality and Standards: MNASGP is working to create seabuckthorn quality assurance, actively. The association has developed seabuckthorn Mongolian National standards: Seabuckthorn seedling (MNS 6250 : 2011), berry (MNS 0916 : 2011) and seabuckthorn oil (MNS 0783 : 2013), Analysing method of seabuckthorn oil (MNS 2692 : 2013), Seabuckthorn juice and nectar (MNS 0664 : 2015), Piknometr method for determining soluble dry matter in fruit juice (MNS ISO 2173 : 2015) and Refraktometr method for soluble dry matter in products of fruit, berry and vegetable.

But standard for organic crop farming and fruit and berry husbandry is under development now.

- Brand development of seabuckthorn products is an issue. Private companies are striving to develop new brand products; there are some good achievements in producing seabuckthorn products – vitamins, juice, pulp oil, cosmetics. But there is some investment support is needed for this issue. Due to the lack technological knowhow and equipment this issue can’t come true.

- Seabuckthorn is geographically indicated product of Mongolia. According to the Law of intellectual property of Mongolia, the certificate of geographically indicated product shall owned by a NGO. MNASGP is applied for geographical indication of Mongolian seabuckthorn in the last year. The application material is under the revision according to the related low.

- There is no big government procurement is existing at the moment for supporting seabuckthorn production. Local kindergarden and school is purchasing its juice but not in large amount. Procurement of seabuckthorn products for army, hospital, schools will support the production progressively.

- There is no subsidy exists for seabuckthorn plantation and produces products in Mongolia, currently. There is existing subsidy for other agricultural products eg. wheat, wool. This should be regulated by the regulations.

- Organic certification regulation is under processing now.

- According to the statistical data of 2015, 2-3% of total seabuckthorn (juice, pulp oil) was exported to Japan, South Korea and Taiwan. But the export supply is irregular due to the shortage of raw material and production seasonality. But Japanese side is requests of regular import and increase amount of export.

There is Japanese-Mongolian Economical partnership agreement existing since 2015. According to this agreement seabuckthorn products will be exported with zero tariffs to Japan for first five years.

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5. Capacity building. There is gap in capacity building of fruit and berry specialists.

There is no curriculum on growing technology organic seabuckthorn and production at the University and Professional training centers. Training is needed for organic seabuckthorn growers, processors and local inspectors.

Summary of the Gap analysis beyond the organic seabuckthorn value chain: 1. Technological knowhow and progresses are needed for the seabuckthorn multiplication, harvesting, processing, storing and transportation.

2. Investment is required for seabuckthorn growing, protecting (fencing, bird scarer), irrigation, harvesting and processing.

3. Policy for pure variety breeding and variety testing and promoting seabuckthorn growing (subsidy) is necessary.

4. Data base and information system is needed for each step of value chain of seabuckthorn production for future development.

5. Professional human capacity resource is necessary for seabuckthorn breeding, variety testing, and inspection of organic products.

6. There is need of TCP and investment project in not only seabuckthorn but also in fruit and berry sector of Mongolia for promoting this sector.

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