1. Introduction

UNNATI – Inclusive Growth Programme is a five year programme supported by the Danish Government with the key priority being to strengthen market-based growth with a focus on the agricultural sector and on private sector development in compliance with the strategies of the Government of Nepal and DANIDA. The strategic focus of the programme is on private sector development in compliance with DANIDA’s strategy for support to growth and employment. The private sectors are beneficiaries as well as implementing partners. The programme’s main implementation is in seven hill districts of the Eastern Development Region of Nepal, namely Dhankuta, Bhojpur, Terhathum, Sankhuwasabha, Ilam, Panchthar and Taplejung, but also with interventions at regional and national levels.

The overall objective of the programme is “Promotion of sustainable inclusive growth that reduces poverty and raises living standards”. The programme consists of three components:

C1: The Value Chain Component comprises two sub-components:

            1.1: Commercialization of Selected Value Chains (tea, ginger, dairy and cardamom)

            1.2: Access to Finance;

C2: The Infrastructure Component comprises two sub-components

            2.1: Rural Transport Infrastructure 

            2.2: Public Market-Related Infrastructure; and

C3: The Enabling Environment Component comprises two sub-components

            3.1: Public-Private Partnership

            3.2: Advocacy for Rights and Good Corporate Governance. 

The Value Chain component is the core component with the other two components being the supporting components. The value chain component has an objective of “sustained improvement in competitiveness of selected value chains”. For this, four value chains are to be developed, namely, tea, ginger, dairy and cardamom. UNNATI’s value chain approach is to identify market opportunities and the players at the various levels of the four Value Chains that it supports. Having identified market opportunities and players, programmes will be designed that will improve the functioning of the Value Chain and bring economic and social benefits to its beneficiaries.

2. Background of the Assignment

There are only a limited number of medium and large tea processing factories that procure tea from small growers besides some production in their own gardens. More recently a trend developed whereby either individuals or farmer groups (cooperatives) have started small tea processing factories, procuring tea from smaller numbers of farmers. About 58small scale orthodox tea processing units are in operation in the UNNATI programme districts (Ilam-45, Panchthar-5, Taplejung-1, Terhathum-2, Dhankuta-2 and Sankhuwasabha-3). They have installed Chinese processing equipment (roller and drier) with processing capacity ranging from 250-2000 kg of green leaf per day. Small tea processors are usually unable to produce high quality made tea. About 50% of their made tea is sold locally and/or in the domestic market. The other 50% is sold to Indian buyers through informal channel at relatively lower prices. There are certain advantages of such small factories, as they are in closer contact with their farmers and thereby in the position to control their production practices, which offers the opportunity to produce tea of higher quality. However, they often lack the capacity and knowledge to exercise this comparative advantage. Some of the key binding constraints of the smaller tea factories are, inconsistency in quantity, quality and marketing, factory running under capacity, mismatch of processing equipment, non-organic products, traceability problem, poor business skill and technical knowledge, high processing cost, low investment capacity, lack of marketing skill and poor access to international market.

In this context, UNNATI aims to stimulate and assist the existing and aspiring new small tea factories to enter the high quality tea business and helping them to overcome the problems with their business model by linking them with high value markets, improving their processing and packaging practices and developing linkages with orthodox tea growers/growers' cooperative, as well as assisting them in changing their farmers' cultivation practices in order to get good quality leaves.

In the Value Chain component, UNNATI works through three main implementation modalities: 1. through Government, 2. through service providers, and 3. through a Challenge Fund. The Challenge Fund will provide grants to individual or groups of value chain actors for improvements that enhance commercialization and benefit stakeholders within the value chain.

In this connection, UNNATI now seeks consultant(s) who will assess the current situation of small scale orthodox tea processing units and identify improvements needed for their sustainable business.

3. Objective(s)

The broad objective of the assignment is to improve the quality and profitability of the small tea factories in order to be able to pay better prices to their farmers and so improving their income.

The specific objectives are;

1. To improve the quality of green leaf produced by farmers
2. To improve the quality and efficiency of the processing equipment
3. To improve the quality of the processing process
4. To improve the management and marketing skills
5. To create strong relationships built on trust between factories and farmers

4. The assignment

The scope of assignment for the consultant(s) includes, but is not limited to, the following:

1. Prepare a detailed list of small scale tea processing units operating in the UNNATI programme districts including their name, contact details, capacity of the factory, product type, quality and quantity, farmers' coverage, major buyers and markets, etc.
2. Document the major constraints and needs perceived by each factory in terms of farmer training, management training, technical (processing, machine operation) training and physical (machinery, equipment) needs
3. Compile the results and formulate and recommend training plan to UNNATI
4. Assist UNNATI in organizing/implementing a training plan based on the recommendation and subject to UNNATI’s approval
5. Compile the results of the physical needs assessment and provide recommendations on the types, sources and prices of the equipment individually and commonly needed
6. Based on UNNATI’s approval, assist the individual factories in preparing applications for the Value Chain Challenge Fund
7. Identify and list other constraints, like product development, marketing etc. both at individual as well as at communal level.

5. Deliverables

The specific deliverables of the assignment are:

1. Study plan with detailed methodology
2. Draft report incorporating all findings from the assessment
3. Training plan
4. List and procurement plan for identified physical needs, including recommended suppliers and costs
5. Adjusted training plans (schedules and contents)
6. Unit-wise applications for the UNNATI Challenge Fund
7. Reports of individual training events
8. Final report with all supporting documents
9. Time sheets and invoices (as per UNNATI’s accounting requirements)
10. Any additional deliverables may be decided based on mutual agreement between UNNATI team and the consultant.