Medicinal and Aromatic Plants Strategic Segmentation Analysis : Nepal
Medicinal and aromatic plants (MAPs) offer opportunities for sustainable economic growth in Nepal.Nepal currently does not hold a significant share of global markets for MAPs, but MAPs are relatively more important in Nepal’s export basket compared...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/496421556737648658/Medicinal-and-Aromatic-Plants http://hdl.handle.net/10986/31613 |
| Summary: | Medicinal and aromatic plants (MAPs)
offer opportunities for sustainable economic growth in
Nepal.Nepal currently does not hold a significant share of
global markets for MAPs, but MAPs are relatively more
important in Nepal’s export basket compared with other
countries.Nepal currently does not hold a significant share
of global markets for MAPs, but MAPs are relatively more
important in Nepal’s export basket compared with other
countries.Market access is affected by non-tariff measures
in this sector.Currently, Nepal primarily competes in the
segment of raw and unbranded MAPs for the non-discerning
user. This segment has minimal value addition and a high
degree of global competition.This study identifies two
segments where Nepal is well positioned to compete in the
short to medium term: (i) lightly processed products for the
discerning and conscientious consumer, specifically personal
care products; and (ii) heavily processed, mass-produced
products for non-discerning buyers, specifically Ayurvedic
and traditional medicine products.Personal care products are
an attractive market segment for individual Nepali
entrepreneurs and micro, small and medium enterprises
(MSMEs).Nepali firms have the potential to integrate into
regional and global value chains for traditional herbal and
Ayurvedic medicinal products.While Nepali firms have the
potential to compete successfully in the two identified
segments, they face many challenges that need to be
addressed. Many of the constraints in the MAPs value chains
in Nepal are similar to those across the broader
agribusiness sector.These challenges include issues with
land rental and aggregating land; lack of investment in
physical infrastructure; lack of R & D; distortions in
input markets (fertilizer and seeds); poor extension
services; inadequate support for building firm capabilities;
weak quality infrastructure (for testing and certification)
that restricts access to foreign markets; poor logistics;
insufficient investment in supply chains; and poor access to
finance for smaller players in the sector.Sustainability of
MAPs is a major concern, especially in higher elevation
areas, and requires continued conservation efforts.The
government should ease trade frictions for suppliers
providing raw materials to domestic manufacturers.In the
personal products segment, Nepali firms could benefit from a
more conducive environment for e-commerce and skills
development.The Ayurvedic and traditional medicine products
segment in Nepal could benefit from protecting Nepal’s
cultural heritage and traditional medicine systems,
implementing intellectual property rights (IPR) polices to
support private sector growth and attract FDI, and research
support to identify the intensity of specific MAPs in their
most common final products.Global demand for MAPs,
especially as inputs for more complex final goods, has been
increasing steadily since the turn of the century. Nepal has
the potential to tap into this demand and compete
successfully in this market if the challenges faced by
Nepali players in the MAPs value chains are addressed. |
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