Rising Stars of Nepal's Export

While the growth in the Nepali economy is near stagnant, its composition has been changing fast. There are complaints that the country's statistical bodies are not fast enough to adapt their reporting structure to reflect the changes in the composition of the economy still, whatever data they have been providing give enough indication of these changes.

For example, in 2000-01, there used to be 13 items in the list prepared by the Trade promotion Centre (today’s Trade and Export Promotion Centre) of the major export commodities of the country including the 'others' category. And the share of the last category in this list used to be 3 percent. The same list for 2007-08 has 18 items and the share of the 'others' category in the value of total exports is 13 percent. This indicates that a number of new products have emerged over this period as major export items.

In this process, some of the products that used to occupy prestigious position in the past have either vanished altogether from the list (such as wooden and bamboo goods) or their share in the total exports has dwindled down (such as readymade garments).

Among the rising stars of Nepal’s exports thus identified are as presented in the accompanying tables.

Revival in Jute

One interesting point indicated by the tables is that the jute industry has very good prospects and deserves serious thoughts to revive it. Jute and jute goods are already among the 11 top export items occupying some 0.8 percent in the total exports to overseas. In exports to India, this item occupies about only 7 percent in the country’s total exports to that country (compared to 26 percent in 2001-02) it is worth nothing that, the value of the jute exports is increasing steadily over the last five years. In the meanwhile, the jute industry in the country is reported to be in the death throes because of lack of raw jute as the farmers have stopped cultivating it. In fact, whatever jute is being exported now from Nepal is made from the raw jute imported from India or Bangladesh – the only two other countries in the world that grow and process jute. When the jute industry in the world was facing tough times in the 1980s due to the competition from the polythene, the governments in India and Bangladesh provide d various supports to this industry for product development (e.g. designing fashionable goods out of jute fibre). But Nepal government closed down the jute research centre it was running to provide the farmers improved seeds. Now is time to reverse that step, it seems.

Herbs

The next important group of products emerging as the fastest growing export items is herbs and spices. Some of these herbs and spices are exported in raw form while others are semi-processed (e.g. dry ginger and essential oil). Cinnamon and cardamom are two such spices. While the cardamom export to the overseas has registered a decline in the recent years, its export to India has increased tremendously. This indicates to the necessity to explore the reasons behind the decline in export to overseas. It can be safely assumed that the product is processed in India and exported overseas. If that is the case, it may be a wise idea to set up a unit to process the cardamom here in Nepal itself.

Catechu (or Katha) is a processed herbal product exported from Nepal. In the recent decades, its export has declined as a number of factories closed down after the availability of Khair (the tree that yields raw materails for Katha) in the Nepali forests declined following reckless felling of Khair trees during the 1970s and 1980s. However, looking at the time series data for the catechu export over the last five years, one cannot fail to notice that the catechu export is gradually increasing these years. Perhaps it is now again time for the revival of this industry. Granting forest area on long-term lease to such industrial unit may be one good idea.

Tea and coffee are the other major export items from agricultural sector. But as the data show, due to the wide fluctuations from year to year in the export of these products, there is doubt whether these products are being imported by the foreigners for commercial purpose. Perhaps, they are imported on the instigation from the international non-government organizations that are involved directly or indirectly in the Nepali tea and coffee sector.

Pulses

If the year 2007-08 is taken as the basis, Nepal has exported a good quantity also of the cereals such as rice and wheat. But that was an abnormal year for these products . While most of the countries in the world were restricting the export of foodgrains, Nepal was encouraging it despite growing fear of food shortage within the country itself. Therefore, one cannot argue right now that there is good and sustainable export opportunity in these products. However, this is not the case with the pulses. Nepal has been a good exporter of pulses (particularly the lentils), though there used to be huge fluctuations in its export figure. But in the last five years the export of this item is growing steadily as is shown in the tables.

Percentage Share of Major Commodotoes in the Overseas Exports of Nepal

F.Y 2000/01

S.N	Commodities	Unit	Quantity	Value	Share in %
1	Woolen Carpet	Sq. m	2,209,828	8,603,721	30
2	Readymade Garments	Pcs.	43,430,777	11,431,246	39.8
3	Hides and Goatskin	Sq.ft	14,813,144	668,097	2.3
4	Tea	M.T	69.5	23,074	0.1
5	Pulses (Lentils)	M.T	15,094	510,461	1.8
6	Handicrafts			284,400	1
7	Silverware & Jewellery			188,608	0.7
8	Woolen & Pashmina Goods			5,269,548	18.4
9	Towel			447,517	1.5
10	Wooden & Bamboo Goods			30,110	0.1
11	Nepalese Paper & Paper Products			259,805	0.9
12	Micro Transformer			57,769	0.2
13	Miscellaneous			915,943	3.2
	Total			28,690,299	100

Source: Trade And Export Promotion Centre

F.Y 2007/08

S.N	Commodities	Unit	Quantity	Value	Share in %
1	Woolen Carpet	Sqm	1,171,033	5,578,860	28.0
2	Readymade Garments	Pcs.	12,989,073	2,837,302	14.2
3	Hides and Goatskin	Sqft	5,168,632	310,211	1.6
4	Wheat	M.T	144,426	3,428,538	17.2
5	Tea	M.T	454	58,047	0.3
6	Pulses (Lentils)	M.T	18,356	1,310,055	6.6
7	Cardamom (Large)	M.T	360	57,736	0.3
8	Coffee	M.T	55	22,046	0.1
9	Handicrafts			347,156	1.7
10	Silverware & Jewellery			298,099	1.5
11	Woolen & Pashmina Garments & Products			1,635,343	8.2
12	Towel			68,361	0.3
13	Nepalese Paper & Paper Products			408,309	2
14	Cotton sacks and bags			415,552	2.1
15	Micro Transformer			45,196	0.2
16	Noodles			314,157	1.6
17	Jute sacks and bags			154,226	0.8
18	Others			2,629,465	13.2
	Total			19,918,659	100.0

Marble Slab & Bristle

Another interesting group of products in which the exports from Nepal are rising are marble slab and bristles. Both are being exported mainly to India. The bristle comes mainly from the indigenous black pigs that Nepali farmers grow. And there is good prospect for the export of bristles from other domestic as well as wild animals. If proper policy interventions can be made in this regard, this product category has a good potential to be a major export item.

Fruit Juice

This too is a relatively new export item of Nepal. Though its export to overseas is not so big and that too has been in declining trend, the export to India has been very good. However, whether all the juice so exported is actually from the fruits grown in Nepal is a matter of separate research. Still, it shows that there is good prospect for fruit juice export from Nepal.

Rising Stars of Nepal's Exports

	2003/04	2004/05	2005/06	2006/07	2007/08
Pulses
Overseas	294554	103939	191,705	454,189	13,10,055
India	579100	667100	643,200	306900	314800
	873654	771039	834905	761,089	1,624,855
Jute goods
Overseas	4162	38383	85188	209754	154226
India	1882600	2693500	2636800	2556800	2582500
	1886762	2731883	2721988	2766554	2736726
Cardamom
Overseas	228963	205212	114333	114792	57736
India	451000	607000	608100	848100	1034800
	679963	812212	722433	962892	1092536
Noodles
Overseas	111049	109744	111563	79750	314157
India	259,700	369,300	414,700	237,400	532,900
	370,749	479,044	526,263	317,150	847,057
Medicinal Herbs
Overseas	13,478	23078	21147	47066	82,589
India	91,500	132,400	133,500	105,600	147,400

Source: Trade And Export Promotion Centre

Exports of Some Major Commodities to Overseas Countries

S.N	Commodities	F.Y 2003/04	F.Y 2004/05	F.Y 2005/06	F.Y 2006/07	F.Y 2007/08
1	Woolen Carpet	5,549,705	5,996,920	5,916,055	5,303,238	5,578,860
2	Readymade Garments	9,592,690	6,355,589	5,443,088	3,947,490	2,837,302
3	Hides and Goatskin	286,117	225,420	292,338	274,616	310,211
4	Tea	121,819	120,727	99,736	123,642	58,047
5	Pulses(Lentils)	294,554	103,939	191,705	454,189	1,310,055
6	Cardamom ( Large)	228,963	205,212	114,333	114,792	57,736
7	Handicrafts	650,377	643,136	699,727	421,493	347,156
8	Silverware & Jewellery	321,569	345,286	298,873	387,909	298,099
9	Woolen & Pashmina	1,473,675	1,460,411	1,665,949	1,789,507	1,635,343
	Garments & Products
10	Towel	249,393	135,162	107,256	64,244	68,361
11	Nepalese Paper & Paper Products	349,667	290,937	379,460	360,510	408,309
12	Wooden Goods	55,695	69,662	37,447	27,342	25,769
13	Incense Sticks	126,058	42,401	25,224	24,285	19,437
14	Cotton sacks and bags	150,509	257,834	349,819	331,218	415,552
15	Jute Sacks & Bags	4,162	38,383	85,188	209,754	154,226
16	Micro Transformer	59,443	45,485	59,771	79,014	45,196
17	Vegetable Ghee	139,810	191,034	134,283	80,601	18,922
18	Rice	40,848	101,621	58,976	19,770	29,327
19	Wheat	4,183	1,152	-	-	3,428,538
20	Wheat flour	57,878	153,544	52,747	13,149	28,707
21	Noodles	111,049	109,744	111,563	79,750	314,157
22	Textiles	246,070	319,498	21,134	17,924	66,701
23	Household articles of Copper	91,494	72,485	17,652	9,803	48,941
24	Imitation Jewellery	56,306	39,112	19,309	9,737	4,975
25	Fruit Juice	43,659	10,811	4,485	6,303	8,801
26	Coffee	37,637	40,332	27,291	40,117	22,046
27	Chocolates	33,745	11,040	3,706	7,098	674

Source: Trade And Export Promotion Centre

Noodles

It is interesting to note that the export of noodles has been growing both to India as well as to overseas. Perhaps it is a better idea to encourage export of noodles than its raw material wheat or wheat flour for the higher value addition in the noodles. And this may be reason why newar players are entering this industry without fearing from the fact that a number of others have closed down.

Exports of Selected Commodities to India

S.N	Commodities	F.Y	F.Y	F.Y	F.Y	F.Y
		2003/04	2004/05	2005/06	2006/07	2007/08
1	Pulses	579,100	667,100	643,200	306,900	314,800
2	Ghee	76,500	83,100	103,000	110,900	89,600
3	Herbs	91,500	132,400	133,500	105,600	147,400
4	Ginger	287,100	161,000	275,200	541,300	543,200
5	Dried Ginger	78,000	80,100	62,200	49,600	54,000
6	Linseed	37,600	41,400	47,500	23,300	35,100
7	Fruits	900	1,800	1,200	100	100
8	Vegetables	18,100	30,500	27,300	11,000	17,500
9	Wheat Flour	32,200	400	-	4,200	3500
10	Vegetable Ghee	2,959,000	4,635,900	3,861,700	4,136,500	2,132,300
11	Jute Goods	1,882,600	2,693,500	2,636,800	2,756,800	2,582,500
A)	Hessian	143,500	186,100	464,500	375,100	528,800
B)	Sackings	1,056,500	1,456,200	1,265,400	1,408,600	1,219,900
C)	Twines	682,600	1,051,200	906,900	973,100	833,800
12	Live Animals	55,100	56,000	58,000	21,700	52,200
13	Ricebran Oil	194,700	199,000	112,600	178,300	196,500
14	Tarpentine	19,300	52,700	105,100	179,200	75,900
15	Cinnamon	6,300	9,200	29,100	16,000	24,300
16	Cardamom	451,000	607,000	608,100	848,100	1,034,800
17	Catechu	162,500	438,700	382,400	542,800	543,700
18	Stone and Sand	209,100	249,100	321,300	425,600	208,200
19	Rosin	173,600	256,600	346,500	577,400	342,900

20	Brooms	65,900	81,500	69,700	43,900	56,800
21	Noodles	259,700	369,300	414,700	237,400	532,900
22	Biscuits	15,500	8,800	6,000	700	500
23	Marble Slab	36,900	62,400	41,900	113,200	147,600
24	Cattle Feeds	550,900	547,400	454,600	80,900	164,000
25	Brans	40,500	57,100	105,900	121,300	264,500
26	Oil Cakes	324,100	317,100	29,160	318,100	404,700
27	Hides and Skins	332,300	338,600	334,800	363,100	346,000
28	Tooth Paste	1,478,800	1,283,000	730,800	663,400	475,600
29	Polyester Yarn	1,114,500	1,896,300	3,476,300	2,241,000	2,617,700
30	Readymade Garments	626,700	365,900	1,137,300	765,000	478,100
31	Handicraft Goods	27,400	104,700	32,900	20,000	19,900
32	Vaneer Sheets	5,100	300	13,900	63,200	51,100
33	Toilet Soap	539,600	368,000	363,600	502,700	424,200
34	Hazmola	289,900	197,500	180,600	249,200	212,200
35	Kachha	13,200	14,100	42,100	6,300	8,500
36	Iron Scrap	8,900	4,700	158,700	1,500	700
37	Bristle	500	1,100	1,500	1,400	1,400
38	Juice	NA	1,091,300	1,139,600	1,591,300	1,836,400
39	Threads	NA	2,213,700	1,897,700	4,056,500	4,134,500
40	Zinc Sheets	NA	1,663,200	2,409,000	3,579,900	4,116,900
41	Textile	NA	2,996,600	2,154,600	3,056,900	2,113,900
42	Wire	NA	1,221,400	1,504,100	1,610,700	1,546,700
43	M.S.Pipe	NA	316,600	105,700	761,900	979,500
44	Others	17,732,500	13,000,800	14,154,840	10,444,000	9,293,600
Total	30,777,100	38,916,900	40,714,700	41,728,800	38,626,400

Traditional products

Going by the export data, there is no doubt that woolen carpets and readymade garments have been the major export items of Nepal for overseas and vegetable ghee, zinc sheets, textile, wires, MS pipes and threads for exports to India since many years. But the data also reveal that these products are in the declining trend in the recent years. Some of them are dependent on political mercy of the importing country and almost all of them are based on imported raw material. Therefore, while these industries have their own role to play in the country’s economy, they may not grow beyond their current strength.

Silverware and ornaments of silver are other traditional items of major exports to overseas and they too seem to be in the declining trend. Recently, there was also a report that the importers of some Nepali silver products have returned the consignments after finding adulteration in the silver used.

There is declining trend also in the imitated jewellery and handicrafts.

One exception in the group of traditional export items is Pashmina where some renewed efforts (such as registering Nepal specific brand name in the international market) are being made, thereby kindling some hope that its export in the coming years may grow.

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