This article is about starting the business of apple processing i.e. grading, waxing and packing in Gilgit Baltistan. There are other fresh fruit such as cherries and apricot but the fact is that cherries and apricot has got abundant market and higher prices in fresh form. Grading, waxing and packing would not add value and would not affect its prices in either retail or wholesale markets.
Apples are in abundance but have limited shelf life and low market appeal due to their perishable nature. The entire process flow is semi-automatic requiring both skilled and unskilled workers. The unit will treat and pack the mentioned products on internationally acceptable standards making the final product compatible enough for local market and even export. The unit would add value to the fruit by bringing it to the international standards, giving it greater shelf-life and lowering the overall wastage.
There are several issues with apple grading, packing and waxing that hinders its overall value, price and market. This study is focused on proper grading, waxing and packing of fresh apple to overcome the above issues. There are other fresh fruit such as cherries and apricot in Gilgit Baltistan but the fact is that cherries and apricot has got abundant market and higher prices in fresh form. Both cherries and apricot have lesser shelf life as compare to Apple and thus grading, waxing and packing would not add value and would not affect its prices in either retail or wholesale markets.
The proposed business involves a total investment of about Rs. 35.70 million. This includes capital investment of Rs. 34.07 million and Rs. 1.6 million as initial working capital. The project is financed through 40% debt and 60% equity. The Net Present Value (NPV) of the project is around Rs. 12.87 million with an Internal Rate of Return (IRR) of 24% and a payback period of 4.39 years.
The suitable locations for setting up the proposed unit is Gilgit Baltistan, the reason is that abundant quantity of fresh apple is produced. Within Gilgit Baltistan the main city and surrounding areas of Gilgit is proposed and the reason is that already business activities are operational there, transport, infrastructure and access to other high end down markets of Pakistan is available. The unit will provide direct employment opportunities to 29 people including management, skilled, semi-skilled and support staff. Higher return on investment and a steady growth of business is expected with the entrepreneur having some prior experience or education in the related field of business. The legal business status of this project is proposed as Sole Proprietorship.
Pakistan produces some of the best quality fruits in the world. Pakistan is world’s 10th largest country with almost 1.5 Million tons of Apple production. There are many kinds of apples in Gilgit Baltistan but the well-known kinds are “golden” , “red “ , “ star” and “five star”. Similarly the apricot is also produced in bulk in Gilgit Baltistan. This Feasibility Study is proposed for Apple Grading, Waxing and Packing.
There are other fresh fruit such as cherries and apricot in Gilgit Baltistan but the fact is that cherries and apricot has got abundant market and higher prices in fresh form. Both cherries and apricot have lesser shelf life as compare to Apple and thus grading, waxing and packing would not add value and would not affect its prices in either retail or wholesale markets.
Grading of Apples in Gilgit Baltistan (Pakistan)
Lack of product uniformity within a container is a serious constraint to marketing fresh fruit, particularly for export. It is very important to have as much uniformity in size, shape, and color within the package as possible. Many countries have national grade standards for each individual commodity that growers must adhere to in marketing their products. Such grade standards do not exist in Pakistan, and therefore a wide variation in fruit quality is common in the domestic market. This does not facilitate orderly marketing of the products and buyers are reluctant to pay premium prices because of this lack of product consistency. In some cases, apples, which have fallen from the tree onto the ground, are put on the bottom layers of the wooden crate and the better appearing fruit are packed on the top layers. Bruised and partially decayed fruit are often mixed in the same container as good fruit.
Waxing of Apples in Gilgit Baltistan (Pakistan)
A dull surface appearance diminishes the attractiveness of apples. Food-grade waxes are widely used internationally on apples to enhance their appearance and reduce shriveling. For those markets in which appearance is critical, apple growers should have available the capability to wax their fruit. The mechanics of waxing generally consists of applying a liquid form of wax to the dry surface of the fruit following washing. The procedure is generally automated and part of the packinghouse operation. However, waxing of individual apple fruit can be done where manual labor is adequate.
Packing of Apples in Gilgit Baltistan (Pakistan)
The packing materials used by the majority of Pakistani fruit growers are not conducive to protecting the product quality and are inferior in appearance and design for the export market. Unfinished 18-kg wooden crates are widely used for domestic marketing of apples. The outer appearance of the crate is not attractive and does not enhance the value of the product inside. Furthermore, the rough inner surface of the standard wooden crate can result in significant physical injury to the delicate skin of the commodity if it comes in direct contact with the rough wood surface. Newspaper and straw are commonly used to protect the fruit inside the wooden crate, but these materials are not appropriate for marketing fruit to supermarkets, high-end shops, or for export. Furthermore, the crates are often over-filled and considerable abrasion and compression bruising of the fruit occurs inside the crate. The additional weight of the wooden crates versus corrugated cartons results in higher transport costs. Food safety regulations and packing restrictions against the use of wood containers in many export markets will preclude the use of this type of packing in the international market. Strong, well-ventilated, attractive corrugated cartons are the norm in packing fruit for export.
Factors for Success of Apple Farming in Pakistan
The commercial viability of the proposed unit depends on the following critical factors:
- Technical know-how and relevant experience of entrepreneur.
- Suitable location where raw material and skilled labor having relevant technical know-how is easily available.
- Ability to generate work orders through appropriate networking, direct marketing and negotiating long term contracts.
- Higher return on investment and a steady growth of business is closely associated with regular training and capacity building of the entrepreneur and employees.
- The most important factor for the success of the project would be the quality products and customer satisfaction in order to get a comparative advantage.
Investment Required for Apple Farming in Pakistan
A detailed financial model has been developed to analyze the commercial viability of apple grading, waxing and packing unit. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet can be studied in the pre-feasibility study of apple grading & waxing unit setup in Pakistan by SMEDA.