INVESTMENT OPPORTUNITIES

I. MEDICINAL AND AROMATIC PLANTS

Due to varied agro-climatic environment, Nepal is very rich in medicinal and aromatic plants with over 700 plant species. The collection of such plants from wild sources has been practised since ancient times. With the establishment of the Royal Drugs Research Laboratory in 1962 the commercial utilisation of medicinal plants has been encouraged. More than 300 species have been screened and studied and extraction of diosgenin, reserpine, alkaloids of belledona, glycosides of digitalis, lemon grass oil, rosin, turpentine and menthol has commenced. Nepal, a traditional exporter of crude herbs, is now gradually emerging as an exporter of processed herbs and aromatic plants. In recent times commercial cultivation of medicinal plants such as atropa belladona and aromatic plants such as palmarosa, lemon grass, citronela and mentha arvensis have assumed importance. Recent studies also indicate good prospects for the cultivation and processing of chrysanthemum cinerariaefolium (pyrethrum), claviceps purpurea (Ergot), digitalis lanata, eucalyptus camaldulensis, glycyrrhiza flabra, mucuna pruriens, piper longum and valeriana wallichi.
The medicinal and aromatic plants can be exploited for the production of following: essential oils from lemon grass, citronella, palmarosa and mint, oleoresin from ginger, large cardamons, timur and tejpat; turpentine oil and rosin from chir pine; medicines from valeriana wallichii, calamous acrous and nardostachye jatamanshi. In addition to traditional medicines and essential oils, herbs and essences also have a potential as a raw material for the production of cosmetics and perfumes, herbal teas and natural health products.

II. MUSHROOM CULTIVATION

Many varieties of edible mushrooms are found in a wild state in the Terai lowlands, the hills and mountains of Nepal. Two rare varieties similiar to European types known as "Guchchi" and "Varsha Gumba" are found in the hills and mountains under natural conditions. Among the cultivated varieties, agaricus bisporus, pleorotus spp and volvariella are important. The temperature and humidity conditions necessary for growing agaricus bisporus (button mushroom) are very satisfactory in the hilly regions during some seasons. The pleorotus spp. (oyster mushroom) and volvariella (paddy straw mushroom) grow easily during most seasons. The Kathmandu valley has temperature, humidity and other biological factors suitable for the cultivation of these two varietiesof mushrooms throughout the year.
The Plant Pathology section of the Department of Agriculture's research stations at Khumaltar (Kathmandu valley) is producing mushroom spawn. This unit has well qualified staff to undertake research, spawn production and for extension work.
The potential for mushroom production on a commercial scale is good speacially with a view to marketing overseas as fresh mushroom, dried mushroom and canned mushroom.

III. VEGETABLE SEED PRODUCTION

A wide variation in agro-climatic regions from tropical to temperate and alpine climates provides opportunities to produce seed of a wide range of varieties. More importantly, the pockets of micro-climates seperated by high mountains provide ideal environments where the risk of loosing parental lines of high value seeds is minimal. Vegetable seed production is undertaken in 15 different areas with the following 4 special areas highly successful in the production of a variety of seeds: Thak Marpha in the Western Development Region (elevation 2516 m.) - cabbage, carrot, cress, peas, turnip, broad leaf mustard; Mushikot in the Mid-Western Development Region (elevation 1460 m.) - onion, radish, cauliflower, peas, turnip, spinach, capsicum, knolkohl; Kathmandu calley in the Central Development Region (elevation 60 M.) - cauliflower, cress, spinach, turnip, radish, broad leaf mustard; sarlahi in the Central Development Region (elevation 60 M) - tomato, egg plant, cucurbits, capsicum, spinach, peas, okra.
Nepal has well qualified vegetable seed agronomists and vegetable seed breeders. The vegetable development division in the Department of Agriculture has many regional farms located in different agro-climatic regions with well equipped production, cleaning and storage facilities. The division can also provide technical supervision and quality control services through well equipped seed testing laboratories.
Very good potential exists in Nepal for the establishment of vegetable seed farms catering to both domestic and foreign markets. Potential markets in India, Bangladesh, Sri Lanka, Pakistan and Thailand could be developed successfully. The seed quality standards in these countries are close to Nepalese seed standards. Export markets in American and European countries too could be tapped with the participation of investors from these counntries.

IV. FLOWER SEEDS

Due to varying ago climatic conditions Nepal is in an unique position to produce a wide variety of flowering seeds which could be sold in international markets. In the summer season zinnia, marigold, gladiolus, salvia, dahlia, canna are grown extensively. In winter and spring most of the annual flowers such as bellies, dianthus, pansy, antirrhinum, helichrysum, aapaver, verbena, sun flower and so on are grown. The potential for seed production of the following varieties, in particular, has been identified as being very good: anemone sp., aster, chrysanthemum morifolium, elsholtzia californica (california poppies), lathryus odoratus (sweet peas).
The availability of varied climatic conditions and inexpensive labour provide Nepal a comparative advantage to produce flower seeds at low cost. Commercial production and export of flower seeds require maintenance of high technical standards and good supervision. Technology and expertise of foreign companies could be effectively employed to develop this profitable agro-business in Nepal.

V. VEGETABLE PRODUCTION FOR EXPORT

Due to the variety of agro climatic regions and fertile soils Nepal produces a wide variety of vegetables of good quality. The major items of vegetables grown on a commercial scale are cabbage, carrot, turnip, radish, cauliflower, peas, capsicum, egg plant, tomato, okra, knol kohl, beans and cucumber. The major centres of vegetable production are in the Kathmandu valley and in the Dhanusa, Sarlahi, Bara, Makawanpur and Chitwan districts. Almost the entire production of vegetables is consumed within the country, though some exports to India and Tibet are taking place. Recently the production of snow peas for export to Japan has got off to a satisfactory atart and other items like french bean are to be produced for export. This has clearly demonstrated the potential which exists for the production of a few special varieties of vegetables on a commercial scale for export. Foreign investment for the scientific cultivation of vegetables for export would be a profitable business.
VI. FRUIT PROCESSING

Nepal is endowed with good ecological conditions for the cultivation of a variety of fruits. At present citrus fruits, apple, banana, pine appple, mango, pear, litchi, guava, peach, plum and apricot are available in sufficiently large quantities. Plans are also underway to increase the area under cultivation through commercial fruit development programmes. The total quantity of fruits produced is estimated around 480,000 mt. Fruit processing industries consume a fair proportion of total production. Two important fruit processing industries are engaged in the produvtion of fruit squash, fruit juice, jams, jellies, marmalades and fruit salad. Some of these products are exported from Nepal. Opportunities exist for the setting up of industries to process fruits for sale in export market as fruit juices and squash, jams and jellies and fruit based special liquors.

VII. TEA DEVELOPMENT

Nepal has commenced commercial production of tea only in comparatively recent times. The Nepal Tea Development Corporation, a government agency owns seven gardens with a total area of around 880 hectares. In addition the private sector owns tea gardens with a total area of around 1250 hectares. These tea growing areas are in the Eastern districts of Ilam, Panchthar Tehrathum and Dhankuta, almost adjacent to the world renowned tea gardens of darjeeling in India.
The government has given high priority to increase tae production in the Eastern Districts with a view to achieving self-sufficiency in tea and to export high quality teas to overseas market. In order to encourage tea cultivation exemption from the land ceiling law has been provided.
Good prospect exist for the production of quality orthodox teas in Nepal similar to the Darjeeling tea produced in India. Improved cultural practises, latest technical know-how and efficient management systems are required to bring the tea industry in line with the other tea producing countries in the region.

VIII. SERICULTURE

The development of sericulture has been identified as offering very good potential for development in the mid-hills and Terai belt of Nepal by experts from Japan, Korea, China and India. Agro-climatic conditions in these areas favour the cultivation of mulberry and teh rearing of cocoons. The Government has set up a nucleus centre at Khopasi about 35 km. east of Kathmandu in 1975. The centre initially served as a demonstration centre and later expanded its activities to provide training, extension and reserach functions. In 1991/92 it will also function as a major silkworm egg breeding station. Nepal has developed six bivoltine lines and these will be used to produce hybrid silkworm eggs in the country. The preferred production technology in Nepal is the temperate bivoltine technology which is simple and easily asaptable by small farmers.
On a very preliminary assessment mulberry cultivation could be extended over an extent of 6000 hectares which could yield around 350 tonnes of raw silk and 85 tonnes of waste silk. The value of silk fabric from this level of production could exceed Rs. 1800 mn. Private investment to encourage mulberry cultivation and cocoon rearing by small farmers could be developed successfully in Nepal. Post cocoon activities involving reeling, twisting, weaving and production of items out of silk fabric could be developed as medium-scale industries.