INTRODUCTION to nepal
Nepal is a landlocked country located in Southern Asia between China and India. It contains eight of the world’s ten highest peaks including Mount Everest and Mount Kanchenjunga (CIA, 2016). Kathmandu, the country’s capital, is the largest city in Nepal. Nepal is a diverse nation with an estimated population of 29 million individuals, 81.3% of which are Hindu, 9% of which are Buddhist, and 4% of which are Islam (CIA, 2016; World Meters, 2016). 44.6% of the population speaks Nepali, the country’s official language (CIA, 2016).
Nepal has a total land area of 147 181 km2 and is composed of three ecological regions: the terai region in the south, the mid-hills region in the centre, and the high mountains region in the north (NTNC, n.d.; FAO, 2011). The ecology, agriculture, and population densities differ in each region; the terai forms plains, the mid-hills have terraces, and the high mountains have highly steep and cold terrain (M. Raizada, Dr., lecture, September 12, 2016; NTNC, n.d.). 28.8% of the total land area in Nepal is used for agriculture (CIA, 2016).
Agriculture anchors the economy of Nepal, providing sustenance for almost 70% of the population and composing 29.4% of the GDP (CIA, 2016). GDP per capita of Nepal is 2500 USD in 2015, which was comparatively low with countries around the world, ranking at 198 (CIA, 2016).
Nepal has a total land area of 147 181 km2 and is composed of three ecological regions: the terai region in the south, the mid-hills region in the centre, and the high mountains region in the north (NTNC, n.d.; FAO, 2011). The ecology, agriculture, and population densities differ in each region; the terai forms plains, the mid-hills have terraces, and the high mountains have highly steep and cold terrain (M. Raizada, Dr., lecture, September 12, 2016; NTNC, n.d.). 28.8% of the total land area in Nepal is used for agriculture (CIA, 2016).
Agriculture anchors the economy of Nepal, providing sustenance for almost 70% of the population and composing 29.4% of the GDP (CIA, 2016). GDP per capita of Nepal is 2500 USD in 2015, which was comparatively low with countries around the world, ranking at 198 (CIA, 2016).
INTended purchaser
The intended purchasers for the T-handled hand tools are individual smallholder Nepalese farmers because the T-handled spade and fork are relatively small and can be used by one person at a time only. There is no statistics available about the number of hand tools used in agriculture in Asia Pacific region. However, the number of hand tools used is estimated based on the population of agricultural labour force and assuming each person uses at least three types of hand tolls for tillage, harvesting and operations. (S. Shrestha, 2012). The estimated number of hand tools used in Nepal is 36.20 million with 12.07 million agricultural labour force, ranking 9th in 19 countries. (S. Shrestha, 2012; FAO, 2011). The market demand for hand tools in Nepal is large.
It is also estimated that 85% of the agricultural hand tools in Nepal are locally made by village blacksmiths (S. Shrestha, 2012). Another reason individual smallholder farmers are intended purchasers of the T-handled hand tools is that the skills and profession of the village blacksmiths are in extinction (S. Shrestha, 2008).
BENEFITS TO NEPAL
No electricity required
The simple T-handled hand tools are practical and versatile options for the poor and rural population of Nepal. With limited access to adopt mechanised equipment, most farm work is completed with manual labour. The spade and the fork would allow Nepalese farmers to work anywhere and anytime since no electricity is required.
Easy for use and transport
Literacy rate in Nepal for total population is 63.9% (CIA, 2016). The T-handled hand tools has the advantage of being immediately used without further training.
The T-handled hand tools are also easy for transport across the terrain in Nepal as they are in lightweight. The spade is 0.6 kg and the fork is around 2 kg (Sneeboer & Zn, 2016).
Easy for storage and customer guarantees
Both hand tools are small so they can be stored easily. Even though the spade and the fork are expensive for hand tools, Lee Valley Tools Ltd. provides a customer satisfaction guarantee: any product may be returned within three months at no cost to the customers. The company will give a full refund to customers with unsatisfactory results (Lee Valley, 2016). The manufacture company Sneeboer & Zn also gives warranty to the tools they manufactured, 2-years warranty on the wooden handles and 100-years warranty on the stainless steel part (Sneeboer & Zn, n.d.).
The simple T-handled hand tools are practical and versatile options for the poor and rural population of Nepal. With limited access to adopt mechanised equipment, most farm work is completed with manual labour. The spade and the fork would allow Nepalese farmers to work anywhere and anytime since no electricity is required.
Easy for use and transport
Literacy rate in Nepal for total population is 63.9% (CIA, 2016). The T-handled hand tools has the advantage of being immediately used without further training.
The T-handled hand tools are also easy for transport across the terrain in Nepal as they are in lightweight. The spade is 0.6 kg and the fork is around 2 kg (Sneeboer & Zn, 2016).
Easy for storage and customer guarantees
Both hand tools are small so they can be stored easily. Even though the spade and the fork are expensive for hand tools, Lee Valley Tools Ltd. provides a customer satisfaction guarantee: any product may be returned within three months at no cost to the customers. The company will give a full refund to customers with unsatisfactory results (Lee Valley, 2016). The manufacture company Sneeboer & Zn also gives warranty to the tools they manufactured, 2-years warranty on the wooden handles and 100-years warranty on the stainless steel part (Sneeboer & Zn, n.d.).
transportation of potential export
Exporting the potential products require a procedure. Firstly, customers (farmers) can place orders of the product by either giving a phone call to the company, or filling an order form and fax it to the company.
Then, Lee Valley Tools Ltd. will send an email inquiring the customers about shipping charges and shipping methods (Lee Valley, 2016). After confirming the shipping method and charges with customers, the order will leave the company’s warehouse located in Ottawa, Ontario, Canada (Lee Valley, 2016).
Hence, the spades and the forks will be shipped by A-1 Freight Forwarding, a Canadian company that offers global cargo service. The order will be shipped by air because Nepal is a landlocked country. The order will first be shipped by cargo trucks from Ottawa to Toronto, the cargo company’s headquarter. Thus, the order will be shipped by air freight to Kathmandu airport, Nepal’s capital city (A-1 Freight Forwarding). Lastly, the order will be shipped from Kathmandu airport to the mid hill regions in Nepal by vans because the terrain is quite dangerous in the mid-hill regions in Nepal.
Then, Lee Valley Tools Ltd. will send an email inquiring the customers about shipping charges and shipping methods (Lee Valley, 2016). After confirming the shipping method and charges with customers, the order will leave the company’s warehouse located in Ottawa, Ontario, Canada (Lee Valley, 2016).
Hence, the spades and the forks will be shipped by A-1 Freight Forwarding, a Canadian company that offers global cargo service. The order will be shipped by air because Nepal is a landlocked country. The order will first be shipped by cargo trucks from Ottawa to Toronto, the cargo company’s headquarter. Thus, the order will be shipped by air freight to Kathmandu airport, Nepal’s capital city (A-1 Freight Forwarding). Lastly, the order will be shipped from Kathmandu airport to the mid hill regions in Nepal by vans because the terrain is quite dangerous in the mid-hill regions in Nepal.
quantities and cost
Assuming 10 farmers from the mid-hill regions each purchasing one unit of T-handled spade and one unit of T-handled fork, the total shipping cost from Toronto, Ontario to Kathmandu, Nepal is $ 345.20 CAD. The 10 sets of spade and fork generate 1 total of $ 139 CAD x10 sets = $1390 CAD.
The total shipping cost is calculated by: airfreight rate + terminal and screening fee + processing fee + surcharges (A-1 Freight Forwarding). The airfreight rate is $ 5.84 CAD/ kg all in. The actual weight of the 20 spades and forks are: 30 kg because 10 spades weight 0.6 kg each and rounding up to 1 kg each and 10 forks for 2 kg each. The volume weight is 5.03kg and the chargeable weight is 30 kg.
After multiplying the weight and the price per weight, the total for air freight is $175.20 CAD. Then adding the terminal and screening fee at $ 95 CAD and processing fee at $ 75 CAD, the total shipping fee is $ 345.20 CAD (A-1 Freight Forwarding).
The total shipping cost is calculated by: airfreight rate + terminal and screening fee + processing fee + surcharges (A-1 Freight Forwarding). The airfreight rate is $ 5.84 CAD/ kg all in. The actual weight of the 20 spades and forks are: 30 kg because 10 spades weight 0.6 kg each and rounding up to 1 kg each and 10 forks for 2 kg each. The volume weight is 5.03kg and the chargeable weight is 30 kg.
After multiplying the weight and the price per weight, the total for air freight is $175.20 CAD. Then adding the terminal and screening fee at $ 95 CAD and processing fee at $ 75 CAD, the total shipping fee is $ 345.20 CAD (A-1 Freight Forwarding).
Export/import procedures and challenges of exporting to Nepal
Export procedure in Canada
For exporting the hand tools to Nepal, Lee Valley Tools Ltd. have to first obtain a business number issued by the Canada Revenue Agency (CRA). Then, the company has to determine whether the hand tools intended for export are subject to any restriction by the CBSA or other department of the government (Canada Border Services Agency, 2016). Hence, determine if an export declaration is required and submit one if required. After the hand tools are exported, a certificate of origin to the receiver of goods may be required (Canada Border Services Agency, 2016). Most importantly, Lee Valley Tools Ltd. should keep all the records regarding the export for several years (Canada Border Services Agency, 2016).
Import procedure in Nepal
Importing the hand tools in Nepal also has a specific procedure for following. Except for prohibited and quantitatively restricted items, no licence is required for imports (Nepal trade information portal, 2016).
After the arriving of the cargo at Kathmandu airport, the CA will approach the TIA customs with several documents such as air waybill, certificate of insurance and Nepal customs declaration (Nepal trade information portal, 2016).
Challenges
One of the challenges is that to successfully export the hand tools from Canada and import them to Nepal, the company must obtain all the documents needed and certificate if required. The second challenge is that 25.2% of the population in Nepal lives below the poverty line (Asian Development Bank, 2014). A set of T-handled spade and fork causing $ 139 CAD might be too expensive for the farmers to purchase to use in farms. Thirdly, road safety is a major challenge in Nepal (World Nomads, 2015). A few roads in Nepal are poorly constructed around the terrain with no safety barriers. Exporting the hand tools through these poorly maintained roads could cause accidents and death of drivers while transporting the products (World Nomads, 2015).
For exporting the hand tools to Nepal, Lee Valley Tools Ltd. have to first obtain a business number issued by the Canada Revenue Agency (CRA). Then, the company has to determine whether the hand tools intended for export are subject to any restriction by the CBSA or other department of the government (Canada Border Services Agency, 2016). Hence, determine if an export declaration is required and submit one if required. After the hand tools are exported, a certificate of origin to the receiver of goods may be required (Canada Border Services Agency, 2016). Most importantly, Lee Valley Tools Ltd. should keep all the records regarding the export for several years (Canada Border Services Agency, 2016).
Import procedure in Nepal
Importing the hand tools in Nepal also has a specific procedure for following. Except for prohibited and quantitatively restricted items, no licence is required for imports (Nepal trade information portal, 2016).
After the arriving of the cargo at Kathmandu airport, the CA will approach the TIA customs with several documents such as air waybill, certificate of insurance and Nepal customs declaration (Nepal trade information portal, 2016).
Challenges
One of the challenges is that to successfully export the hand tools from Canada and import them to Nepal, the company must obtain all the documents needed and certificate if required. The second challenge is that 25.2% of the population in Nepal lives below the poverty line (Asian Development Bank, 2014). A set of T-handled spade and fork causing $ 139 CAD might be too expensive for the farmers to purchase to use in farms. Thirdly, road safety is a major challenge in Nepal (World Nomads, 2015). A few roads in Nepal are poorly constructed around the terrain with no safety barriers. Exporting the hand tools through these poorly maintained roads could cause accidents and death of drivers while transporting the products (World Nomads, 2015).
Summary and recommendations to help potential Canadian exporters in the future
To conclude, the bilateral trade relationship between Nepal and Canada will benefit both countries in a lot of ways, such as generating profits for Canadian companies and increase employment in the transportation sector. Export of T-handled products will benefit Nepalese farmers because they have limited to no access of electricity. However, the price of the hand tools are expensive and demand a premium price that Nepalese farmer cannot afford. Shipping prices from Canada to Nepal is also too costly. The cost of importing the product from Canada to Nepal is larger than the benefits that farmers can gain. Manufactures can design more affordable products in the future for farmers.
Originality of overall idea and specific products
Original idea of exporting T-handled spades was based on the lecture taught by Doctor Tejendra Chapagain. In comparison with Canada, Nepal uses 99% less electricity because it takes 10-12 hours of load shedding per day for getting access to electricity (T. Chapagain, Dr., lecture, September 16, 2016). Having limited access to electricity and mechanised equipment, an alternative way to farm is to use manual labour. Manual labour requires no electricity but only hand tools and labour. T-handled spades and forks will be beneficial to Nepalese farmers.