MSc

ABSTRACT
Value chain is a business model that describes the full range of activities needed to create a
product or services. A value chain comprises the steps that involve bringing a product from
conception to distribution, and everything in between- such as procuring raw materials,
manufacturing functions and marketing activities. The value chain work best when their
actors cooperate to produce high quality products and generate income for all participants
along the chain.
The present study entitled “Value chain analysis of medicinal rice in Kerala was undertaken
with the objectives viz., to map the value chain of Navara rice and Rakthashali rice of Kerala,
to identify and explore the various chains and actors involved in the value chain, to analyse
the price spread efficiency and factors influencing it, and to identify the constraints and
possible solutions at different levels in the value chain.
The area of the study confined to Palakkad and Malappuram districts of Kerala. The selection
of districts has been made based on the highest number of Navara rice farmers and
Rakthashali rice farmers respectively. Both primary and secondary data were collected from
Palakkad and Malappuram districts of Kerala. Primary data were collected from 60 farmers
(30each from the selected districts) and 60 consumers (30each from the selected districts)
using snowball sampling. Sample from the rest of the actors in the value chain was selected
based on the information received from farmers, processors, marketers and consumers.
Secondary data were collected from Department of Agriculture, Kerala, KVKs, District and
Block level offices in the two districts of Kerala and relevant KrishiBhavan. The data were
collected using pre-tested interview schedule. The collected data were analysed with the help
of value chain mapping tool (global approach), modified market efficiency (Acharya’s
approach), percentage analysis, index method and Kruskal Wallis test.
The mapping of medicinal rice value chain revealed that the core process involved in the
value chain of medicinal rice includes input supply, production process, procurement,
processing, marketing and consumption. Farmers, millers, organic certifying agency,
retailers, consumers and Krishi Bhavan were the major actors involved in the value chain of
Navara rice. Whereas farmers, millers, processors, retailers, consumers and Krishi Bhavan
were the major actors involved in the value chain of Rakthashali rice. The main sources of
information were Krishi Bhavan and fellow farmers for Navara and Rakthashali farmers.
These rice varieties were sold within the various places of Palakkad, Malappuram and Thrissur districts of Kerala.
The analysis of various chains and actors involved in the value chain highlighted that there
was two marketing channel for Navara rice and three for Rakthashali rice in the study area.
The identified marketing channels are:
Navara rice
Farmers Retailers Consumers
Farmers Consumers
Rakthashali rice
Farmers Processor Consumers
Farmers Retailers Consumers
Farmers Consumers
The Navara farmers produce on an average of 4923 kg paddy in a year. After the production,
the farmers keep an average of 25.16 kg/year of paddy for self-consumption and also for seed
purpose. The remaining portion was taken for converting paddy into rice and then sold to
retailers and consumers. In the case of Rakthashali farmers, they produce an average of
3108kg of paddy in a year, after the production the farmers were preserve an average of 9
kg/year paddy for self consumption and for seed purpose.It was found that Navara farmers
were earning a high margin of ₹ 109.37/Kg per farmer in channel II. In the case of
Rakthashali rice, the farmers were earning a high margin of ₹ 95.06/Kg per farmer in channel
III followed by ₹81.24/Kg per farmer in channel I and ₹65.06/Kg per farmer in channel II.
No advance sales contract is taking place in the case of Navara and Rakthashali rice
marketing. Consumers of both Navara and Rakthashali rice expressed nutrient value were the
highly satisfied component with a composite index of 88.88 followed by chemical pesticide
free, taste and freshness.
The price spread efficiency in the value chain showed that, the increase in the number of
intermediaries in a value chain decreases the market efficiency through increasing cost and
margin of intermediary. The percentage of producers share in consumer rupee is better for
lesser intermediary chain. Among the two channels in the Navara rice marketing, channel I is
least efficient with market efficiency of 0.6. Channel II is most efficient channel with market
efficiency 1. The producers share in consumer rupee was found to be higher in channel II (100) followed by channel I (66.67). In the case of marketing channels of Rakthashali rice,
channel I and channel II were least efficient with market efficiency with 0.6. The producers
share in consumer rupee was found to be higher in channel III (100) followed by channel II
(66.66) and channel I (60). The only channel which gives maximum return to farmer is the
channel of marketing directly to consumers. The major factors influencing the choice of
selecting the channels were income of the actors and holding capacity of farmers. The entry
into a specific chain by an actor depends on the revenue benefit receivable. When the farmer
is unable to keep the product they choose to sell it through processor, retailers and consumers.
So the ability of a farmer to store the product also influences choosing a particular channel for
marketing.
The identified constraints faced by the farmers were the lack of availability of organic
fertilisers, shortage of labour, lack of knowledge about the application of inputs, lack of
awareness regarding source of supply of inputs, wastage on processing, inadequate
availability of machines, lack of storage and high transportation cost. For processor, the major
problems faced by them include high transportation cost, high labour cost, wastage on
processing, inadequate technology, price fluctuation and high price of the product. Lack of
availability of product in time, lack of storage and high price of the product were the major
problems faced by the retailers. High price of the product and unavailability of product were
the major problems faced by the consumers.
The study therefore concludes that the organisation like Krishi Bhavan should come forward
with training and advisory services for improving the knowledge of the farmers. The
government may support the farmers by providing new machineries at the subsidised rate and
also educate the farmers about the new technologies and machineries prevailing in the market
through the Krishi Bhavan. Government may take steps to provide storage spaces for the
farmers to minimise the effects of price fluctuations. The middlemen involved in the value
chain results in loss or get low margin to the farmers. Because of this many farmers hesitated
to come forward for the cultivation. Therefore, government may help the farmers to avoid
private middlemen either through direct procurement or by getting the services of cooperative
to market the produce. Even though there is high demand for the medicinal rice because of its
medicinal properties, due to the price fluctuation, interference of middleman and the risk
associated with the natural calamities, the farmers are reluctant to cultivate medicinal rice in a
large scale. Only with the proper intervention of government through KrishiBhavan on the above mentioned areas can attract the farmers to come forward for the large scale cultivation
of medicinal rice.