Value Chain Analysis Of Grapes.docx

VALUE CHAIN ANALYSIS OF GRAPE CROP FROM NASIK, MAHARASHTRA

Executive Summary Value chain analysis (VCA) focuses on three key areas: First, the dynamics of information in the value chain, from final consumption through to primary production and input suppliers and back again. Second, the creation and flow of value, in the eyes of the final consumer, at each stage in the value chain. Third, the nature of relationships between the different stakeholders, from input supply to retail.1 Horticulture in India is being emerged as one of the most prominent sources of livelihood for rural people, with 85 percent of land operators being marginal or small (operating less than 5 acres each). 2 Area under fruits and vegetable cultivation is increasing constantly due to introduction of new cultivation practices and improved varieties. Grape is one of the important fruit crop grown in India. It is third most widely cultivated fruit after citrus and banana. Grapes (Vitis vinifera) belong to the Vitaceae family. Maharashtra (75.33 percent) is largest producer of grapes in the country3. Grapes are widely consumed as fresh fruit in India. It is also used for producing raisins, wine, juice, juice concentrate, squash, beverages, jams and marmalades. Grapes are highly digestible and have a number of beneficial properties. Cultivation of grapes is known as viticulture. It is worthwhile to understand the prevalent market channels of grapes herein. This document attempts in understanding various channels supply chain of grapes in Nasik. The document describe in detail about the dynamics and roles of each stakeholder involved in supply chain right from farmer (Producer) to consumer. It also focuses on cost benefit analysis at each level. It also describes the activity framework of grape crop. It aims at understanding the current practices, best practices, gaps and possible areas of intervention at each stage of activity framework i.e. from input supply to marketing of the grapes.

Introduction: Maharashtra has diverse agro climatic conditions suitable for the cultivation of a wide range of crops. Grape is considered as one of the important commercial fruit crops of the state. It accounts for 70 percent of India’s total grape acreage, and 63 percent of production4. 1

Taylor, 2005; Bonney et al., 2007 Datta and Sharma, 2010 3 National Horticulture Board, India 4 National Horticulture Board, India 2

Within Maharashtra, the grape crop comprises 12 percent of the total fruit acreage, with 42,500 acres.5 Thompson Seedless, Sonaka, Sharad Seedless and Tas-e-Ganesh, are some of the major varieties grown in Maharashtra. Harvesting of grapes is being done from early February to early April. Nasik is the major district while Sangali, Solapur, Pune and Ahmednagar are some other districts involved in grape production. The climate of Nasik is relatively cooler and suitable for cultivation of quality grapes. Water availability through Godavari river and its tributaries, easy availability of related inputs, and presence of prominent institutional organizations i.e. Maharashtra Rajya Draksha Bagaitdar sangh, Ojhar, Mahagrapes, Niphad, National Horticulture Board Office, District Superintendent of Agriculture are an added advantage. Nasik district accounts for 78 percent of grape acreage and 80 percent of production of grapes in the state. The average size of holding in Nasik is the same as the average for the state (1.67 ha). A total of 39 percent of its main workers are farmers and 21 percent agricultural labourers. Of farmers in Nashik, 73 percent are small or marginal and operate 40 percent of land. Nasik district also contributes 55 percent of India’s and 75 percent of Maharashtra’s grape exports 6 The exports from Nashik have increased 10-fold from 4,532 MT in 2003 to 48,465 MTin 20137. Grape is the commodity with higher potential for value addition and Nasik is the place with comparatively good access to processing and distribution facilities that enhance the value of final product. Hence it is important to understand value chain for grapes for both local and export market.

5

National Horticulture Board, India National Centre for Agricultural Economics, India 7 National Horticulture Board, India 6

Various channels of the grape supply chain (Flowchart):8 Grafted Seedling/Root stock

Labour

LAND

FarmMachinery

.

Chemical Fertilizers

.

FYM/Compost

Irrigation Water Wine Yards/Orchards Pruning Girdling Thinning GA Treatment (10%)

(5%) Harvesting

Wine Making

Packing (Table grapes)

Distributor Retailer Consumer

Pre cooling (85%) Domestic Market Traders Consumer

Traders

Super Market

Retailer Consumer 8

Packing (5%) Export Market

whole saler

Diagnostic study of SME, Cluster Development Programme, India

Raisin Making

Consumer

Cold Storage Traders Consumer

Around 85-90% of the grapes produced in Nasik are sold directly from the farm to traders. Around 10% of the produce goes into processing/winery industry. Around 5% of the produce goes for export purpose. As shown in the figure above, major players involved in the trade of grapes are farmer, trader, commission agent, wholesaler, exporter and processor. Sometimes farmers may sell to traders directly at the farm gate, to traders at village markets, or directly to processors, co-ops and others. I would like to understand the dynamics and the role played by major stakeholders in supply chain of domestic market in Nasik. Farmers In Nasik there are farmers with five to 25 acres, with part of the land under grapes, who mainly exports, as well as there are very small growers with two to five acres, who mostly sell in the domestic market. In general, in Nasik grape-growing areas, 15-20 percent of farmers are smallholders, 43-49 percent are medium sized and the rest are large landholders. Grape is a crop which requires fixed investment for establishment of orchard. The cost of establishment of an orchard in a hectare is represented below. Table 1: Activity Cost in Rs per Ha9 Activity Cost in Rs per Ha Land preparation 25000 Trellises and support system 312500 drip irrigation system 62500 green manure 30000 organic manure 37500 fertilisers 20000 pesticides 25000 irrigation 2500 planting material 3750 Total 518750 Table 2: Operational cost per Ha in Rs Domestic Market10 Activity Cost in Rs per Ha Growth hormone 8750 Irrigation 25000 Labour for various operations 5000 Fertilizer 3750 Chemical application after 87500 pruning Total 180000 Labour: 9 10

Report on Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II, ADB Report on Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II, ADB

Grape is a labour intensive crop especially during 4 months of the year starting from flowering till fruit maturity i.e. from Oct to January. Major operations include spray of chemicals, thinning bunches, covering of bunches by paper, cleaning of bunches by removing dead or rotten berries etc. Labour accounts for more than half of the operational expense incurred during the year for taking one crop Traders: Trader plays an important role in the value chain. He does the sorting, grading and packaging at the farm itself and the packaged grapes are sent to destination markets. Traders visit orchards when the fruit is nearing maturity. The price is decided on per kg basis depending upon the size and quality of fruit. Wholesaler: They are the bulk breaker and are responsible for distribution of grapes to various locations in the country through retailers.

Consumer: The price paid by the consumer is almost two times of the price realized by the farmer.

Grapes per Kg

Farmer

Cost of Production (Rs)

Trader

Consumer Total

13

Purchase Price (Rs)

13 25

35

40

5

7

1

2

25

35

40

50

7

3

4

8

22

in

31.81

13.63

18.19

36.37

100

in

64.29

25

3.57

7.14

100

Cost of maintenance and logistics (Rs) Selling Price (Rs) Margins (Rs) Percentage share Margins Cost involved Percentage

Wholesaler Retailer

50 15

Though in this case percentage share of farmers in total margins is greater than trader and wholesaler, cost invested by him in establishing the orchard and producing the grapes is high. Although, the returns per unit area of land are very high with grape cultivation, it takes four to five years to get the invested amount back and also it requires recurring cost for maintenance of orchard. It is also worthwhile to understand different agricultural practices and processes involved in each stage of grape production to marketing.

Table 3: Activity Analysis of Grapes of Nasik District, Maharashtra Particulars

Current Practices

Inputs Seedlings Fertilizers, pesticides, and other material required for initial establishment and for thinning, training, pruning is available at Nasik. Credit: Medium and large farmers have good Access to formal credit (network of commercial and co-operative banks (425 branches) Labour: Bounded labours from the same village or migrant labours

Best

Skilled labour,

Practices

Adequate and on time formal credit for all farmers,

Production

Harvest

Farmers and Farm labour are involved from Oct to January operations, include spray of chemicals, thinning of bunches, covering of bunches by paper, cleaning of bunches by removing dead or rotten berries Use of tractors for spraying of medicines, intercultural operation

Period: Harvesting is of about 4 months i.e. in JanuaryFebruary to May, On the basis of ripening, quality parameters such as sweetness, size, colour, residues Method:Hand harvest is the only harvesting system for table-grapes

Fertilization through drip irrigation system

Harvesting should be done only when the berries are fully ripened (sugar: acid ratio2530), Berry size: 16 mm in diameter, Bunch weight 300-750 gm, Berries should be of uniform colour and size in a bunch , advisable to

Post

Local

harvest Bunches are trimmed by removing the decayed or defective berries before packing

addition Presently no value addition is done by farmer at local level

Precooling technolog y (In precooling, temperatur e is maintaine

Use of Trichoderma for improving the postharvest shelf life of grapes

o

d at 0-4 C and relative humidity at 90% and above)The removal

Value Marketing Major markets of grape in Nashik are Pimpalgaon and Nashik APMCs. Around 8590% of the grapes directly to traders trader does the sorting, grading and packaging at the farm itself price is decided on per kg basis depending upon the size and quality of fruit Collaboration with Mahagrapes and the Grape Growers Association

Gaps

Possible Interventio ns

shortage of labour, no training programme on practical work for the labourers, Insufficient labs for testing of soils, grape leaves, berries, the chemical residue

lack of knowledge regarding latest methods Excess money spend on use of pesticides and fertilizers frequent problem of chocking of drippers and non uniform discharge of water

Extension MSGGA Credit (banks) Insurance (public and private) Contract harvest labour system.

Moisture conservation techniques like mulching, subsurface irrigation Application of nutrients through drip

Different seedless and seeded varieties

Dissemination

close the harvesting by 10 a.m

of undesirabl e, diseased and injured berries at initial stage improves the appearanc e and reduce the infection at later stage.

extraction of high yield results in reduction of its economical life and deterioration of the quality, Huge damage due Climatic conditions, Lack of protective to avoid losses due to rainfall in the flower season and from too much heat or sunshine in the fruiting stage

inherently perishable , Rough handling promotes more dry stems, brown stems, more weight loss and soft berries

Lack of time management techniques, many traders own cold stores in Nasik but farmers don’t own,

During harvesting farmers about all wear rubber technical aspects gloves, to reduce of harvesting erasing the fine waxy coating

Use hygienic packaging material for storage and transport to avoid infestation. Production raisins, wine making, ready

Training to

Hygiene not monitored

Lack of marketing infrastructure and professional marketing skills

Long delays from producer to retailer

Farmers club or producer companies can be promoted, Awareness to be created among the farmers to have linkage with

of grapes have to be introduced to cater to the different types of customers and their tastes

of Technology and knowledge through from Research Centre, Agricultural universities, fertilization through drip, seminars workshop arranged by the Grape Growers Association

from the berry surface

to serve beverage, squash and juice

Mahagrapes or other cooperatives

Concluding Remarks:

Though grapes is the crop which gives higher returns to the farmer, there are some loop holes in production as well as in supply chain, more over untimely rains, hailstones, excess cultivation and other negatives such as perishable nature, wastage have adverse effect in grape production. It is important to recognize that the risks of production and market are largely with growers, which may lead in reducing the prospects of grape farmers in Nasik district. These issues need to be addressed in order to increase the production and also to retain the interest of farmers. National Research Centre for Grapes at Manjari (Pune) can play a vital role in research needed to combat adverse effects of climate change and disease through biological methods. The use of U.V. sheets or shaded nets similar to a poly-house needs to be developed with low cost technology. Further for those bearing heavy losses, a calamity fund should be introduced at the association level. Institutional credit facilities are the vital factor in agricultural development. The main emphasis is laid down on adequate and timely credit support to the farmers, particularly small and marginal farmers for encouraging adoption of modern technology and improved agricultural practices.

There are several intermediaries in the marketing chain resulting in delay and rise in market selling price up to 2.5 to 3 times of the farm gate price. We should encourage the farmers to directly sell in the market by reserving some area in the APMC, as stalls especially for farmers, an innovative system followed in Andhra Pradesh called Rutu Bazaar may be replicated. The State Government agencies can guide the farmers by giving day-to-day market information on domestic markets. The Grape Growers Association and similar agencies should play major role in coordinating with the different strata of farmers and transferring the marketing data to the lowest level.

Pre cooling units are burdened due to high electricity charges as they have to pay by commercial rates of billing. A concession in these rates as well as for agricultural pump sets would go a long way in encouraging this sector. The issue has to be taken up with the Ministry of Agriculture and Food Processing. Periodical meetings between the two most important actors i.e. the farmers and the traders should be held before the Agricultural season to understand the situation and build faith among them. Producer companies or Grape growers Association should be promoted for medium and small farmers which could act as facilitator, quality controller, input supplier as well as service provider to its member farmers. There are also local conditions, cost pressures on smallholder producers that they do not permit adequate use of modern techniques and hence they employ workers on farms. But the workers generally are not skilled or acquainted with different methods involved from grape production to harvesting, and also in peak season they are not available, So local service providers can leverage their networks for production and labour supply, also an attempts can be put to percolate down the farm mechanization techniques to the farms and workers, in order to make them better workers as well as entrepreneurs, who could take up part of the value addition activity as groups or associations. Value chains are not just about value creation and capture by the driver, but also about value sharing with others, especially weaker/smaller stakeholders in the chains, from a livelihoods perspective.