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Value chain mapping, producer share and margins for corn snack processors
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Department of Agril. Economics, College of Agriculture, PJTSAU, Hyderabad 500 030, India
1&2
Dean of Humanities and Social Sciences, PJTSAU, Hyderabad 500 030, India
ABSTRACT
The analysis of maize production and marketing in Mahbubnagar district and its processing into different
value added products till it reached the end users is done by collecting the data from producers, traders
and processors of maize. The movement of the produce is tracked through major AMC Badepally from
farmers to the processors and onwards. Even though there are many value added products for maize the
major value added products found were corn sev, corn bolls and corn sticks in this region. The mapping of
the value chain from farmer to the snack processor was done and, the marketing margins were calculated
for the three value added products. The study shows the movement of maize from farmer- market – trader-
snack processor. The mapping of value chain and analysis indicated that processing for corn sticks yielded
maximum returns compared to the other two. The study revealed that processors were the gainers in the
value chain. This revealed the importance of setting the processing units at the production points of maize
leaving a scope to have direct contracts with farmers. Further if training is given to small farmer groups for
taking up small scale processing units and encouraging them to establish units in the same village by
providing matching grants also helps the farmer in receiving large portion of consumer’s rupee.
Key words : Corn bolls, Corn sev Corn sticks, Maize, Value addition and Value chain
maize. According to the Ministry of Agriculture, the input supplies like seed fertilizers, pesticides,
Government of India 80.74 lakh ha have been labour and chemicals. Financial services obtained
brought under maize. Badepally AMC has the high- from the traders and commission agents. After the
est arrivals during the study period and the respon- produce is dried for 3-4 days and shelled using
dents are selected from the identified list of maize maize shellers for this farmer uses the labour for
growers by adopting simple random sampling tech- drying, shelling and winnowing operations. The
nique. Primary data was obtained from farmers by produce is then transported to traders in the agricul-
interview method. The information is also gathered tural market where selling the produce takes place
from traders and snack processors of maize. immediately and sometimes the produce is stored in
Producer’s share in consumer’s rupee, Marketing the market godowns with high price expectations in
margin market agents and price spread is calculated the future. The produce is then sold to the proces-
according to SS Acharya and Agarwal. The broad sors. In snack processing unit after produce is re-
network of value chain and mapping of value chain ceived it first goes for screening and cleaning of for-
to its value added products is done. eign material like sand particles, agricultural waste
if any, later add value to the snack products. These
Results and Discussion diverse value added maize products are distributed
to all the targeted areas.
The market channel through which the produce is
Value chain analysis of maize
delivered to consumers includes traders and proces-
sors. The maize produce is the basic unit traded. It is The concept of value chain is quite prevalent in in-
usually categorized into three types. Primary prod- dustry (Abdullah 2004). A value chain is the full
uct: The raw corn harvested from the farmers field. range of activities which are required to bring a
Eg: maize cobs. Secondary product: These are the product or service from conception through the dif-
sub products derived from maize cobs such as ferent phases of production and final delivery to
grain. Tertiary product: Further differentiation or customers. Market functionaries or middle men
processing of secondary products including snack move the commodities from producers to consum-
foods and processed animal feeds. With this prelimi- ers. (Gereffi et al. 2005). Marketing costs and mar-
nary view the broad value chain of maize is concep- gins incurred by the cultivator, trader and processor
tualized. were worked out. The value chain prompts exist-
The value chain is conceptualized and presented ence of three major value added products prepared
in Figure 1 which included, maize production with out of maize in study area namely corn sev, corn
bolls and corn sticks. Hence the mapping, price ent for preparation of corn sev, corn bolls and corn
spread and market margins are worked out for this sticks and finally supplied to consumers. For this
snack manufacturing channel purpose the processor buys both whole grain and
The value chain shows that the farmers take their also broken grain if any from the trader. If whole
produce for sale to the nearby regulated markets i.e., grain is received from the trader and each maize
Badepally agricultural market rather than selling grain is broken to 4-5 pieces and additives like
them in villages or unregulated markets. In regu- colour is added like yellow, orange colours and the
lated markets farmers are not required to bear many broken grain is thoroughly mixed with colour and is
of the marketing charges. In the market they follow put in the machine run by electric motor and the
close tender system, the bids are invited in the form grain is popped into sev, corn bolls and corn sticks
of a close tender rather than by open announcement. as shown in Figure 2 and there are three machines
The produce is displayed and the commission agent involved in making three different value added
is allotted lot numbers. products. These products are sold to wholesale
The prospective buyer inspects the lots, offer a shops and retail shops and it further reaches the con-
price for the lot which they want to purchase on a sumer. Thus maize value addition takes place. Hav-
slip of the paper and deposit the slip in a sealed box. ing defined this value chain, process of value addi-
When the auction is over the slips are arranged ac- tion in the study area, an attempt has been made to
cording to the lot number, and the highest bidder analyse the market margins, marketing costs in the
gets the produce. Maize having several uses trader major value chain activities.
has divergent selling opportunities as it is used in
the poultry and animal feed industry, in starch and
food industry, in breweries and for human con-
sumption. Traders in the market area of
Mahbubnagar sell the produce to snack manufactur-
ers in Hyderabad who also receive maize from other
traders in Hyderabad.
value addition would go up. The sale price of snack retailers in the country is another way to expand the
foods is ‘ 2500-3000 showing the potential of diver- private sector.
sity of uses and the amount of value addition done
to maize. References
Suggestions
Acharya, S.S. and Agarwal, N.L. 1987. Agricultural Mar-
Maize processing is one of the most potentially lu- keting in India, Oxford and IBH Publishing Com-
crative areas for expansion of private sector. There is pany, New Delhi.
a need to explore the scope and benefits of joint ven- Abdullah S, Al-Mudimigha Zairib M, Moneim A, and
Ahmed, M. 2004. Extending the concept of supply
tures between the multinational food companies
chain. The effective management of value chains.
and local private sector in promoting using enter-
International Journal of Production Economics. 87 (3) :
prises in maize surplus areas. The Government has 309–320.
to introduce schemes to provide financial assistance Gereffi, G., Humphrey, J. and Sturgeon, T. 2005. The gov-
for setting up and modernizing of food processing ernance of global value chains. Review of International
units in rural areas, under the ownership of group of Political Economy 12(1) : 78-104.
women/men farmers, creation of infrastructure, Kulkarni, S.D. 2005. Country Report – India: Agricultural
training the farmers in entrepreneurial skills, sup- Mechanization – Present Scenario and Perspective.
port for research and development. At present, a Presented in Fourth Session of the Technical Com-
mittee of APCAEM held at New Delhi, India.
few private operators have started some processing
Seth, D. Seth, N. and Goel, D. 2008. Application of value
of maize on their own initiative. Strengthening the
stream mapping (VSM) for minimization of wastes
private sector initiatives by helping to link their in the processing side of supply chain of cottonseed
business with outside markets, capacity building oil industry in Indian context. Journal of Manufactur-
and support of viable informal processors and urban ing Technology Management. 19 (4): 529–550.