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Research Progress Report

On

Value Chain Analysis of Micro and Small Enterprises

Faculty of Management Studies


Banaras Hindu University
Varanasi 221005

Submitted By:
Ms. Swati Srivastava
Research Scholar
Faculty of Management Studies
B.H.U, Varanasi

Value Chain Analysis of Micro & Small


Enterprises
Model for Sustainable smallholder inclusion in value
chain

(P

Problems

Recommended
Instruments to
address the problem

Sustainable Inclusion into

Outcome

Simplified Existing Tomato Value Chain


The simplified tomato value chain diagram is referred to as a simplified model
because numerous interconnections were omitted and the size, levels of
control and importance of each of the links and flows could not possibly be
shown in a single diagram. Also of note is that horticultural produce value
chains have a similar structure. The following discussion will focus on the
main segments of the tomato value chain, wholesale, wholesale-retail, retail,
processing and intermediaries.

Tomato Value Chain

Tomato Processed by Micro Enterprises

On farm sorting

Delivery to factory

Sorting at the factory

Washing

Pulping

Seeds

Pulp

Heating/Sterilization

Seeds

Heating/Sterilization

Sauce , juice/squash, ketchup, puree, chutney, chilli , etc.

Packaging

Tomato Production Process


Operations Main Functions
Support Services

Specific Functions

Primary Processing

HARVESTING
AND
POST
Pickin
HARVEST

Packaging
Picking
Tomato Farmers
Large Scale Farmers
2. Small Scale Farmers

Producers

Labour/Self

Processors
Produce Market
Paste
National Fresh Produce Market
Fertilizer and Pesticide Application
Sauces
Preparations
Canning
Freezing

FERTILIZERS
AND
PESTICIDES

Wholesale

WEEDING /
STAKING

Labour/Self

Other Intermediaries
TRANSPLANTING

Pump rent (in


Terai only)

Irrigation

Exporters
Direct Sales
Export Agents
Transplanting

Distribution Centres
Satellite Produce Markets
Chains e.g. fruits & vegetable city
Bed Preparation
Labour/Self
Ploughing

Wholesale Retail
LAND
PREPARATION

Retail

SEEDLING
PREPARATION

Further Processing

Formal & Informal Retailers


Supermarkets2. Hawkers
Tuck shops4. Greengrocers
Seedling

Catering
Restaurants
Fast- food
Functions & events

Hospitality
Hotels
Lodges

Institution
Corporate
Government
Hospital
prison

Typical Market Linkage for Tomato


Consumers

Tractor rent (in


Terai only)

Final Consumers
Local Consumption

Process flow of operations in Tomato value


chain

Vendors
Farmers
Collection Officer Collection Hub
Farmers

Vendors

Farmers
Second Grading & Packaging
First Grading
Vendors
Farmers

Vendors

The Fruit & Vegetale Industry Differentiated


Product Flow Chain

Input Supplier

Grower
Shipper/Packer
Postharvest Handling*

Processing

Wholesale & Import

Retail
Specialised
Food service/ Catering**
Open
Market,
Mobile F&V
StallsRetailer/ Greengrocer
Chain Retailer/ Supermarket
Corner
Shop

Consumer

Fresh Produce Fruit & Vegetable Supply


Chain

Traditional Vegetable Supply Chain (Source:


KGPL)

Producer

Lack of Options at Farm Gate


Rudimentary Farming Practices
Delayed Price Discovery
Distress Selling

Local Level Mandi

City Mandi

Agents

Wholesaler
Retailer

End Consumer

No Value Addition
Channel Financing
Risk Free Income
Multiple Handling leads to wastage & Quality Deteriora

Price & Income Risk


30% wastage of vegetable & fruits
Leftover Unsold Vegetables & fruits
Economy of Scale (Poor)
14-16 hours of working time
Quality & Quantity of Vegetables & fruits (Low)
Hygiene of the Vegetable& fruits (Mandi) (Low)
Fluctuations in Prices
Transaction Time (High)

Traditional and Modern Retailing Chains in Tomato


Traditional Value Chain
Value Chain

Modern

Farmer

Farmer

Village Merchant

Vendor/ Wholesale Supplier

Middlemen

Collection Centre

Wholesaler

Distribution Centre

Commission agent

Retailer

Mandi / Local Bazaar

Consumer

Retailer
Consumer

Tomato Value Chain Map

Input Supply

Production Bulking/ Transporting


Wholesale/ Retail
Processing/ Packing

Co - Operatives
Hotel /Lodges

velopment Institutions
Smallholder producers
Primary Traders

al/ Informal Agro Dealers


Commercial producers
Secondary Traders

Tertiary Traders

Restaurants

Markets / Supermarkets
Imports

Established Linkages
Support Services
Financial
Business development
k Linkages
Market Information
Extension

Wea

The strongest linkages in the tomato supply chain are those orientated
around the trader system. Traders buy from smallholders and transport
through several individuals until the produce is sold to the market.In
extremely few cases do smallholders sell further up the chain than the
primary /secondary trader level.The lack of supporting services to both
smallholders and traders means that the efficiency of routes up the value
chain and the flow of information down the chain is limited.

Food Distribution System

Food processors

Sales Agents or
Brokers

Wholesalers

Caterers

Retailers

Consumers

Summary of Business Relationships in


Tomato Value Chain
Functions

Services

Participant

Linkage between actors

Research
institutions

Research,
multiplication of
seeds
Agrochemicals,
equipments
supply
Input
purchase,
ploughing,
ridging, planting
weeding

Researchers

Persistent network relations exist between


Researcher and Input suppliers.

Input supplier
(stockiest)

Spot market relationships the relations are


created on the sport (including negations on
price).
Spot market relationships (the relations are
created on the spot (including negotiations
on price).

Input supply

Production

Transporters,
Farmers.
Labourers
(casual)

Harvesting

Labour for
harvesting

Labourers

Spot market relationships (the relation are


created on the spot (including negotiations
on price) between farmer and labour

Loading at
farm / local
collection
place
Trading
(primary)

Transport,
loading,
unloading

Transporters
and labourers

Spot market relationships (the relation are


created on the spot (including negotiations
on wage) between farmer and labour

Move
tomatoes to
markets,
load
/unloading,
transport
Unloading,
packing,
transport,
loading
Transporting,
Selling

Transporters,
urban trader sell
tomatoes to
retailer

Spot market relationships (the relation are


created on the spot (including negotiations
on price, volume, type) between local trader
and urban trader

Wholesaler and
retailer

Grading
and
packing,
loading

Exporter /
importer

Spot market relationships (the relation are


created on the spot (including negotiations
on price, volume, type) between urban
trader & retailers
Spot market relationships (The relation
are created on the spot (including
negotiations on price, volume) between
Retailer & consumers
Persistent network relations exist between
exporters and importers, prearrangements
on volume but prices determined by market
forces

Trading
( secondary)

Retailing

Exporting /
importing

Shopkeepers /
stall

Cost Component in Tomato Production

Profit Margins of Tomato

Value Chain Analysis of Tomato


(On the basis of cash payment for labour)
FARMER/GR0WERS
Item
Cost

Production Costs
Seed
Manuring
/Fertilizer/chemical
Labor

LOCAL TRADER
Item
Cost

Assembling
Costs
Sorting,
grading
packaging

WHOLESALER
Item
Cost

Assembly cost
Trucking Cost
tax

RETAILER
Item

Retailing
Cost
Sorting,
Grading
local
transportation

Others tax

Others
Total Production
Costs
Post Production
Transportation

Acquisition
Cost

Total
Assembling
Costs
Total Post
Production Costs

Acquisition
Cost
Total Trucking
Costs
Wholesaling
Cost

Acquisition
Cost

Total
Retailing
Costs

Cost

TOTAL FARM
LEVEL COSTS

Losses

TOTAL
LOCAL
TRADER
LEVEL
COSTS
Losses

Margin
Farm gate Price

Total
Wholesaling
Costs
TOTAL
WHOLESALE
LEVEL COSTS

TOTAL
RETAIL
LEVEL
COSTS

Losses

Losses

Margin

Margin

Margin

Assembler
level price

Wholesale level
price

Retail level
Price

Chapter Plan for Value Chain Analysis of


Tomato
1. Description of the Tomato Industry.
Production areas
Production
Employment
Consumption
2. Market Structure
Domestic market and prices
Share analysis
Processing
3. Market Intelligence
Competitiveness of U. P tomato market
4. Market Access
Tariff, Quotas & Price entry system
5. Distribution Channels
6. Logistics
Mode of transport
Cold chain management
Packaging
7. Simplified Tomato Value Chain
Wholesalers
Wholesale-retailers
Retailers
Processors
Intermediaries
8. Strategic Challenges

9. Conclusion