Value addition in Commodities

Farmers of central Gujarat with large base of cash crops such as tobacco, pulses and potato are not only introducing new crops that were alien in the region but are also investing into processing and value-addition technology.

Commodities, the next big thing in India, has started getting its due from all the existing and emerging stakeholders. But high growth in the sector, particularly agri-commodities, in coming times will be fuelled more by value addition.

At present, Gujarat, the hub of agri-commodities trade and manufacturing in the country, processes only 10% or less of its total agricultural produce. The state can look forward to immense potential of value addition in about 30 agri-commodities, including castor, banana, cumin, cotton, tobacco, mustard, sugarcane, psyllium, groundnut, pulses and potato.

Traders and farmers in the state are now working towards such value additions by improving crop quality, processing, storage and packaging facilities. The value-added products of these commodities are now in great demand especially in the exports market for use in pharma, bio-diesel, foods and beverages, perfumes and industrial sectors. The state, which is the centre of castor seed production, has a potential of creating value at least three times the input cost. This means that India, which currently exports castor seed worth Rs 800 crore, could actually end up exporting castor derivatives worth Rs 2,500 crore.

At present, these value additions are done in different countries. Castor processors are now beginning to realise the potential and are likely to more than double their capacities within two years. Spice commodities such as cumin, fennel seed are two commodities where a number of new usage has created solid demand in recent past. The two are extensively being used as flavours in drinks and eatables. Few processors near Unjha are now also extracting liquid oil from cumin called spice oleoresins which are used by food processing and flavouring industry abroad.

According to National Research Development Corporation (NRDC), an agri-research and incubating agency, the returns in value-added spices are high between 20 to 30 times the raw material cost. Psyllium husk or isabgol products, another large commodity traded in mandis of Gujarat can now be found as part of diet in the US homes. Now it is becoming popular in other parts of the world as well. It finds use in the pharmaceutical/drug composition for reducing cholesterol, improve bowel movements and use as laxatives.

However, much of the exports from India is still done in raw or semi-processed form with few but organised players doing the value additions as processors in India lack technology as well as patent to produce value-added products.

“Not enough is happening on securing patents for such commodities in India. The companies in the business need to make investment in research and development in finding new usage of these commodities. With patents value-addition in commodity processing will gain prominence,” says Anil Gupta of IIM, Ahmedabad, who did an impact study of WTO on agriculture for the Gujarat government.

Packaging is another area where value addition can multiply the returns. Banana farmers of south and central Gujarat are waiting to reap great benefits of value addition by exporting bananas to other countries through the upcoming Banana Pack house in Bharuch district. “The ripening will be undertaken in controlled environment and the packaging facility will cut down on the losses incurred by them,” says Karsan Patel, a local banana trader.

Farmers in the Anand district have introduced new crops like palmarosa and lemon grass are setting up processing units to garner better profits. “I am setting up a processing unit which will increase my returns many folds,” said Bhaskarbhai Patel, a palmarosa farmer in Anand district. The district-based farmers are also benefiting from the innovators like Sopariwala Exports, engaged into manufacturing variety of tobacco for smoking and chewing.
Some of the tobacco processors have also started investing in modern technologies to offer value-added products to customers.

Energy blenders such as ethanol and bio-diesel can be effectively produced in Gujarat. Sugarcane from south Gujarat can find high-end use in ethanol production. While wastes land of the state can be used for jathropa cultivation to be used in bio-diesel. According to government estimates, Gujarat can use close to 2 million hectare of waste land to generate Rs 4,000-crore annually from jathropa cultivation and processing.

Courtesy : Economic Times