ICAR-DSR, Indore

Integration of Guar Supply Chain: Issues and Options

Purushottam SharmaSenior Scientist (Ag. Econ.),

Directorate of Soybean Research, Indorepurushottamji@gmail.com

NCDEX Guar International 2014 at Jaipur on 11.10.2014

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Next 15 minutes on ....

• Guar Supply Chain• Issues and options in Supply Chain

– Pre-production– Post- production

• Policy Related Issues• Strategies to integrate supply chain and boost

guar gum export

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Need for Integrated Supply Network for Agri-Produce

High delivery costs, caused primarily by a fragmented supply chain, inefficient logistics, together with poor standards are the common features of agricultural marketing system in the developing countries. In the present era of globalization & privatization• Competition no longer between firms but between supply

chains• Efficiencies of scale and scope the “buzzword”• Leads to shifts in the risk profile• Benefit to farmers as upgrading as chain actor, adding value

through vertical integration and developing partnerships/ ownerships, feedback to farmers to ‘grow what sells’

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Integrated Agri Supply Chain: Concept

An integrated supply chain provides access to knowledge, technology, finance, markets: leading to shared benefits

Market segmentation, consumers demand & low cost strategy -driving factors for supply chain collaboration

InputInfrastructure

Production and

Harvesting

Processing Infrastructure

Distribution and Export

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Guar Supply Chain: Pre-production

Chain Actors SupportActivity

Input Supply

Farmers

Dealer Network

RetailersFIG/ Producer

Company/ Contract Farming !!!

Res. Inst./Univ.- variety?? - seed??- agro technology- knowledge

Production

Seed Fertilizers Pesticides Inoculants

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Pre-Production: Issues and Options

Issues OptionsLow yield , high instability of APYRainfall dependence

Ensure availability of quality seeds , improve seed replacement rateProtective irrigation at critical stages

Low seed replacement rate

Increase availability of HYV seed

Low gum content and low viscosity varieties

High gum content and high viscosity varieties (like HG 365)Activate industry to fund R&D

Low agro-technology adoption

Popularize short-duration, drought, insect-pest resistant varietiesImproved crop production technology

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India’s share in total import of importing countries

Issues OptionsLow value addition

Development of HYVs / high viscosity for fasthydrating guar.

Technology Use of molecular breeding, biotechnology

Fragmented input supply chain

Integrate input supply chain along with support services

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Improved Guar Production Technology: Farmers knowledge

S. No.

Guar Production Technology Knowledge Score (%)

Knowledge Gap (%)

1 Soil testing 58 422 Improved variety seeds 68 323 Spacing 32 684 Seed treatment 18 825 Inoculation with culture 15 856 Nutrient management 52 487 Weed management 38 628 Plant protection measures 59 41

Source: Singh et. al. 2011

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Dependence of Guar Yield on Rainfall

1970-71

1972-73

1974-75

1976-77

1978-79

1980-81

1982-83

1984-85

1986-87

1988-89

1990-91

1992-93

1994-95

1996-97

1998-99

2000-01

2002-03

2004-05

2006-07

2008-09

2010-11

2012-130

100

200

300

400

500

600

700

800

Guar Yield (kg/Ha)

June-Sept Rainfall (mm)

Rajasthan

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Guar area under diff yield levels in Rajasthan

Rajasthan Haryana Gujarat Punjab IndiaYield CV 54.1 31.4 39.4 22.7 35.7

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Low seed replacement rate

Seed Replacement rate in Rajasthan (%)

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

5.59 2.29 2.27 2.49 3.75 7.38

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Varieties and Seed

Guar Varieties ReleasedPeriod NumberBefore 1980 51980-1990 161990-2000 92000-2010 11

Varieties in Seed Chain (15)

Bundel Guar-3 (IGFRI-1019-1)Gaur Lathi (RGC-1066)Gaur Uday(RGC-1055)Guar Kranti (RGC-1031)HG-365HG 2-20HG-563Rajasthan Guar-1 (RGC-471)RGC-1002RGC-1003RGC-1017RGC-197RGC-936RGC-986Kanchan Bahar (M-83)

Source: DAC, MoA, GOI

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Potential yield of Guar

State IP FP Yield Gap I

State Yield

Yield Gap II

Area ('000ha) TE

2012-13

Higher potential

(Ton) at YG-1At 50% of

YG-II

Rajasthan 1067.6 833.8 233.8 297.8 769.8 3536 826729 13,61,070

Haryana 1394.0 1242.2 151.8 1255.2 138.8 286.3 43450 19,871

Total increased potential (Ton) 8,70,179 13,80,940

Average yield for the period 2004-2008

Yield Gap Analysis and Expected Production

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Guar Supply Chain: Post-Production

Chain Actors SupportActivity

Contract Farming

Commission Agent

Village Trader

Farmers

Wholesaler

Processor (Split/ Powder)

Farmer Groups/ Coop

AggregationWholesale

- APMC- AGMARKNET- News paper- TV/ radio- University

Animal Feed (2%-5%)

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Post-Production: Issues and Options

Issues OptionsLong chain (Lack of farmer-industry linkage)Assured Supply of Guar??

Promote contract farmingFarmers’ GroupsDirect procurement from farm place

Market information Market intelligence needs to be strengthened, disseminated to farmers

Transportation (high cost, Availability)

Farmers’ groups

Market fees, state entry tax (differ with states)

Needs to be harmonised

Market infrastructure Cleaning-grading units at markets

High price fluctuation Risk management- farm to export

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Pre-Production: Issues and Options

Agricultural Produce Market Regulation Act amended to include provisions for

- Contract farming

- Direct marketing

- e-trading

- Private markets

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Price Risk: Management

Year

Rajasthan (CV in %) Haryana (CV in %)

Sri Ganganagar Hanumangarh Fatehabad Hisar2003 26.5 17.4 7.7 24.72004 21.3 21.1 18.6 3.52005 10.2 8.6 8.3 8.12006 7.9 7.2 8.0 7.22007 5.5 5.9 6.7 6.92008 7.2 7.8 7.1 9.62009 20.9 22.0 21.5 20.22010 7.8 8.0 8.3 14.72011 29.4 36.1 29.5 25.42012 46.1 33.8 56.3 56.72013 29.1 28.3 23.5 56.6

Commodity futures as a platform for minimising price risk

- Guar spot price volatility decreased post-futures (Sen Committee Report, 2008)

- Awareness is required

- FIG/ Farmer Producer Companies can help farmers

Source: Sharma, 2011 & Yadav, et. al., 2013

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Guar Supply Chain: Post-ProcessingChain Actors SupportActivity

Processor

Splits Powder Churi/ Korma

-R&D- Processing- Products- Market intelligence

Processing

Export

Animal FeedCompany

Trader/ WholesalerExporter

Farmers/ Dairy Owners

Retailer Animal Feed

Domestic Industries

-R&D-Transport-Containers-Testing-Export Support

Processing/ Export

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India’s share in total import of importing countries

 Country2006 2007 2011 2012

CompetitorsQ V Q V Q V Q V

USA 87.1 69.6 85.0 68.2 95.1 94.5 95.2 96.5 Pak, China, Spain, Nether, Italy

Canada 40.9 22.7 37.7 21.7 37.9 33.8 42.9 56.6 US, China, Pak, Italy, Spain

Germ 80.1 40.8 80.2 44.9 72.4 56.4 68.7 59.9 Spain, Switzer, Italy, Pak, Fr, UK

Aust 77.0 54.5 71.2 46.2 83.8 72.2 86.1 89.0 Spain, Pak, US, Italy,Switzer, China

Italy 58.0 26.1 65.1 31.0 88.3 72.5 82.6 61.0 Pak, Germ, Belgium, Spain, Fr, UK

China 66.0 37.5 57.5 36.4 45.5 30.4 45.1 37.3 Pak, US, Spain, Italy, Morocco

Japan 24.6 7.9 25.3 10.3 28.6 17.9 21.5 20.0 Pak, Spain, Denmark, US, Italy

Russia 13.0 6.3 17.9 37.0 52.9 40.7 54.3 44.7 US, Germ, China, Pak, Denm, Spai

Denm 33.6 8.8 36.4 8.3 26.5 11.1 30.0 26.2 Spain, Pak, Pourtg, Nether, Germ

Nether 51.8 30.0 36.7 18.2 36.0 31.6 42.4 43.9 Germ, Sweden, US, UK, Belgium

France 41.0 11.1 40.2 11.1 39.5 21.4 28.1 18.9 Italy, Morroc, US, Spain, Germ, UK

Q= Share in Import Quantity (%), V= Value share (%)

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India’s export mix and price relation

Year% Splits

(Qty)% Splits

(Val)% Powder

(Qty)% Powder

(Val)Split/Powder Price Ratio

2006-07 21.8 17.2 78.2 82.8 0.742007-08 31.2 27.2 68.8 72.8 0.822008-09 24.5 19.3 75.5 80.7 0.742009-10 18.2 14.6 81.8 85.4 0.772010-11 20.7 17.7 79.3 82.3 0.822011-12 16.3 11.7 83.7 88.3 0.682012-13 21.3 16.0 78.7 84.0 0.712013-14 17.6 13.0 82.4 87.0 0.70

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India’s share in total import of importing countries

Issues OptionsLow value addition

Industry, cess on guar export to fund R&D. Hydrolysed guar for dietary fibre use.Cationic guar for personal care use.Hydroxypropyl guar for construction, personal care,oil field uses.Removal of odour of guar meal and its use as a proteinsupplement for human consumption.Research – industry linkage to be strengthened.

Gap in process / technology for value-added products.

Import or develop process and technology.Establish techno centre to identify and make available the cost-effective and latest technology technology for processing.Export promotion council to assign techno-studies.

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India’s share in total import of importing countries

Issues OptionsCertification for export Certification Lab in processing area

New applications, action plan

R&D for development of new products and itstechnology, capacity building industry for food safety aspects.

Shortage of trained manpower in industry

Develop trained manpower by imparting technicaltraining.

Whole-of-the-chain industry body

R&D institution looking all aspects (right fromproduction to export) of guar.

Export policies Policies to encourage export of value- added products & discourage exporting intermediate products.Special assistance for adoption/ import of advanced processing technology.

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Enabling Factors of Guar Supply Chain

Key Enabling Factors of Guar

Supply Chain

Key Enabling Factors of Guar

Supply Chain

MonsoonMonsoon

Availability, price and quality of seed, inputs

Availability, price and quality of seed, inputs

APMC (Mandi)

APMC (Mandi)Policy and regulation

effectiveness

Policy and regulation

effectiveness

Processor- Ability to process and market

Processor- Ability to process and market

Logistics management

and efficiency

Logistics management

and efficiency

Research Information flow

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The Road Ahead…

Develop a R&D centre as the centre of excellence for Guar: • Collection and dissemination of information,

• Promoting usage of Guar and its derivatives,

• Development of processing technology according to changing market demand and food safety concerns

• Development of value added products.

• Have R&D facilities and pilot plant/ machinery for trial production of value added derivatives of Guar.

• Have facilities and authority for quality certification.

• Capacity building of small and medium enterprises in guar processing on the lines of growing food safety concerns.

Develop a R&D centre as the centre of excellence for Guar: • Collection and dissemination of information,

• Promoting usage of Guar and its derivatives,

• Development of processing technology according to changing market demand and food safety concerns

• Development of value added products.

• Have R&D facilities and pilot plant/ machinery for trial production of value added derivatives of Guar.

• Have facilities and authority for quality certification.

• Capacity building of small and medium enterprises in guar processing on the lines of growing food safety concerns.

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Further actions

Industry Association: How you can support farmers to stabilize yield, achieve

higher productivity, minimize post-production costs, and sustainability.

Access to processing technology: industry specific products

Research – Industry collaboration for higher and sustainable productivity and for processing

Industry Association: How you can support farmers to stabilize yield, achieve

higher productivity, minimize post-production costs, and sustainability.

Access to processing technology: industry specific products

Research – Industry collaboration for higher and sustainable productivity and for processing

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Guar

Greatest

Untapped

Agricultural

Resource

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Thank youThank you