Impact of value addition on farm income in Maharashtra state

Abstract

There is a sharp decline in the share of agriculture and allied sectors in the GDP of India during last few years. The rate at which GDP of the country is growing is much ahead of growth of agriculture sector. This certainly affects the economy of rural masses and would widen the existing urban and rural divide because most of the rural population is dependent on this primary sector. The major factors contributing to this situation could be low prices to agriculture produce, increasing input cost, indebtedness of the farmers, globalization, nature dependence, lack of professionalism, short term Govt. policies and lack of marketing facilities and necessary infrastructure. The agriculture sector needs well functioning markets to drive growth, employment and economic prosperity in rural areas. We also need to·de regulate markets to promote investment in marketing infrastructure and define role of farmer, industry, traders and Govt. Balance of competition for price and quality needs to be ensured. In view of these facts, the present study was under taken. The problem statement of the present study is "Can value addition on farm will significantly improve the farm income?" The study was initiated to understand the extent of value addition taking place on farm and its impact on the farm income and further to identify the technological, institutional and market constraints for value addition. The change in total profit is equal to change in price due· to quality, improvement multiplied by change in quantity due to value addition practices minus additional cost incurred on value addition was the theoretical framework for this study. A structured questionnaire was prepared after consulting experts. The farmers from Pune, Satara, Nasik and Yawatmal districts were surveyed for the research project for the various crops viz. grape, tomato, onion, groundnut and cotton. Except cotton all other crops were studied in two districts to study regional impact. The data was collected on farmer's socio economic profile, credit availability, market facilities and the on farm value addition practices being adopted during cultivation, at the time of harvesting and after harvesting. The data was analyzed with simple cross tabulation as well as regression in SPSS. The study revealed that ratio of profit to expenditure in various value addition practices was highest in variety selection in almost all the crops. In case of cotton crop the use of DAP and integrated pest management gave better results as cultural practices whereas in case of postharvest, it is the use of by products which gave higher profits. However, very few farmers have adopted it. Simple and very cost-effective practice of drum rolling gave highest profit compared to investment in case of groundnut. The value addition practices during the crop production gave better results in grape and cotton whereas, postharvest practices in case of groundnut and cotton. Tomato has shown better results at the time of harvesting. As far as socioeconomic profile of the farmers is concerned, highest percentage of farmers who availed credit were grape growers and they were also highest in repayment of loans. The level of education was higher in case of high range of income generated through value addition practices. The other factors like access to institutional credit, rate of interest, availability of irrigation facility, direct sale to the processing units etc. did show some impact but it was not significant as per regression results. Overall it was observed that strengthening of extension activity through government, cooperatives and private participation to educate farmers on on-farm value addition practices. Deregulating markets and promoting direct marketing to consumers and processing units would also help. Improving access to institutional credit, infrastructure for marketing, transport, storage and processing is necessary. Emphasis needs to be given on quality parameters to capture international market.