Sunday, January 21, 2018

Primary agriculture processing will profitable for farmer

Prices of agriculture commodities and produce are volatile in nature. Just after production farmer goes to market and try to sell his agriculture produce. He has three major disadvantages with just after harvest selling; peak supply period, non-graded material decreases final value of his produce, self-life or perishability of produce.

Value addition: If farmer goes for primary processing of his agriculture produce, it adds some value as buyers have to do same processing with that agriculture produce after buying from farmer. By primary processing farmer can do primary value addition to his agriculture produce which is necessary for further processing. This value addition will increase his earning from same agriculture produce. His quality will give an advantage.     

Reduction of Extra cost:  A lot of transportation cost and time is involved for transpiration of agriculture produce from production point to processing point. Generally, there is some waste material with main agriculture produce, if that waste material is separated from agriculture produce at farm level then it will save cost for complete value chain.  It is very easy to segregate waste material at first stage from agriculture produce. Once waste material will come in value chain then it will bite some share from profit earned from agriculture produce.

Bypass peak arrival time: By doing primary processing of farm produce by farmer, it will consume some time. During this processing period peak arrival will come down in market and after this period arrival for that agriculture produce will go down. farmer will get premium price for same agriculture produce by avoiding the peak arrival period and quality agriculture produce.

More profit  during increasing price: Profit share in case of upward movement of price of agriculture produce. If farmer store his farm produce after primary processing. It will reduce his time consumption in selling process of agriculture commodity/ farm produce. Quality agriculture produce get decent price in upward price movement. In the case of pulses, if demand of processed pulses increases during festival period specially Diwali of other festival. End consume require processed pulses, farmer can directly sell his pulses to end consumer if it is properly processed and he can earn money by by-passing the cycle of trader, stockist, processor, whole seller retailer and consumer. He can get premium price at that time. 

Hedging against price falling. When price of agriculture produce fall sharply then first effect comes to raw commodity and prices is quoted low for normal commodity.  If same agriculture commodity is processed and value added, then farmer will have time to exit before prices fall effect come to final agriculture produce. In the case of Tomato, prices of tomato fall sharply but price of source of tomato-poori don’t come down in same proportion.

Storage time increase. It is very hard to store processed material. If the material is processed properly then we can store agriculture produce for long time.  In case of potato if broken potato are mixed with unbroken potato, then broken potato will start to decompose fast and it will increase the decomposition of good potato.

Farmer must understand benefit of value addition of agriculture produce. He must add value to his agriculture produce up to his highest limit, so that he can increase his profit share from his agriculture produce / farm produce / agriculture commodity.

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