Economic Analysis of Rice Value Chain in Bihar and Karnataka States of India

Abstract

In Rice Value Chain, a value chain starts with the production of a primary commodity i.e. paddy (Farmers), ends with the consumption of the final product (rice and associated byproducts) and it includes all the economic activities undertaken between these phases such as processing, delivery, wholesaling, and retailing. A comparative study of value chain study of rice was undertaken in East Champaran district of Bihar and Davangere district of Karnataka. The districts were purposively selected because these districts were leading producers of rice and also on account of many rice mills are operating in these districts of respective states. The marketing channels III i.e. Producer - Itinerant Merchant - Miller - Wholesaler - Retailer –Consumer and channel VI i.e. Producer - Wholesaler (Paddy) - Miller - Wholesaler (Rice) Retailer – Consumer were found common marketing channel in East Champaran district of Bihar. In case of Davangere district of Karnataka, channel-I, i.e. Producer - Miller- Wholesaler- Retailer-Consumer was found most common channel of marketing. The farmers were the first actor in rice value chain, but they did not receive fair price. They have limited scope of value addition. Rice milling system was not developed; most of the rice mills were of traditional (huller). Only few were modern large rice mills and most of the rice millers were not economically sound to realize the full benefit of value chain in Champaran district (Bihar). Further, it was found that a number of modern large scale mills as well as traditional (huller) were operating in Davangere (Karnataka) on account of high production of rice in the state and it is grown in two seasons leading to sufficient inputs for rice mills in Karnataka. Rice millers were the highest and important value adder in rice value chain, rice millers were added value in three stages purchasing of paddy, milling of paddy and selling of rice.