Supply chain of lemon grass


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Supply chain of lemon grass

  1. 1. Development of Supply Chain of Lemon Grass in the Patna District of Bihar India By K.M. Singh, Director, SAMETI, Bihar, India Burton E. Swanson, Prof. Emeritus, UIUC, USA Expert Consultations on Herbal, Medicinal & Aromatic Plants, ICARDA, Aleppo, Syria, 10-12 July 2007
  2. 2. Background ATMA, Patna pursued a strategy that would help farmers diversify into higher value commodities and products. Three criteria were used to evaluate alternative crops and products within the district:  There had to be a continuing market demand for the crop or product.  The crop must be well suited to the existing agro-climatic conditions, and  The production technology to be used must be relatively low- cost to reduce the farmer’s risk and provide enhanced returns.  In other words, each ATMA is expected to pursue:  Market-driven,  Farmer centered, and  Environmentally friendly approach to agril. diversification.
  3. 3. Lemon grass: The ideal crop The following case study outlines the steps followed by the ATMA, Patna to assess and develop a financially sustainable supply chain for the production and post harvesting handling of Lemon Grass by groups of farmers in the district. Lemongrass cultivation due to its many advantages has come as boon for the farmers, some of them are as follows:  They can be grown even on less fertile and marginal lands.  They resist drought and can grow successfully where no other crop generally grows provided, some care is taken by the farmers in terms of providing life saving irrigation.  There is little damage to the crop from animals and insect-pest, as they normally keep away from it due to its bitter taste.  Attractive economic returns with little risk on the part of the growers.  Selling the Lemon grass oil is not a problem because of its ever increasing demand and a large number of buyers.
  4. 4. Building the Supply Chain for Lemon grass The main constituent of lemongrass oil is 70- 88% of citral, Minor constituents are: linalool, geraniol, citronellol, nerol, 1.8 cineol, linayl acetate etc. The perfume industry has found that Lemon grass oil can give almost the same effect in blends as more expensive scents. Pharmaceutical industry also uses the lemon grass oil extensively Therefore, cultivation of HMAPs quickly emerged an important crop for small-scale farmers
  5. 5. Step 1: Conduct PRA and develop SREP Participatory Rural Appraisal (PRA) used to assess local condition and to identify marketable crops that could be successfully introduced Entrepreneurial farmers already producing different Herbal, Medicinal & Aromatic Plants (HMAPs) were identified Researchers were consulted to determine which HMAPs could be successfully grown in Patna district Findings included in Strategic Research and Extension Plan (SREP) and submitted to ATMA Governing Board for approval
  6. 6. Step 2A: Investigate potential markets Investigating potential markets was difficult since traders engage in secretive and opportunistic buying practices The Internet, published sources, the media and personal contacts were all used to identify firms that manufacture traditional medicines Different companies were contacted to determine their interest in contracting with farmers to produce to specification. Many firms were not interested, Potential demand for different HMAPs was assessed from interested firms
  7. 7. Step 2B: Organize Farmers into FIGs Farmers with similar social/economic backgrounds and shared goals were organized into farmer interest groups (FIGs) Typical village-level FIGs have 10-15 members FIGs that share a common interest, such HMAPs (Lemon grass), may organize into a block-level Farmer Association (FA) and these FAs may organize at district level into Farm Federations (FFs). The goal was to create a producer network whereby a substantial quantity of Lemon grass oil could be produced on a sustained basis to secure: Economies of scale Increased market power Good financial returns for members
  8. 8. Step 2C: Develop/Test Production Technologies . Company contracting for Lemon grass wanted the crop produced organically KVK was asked to develop and validate the technology Then the KVK was to train the FIG members so they could meet the company’s quality and organic production specifications
  9. 9. Step 3A: Facilitate Contract Negotiations A contract was negotiated between the company and a group of FIGs to supply lemon grass oil. ATMA, Patna served as the facilitator between the FIGs and the Buyer. Contract specified that the produce should be free from any adulteration, with min. 70% citral content Company agreed to buy 2MT/year during next five years with a provision of a 20% increase each year. Securing credible markets was considered essential to the success of this activity
  10. 10. Step 3B: Arrange exposure visits for FIGs . FIG leaders were taken to other states (Maharashtra, Uttar Pradesh and Madhya Pradesh) to learn how other farmers have successfully grown HMAPs FIG members were taken to other districts to visit other farmers who were successfully producing herbal, medicinal & aromatic crops FIG leaders were also taken to research institutions, like CIMAP in Lucknow and the FFDC in Kannauj to learn about: Specific high-value aromatic crops The production and post-harvest handling techniques needed to successfully produce these crops.
  11. 11. Training programs were organized by by ATMA in association with national institutes like CIMAP in Lucknow, CEDMAP in Bhopal and FFDC in Kannauj The local KVK and experts from the SAU also helped train the FIG members Company experts were also actively involved in training the FIG members Step 3C: Training FIG Members
  12. 12. Step 4: Arranging for Quality Planting Material Planting material (Slips) for lemon grass was made available to farmers by the ATMA on actual cost- sharing basis Since not available locally, they were procured from CIMAP, Lucknow and FFDC, Kannauj The actual cost of Rs.2/- per slip was charged from the farmers
  13. 13. Step 5: Technical Backstopping of FIGs Company technical staff and researchers from the KVK, SAU and ATMA visited the farmers regularly to monitor the crop Care was taken to ensure that the crop remains organic and free from any pesticide contamination Any problems encountered were resolved in the field itself
  14. 14. Step 6: Harvesting, & Oil Extraction . All pre- and post-harvest handling is supervised by the company and ATMA The crop must be harvested properly, shade dried and then cut into pieces before loading in the Field Distillation unit for oil extraction, as per the requirement of the company Also, the Oil must be properly packed in food grade plastic or stainless steel containers before transporting to the delivery site
  15. 15. Step 7: Oil Tested and Delivered FIG members transport the lemon grass oil in food grade plastic or stainless steel containers to the company’s delivery station The company has its own testing facilities located here. Samples are tested for moisture content, pesticide residues and citral content, (min 70% desired) Payment to farmers is made after testing the oil for citral content and weighing the oil
  16. 16. Identify firms that buys and uses Lemon grass oil BTTs organize FIGs; assess interest in HMAPs Steps in Developing a Supply Chain ATMA Organizes PRA and develops a SREP Arrange for planting material (slips) and other inputs needed to produce the Lemon grass oil FIG members produce lemon grass oil to specification; BTT and buyer’s staff supervise Consult with research institutions; KVK to field test technologies FIG leaders oriented to Aromatic crops through exposure visits ATMA arranges with KVK to train FIG members Transport Lemon grass oil to delivery site, test product, weigh product and pay farmers ATMA facilitates contract agreement between FIGs and buyer
  17. 17. Details of Aromatic crops being grown in Bihar through leads provided by ATMA, Patna (Year 2005-06) Aromatic Crops Area (ha.) Oil yield (kg./Ha. Total oil producti on (kg.) Rate at which oil sold Rs./kg Gross income Rs./ha Net income per ha. Rs./ yr Lemon grass 102 140 14280 300 42000 19500 Java citronella 30 125 3750 270 33750 14250 Mentha 110 120 13200 300 36000 15500 Palma Rosa 20 100 2000 405 40500 18000 Tulsi (basil) 24 100 2400 200 20000 8500 Jama rosa/CN-5 13 155 2275 325 50375 25375 Total 299 37905 Source- Singh, 2006, World Bank Study on ATMA Model in Bihar
  18. 18. THANKS