Contribution of value addition to agriculture development-A case of coconut industry in Tiptur, Karnataka

Processing of agricultural produce is a well-known agro-industrial activity. Agro-industries were essentially perceived as first level post-harvest processing of farm produce. The transformation and preservation of agriculture commodities through altering physical and chemical characteristics and packaging has manifold contribution to economic development. However, value addition is only seven per cent in India as against 23 per cent in China and 88 per cent in United Kingdom. However, research studies focusing on quantifying the benefits of value addition is limited. Hence, an attempt is made in this research study to quantity the benefits of processing and value addition of agriculture commodities. For assessment, value chain of coconut in Karnataka is chosen for the study. Since, Karnataka produces more than 65 per cent of DC production in the country, contribution of DC to agriculture development is considered for the analysis. About 70 small and large scale factories processing coconut to DC are located in Tiptur taluk of Tumakuru district. The major cost of processing coconut to DC is the cost of raw material with a share of 86% followed by labour cost. The average operational cost of processing/day for a small unit which process is Rs. 34, 873 while that for a large unit is Rs. 2, 06, 972 and the net returns was Rs. 18, 595 and Rs. 2, 01, 709/day for small and large units respectively. The income generated by value addition through employment is estimated at Rs 30 crores/annum while the income generated through backward linkages was estimated to be at 170 crores/annum. Though there are increased opportunities for processing agriculture commodities, in Karnataka only one percent of the horticultural commodities are processed. In view of the post-harvest losses and loss in storage, a comprehensive value chain analysis for potential agriculture and horticulture commodities are to be conducted. This will enable to suggest suitable policies for processing and value addition of agriculture and horticulture for overall development of the agriculture economy.