VALUE CHAIN FINANCING STRATEGY FOR AGRO PROCESSING INDUSTRY A STUDY OF APICULTURE IN KODAGU DISTRICT

Transcription

1 International Journal of Mechanical Engineering and Technology (IJMET) Volume 9, Issue 1, January 2018, pp , Article ID: IJMET_09_01_094 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed VALUE CHAIN FINANCING STRATEGY FOR AGRO PROCESSING INDUSTRY A STUDY OF APICULTURE IN KODAGU DISTRICT Janitha M.L and Sunayana N Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru, Amrita Vishwa Vidyapeetham, Karnataka, India ABSTRACT Value chain financing is a method of financing which enables low income producer to bring up their businesses with the help of a systematic chain of financial institutions there by increasing their lifestyle. Apiculture or Beekeeping is the process which aims at collecting pure honey and making it available to the ultimate consumers. Main focus of this study is to suggest how the value chain finance is useful in meeting the financial needs of beekeepers in kodagu district so that it can emerge as a cooperative agro processing Industry. Bee keeping is an activity conducted at households in kodagu district in order to supplement their earnings from agriculture labour. Most of the bee keepers are not the farm owners. The main purpose for the production of Honey bee is income generation and for domestic consumption. Because of lack of financial support most of the beekeepers hesitate to upgrade and still use the traditional way of beekeeping for the concerned study Primary data is collected with the help of questionnaire from 50 beekeepers. Interview method is also used to collect information from a training institute active in the area. Percentage analysis and chi square test were used to analyze the data collected. The study suggest value chain financing involving micro financial institutions, entrepreneurial training institute and State Finance corporations which gives overall development options for the bee keepers. Key words: Agro processing industry, Apiculture, Value chain financing, Beekeepers, Honeybee. Cite this Article: Janitha M.L and Sunayana N, Value Chain Financing Strategy for Agro Processing Industry A Study of Apiculture in Kodagu District, International Journal of Mechanical Engineering and Technology 9(1), 2018, pp INTRODUCTION Apiculture or Beekeeping is an activity where honey bee colonies are maintained in manmade hives by human beings for the purpose of producing honey and other associated products like beeswax and bee glue. Some of the bee keepers rear bees and sell it to other bee keepers in the editor@iaeme.com

2 Value Chain Financing Strategy for Agro Processing Industry A Study of Apiculture in Kodagu District area. These honey most of the times though free from adulteration lack hygiene in preparation and packing. Most of the bee keepers use old bottles to store honey and don t even seal it. There is an evident need of training with respect to scientific method of rearing and extracting honey. There has to be a systematic effort to market these products. The demand and supply of pure honey will be fluctuating and income from bee keeping is not assured and because of this many of them are not able to take this up as a full time occupation it is mostly considered as a part time activity. The value added from bee keeping to the person is minimal. It is not going to impact significantly on the lifestyle of the people dependent on bee keeping. Kodagu district is characterized with coffee estates and orange groves. The other crops are tea, cardamom, rubber, millets and pepper. The district is covered with hill tops and forests. (Encyclopedia Britannica).this geographical setup offers the premier quality raw materials for production of honey and is available free from nature. Buzzing with tourist kodagu district also offers very good market for honey. Considering these facts bee keeping can be taken up as a full time commercial and industrious activity. The large scale production of honey can be taken up. The only resource that is needed is finance. This paper aims at suggesting a value chain financing model which can upgrade the humble primitive bee keeping activity into a completely evolved commercial activity which in turn can create lot of employment opportunities in kodagu district where people are dependent on agriculture or tourism. In the initial stages Beekeepers require finance just for purchasing wooden bee boxes, bee frames and etc. value chain financing offers a set of financial solutions for the problems faced by bee keepers at every stage. Value chain financing can be of two types, internal value chain and external value chain. Internal value chain is a system when the person within the chain like a consumer who is buying in bulk quantities or an organization which can offer packaging and marketing finances the bee keeping activity. External financing is a type of financing with the help of value chain relationships and mechanisms. For example, a bank issues a loan to farmers based on a contract with a trusted buyer or a warehouse receipt from a recognized storage facility (Calvin Miller and Linda Jones, 2010). This paper aims at looking at External value chain financing for bee keeping activity. Value chain finance will make its own contribution for the overall development of the beekeepers. Value chain has been considered as an efficient tool to fight poverty. People with low income, when they want to come to main stream of economy value chain or micro finance helps them. This paper tells that how finance was important to develop their beekeeping as they were having shortage of finance. They were not having Micro finance facility in some of the areas. Beekeepers they need finance to buy their accessories to the beekeeping. Value chain is that which provide low amount of finance to those people who are not able to take loan from the bank. So Micro finance institutions help those group of beekeepers who required low amount of finance to start up their beekeeping. This study focused on how the value chain finance was useful to the beekeepers and also to know how the institutional members were getting the initial investment through micro finance for the activity of beekeeping. 2. LITERATURE REVIEW Beekeeping is one of the introductory that to perfect poverty reduction; environment protecting help small beekeepers in the honey value chain was properly developed. Value chain helped them in reduction of poverty by providing proper finance. (Dr. Arbogast G. Mbeiyererwa, March 2014) editor@iaeme.com

3 Janitha M.L and Sunayana N As there were financial need for present and ability beekeeping activity which enact the demand of the financial services of the beekeeping. The value chain financing they gave the opportunities like providing finance and products as it was very need for the beekeeping. As they identified there were various financial needs with the value chain. (Mr. Jean de matha ouedraogu [2004] ) To build up the understanding with the beekeepers value chain finance was carried out. If there were any constraints for the development of honey sector like weak leadership, unorganized structure, weak financial management, lack of capital value chain used to help them out. It believed that honey value chain had a good economic potential to bring back the poor people out of poverty. (Malani Simukoko [2008]) Trainings were given to the people for the people for the proper development of value chain and by this there was a formation in the beekeeping products. They also encouraged women to be involved more in the beekeeping activity. By the help of value chain beekeeping is been more important for the generation of income. Value chain helped in the structure of beekeeping. (Mburee Peter Denis Muiruri [2015] ) Proper value chain statement was given in this to reduce their poverty reduction and for the finances that they required for their beekeeping. Value chain also focused on end markets. They used the value chain in terms of costs, prices and economic considerations to overcome their poverty. (N.S.Bhat [2016] ) Apiculture producer multiple products with many uses, with economic and also with social values. They are providing a many value chain for both men and women in their apiculture to increase the processing of the products. A member manger operates its activity, by increasing production with the help of credit. (Ingram, V.J, [2011] ) At the production of the honey level they were required with the loan to make the purchase of modern hives and some equipment that related to beekeeping. As the amount was too low the loans were not given by the banks. Thus value chain finance helped them in providing that loan. (Jay D, Peter Neumann [2009] ) The study focused on how to analyze the cost of their production and to know about their profitability of their production. To analyze the market chain of the production of Honey (Assefa Abebe [2009] ) The study was to know the horizontal and vertical linkage will encourage the participation of the poor farmers for the growth in their honey. Value chain ensures to improve their livelihood and provides proper inputs for their final consumption. They proved that there was a limited income, so the pro poor value chain help in strengthening self help group and other beekeepers. (Anu Joshi Shrestha [2010] ) Value chain finance help the low income people to start and to increase their incomes and their business as such their incomes also increases. This paper tells that how the credit was important for the beekeepers to develop their beekeeping. So value chain was facilitating the loans to those who was not able to take loan from the banks. As such value chain became very important. (Ashok Kumar [October 2008] ) 3. OBJECTIVES 1. To understand the effectiveness of financing options in Apiculture activity. 2. To recommend financial option based on value chain method editor@iaeme.com

4 Value Chain Financing Strategy for Agro Processing Industry A Study of Apiculture in Kodagu District 4. METHODOLOGY This paper is based on primary data and secondary data. Primary data was collected using questionnaire, 50 respondent was participated in this survey and was collected from different location in Kodagu district. The researcher has gone and collected the data personally as the literacy rate is lesser and most of the respondent were illiterate the researcher asked the questions in local language and recorded the answers. Interview method is also used to collect the data from the training institution provided in the area. Secondary data was collected by referring different journals. Percentage analysis and chi-square test were used to analyze the data collected. 5. HYPOTHESIS H 0 : The source of finance of beekeepers have no significant influence over the Apiculture venture. H 1 : The sources of finance of beekeepers have significant influence over the Apiculture venture. 6. TESTING OF HYPOTHESIS CHI-SQUARE TEST Sl.no Personal factors Calculated value Table value Significant/ Not significant 1 Sources of Significant finance 2 Purpose of loan Significant Source: Primary Data: It can be observed that the hypothesis is been accepted as the calculated value(30.6) and (24) are more than the table value of (9.48) and (3.81).It can be concluded that there is a significant relationship between source of finance and loan. Uses of the finance provided by Micro finance firm. Sl.no Opinion Respondent Percentage 1 Yes 36 24% 2 No % Total 150 Percentage 76% 24% Yes No 7. FINDINGS The data was collected from a set of beekeepers. Around 48% of beekeepers felt that there is lack of finance and this acts as a hindrance for bee keeping activity. They will not be able to expand their activities. There is no lack of demand but availability of proper market will be a problem as opined by around 28% of respondents wherein around 24% of respondents have editor@iaeme.com

5 Janitha M.L and Sunayana N felt a lack of guidance. Around 62 % of bee keepers depend on loans. More than half of the loans were taken from banks and Micro financial institutions are not popular in this sector for lending loans. Only 38% of the beekeepers has been provided the loan from micro finance institution. There was no proper micro finance facilities provided as Beekeepers responded that only 24% of them are having micro finance facility in their area that could help them in their financial problem. It specifies a need for channelizing the resources of Micro finance institution. MFIs can even customize the financial plan for bee keepers as finance provided by micro finance firm is useful to those 24% of the respondent. 64% of the beekeepers has registered as the honey seller in the honey society and have become the members for selling honey. 24% of the beekeepers are going to process the honey after extraction. As raw honey is having high demand 36% of the respondent are not going to process the honey after extraction, they are going to sell raw honey. The main reason for this is found to be lack of finance and guidance. Recommendation for Value Chain Financing for Beekeepers through model Beekeeper personal finance or loan Loan from MFI Community selling and Guidance Training Institutes Fund Marketing assistence and Training for processing and packagng State Finance Corporation Market and Financial support to set up Industry Agro Processing Industry 8. CONCLUSIONS The value chain financing can be considered as a solution for the financial problems of the beekeepers as it leads to a systematic approach towards agro processing industry. After the analysis the researcher are able to understand that the two basic problems of the beekeepers is finance and guidance therefore just approaching the bank for finance may not help. One more factor that has to be considered in administering the suggestion is socio economic background of respondents. Most of the beekeepers are less educated and hence poor. They are located in interior parts of Kodagu district which is not having access for modern banking solutions. A micro finance institution starts operating in the area which can suggest simple solutions for their problems and their markets. But in Kodagu as there are micro finance existing with respective self-help groups the micro financing institutes can channelize the funds to beekeeping activity also. This not only ensures finance for beekeepers but also encourages collaborative marketing for beekeepers in the area. Institutional members editor@iaeme.com

6 Value Chain Financing Strategy for Agro Processing Industry A Study of Apiculture in Kodagu District were getting initial investment from the micro finance activity to beekeeping. Bee keepers once confident of their ventures can receive their training from entrepreneurial training institutes such as RUDSET institute where intense training on processing, packaging and marketing can be obtained. Many of the entrepreneurial training institutes also provide marketing assistance. This adds confidence in the minds of the beekeepers to process raw honey in market through proper channels and earn higher profits. This leads to increase in the lifestyle of the beekeepers. REFERENCES [1] Alfons G.J.M Oude Lansink, Miranda. P.M.Meuwissen, Jair do Amaral Filho, Hugo Santana de Figwiredo Junior: Evaluating strategies for Honey value chain in Brazil using a value chain structure-conduct performance SCP framework. International food and agribusiness management review Volume 19 Issue 3, [2] Ashok Kumar: Value chain financing to develop the honey sub-sector in India. Enterprise development and Micro finance volume 19 no.4 October [3] Assefa Abebe : Market chain analysis of Honey production: In atsbi wemberta district, Eastern zone of Tigray National Regional State. Haramaya university June [4] Calvin Miler & Linda Jones, Agricultural Value Chain Finance, tools & lessons, Food and Agriculture Organization of the United Nations and Practical Action Publishing, 2010 [5] D.Marngr and R.D.Lyngdoh : Apiculture: An alternative income generation in Meghalaya. Ind.J. Science and Research and Technology (5). [6] Dr.Arbogast G.Mbeiyererwa (2014): Honey value chain mapping in Njombe and Siha district. The united nations development programme dar es salaam. [7] Ebojei, J.F.Alamu and O.B.Adaniji (2008): Assessment of the contribution of bee keeping extension society to the income of bee farmers in Radeena state. Department of Agriculture Economic and Rural Sociology Ahmadu Bello University Zaria. [8] Hoermann B, Choudhary D, Choudhury D, Kollmair M Integrated Value Chain Development as a Tool for Poverty Alleviation in Rural Mountain Areas: An Analytical and Strategic Framework. Kathmandu, ICIMOD: International Centre for Integrated Mountain Development. [9] Ingram V.J. (2012): Apiculture value chain. University of Amsterdam. [10] ICIMOD Improving Livelihoods through Knowledge Partnerships and Value Chains of Bee Products and Services. Final Report. Submitted to Austrian Coordination Office, Austrian Development Cooperation, Thimphu, Bhutan. Kathmandu, Nepal: International Centre for Integrated Mountain Development. [11] Jacques H. Trienekens.(2011): Apiculture value chain in developing countries: A framework for analysis. International food and Agribusiness management review Volume 14, Issue 2, [12] Joshi SR, Ahmad F, Gurung MB Retreating indigenous bee populations (Apis cerana) and livelihoods of Himalayan farmers. Paper presented at the "6th Asian Apiculture Association International Conference" 24 February - 1 March 2002, Bangalore, India. [13] Mburu Peter Denis Muiruri (2015): Mapping of the honey value chain and analysis of changes in gender roles and factors influencing women empowerment among Beekeepers in Kitui country, Kenya. Agriculture and applied economics. [14] Nadeem Akmal, Murad Ali, Sajida Taj, Tabinda Qaiser: Impact of assessment of beekeeping in substantial rural livelihood. Journal of Social Sciences, 1 st April editor@iaeme.com

7 Janitha M.L and Sunayana N [15] Prathap U Information Sheet. Improving Livelihoods through Beekeeping Knowledge Partnerships and Value Chains for Bee Products and Services in the Himalayas. Kathmandu, Nepal: International Centre for Integrated Mountain Development. [16] Tarunika Jain Agrawal: Beekeeping industry in India: Future potential. International Journal of Research in Applied, Natural and Social sciences, Volume 2, Issue 7, July [17] [18] [19] [20] chains.org/dyn/bds/bds2search.details2 [21] [22] Aminuddin Irfani and Muhardi, Freshwater Fish Cultivation Economy Value Chain Model - Survey on Two Villages in Subang and Purwakarta. International Journal of Management, 8 (5), 2017, pp [23] Hena Imtiyaz and Peeyush Soni. Value Chain Analysis of Guava: Producer, Retailer and Consumer Perspectives. International Journal of Management, 7 (4), 2016, pp editor@iaeme.com