This report deals with the status, problems and prospects of the paddy value chain in the district of Balasore, Odisha.

1. Assignment on:
Course Title AE-223
Course Name Agricultural Marketing, Trade and Prices
Submitted To:
Professor Dr. Sarba Narayan Mishra
Department of Agricultural Economics,
College of Agriculture, Bhubaneswar,
OUAT
Submitted by:
Anup Aurojyoti Nayak
2nd
Year, B.Sc. (Hons.) Agriculture,
College of Agriculture, Chiplima,
OUAT
Admission No.- 18131039
STATUS, PROBLEMS AND PROSPECTS
OF PADDY VALUE CHAIN IN
BALASORE DISTRICT

2. Introduction
Rice is considered to be an old and ancient cereal with a history of more than 2800 years. The
biggest consumer of rice is China, followed by India, Indonesia, Bangladesh and Vietnam. Rice
provides 20 percent of the world’s dietary energy supply.
It is a rich source of dietary fibre, thiamine and other essential compounds. Apart from being
consumed as rice, there are several value added products namely parboiled rice, puffed rice,
rice cakes, rice flakes, rice wine, rice flour, starch, etc. Some of its important by-products
include rice bran, rice bran oil, rice husk, broken rice, paddy straw, etc.
India is second largest producer of paddy. It has over 44.07 million hectares under paddy
cultivation with a total production of 110.65 million tonnes (2015-16).
Among the states, Odisha ranks fifth in terms of production (9.5 million tonnes) and fourth in
terms of cultivated area (4.02 million hectares). Compared to Punjab, the productivity is quite
low as despite a small cultivation area of 2.82 million hectares, it contributes around 11.29
million tonnes of rice. This is mainly due to early introduction of green revolution of northern
India and land fragmentation in eastern India. The initiative of “Bringing Green Revolution to
Eastern India” (BGREI) is slowly increasing the productivity of eastern states but it has not
covered the entire state till now.
Status of Production in State (District-wise)
Rice production in Odisha has steadily increased over the last decade. This can be seen from
the graph representation given below:
*During the past decade, productivity has increased at a CAGR of 2.41%.
*There is wide scope for increase in production by increasing productivity.
*Area under HYV paddy is increased from 2.63 million ha in 2001-02 to 3.47 million ha in
2012-13 which is around 86% of the total cultivated area under rice.
Bargarh is the largest producing districts of Kharif paddy. The districts of Bargarh, Balangir,
Kalahandi, Mayurbhanj, Nabarangpur, Sonepur, Sundargarh and Sambalpur contribute around
50% of total paddy cultivation in the Kharif season.
In case of Rabi paddy, Bargarh bags the first position followed by Balasore. Only 8-10% of
paddy is produced in Rabi season.
4.49 4.48 4.45 4.45 4.45 4.37 4.23 4 4.02 4.18
6.59 6.96 6.93
7.66
6.92 7.02 6.93
5.9
9.5
7.61
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Rice Production in Odisha
Area (m ha) Production (m tonnes)

3. Paddy Cultivation in Balasore
i. Geographical Area: 3,77,440 hectares
ii. Forest Area: 26,288 hectares
iii. Misc. tree crops and Grooves: 25.305 hectares
iv. Permanent pasture and Grazing land: 16,483 hectares
v. Cultivated wastelands: 9,576 hectares
vi. Land put to non-agricultural use: 38,865 hectares
vii. Barren and Uncultivable wastelands: 10,008
viii. Other fallow: 6,908 hectares
ix. Cultivated area: 2,50,550 hectares
(a) High Land: 39,069 hectares
(b) Medium Land: 1,04,425 hectares
(c) Low Land: 1,07,056 hectares
x. Paddy area: 2,20,830 hectares
(a) High Land: 349 hectares
(b) Medium Land: 1,04,425 hectares
(c) Low Land: 1,07,056 hectares
As we can observe, all of the cultivated medium and low lands are solely dedicated to
cultivation of Kharif paddy. Since highlands are not prone to floods and drainage problems,
horticultural crops such as cucurbits, betel vine, palms, etc. are cultivated. However, paddy is
the principle crop in Balasore.
Paddy Value Chain
As paddy is an important crop, it is difficult to plan and design policies related to paddy without
existing value chain network margins to various value chain actors.
The value chain may be defined as a range of activities that are required to bring a product
from its conception, through its designing, source of raw materials and intermediate input,
marketing and distributions, to the final consumer.
Importance of Paddy Value Chain
(a) Analysis of the value chain seeks to understand how a business creates value for the
customer by examining the contribution of different activities in the business against
the value.
(b) The productivity, efficiency and depth of paddy value chain are important elements
driving commercial agriculture.
(c) It identifies the various stake-holders involved in the marketing of paddy and its value-
added products.
(d) The analysis of the value chain enables the farmer to know his profit as well as stake.
Status of Paddy Value Chain in Balasore District
The Paddy Value Chain in the district of Balasore has been described with the view point of a
selected area for easy analysis. The area taken under consideration is Remuna and Industrial
Estate. Usually, a value chain can be classified into four processes:
(a) Production
In the sample area of study, i.e., Remuna Block and Industrial Estate of Balasore district, paddy
is the main crop along with some perennial plantation crops. Due to the presence of the Budha
Balanga in the vicinity, irrigation is possible all year round. Production of paddy includes all
the inputs, services and support activities involved in puddling and stagnation. The inputs may
consist of seeds, fertilizers, plant protection measures, etc. obtained from Primary Agricultural

4. Cooperative Societies (PACS) as well as private dealers. Various operations such as land
preparation, puddling, and nursery bed preparation, transplanting, application of manures and
fertilizers, plant protection chemicals, harvesting, drying and threshing. After the production,
the grain is ready for bagging and transportation. It is then moved to various stake holders for
marketing by the producers.
(b) Primary Movement
This includes AMC (Agricultural Marketing Committee), fellow farmers, local traders,
commission agents, money lender, millers and the Food Corporation India (FCI). Paddy is sold
to various stake holders as per the requirement of the producer. He can sell the grain to fellow
farmer for immediate cash or to the money lender for repayment of debt. Local traders are also
identified who collect produce from farmers in various villages at the time of harvest itself.
They tend to retain the stock with themselves for some time and release it at time when demand
is high. Some farmers also approach commission agents for marketing. These agents usually
act as middlemen between farmers and millers. Farmers usually don’t opt for marketing
through AMC directly as this adds travelling costs to distant location.
(c) Processing
Paddy is processed to produce either parboiled rice or raw rice in the mills. There are twelve
rice mills in the district with an average capacity of 0.5 MT. However, milled rice is produced
only in milling plants while parboiling plants can be used for both milling and parboiling. The
sequence of obtaining parboiled and milled rice is shown below:
(d) Marketing of the products and by-products
Raw rice and parboiled rice being the main products of paddy, there are a number of by-
products obtained. One such important product is rice bran oil. The obtained products traverse
diversified ways. The millers are required to deliver around 75% of the processed grain to state
owned FCI or Odisha PDS. The rest can be marketed and distributed as the miller sees fit.
Schematic Diagram of Paddy Value Chain

5. Stake Holders in Paddy Value Chain
(a) Input suppliers
Material inputs for the cultivation of paddy include seed, fertilizers, plant protection chemicals
that are made available by wholesale input distributors, Primary Agricultural Co-operative
Societies, private distributors, State Agricultural Department. It is observed that the farmers
obtained foundation seed from KVK at Balia. The high material input cost is seen in fertilisers
followed by plant protection chemicals and seeds. Although fertilisers are provided in state
agricultural departments and PACS not all farmers could avail the subsidized fertilisers and
had to obtain from private dealers in Remuna Golei and Mandir Chowk. In Remuna Golei
about 23 seed, 15 fertilizers and 15 pesticide dealers are present. The reason for framers to
approach private dealers is that they offer higher credit during the entire season on the inputs
unlike the government, where immediate cash is required to avail subsidy.
The major non material inputs are labour services (human and machinery services) required
during the pre-production, production, harvest and post-harvest stages. Gradually, the
requirement of labour is reducing as machines are becoming available.
A home grown agricultural machinery and Tools Company called Annapurna Agritech has
been providing agricultural tools and implements through the state government’s subsidized
channel all over Odisha.
(b) Credit services
Various banks and micro financing Institutions like PACS, SHGs were available in the rice
growing regions and provided credit to rice growers. In addition to financial institutions few
farmers secured loan from money lenders, fellow farmers, commission agents too. Banks such
as Kalinga Gramya Bank and Balasore-Bhadrak Central Cooperative Bank have been lending
money to paddy farmers over the years.
(c) Intermediaries (Commission agents / fellow farmers / traders)
There are both licensed and unlicensed commission agents. Commission agents don’t buy the
produce from the farmers but trade between miller and farmer and claim their commission
charges. While other intermediaries like fellow farmers and traders buy and store the produce
from the farmers and sell at a later period allowing for speculation of prices. The reason why
farmers sell at farm gate is due to lack of place for performing drying and also to avoid the risk
of other operations such as transportation and marketing. The commission agents are interested
to buy at farm gate as they want to buy at cheaper rate than MSP also which they did not want
to reveal. It should be that intermediaries are involved not only for procurement of raw material
to millers but also to distribute the value added products obtained through processing paddy.
They delivered the value added products to wholesalers, retailers, consumers and by-products
obtained to concerned industries like oil extracting solvent plant, fish ponds, poultry farms and
brick industry.
(d) Wholesalers:
Wholesalers and importers purchase the parboiled and milled rice from the processors. Apart
from actual purchase of the rice these wholesalers engage in bulk selling to the retailers and
consumers.
(e) Retailers:
These are shop retailers who are either licensed or non-licensed for retailing different products
they are not specialized to sell rice only but used as a compliment to other grain products for
customers. They purchase smaller quantity and it takes a longer time to finish selling. They
usually purchase from wholesalers and millers.
(f) Processors
Three kinds of processors have been identified during the survey namely, par boilers & millers,
millers and oil extractors. The parboiling and milling plant owners are licensed for parboiling,
milling and retail trade. The millers procure the raw material at a price not less than MSP either

6. directly from farmers or through commission agents and at AMC. However the licensed millers
purchase the raw material at AMC while the price at AMC is fixed by closed tender.
Name of the Rice Mill Address
01. Annapurna Modern Rice Mill Jaleswar, Balasore
02. Ansuman Rice Mill Soro, Balasore
03. Balasore Solvents Pvt. Ltd. Kuruda, Balasore
04. Gajraj Rice Mill Kuruda, Balasore
05. Haldipada Rice Mill Pvt. Ltd. Haldipada, Balasore
06. Jasoda Agro Food Pvt. Ltd. Anjula, Balasore
07. Laxmi Rice Mill Mitrapur, Balasore
08. Maa Durga Rice Mill Khantapada, Balasore
09. Maa Laxmi Modern Rice Mill Jaleswar, Balasore
10. Maa Laxmi Rice Mill Bagudi, Balasore
11. Mahalaxmi Rice Mill Markona, Balasore
12. Rout and Sons Mini Rice Mills Soro, Balasore
13. Shree Giriraj Industries Ltd. Kuruda, Balasore
14. Shree Hanuman Rice Mill Jaleswar, Balasore
15. Shree Hanuman Modern Rice Mill Markona, Balasore
16. Shree Jagannath Rice Mill Markona, Balasore
17. SNM Business Pvt. Ltd. Shergarh, Balasore
18. Somani Agro Food Pvt. Ltd. Banparia, Balasore
19. Sun Agro Foods Kuruda, Balasore
20. Sun Agro Foods & Exports Ltd. Banaparia, Balasore
21. Uni Deep Food Processing Pvt. Ltd. Jamjhari, Balasore
22. Utkal SGRO Organics Ltd. Shergarh, Balasore
(g) Food Corporation of India (FCI)
FCI is the nodal central agency of government of India and state government agencies
undertake procurement of paddy under price support scheme and rice under statutory levy
scheme. To facilitate procurement of food grains, FCI and various state agencies in consultation
with the state government open a large number of temporary purchase centers at various mandis
and key points. Apart from the direct procurement, FCI takes over food grains from state
agencies for central pool in case of non De Centralised Procurement (DCP) states. This is done
only after the district or state requirement of Targeted Public Distribution System is fulfilled.
Rice is also received through statutory levy system, i.e., whatever rice is milled out of paddy
purchased by rice millers; a specific percentage of levies are enforced based on the respective
state levy control order.

7. Value added products tracked
(a) Paddy
After the harvesting of paddy, the produce is dried and marketed to various stake holders after
bagging. After the post-harvest operations such as drying, bagging the produce, paddy is ready
for marketing. The survey results showed an average production of 5838 kg ha-1. The paddy
produced was met to serve the need of family consumption, gifts and kind wages and the
marketed surplus is sold to the millers. However in few villages some of the farmers produced
the paddy crop for seed production and sold within the village for fellow farmers. Apart from
the main product Paddy the by-product paddy straw (2 trucks/ha) was mainly used as a fodder
material for the cattle. It is seen from the map presented in figure 3 that paddy from various
stakeholders has to go through miller.
(b) Parboiled rice and Raw rice
The produce once after moving to mills, paddy is processed to either obtain the raw rice or
parboiled rice. Raw rice and parboiled rice being the main products of processing paddy, there
are other by-products obtained. The recovery rate of main product, by product and their
percentages are presented in Table 1 where it is projected that for every one ton of paddy
undergoing parboiling and milling 69.7 (697kg) percent of par boiled or raw rice is obtained.
While the broken grain obtained varied from 6-7% around (66 kg) and rice bran constituting
5-7% (68kg) of one ton of paddy milled while the husk obtained constituted the major by-
product varying from 15-20% (150 kg) of one ton milled paddy. Also cheeru or param which
forms the feed for fish ponds and poultry farms was found to constitute 1-2 % of paddy being
milled.
(c) Rice Bran
The raw and boiled bran obtained from rice mills forms the raw material for oil extraction
plants. These plants process the bran to obtain crude rice bran oil. This is carried out by the
process of solvent extraction.
It consists of treating raw or boiled bran with hexane which is called miscella. Oil is recovered
on subjecting the miscella to distillation. Evaporation and condensation from distillation of
miscella recovers hexane absorbed in the material. The hexane is then reused for extraction.
The rice bran oil obtained is then moved to oil refineries at major cities through tankers. Here,
the oil is refined, packed and marketed for distribution. The de-oiled bran is used as fish feed.

8. (d) Puffed Rice
Puffed rice, locally known as “Murhi” is a staple food item in the north Odisha region. Due to
immense demand, many cottage industries have sprung up in and around the district. In the
region of survey, i.e., Remuna, there are 16 such industries that solely produce puffed rice
which is then marketed to districts of Balasore, Bhadrak, Mayurbhanj, Keonjhar, Medinipur,
etc. Some farmers prepare puffed rice for domestic consumption as well as sale in the local
vicinity. There has been a surge in this particular industry due to its cheap and ready availability
for the consumer.
(e) Flattened Rice
This product is locally known as “chuda”. There are a few cottage industries as compared to
that of puffed rice as most people prefer the flattened rice made without the help of machines.
Demand for this product is gradually increasing. There are a number of variations made out of
this such as flakes (“Khaee”), roasted and fried.
(f) Rice Wine
Wine made out of rice has been a traditional drink for the tribal population in Odisha from time
immemorial. Its vernacular name is “Handia”. Although there is no registered industry for the
product, it is gaining popularity among the residents due to its cheapness. Many people have
started making the beverage on a domestic scale for sale during weekly markets, festivals and
other places of commerce. However, the greatest demerit of this industry is that producers of
the wine are using the subsidised grain availed form government for the purpose of dietary
consumption for making liquor. Therefore, black-marketing is prevalent.
(g) Cottage Processing
Some small-scale industries have come up in the district which utilise rice to make a variety of
products such as paste, flour, sweets, starch, etc. These industries then tend to sell these value-
added commodities to consumers and other companies with branding.
Problems and Prospects of Paddy Value Chain
The development of the paddy value chain in Balasore at the district and state level can offer
solution to the existing problems of farmers and other stake-holders in the chain. This will
require not only free-flow of agricultural products but also exchange of knowledge between
scientists, researchers, farmers and business. Development of technical sector is also necessary.
Some of the major problems to overcome are:
(a) Access to finance: Most of the farmers still take loans from the local money lenders;
who charge an exorbitant interest upon the loan amount. The main reasons for the
farmers to avoid co-operative society and bank loans are the lack of requisite documents
and corrupt officers. It has been reported by some farmers that the bank employees and
agricultural officials demand some percentage of the entitled loan amount. In another
purview, some farmers avail loans and don’t use the money for cultivation and default.
(b) Long processing: Export of paddy is not followed due to lengthy inspections such as
mutual recognition certificates, quality and standards testing, health safety regulations,
etc. Small farmers, who form the majority in Balasore can’t afford to wait for such time
period for payment. Therefore, adequate infrastructure and staff should be provided by
the governing authorities to make the processing faster.
(c) Market Access: The existence of middlemen and agents, absence of data and
information about other links in the chain and inability to invest in improving the
performance in almost every part of the chain leads to indifferences. Therefore, Paddy
Value Chain is difficult to stabilise with a large number of small and marginal farmers.
The production, collection, storage and delivery parts of value chain have to be made
efficient for obtaining higher returns.

9. (d) Capacity building: Another major challenge is improvement in the production and
supply competencies of the small and marginal farmers. To export paddy in external
markets, it is necessary that quality and safety of product is maintained. Most of the
farmers do not realise how to produce, store and preserve rice in a modern and
sophisticated era. There are limited godowns and cold storages in the district. Thus the
government and FCI should be critical in maintaining high standards of resources
available to paddy marketing.
Summary and Recommendations
The Paddy Value Chain is complex and diversified. The involvement of various actors and
flow of diversified products produced through processing make the value chain a complex
diversified network. The products captured in the value chain in the surveyed district are raw
rice, parboiled rice, broken rice, crude rice bran oil, de-oiled rice bran, puffed rice, flattened
rice, rice wine, etc. Even if the value of paddy is complex and diversified in the study area,
there is opportunity for development of other value-added industries such as commercial rice
pancakes (“Peetha”), rice bran oil refineries and other sophisticated food items.
These initiatives can provide employment potential in the district and increase the remuneration
of the farmer. By bringing commodity interest groups and farmers’ interest groups together,
hindrances in the value chain can be identified. This will also contribute in developing the value
chain further. There is need of scope to increase the import of premium quality rice grains
which can give farmers good amount of foreign exchange. Research along the lines of food
science, agricultural economics and agri-business management should be promoted. This will
increase employment in all the three sectors. Since, Balasore is the second largest producer of
Rabi paddy in the state, more emphasis should be provided for the establishment of agricultural
industries in the region.
In a nutshell, there is a greater need to promote the value chain and processing industries for
obtaining diversified products.
References
(a) Agricultural Economics by S. Subba Reddy, P. Raghu Ram, T.V. Neelakanta Sastry and
I. Bhavani Devi

10. (b) Value Chain Analysis of Paddy- A conceptual framework by Y. Archana Karuni and K.
Suhasini (Open Access form International Journal of Pure and Applied Bioscience)
(c) Website and Statistical data by Agricultural Promotion and Investment Corporation of
Odisha Limited
(d) Kumar, A., Singh H., Kumar, Sant and Mittal, S., Value Chains of Agricultural
Commodities and their role in Food Security and Poverty Alleviation- a Syntheses.
Agricultural Economics Review
(e) CUTS International Discussion Paper on Agricultural Value Chains in India by
Saurabh Kumar and Aparna Sharma
(f) Agriculture Contingency Plan for Balasore by Ministry of Agriculture, Govt. of Odisha
(g) Website data from Odisha State Marketing Federation (MARKFED)
(h) Website data from Balasore District website in relation with paddy cultivation
(i) Survey and personal interviews of 15 farmers in Mangalpur Gram Panchayat.