Musa Processing Businesses and their Support Environment in India Study Team Dr.S.Sathiamoorthy, NRCB, Trichy Dr.C.K.Narayana, NRCB, Trichy Dr.S.D.Sivakumar, TNAU, Coimbatore Introduction • • • • • • • • • India produces over 140 million tons of fruits & vegetables. Largest producer of Banana and Mango in the world. Annually about 16.8 million tons of banana/plantain produced. Major varieties cultivated commercially are Cavendish (62%), Mysore (16%), cooking bananas(6%), Plantain (5%), Silk (4%), Pome(4%) and others (3%). Main producing states – Tamil Nadu, Maharashtra, Karnataka, A.P, Assam, Gujarat, Bihar, West Bengal and Kerala. Average productivity of the country – 34.3 tons/ha Highest productivity – 60 tons/ha. Processing of F&V in India (2%)- Installed capacity 2.33 million tones- 5000 registered unit – 70% in small /cottage sector. Contribution of processed food industry - 14% of industrial output – 6.5% of GDP – employ 1.6 million workers (19% of total industrial work force) – provides 3-4 times more employment opportunity compared to similar investment in other sectors. Status of Musa Processing Businesses • 90% of Musa produced is consumed domestically as fresh fruit. • 5% consumed in processed form ( 2.5% as purely processed Musa product and 2.5% as an ingredient in other foods). • Primary product of Musa in market is ‘Fried Chips’ (1.8% of total Musa production) ; Qty wise- 0.1 million tons chips; value wise - > US$ 100 million ; this is used for more than a century. • Other products are banana/plantain flour, puree, pickles, fig, juice, jam, etc. from fruit; fibre and fibre products from waste. • Informally used product are – bajji, pazham pori, porial, payasam, vadai/cutlet, curries/sabji, laddu, milk shake, extruded snack foods and stem juice. • Government initiated promotion of processing businesses in big way - several schemes for investment capital, infrastructure, etc. A Preliminary Survey on Musa Processing Different Types of Processed Musa Products available in the Market Formally Processed forms (Available as branded) Chips & Candy -31%- Plantain Fibre & Products- 22%- Plantain Red Banana Pickles-13% - P.Awak, cooking types Puree – 9% - Cavendish Fig – 8% - P.Awak, Silk, Neypoovan Flour – 6% -Cavendish, Plantain Baby food – 6% - Plantain, Bhimkal Juice– 3% - Cavendish, Silk, P.Awak Jam – 1% - Cavendish Sauce – 1% - Cooking types Informally Used as an ingredient (Used all in eaterie &, homes) Bajji- Cooking types Pazham Pori – Plantain (Nendran) Porial/Avial – Cooking types, P.Awak (fruit, flower & stem) Payasam – Plantain (Nendran) Vadai/Cutlet–Flower of all varieties Curry (Kofta) – Cooking types Cake – Plantain (Nendran) Milk Shake – Cavendish Laddu / Sugar balls – Cavendish Extruded foods - Cavendish Size and Number of major Musa Processing Businesses Type of Product 1. Plantain Chips & Candy 2. Fibre Products 3. Banana Pickles 4. Puree 5. Figs 6. Flour & Others Size of Business Small & Very Small Very Small, Mostly NGOs Small Large and Small Very small & small Small & Medium Approx. Number >8000 units ~ 10 NGOs & > 100 SHGs ~ 20, only 1 is big 1 Large, ~ 5 small ~ 100 Units ~ 10 Small & 3 medium Preliminary Workshop The preliminary workshop was TIDISSIA officials conducted in July 2005 in Anthyodaya (NGO) association with Banana Products Regional Managers of Comm. Banks Cluster Development Committee DIC officials DRDA officials • Participants included : KVIC officials District Administration Authority Marketing Consultants Director, NRCB Processing Scientist, NRCB Agri. Business Scientist from TNAU Local Rep. of TNAU Local Health Authority NABARD officials • Based on the consensus of participants and results of preliminary survey the following products were identified for detailed study as they are most commonly found Musa products in the market and has potential for expansion – Chips, figs, pickles, fibre and fibre products. Results of Analysis of Small Processing Businesses A. Plantain Chips Industry Salient features: • Chips in India are made from two varieties, Nendran(AAB) or French Plantain (95%) and Monthan (ABB) or cooking bananas (5%). • It is the single largest Musa product consuming 55% of total production of Plantains. • Business Valued approx. US$ 100 million. • Employment – ~1 million (direct and indirect/ farm & non-farm) • Totally in cottage / Small scale businesses • Main Market - Local. Results of Analysis of Small Processing Businesses Case Studies with commonality. • Process Technology: Full mature plantains are peeled longitudinallySlide 32, put in saline water (1%), sliced into smocking coconut oil in an Kadai / Uruli directly, fried till scrisp, salted with salt water while frying, drained off using perforated spoon (Jharni), cooled, packed / stored in polybags or tin bins. • Market & Marketing : Raw material sourced from local market directly / agents. Finished product sold in the shop-cum-factory directly to consumers/distributors. Payment – Cash & carry / credit against deposit.. No professional marketing services used. • Business & Financial Management: : No professional services used, no planning and budgeting, no strategies for business promotion and expansion, complacency prevalent ( tax evasion some times a motive). • Key Information sources & Service providers: Generally less informed. Services providers are mostly non-professionals. Arrival of Plantain in market & Preparation for chip making Arrival of Plantain in local market A closer view of Nendran variety Peeling of Plantain in progress Peeled Plantains put in salt water Process of Plantain Chips manufacture Holding four plantains in a hand to slice Slicing directly into the hot oil Frying the chips till crisp Draining the fried chips from oil Different varieties of Plantain chips 4- Cut Chips Round sliced Chips Plantain Sweet Candy Some of the brands of plantain chips in India with normal packing No.1 Chips, Thrissur A-One Chips, Thrissur Ayyappa Chips, Calicut A road side cool bar, Kochi Some of the brands of plantain chips in India with Gas flushed packing Yellow Foods (P) Ltd. Thrissur Prowins Foods (P) Ltd. Trivandrum Banana Slice, Coimbatore A local snacks food shop, Thrissur Results of Analysis of Small Processing Businesses SWOT ANALYSIS OF CHIPS INDUSTRY Opportunities • Expanding snack business • Increasing demand • New local market abundant • Export potential • Variants in flavours possible Threats/Challenges • If big players enter the business, small businesses will be marginalized • Competition from tapioca & potato chips. Strength • Raw material available locally. • Labour cheap • Process very simple • Scope of improving packaging • Product recovery more than other chips • Good market demand Weaknesses • Fluctuating cost of raw fruits • Short Shelf life (2-3 weeks) Results of Analysis of Small Processing Businesses Specific contribution to Rural Development Capital Contribution A smallest chips unit provides job to 3-4 people directly and much more indirectly. It is the biggest potential job provider. Work place healthy and non-hazardous. Opportunity for maximum interaction among people from different regions, communities, etc. due massive movement of men and material. Due to movement of men and material (raw and finished goods) from & to far off regions ( 600 km) physical environment like transport, housing, telecom, etc. is improved. The salaries earned by individuals employed in units have ensured regular household income, related businesses provide income to other employees indirectly, e.g., oil mills, paper mills, sweet shops, PE bag makers, etc. Contributes to regional economic growth. Do not compete for natural resources with other industries, no pollution, wastes are economically used. Human Social Physical Financial Natural Results of Analysis of Small Processing Businesses B. Banana Flower / Fruit Pickle Industry Salient features: • Flowers buds of banana after female phase is removed as a waste. About 3000 flowers produced per hectare. Winds damage large number of plantations each year leading to lodging/falling of plants and loss of bunch. Bad handling practices leads to damage of fruits (10-20%). All these goes as waste – adds to farmer’s loss. Banana flower/fruit pickle is an new entrant in processed banana product industry - creating wealth from waste. Branded F&V pickles business in India is valued – US$ 200-250 million. Almost equal unbranded/house hold consumption. Indian pickle/chutneys exports – US$ 34 million. Banana flower/fruit pickles started and introduced by NRCB in 2003. More than 15 industries came up in Tamil Nadu during last 2 years. A single home scale unit capable of employing 12 women with an annual business of Rs.0.5 million. • • • • • • • • • Results of Analysis of Small Processing Businesses Case Study of a Multi Product Musa Business Unit (Dorven-Agro-Eco-Bio Ventures Pvt. Ltd., Chennai) • Process Technology: Bracts of male flower buds are removed, individual stamens pulled out, flowers washed, steam blanched, ground into paste, fried using little oil sufficient to remove moisture, spiced, seasoned, cooled to air temp., vinegar added, filled in sterile bottle or pouch, sealed, stored under normal condition. In case of fruit pickle, the fruits are peeled, shredded, blanched, fried, spiced, seasoned as above. Packs are labeled and stored. Finished product is storable up to a year. • Market & Marketing : Raw material sourced from farmers/local market / agents. Finished product sold to the retailers/distributors locally, or directly to consumers/distributors in other markets within the country. Payment – Advance for outstations/credit for local. Mostly, no professional marketing services used. Creating market was easy, market acceptance was instant. New clients identified through exhibitions, expos and road shows, marketing strategies are not strong, publicity and advertisement is not adequate. Mostly institutional markets, retailer dealer network not strong. Results of Analysis of Small Processing Businesses Case Study of a Multi Product Musa Business Unit (Dorven-Agro-Eco-Bio Ventures Pvt. Ltd., Chennai) • Business & Financial Management:A professionally managed company. Business and Business/Financial management is professional (self & services), it had planning and budgeting, while other did not have that. Generally professional advice sought, financially supported by TDB & banks. Business expanding and companies going for expansion. • Key Information sources & Service providers: NRCB was source for information & services of technology, inputs, consultancy, trial production, quality control, exposure and publicity. As the promoter himself was a corporate employee and professional financial manager he was well informed about several sources of info. for other services. All other needs like feasibility study, market development strategies, Admin, transport & logistics were attended by entrepreneurs themselves. Process of making banana flower pickle at ‘DorVen's’ factory Flower Cleaning Cleaned Flowers Steaming & frying pickle Filling & packing of pickle Filling and Sealing of Banana flower and fruit pickles at ‘DorVen’s” factory Sealing Pouches Sealed Pouches packed in carton Results of Analysis of Small Processing Businesses SWOT Analysis of Banana Flower/Fruit Pickle Industry Strength • Raw material, inputs cheap and available locally. • Labour cheap • Process Technology simple • Machinery available locally • Long shelf life • Electricity subsidized • Tax holiday for food processing sector. Weaknesses • New product, needs publicity to compete with other pickle • No professionalism in marketing. Opportunities • Increasing market demand for packaged pickles • Product has multiple uses unlike others. • Cost of production is very low. • Scope for export. Threats/Challenges • Competition from big companies/brands which can spend more on advertisement Results of Analysis of Small Processing Businesses Specific contribution to Rural Development Capital Human Contribution The business provided opportunity for education to entrepreneur ( eg. SHAN), new skills to villagers. Ancient literature talks of medicinal/beneficial effects of banana flower. Process is labour intensive, hence scope for more jobs in each unit. Work place healthy and non-hazardous. Better interaction at work place bridged the social divide based on community, caste, creed, etc. Contributed to local development. Social Physical As many units are located in villages, infrastructure like roads, electricity, telecom facilities improved in the area. It is providing physical capital for economic growth in future. Income of households of the villages improved. All the women employed in these units were jobless. Now it has ensured regular household income (Min.Rs.2000/-). Financial security for women and accessibility to essential needs of families. Do not compete for natural resources with other industries, no pollution, wastes are economically used as compost. Financial Natural Results of Analysis of Small Processing Businesses C. Banana Fibre & Fibre Products Industry Salient features: • Banana fibre is obtained from pseudostem after crop harvest. • The coarse fibre is widely used after stripping as strings for making garlands. • Banana fibre & its products industry is concentrated mainly in two states in India ( Tamil Nadu & Bihar) • Every hectare of banana plantation has a potential to yield approx.340 kg fibre • Red banana and Nendran varieties give the best quality fibre • In one district of Tamil Nadu ( Kanyakumari alone) there are 40 units of banana fibre products each supporting about 90 farm families. • The Value of business done by these units in that district is approx. US$ 0.2 million per annum. • Mostly done by NGOs and SHGs (not an organized activity) Results of Analysis of Small Processing Businesses Results of three case studies of Banana Fibre Based Business • Process : (Manual Fibre Extraction): Banana sheaths are collected from the farmers fields by stripping the pseudostem after harvest, sheaths are cut to a length of 2 feet and using blunt a knife mounted on wooden handle the sheath are scraped to remove the pithy material. The fine silky fibre is washed, dried and bundled. The fibre is dying using different color based on need. The dying is done by adding color to boiling water and soaking fibre for some time in the boiling water. Later it is dried and bundled. • (Machine Extraction): Machine extraction is done by using a power operated small decorticator having two rollers (one stationary & other rotating) fitted with metallic beaters. The sheath is fed into the roller by holding at one end. The movement of roller pulls the sheath in simultaneously removing the pith. The sides of sheath is then reversed to obtain a clear thin strands of fibres. It is washed and dried. Dying is done as stated earlier. Results of Analysis of Small Processing Businesses Case Study of Banana Fibre Based Business • Product Preparation : Banana fibre craft units are mainly located in Tamil Nadu and Bihar and run by KVIC and DRDA. These units train the village women in handicraft using fibre from banana and several other natural fibres. Several NGOs & SHGs purchase banana fibre from villagers or fibre producers and manufacture several items like bags, table mats, wall hanging, toys, decorative items etc. The women making these articles are paid wages based on each product. The product designs are given by the agency employing them. Market & Marketing : Raw material sourced from farmer’s field by the villagers/women engaged in this activity. The finished products are sold through state owned handicraft retail outlets and also to private traders in bigger cities who sell through their outlets/export houses. Business & Financial Management: As the different activities of business are not organized under single roof or management, it does not have an organized business management system. Different groups of activities of this industry is done by different businesses. Therefore, each of these businesses has its own management style/function. However, wholly as an industry it has certain strengths and weakness. • • Coarse banana fibre & livelihood Use of Coarse Banana Fibre for floral garland making Self Help Group Women engaged in Fibre extraction, dying & handicraft making Stem sheath cut into 2’ pieces Manual Fibre Extraction Dying of Fibre Handicraft items made of fibre Machine Extraction of Banana Fibre Hand Made Banana Fibre Products Results of Analysis of Small Processing Businesses Strength • Raw material freely available • Skill training easily available • Process Technology simple • Machinery available locally • Requires less capital • Product non-perishable Weaknesses • Machine made- poor quality • Current prices not attractive • No aggressive marketing • No special incentives • Done by SHG with low capital SWOT Analysis of Banana Fibre & Products Industry Opportunities • Demand for natural fibres based products increasing • Cost of production is very low. • Scope for export. Threats/Challenges • Competition from synthetic fibres Results of Analysis of Small Processing Businesses Specific contribution to Rural Development Capital Human Contribution The business provided new skill of fibre extraction and product preparation to rural women. A source of supplementary income to the families. Work place healthy and non-hazardous. SHG women interact with traders, officials of unit and buyers of product from different places - better social interaction. As production is manual, many women are involved. The income generated by them enables to access basic necessities like education, health and other services. Unemployed women get an additional income by working from their home. This gives them a financial independence and security. Sometimes the members of SHG get annual bonus out of profits. Waste is biodegradable and forms manure. The industry does not compete for resources. Harmless to neighbors. Social Physical Financial Natural Identification of Support Sector Type of Support Technological Promotion/ support for SPB Credit Regulatory and Others Organizations NRCB, CFTRI, DFRL, IARI, SAUs. NSIC, DIC, KVIC, DRDA, CII, FICCI, TIDISSIA, NGOs Banks, NABARD, Coop.society, others MOFPI, District administration (for state and union govt.) Service offered Training, Consultancy, Know-how, others. Project reports, fairs, exhibitions, marketing, finance, liaison. Finance, investment capital, partnership Licensing, quality control, registration, govt. schemes. Results of Analysis of Small Processing Businesses Analysis of Support Services Area 1. Physical structure & equip. Principal Weaknesses 1. No Food parks with essential infrastruc. 2. Suitable equip. for small businesses not available. Services Offered 1.Industrial park unsuitable for food industry 2. Water unfit 3. Equipments only suitable for big Businesses. 1. Glut & scarcity of plantains 1. Heavy duty machines. 2. Only solar drier or electrical model available. Gaps in Services 1. Food parks for F&V Processing. 2. Trained fabricators for small industry Machinery. 3. Interaction between TP & EP. 1. Contract farming 2. Subsidized packing material and machine 1. R & D needed for design of machines for SPB 2. Dual type driers needed. 2. Avail. & use of inputs 1.Insufficient quality inputs. 2. Price fluctuation 3. Product- 1. Mostly manual ion process (chips). 2. No simple tools for Mechanization. Results of Analysis of Small Processing Businesses Area 4. Business Manage. & Administrat ion. Principal Weaknesses Analysis of Support Services Services Offered 1. Management training institutions are available. 1. Institutions to train businessmen on this area are available. 1. Market research service available, but costly Gaps in Services 1. Lack of info. about such services. 2. No awareness about importance of such services in SBM. 1. Training businessmen 2. Awareness creation about importance of planning & management 3. Motivation to grow. 1. Lack of info. on Ser. Providers among SMPB. 2. Ignorance of imp. of Ads & publicity. 3. EDPs for SMPB. 1.Professional Management methods and services not used. 5. Planning & 1. Lack of expertise financial in this area. Management 2. No investment/ strategies budgeting strategies for expansion & BP 6. Markets 1. No budget for & Marketing market research 2. No aggressive sale 3. No publicity 4. Services not used Results of Analysis of Small Processing Businesses Analysis of Support Services Area Principal Weaknesses Services Offered 1. Govt. & Inst. Finance available against Collateral Security only. 2. Micro finance available only to SHGs and NGOs not individuals. 1.Narrow road, traffic blocks, delay in delivery 2. No sector oriented logistic services. Gaps in Services 1. Policy change to relax collateral for SMPB. 2. Speedy processing of proposals. 3. Publicize schemes 4. Organize loan mela 1. Subsidized transport for movement of food & food products. 7. Financial 1. Most of the Capital businesses are of multi product type. 2. Small distributors do not get finance. 8. Transportation & Logistics 1. Transport costs are more. 2. Logistic services are poor. 9. Food Quality & Safety 1. Poor health & hygiene awareness. 2. No publicity of Nutritional value of F & V/ its products 1. Food quality & safety 1. Poor monitoring monitoring agencies of safety norms. exist, poorly monitored. 2. Lack of info.– 2. No publicity agency benefit of F&V and for nutritional benefits. its Products. Final Workshop Participants included : Director, NRCB Processing Scientist, NRCB Agri. Business Scientist from TNAU Local Rep. of TNAU Local Health Authority NABARD officials TIDISSIA officials Anthyodaya (NGO) DIC officials Marketing agents. Local machinery manufactures & equipment suppliers. Proposed follow up • Conducting a follow up meeting to set achievable targets for next quarter. • Strengthening the Banana Products Cluster Development Programme and organizing a training workshop for small and rural entrepreneurs on viable projects & projects. • Awareness creation about health and Nutritional benefits of banana and its products through media. • Identifying and guiding the potential entrepreneurs for future • Certain policy matters to be brought to the notice of government through proper channel.