Value Chain Analysis of Animal Feed Sector in Indian States of West Bengal and Odisha

Abstract

The animal feed sector in India is not new but performance of the sector is not well understood or documented, even though value-chain analysis provides a methodological tool to do so. To provide a better understanding of the sector, a study was carried out to evaluate the value chain performance of the animal feed sector in two eastern states of India, in terms of value addition, employment and profitability. Quantitative data were collected for each link in the value-chain on operational and financial performance. The strength and weaknesses of each link of the value chain were assessed and appropriate upgrading, management and development strategies were suggested. The results indicated that the animal feed value chain is relatively simple including only five main stakeholders groups; major feed input supplier, minor feed input supplier, animal feed producer, feed marketers and service providers. About 58.26 and 36.47 percent of input is supplied by trader and miller respectively. Capacity utilization in small firms (production capacity 35000 tonnes per year) is 51percent. Wholesaler is the main actor in forward value chain marketing 46 percent of the feed. Employment generation in small mill was 67 jobs per mill where as large mill created about 144 jobs per mill. Male represent 98percent of the labour force in the feed producing mills. Feed ingredients cost represent 80–90 percent of the total operating cost of the firms. The major factors impacting on the performance of the value chain relate to inputs, to feed production, to marketing, transportation, sale of product, low value addition on successive links in the chain, and low export. This paper highlights the benefits of value-chain analysis as a useful tool to understand sector performance and argues for its wider use in identifying critical factors and actions to support animal feed sector improvements.