ECONOMICS OF NON-OIL VALUE CHAINS IN PEANUT:A CASE OF PEANUT-CANDY AND SALTED-PEANUTSMALL-SCALE UNITS IN INDIA

This study was conducted to assess the extent of value-addition,employment generating potential and economics of peanut-candy and salted-peanutsmall-scale units in India. In the low-capacity peanut-candy units, thevalue-addition at the end of Stage-I (pod to kernel) was $ 2.4/q, whereas, it was $2.2/q in the high-capacity units. In salted-peanut units, the value-addition in thelow- and high-capacity was $2.2/q and $2.3/q, respectively. In Stage-II (kernel tofinal product), the value-addition was high across sizes and type of the processingunits. Around 525 and 635 man-days of employment/month/unit were generated bylow and high-capacity peanut-candy units, respectively. The employmentgeneration was less in salted-peanut vis-à-vis peanut-candy units due to differentprocessing methods. The kernel alone constituted 50 to 52 per cent of the total costin peanut-candy, and 89 per cent in salted-peanut units. The sensitivity analysisrevealed that change in the kernel price directly affected the magnitude of profits.The important policy implications emerged were: if the units process the pods toobtain kernel (Stage-I) instead of procuring kernels from the market, considerablevalue-addition can be made, kernel price directly affects the profits and hence anappropriate mechanism like ‘contract farming’ would stabilise the kernel prices,majority of the units retrench labour during off-peak period due to less demand andhence diversification in processing will generate sufficient employment toretain the existing skilled employees, and appropriate policy intervention isnecessary to address the capital, technology and marketing constraints of thepeanut processing units.