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ACKNOWLEDGEMENTS NABARD Consultancy Services (NABCONS), a subsidiary of National Bank for Agriculture and Rural Development, Mumbai gratefully acknowledge the assistance and co-operation received from the various agencies contacted by the study team in Dhule and Mumbai in Maharashtra, Ahmedabad in Gujarat, Shimla, Baddi, Una, Hamirpur, Sunder Nagar, Mandi, Palampur and Kangra in Himachal Pradesh. The help extended by the Director of Industries, Shimla, All India Starch Manufacturers Association, Mumbai, All India Maize Development Association, New Delhi and various suppliers of plant and machinery, who had very kindly furnished the required information, is highly acknowledged. Our acknowledgements are due to all the Deputy Directors, Agriculture in the districts of Una, Hamirpur, Mandi and Kangra and their staff members in making necessary arrangement for the study and pleasant stay of the team during the visits. Nabcons is highly grateful to the officials of Directorate of Agriculture, Government of Himachal Pradesh, Shimla, especially Dr. J.C. Rana, Director Agriculture and Dr. J.K. Alag, Deputy Director (Agriculture, Shimla) for entrusting this assignment to nabcons. The help and the co-operation extended by the following officials of NABARD in this connection are highly acknowledged. Chief General Managers of, Himachal Pradesh Regional Office, Shimla. General Manager and Officer In Charge, Jammu and Kashmir Regional Office, Jammu Chief General Manager, Rajasthan Regional Office, Jaipur. Shri S.R. Desai, Deputy General Manager, NABARD Regional Office, Gujarat. District Development Managers at Dhule, Maharashtra and Una, Himachal Pradesh. STUDY TEAM AND REPORT PREPARATION 1. Dr. B.R.Premi, Manager, NABARD 2. Shri. Somainder Singh, Manager, NABARD 3. V. Esakkimuthu, Assistant Manager, NABARD REVIEW BY Dr. E.V. Naidu, General Manager, Nabcons CONTENTS Chapter Subject 1 Introduction 2 An overview of Indian maize 3 Status of maize processing 4 Status of corn starch industry 5 Status of marketing of maize products in India 6 Critical factors for setting up a maize processing plant 7 Infrastructure facilities and industry development 8 SWOT analysis 9 Feasibility of maize processing in Himachal Pradesh 10 Potential assessment for maize processing 11 Social and economic impact of the project 12 Incentives available for maize processing units 13 Suggested action plan Annexure Annexure No Content I District wise, Area, production and productivity of maize in H.P II List of major starch manufacturers in India III Major consultants / suppliers of technology of wet milling of maize in India IV District wise, group wise details of units in medium & large scale sector V a Techno - Economic parameters of a model wet milling unit V b Project outlay V c Details of plant & machinery and miscellaneous fixed assets V d Assessment of working capital requirement V e Income & Expenditure statement V f Calculation of IRR, BCR & NPW V g Assessment of man power requirement VI Break even analysis VII Repayment schedule VIII a Risk variables analysis VIII b Risk analysis results VIII c Risk variables report IX Details of incentives available to industrial units in H.P 1. INTRODUCTION 1.1. Background Maize (Zea mays) is one of the important Kharif crops of Himachal Pradesh. The major area under maize is rain fed and there is no substitute for this crop during rainy season. The quality of maize grown in the state is very good. It is an important crop of the state both as staple food as well as for feed. The farmers are compelled to sell their produce to the traders at throw away prices due to lack of local demand and excess production. The trends in production, consumption and marketing of this crop have drawn the attention of the State Government for finding out the value addition locally. They planned to promote processing of this crop in to value added products. Some efforts were also made to set up a processing plant in the state but the same could not materialized. Keeping this in view, the Himachal Pradesh State Directorate of Agriculture, Shimla assigned NABARD Consultancy Service a study to assess the feasibility of maize processing in the State with the following objectives. (1) To assess the production and marketable surplus of maize. (2) To identify the suitable technology. (3) To assess the techno-economic feasibility and location for setting up processing unit. The broad terms of reference for the study were as under: 1.2 Terms of Reference 1. To assess the district wise production and marketable surplus of maize in the State. 2. To survey the existing resources / institutions / organisation and various linkages existing in various parts of the area. 3. To identify / recommend possible products of maize based on the quality. 4. To identify / recommend suitable technologies for processing of maize and suggest suitable locations for setting up such units, keeping in view the forward and backward linkages including marketing. 5. To assess the financial implications and suggest means of finance and financing pattern. 6. To assess techno - economic feasibility and financial viability of the project for securing financial assistance from different sources such as loans from banks and financial institutions and grant from Ministry of Food Processing Industries, GoI and other agencies. 7. Identify the agencies and suggest strategies for implementation of the project. The study was completed in two phases. The first phase of the study was conducted in Maharashtra to identify suitable technology for processing of maize to value added products. The technology followed by the existing units in the state were studied. Phase II of the study was taken up in Himachal Pradesh to assess the marketable surplus of maize and also ascertain the feasibility of setting up of maize processing unit(s) 1.4 Methodology The primary data were collected from the existing units, traders of maize products, farmers, consultants, suppliers of plant and machinery, units consuming maize products as raw material and various officials of State Govt. Departments of Agriculture, Himachal Pradesh Krishi Vishvavidyalaya, Industries and Pollution Control Board and some professionals who have worked in this sector. The study was completed in two phases. Phase I- The study covered the existing maize processing units at Dhule (Maharashtra), Ahmedabad (Gujarat) and units consuming maize products at Baddi, Himachal Pradesh. Phase II- Covered field study in four major maize producing districts in Himachal Pradesh, namely Una, Hamirpur, Mandi and Kangra. The owners of the existing maize processing units in Gujarat and Maharashtra and farmers in Himachal Pradesh were interviewed individually and also group discussions were held with farmers wherever possible. In addition, discussions were held with the Indian Starch Manufacturing Association, Mumbai and Indian Maize Development Association, New Delhi to know the common issues connected with the maize processing industry. The secondary data were collected from various Departments of State Government in H P, like Director of Agriculture, Director Industries and State Pollution Control Board. 1.5 Reference Year The year 2002-03 was taken as reference year for the study. However, some data/information pertain to 2003-04. Vital and important inferences were made based on the latest information/data. 1.6 Data Analysis Data were analysed using Lotus 123/ Excel work sheets. Other methods and procedures followed in the study were discussed in the respective chapters. 1.7 Limitations of the Study Data availability from the secondary sources was sometimes not consistent with actual field level data and from other sources. The information collected from the owners of the units and farmers is based on personal interviews and hence may not be comparable with the official records/ books of accounts. 2. AN OVER VIEW OF INDIAN MAIZE (Zea mays) Maize (Zea mays) is classified into dent, flint, waxy, sweet and pop corn categories. Dent corn (Zea mays var. indentata) also known as field corn, containing both hard and soft starch, becomes indented at maturity. Flint corn (Zea mays var. indurata) having hard, horny, rounded or short and flat kernels; with the soft and starchy endosperm is enclosed by hard outer layer. Both of these varieties are used for industrial purposes. Popcorn (Zea mays var. everta) has small pointed and rounded kernels with very hard endosperm which on exposure to dry heat popped or evereted by the expulsion of the contained moisture and forming a white starchy mass many times the size of the original kernel. Sweet corn (Zea saccharata or Zea rugosa) is distinguished by kernels containing a high percentage of sugar in the milk stage and therefore suitable for table use. Indian maize has white, red, purple, brown or multicoloured kernels and is characteristically dent corn. The dent corn is useful for starch processing by wet milling method. The area and production details of this cereal crop is given as under: 2.1 Production of Maize The total area under maize cultivation in the world is 139 million hectares with a production of 598 million MT ( mMT ). USA is the world's largest producer and exporter of maize with an out put of 240 mMT from an area of 29 million hectares. Other major producers are China (125 mMT), European Union (39 mMT), Brazil (37 mMT), Mexico (19 mMT), Argentina (14 mMT) and India (11 mMT). Among all cereals, maize occupies the fifth largest in area, fourth largest in output and third largest in yield. India is the tenth largest producer with a production of 11.10 mMT from an area of 6.6 million ha. The average yield in India is 1.77 MT/ha which is very low as against 7 MT/ha in temperate areas of developed economies and 3.8 MT/ha of global average. Maize is cultivated in almost all states in the country. Bihar is the leading producer in India followed by Rajasthan, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka and Himachal Pradesh.