Status of Maize Cultivation in Bihar

Chapter 1: Introduction

1.1 Background and Context

Bihar is one of the largest maize growing state and the crop was grown primarily as a subsistence crop to meet food needs for a long time till recently. But now like in non- traditional areas (Karnataka and Andhra Pradesh), it is also grown for commercial purposes (i.e., mainly to meet the raw material requirements of the animal feed sector). It is third largest maize producing state contributing around 10 percent to national production. Around 0.65 million hectare is presently under maize cultivation, which is about 7 per cent of Gross Cropped Area (GCA) in the state and over 13 lakh farmers are engaged in maize cultivation. During 2005-06, the state produced about 1.4 million MT, which is about 5 per cent of the total crop production.

Maize can be utilized in many different forms by converting it into a variety of products, through grinding, alkali processing, boiling, cooking and fermenting, such as corn starch, corn flakes and cereals, ethanol etc. It also has many industrial applications, which can make it a profitable crop in the state. Maize processing and utilization pattern shows that in India, around 60 per cent of the total produce is for animal feed, 28 per cent for human consumption and 12 per cent is used by the industry (starch, brewery etc). In Bihar only 8-10% of maize (5% directly by the processors and another 3-5% is being used by road side snack joints etc.) is processed within the state despite the fact that the state has huge and rising marketable surplus.

While the area under cultivation, maize production & yield have increased during 1977 to 2007, there are only 8-10 maize processing units in Bihar. They are mainly into milling of flour and production poultry feed. In absence of adequate processing facility, the huge marketable surplus of Bihar, especially in rabi season depends completely on other states for its consumption. Any obstruction in this trading chain in future may lead into spoilage of that surplus, affecting the entire value chain.

Also due to inadequate processing facilities in the state, result more than 80% of Bihar maize goes outside the state and gets processed there depriving it of value addition and higher income for the people in the state. The processed maize in the form of poultry feed and seeds then comes back to the state.

There is potential for processing of both high & low value added products in maize sector in the state itself. There are factors contributing to increase in the demand of processed maize. Some of them are (1) growing demand for eggs and chicken leading to increased demand for poultry feed in the state; (2) the state has 8 lakh hectare land under water which is suitable for fish farming; (3) increased demand for ethanol as a fuel additive; (4) growing urbanization leading to increased demand for processed food like corn flakes etc; (5) dairy sector is on growth path and this sector can provide a good market for cattle feed products. Thus there is growing demand for processed maize in the state and there is also adequate supply of good quality maize in the state. Yet the processing industry in Bihar is almost non-existent as there are only 10 processing units in the state engaged mainly in manufacturing of traditional food products (flour, besan, suji etc) and poultry feed. It is therefore important to study the reasons and factors restricting the growth of processing industry in the state.

It is in this context the study was commissioned by World Bank to study the maize sector in Bihar with the following objectives

1.2 Objectives

The broad objective of the study is to assess the investment climate for processing of maize (corn) into value added products in Bihar.

1. To assess and analyse the status of maize cultivation with respect to inputs, harvesting and post harvesting practices and infrastructure (including storage, warehousing etc)

2. To map major mandis and analyse price movements

3. To study the trade channels (marketing network) and value chain in maize cultivation

4. Study the status of maize processing in the state

5. To find potential of maize processing industry in the state,

6. To out line the regulatory/Policy guidelines of the government,

7. To identify the constraints with farmers, traders and processors.

8. Suggest measures for improving investment climate for maize processing in the state.

1.3. Approach, Database and Methodology

The assignment involved collection and scanning of secondary data available about the maize sector with a focus on status of maize processing industry in the state. It was felt that benchmarking the sector in Bihar with other states would enable us identify the constraints and draw best practice cases. Therefore information has also been collected from Andhra Pradesh and Karnataka.

Primary data collection Data was collected from both primary and secondary sources. The Primary data was collected through a diagnostic survey of the farmers/growers, traders and maize processors in the state in order to study existing cultivation and post harvesting practices, storage systems, maize arrivals and price movements, marketing channels, value chains etc and identifying the factors constraining the growth of the sector at different levels of production and marketing.

A structured questionnaire was developed for data collection and collate the critical information. The quantitative data was mainly collected by interviewing over 60 growers, 20 traders and all 10 processors operating in the state. The data on physical infrastructure in mandis, monthly prices and corresponding arrivals, name and share of the markets (local as well as outside state), etc has been collected directly from mandis. All major mandis trading in maize i.e Gulabagh, Katihar, Mansi etc have been covered by the survey for studying the trade channels and value chain mapping in maize cultivation.

The diagnostic survey itself was carried out in two phases: qualitative and quantitative surveys. The survey was carried out in the identified 4 districts of Bihar, namely Begusarai, Khagaria, Purnea and Bhagalpur. Secondary data was used as the basis for short-listing the target group for obtaining trade feedback and critical inputs from various stakeholders including government agencies. The short listing was done on the basis of following parametres:

 Current area, production, productivity of all districts for maize production

 Marketable surplus of maize in these districts

 Linkages of production hubs to different consumption sources.

The ultimate objective of the survey was to come out with credible inputs and database for the formulation of recommendations to improve the competitiveness of the sector.

Secondary Data Collection

The secondary database sources included published books, Reports of multi-lateral bodies like World Bank, articles published in national and international journals, magazines, newspapers, Reports of the various Government departments, consultancy firms, research projects etc. It was used to study the status of maize production in world with a focus on India and Bihar. This included data related to production, productivity and area of the crop in India and Bihar, existence, role and relevance of concerned institutions, policy framework etc. The data have been sourced from various sources including government agencies including Department of Agriculture (DoA), and Rajendra Agricultural University (RAU), Department of Industry, CGIAR (Maize Regional Research Centre and Seed Production), Begusarai and Confederation of Indian Industry (CII), Patna.

In addition to the above structured interviews, 4 Focussed Group Discussions (FGDs) were held among farmers, commission agents, traders, processors, industry associations, and research institutions to get the first hand information on the sector with a primary focus on maize trading and processing.

The data and information have also been collected through interactions and in-depth interviews with various stakeholders including Government departments like Department of Agriculture (DoA), Industrial Development Commissioner (IDC), Department of Fisheries, Research Institutions, bankers, trade and industry associations etc.

Study Tools

As stated, separate structured questionnaires were developed for farmers/growers, traders and processors in accordance with the objectives of the study. They were pre-tested and later administered in the field. Similarly, guides for FGDs and in- depth interviews were developed and finalized to get optimum results.

Field Operations and Data Management

In all, 4 field investigators and 2 supervisors were deployed for conducting the field study. All of them have had prior experience in conducting such surveys. These field officials administered the quantitative questionnaire among the target group. The gaps and inconsistencies found in the filled - in questionnaires were rectified in the field itself.

The information collected through field survey was tabulated and analysed. The issues that emerged during FGDs and discussion with various stakeholders, including state government officials, have also been captured in the Report.

Chapter 2 : Maize Production – Global and National Scenario

Maize (Zea mays) is the third most important crop after rice and wheat and is an important staple food in many countries of the world. It is also known as the Miracle Crop or Queen of Cereals due to its high productivity potential as compared to other crops of Graminacea family. Besides, being extensively used as human food and animal feed it is a source of a large number of diversified industrial products. Maize can be processed to utilize any or all components to manufacture large number of end products including corn starch, corn oil, baby corns, popcorns, alcoholic beverages, food sweeteners and more recently, fuel have added to its demand thereby increasingly making it a high value product.

Figure 2.1: Components of Maize

4% 4% 3% 10%

79%

Starch Protein Oil Fibre Minerals

Source: ICAR Annual Report

Maize is high yielding, easy to process, readily digested, and costs less than other cereals. It is also a versatile crop, allowing it to grow across a range of agroecological zones. Every part of the maize plant has economic value: the grain, leaves, stalk, tassel,

31 and cob can all be used to produce a large variety of food and nonfood products etc. Generally following three types of corn is grown

 Grain or field corn,  Sweet corn used mainly as food  Popcorn.

Maize in India is an important cereal. Its area and production have steadily increased during the past two decades. Maize has varied usages from food preparation to poultry feed. In India, it is mainly used in poultry feed manufacturing.

2.1. Trend in Global Production, Consumption and Trade in Maize

2.1.1. Status of Maize Production in the World

The area under cultivation and as well as the production of maize have been increasing continuously over last decades. Though the acreage has increased consistently, production pattern has been erratic owing to the variations in the yield. There are many factors that have contributed towards changes in yield like weather during crop growth, pest and disease attack, technological advances and development of new hybrids and varieties etc.

Figure 2.2: World Area, Production and Yield (In Kgs/Ha) of Maize (2005)

800000 60000

700000 50000 600000 40000 500000

400000 30000

300000 20000 200000 Production000(intonnes) 10000

100000 HarvestedArea 000(inhectares)

0 0

1990 1995 2000 2001 2002 2003 2004 2005 Year

Production Area harvested Yield per hectar

Source: Estimated from data downloaded from www.fao.org/es/esa/en/pubs_sofa.htm

According to USDA report, acreage under corn increased to 157.1 million hectares in 2007-08 from 148.11 million hectares during 2006-07. Accordingly the production figure has also increased to 770.17 million tones from 704.28 million tonnes. This increase has been mainly due to increased acreage coupled with favorable weather conditions and use of high yielding hybrids. Major rise in production contributed from Brazil due to congenial climatic conditions like adequate rain fall and low heat stress during the growth period1.

Table 2.1: Area, Production and Yield of Major Maize Producing Countries in 2005 Production (Quantity in 000 Area Harvested (in Yield per Hectare Country tonnes) 000 Ha) (kg/Ha) United States of America 282311 30399 9287 China 139498 26380 5288 Brazil 35113 11549 3040 Argentina 20483 2783 7359 Mexico 18012 6606 2727 India 14172 7430 1907 France 13850 1655 8371 Indonesia 12014 3504 3428 South Africa 11716 3223 3635 Italy 10428 1113 9368

1 Karvy Comtrade Limited (2008) Seasonal Report on Maize

Romania 10389 2609 3982 Others 135270 45438 3902 (Average) World 703255 142690 4016 (Average) Source: Estimated from data downloaded from www.fao.org/es/esa/en/pubs_sofa.htm

The US has the largest harvested area of corn and contributes one fifth of the world corn harvested area. China, Brazil, Mexico, India and Indonesia are the other countries, which contribute significantly to the world harvested area. These six countries have around 60% of the world corn harvested area. USA is the largest producer of maize in the world accounting for about 40% of the global production. Other major maize producers are China (20%), EU (14%), Brazil (5%) and India

The global average productivity of maize is around 4000 Kgs / hectare. Italy recorded the highest yield of 9368 Kgs / ha followed by USA (9287 Kgs / ha), France (8371 Kgs / ha) and Argentina (7359 Kgs / ha). India at around 2000 Kgs /ha has the lowest yield among major maize growing countries in the world.

2.1.2. Global Consumption Scenario

Globally, there has been continuous increase in the consumption demand of corn mainly owing to increase in the demand from meat and starch sector. There is growing requirement of maize from poultry sector, which use corn as feed. Consumption of corn for both the purpose feed purpose as well human consumption purpose is increasing. Major consuming of corn countries are USA and China with respective shares of 35% and 19%. Other important consuming countries are EU-27 (8%), and Brazil (5.5%). India‘s share in total global consumption is accounted to only around 2%2.

2.1.3. International Trade in Maize The global export market for corn presently stands at about 95 million tones. United States with a share of 65% in total global exports is the largest exporter of corn in the world followed by Argentina and Brazil with individual respective shares of 15% and

2 ibid.

11%. Other exporting countries are Paraguay, South Africa (each contributing 2%) and India (1%)3 though their shares remain low.

As far as imports are concerned, Japan (17%), EU- 27 (11%) and Mexico (10%), Korea (9%) and Egypt (6%) are the major importing countries of corn in the world. respectively4.

Fig 2.3: Share in Global Exports (2007-08) Fig 2.4: Share in Global Imports (2007-08)

Paraguay India 2%S. Africa Others J apan 1% 17% Brazil 2% 4% 11% Ot hers EU (27) 47% 11% Argentina USA 15% Mexico 65% 10% Korea Egypt 9% 6%

Source: Karvy Comtrade Limited (2008) Seasonal Report on Maize

2.2. Trend in Production, Consumption and Trade in Maize in India

2.1. Maize Seasonality in India

It is a seasonal crop and can be harvested thrice in a year. In India, maize is grown in all the seasons i.e., kharif (Monsoon), rabi (winter) and summer but it is essentially a

3 ibid. 4 ibid.

warm weather (kharif) crop as nearly 90% of the production is from kharif season and is rain dependent. It is cultivated during winter (rabi) in Peninsular India and Bihar. About 7-8% of the production is during rabi season, and the rest is from spring season (summer maize) grown mainly in Northern India. It is usually grown as a pure crop but is also grown as inter-crop with different crop combinations like sugarcane, cotton, legumes, vegetables etc. Higher yields have been recorded in the rabi and spring crops. The higher yields are primarily due to long crop duration, better water management and lower incidence of disease and pests.

In most parts of India, maize during kharif is sown with the break of monsoon, the actual dates varying from region to region. It is sown in early March in north-eastern hills, in April to early May in north-western hills, in May-June in Peninsular India, in the end of June to mid-July in the Indo-Gangetic Plains. The late sowing of maize may extend up to late August in certain irrigated tracts of Punjab. Spring maize is sown in late January to the end. Rabi maize is generally sown in Bihar, Andhra Pradesh, Tamil Nadu and Karnataka in the end of October to mid-November. Both the spring and the rabi crops are raised, more or less, under irrigation.

Fig 2.5: Seasonality Chart for Maize Arrivals in India

May June July Aug Sep Oct Nov Dec Jan Feb March April Andhra Pradesh (K) Andhra Pradesh (R) Karnataka (K) Karnataka (R) Bihar (K) Bihar (R) Maharashtra (K) Madhya Pradesh (K) Uttar Pradesh (K)

Lean Peak

Source: Discussions with traders

Maize can grow from sea level to 3000 metre altitudes under diverse conditions. Maize does however, require considerable moisture and warmth from germination to flowering. The ideal temperature for germination is 21° C and for growth 32°C. 50-75 cms of well-distributed rainfall is conducive to growth. It can be successfully grown where the night temperature does not go below 15.6oC (60oF). It cannot withstand frost at any stage of its growth. In India, its cultivation extends from the hot arid plains of Rajasthan and Gujarat to the wet hill of Assam and Bengal (receiving over 400 cm of rainfall)5.

2.2.2. Maize in India – Acreage, Production and Yield India is the fifth largest producer of maize in the world contributing 2% of the global production. Maize area, production and yield in India have seen a phenomenal growth over the last five decades. The total area under maize in India expanded from 3 mn ha in 1951 to 7.8 m ha in 2006, growing annually at an average rate of around 3%. In the early 1970s, expansion in area under maize cultivation slowed dramatically but after that for three decades the maize area remained virtually unchanged till 2000. The acreage started to increase after 2001. The yield has also increased over the years but continues to be very low as compared to other maize producing countries. Figure 2.6: Maize Area, Production and Yield in India

16000 2500 14000 2000 12000

10000 1500

8000 Yield 6000 1000 4000 AreaandProduction 500 2000

0 0

1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Year

Area (in 000 Hectares) Production (in 000 Tonnes) Yield (Kg per Hectare)

Source: Estimated from data downloaded from http://dacnet.nic.in/eands/

5 http://www.pnbkrishi.com/maize.htm

Rising yields, coupled with a steady expansion in area, led to growth in maize production of 5.9% and 5.2% per annum in the 1950s and 1960s, respectively. After slowing down in the 1970s as the area under cultivation stabilized, growth in maize production, fueled by continuing improvements in yield, averaged about 2.6% per annum in the 1980s and 3.2% per annum during 1990s. A significant shift occurred in the 1990s when irrigated winter (rabi) maize cultivation expanded rapidly, particularly in the states of Bihar, Andhra Pradesh and Karnataka. Total maize production exceeded 10 million tons in 1997-98. Production of corn in India has shown an increasing trend consistently except the year 2002 when production showed a little decline due to drought conditions in some of the states in India.

Though kharif maize dominates the acreage and thus the production, productivity is highest for Rabi maize. The average yield of kharif maize is about 2 tonnes/hectare while that of rabi maize is more than 3 tonnes /hectare. The average yield for spring season is also around 3 tonnes per hectare. The higher yield during rabi and spring are primarily due to (a) relatively mild climatic conditions rabi and spring seasons during which the duration of the crop is longer resulting in sustained harvesting of solar energy leading to higher recovery of grain and biomass; (b) larger coverage of hybrid seeds having higher productivity. The states with favourable ecosystem specially Bihar (rabi) are witnessing expansion of winter maize area. Almost 90% of the total hybrid seed production of the country is confined to Andhra Pradesh and Karnataka in rabi season due to seasonal and productivity advantages6.

Fig 2.7: Season Wise Area Under Cultivation Fig 2.8: Season Wise Production

R a b i S u m m e r R a b i S u m m e r (8%) (2%) (11%) (3%)

( Kh a r i f ) Kh a r i f 90% (86%)

6 ICAR (2007) Vision - 2025

Fig 2.9: Season Wise Productivity (Kgs per Hectare)

3000

2500

2000

1500

1000

500

0 Kharif Rabi Summer

Source: ICAR (2007) Vision – 2025

2.2.3. State Wise Production of Maize

Maize, like any other cereal is grown across all the states in India and in many states it is one of the important staple foods. Indian maize production has traditionally been concentrated in the southern ―Corn Belt‖ states of Karnataka and Andhra Pradesh, where it is grown during the kharif season. In recent years, introduction of cold-tolerant varieties has led to the emergence of an irrigated rabi maize crop in the northern states of Bihar and Uttar Pradesh. Table 2.2: State-Wise Maize Area, Production and Yield during 2005-06

Area (in 000 % of Total Production (in ooo % of Total Yield (Kgs per State Hectares) Area tonnes) Production Hectare) Andhra Pradesh 760 10.01 3090 21.01 4073 Karnataka 940 12.38 2730 18.56 2915 Bihar 650 8.56 1360 9.25 2098 Madhya Pradesh 860 11.33 1250 8.50 1450 Rajasthan 1000 13.18 1100 7.48 1098 Uttar Pradesh 810 10.67 1050 7.14 1295 Maharashtra 470 6.19 1000 6.80 2106 Gujarat 500 6.59 560 3.81 1124 Himachal Pradesh 300 3.95 540 3.67 1839 Jammu & Kashmir 320 4.22 450 3.06 1413 Punjab 150 1.98 400 2.72 2723 Jharkhand 180 2.37 240 1.63 1315 Tamil Nadu 200 2.64 240 1.63 1189 West Bengal 50 0.66 130 0.88 2533 Others 400 5.27 570 3.87 @ All India 7590 100.00 14710 100.00 1938 Source: Estimated from data downloaded from http://dacnet.nic.in/eands/

Among the major producing states, Andhra Pradesh tops the list with the contribution of over 20% to the total Indian maize production. Other producers are Karnataka (18.6%), Bihar (9.2%), Madhya Pradesh (8.5%), Rajasthan (7.5%), Uttar Pradesh (7%), and Maharashtra (6.8%). The maize growing states can be divided into two groups

1. High Productivity States: Karnataka, Andhra Pradesh, Bihar (Rabi) Maharashtra, Punjab and West Bengal account for about 30 percent of the national maize acreage and their productivity levels range from 2 – 4 tonnes per hectare.

2. Low Productivity States : Rajasthan, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar (Kharif) which together cover about 50 percent of the area have yields ranging 1 – 2 tonnes / hectare (i.e. < 2 tonnes/hectare) which is lower than the national average

2.2.4. Utilisation / Consumption Pattern of Maize in India

Diversified uses of maize have prompted higher production in India. Presently, maize is mainly used for preparation of poultry feed and extraction of starch in the country. In India both white and yellow both types of maize are grown. While white maize in grown mostly for human food purpose, yellow maize is consumed primarily in the manufacturing of poultry and animal feed. The maize consumption pattern in given in the following graph.

Direct human consumption of maize has declined over time, while feed and industrial uses have increased. A recent study by NCAP has shown that the per capita human maize consumption which stands at around 3 kg per annum (average rural – 3.89 kg per annum; and urban average – 0.61 kg per annum) is declining at 2% per annum due to greater availability of maize and rice at subsidized rates through Public Distribution System (PDS). Rising household incomes have also shifted consumption from maize to other cereals like rice and wheat. This has also led to an increased consumption of meat, particularly of poultry, which has in turn increased the demand for maize as feed. Increased industrial demand for maize comes primarily from the

40 starch and milling industry which in turn caters to textiles, paper, glue, alcohol, confectionery, food processing, pharmaceutical industry etc7.

The utilization pattern indicated that about 28% of the maize produced in India is consumed directly as food, 59% goes for poultry, fishery, piggery and livestock feed, about 12% to milling and brewery industry (like starch, oil, and dry milling) and the balance 1% for the seed. The utilization pattern of maize varies from state to state an according to the size of the farm.

Fig 2.10: Mize Consumption Pattern in India

Seed Starch Brewery 1% 11% 1% Food 28%

Animal Feed Poultry Feed 11% 48%

Source: ICAR (2007) Vision – 2025

Dry, shelled cobs are used as fuel. Green leaves and stems, from thinning the maize crop, are used as animal fodder. Maize grain is often fed to dairy cattle, whose milk yield is reported to increase by 20-25% if fed maize grain. Maize gives higher conversion of dry substance to milk, meat, and eggs as compared to other cereals. Maize grain is either fed directly to animals or is dried, milled, and mixed with other ingredients. Other Industries (mainly starch, dextrose, corn syrup, corn oil, ethanol, etc) also uses maize as their raw-material/input8.

7 Multi Commodity Exchange of India Ltd (2007) Maize Futures: Feasibility Study and ICAR Vision – 2025 Document 8 http://www.pnbkrishi.com/maize.htm

2.2.5. India’s International trade in Maize

The production in 2007 was estimated at around 138 lakh tonnes. India was exporting maize to the world and the exports also increased during 2000-2005. It declined in 2003 due to fall in production. Exports increased again in subsequent years of 2004 and 2005 but declined again in 2006. This time the decline was due to imposition of certain restrictions on maize exports from India.

Imports of maize into India has significantly declined since 2000 and according to CMIE, India imported 1.6 million MT of maize valued at Rs 30.7 million in 2006. However, imports have been witnessing a rising trend in since 2003 onwards.

Graph 2.11: India’s Exports and Imports of Maize During 2000 –2006

8000 7000 7276 6000 5000 3993 4000 4163 3000 1770 2000 2 975 688 1000 296 16 Import& Export (In Lakh MT) 43 7 12 0 289 1 2000 2001 2002 2003 2004 2005 2006 Year

Imports Export

Source: CMIE database

Maize is an important crop in India. Besides being used for human consumption, it is a key ingredient of poultry and livestock feeds. The poultry industry in India is rapidly increasing. The country‘s requirement for poultry feed is increasing at over 10 % per annum. Its demand for industrial uses is expected to increase. The maize sector has lot of potential for growth.

Chapter 3: Policy and Institutional Framework for Maize Sector in Bihar

This chapter will map the institutional framework and the policies/programmes relating to maize sector in Bihar. The presence and role of major institutions and associations that are associated directly or indirectly with maize have been discussed. 3.1. Institutions in Maize Sector in Bihar Following institutions are working in Bihar on maize sector. 1. Bihar Veterinary College, Patna - This College helps the farmers & the industries, related to poultry & dairy sector. It also does technology transfer (Lab to Land program) through its respective Krishi Vigyan Kendra‘s (KVKs). Poultry in Bihar is not a great success story due to socio-economic constrains, but dairy is a success.

2. College of Agricultural Engineering, Samastipur, Rajendra Agricultural University, Pusa, Samastipur - This institute is primarily responsible for the irrigation aspects of maize in Bihar. Good work is being done on spring maize. The exponential increment in the quality & quantity of spring maize yields in the last half a decade is the proof of it.

3. College of Fisheries, Dholi & College of Fisheries, Tirhut , College of Agriculture (TCA) campus, Muzaffarpur – Pusa Road, Doli, Muzaffarpur – Though traditionally a fish eating state, these two colleges has not been exploited by the fishermen & government to make fisheries an industry. This is evident from the fact quoted by Deputy Director Fisheries, Department of Fisheries, GoB, who had an interview with World Bank & IL&FS-CDI that presently 25% of the water bodies are being utilized with a ―capture fishing process‖ not the ―culture fishing process‖. The state imports 20% of its requirement from West Bengal & Andhra Pradesh. At present, the total fish requirement in Bihar is 2 lakh tons per year with an average yield of 3-5 t per ha per year. There are no fish feed unit in Bihar. According to a recent research

carried out in the Institute, fish feed should contain about 45% of maize for better fish production per year. Presently the fishermen are using cow-dung & organic manures to grow phytons for the fish while they use mustard cake with rice bran cake, mixed in molasses to directly feed the fish. This feed is works out to be cheaper than maize as in the fish producing districts of Bihar, maize is not adequately produced/available. These flood prone fish producing districts mostly grow paddy in kharif followed by mustard in Rabi. GoB is planning to double its fish volume by 2013, by bringing in additional 20000 ha under fish culture to make it a total of 50000 ha of area under fish culture. The output will also be increased from 3 tons to 5 tons fish per ha per year. To make this happen by 2013, about 2.58 lakh tons of fish feed is required which would have over one lakh tons of maize in it.

These two colleges are now consulting Central Institute of Fresh Water Aquaculture (CIFWA), Bhubneshwar to make fish feed units in Bihar. A proposal is with GoB submitted by the department that 25% subsidy with a cap of Rs.12 lakh will be given to fisheries graduate for setting up a new fish feed unit. To make these feed units viable Rs.20000/- per acre of pond will be given to energize it. This one acre can hold 1 lakh fingerlings which can be sold @5 paise per fingerlings. Feeding the fish from these feed units can produce 1kg of Katla (local freshwater fish variety), @ Rs.50 per kg, in a year from the fingerlings. The proposal looks to be viable but requires initiatives from fishermen & fisheries graduate.

4. Rajendra Agricultural University, Faculty Of Agriculture, P O Pusa, Samastipur - Established on 3rd December 1974, it has a mandate for overall development of the maize sector. This institute has done good work in the initial stages till 1979 for white corn. Presently it has a full-fledged maize research team with the Maize Coordinator as head. It produces small quantity of seed for Bihar Beej Nigam, but the volumes are decreasing as the seed sector is dominated by the private players. The university is helping GoB in drafting the ―Bihar Road Map for Agriculture‖ with the following highlights on maize:

 DoA will soon bring out a MAIZE MISSION for Bihar. The highlights of it will be as follows

1) Growing maize in flood prone areas.

2) Setting up 12 godowns in all the maize growing districts

3) Setting up of rural godowns in 216 blocks of each 250 MT.

4) Target production by 2012 to be 3 million MT per annum from 1 million hectare with yield of 3t/ha

 Seed production will be private companies' domain

 Immediate investment in farm mechanization and rural warehousing. Warehousing will cost Rs.2.5 million for 1000 MT.

With the joint effort of this university and Directorate of Maize Research (DMR), Begusarai some good Quality Protein Maize (QPM) has been released. GoB is promoting QPM as mid-day meal in all government schools. To make this happen, the university is helping the processors like Katyani Makka Udayog, to set up a unit in Khagaria. The World Bank & IL&FS-CDI, has visited this processing unit at Chautham in Khagaria district. This unit is temporarily closed due to financial issues. One of the best cases of technology transfer by the university can be observed as given below:

Source: www.rwc.cgiar.org/RSCRTCC/2005/Sessions

5. Sanjay Gandhi Institute of Dairy Science and Tech., Pusa, Samastipur & Sanjay Gandhi Institute of Dairy Technology, Patna, Rajendra Agricultural University, P O Dhelwan, Lohiyanagar, Patna – These two institutes have done a commendable job creating an oldest (25 years old) single most success story of Bihar, i.e., Bihar State. Cooperative Milk Producers‘ Federations Limited (COMPFED). As per interview conducted by World Bank and IL&FS-CDI with the General Manager, Operations, COMPFED, will be doubling its capacity to 200t/day of cattle feed in the next four years with 16% growth per annum. COMPFED procures 60-70% of its maize requirement from Bihar. COMPFED prepares the following animal feeds with different maize compositions:

Type of Animal feed Maize content Adult cattle feed 08-12% Milking cow feed 15% Poultry feed 50-60% Pig feed 25-30% Source: COMPFED, Patna

The irony here is that cattle & cow feed is picking up but not poultry & piggery. COMPFED has more than 99% business in cattle & cow feed. It does some poultry & pig feed production for the government like military farms, Central dairy farms etc.

The two institutes have done some good research work on maize as cattle feed. In collaboration with National Dairy Research Institute (NDRI), Karnal.

6. Directorate of Maize Research (DMR) Regional Research and Seed Production Centre, Kushmahout, Bishnupuri, Begusarai - Consultative Group on International Agricultural Research (CGIAR) (www.cgiar.org), Begusarai, was established on 4th May, 1997 exclusively for maize as a Regional Research & Seed Production Centre, has no mandate for industrial research. This institute is one of the best resources for all the private seed companies. Exchange of parent seed & endorsement of hybrids, do happen un- officially, boosting the private seed companies to produce the best performing hybrids for Bihar Rabi.

7. Krishi Vigyan Kendras (KVK) – All the 16 KVKs in Bihar are governed by different organizations like Indian Council of Agricultural Research (ICAR), State Agriculture University (SAU), Non-Government Organizations (NGO) and state Govt., Central/State Public undertaking, Educational Institutions including Central Universities. KVK at Begusarai is the only one which has the main mandate for maize. Remaining KVKs indirectly help the maize farmers & processors like distribution of mid-day meals in primary schools, health awareness among the fishermen cooperatives, increasing the milk production & for a particular down trodden community, to increase the piggery sector.

Table 3.1: Details of KVKs Operating in Bihar

S.N. Name & Address of KVK Host Organization Est. Year & governed by

1. Training Organizer, Vice- Chancellor, 1979 Krishi Vigyan Kendra, Rajendra Agriculture University, S P.O. Sankarpur, Munger - 811201 Samastipur-848125 (Bihar) (Bihar)

2. Training Organizer, -do- 1996 Krishi Vigyan Kendra, Darbhanga S (Bihar)

3. Training Organizer, -do- 1996 Krishi Vigyan Kendra, S Hajipur Farm, Vaisali (Bihar)

4. Training Organizer, -do- 1992 Krishi Vigyan Kendra, P.O. S Meghaul, Khodawanpur, Begusarai (Bihar)

5. Training Organizer, -do- 1979 Krishi Vigyan Kendra, S Agwanpur, Saharsa (Bihar)

6. Training Organizer, -do- 1992 Krishi Vigyan Kendra, S P.O. Harnaut, Nalanda (Bihar)

7. Training Organizer, -do- 1983 Krishi Vigyan Kendra, P.O. Vijay S nagar, Banka -813101 (Bihar)

8. Chief Training Organizer, -do- 1992 Krishi Vigyan Kendra, S Barh, Patna (Bihar)

9. Training Organizer, -do- 1996 Krishi Vigyan Kendra, S Sekhupura (Bihar)

10. Training Organizer, -do- 1997 Krishi Vigyan Kendra, S Saraiah Farm, Muzaffarpur (Bihar)

11. Training Organizer, Chairman, 1993 Krishi Vigyan Kendra, Sone Command Area O SCADA P.O. Arra, Deve.Agency, Bhojpur -802301 (Bihar) Sone Bhavan, Patna (Bihar)

12. Training Organizer, -do- 1997 Krishi Vigyan Kendra, O Jahanabad (Bihar)

13. Training Organizer, General Secretary, 1979 Krishi Vigyan Kendra, Gram Nirman Mandal Ashram, N P.O. Sokhodeora, Nawada -805106 Sokhodera, Nawada -805106 (Bihar) (Bihar)

14. Training Organizer, President, 1992 Krishi Vigyan Kendra, Banavasi Seva Kendra, Adhaura, N Vanavasi Seva Kendra, Bhabhua - 821116 (Bihar) P.O. Adhaura, Bhabua 821116

15. Training Organizer, Chairman, 1994 Krishi Vigyan Kendra, Sharma Khadi Gramydog Sangh, N Bharti Khadigram, Khadigram, Jamui -811313 Khadigram, P.O.Jamui - 811313

16. Training Organizer, Chairman, 1994 Krishi Vigyan Kendra, VPO S.K.Choudhary Edn. Trust, New N Basaith,Chandpura, Madhubani- Delhi 847102 (Bihar) Notes: I – ICAR; S – SAUs; N – NGOs; O -Others, includes state Govt., Central/State Public undertaking, Educational Institutions including Central Universities Source: http://dare.nic.in/KVKList.htm

3.2. Policy Incentives for Maize Sector in Bihar

On the policy front, DoA is providing lot of policy support for the development of maize sector in the state. The Institutional Reforms (2006-07) are

 Establishment of Soil Testing Laboratories in every district (16 new laboratories added during 2006-07). All the maize producing districts have now a laboratory.

 Establishment of State Pesticide Testing Laboratory at Patna for Sanitary and Phyto Sanitary certification

 Mechanization: 25% additional subsidy from State plan for 2007-08.

 DoA has allowed Leading commodity bourse NCDEX to launch the country's first spot exchange in Bihar in September-end 2007 with trading in maize contracts. The NCDEX-promoted spot exchange, initially trading in maize -- a major crop in Bihar. Since agriculture is a state subject, an electronic spot exchange cannot be launched at the national level. For any spot exchange to get a presence in all states, it has to ask permission from

each state separately. The sellers would be from Bihar but buyers could be from anywhere in the country. Traders functioning in futures market can also buy from the spot market. (Source: Fifth Column in KOILAKH NEWS on August 27, 2007 3:39:00 PM & DoA)

 On seed, DoA is still following the National Seeds Policy, 2002 9. The present government under the initiative for development of agriculture in state of Bihar has formulated a ‘Bihar Seed Plan’, mainly comprising of –

1. Revival of ‗Bihar State Seed Corporation‘

2. Revival of State Seed Farms

3. Establishment of Seed Testing Laboratory at district, subdivision, and block levels subsequently.

4. To promote the use of hybrid maize seeds during kharif up to 50 percent.

5. Development of very short duration seed banks in flood prone areas.

Bihar Government has started working on ‘Bihar Seed Plan’, but substantial progress is yet to be made in this direction.

In addition to above, DoA is also planning for

 Implementation of Vaidyanathan Committee Report on Cooperative Credit.

 Krishak Salahkar (Agri-consultants) as para extension service providers to farmers in all Panchayats

Department of Industries has not yet taken any concrete steps exclusively for development of maize processing sector in Bihar. The policy remains the same which is in general for all the industries.

9 Source: www. indian seed act 2002_files

Chapter 4: Status of Maize Production in Bihar

Bihar is the 8th populous state in India and depends primarily on agriculture. It produces a variety of crops like maize, sugarcane, potato, jute and many other vegetables and fruits due to its soil fertility and climatic conditions. The geographical location and climatic condition of eastern part of Bihar namely Purnea, Katihar, Samsatipur, Saharasa districts are favourable for cultivation of maize. Maize is thus an important crop in Bihar which is third largest producer of maize in the country after Andhra Pradesh and Karnataka and accounts for about 10% of national maize output. Cultivation of maize provides livelihood to about 1.3 million farmers in Bihar, majority of whom are marginal and small farmers. According to the figures of 2005 – 06, Bihar produced 1.7 million tonnes of maize valued at Rs. 10.6 billion (at MSP of Rs. 620/qntl).

Table 4.1: Number of Farmers Involved in Maize Cultivation in 2005-06 in Bihar Season Bihar maize area (lakh ha) Number of farmers attached Kharif 1.623 312115 Rabi 3.598 691923 Summer 1.613 310192

4.1. Production, Acreage and Yield of Maize in Bihar

Bihar is a traditional maize growing state and the crop was grown primarily as a subsistence crop to meet food needs for a long time till recently. But now like in non- traditional areas (Karnataka and Andhra Pradesh), it is also grown for commercial purposes (i.e., mainly to meet the feed requirements of the animal feed sector). It is third largest maize producing state contributing around 10 percent to national production. Around 0.65 million hectare is presently under maize cultivation, which is about 7 per cent of Gross Cropped Area (GCA) in the state and over 13 lakh farmers engaged in maize cultivation.

Figure 4.1: Maize in Bihar – Acreage, Production and Yield

3000

2500

2000

1500

1000

500

0 1999- 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2000

Area (in 000 Hectares) Production (in 000 MT) Yield (Kg per Hectare)

Source: Department of Agriculture, Government of Bihar

During 2005-06, the state produced about 1.4 million MT, which is about 5 per cent of the total crop production. Though yield in Bihar is higher than the national average, it has come down between 2000-01 and 2005-06 indicating a decline in the productivity levels in maize cultivation in Bihar. The total production of maize for the last seven years in Bihar is presented in Appendix table.

Table 4.2: Cropwise Cultivation of Maize in Bihar Year 2004-05 2005-06 2006-07 (Estimates) Crop Area Prodn. Yield Area Prodn. Yield Area Prodn. Yield Autumn 0.270 0.443 1638 0.276 0.456 1647 0.259 0.397 1532 Maize Rabi Maize 0.195 0.592 3039 0.208 0.551 2641 0.382 1.31 3444 Summer 0.160 0.454 2827 0.163 0.389 2386 - - - (Spring) Maize Total 0.626 1.49 2379 0.649 1.39 2153 0.641 1.71 2671 Area in Million Hectares; Production in Million Tonnes ; Yield in Kgs/Hectare Source: Department of Agriculture, Government of Bihar

Fig 4.2: Agricultural Map of Bihar

4.2. Status of Maize Cultivation in Bihar

4.2.1. Size of Farm Land Holdings

Maize is mainly grown by small and marginal farmers in Bihar. The fragmentation of land holdings is much more pronounced in Bihar than other states as the average per capita operational holding in the state was 0.75 hectares in 1995-96 much below the national average and nearly one quarter of the size of Punjab. About one-third of the operational holdings are marginal (less than one hectare) in which the average size is merely 0.34 hectare. This explains the largely unorganised nature of maize cultivation in the state where about 91% of the cropped area is dissected into

53 plots less than 2 hectares each. It also leads to the inference that due to the small land size the farmers find it unviable to invest in better harvesting technologies, seeds etc., thereby leading to a comparatively lower yield per hectare. The low yield limits their incomes and this again in turn leads to poor investment capacities. This vicious cycle of limited capacity to invest and thus the ensuing low returns has largely hampered the growth of the sector in the state. The category wise farmers and their operated area are indicated in the following table.

Table 4.3: Size Class-wise Number and Area of Operational Holdings in Bihar (1995-1996)

Total Holdings

Size Class (In Number Area ('000 Average Area per Hectare) ('000) Percentage Hectares) Percentage Holding (Hectares) Below 0.5 8422 59.51 1752 16.4 0.21 0.5 - 1.0 2922 20.64 2119 19.84 0.73 Marginal 11344 80.15 3871 36.25 0.34 1.0 - 2.0 1526 10.78 2018 18.89 1.32 Small 1526 10.78 2018 18.89 1.32 2.0 - 3.0 640 4.52 1534 14.36 2.4 3.0 - 4.0 301 2.13 1031 9.66 3.43 Semi- Medium 941 6.65 2565 24.01 2.73 4.0 - 5.0 170 1.2 750 7.01 4.42 5.00 - 7.50 99 0.7 597 5.59 6 7.50 - 10.0 45 0.32 402 3.76 9 Medium 314 2.22 1749 16.37 5.57 10.0 - 20.0 24 0.17 336 3.15 13.84 20.0 and Above 5 0.03 143 1.34 29.49 Large 29 0.2 479 4.48 16.45 All Sizes 14155 100 10682 100 0.75 Source: Directorate of Statistics and Evaluation, Govt. of Bihar.

Although the state has a very low amount of land per capita, in some parts of the state there are still significant numbers of landholders having large amount of land leased in their possession, in violation of the ceiling law. Most of such landholders are absentees and consequently the state reports one of the largest land area under tenancy in the country, although a significant amount of land leased out is also by small and petty landholders engaged in a variety of occupations outside the village. According to the NSS survey in 1980-81 the proportion of cultivated land under tenancy was about 10

54 percent. Thus farmers have limited interest and capacity to invest in farm land fertility etc.

Maize is grown throughout the year in Bihar all three seasonal crops of maize are cultivated; however, main crop is Rabi maize. Winter (Rabi) maize is the USP of the state that dominates total maize production in the state with a 40 percent share. Monsoon (Kharif) maize and Summer maize each contributes about 23 percent to the total maize area.

Maize is grown in almost all the districts of Bihar. The leading district is Khagaria, which accounts for about 12 per cent of maize production in the state. Other important maize producing districts include Begusarai, Madhepura, Saharsa, Purnea, Katihar, Muzaffarpur, Vaishali, and Samstipur. As maize is grown in most of the districts of the state, there is not much movement of the grains within the state. Entire stretch form Begusarai to Khagaria on the north side of national highway, having highly fertile land of Gangetic plains provides very favourable soil for maize cultivation. The acreage, production and yield of major maize (Rabi, Kharif and Summer) growing districts in Bihar during 2006-07 is indicated in the following table

Table 4.4: Area and Production of Summer Maize (Gamma) in Major Districts in Bihar During 2006-07

S. No Name of Districts Area (ha.) % Share Prod. (M.T.) % Share 1 Purnea 17774 10.12 86824 14.14 2 Katihar 14890 8.48 71515 11.65 3 Madhepura 19483 11.09 57051 9.29 4 Saharsa 15999 9.11 53394 8.69 5 Sapaul 9634 5.49 45808 7.46 6 Araria 8099 4.61 38893 6.33 7 Bhagalpur 7788 4.43 26655 4.34 8 Khagaria 7509 4.28 25139 4.09 9 Vaishali 10902 6.21 23682 3.86 10 Muzaffarpur 10963 6.24 22255 3.62 11 Samastipur 5147 2.93 22237 3.62 12 Others 47449 27.02 140631 22.90 Total 175637 100.00 614084 100.00 Source: Directorate of Statistics and Evaluation, Government of Bihar

Around one-fourth of land under maize cultivation in Bihar is for summer maize which contributes about 28% of total maize produced in the state. The yield is also very high.

It is mainly grown in the districts pf Purnea, Katihar, Madhepura, Saharsa, and Supaul. These together account for 45% of acreage and 50% of production of summer maize in the state.

Table 4.5: Area and Production of Kharif in Major Districts in Bihar During 2006-07 Sl. No. Name of Districts Area (ha.) % Share Prod. (M.T.) % Share 1 Begusarai 42678 16.45 51721 13.01 2 Purnea 13795 5.32 38097 9.58 3 Bhagalpur 25812 9.95 35553 8.94 4 Saran 17974 6.93 26446 6.65 5 Vaishali 15801 6.09 23768 5.98 6 Araria 8602 3.31 21676 5.45 7 Katihar 10681 4.12 21259 5.35 8 Samastipur 14158 5.46 20932 5.26 9 Khagaria 14828 5.71 17810 4.48 10 Siwan 12011 4.63 17300 4.35 11 Patna 7569 2.92 14350 3.61 12 Others 75585 29.13 108679 27.33 Total 259494 100 397591 100 Source: Directorate of Statistics and Evaluation, Government of Bihar

Kharif is mailnly grown in the districts of Begusarai, Purnea. Bhagalpur, Saran and Vaishali. These five districts together account for about 45% of acreage and production of kharif maize in the state.

Table 4.6: Area and Production of Rabi Maize in Major Districts in Bihar During 2006-07 Sl. No. Name of Districts Area (ha.) % Share Prod. (M.T.) % Share 1 Khagaria 32400 15.71 181926 24.44 2 Samastipur 25263 12.25 118660 15.94 3 Begusarai 17164 8.32 68175 9.16 4 Katihar 15519 7.53 48931 6.57 5 Madhepura 16579 8.04 47946 6.44 6 Saharsa 10485 5.09 45390 6.10 7 Bhagalpur 10838 5.26 42691 5.74 8 Purnia 11399 5.53 25750 3.46 9 Muzaffarpur 8549 4.15 22484 3.02 10 Darbhanga 7871 3.82 22424 3.01 11 Vaishali 7459 3.62 22347 3.00 12 Others 42658 20.69 97550 13.11 Total 206184 100.00 744274 100.00 Source: Directorate of Statistics and Evaluation, Government of Bihar

As far as Rabi maize is concerned Khagaria alone accounts for about one-fourth of total production in the state. Samastipur, Begusarai and Katihar are other important districts for maize production. These 4 districts together contribute 44% to acreage and 56% of total rabi maize produced in the state.

4.2.2. Cropping Pattern

There are two distinct maize cropping patterns in Bihar. In the flood prone areas of Khagaria, Saharsa (Kosi) and parts of Samastipur maize is being cultivated during rabi. In these districts sowing starts in October (after flood water recedes) and continues up to early January. The majority of the sowing is done during December. Maize harvest starts towards the end of February and continues till the end of June. Majority of the crop is harvested during the months of May and June. In these parts of Bihar maize is the major and in some cases the only crop.

In Begusarai and Samastipur, maize is cultivated during both seasons Rabi and Khariff. The sowing, during the khariff season, starts during the month of June and continues up to July. The harvesting starts around the month of September and last up to October. The sowing and harvesting during rabi follow the similar pattern as observed in other places. The seasonality chart is given below:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Khariff Rabi

Since most of the maize cultivation is concentrated in the districts of Khagaria, Saharsa, Katihar and Purnea where it is grown only in Rabi, it can be concluded that the proportion of Rabi maize (including both winter and spring) in the total maize production of Bihar can be up to 80%. This was also corroborated during discussions with farmer groups.

Figure 4.2 : Major Maize Growing Districts in Bihar

Note: In kharif maize is scattered through-out Bihar as it is a rainfed crop. Map for kharif is not being captured by the satellite as the cropping density is below 100ha, hence no data is available. Source: CGIAR

4.2.3. Practices in Maize cultivation in Bihar

Following maize cultivation practices were observed in Bihar.

 Land Preparation — The first step in maize cultivation is ploughing. Farmers use tractors to deep plough the land. Normally ploughing is done thrice to break down the soil. During ploughing, 50 Kg of DAP, 50 Kg of Urea and 25 Kg of Potash is used alongwith some organic manure.

At field level, there is very limited use of bio-techniques to protect the fertility of land for future crops. Chemical fertilizer is used to enhance the productivity, but in long-run, it affects the fertility of land.

 Sowing — Farmers on an average use around 11 Kg of seeds per acre, which is about 20% higher than the average seed requirement. The seed requirement is

higher because of lower germination rate and high incidence of plant mortality. Line sowing was observed in most of the places.

 Weeding — Normally weeding is done only once by the farmers when the plant is 3-4 weeks old. Approximately 10 labours are used per acre to carry out the process of weeding.

 Irrigation — Normally the crop is irrigated 3 times but the number of irrigations can vary between 2-6 times depending upon the climate. Normally flood irrigation is applied to the crop. Use of sprinklers and/or drift irrigation was not observed in the study area.

Diesel motors attached to bore-wells are used to irrigate the crop. The cost of one time irrigation per acre is between Rs.400-Rs500.

The cultivation practices in Bihar when compared to that of Andhra Pradesh suffers from following deficiencies.

Parameter Practices in Andhra Practices in Bihar Effect Seed Use 7 kg/acre 11 kg/acre Higher cost of cultivation Thinning Within 10 days Thinning is done at Lesser growth of the time of weeding plants resulting in only lower productivity Spacing 75 cm (3-1/2‘) between No standard spacing Lower rows and 20cm (8") was observed productivity between plants or 60cm (2‘) between rows and 25cm (10") between plants Fertilizer 120 Kg of Nitrogen 250 Kg of Urea Higher cost of production 50 kg of Zinc sulphate 100 Kg of DAP Absence of 2 kg of Zinc balance nutrients for plant

Source: Field study by IL&FS CDI

However, the negative effects are getting neutralized due to higher soil fertility. But with better cultivation practices this yield can be improved further.

4.2.4. Cost of Cultivation

The average cost of maize cultivation in Bihar is around Rs 900 per acre. Inputs like seeds, fertilizers and constitute about 25% of the total cost. The rabi crop on an average is irrigated 6 times during a season. The irrigation cost contributes another 25% to the total cost of cultivation. The hiring charges of machinery (tractors, threshers etc) and labour for ploughing, planking, sowing, weeding and harvesting comes out to around Rs 4000 per acre. Details of the cost of cultivation and revenue per acre of land is given in the annexure table given at the end of the chapter

Table 4.7: Cost of Maize Cultivation Cost (In Rs per S.No Cost Components and Returns (Details) Acre) 1 Land Preparation (Planking, sowing, fertilizer application etc) 810 2 Seeds (10 Kgs per acre @ Rs 120 per Kg) 1200 Fertilizers 1486 (a ) Basal – NPK (66 kgs @ Rs 10) 660 (b) Basal – MOP (22 Kgs @ Rs 5.5 121 © Basal – AS (22 Kgs @ Rs 7.75) 170.5 (d) 2nd Dose – Urea (55 Kgs @ Rs 5.4) 297 3 (e) 3rd Dose – Urea (44 Kgs @ Rs 5.4) 237.6 4 Pesticides (lumpsum) 500 5 Labour / machinery 3955 6 Irrigation 2700 7 Transportation (2 Trolleys @ Rs. 200/trolly) 400 Total Cost 11051.1 Return 1 Harvest of Grains (for 28 quintals / acre @ Rs 500* 14000 2 Harvest of Cobs (lumpsum) 500 3 Harvest of biomass (used as fodder & fuel) (lumpsum) 2000 Total Return 16500 Net Profit (not including the lease rent of 1 acre of land) Only from harvest of Grains (Rs / Acre) 2948.9 If included cobs and biomass (Rs/Acre) 5448.9 Notes : * Farm gate prices during peak season Source : IL&FS CDI Field Survey

4.3. Post Harvesting Practices and Infrastructure

The harvesting is generally done manually in the open field. Seeds are being extracted using threshers. However, in some cases farmers are not extracting seeds immediately after the harvest. Here they are simply storing the cobs. The important post- production/post-harvest operations for maize are drying, grain (and seed) storage,

60 shelling, and milling. After extraction seeds are being sun-dried (on house roofs, flat cement floors or roads, drying baskets, or plastic sheets because mechanical dryers are not available in the villages) to reduce the moisture contents10. Normally the seeds are being dried for about 15 days before packing is done. After drying seeds are packed in gunny bags and stored in sheds, storage barns, or plastic sacks at home which suffer risk of damage due to pests and aflatoxin which makes it unsuitable to be used as raw material for starch production. Only few farmers use fumigants like celphos to protect the corn from grain-pest.

It is estimated that about 20-25% of the maize production is lost due to use of old and obsolete post harvest machines and processes, open drying on floors inadequate warehousing and grain store/bins, poor packing practices, and lack of collective transportation facilities etc. The production loss due to poor post harvesting practices and infrastructure affects the marketable surplus and thus the price and availability of grain thus affecting the entire value chain in the state.

4.4. Storage and Warehousing

Most of the maize cultivators are small and medium farmers, so their grain retention capacity is low (these farmers can‘t wait for higher prices of maize to sell their grains). They sell most of their grains soon after harvesting to meet their essential expenses. In maize belt of Khagaria and adjoining districts, which are flood prone, farmers sell their grains otherwise it would be spoiled by flood water. Farmers have very limited in- house capacity (2-10 quintals) to store their maize grains. These grains are stored in gunny bags or wooden & earthen drum sort of pot having limited storage capacity. Some pesticides are used to protect these grains during storage. No mass scale storage facility is available, either in private sector or public sector. Only Gulab Bag mandi has storage capacity of 12000-15000 MT. It has about 15 godowns each having a capacity to store 750-1000 MT of maize. Existence of facilities of ‗Central Ware Housing

10 Shelling of maize is mostly done through mechanical shellers. Normally, big farmers own these machines and smaller ones use it on hire basis. However, there is a provision for subsidy on purchase of shelling machines, but only a limited number of farmers can avail benefit of this scheme due to various factors like higher price of machine, non-transparent procedure of getting these subsidies, scheme available for a fixed pre-determined number of machines, etc.

Corporation‘ or ‗Bihar State Ware Housing Corporation‘ is practically negligible in maize producing areas. Lack of storage facility, prevent farmers from exploiting the opportunity of good prices for their maize. It also leads to mass-transshipments of maize grain by the traders .

4.5 Prices and Procurement

Basic staples in India including maize continue to be subjected to Minimum Support Price (MSP) guarantees with the objective of ensuring remunerative prices to the farmers, even out effects of seasonality, and promote agricultural diversification although the guaranteed prices can be at times below prices prevailing in markets. Though there is provision for MSP for maize grains, but at present there is no procurement by the State agencies. Corn procurement by the government agency is very rare (like once in five years) and that too in scanty volumes (707 MT in 2003-04) which was just 0.2% of the total maize procurement in the country. It clearly indicates poor procurement structure in the state (Refer to Annexure table).

In absence of any procurement by the state agencies, maize is sold in the open market at the market prices (determined by the demand and supply forces). Prices of maize in different grain markets of Bihar varies between Rs.500-Rs.700 per quintal, depending upon the quality of grain (yellow flint grain is most preferred) and season from point of view of grain trading (peak season – April to June; and lean season – December to March). Minimum support prices act as a benchmark for open-market prices.

Table 4.8: Minimum Support Price for Maize (Rs./quintal) 2003-04 2004-05 2005-06 2006-07 2007-08 505 525 540 540 620

Source: Commission for Agricultural Costs and Pricing, Govt. of India

The prices in Gulab bag mandi during this year are as follows

Figure 4.3: Trend in Maize Prices and Arrivals at Gulabagh Mandi, Purnea During 2007-08 (Prices in Rs. per Quintal and Arrivals in 000 MT))

900 800 700 600 500 400 300

200 Prices (in Rs/Quintal) (in Prices 100

Jan

Oct

Feb

Dec

July

Aug

Nov

Sept

June

May April Months

Market Price MSP Arrivals (Qnty in 000 MT)

Source: IL&FS CDI Field Survey

At present level of production and marketable surplus, absence of procurement by the government agencies is not creating problems in terms of lack of demand for maize grain, but it certainly slow down the upward movement of prices and hence lower returns to farmers.

4.6. Credit Delivery Mechanism

Informal credit delivery system plays a very important role in meeting the credit needs of the maize cultivators and even processors. Local wholesaler/trader gives credit support to maize farmers for meeting their consumption and production needs and hence farmers are obliged to sell maize to them. It was observed during field survey that maize farmers in the district of Khagaria on an average take loan of Rs 6000-8000 per acre from the traders/moneylenders to meet their working capital requirement i.e. input cost (seeds, fertilizer and pesticide etc), labour etc. Besides this, traders also support farmers to meet their incidental expenses like medical treatment, marriage, death etc. The prevalent monthly interest rate for informal credit in the selected districts if found to be approximately 5 – 10% per month.

After harvesting, farmers sell maize to the moneylenders (wholesalers/traders) and loan is settled against the value of the produce. Because of high interest rate and credit linked product transactions, maize farmers are trapped in vicious cycle of debt and poverty.

4.7. Marketing Channel and Infrastructure

Agricultural marketing includes the movement of agricultural produce from farms where it is produced to consumers or processors. There is free market for maize in the state but marketing network and infrastructure remains a weak link. Maize sector is highly unorganized with many intermediaries and farmers depend on the local village aggregator/trader who plays an important role in procurement and marketing of the produce. There are also some rural primary markets. Broadly two marketing channels in maize were observed:

1. Farmer Wholesaler

2. Farmer Village Aggregator / trader Wholesaler Feed/Starch industry Retailer Consumer

Typically, after harvest maize grains are brought to mandis (like Gulab Bag mandi in Purnea, Khagaria etc.) by village aggregator (adhatiyas) for selling. Trade process at all other places comprises of village level aggregation at multiple locations and then its direct transportation to rake loading points like Khagaria etc. or is even directly sent to customer‘s destination.

These mandis lack basic infrastructural facilities like platform for drying grains, pest- free storage godowns, machines for weighing/sorting, public utilities, etc. Only Gulab bag mandi in Purnea has facility to store maize to the tune of 12000-15000 MT. It has about 15 godowns each having an average storage capacity for 750-1000 tonnes of maize. These mandis also do not have mechanized grading except for Gulab Bag mandi but even there the machines are not caliberated and moisture meters are found to be faulty. There are no price display boards like it is being done in Nizamabad Mandi in Andhra Pradesh.

From Mandis, it goes directly to

1. Starch Units

2. Poultry Units

3. Dairy feed Units

4. Snacks etc

Some portion also finds its way to Bangladesh under the export license of players like Bhengani/LMJ, But it is actually supplied by traders at Gulabbag/Khagaria etc to Bangla Desh border like Hilly Border and Changra border

Table 4.9: Description of Maize Going to Different Markets from Major Mandis in Bihar

Name and Name of the Major Corn Sl. Name of the %age Local Name and %age of Outside Processors Sourcing Maize No Mandi Markets Markets From Mandi Patna (3%) & Amrit feeds (Bihar) & Suguna 1 Begusarai Hajipur (5%) Kolkata (30%) & Siliguri (25%) Poultries (Kolkata) Punjab (8%), Haryana (15%), Chandigar (7%), Delhi (10%), Kolkata (30%), Jaipur (8%), Anil Starch (Ahmedabad); Surjit Khagaria, Gogri Ahmedabad (8%), Jabalpur (7%), Starch (Phagwara, Punjab); Bharat 2 block (Big) Negligible Rajnandgaon (7%) Starch (Delhi) Patna (0.5%), Khagaria Gogri Gulabag (0.5%) & 3 (Small) Hajipur (0.5%) Siliguri (30%) & Kolkata (20%) NA Khagaria Khagaria (95%) & 4 Alauliblock Bakhsi (2-3%) Negligible NA Bhagalpur Kolkata (30%), Siliguri (25%) and 5 Kharik Bazar Kurrela (15%) Haryana (20%) Amrit feeds (Kolkata) Punjab (20%), Gurgaon (10%), Surjit starch (Phagwara, Punjab), Khagaria, Delhi (20%), Siliguri (10%), Bharat starch (Yamunanagar, 6 Parbatta Deoghar (5%) Kolkata (5%) Haryana) Sugna Poultries (Kolkata); Amrit Bhagalpur, Kolkata (25%), Silliguri (20%), Feeds (Hajipur), Venkey's India 7 Jhandapur Haripur (5%) Lucknow (12%), Karnal (15%) Limited (Kolkata) Surjit starch (Phagwara, Punjab), Ultra Bhagalpur, Punjab (20%),Varanashi (14%), Food & Feeds (Varanasi, UP). Amrit 8 Narayanpur NA Kolkata (30%) feeds (Kolkata) Anil Starch (Ahmadabad), Maize Ahmadabad (8%), Indore (5%), Products (Ahmadabad), Tirupati Ratlam (4%), Ajmer (10%), Starch Industry (Indore, MP), Kashyap Dehradun (6%). A significant Sweetners (Ratlam, MP), Universal 9 Khagaria Negligible portion goes out to Bangladesh Starch (Dondaincha, Maharastra) etc Amrit Feeds (Hajipur & Kolkata), Patna & Uttar Pradesh (8%), Uttaranchal Venkey's India limited (Dehardoon), Bhagalpur, Muzaffarpur (0.5 (15%), West Bengal (20%), Bharat Starch industry (Yamunanagar, 10 Naugachhia to 1%) Haryana (18%), Delhi (5%) Haryana). Hajipur & West Bengal (50%), Bangladesh Hitech Feed (Kolkatta), Sugna Purnea, Gulab Muzaffarpur (20%), Punjab (5%), Haryana Poultries (Kolkata), AaramBag 11 bag (0.5% each) (5%), Delhi (3%), Assam (8%) hatcheries (Il am Bazar) Source: IL&FS CDI Field Survey on Traders in different mandis

Many of the maize growing areas trade through commodity exchanges like MCX and NCDEX (in Mumbai) and NMC in Ahmedabad. There have been no delivery centers of these bodies in Bihar. Recently Department of Agriculture (DoA) has allowed NCDEX to launch the country's first spot exchange in Bihar in September-end 2007 with trading in maize contracts.

Trade Channel and Value Chain

The following trade channel was observed in maize marketing in Bihar.

Village level aggregator — The village level aggregator operates in two ways (depending upon his financial capability):

 Trader

 Commission Agent

As a trader, the aggregator buys the produce from the farmers and sells them to the bigger traders operating at block level. The cost of transportation, packing and labour charge is met by the aggregator. The aggregator in this case keeps a margin of around 3-5% over and above the cost incurred by him.

Whereas, as a commission agent he simply executes the order taken from the traders. The entire cost up to the traders point, in this case, is borne by the farmer. The commission agent in this case charges a commission up to 3% of the value of the produce.

Commission agents at block level - In major market places such as Khagaria, Maheshkhut, Mansi, etc commission agents are working for traders of Delhi, West Bengal, Maharashtra on a commission of around 1.5%. These commission agents are procuring maize from the village level aggregators and in turn supplying to the traders operating out of major cities.

The overall trade and marketing channel is depicted in the following figure. The diagram of the value chain of maize in Bihar explains the way in which the maize growers, processors and other stakeholders are linked to each other:

Figure 4.4: Supply / Marketing Linkages for Maize in Bihar

Plz see the attached file

Mode of transport - Both railway and road transport is used for transportation of maize. Generally transport cost incurred in road transport is lesser than the cost incurred in railway wagons. For example, the transport cost using railway wagon up to Delhi is Rs.100/quintal while the transport cost using truck is Rs.80/quintal. There are some indirect / hidden costs involved in transportation through trucks such as bribes demanded at check posts.

Table 4.10: Maize Value Chain in Bihar Details Cost (Rs.)/Quintal Farm gate price of maize 600 Packing 6 Labour charge for loading 2.50 Transportation up to CA level 20 Aggregator margin 20 Price at CA point 650 Commission of CA 9.75 Transportation up to Delhi 100 Trader price at Delhi 760

Source: IL&FS CDI Field Survey

The transport cost of carrying maize differs with the distance. The transport cost of carrying maize to major ultimate users is given in the following table. Tthe transportation cost may also vary depending upon the season. For example, it varies in the range of 8-10% during peak season due to higher demand of trucks.

Table 4.11: Fare to various destination market from Gulabbag Mandi (Purnea)

(Fares are for one quintal) (In Rs per Quintal) Indore Kolkata Ahmedabad Jaipur Yamuna Nagar Guwahati (Madhya (West (Gujarat) (Rajasthan) (Haryana) (Assam) Pradesh) Bengal)

Gulab Bag 220 140 150 110 180 70 (Purnea)

Source: IL&FS CDI Field Survey

The value chain is depicted in the diagram below:

Figure 4.5: Value Chain in Maize

760

Rs/Quintal Wholesale Price- 100 Delhi

Transportation-

20 Delhi

Transportation up

to CA level 2.50

Handling 6

Packing 600

Farm gate price

Source: IL&FS CDI Field Survey

4.9. Utilisation Pattern and Marketable Surplus of Maize in Bihar

The utilization pattern of maize in Bihar indicates that rabi maize is mainly grown for market, whereas a substantial part of kharif maize is used as food and feed. In Bihar, as far as Rabi maize is concerned, about 10-15% of the produce is retained at the household level for self consumption / storage etc. About 85% of grower respondents have reported that they sell more than 75% of their produce. Around 5% is being used by local processing industry and the rest 80-85% goes out to other states like AP, Punjab, Rajasthan and even Bangladesh where it is being used mainly in starch and animal feed industries. However, in the districts of Begusarai and Samastipur, where dairying is an important economic activity, boiled maize is being used as cattle feed. It was also observed that human consumption of maize is very limited as the local food preference is skewed towards wheat and rice.

It was estimated that almost 90% of the total maize produced in Khagaria, Katihar, Purnea and Bhagalpur are being marketed outside the state. Whereas in Samastipur and Begusarai this marketed surplus is around 75% as some portion (to the tune of 20% of the total production) is used as cattle feed. However, marginal farmers in these districts (with landholding up to 2 acres) are cultivating maize exclusively for cattle feed.

4.10. SWOT Analysis of Value Chain of Maize

Pre-production Production Post-harvest (storage/ Marketing processing) Strength  Favourable Agro-climate  Higher yield than national  Availability of average middlemen  Well established network traders at of agri-input suppliers  Farmers aware of latest -- different levels seed/fertilizer/pesticide options Weakness  Limited access to land by  Higher irrigation cost  Lack of storage facility  High seasonal poor forces farmers to sell at price fluctuation  Lack of proper guidance on lower prices  Lack of agri-extension micro-nutrient use and right  Deferred/delayed support agronomic practices towards  Lack of credit availability payment effective production to withhold stock  High transportation cost of agri-inputs for most areas  Lesser requirement of manual labour, thus less scope to  Difficulty in accessing augment employment credit and demand of opportunity for agriculture upfront payment by input labour in the production suppliers process Opportunity  Collective input  Area expansion under QPM  Proposed ethanol plant at  Increasing procurement (QUALITY Protein Maize) Begusarai railway raking facility (one  Provision of crop loan  Pooled irrigation with  Growing poultry industry more station through revolving fund effective methods/provision and feed requirement getting added to for small and marginal of electricity for irrigation existing 2 with farmers  Expanding industrial  Better crop-rotation and demand of maize such facility) inter-cropping practices  Pooled collection and  Collective  Use of bio-fertilizers, bio- holding at village/GP marketing pesticides and micro- level with storage facility through rural nutrients for sustainable business hubs maize farming  25% subsidy available on and producer de-shelling machine groups  Availability of improved low cost drying tools (dried maize with standard moisture % commands higher prices)  Small-scale intermediate maize processing like flour mills etc.  Provision of storage structure at GP level Threat  Degrading soil quality with over-application of fertilizer may affect maize yield in long run

Annex Table 4A: Cost and Return from Cultivation of Rabi Maize Cost Materials Unit Quantity/Acre Price Amount Total 1 Seed Kg 10 120 1200.00 1200.00 2 Fertilizer (three times) a Basal - NPK Kg 66 10 660.00 1486.10 b Basal - MOP Kg 22 5.5 121.00 c Basal - AS Kg 22 7.75 170.50 d 2nd Dose - Urea Kg 55 5.4 297.00 e 3rd Dose - Urea Kg 44 5.4 237.60 3 Pesticides lumpsum 500 500 Subtotal (Materials) 3186.10 Labour/Machine 1 Ploughing by tractor 2530.00 2 times by 3 furrow 2 440 880.00 tyne 5 times by 9 furrow 5 330 1650.00 tyne 2 Sowing MD 13 30 390.00 390.00 3 Planking MD 3 70 210.00 210.00 4 Fertilizer application MD 3 70 210.00 210.00 5 Irrigation by diesel Times 4 675 2700.00 2700.00 pump (9 hrs. per acre @ Rs. 75/hr.) 6 Harvesting (1/16th of Kg 175 5 875.00 875.00 produce) 7 Transportation (Rs. Trolley 2 200 400.00 400.00 200/trolly) 8 De-shelling (cob- Kg 70 5 350.00 350.00 grain) – (1/40th share) 9 Drying & packing of Per acre 1 200 200.00 200.00 maize grains Subtotal 7865.00 (labour/machine) Total 11051.10 Return Harvest of Grains Qtl./acre 28 500 14000.00 14000.00 Harvest of Cobs Lumpsum 500.00 Harvest of biomass lumpsum 2000.00 (used as fodder & fuel) Total Return 16500.00 Net Profit (not including the lease rent of 1 acre of land) Only from harvest of Grains Rs./acre 2948.90 If included cobs and biomass Rs./acre 5448.90 * Prices and Amounts are in RS.

Annex Table 4B: Area and Production of Kharif Maize Between 2002-03 and 2006-07

Sl. Name of Districts 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 No. Area Prod. Area Prod. Area Prod. Area Prod. Area Prod. Yield (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) (Kg/Ha 1 Patna 6905 11013 7598 10168 7689 11400 9072 14022 7569 14350 1570 2 Nalanda 2010 2463 2205 2936 2257 857 2462 934 2858 936 689 3 Bhojpur 2549 2722 2538 2016 3543 5878 2910 4924 2870 4497 1390 4 Buxar 1216 1897 1300 1599 3908 5026 3436 4287 4117 4408 1232 5 Rohtas 611 960 554 668 511 664 578 968 574 953 1490 6 Bhabhua (Kaimur) 383 601 332 408 338 436 498 701 356 470 1372 7 Gaya 3071 3775 4855 8302 6506 9265 4915 6267 4940 6723 1413 8 Jahanabad 705 813 604 1033 985 1310 705 863 690 959 1349 9 Nawada 1500 1651 1836 3138 1099 1326 1007 1274 1509 2116 1367 10 Aurangabad 505 548 418 714 431 501 787 1112 572 935 1404 11 Saran 18851 35764 17975 22654 16583 31709 18368 35224 17974 26446 1691 12 Siwan 11212 24101 11335 17991 11579 15204 10434 13584 12011 17300 1559 13 Gopalganj 8686 10853 11069 13453 8631 13984 8009 13036 7592 11414 1426 14 Muzaffarpur 7335 13113 6853 11179 9077 16664 3506 5482 3031 4059 1694 15 E.Champaran 7140 18234 5548 15742 6100 14145 6119 14145 6143 6175 2200 16 W.Champaran 2917 13195 2919 3756 4085 2283 3956 2187 4116 6821 1570 17 Sitamarhi 483 1044 484 813 210 374 212 372 210 288 1808 18 Sheohar 126 336 124 153 0 0 21 44 29 31 1868 19 Vaishali 16539 30809 17352 20587 17206 31763 15569 29187 15801 23768 1651 20 Darbhanga 1049 1606 727 854 1885 2464 2212 2885 2198 3424 1392 21 Madhubani 1038 1840 2371 3181 1769 2318 1871 2449 650 1011 1403 22 Samastipur 14628 19305 7196 9743 14939 19246 14933 19240 14158 20932 1343 23 Begusarai 40819 54458 40362 76611 40164 60514 40910 61138 42678 51721 1486 24 Munger 6135 7907 10374 12105 8676 13003 8378 12545 4200 5863 1362 25 Sheikhpura 865 1049 845 1369 580 830 2131 3010 1361 1632 1365 26 Lakhisarai 4444 8921 5205 8495 7075 8288 9473 11624 7601 9496 1385 27 Jamui 5949 6331 6101 8309 5633 2980 5300 2896 4725 4495 902 28 Khagaria 14099 11386 15298 21589 15003 23592 15202 23911 14828 17810 1321 29 Bhagalpur 27812 51263 29353 51402 25109 37755 26201 38811 25812 35553 1599 30 Banka 9526 11735 8371 19547 8011 7782 7008 6833 6652 8940 1386 31 Saharsa 6371 11449 5093 12338 5397 18828 3567 12891 3995 11317 2736 32 Sapaul 1408 3388 1216 3564 1549 4711 258 781 407 924 2763 33 Madhepura 7303 19313 6350 17027 4076 10953 4120 11466 3748 9840 2680 34 Purnia 10609 19894 11319 24395 10013 20488 15584 31267 13795 38097 2188 35 Kishanganj 885 1753 173 434 161 296 151 283 441 952 2053 36 Araria 3040 5521 3077 6389 7001 19755 8066 22393 8602 21676 2543 37 Katihar 7311 15676 9700 23350 13194 27227 18941 43069 10681 21259 2183 Total 256035 426687 259030 438012 270973 443819 276870 456105 259494 397591 Source: Directorate of Statistics and Evaluation, Government of Bihar

Annex Table 4C: Area and Production of Rabi Maize Between 2004-05 and 2006-07 Sl. Name of Districts 2004-2005 2005-2006 2006-2007 No. Area Prod. Yield Area Prod. Yield Area Prod. Yield (ha.) (M.T.) (kg/ha.) (ha.) (M.T.) (kg/ha.) (ha.) (M.T.) (kg/ha.) 1 Patna 657 3220 4901 678 1599 2358 582 1072 1842 2 Nalanda 666 3264 4901 924 2180 2359 751 1912 2546 3 Bhojpur 57 279 4895 23 54 2348 53 119 2245 4 Buxar 0 0 0 14 33 2357 81 182 2247 5 Rohtas 0 0 0 5 12 2400 2 4 2000 6 Bhabhua (Kaimur) 5 25 5000 0 0 0 0 0 0 7 Gaya 151 458 3033 98 259 2643 90 325 3611 8 Jahanabad 218 662 3037 411 1086 2642 195 705 3615 9 Nawada 136 413 3037 112 296 2643 148 535 3615 10 Aurangabad 7 21 3000 10 26 2600 7 25 3571 11 Saran 5210 14083 2703 4876 10864 2228 4850 10942 2256 12 Siwan 4072 8335 2047 4514 13271 2940 4095 15987 3904 13 Gopalganj 6206 14112 2274 8291 17320 2089 5626 11134 1979 14 Muzaffarpur 12218 32353 2648 10146 29941 2951 8549 22484 2630 15 E.Champaran 6644 26131 3933 6656 20840 3131 6235 3520 565 16 W.Champaran 5906 18675 3162 5984 13171 2201 6045 4256 704 17 Sitamarhi 1057 1640 1552 1148 1106 963 1737 3333 1919 18 Sheohar 855 1913 2237 768 1995 2598 668 2940 4401 19 Vaishali 6439 22672 3521 7865 17563 2233 7459 22347 2996 20 Darbhanga 7220 16454 2279 7437 8121 1092 7871 22424 2849 21 Madhubani 50 126 2520 200 218 1090 302 1286 4258 22 Samastipur 23964 62019 2588 24938 27232 1092 25263 118660 4697 23 Begusarai 16849 38702 2297 16733 54750 3272 17164 68175 3972 24 Munger 2009 3626 1805 756 1630 2156 1820 3802 2089 25 Sheikhpura 0 0 0 16 62 3875 13 64 4923 26 Lakhisarai 841 2641 3140 541 2089 3861 541 2673 4941 27 Jamui 216 678 3139 56 216 3857 92 455 4946 28 Khagaria 25792 97881 3795 29868 126521 4236 32400 181926 5615 29 Bhagalpur 10300 20242 2812 10516 20327 1033 10838 42691 3000 30 Banka 2242 5527 2465 2126 9461 4450 1936 7726 4208 31 Saharsa 9411 33908 3603 12100 98539 3185 10485 45390 4329 32 Sapaul 3447 13788 4000 2707 7553 2790 1861 7941 4267 33 Madhepura 13536 67274 4970 14976 36991 2470 16579 47946 2892 34 Purnia 10774 24037 2231 11859 26742 2250 11399 25750 2259 35 Kishanganj 271 681 2512 922 2384 2586 864 2477 2867 36 Araria 4090 8552 2091 4897 15964 3260 4064 14135 3478 37 Katihar 13496 38680 2866 15753 41352 2625 15519 48931 3153 Total 195012 583072 3035 208924 611768 2641 206184 744274 3612 Source: Directorate of Statistics and Evaluation, Government of Bihar

Annex Table 4D: Area and Production of Summer Maize Between 2002-03 and 2006-07 Sl. Name of Districts 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 No. Area Prod. Area Prod. Area Prod. Area Prod. Area Prod. (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) (ha.) (M.T.) 1 Patna 3012 7385 2755 7869 2730 7385 3816 9328 3814 13123 2 Nalanda 1557 4375 1581 4225 1628 4767 1378 3275 1364 4999 3 Bhojpur 244 695 755 2163 791 2125 756 1895 728 2386 4 Buxar 16 37 142 413 116 301 87 206 88 265 5 Rohtas 12 34 156 451 15 39 16 38 15 53 6 Bhabhua (Kaimur) 25 71 25 67 26 76 26 62 0 0 7 Gaya 1702 5492 2004 5572 1489 4150 1216 2997 1226 4177 8 Jahanabad 249 684 297 838 274 752 261 630 395 1403 9 Nawada 391 1071 574 1618 2427 6322 948 2370 1021 3334 10 Aurangabad 3 9 20 55 12 35 0 0 12 39 11 Saran 5815 15276 7183 29034 6639 13896 4931 7429 4953 16447 12 Siwan 3279 8749 3083 12466 2504 5222 3572 5747 3304 10925 13 Gopalganj 2001 5216 1957 7595 1437 3140 1906 3174 1707 5611 14 Muzaffarpur 13544 31630 11633 25960 11081 30191 13138 26196 10963 22255 15 E.Champaran 4700 14418 4994 11242 4725 11784 4851 12025 4806 10163 16 W.Champaran 5953 17072 6039 12684 5996 17524 6101 19200 6459 13734 17 Sitamarhi 1657 5142 1085 2432 1384 3520 4202 10418 4202 8939 18 Sheohar 480 1502 494 1115 370 962 279 693 275 626 19 Vaishali 12105 48981 9394 22231 9679 29249 9762 26486 10902 23682 20 Darbhanga 1835 4243 2050 3928 3473 8774 3421 8687 3349 10519 21 Madhubani 468 1080 1017 1842 236 502 271 630 265 981 22 Samastipur 5141 11890 5129 8857 5172 9438 5054 10500 5147 22237 23 Begusarai 3641 9901 3875 11057 3451 7113 3251 6974 3445 11863 24 Munger 1065 2624 1171 3681 1182 2868 1825 3190 1768 5796 25 Sheikhpura 82 162 194 712 31 48 53 120 57 210 26 Lakhisarai 112 221 48 174 46 139 0 0 10 34 27 Jamui 311 613 323 1077 349 863 164 342 216 661 28 Khagaria 8948 21179 9543 30586 10267 23699 7104 14281 7509 25139 29 Bhagalpur 9522 24636 9383 25896 7716 21687 10328 28602 7788 26655 30 Banka 2449 6383 3281 8938 3306 9214 3310 9123 3726 13113 31 Saharsa 14029 35470 13419 39285 13572 39857 16024 51460 15999 53394 32 Sapaul 6392 13970 6875 17779 5726 23605 6998 23036 9634 45808 33 Madhepura 15783 63342 17366 60828 18225 89774 18530 52644 19483 57051 34 Purnia 18214 39762 17616 40942 16242 40034 18603 30936 17774 86824 35 Kishanganj 198 418 209 465 192 421 213 427 244 1230 36 Araria 6878 13040 5190 11754 6343 9245 7117 21252 8099 38893 37 Katihar 9050 15890 10402 24990 11917 25771 15706 32161 14890 71515 Total 160863 432663 161262 440821 160769 454492 175218 426534 175637 614084 Source: Directorate of Statistics and Evaluation, Government of Bihar

Annex Table 4E: Procurement of Coarse-Grains (Figures in Tonnes)

State/Year JOWAR BAJRA MAIZE RAGI TOTAL 2001-2002 Andhra Pradesh - - 14961 - 14961 Gujarat - 45867 8164 - 54031 Karnataka - - 17783 77598 95381 Madhya Pradesh 2867 10339 43055 - 56261 Maharashtra 28301 6075 23254 - 57630 Rajasthan - 33982 2181 - 36163 Total 31168 96263 109716 77598 314745 2002-2003 Andhra Pradesh - - 4035 - 4035 Karnataka - - 990 9 999 Madhya Pradesh 3012 - 27 - 3039 Maharashtra 50382 4 1354 - 51740 Total 53394 4 6406 9 59813 2003-2004 Andhra Pradesh 4274 2174 270473 - 276921 Bihar - - 707 - 707 Chhatisgarh - - 2863 - 2863 Gujarat - 1 705 - 706 Haryana - 199121 - - 199121 Karnataka - - 15591 - 15591 Madhya Pradesh 863 87 20310 - 21260 Maharashtra 42980 192 16838 - 60010 Rajasthan - 44297 29277 - 73574 Total 48117 200,000 356764 - 650753 2004-2005 Andhra Pradesh - - 223223 - 223223 Chhatisgarh - - 10891 - 10891 Haryana - 130122 - - 130122 Karnataka - - 380341 48730 429071 Madhya Pradesh - 259 1782 - 2041 Maharashtra 11928 4810 14757 - 31495 Punjab - - 227 - 227 Total 11928 100000 631221 48730 827070 2005-2006 (Position As On 01.05.2006) Andhra Pradesh - - 448861 - 448861 Chhatisgarh - - 8737 - 8737 Haryana - 4900 - - 4900 Karnataka - - 379650 63273 442923 Madhya Pradesh 220 - 2788 - 3008 Maharashtra 67258 58 29649 - 96965 Total 67478 4958 869685 63273 1005394

Annex Table 4F: Value Chain Analysis of Maize Pre-production Production Post-harvest Marketing process & (storage/ harvesting processing) Stakeholders Revenue officials Farm machinery Village /cluster Village/cluster involved in land suppliers, agri- level petty level petty traders; settlements and input suppliers, trader/storage, de- raking agents at consolidation, agriculture labour shelling operator, Railway yards, lessee/landlords, (mostly women), agriculture labour market yards, agri-input bore-well owners, (mostly women) District suppliers, Govt. Extension Agents, Procurement Extension Agents, Govt. Irrigation Committee credit institutions, Deptt. Staff fellow farmers/knowledge and input providers Activities/ Land leasing or Ploughing by Transportation by Negotiation with Processes share cropping , tractor, sowing, tractor and storage village traders/ procurement of planking, fertilizer at home by human transportation to agricultural inputs and pesticide labour railway or market like seeds and application, yards fertilizers weeding/hoeing, harvesting, drying, de- shelling by human labour Tools/ Materials Tractors, pick-up Tractors for De-sheller Tractor & mini- vehicles, boats for ploughing, trucks for transportation of levelling and transportation inputs making furrows and diesel pumps for irrigation, weeding and harvesting tools Institutions Seed companies, Informal farmers‘ Informal traders/ Traders State agriculture interaction, adhayatias Associations, department, Agriculture network networks, agents farmers‘ clubs Department, of maize-based Govt. Irrigation industries Department * Agri-input supplier includes traders and petty traders at district/block/village level market supplying fertilizers, seeds, and pesticides to farmers.

Chapter 5: Status of Maize Processing in Bihar

Introduction

Maize can be utilized in many different forms by converting it into a variety of products, through grinding, alkali processing, boiling, cooking and fermenting (like animal feed, flour, corn flakes, corn meal, corn oil, starch and its derivatives like glucose etc). The utilization spectrum of maize is large and diversifies covering about 3500 industrial products, specially textiles, pare, glue, pharmaceuticals, confectionery, cosmetics and more recently fuel. All these industrial applications are adding to the global demand and thus offering opportunities to make it a profitable crop in the state.

Maize processing and utilization pattern shows that in India, 10-15 per cent of the total produce is used for industrial purposes. In Bihar, However, only 5% of the maize is being used by local processing industry and over 80% goes out of state. Bihar has no starch-producing unit. There are some units (around 10) dealing in poultry feed & flour making in Khagaria, Bhagalpur and Purnea districts.

Earlier maize was the staple food in the state. But now, different varieties of paddy & wheat are entering the grain market replacing maize from its staple food status. Hence its consumption is falling. On the other hand its supply is increasing due to various factors like growing production and productivity among others. The state is not being able to make use of the availability of maize in the state due to lack of maize processing units in Bihar. As a result more than 80% of Bihar maize goes outside the state to the processors in Andhra Pradesh, Gujarat, Rajasthan, Haryana, Karnataka through road and rail transport and gets processed there. Therefore from value chain perspective, more profitable processing/activities relating to this sector like – production of hybrid maize seeds, and by-product of maize i.e. starch, maize syrup, ethanol, corn flakes, etc. are carried out side the state.

Thus in absence of adequate processing facility, the huge marketable surplus of Bihar, especially in rabi season depends completely on other states for its consumption. Any obstruction in this trading chain in future may lead into spoilage of that surplus, affecting the entire value chain.

5.1. Status of Maize Processing in Bihar

The processing industry plays a vital role in growth of a sector. The maize sector in Bihar is too small in relation to the production of maize in the state. The maize processing industry in Bihar is represented by about 10 small and micro units manufacturing traditional food and animal feed products. The processing in maize sector that exists in Bihar is basically limited to hybrid seeds, raw grains, and production of some low value added products like – cracks, grinded corn, maize besan, poultry feed, cattle feed, etc. This sector is dominated by private players.

Shiv Shakti Agro India with annual production of 50000 MT of cattle and poultry feed and Amrit Feed with annual production of about 50000 MT of poultry feed are the largest maize processors in the state. Surya Pashu Aahar is another, though insignificant manufacturer (60 MT / year) of cattle feed in the state. Rest of them are engaged in the manufacture of traditional food items.

K.M Udyog with annual production of about 2000 tonnes is the largest producer of traditional maize (food) products. They are engaged in production of Besan, flour, Dalia, Seviyan, Suji and cracks. Sudhir Cracks is also into production of cracks and grinded corn and produces about 400 quintals annually. Other processors are very small producing insignificant quantities (<35 tonnes / annum)

The data on the units engaged in maize processing in Bihar has been given in the following table.

Table 5.1 : Details of Maize Processing Units in Bihar

Sl. Name & Location Year of Production Details Primary Raw Procurement of Source of Maize No. Address 0f of the Unit Estab- Material Maize Procurement Storage the lishment Capacity in Processing Plant Unit Quantity Price 1 Shivshakti Khagaria 1991 1. Cattle Feed (5000 Maize 23000- Rs.500- Sourcing Agent 5000-7000 T Agro India T/Y) 24000 MT 850/Qn. in plant Ltd., godown 2. Poultry Feed (45000 T/Y) 2 K.M.Udyog Khagaria 2005 1. Besan (312T) Maize 2328 T - Organised 200-250 T (Q.P.M) supply source 2. Atta (351T) 3. Dalia (784T) 4. Seriyan (176T) 5. Suji (265T) 6. Cracks (155T) 3 Sudhir Cracks Khagaria 1998 1. Cracks (300 Q) Maize 305 Qntls - Grain Mandi, 100 Q Industry Khagaria 2. Grinded Corn (80Q)

4 Anil Cracks Khagaria 2003 1. Cracks (25 T) Maize 32 T Grain Mandi, 60 Q Factory Khagaria 2. Grinded Corn (10 T)

5 Girdhari Corn Bhagalpur 2002 - Maize 2.6 T - Grain Mandi, Gunny bags Chips Nathnagar (Bhagalpur)

6 Surya Pashu Bhagalpur 2004 Cattle feed (60 T) Maize 130 T - Grain Mandi, No storage Aahar (Bhagalpur) facility 7 Sri Purnea 2006 1. Chips (12 Q) Maize - - - - Ramprasad Jaiswal 2. Grinded Corn (5 Q) 8 Alok Flour Purnea 1992 Grinded Corn (96.5 T) Maize 130 T - Grain Mandi, 55-60 Q Mill Gulab Bagh, Purnea

9 Yogendra Purnea 2003 Grinded Corn (6.10 T) Maize 6.40 T - Grain Mandi, 25 Q Saha Gulab Bagh, Purnea

10 Amrit Feeds Patna 1994 Poultry Feed (69067.19 Maize 41176.25 T - - - Limited T)

Note: NA=Not Available; Darra - Semi Grinded corn for non-human consumption; Besan- Roasted corn Flour; Dalia- Semi Grinded corn for human consumption; Sewai- Corn porridge Suji-Finely grinded corn for human consumption. Source: IL&FS CDI Field Research

Some of the Bihar maize is also being used by some food processing units to make extruders & cracks. These companies are

Maize Name of the S# Location consumed Brand companies (MT) 1 Fritolays Kolkata 5000 Kurkure

2 Haldiram Kolkata 4000 Murmure 3 Kuber Kolkata 500 Bindaass 4 others Bihar 500 Cracks Total 10000 Source: Fritolay raw material vendors

5.2. Maize availability and quality

In Bihar, overall supply of maize does not lag behind the demand, and the state attracts lot of buyers from outside the state due to superior quality of its rabi maize. The processing units in Bihar procure raw maize either from the agents or directly from the mandis. The interactions with processors revealed that the procurement price of raw maize is quite reasonable and quality quite acceptable. The availability however (particularly during off season) has been reported as one of the constraints for growth of the sector. 5.3. Production and Production Costs Maize as the raw material is the single largest component of production cost of poultry / cattle feed. Any change its price and/or quantity will directly affect the prices and realization of the final product. Table 5.2: Cost of Production for Cattle Feed (Apr-2007 to Jan-2008) (Cost is in Rs per Kg of Cattle Feed) Cost Component April May June July Aug Sept Oct Nov Dec Jan Average Raw Material 5.8 5.78 5.76 5.75 5.6 5.91 5.87 5.85 6.01 6.32 5.87 Processing 0.39 0.38 0.4 0.35 0.39 0.41 0.31 0.39 0.36 0.34 0.37 Lab 0 0 0.01 0.01 0 0 0.01 0.01 0.01 0 0.01 Packing 0.33 0.39 0.34 0.34 0.36 0.35 0.33 0.35 0.36 0.3 0.35 Salary and Wages 0.37 0.39 0.43 0.5 0.39 0.39 0.34 0.38 0.34 0.32 0.39 Admin. OH 0.32 0.3 0.31 0.35 0.31 0.26 0.22 0.28 0.23 0.26 0.28 Total Cost of Prodn 7.21 7.24 7.25 7.3 7.1 7.32 7.1 7.26 7.31 7.5 7.26 Source: COMFED

Figure 5.1: Break-Up of Production Cost for Cattle Feed

Salary and Packing Wages (5% ) (5% ) Admin. (4% ) Lab (0% )

Processing (5% ) Raw Material (81% )

Source: COMFED, Patna Comparing production costs of two poultry feed units of Amrit Feeds (the largest maize processor in the state, producing 70000 MT of poultry feed per annum) in two different locations one in Bihar and other in Andhra Pradesh, it has been observed that the cost of raw material is 20% cheaper in Bihar during April to August as compared to Andhra Pradesh. However, the cost of raw material is 15% expensive in Bihar as compared to Andhra Pradesh during September to March. The cost of production can be brought down if stored maize locally available during September – March. Non availability of power is a major issue of concern for the industry. The average power cut in Hyderabad suburb in Andhra Pradesh is 4-6 hours per day whereas there is 8-10 hours of power cut in Hajipur, Bihar. To add to the production costs in Bihar the diesel cost is also 5% higher in Bihar. 5.4. Market for Processed Maize

A close look at the maize sector in general reveals that the states, which are developed in dairy and poultry industry have a larger maize processing sector also. This is due to the availability of assured market for the product. For example, Andhra Pradesh, which tops in the poultry industry, has a number of feed units spread in the state apart from a few starch units. Due to this large market base, the processing industry can produce the quantities without much fear of lack of marketability.

At present the poultry and fishery industry in Bihar is not yet developed and starch industry is virtually non-existent. However the recent trends show increase in chicken consumption in the state. This would automatically lead to higher demand for poultry feed.

In north Bihar, there are several rivers and ponds in which fishing is being done. This fishing business can provide a good market for fish feed, which uses maize as their basic ingredient. But this can be achieved only if the fishing industry itself is in the first place made more organized. Government of Bihar is taking lot of steps to encourage the sector. (see chapter 03 for details)

5.5. Problems Relating to Maize Processing in Bihar

There is a lot of scope for processing industry in the maize sector. Both, high & low value added products can be processed in maize sector. At present, despite sufficient availability of raw material, maize processing industry in Bihar is very underdeveloped Some of he factors constraining maize processing industry in Bihar as follows:

1. Poultry sector which uses poultry feed is not so much developed in Bihar, hence low demand and low production within home state.

2. Most of the farmers use by-products of their crop as cattle feedback, so no sufficient domestic demand for cattle feed (lack of purchasing power is also an important factor).

3. Dearth of industries in Bihar, using high value by-products of maize i.e. starch, maize syrup, corn oil, ethanol, etc, as their input.

4. Low rate of urbanisation in Bihar does not provide good market for maize processed items like breakfast cereals (corn flakes,etc.)

5. And most important of all these are lack of power which is very essential for running of any machine based industry.

5.6. Government Initiatives

These constraints has certainly hampered the growth of maize processing sector, but now with the changed scenario in Bihar, there are certain impetus for the growth of maize processing sector –

1. New government is very consciously and sincerely trying to negate the negative image of the state which had made the state non-preferred investment destination for entrepreneurs.

2. Due to governmental efforts to reduce air pollution (ethanol blending of petroleum & diesel), the demand for fuel ethanol has to increase. This increased demand for ethanol as a fuel additive would result in dramatic growth in ethanol production. Ethanol is produced from maize by either wet milling or dry-grind processing.

3. Brand building of ‘Bihar’ is going to change the urban character (both in qualitative and quantitative terms) of the state, and this change would provide impetus for growth of beverage and snacks sector. This would increase the demand for by-products of maize like maize syrup.

4. Dairy sector is on growth path and this sector can provide a good market for cattle feed products. COMFED has a good network of milk collection centres, this network can be used for marketing of cattle feed products. COMFED can have its own cattle feed producing plant.

From investment perspective, there are positive developments for maize processing sector in the state. Investors from other states have put forward their proposals for investment in the maize processing sector in Bihar. One such proposal was approved by the State Investment Promotion Board (C.M/Cabinet approval date – 22.09.2006) for establishment of four maize processing units and Silicon Project one in each district – Begusarai, Muzaffarpur, Khagaria, and Vaishali. Product mix of this proposal is ethanol, extra neutral alcohol, pharmaceutical/perfumery alcohol, maize oil, ferphural alcohol, poultry feed, and cattle feed. Total investment is of Rs. 2500 crore and promoter of this project is M/S Indian Gasohol Ltd., Tamilnadu.

5.7. SWOT Analysis for Maize Industry in Bihar

Strengths Weaknesses

 Favorable Government policies for  Stagnating corn production in the cultivation and production of state maize  Weak marketing linkages affecting  Strong raw material base with prices and procurement. huge surplus for high value  Poor availability of basic products infrastructure  Stable and consistent demand for maize which has no close substitutes  Winter crop gives the state a significant strength

Opportunities Threats

 Increasing and diversified product  Inconsistent supply due to uses dependence on rain  Growing demand for starch from  Stiff competition from other states sector like food, textiles, paper, pharmaceuticals etc.  Increasing demand for corn gluten as a poultry feed in South East Asian countries.  Growing demand for ethanol used as fuel

Chapter 6: Constraints / Priority Issues in Maize Cultivation and Processing

From the field study and discussions with the stakeholders, some issues have been identified which are constraining the growth of maize sector in Bihar. Since quality and supply of maize production would determine the price, quality and supple of raw material for the processing units, problems relating to maize cultivation have also been included. On the basis of the findings the constraints can be broadly covered under following heads: 1. Quality and Availability of farm inputs

2. Poor extension services

3. Poor Post Harvesting Practices and Infrastructure

4. Low Procurement

5. Lack of Proper marketing linkages and Infrastructure

6. Limited / No Processing Industry within state

Farm Inputs

Seed is one of the most important inputs of maize production on which the efficacy of other agriculture inputs is dependent. Maize farmers of Bihar are mainly using hybrid seeds manufactured by private companies. They are procuring these seeds from local retailers. The quality of these seeds, sometimes, is questionable. There are some instances of low germination, high mortality of plants along with lesser seeds in the cob. Farmers are attributing this mainly to the quality of seeds, as even with similar kind of farming practices and soil type they are getting different results.

The availability of inputs such as seeds, fertilizers and pesticides is not adequate. This is sometimes resulting in higher prices being paid by the farmers. Similarly the quality of fertilizers is also questionable at the end of the farmers. They are finding lots of adulteration especially in urea. 2. Research, Extension Services And Institutions

There is very less support to maize farmers in Bihar in terms of extension services and institutions. Whatever extension service support is there in the state, it is mainly from the private seed companies. These companies, to promote sales of their brand, provide

85 different types of support services to farmers. State has an agriculture university, a regional centre of Indian Council of Agricultural Research, and there is also Centre of the Directorate of Maize Research at Begusarai, working in the field of research on maize. Out of all these three, only the Directorate of Maize Research is primarily doing research related to maize. Krishi Vigyan Kendra (KVK) in Khudamanpur (Begusarai) is doing good work for maize cultivators. Maize farmers are hardly aware of existence of extension services for this sector. However, this sector could immensely benefit from extension services. Through demonstration cropping of high value added maize crops, farmers could be made aware of these crops and high returns on their cultivation.

The feedback from farmers revealed that they are unaware of suitable technologies for preventing losses/damages to the crop. Since technological options for controlling these biotic constraints are already available, non- adoption appears to be the main constraint. Lack of appropriate input markets, inadequate information about improved technologies, and failure of collective action constrains the adoption of available rat- and termite-control technologies.

Rabi maize which is the main crop of Bihar needs 4-6 times irrigation, and these are done by flooding process. Since, major maize producing areas are not under canal irrigation and electric supply is highly deficient and unreliable, these irrigations for maize crops are through diesel pumpsets, which makes irrigation cost high for maize farmers. If farmers could be made aware of low cost irrigation techniques, like drip irrigation, irrigation through sprinklers, etc., their irrigation cost could be reduced substantially. Subsidy for these irrigation implements and others like de-shelling machines can also play an important role in farm mechanization of this sector.

At industry level, on one side there are no restrictive types of regulations for this sector, but at the same time, on the other side there are no substantial promotional schemes of government for this sector. In Bihar, potential of agriculture-industry linkage in this sector has yet to be realised. Due to very limited development of high value adding industry in this sector, institutions supporting maize based industry are yet to be developed in this State.

3. Post Harvesting Facilities And Infrastructure

There is low level of mechanization at farm level and most of the activities are carried out manually. Since farmers are generally small and marginal, they store maize in gunny gas etc at home. Their capacity to retain grain, therefore is limited to 2-10 quintals. As the maize producing areas are flood prone areas, their storing capacity goes down to a great extent during the rainy season. Even if they are able to store the quality of the produce is affected by high moisture content in these grains which lowers their prices.

There are no mass scale storage facility available, either in private sector or public sector. Only Gulab Bag mandi has storage capacity of 12000-15000 MT. Lack of storage facility, prevent farmers from exploiting the opportunity of good prices for their maize. High transportation cost further reduces farmers‘ return on maize crop.

4. Prices And Procurement

There is provision for ‗Minimum Support Price‘ for maize grains, but at present there is no procurement by the State agencies. Very high percentages of total produce are available as marketable surplus. And this marketable surplus is easily sold in the market. Prices of maize in different grain markets of Bihar varies from Rs.500 to Rs.700/quintal, depending upon the quality of grain (yellow flint grain is most preferred) and season from point of view of grain trading (peak season – April to June; and lean season – December to March). Minimum support prices act as a benchmark for open-market prices.

At present level of production and marketable surplus, absence of procurement by the government agencies is not creating problems in terms of lack of demand for maize grain, but it certainly slows down the upward movement of prices and hence lower returns to farmers.

5. Marketing Facilities And Infrastructure

The maize marketing is unorganized and is dominated by commissioning agents and traders. There is only one mandi for maize at Gulab bagh, Purnea. There are other

87 mandis like Dalkola, Mansi and Maheshkhunt (Khagaria) etc also which deal in maize as well, besides other grains, though in small quantities.

These markets/mandis lack basic infrastructural facilities like platform for drying grains, pest-free storage godowns, moisture metres, machines to ascertain quality, grading and weighing, public utilities, etc. Only Gulab bag mandi in Purnea has storage facility. It has 15 godowns having total storage capacity for 12000-15000 MT of maize..

Lack of these facilities at mandis reduces the returns to both farmers and local maize traders. Small players (farmers & small traders) are exploited by big players (wholesale traders who supply grains to maize industry) on account of manipulation in weight and assessment of quality of maize grains.

6. Limited Processing Activities in the State

Processing for maize sector in Bihar is basically limited to hybrid seeds, raw grains, some low value added products like – cracks, grinded cron, maize besan, poultry feed, cattle feed, etc. This market sector is almost dominated by private players. From value chain perspective, more profitable processing/activities relating to this sector like – production of hybrid maize seeds, and by-product of maize i.e. starch, maize syrup, ethanol, corn flakes, etc. are out side the state of Bihar. Home state mainly deals in low return activities like – production of grains, semi-processed products (cracks, grinded maize, maize besan, etc.), and some poultry & cattle feed industries. Majority of maize grains are exported to states like – West Bengal, Punjab, Haryana, Andhra Pradesh, Maharashtra, Tamil Nadu and Nepal through road & railway transportation.

The overall poor investment climate in the state over last one and half decade poor infrastructural facilities (including poor power supply) have been identified as the major factors constraining the growth of processing industry in Bihar.

7. Power

The milling units require uninterrupted power supply. People from all sectors, farmers, traders, industrialist, government officials expressed great concern about availability of

88 power in Bihar. Extremely poor power supply, in term of quantity and quality both, in Bihar is the greatest limiting factor in setting up maize based industries in this state.

While larger processing plants can setup own captive power generation units, medium and small size processors have to depend upon the power supply from the government.

Chapter 7: Recommendations

For proper integrated development of maize processing sector in Bihar, a multi- dimensional approach is needed. Other related sectors, also have to be developed for development of this sector. Government has to support private sector in terms of research input, tax incentive, storage facilities, basic infrastructure like power, roads, etc. This chapter summarises major recommendations for improving the competitiveness of maize sector in Bihar. Major problems constraining the sector are summarized below on the basis of response from the questionnaire survey.

Table 7.1: Major Problems of the Maize Sector in Bihar

Problems Weightage Maize Maize Cultivation Processing 1. Lack of demand     2. Lack of finance/ credit facility      3. Lack of linkages with service providers such as Agricultural       universities, FCI, etc 4. Lack of skills / practices    5. Problems in raw material procurement     6. Problems in uninterrupted power supply       7. Lack of infrastructure such as storage and roads * * * * * * 8. Lack of marketing infrastructure * * * * 9. Natural calamities (Flood) * * * Note:    Very Severe   Moderately Severe  Not much Severe Source: Based on IL&FS CDI Primary Field Research

Recommendations i) Overall environment, in terms of availability of inputs, extension services to farmers at field level, post harvest support to farmers, good returns to farmers by developing marketing network, etc. need to be improved. ii) There is a need to document analytically-based reasons for low farmer adoption of improved maize technologies. iii) Government can play the role of facilitator in this sector. Use of seeds for high value added maize crops like baby corn, sweet corn, etc. should be promoted through input subsidy to farmers. These high value added crops would enhance the economic return to farmers. iv) Government can play the role of facilitator in boosting the poultry & fish sectors. These two sectors can grow quickly if maize based feed are being given. v) Normally, crop diversification within the maize crop, in terms of use of different mixed crops like turmeric, onion & coriander by individual farmer is negligible. This increases the risk of farmers in case of crop failure on account of seed factor, as it has occurred sometime back on account of some problem with Monsanto brand of maize seed. To minimize these types of risks, State government can introduce crop insurance for hybrid maize seed crop. vi) There is a need to develop and popularize help line services on the lines of one extended by Chandra Sekhar Azad University of Agriculture and Technology, Kanpur, for farmers of Bihar, to disseminate first-hand information. vii) Farmers should be made aware of low cost irrigation techniques, like drip irrigation, irrigation through sprinklers, etc., their irrigation cost could be reduced substantially. Subsidy for these irrigation implements and others like de-shelling machines can also play an important role in farm mechanization of this sector.

91 viii) Bold initiatives in terms of research and institutional development are needed from Bihar government, to reap benefits from new opportunities that are arising in the maize sector. ix) Creation of mass scale storage facility is urgently required, which will enable the farmers to exploit the opportunity of good prices for their maize. In future, this will ensure the constant flow of maize as raw material for the processors in Bihar. Since constructions of warehouses are beyond the means of small and marginal farmers, there is a need for strengthening the network of warehouses owned and managed by ‗Central Warehousing Corporation‘ and ‗State Warehousing Corporation‘ in maize producing areas.

It has been recommended that possibility of building storage capacities in Public Private Partnership (PPP) format should be considered. x) At markets/mandis level development of common facilities such as platform for drying grains, standardized weighing machine, etc. should be done either through public initiative or cooperative organizations. xi) Procurement of maize by the government agencies is must to prevent the downslide of prices and enable the farmers to get better returns. xii) For proper integrated development of maize processing sector, a multi- dimensional approach is needed. Other related sectors, like poultry & fisheries, also have to be developed for development of this sector. Government has to support private sector in terms of research input, tax incentive, basic infrastructure like power, roads, etc. xiii) At present, power supply for industrial purpose is not regular in Bihar, and this is not going to improve in near future. So, in short term, option of captive power generation (maize bio-mass co-generation) should also be thought about.

Viability of Setting up Storage Facility

There is lack of proper storage and warehousing facilities for maize in the state. It is leading to distress selling by farmers and traders, reduced prices/realization due to spoilage, wastages, flow of maize outside the state etc. The following section discusses the viability of storing maize for securing higher prices at a later stage.

Fig. 7.1: Trend of Maize Prices (in Rs per Quintal) and Maize Arrivals (in 000 MT) at Gulab Bagh Mandi During 2007-08

900

800

700

600

500 800 400 750 750 650 700 650 650 650 300 600 600

550 Pricesand Maize Arrivals 200

100 55 100 25 15 10 45 10 5 5 3 2

Jan

Oct

Feb

Dec

July

Nov

Aug Sept

June

April May Months

Source: Trader‘s Feedback at Gulab bag Mandi

The monthly maize prices in Gulab Bag mandi for 2007-08 have been used for the analysis. The maize arrivals in mandis begin in April at Rs 650 per quintal. Since arrivals are small as compared to its demand, the prices are higher. Maize starts to arrive in bulk in May. During May 2007, over one lakh MT of maize was traded in this mandi. This excess supply causes glut in the market thus pushing down the prices to Rs 550 by end of May. The prices start recovering by end of June as the maize arrivals start coming down and overall trading slows down. During July-August, there is demand in the market but supply is small. This leads to rise in prices and the prices

93 continue to rise consistently and reaches peak at around Rs 750 per quintal in August. Prices fall again during off season (September – October) due to fall in demand and lack of supply. There is little trading done during September – February as there is no maize available in the state. These small quantities consists of maize stored by farmers in cobs etc and whatever little is there in storages in Gulab Bagh mandi.

During this off season, buyers of Bihar maize get diverted to other states (like Andhra Pradesh, Karnataka, Maharashtra etc) as Kharif maize start to arrive in mandis of these states from September onwards and is available till end of November. However, during December to February, there is no maize available anywhere in the country. Therefore the prices begin to rise in by end of November and continue to rise till February when the price of maize ranges between Rs 800-850 per quintal.

Large traders and processors have confirmed the need for storage facilities for Rabi maize in Bihar to the tune of 2-2.5 lakh MT at various places like Kursela, Seemapur (Naughachia), Mansi, Khagaria and Gulab Bagh, Purnea. Riddhi Siddhi (Uttaranchal), Sukhjit (Malda), and Gujarat Ambuja exports (Uttaranchal) together need around 1000- 1100 MT per day and are the major buyers of maize from Gulab Bagh mandi. Poultry units in Assam also procure maize from this mandi. Some quantities also find their way to Bangladesh to be used in poultry feed units.

Buyers of Bihar Rabi maize (mainly starch and poultry units in Assam, Gujarat, Haryana, Rajasthan etc) divert their procurement from other distant maize producing areas in AP, Maharshtra and Karnataka during off season in Bihar (September onwards). If Bihar Rabi maize is available in stores and warehouses, it would be more economical for these producers to buy it from Bihar than the distant markets (due to high transport, logistics, other expenses). Also the quality of Bihar Rabi maize is much superior as compared to Kharif maize available in mandis of AP, Karnataka etc.

Thus the maize can be stored during May and June (at prices around Rs 550 per quintal) and sold during off season (during September to February) when prices go upto

Rs 750 –800 per quintal.11 However, enough care would need to be taken to ensure quality as most of buyers of Bihar Rabi maize are poultry units which are quality sensitive.

If the trader or the farmer is to take advantage of the price rise, he should be able to store it for this period and there should be enough margin after deducting the cost of storage.

Table 7.2: Cost of Storing Maize

Cost for 3 Cost for 8 S. No Cost Component Unit Cost months months 1 Rent charges for storage 3.5 10.5 28 2 Fumigation 1.5 4.5 12 3 Interest @10% 1.00 3 8 4 Gunny Bag cost (2nd hand) 18 18 18 5 Transportation (lumpsum) By Truck upto 50 Kms 20 20 20 6 Loading / Unloading / Stacking 8 8 8 Total Cost of storage (1 to 6) 31 64 94 7 Procurement price in may / June (Rs per Quintal) 550 550 Total cost in February (1 to 7 ) (Rs per Quintal) 614 644 Expected Price in February (Rs per Quintal) 750 800 Net Profit (Rs per Quintal) 136 156 Source: IL&FS CDI Field Survey

The total cost of storage (including procurement price) for 3 months work out to be around Rs 614 per quintal for 3 months. If the prices go up to Rs 750 in August, then the net profit per quintal is Rs 136. Now if it is stored during May-June (@Rs550) for 8 months and sold in February (@Rs 800), the net margin after deducting the storage costs work out to be Rs 156 per quintal. Thus, there is a strong case for setting up storage and warehousing facilities in the state. But since there is risk involved (uncertainty in demand, unforeseen events etc) which could in fact affect demand and prices in future prices. If there is some risk mitigation mechanism in the form of insurance etc, it sure is a viable option

11 During October-November, kharif is available in markets of AP and Karnataka. Maize can also be procured from these states for storage in Bihar

Table 7.3 : Constraints & Interventions Required for Maize Sector in Bihar Supply Chain Major Constraints Intervention required

 Use of old techniques of cultivation  Strong linkage with relevant institutions for (for sowing, irrigation etc) providing effective extension services

Maize Cultivation  Limited mechanization at farm level  Direct linkages with input suppliers such as seed and fertilizer companies with farmer  Lack of quality inputs groups  Lack of awareness/ limited ability of  Creation of Cluster Parks with necessary farmers for upgradation/ infrastructure and common facility centre modernisation of machinery as they are small  Boosting the co-generation of power units from maize biomass  Lack of access to institutional credit  Absence of modern infrastructure  High irrigation cost due to expensive diesel

 Poor harvesting practices and lack of  Improvement in post harvesting operation Post Harvesting storage and warehousing facilities are  Providing proper storage facilities Practices and leading to wastages upto 25% Infrastructure  Inadequate storage facilities and warehouses  Inadequate infrastructure at the  Implementation or activation of quality mandis in terms of lack of testing / control & testing system Prices and grading/sorting facilities Marketing  Storage and warehousing facilities at the Infrastructure  Limited storage facilities mandis

 Declining demand of maize as  Product diversification and its human food commercialization Market  No processing industry within the  Contract farming done by the processors state  Innovative market support schemes.  Development of poultry & fish sector

Source: Based on IL&FS CDI Primary Field Research

Table 7.4: Major Constraints & Interventions Required for Maize Processing Industry in Bihar Supply Chain Major Constraints Intervention required  Seasonal supply due to lack of  Setting up of Storages and warehouses will adequate storages and facilitate uninterrupted supply of quality raw Raw Material warehousing materials at reasonable rate  Unreliable supply, and high prices

 Scarcity of availability of skilled  Improvement of existing equipment craft persons implementation of advanced technology and Process production technique  Lack of financial resources/credit facilities  Linkages with lead banks, financial institutions and MFIs  Lack of modern infrastructure  Creation of Cluster parks with necessary infrastructure and common facility centre

 Highly dependent on traditional  Market creation for food items products : Poultry feed and cattle

feed, flour etc.  Development of related industries such as Products poultry and fishery  Stiff competition from

processing industry in West Bengal, AP and Karnataka  Lack of demand for other value added products such corn-flakes within the state Lack of testing/certification facilities  Implementation or activation of quality control & testing system Quality Assurance

 Loss of substantial local and  Improved physical infrastructure national markets because of poor

investment climate in the state  Strengthening linkages with central agencies like FCI, COMFED, SWC, CWC,  Lack of demand for maize as BISCOMAN cereals due to slow rate of urbanisation  Setting up of urban haats and other market Market systems in the state,  No coordinated movement as yet

to promote the maize products  No institutional marketing channel for maize Source: Based on IL&FS CDI Primary Field Research

References

CIMMYT (2005) Maize in India: Production Systems, Constraints, and Research Priorities

CIMMYT (2007) Tropical and Subtropical Maize in Asia: Production Systems, Constraints, and Research Priorities

Department of Agriculture, Government of Bihar

ESCAP (2005) Identification of Pulling Factors for Enhancing the Sustainable Development of Agriculture with Special Reference to Maize in India, Working Paper No. 88 http://dacnet.nic.in/eands/ http://www.agriculture-industry-india.com/

Karvy‘s Special Report on Maize

Multi Commodity Exchange of India Ltd (2007) Maize Futures: Feasibility Study

World Bank (2007) Bihar Agriculture: Building on Emerging Models of “Success” www.fao.org/es/esa/en/pubs_sofa.htm www.ficci.com

CONTENTS

100

List of Abbreviations

AP : Andhra Pradesh CGIAR : Consultative Group on International Agricultural Research CIFWA : Central Institute of Fresh Water Aquaculture CII : Confederation of India Economy CMIE : Centre for Monitoring Indian Economy COMPFED : Bihar State Cooperative Milk Producers‘ Federation Ltd. DMR : Directorate of Maize Research DoA : Department of Agriculture EU : European Union FCI : Food Corporation of India FGDs : Focussed Group Discussion FHP : Farm Harvest Price GCA : Gross Cropped Area GDP : Gross Domestic Product GIA : Gross Irrigated Area GoB : Government of Bihar GoI : Government of India GSDP : Gross State Domestic Product Ha : Hectare HYV : High Yielding Varieties ICAR : Indian Council for Agricultural research IDC : Industrial Development Commissioner IFPRI : International Food Policy Research Institute KVKs : Krishi Vigyan Kendra M. Ha : Million Hectares MSP : Minimum Support Price MT : Metric Tons NABARD : National Bank for Agricultural and Rural Development NCAP : National Centre for Agricultural Policy

101

NDRI ; National Dairy Research Institute NGO : Non-Government Organization NIA : Net Irrigated Area NSA : Net Sown Area NSDP : Net State Domestic Product NSSO : National Sample Survey Organization PDS : Public Distribution System PPP : Public Private Partnership QPM : Quality Protein Maize RAU : Rajendra Agricultural University SHG : Self-Help Groups T/Ha : Tons/Hectare USA : United States of India WB : World Bank WHP : Wholesale Price WTO : World Trade Organization

102

List of Tables

Table 2.1: Area, Production and Yield of Major Maize Producing Countries in 2005 Table 2.2: State-Wise Maize Area, Production and Yield during 2005-06 Table 3.1: Details of KVKs Operating in Bihar Table 4.1: Number of Farmers Involved in Maize Cultivation in 2005-06 in Bihar Table 4.2: Cropwise Cultivation of Maize in Bihar Table 4.3: Size Class-wise Number and Area of Operational Holdings in Bihar (1995-1996) Table 4.4: Area and Production of Summer Maize (Gamma) in Major Districts in Bihar During 2006-07 Table 4.5: Area and Production of Kharif in Major Districts in Bihar During 2006- 07 Table 4.6: Area and Production of Rabi Maize in Major Districts in Bihar During 2006-07 Table 4.7: Cost of Maize Cultivation Table 4.8: Minimum Support Price for Maize (Rs./quintal) Table 4.9: Description of Maize Going to Different Markets from Major Mandis in Bihar Table 4.10: Maize Value Chain in Bihar Table 4.11: Fare to various destination market from Gulabbag Mandi (Purnea) Annex Table 4A: Cost and Return from Cultivation of Rabi Maize Annex Table 4B: Area and Production of Kharif Maize Between 2002-03 and 2006-07 Annex Table 4C: Area and Production of Rabi Maize Between 2004-05 and 2006-07 Annex Table 4D: Area and Production of Summer Maize Between 2002-03 and 2006- 07 Annex Table 4E: Procurement of Coarse-Grains (Figures in Tonnes) Annex Table 4F: Value Chain Analysis of Maize Table 5.1 : Details of Maize Processing Units in Bihar Table 5.2: Cost of Production for Cattle Feed During April 2007 to Jan 2008) (Cost is in Rs per Kg of Cattle Feed)

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Table 7.1: Major Problems of the Maize Sector in Bihar Table 7.2: Cost of Storing Maize Table 7.3 : Constraints & Interventions Required for Maize Sector in Bihar Table 7.4: Major Constraints & Interventions Required for Maize Processing Industry in Bihar

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List of Figures

Figure 2.1: Components of Maize Figure 2.2: World Area, Production and Yield (In Kgs/Ha) of Maize (2005) Figure 2.3: Share in Global Exports (2007-08) Figure 2.4: Share in Global Imports (2007-08) Figure 2.5: Seasonality Chart for Maize Arrivals in India Figure 2.6: Maize Area, Production and Yield in India Figure 2.7: Season Wise Area Under Cultivation Figure 2.8: Season Wise Production Figure 2.9: Season Wise Productivity (Kgs per Hectare) Figure 2.10: Maize Consumption Pattern in India Figure 2.11: India‘s Exports and Imports of Maize During 2000 –2006 Figure 4.1: Maize in Bihar – Acreage, Production and Yield Figure 4.2: Agricultural Map of Bihar Figure 4.3: Major Maize Growing Districts in Bihar Figure 4.4: Trend in Maize Prices and Arrivals at Gulabagh Mandi, Purnea During 2007-08 (Prices in Rs. per Quintal and Arrivals in 000 MT)) Figure 4.5: Supply / Marketing Linkages for Maize in Bihar Figure 4.6: Value Chain in Maize Figure 5.1: Break-Up of Production Cost for Cattle Feed Figure 7.1: Trend of Maize Prices (in Rs per Quintal) and Maize Arrivals (in 000 MT) at Gulab Bagh Mandi During 2007-08

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Figure 4.4: Supply / Marketing Linkages for Maize in Bihar

Market (National and International)

Starch Units like Ridhi Sidhi, Poultry feed Snack / Breakfast Dairy feed Sukhjeet processors companies companies

Starch etc

Maize Processing/ Product manufacturing manufacturing Product Processing/ Maize Bihar) of out (mainly

(Stockist

Maize Marketing (Bihar) Marketing Maize /Traders) Rs 575-800/Quintal Prices depends on Month of sale Mandis

550-650/Qt.

550 - 650/Qt. (Stockist Kachchha Adhatiya (Village Aggregators) /Traders

MSP or Below MSP for Maize Cultivation (Bihar) Cultivation Maize that year 500 - 600/Qt. Storage (CWC / Maize Growers SWC)

Seeds Fertilizers Extensions Private dealers & NSC Private dealers services

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