Marketing and processing of food legumes and coarse grains ...

TCGPRT NO. 29

TMarketing and Processing of Food Legumes and Coarse Grains: Effects on Rural Employment

in Asia Proceedings of a Workshop

Held in Serdang, Malaysia May 24-27, 1993

The CGPRT Centre The Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific (CGPRT Centre) was established in ] 981 as a subsidiary body of UN/ESCAP.

Objectives In co-operation with ESCAP member countries, the Centre will initiate and promote research, training and dissemination of information on socio-economic and related aspects of CGPRT crops in Asia and the Pacific. In its activities, the Centre aims to serve the needs of institutions concerned with planning, research, extension and development in relation to CGPRT crop production, marketing and use.

Programmes In pursuit of its objectives, the Centre has two interlinked programmes to be carried out in the spirit of technical cooperation among developing countries:

1. Research and development which entails the preparation and implementation of projects and studies covering production, utilization and trade of CGPRT crops in the countries of Asia and the South Pacific.

2. Human resource development and collection, processing and dissemination of relevant information for use by researchers, policy makers and extension workers.

CGPRT Centre Monographs currently available: CGPRT No. 10 Soybean Research and Development in Indonesia edited by J.W.T. Bottema, F. Dauphin and G. Gijsbers CGPRT No. 11 Constraints to Production of Pulses in Bangladesh by S.M.S. Elias CGPRT No. 12 Marketing and Storage of Pulses in Bangladesh by Firoze Shah Sikder and S.M. Elias CGPRT No. 13 Maize Production in Java: Prospects for Improved Farm-Level Production Technology by Aman Djauhari, Adimesra Djulin and Irlan Soejono CGPRT No. 14 Agriculture, Food and Nutrition in Four South Pacific Archipelagos: New Caledonia, Vanuatu, French Polynesia, Wallis and Futuna by J.P. Doumenge, D. Villenave and O. Chapuis CGPRT No. 15 Potential for Pigeonpea in Thailand, Indonesia and Burma by E.S. Wallis, R.F. Woolcock and D.E. Byth CGPRT No. 16 Maize Production in Sri Lanka by N.F.C. Ranaweera, G.A.C. de Silva, M.H.J.P. Fernando and H.B. Hindagala CGPRT No. 17 Sistem Komoditas Kedelai di Indonesia CGPRT No. 18 Socio-Economic Constraints to Pulse Production in Nepal by M.K. Khatiwada, S.K. Poudel and D.K. Gulling CGPRT No. 19 Agricultural Marketing in a Transmigration Area in Sumatra

by Yujiro Hayami, Toshihiko Kawagoe, Yoshinori Morooka, Henny Mayrowani and Mat Syukur

(Continued on inside back over)

Marketing and Processing of Food Legumes and Coarse Grains:

Effects on Rural Employment in Asia

The designations employed and the presentation of material in this publication do not

imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area of its authorities, or concerning the delimitation of its frontiers or boundaries.

The opinions expressed in signed articles are those of the authors and do not necessarily represent the opinion of the United Nations.

CGPRT NO. 29

Marketing and Processing of Food Legumes and Coarse Grains:

Effects on Rural Employment in Asia

Proceedings of a Workshop Held in Serdang, Malaysia

May 24-27, 1993

Edited by T. Napitupulu

J.W.T. Bottema D.R. Stoltz

CGPRT Centre Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific

v

TABLE OF CONTENTS

Page Foreword .......................................................................................................................... vii

Introduction

Opening Address Seiji Shindo ............................................................................................................. 1

Resource Papers

Coarse Grains and Food Legumes Marketing and Processing Situations in Selected Countries in Asia Prakarn Virakul ...................................................................................................... 5 Nestle's Experience in Soya Production, Marketing and Processing in the Philippines D.T. Santos .............................................................................................................. 15 Marketing and Processing of Sweet Potato in Asia: The Experience of UPWARD Gordon Prain ...................................................................................................................... 21

Country Papers

Production, Processing, Utilization and Marketing of Food Legumes and Coarse Grains in India G. Singh ................................................................................................................... 45 Food Legumes and Coarse Grains in the Lao People's Democratic Republic. Kham Sanatem 67 Marketing and Processing of Food Legumes and Coarse Grain Crops to Increase Income and Employment of Farmers in the Union of Myanmar UMyint Oo ............................................................................................................... 69

Case Studies

Economics of Production and Marketing of Soybean in Ha Bac Province, Viet Nam Tran Van Lai ....................................................................................................................... 77 Post Harvest Processing and Utilization of Food Legumes and Coarse Grains in the Dry Zone of Sri Lanka W.H.D. Kularatne ................................................................................................... 91

vi

Production, Marketing and Utilization of Soybean in Thailand Pinit Kulamongkon .................................................................................................. 111 The Processing and Marketing of Fresh Soybean Milk as an Income and Employment Generator in the Kiang Valley, Malaysia T.Y. Tunku Mahmud and A. Abu Kasim .................................................................. 131 Labour Employment and Income Generation in Maize Production, Marketing and Processing in Pakistan M. Manzoor A/i, M. Igbal, M. Sharif, A.H. Qureshi, M. Shafiq and Umar Farooq 143 Economics of Soybean Processing in Nueva Ecija, Philippines, 1992 Romeo R. Huelgas and Elsa G. Tuiza ................................................................................. 163 Processing and Marketing of Soybean to Expand Rural Income and Job Opportunities in West Java, Indonesia Made Oka Adnyana and Amar Kadar Zakaria ....................................................... 181

Annexes Annex 1 Program ................................................................................................................ 207 Annex 2 List of Participants ............................................................................................... 211

vii

Foreword

Agriculture covers a huge range of crops and related activities in production, product transformation, and actual marketing practices. The diversity of crops, related product transformation and local and urban demand determines a multitude of local solutions and organizations of markets for agricultural produce. The FAO/UNDP RAS/89/040 project on food legumes and coarse grains brings together in this volume the results of research on processing and marketing of food legumes and coarse grains and employment opportunities in Asia. The research covers China, India, Indonesia, Lao PDR, Malaysia, Myanmar, Pakistan, the Philippines, Sri Lanka, Thailand, and Viet Nam and shows that marketing and processing of food legumes and coarse grains create employment in all economic situations in the region. We hope that this volume provides an impression of the role of food legumes and coarse grains in a variety of economic situations in Asia that may be useful as a basis for future research.

Hashim bin Yusuf Director GeneralMARDI

Seiji Shindo Director CGPRT Centre

Opening Address

Seiji Shindo* Dr Hashim bin Yusof, Director General of MARDI, distinguished participants, ladies and gentlemen: I am extremely happy to address the opening of the workshop entitled Marketing and Processing of Food Legumes and Coarse Grains: Effects on Rural Employment in Asia. Many farmers in Asia grow and produce FLCG crops. Maize, millet, soybean, mungbean, groundnut, and other food legumes are found everywhere in the region. Farmers use part of their produce for home consumption and sell the rest, although the degree of commercialization varies by country, crop and size of farm operation. A recent trend concerning FLCG crops has been the general increase in commercialization to meet increasing demand by processors and consumers. Processed and value added forms are becoming important. With the sustained rapid growth of economies and subsequent increases in income of populations, patterns of food consumption have undergone considerable change. Generally speaking, people tend to consume more food with a preference for so-called superior food. Indeed, there are shifts from `inferior' food crops, such as maize, millet, cassava and sweet potato to `superior' cereals such as rice and wheat. More importantly, people tend to consume more of certain foods such as cooking oil, milk, eggs, and meat. At the same time, demand for processed food increases continually. Again, I would like to qualify that these changes never take place uniformly among countries or even within a country. The CGPRT Centre recently held, jointly with our partners in Sri Lanka, a workshop entitled Changes in Food Consumption: Effects on Production and Use of Upland Crops in Asia. That workshop stressed the fact that the changes and trends that I have just summarized have been taking place to various extents in a number of countries. This workshop will examine these changes from a different angle. It will focus on the effect of marketing and processing on income and employment generation for rural populations, including the producers themselves. FLCG crops by their nature often need processing before they reach the ultimate consumer. Maize is now processed by agroindustries to livestock and poultry feeds, and industrial and food materials, such as starch. Soybean has a long history of bring consumed in various forms of processed foods such as tofu, tempe, soysauce, fermented paste and others. Soybean has become an important material for producing cooking oil. Soybean milk is an emerging outlet and a drink preferred by many Asian people. Mungbean has also been used for numerous processed foods such as noodles, sweets, and bean sprouts. Other legumes, although sometimes called minor legumes, are, on the contrary, the source of dhal in South Asia, and various processed foods throughout Asia. Greater involvement of post-harvest activities means greater opportunities for additional income and employment for rural people, if certain procedures are followed so that accrued benefits can be brought back to rural people. According to studies conducted by the Centre on soybean producers in Indonesia, nearly half of the earnings and employment comes from post- * Director, CGPRT Centre, Bogor, Indonesia.

Introduction 2

harvest activities. A similar phenomenon is observed in maize for feed, and cassava for starch and processed snack foods. In fact, traditional upland crops including FLCG crops, which were in the past grown mainly for subsistence of peasant producers, have much larger potential than rice to add value to income and employment through processing and marketing. In particular, since these crops are often grown by small farmers in remote and marginal areas where additional income and employment are badly needed, the effect of FLCG crops in this respect should contribute to the equitable and balanced development of a national economy. With these issues in mind, the Centre initiated a series of studies to analyze the mechanism and constraints of employment and income generation in rural areas and on the basis of their findings designed policies for ensuring and enhancing these effects for the benefit of small farmers and rural populations.

Eight studies were carried out by our colleagues in their respective countries. The study in Indonesia describes the processing of soybean in small scale agro-industries in one of the renowned areas for these products, and it estimates the rate of increase in employment opportunities in these industries. The study in the Philippines also chooses a case of small scale soybean processing industries in Nueva Ecija province and analyzes the structure of the industries including financial viability. It is interesting to note that one of the recommendations of the study is that medium-sized processing plants owned and managed by a farmers' cooperative would be instrumental to enhance the effects on rural employment and income. The case study of Vietnam addresses the economics of production and marketing of soybean, focusing on identification of constraints to production increase and efficient marketing. The Pakistan study selects maize in Punjab province and its producers, food processors and feed manufacturers, and analyzes the employment structure and constraints to further expansion. In Sri Lanka, in spite of the importance of FLCG crops particularly in the maha season under rainfed conditions, their marketing opportunities are limited as are income and employment generation effects due to the sale by producers immediate after harvest because of lack of storage capacity and market information. The study suggests several measures to realize the potential of adding value for the benefit of rural people. The study of Thailand analyzes the cost and benefit structure of soybean production and its processing industries. It implies a high value added by these industries. The study of China represents an application of economic matrix for estimating income and employment in quantitative terms under various conditions. It provides an interesting and effective tool for planning and other purposes, which could be applied to other countries. I would like to stress the situation of Malaysia, the host country of the workshop, because of its uniqueness. In Malaysia, which witnessed rapid growth of the economy and subsequent changes in its structure in the last decade, the agricultural sector has been far surpassed by the manufacturing sector. According to the New National Agricultural Policy (NNAP) for 1992 to 2010, the sector will continue rapid transformation into one that is highly modernized, commercialized and sustainable, whose growth and development will be market driven and human resource led. Thus the sector will comprise efficient agri-businesses, farms and enterprises, the growth of which will be based on a rapid pace of innovation in products and processes, in addition to productivity increases and expanded technological diffusion. Malaysia already has a sizeable processing industry for FLCG crops "as it imports substantial amounts of maize, soybean, and groundnut for processing into various foods and feeds. These industries have been providing employment opportunities for thousands of people while supplying foods and feeds at reasonable prices to consumers. The case study of soybean milk in the Klang Valley illustrates the advanced stage of development of processing industries in Malaysia. I am confident that the study. together with other information on new technology and potential uses for FLCG-related products, will be useful for future exchange and mutual benefits among countries.

Opening Address 3

We also expect contributions from the other countries participating in the workshop, namely, Bangladesh, India, Laos and Myanmar. I am sure that the specific experiences of these countries are equally important and useful for the deliberations of the meeting. In addition to the above studies and contributions, we have papers from three resource persons. Mr Prakarn, the leader of the socio-economic working group in the RAS/89/040 project will give us an overview of regional trends in marketing of FLCG crops. Dr Gordon Prain from UPWARD will present the experience of this project regarding the participatory analysis of marketing and processing systems of sweet potato, while Mr Santos will show us the experience at Nestle Philippines regarding production, marketing and processing of soybean in that country. I expect the workshop to discuss, compare and assess the findings and suggestions presented in the eight country studies and contributions from other participating countries, together with those of the resource persons, and to recommend actions at national and regional levels. The recommendations should address future research subjects, government policies, the role of the private sector and, of course, regional cooperation, including activities for the CGPRT Centre. Moreover, since many case studies discuss successful processing undertakings involving new products, new outlets and new technology, the workshop participants may wish to exchange ideas and knowledge at this level. Finally I express our appreciation to UNDP and FAO for their generous support in funding the workshop and the studies through the Regional Cooperative Programme for the Improvement of Food Legumes and Coarse Grains in Asia (RAS/89/040). The Programme, as Dr Tantera mentioned, aims at strengthening national capabilities for improved production, distribution, and utilization of FLCG crops in the participating countries in Asia. The Programme is expected to establish a sustainable network among research institutes and researchers involved in FLCG crop development. The CGPRT Centre takes part in the socio-economic areas of the Programme and intends to strengthen the network among researchers engaged in agro-socio-economic aspects of FLCG crop development. In fact, this workshop assembles most members of the socio-economic working group established under the Programme and is expected to reinforce the network towards its sustainable functioning. I also express my great appreciation to the Government of Malaysia, specifically the Malaysian Agricultural Research and Development Institute (MARDI), for kindly offering to host the workshop. Indeed, the excellent preparation for the workshop in this beautiful setting, I believe, should be highly conducive to active discussion and successful conduct of the meeting. In closing, I wish to express may appreciation to all of the participants for their attendance in this workshop. I wish you all a fruitful discussion and successful workshop. I now declare this workshop open.

Coarse Grains and Food Legumes Marketing and Processing Situations in Selected Countries in Asia

Prakarn Virakul **

The importance of CGFL crops Coarse grains and food legumes (CGFL) covered by this report include maize, pulses, soybean and groundnut. Only the most relevant issues on CGFL production and marketing for seven countries, China, Indonesia, Malaysia, Philippines Sri Lanka, Thailand and Viet Nam, are discussed. The CGFL crops play an important role in the agricultural sector of all the seven countries under this study. They provide a significant source of income to a majority of small farmers located under rainfed conditions. On the demand side, food legumes are used in many forms for human consumption and for protein and edible oil, in particular. Coarse grains and certain by-products, such as oilseed meals, are used as animal feed in the fast growing livestock and poultry industries. CGFL crops also fit well as components of indigenous cropping systems and maintain soil fertility.

Maize production and trade Among the seven countries covered, maize production was greatest in China, followed by Indonesia, the Philippines, Thailand and Viet Nam. The records show that nearly all maize production was used for domestic consumption. Malaysia, the Philippines and Sri Lanka were absolutely dependent on imports. China also showed a gradually increasing trend of net trade deficit. Only three countries, namely Thailand, Indonesia and Viet Nam were net exporters of maize, exporting a small proportion of domestic production except for Thailand which exports large volumes, accounting for 30% of total production. However, there is pressure to increase maize production as a source of carbohydrate in feed rations from governments of all countries in the region. Information on production of maize oil is not available for this study. The FAO Trade Yearbook recorded that Malaysia traded maize oil in the world market but the import demand was greater than the export demand. The rest of the countries traded insignificant volumes (Table 1).

* Office of Agricultural Economics, Ministry of Agriculture and Cooperatives, Bangkok, Thailand.

Resource Paper 6

Pulse production and trade China, again, is the leading producer of pulses in Asia with a three-year production average of 6 million tons. Indonesia and Thailand can be considered equally as the second largest producing countries. However, among the seven countries under this study, only one

Table 1 Maize and maize products: production, gross exports and imports ('000 ton). Domestic production Gross exports Gross imports Net trade Commodity 1988 1989 1990 1991 1988 1989 1990 1989 1989 1990 1988 1989 1990

Maize China 73,820 79,25997,158 93,350 3,912 3,503 3,405 4,568 4,423 5,440 -656 -920 -2,035Indonesia 6,668 6,193 6,734 6,409 38 234 142 64 40 9 -26 194 133Malaysia 31 34 35 36 4 3 21,360 1,265 1,400 1,356 -1,262 -1,398Philippines 4,522 4,854 4,655 * * * 25 154 343 -25 -154 -343Sri Lanka 43 31 33 34 0* 0 14 30 46 -30 -46Thailand 5,166 4,393 3,722 3,990 1,209 1,181 1,235 * * * 1,209 1,181 1235Viet Nam 580 838 671 652 54 35 34 0 0 0 54 35 34 Maize Oil China 3 1 0 0 1 1 3 0 -1Indonesia 0 * 0 1 1 1 -1 -1 -1Malaysia 4 6 6 7 13 10 -3 -7 -4Philippines 0 0 0 * 1 * 0 -1 0Sri Lanka 0 0 0 0 * * 0 0 0Thailand 0 0 0 * * * 0 0 0Viet Nam 0 0 0 0 0 0 0 0 0Source: FAO Production Yearbook 1991; FAO Trade Yearbook 1990 * Minimal amount. country, Malaysia, was reported not to produce any pulses. Therefore, to meet the domestic demand, pulse imports were made mostly from Thailand. China and Thailand were the two pulse producers which had sizeable surpluses and competed in the world market. Indonesia, although producing large quantities of pulses, has experienced growing demand for domestic needs of these protein-rich commodities offsetting its production capability (Table 2).

Table 2 Pulses: production, gross exports and imports ('000 ton). Domestic production Gross exports Gross imports Net trade Commodity 1988 1989 1990 1991 1988 1989 1990 1988 1989 1990 1988 1989 1990

Pulses China 5,679 4,814 6,135 6,915 573 470 763 95 92 86 478 378 677 Indonesia 339 394 464 508 2 1 2 75 30 63 -73 -29 -61 Malaysia 0 0 0 0 2 3 2 51 61 58 -49 -58 -56 Philippines 35 35 36 37 0 0 0 15 41 41 -15 -41 -41 Sri Lanka 39 69 73 72 6 * 5 37 10 44 -31 -10 -39 Thailand 282 511 459 474 224 150 193 3 4 4 221 146 189 Viet Nam 190 189 195 203 8 4 1 0 0 0 8 4 1 Source: FAO Production Yearbook 1991; FAO Trade Yearbook 1990 * Minimal amount.

Soybean production and trade Soybean has been grown and utilized in Asia, particular in China, from time immemorial. China is the fourth biggest soybean producing country in the world behind the USA, Brazil and Argentina, with production recorded around 10 million tons annually. Soybean development in Indonesia and Thailand has changed remarkably.

Coarse Grains and Food Legumes in Asia 7

The governments of Indonesia and Thailand have been implementing development programs in line with the steadily increasing demand for soybean. The soybean consumption patterns of these two countries are different; in Indonesia 80% of soybean is processed for human consumption, whereas in Thailand the same percentage is used in the animal feed industry. At present Indonesia imports an amount equal to one third of the national soybean production due to an expanding demand for soyfood processors and the feed industry. The import restriction of soybean in Thailand distorts the picture of real demand, showing no importation in normal years. Very limited amounts were produced in Philippines and Sri Lanka and none in Malaysia. However, both Malaysia and Philippines regularly imported 400 thousand tons and 25 thousand tons of soybean, respectively. In addition, China had a net trade deficit of one million tons of soybean in 1990. Likewise, additional soybean oil imports showed an increasing trend from 143 thousand tons in 1988 to 530 thousand tons in 1990. Nonetheless, soybean meal which is the by-product from the oil crushing industries was exported to its neighboring countries. All countries, except China, maintained sufficient availability of soybean meals through importation. Philippines is one country that imported soybean products, meal and oil, directly instead of beans as raw material for downstream industries. On the contrary, Malaysia which is the largest palm oil producer, had a balance in soybean oil trade and stable imports of soybean meal up to 140 thousand tons a year, while the bean imports increased annually (Table 3).

Table 3 Soybean: production, gross exports and imports ('000 metric ton).

Domestic production Gross exports Gross imports Net trade Commodity

1988 1989 1990 1991 1988 1989 1990 1988 1989 1990 1988 1989 1990 Soybean China 10,91

810,23

911,00

89,807 1,477 1,248 940 2,250 1,81

01,99

2-773 -562 -1,05

Indonesia 1,260 1,315 1,487 1,549 * * * 465 390 541 -465 -390 -541 Malaysia 0 0 0 0 4 3 8 363 371 474 -359 -368 -466 Philippines 6 4 7 8 * 0 0 24 29 24 -24 -29 -24 Sri Lanka 4 2 8 8 * * * 0 0 * 0 0 0 Thailand 490 672 578 605 * * * 33 * * -33 0 0 Viet Nam 100 82 86 85 62 56 55 0 0 0 62 56 55 Soybean Meal China 2,560 1,813 1,958 9 63 30 2,551 1,750 1,928 Indonesia * 2 2 72 114 5 -72 -112 -3 Malaysia 4 4 4 141 144 138 -137 -140 -134 Philippines 0 0 0 513 537 624 -513 -537 -624 Sri Lanka 0 0 * 21 17 11 -21 -17 -11 Thailand 0 0 0 225 172 340 -225 -172 -340 Viet Nam 0 0 0 0 0 0 0 0 0 Soybean Oil China 10 5 29 143 425 530 -133 -420 -501 Indonesia 20 33 29 33 * 2 -13 33 27 Malaysia 30 38 24 37 34 40 -7 4 -16 Philippines 0 0 0 17 21 22 -17 -21 -22 Sri Lanka * * * * * * 0 0 0 Thailand * * * 3 4 0 -3 -4 0 Viet Nam 0 0 0 0 0 0 0 0 0 Source: FAO Production Yearbook 1991; FAO Trade Yearbook 1990 * Minimal amount.

Resource Paper 8

Groundnut production and trade

China is still the biggest groundnut producer in Asia and the runner up for world groundnut production. Indonesia produced nearly one million tons, while Viet Nam and Thailand produced around 200 thousand tons each. Most production is for domestic consumption, except for Viet Nam which exported about one third of its groundnut production to the world market. Therefore, in terms of trade, all countries, except China and Viet Nam had net trade deficits in groundnut. Groundnut meal was considered relatively important for feed industries as a substitute for soybean meal in Thailand, Indonesia and Malaysia. China was again the major supplier of groundnut meal to the users. Groundnut oil trade was not significant among the countries studied (Table 4).

Table 4 Groundnut and its products: production, gross exports and imports ('000 metric ton). Commodity Domestic production Gross exports Gross imports Net trade 1988 1989 1990 1991 1988 1989 1990 1988 1989 1990 1988 1989 1990Groundnut (in shell)

China 5,855 5,427 6,433 6,060 238 251 375 * 2 1 238 249 374

Indonesia 859 879 930 920 1 1 ' 28 14 50 -27 -13 -50 Malaysia 5 5 5 5 * * * 21 23 24 -21 -23 -24 Philippines 35 38 35 34 0 0 0 19 24 24 -19 -24 -24 Sri Lanka 5 7 6 7 * * 0 0 0 0 0 0 0 Thailand 170 161 162 164 1 1 1 * * * 1 1 1 Viet Nam 290 206 218 212 109 56 63 0 0 0 109 56 63 Groundnut Meal China 140 63 139 3 14 7 137 49 132 Indonesia 0 0 2 9 71 108 -9 -71 -106 Malaysia 0 0 0 23 47 46 -23 -47 -46 Philippines 0 0 0 0 0 0 0 0 0 Sri Lanka 0 0 0 19 1 * -19 -1 0 Thailand 0 0 0 91 139 147 -91 -139 -147 Viet Nam 0 0 0 0 0 0 0 0 0 Groundnut Oil 19 9 54 6 22 7 13 -13 47 China 2 0 0 ' * * 2 0 0 Indonesia * 1 1 1 2 2 -1 -1 -1 Malaysia 0 0 0 * ' * 0 0 0 Philippines 0 * 0 0 0 0 0 0 0 Sri Lanka * 0 0 0 * * 0 0 0 Thailand 1 * 2 0 0 0 1 0 2 Viet Nam Source: FAO Production Yearbook 1991; FAO Trade Yearbook 1990 * Minimal amount.

CGFL opportunities for agro-processing CGFL crops have potential for use in a series of agro-industries providing food, feed and other natural products for the benefit of growers, processors and consumers. In addition, they provide numerous downstream opportunities for farm-processor linkages and new areas of commercial and agro-industrial exploitation which can contribute to overall economic development. The CGFL processing chain may provide a variety of product forms ranging from simple processed foods to high technology ones. For example, the soybean plant provides bean, and plant debris. The bean when further processed provides a variety of products:


fermented and non-fermented foods, soybean oil, de-oiled cake and non-edible products from soybean oil, i.e. oleochemicals and printing inks. Similarly, a range of products can be produced from other commodities such as maize, pulses and groundnut (Figures 1-5). Figure 1 Maize product system.

Figure 2 Products of maize grain

Resource Paper 10

Figure 3 Mungbean product system.

Figure 4 Soybean product system.


Figure 5 Groundnut product system.

Source: adapted from RAPA, FAO, 1987. Cooperative Processing of Agricultural Produce.

Marketing channels Domestic marketing structures of soybeans in Indonesia, the Philippines and Thailand are basically similar in the sense that they can be divided into three levels, the village/local market, the assembly wholesaler/processor market, and the terminal/retailer market. In Indonesia and the Philippines, government intermediaries are involved in the marketing channels for soybean procurement and distribution, ie. BULOG in Indonesia and The National Food Authority (NFA) in the Philippines. In Thailand, the marketing activities of soybean are solely managed by the middlemen who play an active role in linking with growers, processors and consumers (Figures 6-8).

Summary Coarse grains and food legumes are important in the agricultural economies of all the Asian countries under study. They have their place in the human diets and cropping systems. Soybean is the only commodity of high demand for the fast growing livestock and poultry industries in all countries as shown by the net trade deficits from importation in all countries, except for Viet Nam. Opportunities for agro-processing exist wherever simple/complex technological breakthrough is realized to produce a new series of product lines from CGFL crops and to generate income and employment opportunity for small farmers.

Resource Paper 12

Figure 6 Marketing channels for soybean in Indonesia


Figure 7 Marketing channels for soybean in Southern Mindanao.

Fieure 8 Soybean maketine channels in Thailand. 1985/86

Nestle's Experience in Soya Production, Marketing and Processing in the Philippines

D.T. Santos*

Introduction

The entry of Nestle into soya production and development marked the rebirth of the soybean industry in the Philippines. Surprisingly, the Philippines is not known as a soya eating nation among its Asian neighbors although for some Filipinos soya crept into the cuisine during the early pre-Spanish era. Attempts to commercialize soya both in food and livestock feed using indigenous sources remained a dream until the late 1970s when Nestle Philippines took a serious decision to develop soya as a food of the future. Soya has been envisioned by both scientific and economic communities as a major potential protein food source.

Why soya based products? Nestle Philippines turned to soya for several reasons:

• Low protein intake can result in protein malnutrition; for example, the average per capita consumption of protein in the Philippines is 77% short of the recommended daily allowance for children up to twelve years old.

• The increasing population requires more food and protein. • The absence of a viable milk industry in the country has led to the importation of milk

products as a primary source of protein. It is expected that the price of milk protein will increase further and will entail foreign exchange outflow, considering the continuing decline of the Philippine peso against the US dollar. The price of milk may rise beyond the reach of most people.

• Soya's nutritional excellence and high protein may partly replace imported milk protein. It can be transformed into a variety of food preparations including milk-like products.

• Soya can be grown under a wide range of agro-climatic zones and the Philippines is blessed with varied agro-climatic zones suitable for growing soybeans almost throughout the year. Soybeans can be grown locally, ensuring continuity of supply. It is much cheaper to produce soya compared to milk per unit area per unit protein.

• Furthermore, the government has initiated comprehensive soya based nutrition program and is looking favorably at any and all import substitution efforts, especially for the animal feed industry which consumes about 400,000 tons of mostly-imported soybeans and/or soy meal.

* Nestle Philippines Inc., Makati, Metro Manila, the Philippines.

Resource Paper 16

Nestle's objectives Nestle's objective is to develop and commercialize soybean production and soya-based products, consistent with Nestle's nutritional, agronomic, and organoleptic criteria. Agronomically, Nestle will continue its efforts to further improve soybean quality in terms of yield, resistance or tolerance to major pests (adoption of integrated pest management), non-lodging and shattering, and organoleptically acceptable (non-beany flavor). Institutionally, Nestle will continuously provide technical assistance to soybean farmer cooperatives nationwide, sourcing through them the best quality soybeans all year round.

The soya production challenge Soya products are gaining importance as a protein source in the country as well as in South East Asia. The need for an overall concept from raw material production/procurement, processing, and marketing served as a challenge and an opportunity for Nestle, which started pioneering soya development at the commercial level in the Philippines thirteen years ago. Site selection is one of the most vital factors to consider in soya production. The inter-play of soil and climate will dictate the viability of the program. Healthy, well-drained soils will be highly favorable to soya growing. The entire country has been examined for commercial soya production, including some of the minor islands (Figure 1). From origins in Tupi, South Cotabato in 1980, soya production has expanded to twenty-five provinces mainly in Mindanao and Luzon covering approximately 6,000 hectares (Table 1).

Table 1 Soybean growing areas in the Philippines. Location Area (ha) Luzon 765 Cagayan 20

Isabela 300 Nueva Viscaya 30 Pangasinan 30 Ilocos Sur 70 Abra 20 11 Bicol 100 Pampanga 15 Nueva Ecija 50 Mindoro/Palawan 130

South Mindanao 4,500 Davao Sur 200 Davao Norte 1,600 Agusan Sur 300 Surigao Sur 1,500 South Cotabato/S. Kudarat 700 North Cotabato 200

North/Westem Mindanao 510 Agusan Norte 200 Misamis Oriental 100 Lanao 50 Zamboanga Sur 45

Visayas Guihulnga, Negros 50 Bohol 65

Total 6,265

Good planting material is important both in terms of farm productivity, processing, and taste of the final product. Supplying seeds is currently undertaken by the National Seed

Nestlé’s Experience with Soya in The Philippines 17

Foundation under U.P. Los Banos, Central Luzon State University and the three seed growing cooperatives strategically located in the country. Combinations of good plant nutrition, appropriate cultural practices (seeding rate, proper planting time per given area, plant protection, irrigation) and proper harvesting, grading, transport, and storage practices are being optimized to give high yields and uniform quality raw materials. Starting with about twenty soya farmer cooperators from Tupi in 1980, Nestle is now linked to about 200 cooperatives with 4,000 members directly benefiting from the soya program. Transfer of technology, e.g. training, workshops, and apprenticeship programs, is conducted through the cooperatives both on-farm and at the Nestle Soya Farm, Tupi, South Cotabato: In cases of credit financing for farm inputs, Nestle assists agricultural credit financing through the Land Bank of the Philippines and other financing institutions.

Figure 1 Soya growing areas.

Resource Paper 18

Market assurance and price guarantees for soybeans are important particularly if high quality materials are required. In soybean contract growing, the farmers are committed through their cooperative to produce and deliver the soybeans to designated Nestle buying stations according to soya quality standards set by Nestle.

Manufacturing technology challenge A complete soya extraction line using the whole bean was set up in Nestle's Cabuyao factory to face the challenge of developing soya based products acceptable to consumers. Using a combination of soya milk extract and dairy materials, soy beverage is prepared under exclusive technology developed by research at the Nestle Research Center in Switzerland. The processing technology is designed to optimize extraction from dehulled beans under conditions which improve the organoleptic value to suit the Philippine palate. The product is in powder or liquid form and can be plain milk, chocolate, or other flavor. A simplified manufacturing flow diagram is presented (Figure 2).

Figure 2 Soya beverage manufacturing flowsheet,

Soybeans. The soya commercially grown in various parts of the country is directly sourced as raw material from the farmers. Cleaning/grading. In this step impurities are removed and the soybeans classified according to size to optimize dehulling efficiency.

Nestlé’s Experience with Soya in The Philippines 19

Dehulling. The hulls (seed coats) which account for 8% are removed. What remains .s the cotyledon, 90%, and the germ or hypocotyledon, 2%.

Extraction. Extraction is either neutral or alkaline depending on the product. The neutral process retains the beany flavor while the alkaline extract has the least beany taste. The pulp is separated from the soya extract which is preconcentrated then chilled before use.

Dissolving/mixing. Other ingredients are added, mixed with the soya cold extract and then standardized.

Processing. The mix is processed, dosed in line with oils/fats and then homogenized. Spray drying. The concentrate is spray dried with dry hot air until the moisture of the powder is constant at around 2.5-3.0%.

Filling/packing. The bulk powder is released for filling after quality tests according to brand pack and size. The brand packs are packed for final storage prior to final quality evaluation and eventual release to the market.

Market challenge The nutritional importance of soybeans in the human diet has grown enormously. The current yearly production is estimated to be approximately 2 million tons worldwide. Soy proteins appear to be the only large volume commercial protein ingredients that will be used in the foreseeable future both for nutritional and functional purposes as substitutes for the traditional animal proteins. Since soya is a cheap source of protein, there is an opportunity to develop soya products palatable to Filipinos and which can be part of their daily food as in other soya eating countries. Socio-economic impact of soybean growing in the Philippines Three major factors have resulted in the growth of the soybean industry in the Philippines:

1. Economic improvement • farm incomes have increased consequently widening farmers purchasing power • gross productivity margins have improved. • indirect developments have improved farm inputs and post-harvest activities. • enhanced participation of funding institutions has led to infusion of fresh capital to

cooperatives. 2. Socio-institutional development

• soya based farmer cooperatives have been established. • post-harvest processing equipment has been acquired generating employment to

machine operators. • job opportunities have opened for the non-agricultural labour sector, forwarders,

shippers etc. 3. Technological diffusion

• soil fertility has been improved by inoculants. • appropriate cultural practices have increased yields.

Marketing and Processing of Sweet Potato in Asia: The Experience of UPWARD

Gordon Prain *

Introduction: the need for a user perspective

Over the past fifteen years or so a clearer recognition of both the strengths and the weaknesses of the Green Revolution has emerged. The high-input agriculture mainly involved in the revolution has had tremendous success, but also significant geographical, ecological and socio-economic limitations. The successes have been mainly limited to the more intensively farmed, "core" jgricultural areas, characterized by relatively homogeneous landscapes and agricultural systems. Indeed there has been widespread widespread rejection of Green Revolution and other modern technologies by poorer farmers living in marginal environments (Farmer 1977). It is becoming apparent that increased inputs are required to maintain the same productivity within "core" areas, suggesting a decline in the resource base and/or genetic potential (Pingali and Rosegrant 1991). Furthermore, the dependence of this type of agriculture on purchased inputs and capital investments has offered greater benefits for wealthier farmers (Barker and Herdt 1978). Finally, Green Revolution agricultural research has been heavily biased toward production-side solutions to the problems of development and has identified the individual (usually) male farmer as the change agent. Gradually pressure has mounted to address also the needs of farmers in more marginal environments who grow secondary crops such as roots and tubers and coarse grains rather than the Green Revolution crops. As researchers have tried to grapple with the great complexities of these kinds of livelihood systems they have been led to a different kind of approach to agricultural research and development. This new approach recognizes that, in the vast majority of agricultural enterprises in the developing world, it is not the individual male entrepreneur which is the key social unit involved, but the household, with its web of gender and other role divisions and relations. Farming and other kinds of expertise are held in different degrees by different members, depending on their roles. Households and complex agricultural systems in general involve interactions and interdependencies along the food chain, linking production, conservation, distribution and consumption activities. A narrow focus on production is simplistic and potentially misleading under these circumstances. The presence of these different roles and relationships in the food system requires us to adjust our concept of the user and our approach to agricultural research. The results of UPWARD research presented in this paper reflect a broad approach to marketing in which a wide range of social, economic and even ecological transactions present in rural society and associated with sweet potato are considered. There are two main reasons for this. First, we believe that users themselves do not arbitrarily separate commercial from other kinds of transactions, especially those linking production, distribution and consumption. Second, it is increasingly clear that a broader and longer term view is needed of transactions to ensure equitable and sustainable development. Recent discussions of sustainable agricultural * UPWARD (User's Perspective with Agricultural Research and Development), Manila, the Philippines.

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production have underscored the need to go beyond a simple concern with short-term productivity and narrowly defined cost/benefit ratios to consider the long-term viability of agricultural systems and the environments on which they depend. There is an equal obligation on those who study markets to go beyond a concern with profit margins to look at the longer term viability of exchange systems. On the basis of such an understanding it should be possible to propose research interventions which contribute to local development through understanding of and building on the positive aspects of existing exchange relations. The paper is divided into two sections: the first section deals with the results of the participative diagnosis of marketing and processing systems, particularly in the Philippines, but also with reference to Thailand, Indonesia, Nepal, China and Sri Lanka. The second section looks in more detail at two projects where UPWARD is supporting research to improve the local income generation potential of sweet potato through increased efficiencies in commercial production of the fresh root in the first case, and in the second, through developing the processing potential of sweet potato.

An overview of sweet potato marketing and processing Although one of the developing world's most widely distributed and versatile crops with important nutritional characteristics, sweet potato has probably received the least research attention of all major food crops. The crop has not been entirely ignored, of course, and important research has been conducted at the international level at The Asian Vegetable Research and Development Center (AVRDC) in Taiwan and at the International Institute for Tropical Agriculture in Nigeria and at the national level in several Asian countries, particularly in The People's Republic of China and in Viet Nam. Nevertheless, even in these latter countries there has been relatively little systematic research on micro-level production, distribution and utilization of the crop. UPWARD therefore saw as one of its first obligations a diagnosis of sweet potato production and use in Asian food systems, from a user perspective point of view. UPWARD projects in the Philippines, Thailand, Sri Lanka and Nepal concur in identifying three basic types of production system in which sweet potato is produced:

• Homegarden or backyard garden • Hillside or upland subsistence (extensive system in Thailand) • Commercial (rolling and flat types in the Philippines, intensive systems in Thailand)

Sweet potato in homegardens Probably because of its low nutrient requirements, hardiness and perennial habits, sweet potato is a favorite homegarden crop in tropical regions of Asia. UPWARD has supported several projects which have both analyzed the dynamics of home gardening and the role of sweet potato, and also explored means to improve the contribution of homegardens tc household livelihood. The primary contribution at present however is via nutritional supplements rather than through income generation. Results from the collection of a Philippines-wide "minimum data set" on sweet potato production and use, show that or average only 7% of sweet potato grown in home gardens is destined for sale (Francesco et al 1993). A detailed survey of both rural and urban home gardens in the northern Cordillera region of the Philippines not included in the country-wide study found little evidence of any sales to the market but did identify it as an important protein source (Mula and Gayao 1991) Although lacking quantitative data, the results of surveys in both Sri Lanka and Nepal

Sweet Potato in Asia 23

corroborate the finding that sweet potato produced in homegardens is predominantly for home consumption, either by humans or animals. It is not yet entirely clear whether food produced for subsistence in homegardens can release money otherwise used for purchasing food. Data suggest that homegardens may increase the range of foodstuffs eaten rather than. provide substitute as for basic foodstuffs that otherwise would be bought although the Cordillera study referred to above did find that sweet potato was sometimes substituted for expensive potatoes. Results from a consumption and nutrition study also in the Philippine Cordillera show that sweet potato is often used as a rice "extender", when rice stocks are low. However, it seems more likely that this is due to lack of money to buy additional rice rather than releasing money to buy other things. Among extremely impoverished slum-dwellers of a central Philippines city, UPWARD has supported research on cultivation of sweet potato in pots as a source of green vegetables. In this case, some income was saved for other uses and although the amounts were very small, they nevertheless may be important for this at-risk group (Villamayor 1992).

Sweet potato in subsistence-oriented production systems Generally, sweet potato is not a large farm crop in Asia. In the Philippines, there are no huge differences in farm size between commercial and subsistence systems. Commercial sweet potato production tends to occur in farms about double the size of subsistence production, whereas the cultivation area available in homegarden systems where sweet potato is grown is understandably smaller (Figure 1). As can be seen in the figure, there is a slightly larger difference in the average size of area planted to sweet potato in the two systems in the Philippines, a situation also found in Thailand (Figure 2). In Thailand, whereas subsistence-oriented farms can be found with more than 11 rai under sweet potato, especially in the western part of the country, nearly two-thirds of this type of farmer have 5 rai or less. Figure 1 Farm size and area planted to sweet potato in different production systems in the Philippines.

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Figure 2 Area of sweet potato planted by different types of farmers in Thailand.

Subsistence-oriented sweet potato production is strongly associated with shifting cultivation in tropical Asia, and it is often the first crop planted in the newly opened swidden. As shifting agriculture has become more difficult to implement with growing populations, decreasing forested land and legal restrictions, sweet potato has become part of short-fallow upland rotation systems as in parts of the northern Philippine highlands (Lleva 1991). In sub-tropical areas, sweet potato is part of more permanent upland rotation systems, following winter wheat in central and eastern China and maize in the plains of Nepal. The key feature of hillside or upland subsistence systems is their predominant orientation towards satisfying household needs. These needs may be principally for a seasonal supplement to the main household food staple, as in many parts of the Philippines (Figure 3, see also Verdonk and Vrieswijk 1993), or for animal feed, as in China (Van der Zaag et al. 1991). In a small number of cases in Asia sweet potato is used as a main staple, most famously on the two sides of the island of New Guinea: Irian Jaya (Indonesia) to the west (Sawor 1991) and Papua New Guinea to the east (Kama and Rangat 1989). Together with other root crops such as taro and yam, it is also an important staples in many of the Pacific islands beyond New Guinea (Yen 1974). Sweet potato may also be one of the main starchy staple in some areas on the central coast of Viet Nam (Kim et al. 1990) and in the most northern islands of the Philippines.

Figure 3 Destination of sweet potato output in different types of production systems.


Official statistics show a decline in area planted to sweet potato over the past twenty years (Figure 4), reflecting a reduction in the role of the crop as a food staple in countries such as China, the Philippines and Indonesia as a result of increased productivity of grains, urbanization and other causes (Yen 1991; Van der Zaag et al. 1991). In China there has been a shift of use to pig feed as economic development has made rice and wheat more widely available and increased demand for meat. Around 50% of total production is now estimated to be used in this way.

Figure 4 Sweet potato production and area trends for selected countries of Asia, including China, 1961-1990.

Sweet potato as a commercial crop The most common agro-ecology where sweet potato has been established as a commercial crop is in tropical and sub-tropical lowlands, before, after, or occasionally instead of the rice crop. The exact cropping systems often depend on rainfall patterns and the quality of local natural resources, especially irrigation water and soils. It also depends on availability of capital, with sweet potato a common, low- input option for poorer farmers. This type of lowland production is found in many parts of Viet Nam, especially those production areas surrounding large cities (Bottema et al. 1991), in Thailand, especially the central region (Pittuck 1993) and in Sri Lanka (Balasuriya 1991 and 1992). Sri Lanka is one of the few countries in Asia where sweet potato is replacing rice in two areas of irrigated lowlands because of its greater value as a commercial crop for sale in the capital, Colombo. Sweet potato is also grown commercially in the uplands in a variety of systems. A rather common commercial system in the Philippines, particularly in Mindanao and in southern

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Luzon, is planting sweet potato under coconut, often rotated and occasionally intercropped with maize, legumes such as groundnut and/or other root crops. Usually coconut is the principal cash crop in such systems, with sweet potato and maize alternating in secondary importance. In some cases sweet potato offers greater commercial potential than coconut or other crops and in this case is more likely to be grown in the open or with much less shade from coconut trees. Such a situation will be discussed in detail in the second section. Semi-commercial upland production is also practiced in the Nepal plains, where sweet potato is grown as an autumn crop, again rotated with maize and groundnuts (Shah and Koirala 1991).

Rural employment in subsistence and commercial sweet potato production Agriculture is still the main form of rural employment in Asia, but labour utilization in particular crops is variable through the cropping season. Sweet potato is often regarded by farmers as a crop demanding relatively little labour, compared for example to rice. An exception is South Viet Nam, where hand-watering of the sweet potato crop during the dry season makes sweet potato a more labour-intensive crop than rice (Bottema et al. 1991). Nevertheless, certain activities such as clearing of swiddens in shifting systems and land preparation in lowland systems make quite high labour demands. Table 1 compares labour utilized for different activities in the different types of production systems. Perhaps surprisingly, subsistence hillside producers are shown to invest more time in land preparation, planting and cultural practices than the more commercial farmers, when they are compared on a per hectare basis. It may be that the scaling up to a hectare introduces distortions, given that the subsistence farmers are in many cases cultivating very tiny plots. Nevertheless, these figures suggest caution in assuming that increased commercialization necessarily brings with it greater labour inputs.

Table 1 Labour utilization (man-days) in different production systems, the Philippines, 1991.

Type of Farm (Mean area planted to Land Planting Weeding Harvesting Total sweet potato) Preparation man-days Subsistence hillside (0.23 ha) per farm 6.9 5.6 11.4 9.6 33.5 per ha 30 24 50 42 146 Subsistence homegarden (0.21 ha) per farm 4.1 4.6 6.5 3.37 18.63 per ha 19 22 31 16 88 Commercial farmland (0.38 ha) per farm 9.4 8.8 15.4 12.8 46.4 per ha 25 24 43 34 126

The source of labour for the different systems is less of a surprise. Home gardening in the Philippines and elsewhere almost always involves household, and particularly female labour. Women (and children) commonly combine gardening activities with collection of foodstuffs for cooking, most commonly in the late afternoon. Hillside subsistence systems also involve predominantly household labour and this is especially the case in the Philippines. In Thailand subsistence-oriented farms are more likely to hire labour (Figure 5). With greater


commercialization there is increased demand for hired labour, although this process seems to be slower in the Philippines than in Thailand.

Figure 5 Type of labour utilized in different sweet potato production system*.

Transformation from subsistence to commercial sweet potato production In the central Philippines an UPWARD project conducted an economic analysis of the commercialization of sweet potato production in one of the biggest growing areas of the country (Bautista and Vega 1991). They identified three types of sweet potato farming household: semi-subsistence, commercial and contract-commercial, the latter producing for a provincial processing enterprise. The study considered several variables that might influence

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the degree of commercialization of the farm. The cost of transporting agricultural products from the farm to market has been frequently cited as strongly influencing the degree of commercial activity because it largely determines the marketing costs. Three variables were considered, namely the kilometer distance, fare in Philippine pesos, and the number of hours needed to travel from farm to the nearest market. Only the latter showed a significant inverse relation with degree of commercialization. However, since very few of the commercial sweet potato farmers sell their products to the nearest market in the area either by going themselves or to traders from such markets, this correlation may be coincidence. What the study finds to be of much greater importance is the easy access of traders to farms, whether those traders come from the nearest market or from more distant ones. This ease and therefore frequency of access leads to a phenomenon which was found to be highly significant: the farmer-buyer linkage. As Figure 6 indicates, strong linkages, either through the traditional suki relationship or through the contractual relationship with processing enterprises. The suki relationship is a regular commercial-social relationship between traders, shopkeepers or large farmers and farming households offering security, but also entailing dependence in the classic patron-client mode. See more detailed discussion of the relationship in the following section. As Bautista and Vega (1991) conclude, "the bottom line in this analysis is that, in Albay, the commercialization of sweet potato hinges on the existence of a viable marketing mechanism which could effectively reduce the risk that farmers face in selling their products. Sweet potato farmers need the assurance that their produce will be sold." Both the quasi-social relations with the suki in the marketing of traditional varieties and the new contractual relations with processors offer stability and the reduction of risk.

Figure 6 Relation between market outlet and degree of sweet potato market participation Philippines

Exchange and distribution systems involving sweet potato As mentioned in the introduction, farming households are involved in a broad set of exchange relations, of which marketing is only one, although in many cases it will be the most important one. Sweet potato is rarely associated with local ritual transactions in the way rice is (Conklin 1975), but an exception to this low ritual importance occurs in Nepal during the January festival, when sweet potato is included as part of the puja offering to the god (Shah and Koirala 1991). Nevertheless sweet potato is frequently given as a gift and for this reason can be regarded as an important social crop. The gifting is institutionalized in the upland, subsistence-oriented systems of the northern Cordillera of the Philippines in the practice of makiboka, whereby relatives are given permission to freely harvest roots from one's sweet


potato field (Lleva 1991). Even in the more commercial system in the southern Philippines gifting of sweet potato occurs at harvest-time, especially among relatives who participate in the harvest (Bautista and Vega 1991). Gifting also occurs of sweet potato vines, especially for planting material in tropical zones where the vines grow throughout the year. This gifting recognizes the paradoxical ease of obtaining planting material from the growing crop (pieces of cut vine), but the occasional problem of having that material available in sufficient quantities at the right moment, given that in tropical areas there is considerable flexibility in planting dates. In sub-tropical areas with cold winters where roots must be stored and then used for sprouting, planting material is often sold. The common association of gifting with harvest-time and shared work links it closely with barter exchange. In the harvests there is a kind of exchange of kin labour for sweet potato roots. Bartering also occurs directly between goods, which again is socially recognized in Ifugao in the tub-ok, the bartering of a portion of the swidden field for chickens, other articles of value or sometimes for cash (Lleva 1991). Bartering of sweet potato, especially for rice, continues to be practiced in the north-eastern region of Thailand alongside local sales (Pituck et al. 1993). Nevertheless, the increasing articulation of peasant economies with the market economy has contributed to the decline of barter exchange in Asia. Now two types of market exchange dominate the forms of distribution of sweet potato: small-scale, local marketing systems and what we can call metropolitan marketing systems.

Sweet potato in local marketing systems Small-scale marketing of sweet potato is closely associated with the form of harvesting of the root in tropical, semi-subsistence systems. "Priming" or piecemeal harvesting is the collection of the larger roots from the growing crop for household consumption or sale. In extreme versions of this practice in Irian Jaya for example, sweet potato may be continuously harvested for up to five years. More commonly priming will continue for six months to one year, depending on the cropping system. This practice usually means that small amounts of the crop are available for sale at any one time, too little in fact to be of interest to wholesale assemblers and traders. Marketing in local systems is usually rather complex, with several options and levels present. Producers may sell to retailers in local markets or a member of the producer household, usually a woman, may sell directly to consumers, either from the farm or on the periphery of the local market. Sometimes small local assemblers gather a larger amount for sale to district or regional markets. These multiple levels offer considerable opportunities for small scale rural employment. Quantities involved in sales are often minute. In a study of a remote village in the mountains of Ifugao in northern Philippines it was estimated that from 10 to 100 kg were sold by producer households in the district market of Banaue. With transportation costs per 30-50 kg sack of P10 plus the travel costs of the farmer and the retail price at that time of P2.00 per kg income generation was very modest. Nevertheless, local marketing systems which are frequently run by women are important sources of cash for making small household purchases. The standing crop is used almost like a bank account. Nepal, with its highly problematic transport links is primarily a zone of local marketing. Although sweet potato is grown on a rather small-scale, 60% of the produce is estimated to be sold to the market. This is done in small quantities but over a short time, whatever the price. The pressure to sell relates to the quite tight cropping pattern and the need to plant maize after sweet potato.

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Metropolitan systems Whereas local, small-scale selling is strongly associated with upland production and particularly with shifting cultivation, larger scale sales to big population centres occur in both upland and lowland contexts and are usually simpler, often with a relatively small number of traders buying from the farms. These metropolitan market links are probably one of the main factors influencing increased commercialization of sweet potato production, on the basis of findings in the Philippines described above (Bautista and Vega 1991) and also in Sri Lanka (Balasuriya 1992). In Sri Lanka, a considerable commercial security has accompanied the rapid development of a commercial sweet potato sector in two areas, one in the south and the other in the north of the country. The southern site in Ratnapura shows the conjunction of agro-ecological factors and economic opportunism which is of considerable interest. The lowlands in this area have an inadequate irrigation supply which means that water for rice production is allocated alternately by sector over several seasons. This means that lands where farmers would normally plant rice only have sufficient water for rice production once every three or even five years. Several other crops have been tried as alternatives and sweet potato, which was already grown as an upland crop in the area, was a natural choice although many different types of vegetable are also grown on a smaller scale. Assembler-traders operating at the village level and known to farmers are the key to this metropolitan system. They forward large volumes of sweet potato to the main market in Colombo through transport agents who deliver for sale to Colombo wholesalers. Although some sweet potato can be seen in village markets and weekly fairs, the volumes are quite small, even close to the commercial production areas.

"Complex systems" Although many marketing arrangements can quite well be classified in the way described above, some situations are highly complex, involving the exploitation of many channels by local producers for sale both to the fresh and processing markets and participation by different kinds of traders and processors (Colanta et al. 1991). The study focuses on an upland farming area which has recently intensified commercial sweet potato production and the small villages and surrounding towns which depend in various ways on that production. Figure 7 shows that marketing of fresh roots is done by both producing households and by traders to five distinct kinds of destinations, ranging from the local municipal market to the country's principal wholesale market in Manila. Many of the marketing functions are carried out by a combination of farming household and trader, depending on the volume being sold and the final destination. Table 2 gives one of the more straightforward cases in which production a single farm is sent to 3 destinations, two managed by a female trader from the nearby municipality, and one by the woman farmer, and with different associated marketing costs. Drawing on similar data, Table 3 lays out the kinds of profits which can be made through marketing along different channels. As will be discussed in more detail later, the most common marketing channel available to local producing families is the local municipal market, which according to these data offers the lowest profit margins. Though farmers do market to the local city as Table 2 indicated, the volumes are usually very small.


Table 2 Distribution process and marketing cost per kilogram raw sweet potato. Process Number of persons Cost Cost involved per sack (P) per kg (P) Sorting Producer + Trader (3) - - Packaging Producer + Trader (3) 5.50 0.08 Weighing Producer + Trader (3) - - Loading Producer + Trader (3 - - Marketing Transport

1. Local city Wife (1) 8.00 0.11 2. Distant town, 50 km Trader (1) 30.00 0.43 3. Capital, 80 km Trader (1) 46.00 0.66 Unloading: I. Local city Porter (1) 2.00 0.03 2. Distant town Porter (1) 2.00 0.03 3. Capital Porter (1) 2.00 0.03

Table 3 The economic potential or sweet potato production: a case from the Central Philippines. Distribution Volume Marketing Ave. amt. Average net (kg) cost added to farmgate profit (P) (P/kg) price (P/kg) per kg Total Farm-factory 500 - - - - Farm-local market 1,400 0.56 1.00 0.44 880 Farm-city market 1,400 0.38 1.00 0.62 620 Farm-metropolis 1,400 0.94 1.54 0.56 560 Source: Colanta et al. 1991

Processing Root crop processing in Asia has a long history as an indigenous form of food and feed conservation. The most common processes for sweet potato are chipping of the raw root followed by sun drying and either storage of the chips or pounding into flour for storage. Chips are stored both for human and animal consumption whereas flour is only for human food. This practice has been widespread in Asia although there appears to be a decline in its use as rice has become more generally available to the populations dependent on root crops for at least a part of the year. In China, in particular, other forms of processing may also be of great antiquity (Timmins et al. 1992). More recently developed sweet potato processing techniques can be divided into two basic categories: processing into high value, low volume products, such as candies, sauces, soft drinks, etc, and low value, high volume products, such as flour, feed, starch and alcohol. High value, low volume

High value, low volume

The complex marketing system in the central Philippines studied by Colanta et al. (1991) and briefly described above included sales to local processing enterprises as one of the

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outlets. A second part of the same study looked in detail at the functioning and profitability of the household enterprises involved in the processing. They conclude that much higher profits can be generated through transforming the raw sweet potato into processed goods and opportunities exist for increasing rural incomes, but at the same time they discovered a great variability in the enterprises.

Figure 7 Market links for fresh and processed sweet potato product&

In the area studied there are at least 20 registered household enterprises involved in sweet potato processing and a much larger, unknown number of smaller, unregistered activities. Enterprises basically fall into small and large scale, differing in the types and complexities of products made and the use of additional hired labour (Table 4). The small enterprises are essentially involved in street stall snack production based on direct frying or boiling, mashing and deep frying. Volumes are also quite small, hence there is no requirement for, nor sufficient profit to justify, hired labour. One of the case enterprises studied currently processes about 40 kg of raw sweet potato per week for the two types of sweet potato cue (cut, fried and sweetened) and only about 5 kg per week for the less popular butse. This woman processor began 24 years ago with a more prosperous business, processing from 350 to 500 kg per week compared to the current 45 kg. At that time she sold to dealers as well as direct to consumers. The decline she attributes to the proliferation of competing snack foods and perhaps also to her shift to only direct marketing.


Table 4 Sweet potato-based small scale processing enterprises, Central Philippines. Product Cost Net Income Labour Utilization (P/10 kg) (P/10 kg) Household Hired Members Labour Sweet potato 11.54 97.10 2 0 cue in stick Sweet potato 108.30 51.70 2-3 0 cue cut in pieces Sweet potato 194.60 105.40 2 0 butse US$ 1 = P 28 (1991).

The larger enterprises are involved in producing candies of various kinds, of which about 60% are sweet potato-based. The three main types of such candies all depend on washing of roots, grinding, boiling with sugar and other ingredients and then shape forming (with sugar coating sometimes) and finally packing/wrapping, labeling and sealing (Table 5). Packaging is where most of the hired labour is involved. Typical household enterprises are using just under 200 kg of raw sweet potato per week to produce 8,400 processed units (blocks, bars or candy bags). This suggests a demand for about 4,000 kg weekly by these larger enterprises. Marketing by the large enterprise case household is relatively simple. About three quarters of the product is sold to Manila once a week, to retailers in a public market. Several processors hire transport and go together. Around 15% is sold in a nearby town to a known small store owner and a canteen. The rest are sold to small traders in the vicinity who market them in the area. It was concluded that the marketing activities of the larger enterprises are not exhausting the- potential demand for the products and there is therefore potential for expansion. It was also felt that with a steady supply of sweet potato and a semi-skilled labour force (though the processor reports problems of labourers "defecting" to other processors), there is also opportunity of diversifying products, perhaps combining sweet potato with locally available fruits. In the case of the small enterprises, there is attractiveness in the low cost and established demand for the traditional product. However, the entry of new snack foods is posing a threat, and an improved marketing strategy is felt to be needed, such as using a distributor. .

Table 5 Sweet potato-based large scale processing enterprises, Central Philippines Product Cost Net Income Labour Utilization (Peso) (Peso) Household Hired Members Labour Molido blocks 224 232 3 9 250 bags Thin bars 408.92 352 3 12 400 bags Sweet potato 532 345 3 15 candies (balls) 500 baps

UPWARD recently supported a small project to assess the economic potential of a number of high value low volume products made from sweet potato in an area of the Philippines further south (Mojica 1992). Products included catsup, soy sauce, dried sweet potato, chips (crisps) and sticks. Using systematic focus group interviews with consumers

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Mojica concluded that for both catsup and soy sauce, perceived inferior quality of sweet potato-based products coupled with considerable brand loyalty to currently available products makes it unlikely that sweet potato can enter these markets. With regard to dried sweet potato, although there was liking for the sweet potato-based product, very limited volumes of this product are likely to sell. She identifies brighter prospects for small scale enterprises producing sweet potato chips and sticks. Here consumers appeared to buy brands rather than types (potato, cassava, sweet potato) so it would be important to pay considerable attention, and investment, in packaging. This is problematic for small processors since the manufacturers of attractive bags charge very high prices for small orders.

Low value, high volume There are three major products of this type of importance in Asia which could potentially be made from sweet potato: flour, feeds and starch. In all three products, the ke) issue is the cost of the raw material, and in many Asian countries other crops such as cassava and maize have been more attractive for one or the other product. Although there are some possibilities of UPWARD becoming involved in a project being prepared by SAPPRAD (Southeast Asian Program for Potato and Sweet potato Research and Development), no action has so far been taken. This particular project would seek to support rural employment vie development of sweet potato agriculture and flour and feed processing in the lands devastate( by the Mount Pinatubo eruption. Sweet potato is one of the few crops to flourish on the ash-covered soils. Production of starch from sweet potato is of considerable importance in China, and the starch and by products are then further processed into alcohol and several other products. One of those products is of great commercial importance and could be described as a high value high volume product: "transparent" noodle. More than 50 tons of manually processed noodle are sold weekly in the wholesale market in the capital of Sichuan Province, the larges producer of sweet potato in China. Similar demand for transparent noodles exists in Viet Nan but it is not made from sweet potato. This opened up the possibility of introducing sweet potate as a novel raw material in large production areas. This is the subject of the first of the twe detailed cases in the following section.

The potential of sweet potato as a raw material for starch and transparent noodle markets in Viet Nam The transparent noodle is one of the favorite kinds of noodle in Viet Nam and in other Asian countries. In Viet Nam it is traditionally an essential food component of most important domestic functions, such as weddings, Moon Days and especially the New Year's celebration. The transparent noodle is commonly made from mungbean starch, but the raw material is expensive and the processing technology is complicated and labour-intensive resulting in high-priced product. However, processing is an important source of alternative income for middle and pod farmers and they have sought alternative raw materials for making noodles. Since the earl 1970s there has been growing market acceptability of transparent noodle produced from th more cheaply produced starch of the canna root. But as a raw material, canna has severe limitations, especially limited, seasonal supply which requires drying and storing of the stare during the rest of the year.


On the other hand in some areas of the north there is over supply of the very widely grown sweet potato (Viet Nam is second largest producer in the world), such that farmers are tenable to sell it, even though the markets are opening up for many products. Farmers prefer to Urn at least some of their sweet potato into pigs for which there is a growing market. For the rat, some farmers even report not harvesting excessive supplies. To confront these dual problems, the first phase of this project involved a search for a substitute for canna starch which is more readily available. It was found that sweet potato, widely grown throughout the year, can provide an alternative source of starch to canna. The tecbnology developed for processing transparent noodle from sweet potato starch has been reported (Dang 1993). To identify the potential of sweet potato for the production of transparent noodles and thus an increased means for rural income generation, two things were felt to be necessary: a thorough understanding of the existing marketing systems of both starch and transparent noodle made from more traditional raw material, and the participation of local people to test the technology under real, household enterprise conditions. The starch and noodle distribution system The following summarizes parts of Dang (1993). Currently, transparent noodles are made from canna starch only. Production from mungbean ceased in the north about ten years ago. There are 3 processing centers which formed in about 1970 between 10 and 30 km. from the capital Hanoi, specializing in production of starch ad noodle and supplying the capital and other provinces. Center I processes canna starch for making transparent noodle and makes transparent noodle by the steaming-cutting method. One village makes transparent noodle by the extrusion method. Center II specializes in making canna starch to supply Center III and other places. Center III specializes in making transparent noodle. The centers have several special characteristics:

• Processors of starch and noodle are farmers and their main activities are agricultural. They have only on average 3-4 sao or 1080-1240 sq. m per household, which is not enough for survival. They have to seek alternative income sources off-farm. Their processing activities are household-based.

• In the centers almost all farmer families participate in the processing activities and there is a division of labour among families. In centers I and II, some households specialize in grating roots for other households who then do the starch extraction. One family with a grating machine can service 50-100 starch producing households. Other service networks have also developed, for example, local chemical supply and equipment maintenance services, fuel supply, water supply etc.

• Root assemblers collect the root from other provinces and transport by large truck to an assembly point in the starch processing areas. Starch processors buy the root and make starch in their houses. They usually buy about 300-500 kg canna root at a time, which is the capacity of starch extraction per household per day.

The existing canna starch and transparent noodle market consists of two or three intermediate levels. Starch processors sell their main output to noodle processors either directly or they sell to starch assemblers located along the roads of villages or at a particular processor's house. Sales are usually directly for cash, but occasionally assemblers can obtain starch on a consignment basis, paying the starch producer later (see below on noodle processing sales). Assemblers transport the starch to the noodle processors in other Centers. The quantity of starch purchased by noodle processors is largely determined by available cash. They are able to process about 90-150 kg noodle per day.

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Transparent noodles are sold to assemblers who collect the noodles at points in the village market or directly from the processors' houses. The processing household usually have established relationships with traders who not only are purchase the noodles for immediate cash payment but are also able to obtain noodles for immediate cash payment but are also able to obtain noodles on a regular consignment basis, paying the producer after each batch has been sold and obtaining at the same time a new batch on credit. These assemblers then sell the noodles to wholesaler/ retailers in the central market in Hanoi, mainly on a consignment basis. During the peak months of consumption noodles are sold direct from source to wholesalers in other provinces by the assemblers. During lean months for noodle consumption, wholesalers from other provinces must come to Hanoi Central market to buy their noodles. Wholesalers in the Central Market only sell to retailers and wholesalers for immediately payment in cash. Income share by the different actors Processors and traders enjoy a good share of the profit pie. Starch processing household have an average income of about 4.0-5.8 million dong (400-500 US$) per season, which runs from late October to February. Processors evaluate their income as the amount of money they receive from selling their product minus all the expenses such as materials, grating payments, fuel, chemicals, market tax etc. They do not include as expenses their own labour costs. In the starch processing area, farmer-processors keep some pigs as an additional source of income, using the residue of starch extraction as feed. Noodle processors get an average income of about 4.0- 6.2 million dong (400-620 US$) per season, which runs from November to February. About 20% of households continue processing noodle during lean months by purchasing dry starch, since no wet starch is then available. Note that wet starch is much better for noodle quality. Traders at each transaction level make an average profit of about 100-500 dong/kg (from 1 to 5 US cents) Assembler/transporters who supply starch to the noodle making households by bicycle can get about 7,000-20,000 dong/day (0.7-2 US$). They can bring 100-150 kg of starch once per day. Conclusion of marketing study Noodle and starch processing based on canna are concentrated in the areas which are close to Hanoi, the biggest population center in the north. The distribution networks radiate from the central market in Hanoi to the other Provinces Between producers of noodles and consumers, different types of assemblers, wholesalers and retailers are typically involved who receive variable margins depending on level, season of the year and form of sale. Market prices vary considerably, due to seasonality of demand and supply, quality classifications and the form of selling. The price of transparent noodle is more expensive in provincial areas compared to Hanoi. These are areas of low income so that consumers need to buy low quality noodle. There is therefore a need to make transparent noodles with lower price but of good quality and sweet potato can be the raw material.

Commercialization of sweet potato transparent noodle in a sweet potato-producing area In Hanoi sweet potatoes are mainly used as a high value snack food, consumer preferring the sweet taste compared with other crops. However, sweet potatoes are an expensive raw material in Hanoi (500-1100 dong/kg) and are not appropriate as a raw material


for starch and noodle production. However, sweet potatoes are extensively produced in the central coast, for example in Thanh Hoa Province, where they sell more cheaply, on average at 200-400 dong/kg. There, sweet potato is a staple food and is usually processed into dry chips. Farmers like to plant varieties with high dry matter content which produce a good quality chip. During peak months in this area it is possible to produce starch from sweet potato much more cheaply than from canna root. However, survey data reveal that in Tinhgia District, the price of transparent noodles made from canna is very expensive, with a price difference as much as 1000 dong/kg more than Hanoi. There is clearly a great potential in this area for sweet potato to be used as an alternative raw material for noodle production. It was therefore decided to test the feasibility of using sweet potato as the raw material and particularly to test the other factors apart from price determining its potential: processing technology; enterprise organization; market connection. The procedures adopted in this action research have been as follows:

1. Testing of technology with an experienced processor in one of the processing villages near Hanoi. Noodle was successfully produced from sweet potato starch, after local processing households had introduced innovations into the laboratory-developed technology. They also noted that by mixing sweet potato starch with canna starch they can reduce costs of production but the supply of sweet potato starch remains a particular problem.

2. Organize household enterprises for starch and for noodle production from sweet potato in Tinhgia District, Thanh Hoa Province, using lessons from study of canna-based starch and noodle processing. This is still on-going and is currently comparing the findings during the peak season with off-season. One household is now producing noodle from sweet potato starch, after an uncertain beginning, during which this household was nervous about investing in the enterprise (these are farming families without commercial and marketing experience). Initial production was very small, around 5 kg a day. With such small production the profit margin is also small and with an increase in the price of the raw material they easily give up the processing. It is not economically attractive. The problem was solved by inviting the Hanoi processor who had tried the technology to come to the village and act as "processor-trainer" to the cooperating family in Tinh Gia. The enthusiasm of the Hanoi processor for the use of sweet potato as raw material and his knowledge of the market was far more convincing for the local family than words of the government scientist. The processor discussed the temporary nature of fresh root price fluctuations. He also explained the importance of building confidence with specialized retailers by guaranteeing a continuing supply of noodles so they will not go to another supplier. Such was the confidence of the Hanoi processor that he became an equal partner with the local family in the sweet potato noodle enterprise. During October/ November, production rose dramatically, reaching the same scale as Hanoi, 150 kg per day. This level of production was maintained throughout the peak period. However, we need more time to evaluate the enterprise during the lean season.

3. Organize household production of sweet potato starch to supply the local noodle production in Thanh Hoa. With very limited noodle production, the starch producers began with a very limited supply. Using a small grinder, one family began the processing activity. Once the scale of noodle production increased, the starch producing family could not supply sufficient starch. They lacked access to raw material and the processing facilities were too small. This meant that the noodle processor had to buy canna starch from Hanoi and mix it with the sweet potato starch.

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One interesting result of this situation is that the mixture of canna and sweet potato turned out to be superior to both pure canna and pure sweet potato-based starch. The next step is to develop ways of expanding starch production based on sweet potato, involving other families and perhaps the community.

Social and ecological exchange of a commercializing food system in the Philippines T his case looks at a situation of increasing commercialization of sweet potato and increasing financial dependence of local farming households on the crop. It seeks to show how a broad approach to exchange can identify the economic and ecological costs of various existing exchange relations which support that commercialization. After identification of these costs, action research is described which seeks to alleviate them. Agricultural transformation and intensification The research area is in the sloping uplands of Southern Luzon island in the Philippines, an area once heavily forested and which first became settled about 1910. The first settlers cleared the lower slopes mainly for planting upland rice, some vegetables and small scale livestock raising. Beginning in the 1940s increased migration began to put pressure on land leading eventually to declining yields of rice which became critical in the 1960s and the introduction of new crops such as coffee and later coconut as sources of income first and foremost to buy rice for subsistence. During the 1970s the small amount of sweet potato was gradually expanded as it became apparent that it would grow well on the soils with very few

Figure 8 Source of income among case households, Pinagdanglayan,1990.

inputs compared to vegetables. More recent government attempts to introduce other vegetables have been resisted because of their high production costs compared to sweet potato. Sweet potato has steadily increased in importance over the past decade and for many households is now the major source of cash (Figure 8). This increased dependence on sweet potato has combined with continuing pressure on land resources. There is expansion of agricultural area higher up the hill with consequent removal of forest cover and increased soil erosion further down (Orno 1992). At the same time,


limited land availability has made fallowing very difficult and the over-intensive use of fields is leading to nutrient mining and impoverishment of soils. Even the tolerance of sweet potato for poor soils has reached its limit. Declining sweet potato yields were occurring at the same time as dependence was increasing on the crop for household income. The increasingly common solution adopted by farmers was to apply inorganic fertilizer. Household budgets have been based on low input costs for agriculture and the increased costs associated particularly with fertilizer use have in many cases pushed overall expenditures higher than income (Figure 9). ?be only solution under such circumstances is to obtain credit.

Figure 9 Household expenditure as related to available income and credit needs.

Rural credit and the suki system In common with the rural poor in many developing countries, local people in Pinagdanlayan are very wary of official credit sources. The principal reason for this is the need for collateral which for most households means the titles to their land. The risk of losing land and therefore their livelihood is one of the principal reasons for resource to informal source. There are several informal credit sources in the area (Figure 10). In terms of the total member of loans held by the case households, kin and friends are the most important source, followed by suki lenders. The term suki refers to traders, large farmers or other relatively wealthy individuals in the locality or area with whom a commercial-cum-social relation is maintained. The relationship is often based on trading, but it may also involve service to a larger farmer in return for favors or assistance of various kinds, including credit. Almost all are local people, although the traders are now mostly based either in the nearby city of San Pablo or the local municipality. In sociological terms the suki relation is known as a patron-client relationship. Other sources of credit are small local shops know as sari sari stores and the local, informally constituted farmer's association. If we look at the total value of loans, the suki leaders are clearly of most importance with more than half the total value of loans to case households. The value of loans from kin and friends is still important, but both the shop and farmers' association contribute quite a small part of total value. The additional data in Figure 8 helps to explain the situation. The suki lenders in general lend large amounts of money with a wide range of loans above 1000 pesos. Kin and friends can also be tapped for large amounts in some cases, but very small loans are also fairly regularly obtained. The few loans from the farmer's association have a higher median value than kin and friend loans but a lower upper limit, reflecting limited funds. Finally the stores consistently offer small loans within a narrow range.

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Figure 10 Value of different sources of household credit as percentage of total

Loans from kin and friends are often interest free, or where interest is attached, it is in line with banks or even less. Suki lenders on the other hand can charge very high interest, 120% for the season not being unusual. Despite these high interest rates the study suggests that there is greater security in facing these payments than in pledging land to the formal credit system. Failure to pay off loans results in long term indebtedness which may be paid off with cash, products or services. Although from the point of view of the case households their long term sustainability as a farming family is more assured with the suki than with the bank, the convergence of input needs, informal credit facilities and marketing arrangements suggests that neither circumstance is highly sustainable. Farming households are able to reduce credit interest rates or pay off past indebtedness through "tying" their harvest sales to a particular trader-lender. As frequently occurs, these sales are below the current market price, which is usually low anyway if the harvest occurs at the end of the main season. So the farmer may lose out doubly in that there is no flexibility tc choose the best moment to harvest, and there is a reduction on the existing market price. This clearly leads to a vicious circle. Whereas the traders have some flexibility in choosing between alternative markets, the farmer must sell to the trader lender when the trader requests it (Figure 11). With reduced earnings, the farming household is less able to afford to pay foi fertilizers the next season and must either risk low yields and increasingly depleted soils or gel more credit. Soils are in any case fast depleting and according to farmers there is need foi increased fertilizer applications to maintain the same sweet potato yields.


Figure 11 Credit supply and sweet potato marketing by San Pablo and Dolores saki traders.

A production or marketing response? How should agricultural R&D actions be targeted in this case? Informal local credit sources are no doubt very important for local people and it is difficult to envisage how their negative side can be easily changed, at least by the modest resources and powers of agricultural scientists. What is required here is undoubtedly the empowerment of local small farmers vis a vis trader lenders. One way to do this is to make them less dependent on credit for inputs. Work recently began to explore indigenous techniques of soil management of which there are several, but almost all are no longer used. Current activities are trying to understand why they are not being used and to seek ways to re-introduce them. At the same time through a series of farmer-led experiments, we are testing alternative fertilization practices, particularly focusing on the use of cheap biofertilizers.

Conclusions These experiences of UPWARD researchers in understanding and attempting to support improvements to marketing and processing of sweet potato in several Asian countries are still preliminary. Trying to understand transactions from the user's point of view and attempting to see the social and ecological aspects of exchanges as well as their economic significance is a complex business which requires continued exploration and discussion. Nevertheless, we believe that it is worth taking this trouble. There is now considerable evidence from the international arena that blind faith in market forces, i.e. prices, which characterized the 1980s, led to social and financial chaos. Currently there are also warnings being voiced in the rapidly transforming socialist economies of Asia that a too rapid shift to total dependence on the market could cause serious long term effects, for example in the security of national food

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supply. Markets exist within societies and have their own institutional contexts. We need understand this broad context if we are to have the chance of making sustained improveme in rural income generation.

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Asia and South Pacific, Proceedings of the 2nd Annual UPWARD Internati Conference. Los Banos, Philippines.

Balasuriya. 1992. Socio-economic aspects of production and marketing of sweet potato it Lanka. Interim research report, Los Banos: UPWARD.

Barker, R. and Herdt, R. 1978. Equity implication of technology changes. Interpretive ana of selected papers from changes in rice farming in selected area of Asia. Los Ba IRRI.

Bautista, A.T. and Vega, B.A. 1991. Indigenous knowledge systems on sweet potato fan among Maranao Muslims in northern Mindanao. In Sweet potato cultures of Asia South Pacific. Proceedings of the 2nd Annual UPWARD Conference. Los B Philippines.

Bautista, J.G. 1992. Commercialization of sweet potato production in Albay, Philippi Unpublished Final Report to UPWARD. VISCA, Baybay, Leyte.

Bottema, J.W.T., Binh, P.T., Ha, D.T., Hoanh, M.T. and Kim, H. 1991. Sweet Potato in Nam: Production and Markets. CGPRT Publication No. 24, Bogor: CGPRT Centre

Colanta, C., Fernandez, V. and Tubelleja, M. 1991. Distribution and utilization of potato in small-scale enterprise. In Sweet potato Cultures of Asia and South Pal Proceedings of the 2nd Annual UPWARD International Conference. Los E Laguna.

Conklin, H.C. 1975. Hanunoo agriculture. A report on an integral system of sI cultivation in the Philippines. Food and Agriculture organization of the United Na Rome: FAO.

Dang, T.L. 1991. Utilization of sweet potato for making transparent noodles in Vietnam Thesis. Asian Institute of Technology, Bangkok, Thailand.

Dang, T.L. 1993. Marketing of starch and transparent noodle in the north of Viet Nam. read at the Workshop on Methods for Agricultural Marketing Research in Deve: Countries. 16-20 March, IARI Campus, New Delhi, India.

Farmer, B.H. 1977. Green Revolution? Technology and Change in Rice-growing Ar Tamil Nadu and Sri Lanka. Cambridge Commonwealth Series. Hongkong: Mac Press Ltd.

Fransisco, H., Mojica, F. and Villanueva, E. 1993. Perspective of users along Philippine potato food chain (a minimum data set study). Unpublished final report, Los UPWARD.

Karma, M.B. and Rangat, S.S. 1989. Indegenous technologies and recent advances it potato production, processing, utilization, and marketing in Papua New Guii Sweet Potato Research and Development for Small Farmers. Mackay, K.T., Pa M.K., and Sanico, RT., ed.

Kim, H., Hoanh, M.T., Thuy, N.T., Tuan, V. V., Quang, T.V. and Vander Zaag, P Sweet potato in central Viet Nam: a survey of farmers' practices and cons Palawija News 7(3): 1-9.

Lleva, E. 1991. Sweet potato cultivation in Infugao: transitions and change. In Procee( the 2nd Annual UPWARD International Conference. Los Banos, Philippines.


Mojica, L. A. 1992. Market assessment study on sweet potato products in five municipalities of Albay, Central Philippines. Final UPWARD Report. Unpublished MSS. Los Banos: UPWARD.

Mula, P. and Gayao, T. 1991. Urban and rural homegardens in the highlands of northern Philippines: the case of sweet potato. In Sweet potato Cultures of Asia and South Pacific Proceedings of the 2nd Annual UPWARD International Conference. Los Banos, Philippines.

Omo, J.L. 1992. Farmer's perception on economic and environmental importance of sweet potato. MS Thesis. University of the Philippines at Los Banos, College, Laguna.

Pingali, P.L. and Rosegrant, M.W. 1991. Sustaining rice productivity growth in Asia: a policy

perspective. Los Banos: IRRI. Pituck, M., Suwannalo, T. and Wongkasem, M. 1993. Sweet potato production in Thailand: a

baseline survey of farmers' practices. UPWARD Working Paper No. 2, Los Banos, Philippines (in preparation).

Sawor, T. 1991. Sweet potato cultivation systems in Irian Jaya, Indonesia. In Sweet Potato Culture of Asia and South Pacific. Proceedings of the 2nd annual UPWARD International Conference. Los Banos, Philippines.

Shah, B and Koirala, M. 1991. Sweet potato in the Nepalese food system: present significance and future prospects. In Sweet potato Cultures of Asia and South Pacific. Proceedings of the 2nd Annual UPWARD International Conference. Los Banos. Laguna.

Timmins, W.H., Marter, A.P., Westby, A. and Yunchalad, M. 1992. Aspects of sweet potato processing in Sichuan Province, People's Republic of China. In Product Development for Root and Tuber Crops. Volume I - Asia. Lima: International Potato Center.

Vander Zaag, P., Qiwei, D. and Shang, X.L. 1991. Sweet potato in the food systems of Asia with emphasis on China. In Sweet Potato Cultures of Asia and South Pacific. Proceedings of the 2nd Annual UPWARD International Conference. Los Banos, Philippines.

Verdonk, I. and Vrieswijk, B. 1993. Sweet potato consumption in two municipalities in the Cordillera. Unpublished Research Report.

Villamayor, F.G. 1992. Camote tops pot garden for the slum dwellers of Tacloban. Terminal report. Philippine Root Crop Research and Training Center, VISCA. Baybay, Leyte. Yen, D.E. 1974. The Sweet potato and Oceania. (An Essay in Ethnobotany). Bernice P. Bishop Museum Bulletin 236. Honolulu: Bishop Museum Press.

Yen, D.E. 1991. The social impact of sweet potato introduction in Asia and the South Pacific. In Sweet Potato Cultures of Asia and South Pacific. Proceedings of the 2nd Annual UPWARD International Conference. Los Banos, Philippines.

Production, Processing, Utilization and Marketing of Food Legumes and Coarse Grains in India

Gyanendra Singh*

Introduction

Food legumes and coarse cereals have an important place in the Indian economy. They are the chief staple food for millions of people, particularly in rural areas and amongst vegetarians in general. Nutritionally, legumes are regarded as good sources of low cost proteins since they contain 18-25% protein with the exception of soybean which contains about 40% protein. These proteins are much less expensive than milk and meat. They also contribute a major portion of lysine, although they are deficient in sulphur containing amino acids. The pulses are good sources of vitamins such as thiamine, niacin and riboflavin and much needed iron (Table 1). The production of pulses has increased marginally. However, due to increased population, the per capita availability decreased from 69 g/day in 1961 to 40 g/day in 1991. The FAO recommendation for pulses is 75-80 g/day. The production of food legumes during 1992/93 was 14.7 million tons from 24.4 million hectares compared to total food grain production of 180.3 million tons. This necessitated importation of 1.27 million tons of pulse grains valued at Rs 4,811.8 million (Table 2). This deficit could be met by reducing the post harvest losses during milling/dehulling operations. The pulse milling industries by and large remain traditional, with losses accounting for up to 10-15%. Major food legumes are Bengal gram (Cicer arietinum), pigeonpea (Cajanus cajan), green gram (Vigna mungo), lentil (Lens culinaris), peas (Pisum sativum var. arvense), cowpea (Vigna unguiculata), cluster bean (Cyamopsis tetragonoloba), kidney bean (Vigna aconitifolia) and horse gram (Dolichos biflorus). In addition to the above pulses, production of soybean has increased in recent years. This crop is more popular for oil extraction than as a source of pulse. The major coarse cereals are pearl millet (Pennisetum typhoides), sorghum (Sorghum bicolor), maize (Zea mays), ragi (Eleusine coracana), small millets and barley (Hordeum vulgare). The coarse cereals have great economic importance to rural people. The entire processing operation from pearling to milling is undertaken at the domestic/cottage level except for sorghum, barley and maize which have industrial applications for extracting starch and its derivatives, oil, fibre, paper board, extruded snacks, alcohol, etc. The coarse cereals are consumed as freshly prepared bread or they may be boiled like rice and eaten with pulse and/or vegetables. They are also consumed green after roasting. The roasting operation provides seasonal job opportunities to millions of small traders in cities and small towns. In rural areas, however, this is done at the domestic level. There is no organized milling industry for processing of coarse cereals. The milling is done at the rural level by small scale domestic flour mills. The coarse grains, thus, have economic importance not only for farmers but also for small village level processors, whose livelihood depends upon these crops. * Indian Council of Agricultural Research, Ministry of Agriculture, New Delhi, India.

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Table 1 Composition of food legume fractions. Seed Part Proportion Protein Ether Crude Phosphorus Calcium Iron of whole grain extract fibre Seed coat (%) (%) (%) (%) (mg/100 g) (mg/100 g) (mg/100 g) Pigeonpea 15.50 5.6 0.3 31.9 31 917 9.5 Peas 10.00 3.1 0.4 46.9 14 900 6.1 Lentil 8.05 14.3 0.6 29.4 152 723 12.8 Mungbean 12.09 10.6 0.6 25.6 36 812 16.7 Cowpea 10.64 10.7 0.9 25.8 89 853 11.6 French bean 8.64 8.2 0.6 26.6 79 808 11.6 Cotyledon Pigeonpea 83.00 24.3 4.4 0.4 423 176 6.1 Peas 89.28 30.1 3.3 1.2 311 181 4.9 Lentil 89.97 30.1 3.0 1.0 374 103 6.4 Mungbean 85.61 26.9 3.2 0.5 341 115 6.1 Cowpea 87.23 26.7 2.3 0.3 496 165 6.1 French bean 90.37 34.0 2.3 0.3 421 115 6.4 Embryo Pigeonpea 1.50 48.1 13.5 1.4 890 400 13.0 Peas 1.26 47.9 10.2 2.6 814 461 19.2 Lentil 1.98 71.1 8.2 2.4 952 355 19.2 Mungbean 2.30 52.5 9.4 1.4 756 492 22.9 Cowpea 2.12 44.1 9.8 1.6 829 368 20.7 French bean 0.99 68.3 7.7 1.8 897 438 18.5

Table 2 India's import/export of coarse cereals and pulses. Crop Tons (million Rs) 1987/88 1988/89 1989/90 1990/91 Import 1. Coarse cereals 708 116,837 94,871 1,339 (1.259) (234.479) (234.964) (3.523) 2. Prepared cereal 115,965 135,430 82,211 178,278 (547.914) (864.58) (503.026) (1204.87) 3. Pulses 674,024 806,980 828,896 1273,433 4. Vegetable oils (edible)

(2509.943) 1944,915

(3440.10) 1083,144

(2279.04) 291,980

(4811.67) 525,815

Export (9687.706) (7296.962) (2108.638) (3257.91) 1. Coarse cereals 61,579

(26.356) 8,130

(24.478) 5,954

(19.649) 7,310

(27.702) 2. Oil meals (including soybean)

1126,504 (2133.592)

1609,272 (4086.565)

33230,601 (6101.598)

244,776 (6084.50)

Production of coarse cereals and legumes

Coarse cereals The legumes and coarse cereals are predominantly rainfed crops. The total area u1 coarse cereals during 1992/93 was 36.55 million hectares producing 36.8 million tons giving average yield of 1 t/ha (Table 3; Figure 1). Of this, less than 9% comes from irrigated areas.

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Over the years the area under coarse cereals has been decreasing. Between 1967/68 and 1990/91 the area was reduced at the rate of 1.01% per annum (compound), but the productivity increased by 0.66% per annum. About 14.72 million hectares (40.3%) are covered by a coarse grain high yielding varieties program and this is likely to increase to 20 million hectares during the period 1992-97. The development programs not only include distribution of hybrid seeds but also packages of technology to enhance productivity, such as fertilizer.

Table 3 All India area, production and yield of coarse cereals.

Year Area (million ha)

Production (million tons)

Yield (kg/ha)

% Coverage under irrigation

1949/50 38.83 16.83 433 8.5 1950/51 37.67 15.38 408 7.9 1951/52 38.88 16.09 414 8.7 1953 42.45 19.61 462 8.1 1953 54 45.37 22.97 506 7.8 1954/55 43.92 22.82 520 8.1 1955/56 43.45 19.49 449 8.0 1956/57 42.02 19.87 473 7.6 1957/58 42.91 21.23 495 8.0 1958/59 44.66 23.18 519 7.5 1959/60 43.79 22.87 522 7.5 1960/61 44.96 23.74 528 7.7 1961/62 44.73 23.22 519 7.1 1962/63 44.29 24.63 556 7.3 1963/64 43.93 23.72 540 7.3 1964/65 44.35 25.37 514 7.3 1965/66 44.34 21.42 483 8.1 1966/67 45.09 24.05 533 8.5 1967/68 47.34 28.80 608 8.0 1968/69 46.24 25.18 545 9.6 1969170 47.24 27.29 578 9.4 1970/71 45.95 30.55 665 8.3 1971/72 43.57 24.60 564 8.4 1972/73 42.21 23.14 548 8.6 1973/74 46.24 28.83 623 8.3 1974/75 43.15 26.13 606 10.9 1975/76 43.80 30.41 694 9.9 1976/77 41.94 28.88 689 9.7 1977/78 42.28 30.02 710 8.9 1978/79 42.23 30.44 721 8.5 1979/80 41.36 26.97 952 9.4 1980/81 41.78 29.02 695 8.8 1981/82 42.45 31.09 733 8.5 1982/83 40.43 27.75 685 8.6 1983/84 41.71 33.90 813 7.6 1984/85 39.21 31.17 795 8.1 1985/86 39.47 26.20 664 8.3 1986/87 39.74 26.83 675 9.0 1987/88 36.55 26.36 721 9.5 1988/89 38.68 31.47 814 8.9 1989/90 37.69 34.76 922 9.3 1990/91 36.32 32.70 900 1991/92 33.75 26.26 778

irrigation and plant protection measures. The certified seeds are supplied by National Seeds Corporation and State Seed Corporation. Import of seeds is also allowed by private sector companies which have technical/financial collaboration arrangements with foreign companies to supply parent line seeds to Indian companies. The details of supply of breeder's seeds and certified seed for the year 1989/90 are given in Table 4.

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Figure 1 All India production of coarse cereals.

Table 4 Production of certified, breeder and foundation seed in 1989/90 ('000 kg).

Crop Breeder's Seed

Foundation Seed

Certified Seed

Coarse Cereals Maize 0.424 4.735 184 Sorghum 0.325 7.345 379 Pearl millet 0.026 1.099 146 Ragi 0.002 1.643 8 Barley 0.154 0.732 7 Pulses Gram 1.617 31.73 134 Lentil 0.133 0.673 11 Peas 0.218 3.867 34 Black grain 0.173 2.965 72 Green gram 0.133 4.300 58 Pigeonpea 0.195 6.683 45 Other pulses 0.050 1.285 13

The development of high yielding varieties of coarse cereals is undertaken by the Indian Council of Agricultural Research (ICAR) network through institutes, agricultural universities and All India Coordinated Crop Improvement Projects for seven specific crops technologies are upgraded continuously to meet needs of specific agro-climatic zones. addition to evolving new varieties, cultural practices such as tillage, sowing, w management, integrated pest management, harvesting and threshing and post liar technologies have also been developed through the ICAR research network. Farm equipment suit small and marginal farmers, such as a bullock drawn tool frame for tillage, sowing weeding, 3 tyne cultivator, seed-cum-fertilizer drill, reaper harvester and multicrop thresher are commercially available. Major production constraints to increasing the productivity of coarse cereals include hybrid coverage and slow spread of improved varieties, little or no fertilization, negligible irrigation, and poor plant protection measures.

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Legumes Like coarse cereals, legumes are also predominantly rainfed crops with only 9% under irrigation. The area under irrigated gram is about 18% but only 3.9% under irrigated pigeonpea About 24.4 million hectares are under legumes producing 14.7 million tons (1992/93). The average yield thus, is very low- only 576 kg/ha. There has not been any appreciable increase in area under cultivation of pulses and the productivity also remained static around 475-576 kg/ha for the last 45 years, except for soybean (Table 5 and 6; Figure 2)

Table 5 All India area, production and yield of total pulses Area Production Yield % Coverage Year (million ha) (million tons) (kg/ha) under irrigation

1949/50 20.17 8.16 405 7.8 1950/51 19.09 8.41 441 9.4 1951/52 18.57 8.42 448 9.7 1952/53 19.84 9.19 463 9.8 1953/54 21.73 10.62 489 9.2 1954/55 21.91 10.95 500 8.8 1955/56 23.22 11.04 476 8.4 1956/57 23.32 11.55 495 7.3 1957/58 22.54 9.56 424 9.1 1958/59 24.31 13.15 541 8.4 1959/60 24.83 11.80 475 8.5 1960/61 23.56 12.70 539 8.0 1961/62 24.24 11.76 485 8.1 1962/63 24.27 11.53 475 8.9 1963/64 24.18 10.07 416 8.9 1964/65 23.88 12.42 520 9.2 1965/66 22.72 9.94 438 9.4 1966/67 22.12 8.35 377 10.9 1967/68 22.65 12.10 534 8.7 1968/69 21.26 10.42 490 9.8 1969/70 22.02 11.69 531 9.4 1970/71 22.54 11.82 524 8.8 1971/72 22.15 11.09 501 8.8 1972/73 20.92 9.91 474 8.1 1973/74 23.43 10.01 427 7.9 1974/75 22.03 10.02 455 8.1 1975/76 24.45 13.04 533 7.9 1976/77 22.98 11.36 494 7.5 1977/78 23.50 11.97 510 7.1 1978/79 23.66 12.18 515 7.9 1979/80 22.26 8.57 385 8.8 1980/81 22.46 10.63 473 8.9 1981/82 23.84 11.51 483 8.5 1982/83 22.83 11.86 519 8.0 1983/84 23.54 12.89 548 7.2 1984/85 22.74 11.96 526 7.6 1985/86 24.42 13.36 547 8.1 1986/87 23.16 11.71 506 9.8 1987/88 21.27 10.96 515 9.2 1988/89 23.15 13.85 598 9.0 1989/90 23.41 12.86 549 9.5 1990/91 24.66 14.26 578 1991/92 22.57 12.05 534

Pulses are important crops for the predominantly vegetarian population of India. Besides nutritional value they are endowed with the unique property of maintaining and restoring soil fertility through biological nitrogen fixation as well as conserving and improving physical properties of soil by virtue of their deep root system. Pulses also provide green fodder and feed

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for livestock. Major strategies to increase the production and productivity through the National Pulse Development Programme under the Technology Mission on Oilseeds and Pulses include:

• development of short duration, high yielding and early maturing varieties, • vertical (yield) and horizontal (area) spread of cultivation of pulses, • supply of better inputs (seed, fertilizer, chemical) and packages of practices through

demonstration kits, and • credit support and subsidy on inputs.

Table 6 All India area, production and yield of soybean. Year Area

(million ha) Production (million tons)

Yield (kg/ha)

1970/71 0.03 0.01 426 1971/72 0.03 0.01 426 1972/73 0.03 0.03 819 1973/74 0.05 0.04 829 1974/75 0.07 0.05 768 1975/76 0.09 0.09 975 1976/77 0.13 0.12 988 1977/78 0.20 0.18 940 1978/79 0.31 0.30 975 1979/80 0.50 0.28 568 1980/81 0.61 0.44 728 1981/82 0.48 0.35 741 1982/83 0.77 0.49 637 1983/84 0.84 0.61 735 1984/85 1.24 0.95 768 1985/86 1.34 1.02 764 1986/87 1.53 0.89 584 1987/88 1.54 0.90 582 1988/89 1.73 1.55 892 1989/90 2.25 1.81 801 1990/91 2.56 2.60 1015 1991/92 2.82 2.82 806 Note : Soybean crop was bought on forecast basis for the first time in 1981/82, Data for earlier years are based on ad hoc assessments by state agriculture departments.

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Through the ICAR research network, stable high yielding varieties resistant to pests and diseases have been developed for various agro-ecological situations and non-traditional areas. Early maturing varieties of green gram and black gram for the spring/summer season after harvest of potato, sugarcane and wheat under assured irrigation and an early maturing variety of pigeonpea for rainfed areas were developed, causing a drastic transformation in cropping patterns. Greater awareness among farmers about the use of irrigation, fertilizer and Rhizobium culture in the cultivation of pulses is helping to increase their productivity. Disease resistant varieties, monitoring of heliothis incidence, and the use of plant derived insecticides inch as neem kernel extracts have helped in reducing the losses through insect attack. Weed management is important and affects yield by 25-30% during kariff. Pre-emergence herbicides an most efficient in controlling seasonal weed flora. The cultivation of legumes as a mixed crop has been practiced by broadcasting. Line swing was practiced only in selected cases such as gram, peas and soybean. Line sowing not esly reduces seed rate but also facilitates fertilizer application and also helps in weed 'management. Bullock operated and tractor operated seed-cum-fertilizer drills have been developed to enable fanners to sow crops in lines. Self-propelled reaper and combine harvesters are commercially available. Multicrop threshers are more suited for threshing pulse sops due to lower grain damage. Processing of legumes into dal is one of the major operations performed at domestic, cottage and organized industrial levels. At the domestic and cottage level the traditional method is followed with 10-15% losses. Losses at milling industries are also high but recovery its possible. Low cost machines of Rs 15,000-30,000 have been developed and efforts are being made to popularize them. Major constraints to increasing the production of legumes are:

• lack of adoption of improved high yielding varieties, • cultivation in rainfed marginal and sub-marginal lands, • lack of adoption of improved production technology, plant protection and weed

management and poor or no fertilizer application, • erratic rainfall, long dry spell and occasional very heavy rain, and • lack of incentive to farmers in terms of availability of credit and price support.

Utilization

Legumes Nutritionally legumes are regarded as good sources of protein since they contain 18-25% protein. In countries such as India where the majority of the people are vegetarian and poor and cannot afford protein from milk and animal and fish products, the inclusion of legumes in the cereal based diet can solve the protein calorie malnutrition. The optimal ratio of cereals to legumes is about of 3:1. Legumes are utilized alone, milled and mixed with cereals, salted and sweetened. The legumes are consumed in various ways, as immature grain (green, roasted, boiled, fried, and crushed and cooked), as mature green grain (boiled, roasted, fried, and crushed and cooked), as mature dried grain (boiled, boiled and fried, boiled, crushed and cooked, cocked (as dal and terminated) and dehusked (as dal, milled and mixed with cereal, crushed and fried, boiled, cashed and fried). The utilization patterns can be classified as follows:

• green pulses (fresh, boiled and roasted), • sprouted and germinated (boiled and fried), • puffed and roasted, • milled and cooked (steamed, boiled and fried), and

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• fermented products.

Green pulses Freshly harvested green gram and peas are extensively consumed as snacks after boili and frying. In rural areas the green pods are roasted and consumed. These are also prepared curries and eaten with cereals. As green vegetables, peas, grain and beans are most popular. Germinated legumes Many legumes (gram, cowpea, green gram, black gram) are sprouted/germinated fried before eating. They are dressed and seasoned with other ingredients according to taste Germination improves their nutritional quality, since starch is converted to sugars when germination time is sufficiently long. In addition proteolytic and amylolytic enzymes increased and vitamin C is released due to the embryonic activity. The cooking quality several legumes is, however, impaired due to reduction of water-soluble solids. Puffed and roasted legumes These are two very common processing methods carried out at home and cottage les for making legumes more palatable (gram, peas, green gram, lentil, pigeonpea). Flavour texture and nutritive value of these are found to improve by judicious roasting. The digestibility of winged bean, soybean, navybean and black gram is improved by puffing and roasting. The roasting and puffing of legumes are major agro-processing activities which pros employment to many people in rural areas and to small traders in urban areas. Presently, this is traditional family trade practiced all over India and a major source of income generation Improved processing and low cost equipment may increase the quality and thereby the income of small traders. Puffed/roasted gram mixed with roasted barley and milled as flour is used as precooked instant food especially in rural areas in the north. This is one of the most popular foods which requires only sugar/salt and water added to the required consistency (dough, batter, drink). Milled and cooked legumes The most popular method of using legumes in India is as a supplement to cereals, ei cooked whole or milled. During the milling process the husk is removed completely in cas pigeonpea and gram but in the case of green gram black gram and lentil, the husk may removed or it may be only split into two cotyledons and cooked with the husk intact. Several studies have shown that husk is less nutritive but contributes to flavour and colour (be lentil, green gram, black gram, peas). Some of the pulses contain tannins, mainly concentrated in the husk, which cause slightly bitter taste (beany flavour). Removal of the husk lowers tannin content and improves the taste. Reductions in crude fibre and Ca have also been noticed. Milling of the legumes means removal of husk and splitting the cotyledons. All leg% have a husk layer tightly attached to the cotyledon. The legume milling industry is one of most important industries next to wheat and rice milling industries. More than 75% of the legume produced in the country is converted into dal or split pulse through cottage level organized sectors. The cooking quality of dal is affected by premilling treatments and soaking. W pulses normally take 6-18 hours of complete soaking, but green gram and black gram require only 4-6 hours and common beans need prolonged soaking of 18 hours or more. Nut losses occur when whole grains are soaked in water; these may be 2.3% in cold water or up to

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5% in warm water. For dais up to 15-20% of solids including water soluble proteins, vitamins minerals can be leached. Apart from this, certain undesirable constituents such as flatulance- causing sugars (oligosaccharides), phytates and tannin are also leached out. Short soaking at room temperature followed by discarding the soak water is desirable. National as well as cooking quality are adversely affected if soaking is prolonged or done at higher temperature. Pretreatment with oil, water, salt solution and heating before bulking/dehusking not help milling but also reduce cooking time. The quality of dais prepared by wet methods of ent is usually poor, especially for pigeonpea. Cooking whole legumes or dais either by boiling or steaming after presoaking is a common method of preparation. The dais are cooked until soft, mashed, mixed with water and other ingredients and reboiled to give a consistency of soup or gruel. Spices are added according to taste. While optimal cooking improves the availability of nutrients as a result of destraction on of certain antinutritional factors (enzyme inhibitors and flatulence factors), execessive cooking leads to lowering of digestibility of proteins and lowering of certain vitamins which as thiamine, riboflavin and nicotinic acid. The dehusked pulses milled to flour are used for many preparations. The roasted gram and green gram flour mixed with fat or butter oil and sugar is formed into round balls and consumed as a popular sweetmeat in India. Water may be added to the flour to make batter, paste for dough for making nodules papad (thin round wafers) and fried to make sweet and Ink preparations. These items are made by small scale traders in rural areas and in cities and sold commercially, providing a livelihood to many small traders. Onion, vegetables, potatoes lad spices may be added to batter and fried into round balls (pakoras, wadas, bhujia) to make snacks. Fried gram flour is used for making stuffed parothas (bread) or kachauri (deep fried bead). Fermented and coagulated legume products Legumes are consumed in fermented forms either alone or in conjunction with cereals. Soybean, green gram, black gram, and gram are the most popular pulses for making fermented products such as idli a steamed product of rice and black gram, dosa, a pancake-like product made from rice and black gram or green gram, dhoka, a salted cake-like item made from gram and rice, curd, milk and tofu from soybean. During fermentation starch is broken down to sugars and finally to acid and carbon dioxide by the action of micro-organisms. Proteins are also broken down to amino acids and low molecular weight products by the enzymes of the micro-organisms. The reported changes during fermentation also include an increase in free sugars, non-protein nitrogen, methionine and choline in idli. Reduced flatulence in tempeh is suggested to be due to reduction in its oligosaccharide content. The active foaming principles and a mucilaginous polysaccharide make the black gram most suitable for making dosa and idli. All these preparations are made at the household level or by small traders. The technology of making tofu, tempeh, soy milk, soycurd, and soy ice cream are of recent origin and is being undertaken by the organized sector. The technology for making these products at cottage and domestic levels has been developed utilizing low cost equipment. For example, the process for making tofu consists of overnight soaking, wet grinding, cooking, filtration to separate soy pulp, coagulation using CaSO4 or MgC12, filtration and pressing. Coarse cereals The coarse cereals are consumed by humans and animals like other cereals. Industrial uses both by wet and dry millers have increased marginally. For many poor families these are

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staple food. There has been a trend by dairy and poultry industries to convert maize into animal feed in recent years. The crop residue (green or dry) is utilized as cattle feed or for constructional purposes. Because of their tough outer husk and characteristic flavour, coarse grains are not popular among affluent consumers. The keeping quality of the flour is also poor, which hampers their commercial availability in the market. The grains are thus stored with husk intact and pearled before using. The pearling involves removal of the pericarp which may vary from 3-10% depending upon the grain. The operation is performed by hand pounding. Low cost mechanical pearling have been developed recently but are yet to become popular in run areas. These are stone or carborundum discs arranged on a rotor and encased. The pearling is done by abrasion. These pearled grains are milled locally by stone grinders or low horse power (5hp) wheat grinding flour mills. The methods of utilization of coarse cereals can be classified as:

• puffing and roasting, • boiling, • cooking/baking, • extrusion, • industrial application, and • animal feed.

Puffing and roasting of coarse cereals The immature green cobs of maize, sorghum and pearl millet are roasted and puffed al eaten hot all over the country, with salt and lemon added to taste. Dried grains of these are al puffed at the domestic level and consumed. This is a popular trade in rural areas at the cotta level. Corn flakes are made by small traders in cities and marketed. Boiling of course cereals The pearled coarse cereals (green and dried) are cooked by boiling and eaten like ri with vegetable or dal. Sometimes these grains are milled into a granulated form and boiled make gruel and broth, with addition of vegetables or pulse. The outer bran layer (pericarp) in millets, which hinders water absorption and contai pigments which are nutritionally undesirable, is removed. In addition to improving palatabil of millets, pearling also helps in reducing cooking time and increasing volume expansion the grain. The cooking time for 10% pearled sorghum grains is usually 50-70 minute compared to 90 minutes for undehulled grains. Cooking/baking of coarse cereals The palatability of sorghum, pearl millet, ragi and small millets can be increased removing 3-5% of the outer fibrous layer using grain pearlers. Some of the coarse cereals also covered by husk and this is removed before milling. These dehusked and pearled grains are milled to flour for making bread or roti on hot plates. The milling of these coarse cere for roti making is done at the domestic/village level by low horse power flour mills. There are many multinational companies which utilize coarse cereals to make biscuits cakes, non-wheat bread, infant weaning foods, etc.

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Extrusion of coarse cereals The manufacture of a number of breakfast and snack foods from coarse grains has slotted with technical collaboration of western firms. The exact breakdown of their production by input use is not available as they are mixed with other cereals. The total installed capacity to manufacture breakfast cereals is about 2,550 tons. There are 54 units in India engaged in the manufacture of ready to eat snacks and 7 units produce extruded snacks. These products are, however, popular amongst the affluent urban population. The popularity of these products may help farmers by giving remunerative prices to their produce. Industrial applications of coarse cereals The industrial uses of coarse grains have slowly been increasing in India for extracting March and its derivatives. Maize starch can be used in the manufacture of asbestos, ceramics, dyes, plastics, oil cloth, linoleum, paper, paper boards, textiles, cosmetics and pharmaceuticals. The derivatives include glucose or corn syrup, corn sugar, industrial alcohol and various adcoholic beverages. Corn oil obtained from the embryo is used for paints and varnishes, as a rubber substitute and as cooking medium. The fibres in stalks and leaves are used for making paper, board and yarn, and the pith for explosives and light packaging material. Certain varieties of sorghum, small millets, ragi and pearl millets are better suited for extraction of starch. Most of the starch manufacturers in India are also engaged in the production of the variants of starch such as dextrines, acid-modified starch, oxidized starches, pre-gelatinized starches, acetates, phosphates, carbamates, sulphonates, etc. Sorbitol is one of the major derivatives of starch for which Indian industries have necessary capabilities. There are 4 units in the organized sector with installed capacity to manufacture 14,500 tons of sorbitol. High fructose syrup (HFS) is one of the major by-products of the starch industry, produced mainly from maize using different enzymes. The product is used in cold drinks, squashes, jams, jellies and pharmaceuticals. Production is around 5,000 tons. Coarse grains are also used in malt extracts. There were 5 units manufacturing malt extracts with installed capacity of 13,060 tons as of 1986. Starches can be recovered from coarse grains by several processes of which wet milling is the most prevalent in India. The grains are soaked in dilute sulphuric acid at 5-52°C for 30.40 hours in counter current steeping. The steeped kernels are degerminated by attrition grinding in a water slurry. The germ containing oil is separated by hydrocloves. The degerminated residue is finally ground to release starch granules from the protein matrix cell melt. The fibre is separated by sieving, and the starch is washed and dried. Animal feed Coarse cereals such as sorghum, pearl millet, ragi and barley are preferred by farmers not only as a source of grain but also for animal feed and fodder. The green plants are chopped into small pieces and fed to the cattle with some concentrates such as oil cake, husk and broken from pulses and grains. The dry mass of the plant (stem and leaves) from cereals and pulses is mixed with green fodder and fed to the cattle. The availability of biomass from different coarse cereals varies from 60 to 70 million tons. Traditional pulse milling units have dal recovery of 65-68% and remaining husk and brokens. The biomass from coarse cereals and by products from the dal milling can both be utilized for making feed. The process involves chopping of stem and leaves, grinding in a hammer mill, mixing and pelleting through extruders. Maize, sorghum, pearl millet, barley and oats can also be added and converted into feed. To increase the digestibility, stems of sorghum, maize and pearl millet are sometimes treated with urea or molasses.

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Marketing Food grain marketing in India involves exchange of grains for money or its equivalent in goods and or services. The exchanges are often facilitated by marketing agents/institution and servicing units. It is estimated that about 30-35% of India's food grain production is so: for consumption outside the village of the origin. The basic physical functions performed in marketing are transportation, storage exchange, and processing. Processing includes standardization (primary processing: cleaning grading, sorting, dehydration) as well as changing the physical form of the grain (value addition and secondary processing). For maximizing social welfare the marketing system must allocate agricultural products in time, space and form to intermediaries and consumers in such proportions and at such prices that no other allocation would make the consumer better o within the context of their existing income. The marketing prices are efficient only if the fulfill the following conditions:

• Prices through space (geographically) vary no more than the cost of transportation. • The price varies through time only by the cost of storage and handling. • The price of different forms of products after primary processing or value addition

varies no more than the difference in cost of processing. In the absence of perfect knowledge of demand and supply variations, monopolistic practices adopted by marketing agents, and government interference through marketing intervention and support prices including restrictions in free grain market transaction agricultural prices behave differently. The agriculture produce market in India in general is characterized by intense competition among sellers (farmers) and nil or negligible competition among the buyers (market agents, middlemen, processors). As the produce moves from primary markets to the wholesale market, competition among buyers and sellers increases. Thus in primary mark the sellers are exposed to exploitation of various kinds. The major problems faced in the primary markets are coordination of production and marketing; transport and communication storage, handling, packaging and processing; marketing intelligence; and credit and prices. Grain marketing involves all business activities from widely scattered producers to ultimate consumers. In this process food grains undergo a change in time, space, form a. ownership which adds value to the price of produce. The marketing channels for coarse cereals and pulses differ marginally due to milling of pulses. Major marketing channels are described below. Producer - consumer Coarse grains and pulses are generally processed at the consumer's level. Consume purchase directly from producers in the villages. More than 74% of the population lives villages, and of this only 38.8% are cultivators. Throughout India, weekly rural markets organized where food grains, fruits, vegetables, animal products, cottage industry products a other daily necessities are offered to consumers by producers. In a few areas, marketing age: also procure agricultural produce in bulk for sale mainly to urban consumers. In a study conducted during 1963/64 by the Agricultural Price Commission, dependen on markets of rural households for food grain was found to be 26.6-34.7% for producers, 47 631% for agricultural labourers, 74-99.4% for agricultural labourers without land, and 29 53.5% over all classes. This indicates the importance of weekly rural markets in India.

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Producer - village shop keeper - wholesaler - reailer - consumer Village shopkeepers exchange grocery items and other daily necessities with producers far food grains. Supplies obtained in this way are either resold in the village especially to labourers or at a nearby periodic or wholesale market. Producer - itinerant merchant - wholesaler - retailer - consumer The itinerant merchants are petty traders generally without shops, middlemen who purchase directly from farmers either at threshing floor or from the house. Their prices are usually close to the market price less transport and handling costs. Payments are made only after they sell the produce, which may take a week or more. The farmer bears storage cost, losses and interest in the interval. Fanners sell to itinerant merchants because it saves them the trouble of arranging for transport and handling in a local market. Many of the farmers also obtain credit from these traders and are thus obliged to sell their produce to them. Producer - primary wholesaler - retailer - consumer This is the most common marketing channel for free market transactions in the heavy food grain producing areas adopted by the farmers having large holdings. Producers deliver to commission agents (katcha arhtias) in primary wholesale markets who in turn sell for the producers to commission agents (pucca arhtias) purchasing on behalf of wholesalers. The wholesalers in turn supply retailers in towns and cities. Producer - primary wholesaler - miller - retailer - consumer Coarse grains are generally processed and milled at the consumer level in the cities as well as in rural areas due to poor storage qualities of the milled grain. At the rural level pulses arc dehusked by the producer for home consumption and also partly for sale as they fetch a higher price. But in the cities only dehusked pulses are purchased. Dal millers typically purchase their supplies through primary wholesale markets and sell the processed (milled) dal through wholesalers or retailers to consumers in cities as well as in rural areas. The grain, thus, flows from production catchment (rural areas) to urban areas for processing and then back to rural areas for consumption at much higher price. Producer - primary wholesaler - government procurement agency - fairprice shop - consumer Considerable quantities of wheat and rice and a small quantity of coarse grains are purchased by the government in primary wholesale markets and then sold through fair price shops in major towns at fixed (subsidized) prices. Although the government declares support prices for pulses, the open market prices are always higher and thus, producers prefer to sell in open markets. Regulated marketing India has approximately 6,632 wholesale assembling markets and cold stores of which 2,193 are principal regulated markets and 4,024 sub-regulated markets, including rural primary markets. The farmers bring their produce by bullock carts, tractors, trucks, pack animals, etc. either in bags or loose. They usually sell their produce through commission agents who handle the produce from unloading, cleaning, weighing, bagging, stitching to loading. The payments are also made through these commission agents for sales either to government agencies or in the free market. The farmers usually pay 3-3.5% as commission.

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Even after paying this commission, farmers get 3-4% more than they would from village shopkeepers. The facilities in regulated markets are continuously being improved to provide facilities to farmers and regulation of market charges, particularly those levied on the farmers. Market regulatory committees usually consist of government representatives; farmers and trader oversee such markets. Government marketing agencies The marketing of major agricultural commodities is regulated by the central government through various corporations, boards, federations, societies and development councils to reduce fluctuation of prices in the market which may have adverse effects on consumers an producers. This is intended mainly to reduce exploitation by middlemen/traders. The ray materials of many of the products which are sold through public distribution systems after processing by agro industries, are supplied to the industries by government at fixed prices. I the event of fluctuating production of farm produce, which affects the market sale price, the government intervenes through support prices/market intervention. The agricultural price policy pursued by the government thus seeks to evolve a balanced and integrated price structure in the perspective of the overall needs of the economy, keeping in view the interest of both producer and consumer. At present the government has support prices for the following major agricultural commodities: paddy, rice, wheat, sorghum, pearl millet, maize, ragi, barley: gram, pigeonpea, green gram, black gram, sugarcane, cotton, jute, tobacco, groundnut-in-shell sunflower, soybean, rapeseed, mustard, safflower and copra. The price policy, level of procurement and minimum support prices are announced aft taking into consideration the recommendation of the Commission for Agricultural Costs an Prices, the views of the state governments, central economic ministries and the Planning Commission. The procurement/minimum support prices fixed by the government are in t] nature of a guarantee to the farmers that in a glut situation in the market, the price will not 1 allowed to fall below the fixed minimum level. The farmers are; however, free to sell the produce in the open market at any obtainable higher price.

Table 7 Procurement/minimum support prices of selected food grains. Food grain Price in Rs /'00 kg 1990/91 1991/92 1992/93* Paddy 205 230 270 Wheat 225 275 350 Barley 200 210 260 Maize 180 210 245 Coarse cereals 180 205 240 (sorghum, pearl millet and ragi) Gram 450 500 600 Pigeonpea 480 545 640 Green gram 480 545 640 Black gram 480 545 640 Soybean (black) 350 395 475 Soybean (yellow) 400 445 525 As of 2 March 1993

Market intervention was introduced to provide scarce agricultural produce at reasonable price to consumers. The National Agricultural Cooperative Marketing Federation and state, marketing federations act as nodal marketing agencies. In the case of price support the cent government meets the entire loss whereas the loss is equally shared by central and state government in the case of the Market Intervention Scheme.

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The procurement/minimum support prices of selected food grains are given in (Table 7). The food grain procurement policy of the government has so far favoured only superior quality grains such as wheat and rice. The total procurement of wheat and rice during 1989/90 by the government was 22.13 million tons. The available stock of these commodities on 1 July 1990 was 20.14 million tons which' was 16.3% of the total produce of that year. In contrast, the government stock of coarse grains was a meager 0.17 million tons. This is only 0.5% of the total produce of that year. This indicates that the public procurement policy has so far neglected coarse grains. There is no procurement and distribution of pulses through the public distribution system. Even under various public works programs oriented towards employment generation in backward areas, the government has been distributing only superior cereals such as wheat and rice. Poor people including tribals who habitually consume coarse grains are consequently induced to switch to superior cereals. Traders and middlemen In the absence of a favourable government procurement policy, traders and middlemen the rive on the misery of distress sale of coarse cereals and legumes by farmers. The poor keeping quality of processed coarse cereals does not allow marketing of processed products except those utilized by industrial sector. In rural areas farmers/consumers keep the required stock for the whole year and process only the quantity required for immediate consumption. Processing of legumes is undertaken by large organized dal milling industries. These industries store their bulk requirement of raw material up to 2-3 years. Processed dal is sold in the market is large gunny sacks of 80-100 kg each and through supermarkets/grocery stores in 35, 10 and S kg cloth bags or plastic lined gunny/cloth bags. It is also sold in 1 kg and 0.5 kg plastic bags. The marketing cost of the processed legume varies from 200-300% of the cost of raw materials. The cost of average quality of dal is Rs 800-1200/100 kg and grade I Rs 1550-1600/100 kg and that of raw legume Rs 500-550/100 kg. About 35-50% of the processed dal is sold within the state/region and the balance is marketed in other regions through agents. Cottage and village level processing of legumes is undertaken by villagers following traditional methods including soaking, drying, dehusking and splitting of cotyledons. This practice exists side by side with the large scale organized milling. Millions of people make their living in this traditional industry. Due to poor quality of processed products, however, Obese cottage industries are not able to compete with products processed by large industries. As a result, the village processors are driven out of their traditional occupation to become middlemen trading products of large industries. This is not a healthy trend because it creates rural unemployment and the processed dal is sold to villagers at an exorbitant price. Small-scale milling and packaging machinery may help villagers/farmers to process quality dal and reverse the trend in favour of cottage level industries. Case study 1: marketing in villages In a survey conducted in Mandala District of Madhya Pradesh (1977) which is predominately tribal populated, the popular marketing channel was observed to be farmer middleman-grain market-trader/consumer/miller. These middlemen (locally called kuchia) regularly visit the tribal villages on their ponies and purchase grains from the fanners by volume measure: pali (1 pall = 2.5 kg wheat millet), kudo (1 kudo = 5 kg millet) and khandi (1 khandi = 100 kg wheat). The kuchia makes immediate cash payment or 50% immediately and 50% after sale. He apparently makes as high payment as a farmer would get in the grain market (mandi) thus keeping his business thriving. However, he compensates his larger share by adopting foul methods - cheating in measuring. awe the yields are low and area small, marketable surpluses are small. The tribal farmers are

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weak in accounts and are afraid of getting cheated in the grain market and, thus, prefer to sell through kuchia. Agricultural produce marketing centres were established by the government as per the Mandi Act 1972 at various places with modern processing facilities. But services such as storage, parking, over-night stay facilities are not provided. The kuchias are compelled to sell their produce immediately to primary wholesalers. Case study 2: marketing of unprocessed produce Another survey conducted during 1976 indicated that when unprocessed Bengal gram is sold, the farmer received 70% and market functionaries charged 30% of the total price. Of this transaction 60% is the cost of production. The farmer thus makes 10% profit. After processing, the share of processor and market functionaries increased to 44% and the farmers share reduced to 56% of which the cost of production was 48% and his profit only 8%. This revealed a potential advantage to farmers if the pulse is processed by the farmers and sold in the market as dal. Case study 3: marketing through primary marketing centre In a study conducted in 1986 in the state of Punjab, which is better equipped for marketing of agricultural produce, the marketable surplus was found increasing from 38.5% in 1961/62 to 72.50% in 1978/79 in the case of small farmers. In comparison, large farmers ha( more than 84% marketable surplus. The farmer after harvesting, threshing and cleaning brings his produce to the shop o his grain merchant in the nearest organized grain market by bullock cart, tractor trailer o truck. The grain is unloaded by labourers of the grain merchant and cleaned manually. The grain is sold by auction. The quality of the produce is judged subjectively, which provide ground for manipulation and malpractice. Sale transactions in these markets take one day t one week at a time when the farmer is extremely busy harvesting and threshing and preparing fields for sowing the next crop. Due to poor storage facilities he is compelled to sell in these markets. Case study 4: marketing through government agencies The Food Corporation of India (FCI) acts as the main agency for procurement handling, transportation, preservation, storage and distribution of food grains on behalf of ti central government. The major functions involved are:

• Procuring a sizeable market surplus at incentive price from farmers, • Ensuring release of stocks through the public distribution system to the consumer, and • Minimizing inter-seasonal and inter-regional price variation and build up of sizeab

buffer stocks. There are a number of agencies which procure the grain on behalf of FCI. The agencies enter the market late and farmers are forced to distress sell in the market. Studies conducted by the Commission on Agricultural Costs and Prices during 1988 revealed that t total amount of distress sale of paddy in the Punjab market was 20%. Sales in these marketing systems (FCI procurement) still continue through commission agents who look after the procurement process, filling of grain bags and their protection mi the bags are transported. They charge 1.5% of the total procurement price as commission a payment to the farmers is made through them. The payment is usually delayed and the more is temporarily invested in other channels for profit.

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In another study conducted on regulated and unregulated markets in Damoh district of Madhya Pradesh (1989), it was found that storage, processing, financing and market formation facilities were available in 0, 48, 40% and 40% of unregulated markets whereas in plated markets these figures were 28, 76, 20 and 12%, respectively. The service charges in regulated markets were 2.45% compared to 1.75% in regulated markets. In spite of the publishment of regulated markets, the volume of business transacted by these markets was Olmsted at 40% and the remainder was handled by village merchants, unregulated markets.

Post Harvest Technology Pulse milling Cleaning, grading, drying, pearling, milling, packaging, handling and storage are major operations performed before the coarse grains and legumes are used for cooking operations, except where they are used green. Many of the above mentioned operations are performed at the farm level using traditional practices and equipment. Improved low cost technology packages have been developed for coarse cereals and legumes. Hand/power operated (single phase one horsepower) cleaners and graders with replaceable sieves are commercially available. Mechanical dryers using biomass, solar energy and electrical energy are also available but sun drying is the most common practice. Since pearling and milling are major post harvest operations which affect the rural economy, they require detailed analysis. Surveys have indicated that about 10-25% of pulse is converted into dal at the domestic level and the rest sold in the market at low price for conversion into dal by organized pulse milling industries. Dal milling is the third largest food processing industry in the country after rice milling and wheat milling; more than 75% of the million tons of pulses are converted to split pulse or dal. Dal milling basically consists of removal of the pericarp, which is attached to the cotyledons through a layer of biochemically complex gum. Pre-milling treatment involves loosening of pericarp from cotyledons through chemical, mechanical or heat treatment. In modern machines the pre-treatment step is an integral component of the dal milling plant. There are more than 11,000 pulse mills with average capacity 10-20 tons day. The milling lossess in these mills vary from 10-15%. Domestic and cottage level pulse milling Milling of pulses at the domestic level is undertaken by splitting the pretreated pulses between two stone discs (one stationary and the other rotary). Wet and dry methods of pretreatment are practiced for loosening the husk. In the wet method, cleaned and graded pulse steeped in water. The steeping involves soaking in cold water for a few minutes and keeping overnight. The steeped pulse is then sun dried to about 10% moisture. In the southern part of India red earth is added during steeping mainly to improve the colour of dal. The dried pulse is tempered for 1-5 days before milling. Normally 2-4 milling operations are required to achieve than 90% dehusking (Figure 3). In the dry method, the cleaned grains are scratched/pitted by abrasion and smeared with oil and water (Figure 4). For easily husked pulses (gram, soybean, pea, lentil), oil smearing is not required. These oil-water smeared grains are tempered (stored in a heap) for 1-5 days. The pitting helps in absorption of oil-water which diffuses between husk and cotyledons and thus weakens the gum bond. These treated grains are dried to 10-12% moisture before milling. The of pretreatment and milling continues until dehusking and milling is complete (3-7

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passes). The application of edible oil varies from 50-400 g/100 kg of grain and water from 4-20 kg/100 kg depending upon the region. These practices have evolved through experience. The hand-operated stone mills (chakki) have capacity of 30-50 kg/h with head dal recovery of 45-55%, breakage 25-45% and dehusking efficiency of 80-95%. The cost of the machine is low (Rs 100-500) and it is locally available. The processing of dal at the rural level is gradually declining since it is economically not feasible due to low output and poor quality of dal. There has been a concerted effort to develop a low cost pulse dehuller, which can be popularized at the village level. Only the inverted cone type and burr mill type are discussed here. The processing of dal at the rural level is gradually declining since it is economically not feasible due to low output and poor quality of dal. There has been a concerted effort to develop a low cost pulse dehuller, which can be popularized at the village level. Only the inverted cone type and burr mill type are discussed here.

Figure 3 Three domestic methods of pulse milling.

An inverted cone type machine was developed at the Central Food Technological Research Institute (CFTRI), Mysore. The machine eliminates the use of oil and water for pretreatment and, thus, reduces total milling time. The machine consists of an emery-coated inverted metal cone fixed to a vertical shall rotating inside a conical wire mesh screen. The clearance between the rotor and casing is adjustable according to the size of grains. The capacity of the machine is 50-70 kg/h at 60-70 rpm and it is operated manually. Power operated dal mills also have been developed at CFTRI with output capacity of 150-200 kg/h. In all these machines pretreatment of pulse grains is not required. Small capacity burr mills for dal have been developed at several research centres. These are usually 1-2 hp low cost machines with dehulling, splitting and aspiration facilities. In these machines stone discs or hard rubber coated discs are used. Dehulling is by attrition or abrasion action. The cost varies from Rs 15,000-25,000 with capacity ranging from 100-200 kg/h. These machines require conventional pretreated (water + oil) grains. A salt treatment method has also been developed for conditioning the grain. The grains are soaked in a 6% sodium bicarbonate salt solution for 45-50 _minutes and dried to 10-11% moisture before dehulling.

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Salt treatment helps in loosening the pericarp. In some cases the grains are pitted before log salt treatment or water soaking to hasten the absorption of salt, water or oil. IN spite of the fact that pulse pretreatment techniques have been refined and low cost developed, these have not become popular among villagers for processing of dal. The are milled by the organized sector only.

Figure 4 Conventional method of pulse milling.

Commercial dal mills There are about 11,000 dal mills in India with average processing capacities of 10-20 ton/day. These units are scattered mostly in north and central India and adopt dry milling technology. In the south, the wet method of milling is generally adopted and capacity is smaller. The regional distribution of mills is given in Table 8.

Table 8 Commercial dal mills in India. Region Capacity Power Oil used Water used Working (ton/day) (h p) (gm/100 kg) (litre/100 kg) days/yr South 5-20 70-140 150-250 1-2 260 East 4-8 20-60 250-500 4-5 200 Central 10-20 65-150 200-250 1-2 260 West 10-30 45-100 600-1500 2-5 200 North 5-50 70-90 150-200 4-5 260

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The commercial dal mills consist of cleaning and grading units, pitting, pretreatm and drying units, tempering, dehulling, winnowing, splitting, bagging and packaging u (Figure 5). The cost of the plant depends upon the capacity and the degree automat introduced for material handling (Table 9).

Figure 5 Modern milling method for red gram.

Table 9 Cost of commercial dal mills. Capacity Cost Degree of automation (kWh) (Rs)

Semi-mechanized 350 200,000 540-640 250,000 820-1000 350,000 Mechanized 500 325,000 1000 375,000 US$ 1 = 32.2 Rs.

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About 75% of total pulse produced is processed by commercial dal mills. The loss in these mills is very high (10-15%) and energy consumption per unit output very high. Dehusking in these mills is done by rollers. There is no standardization for specifications of various components and methods of oil/water treatment. The dal milling industries in India have so far remained neglected. One of the reasons may be family ownership of these mills. Not only is the technology primitive but the working environment is very poor in these industries. Storage and handling Suitable materials and appropriate technology for handling, packaging and storage have been developed for pulses in general and soybean in particular in India. The germination of soybean can be maintained at 75-80% if dried soybean (8-9% moisture) is kept treated with arum at 3 g/kg and stored in reasonably airtight metallic bins. These should be kept in cool places where gain temperature should not exceed 35°C. Large silos are also commercially available for storage of pulses. The common materials used for packaging of food items are paper, cloth, jute bags, polyethylene, laminated foils, metallized plastics, PVC, BOPP, metal and glass. The quality of materials for packaging depends upon mode and quantity handled methods of dispensing and the product. Jute and cloth bags were found to be unsafe for storage for more than 15 days under adverse weather conditions (high temperature and humidity). Aluminum laminated foil and LDPE (400 gauge) are more suitable and can safely store up/to 60 days. The flours can also be stored in these materials if the pouches with are flushed nitrogen gas.

Government recommendations The government is concerned with problems of the dal milling industries. A number of studies have been sponsored by the Ministry of Food Processing to assess the production capacity, marketing, modernization constraints, etc. Major recommendations which have emerged are:

• modernization of the dehulling process, especially elimination of use of oils and introduction of mechanical drying to reduce losses during sun drying,

• reduction of processing and handling losses, which presently account for up to 15%, • improvement in the working environment within factories by adopting dust control

measures, • promotion of dal processing units in rural areas to reduce cost of production, increase

dal recovery (freshly harvested pulses are easily dehulled) and increase rural employment,

• introduction of improved storage structures to reduce losses due to spoilage as well as insect and rodent attack, and

• modernization of packaging for bulk handling and handling at sales outlets.

Food Legumes and Coarse Grains in the Lao People's Democratic Republic

Kham Sanatem *

Introduction The Lao People's Democratic Republic (Lao PDR) is land locked by its neighbouring countries: Viet Nam, China, Myanmar, Thailand, and Cambodia. Most of the Lao PDR is situated within the Mekong River watershed. The Mekong River forms the border between the Lao PDR and Thailand for approximately 1,500 kilometers. Only a small number of sections of its course in the Lao PDR are navigable. Seventeen provinces comprise the Lao PDR. These include 113 districts, 937 sub-districts, and 11,582 villages. The total and area is 236,800 square kilometers, of which 75% is hilly to mountainous, and about 47% is covered by tropical forests. Only 800,000 hectares of around 5 million hectares of land suitable for cultivation are planted with rice or secondary food crops. An additional 750,000 hectares are used as pasture land and around 50,000 hectares of ponds are used for raising freshwater fish. The natural miffed conditions under which most land is cultivated permit only one paddy or hill field crop a year. Food legume and coarse grain production is detailed in Table 1. Improved irrigation and the use of higher yielding seed stocks, fertilizers, and pesticides have improved rice yields in recent years. However, annual production has consistently failed to meet government targets.

Table 1 Food legume and coarse grain production 1992.

Crop Area (ha)

Yield (t/ha)

Production (t)

Change since 1990 (%)

Soybean 5,20 0.8 4,29 102 Mungbean 3,84 0.7 2,74 107 Groundnut 13,42 0.7 10,63 198 Sweet potato 14,45 0.8 104,80 - Vegetables 1,66 11.0 18,35 - Sesame 8,03 0.6 4,84 - Maize 33,11 1.7 57,58 90

The country's population of 4.2 million is growing at an annual rate of 2.9 percent. The density of population is 16 people per square kilometer. Eighty-five to ninety percent of the population lives in widely-scattered rural settlements.

* Department of Agriculture and Extension, Ministry of Agriculture and Forestry, Lao PDR.

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Development policy The economy of Lao PDR is dependent on an agricultural base, which so far was oriented towards the subsistence requirements of farmers. However, under the New Economic Mechanism, agricultural production and rural development have to move progressively from subsistence to a market economy. To develop the rural area and to realize the development policy, the government emphasized the importance of agriculture and forestry to the economy. It considers the farm household as the main unit of agricultural production. Proper incentives and support are needed to achieve objectives of productivity, stability, sustainability, and equality. The implementation of these government development objectives is the responsibility of the Ministry of Agriculture and Forestry (MAF). After a reorganization, the MAF now has seven technical departments, of which four are directly involved in rural development. These four are: the Dept. of Agriculture and Extension, the Dept. of Livestock and Veterinary, the Dept. of Forestry, the Dept. of Irrigation. Presently, the MAF is reorganizing its relationship with the Provincial Agriculture Service (PAS) to develop a centrally coordinated delivery system from the center to the provinces. Through the centrally coordinated system, all the government policies, strategies, and programs can be absorbed and realized.

Strategies and programs for agricultural development To fulfill the government policy, all agricultural and development efforts are solidly based on global principles of sustainability, equality of gender, maintenance of environmental quality, enhancement of the quality of life, and peaceful coexistence of, and cooperation among, all nations. The government is presently implementing its New Economic Mechanism. Its major objective is to disengage the state from production activities and favor private sector production by providing the legal framework, appropriate macro-economic measures, and the needed infrastructure to facilitate the move towards a market economy. The Third Five Year Plan (1991-1995) emphasizes intensification of agricultural production, diversification, and extensification, with particular reference to commodities. One of the major impacts of the implementation of these policies, strategies, and programs in the Lao PDR is the increase of food security and promotion of commodities. In addition to the implementation of the New Economic Mechanism, the government has three main programs:

• The Food Production Program, lasting to the year 2000. In this program the government will set up five rice production projects, which are situated in the five basins along the Mekong River and cover an area of 250,000 hectares. These areas are responsible for producing sufficient rice to satisfy the whole country.

• Stabilization of upland rice cultivation, which also refers to permanent cultivation especially in the hilly areas.

• Limitation of shifting cultivation by introducing different systems of production such as livestock, fruit tree production, etc.

Along with the three main programs, the government has several integrated rural development and agricultural extension projects to be operationalized in different regions and provinces.

Marketing and Processing of Food Legumes and Coarse Grains to Increase Income and Employment of Farmers in the Union of Myanmar

Myint Oo *

Introduction

Myanmar is predominantly an agricultural country with favorable conditions for agricultural development. The agricultural sector is considered important since it contributes about 40 % to the country's gross domestic product. The total population of the Union of Myanmar in 1962/63 was 23.19 million; the growth rate ranges from 1.88 to 2.2% and, according to the last census, the total population in 1992/93 reached 42.33 million, of which about 75% resides in rural areas. The total labour force is 16 million, of which about 10 million (63%) are engaged in the agricultural sector. The majority of the rural population are fanners; there are about 5 million farm families involved in agricultural activities. Myanmar is bounded on the north by the People's Republic of China, on the east by Thailand and Laos, on the west by Bangladesh and India, and on the south by the Bay of Bengal. It stretches for about 1,280 miles (2,060 kilometers) from the north to south and about 600 miles (966 kilometers) from east to west. Administratively, Myanmar is divided into seven states and seven divisions with 319 townships. Myanmar can also be divided into 6 different natural regions based on the physical features and agro-ecological zones (Figure 1):

• western mountain region, • northern mountain region, • eastern mountain region or Shan Plateau, • delta area of Ayeyarwady and Sittaung Rivers, • coastal strips of Rakhine State and Tanintharyi Division, and • central plain or dry zone.

Agro-ecological conditions permit over sixty different crops to be grown. Rice is the major crop covering 4,83 million hectares, or about 53% of total cultivated area. Other upland crops, such as wheat, maize, sorghum, and pulses, oilseed crops, such as sesame, groundnut, and sunflower, fibre crops such as cotton, jute, and kenaf, culinary crops, spices, and industrial crops cover 47% of the total cultivated area. In the current decade (1982/83 to 1991/92) the average gross sown area is 9.93 million hectares. The area under pulses is 0.88 million hectares (8.9% of the gross sown area), and the area planted to coarse grains is 0.49 million hectares (5% of the gross sown area). The total area for food legumes and coarse grain constitutes nearly 14% of the gross sown area.

* Sagaing Division, Myanmar Agriculture Service, Ministry of Agriculture, Myanmar.

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Importance of food legumes and coarse grains The annual production of food legumes is 0.58 million metric tons. Besides domestic demands, the food legumes also sustain an export trade worth 63 million kyats or 18.8% of the total export of all agricultural commodities. Besides their importance in the economy and export trade of Myanmar, the food legumes are significant for two other reasons, as a cheap and efficient source of protein, and secondly, with regard to their agronomic importance. The roles of food legumes in agriculture can be classified broadly as follows:

• as cash crop in multiple cropping, involving either rice or other crops; • as contingent crops, when the main crop has either failed or could not be planted due to

vagaries of weather; • in the mono-cropped systems of dry zone characterized by inadequate and/or erratic

rainfall; and • to improve soil fertility due to the symbiotic nitrogen fixing bacteria.

Figure 1 Natural regions of Myanmar.

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Coarse grains like maize, sorghum and millet are grown particularly in the central Myanmar dry zone area and mountain regions. These coarse grains are used largely in animal feeds, but in some dry zone areas and hilly regions where rice production is not sufficient, the coarse grains are the staple food for the local people.

Area extension and production increase during last three decades Data have been collected for three decades, 1962/63 to 1971/72; from 1972/73 to 1981/82; and from 1982/83 to 1991/92. The average sown area and average production of different varieties of pulses and coarse grains for each decade are shown in Tables 1 and 2.

Table 1 Average sown area (ha) of pulses and coarse grains. Crop 1962/63 -

1971/72 1972/73 - 1981/82

Growth rate(%)

1982/83 - 1991/92

Growth rate (%)

Pulses (Total) 683,098 721,730 5.88 884,692 22.22 1. Black gram 73,486 68,883 118,080 2. Green grain 43,593 30,732 74.363 3. Butter bean 64,437 64,648 56,769 4. Bocate 18,139 21,548 35,738 5. Sultani 19,436 6,154 4,735 6. Sultapya 32,671 51,820 41,881 7. Soybean 16,734 23,219 31,394 8. Chickpea 126,913 164,285 183,528 9. Pelun 21,220 21,351 26,298 10. Pigeonpea 74,897 62,163 73,360 11. Peyin 16,104 14,065 12,582 12. Pebyugalay 4,487 1,530 1,723 13. Lablab bean 67,351 80,040 75,316 14. Pekya 10,649 6,397 8,494 15. Garden pea 23,679 25,397 25,986 16. Peyaza 3,044 3,293 2,148 17. Penauk 31,024 34,187 51,300 18. Other pulses 25,004 41,988 60,997 Coarse grains 374,315 454,703 21.62 496,440 11.11 1. Maize 151,277 222,538 249,092 2. Sorghum 172,922 177,684 201,178 3. Others 50,116 54,481 46,170 Gross sown area 8.670.000 9.480.000 9.34 9.930.000 4.75

Production and export of food legumes and coarse grains In 1990/91, 226,000 metric tons of pulses were exported and 326,000 metric tons were used for domestic purposes. In the same year, 20,000 tons of coarse grains were exported and 167,000 tons were used for domestic purposes. As the production increases year after year, the export and domestic uses also increase annually. The average production, export and domestic use for each decade are given in Table 3.

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Table 2 Average yield (metric tons) of pulses and coarse grains. Crop 1962/63 -

1971/72 1972/73 - 1981/82

Growth rate (%)

1982/83 - 1991/92

Growth rate (%)

Pulses (Total) 295,121 356,235 20.68 581,654 63.48 1. Black gram 31,460 37,840 93,723 2. Green gram 10,159 7,678 38.553 3. Butter bean 31,778 44,482 68,733 4. Bocate 12,828 14,939 27,143 5. Sultan 10,231 3,644 3,144 6. Sultapya 14,271 23,641 29,872 7. Soybean 10,425 15,087 24,847 8. Chickpea 65,516 83,903 130,474 9. Pelun 7,501 7,498 12,033 10. Pigeonpea 26,274 24,712 43,249 11. Peyin 10,640 8,818 6,901 12. Pebyugalay 2,476 698 1,035 13. Lablab bean 27,882 41,071 42,092 14. Pekya 3,690 2,555 4,524 15. Garden pea 13,680 15,494 17,112 16. Peyaza 1,106 896 692 17. Penauk 6,869 9,283 17,195 18. Other pulses 8,335 13,996 20,332 Coarse grains 108,681 170,800 56.88 421,603 146.78 1. Maize 54,273 95,377 242,579 2. Sorghum 43,051 56,636 161,110 3. Others 11,357 18,787 17,914

Post harvest activities In Myanmar, harvesting, threshing, and winnowing of pulses and coarse grains are commonly done manually or by trampling with draft cattle. The mechanical thresher and winnower are used in a few areas. Mechanical harvesters for maize are also used in some areas where maize is grown on a large scale.

Table 3 Production and utilization of FLCG over 3 decades. Particular Unit 1962/63-1971/72 1972/73-1981/82 1982/83-1991/92 1. Production ('000 t) 295 356 582 2. Export ('000 t) 75 47 94 3. Domestic use ('000 t) 220 309 488 4. Population (million) 25.64 31.43 41.21 5. Per capita (kilograms) 8.5 9.8 11.8 consumption

Farmers market their food legume and coarse grain produce mainly in the raw condition. There are many market centers in the townships where communication facilities are better. Buyer's agents also contact the farmers for direct purchase. The market centers are owned by both government and the private sector. Government agencies buy some selected crops such as green gram, black gram, chick pea and pigeon pea for local consumption and export. Private agencies and joint ventures also buy pulses and grains, especially for export. Grain cleaning, sieving, measuring, and packing are done by the purchasing agencies. These export commodities are transported to the trading centers for shipment.

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Domestic use of food legumes According to data collected by the Myanmar Agriculture Service, the average annual rate of consumption per person is 9.2 kilograms of pulses. Myanmar people eat food legumes in various types of foods. For example, boiled garden pea mixed with steamed glutinous rice is a common breakfast for both urban and rural people. For lunch and dinner, chick pea, pigeon pea, or lentils are crushed and cooked as curries. The germinated black gram or green gram are used as vegetable salad either fermented or fresh tohu. The flour of different varieties of pulses is boiled to make a fresh tohu. The pulses are soaked for a few hours and then roasted or fried after removal of the seed coat to make delicious snacks. Noodles made from crushed pulses and fermented soybean chips are also traditional foods of Myanmar. The coarse grains are crushed and boiled. In some regions the boiled grains are mixed with sweet potato and other fresh vegetables and used as the staple food. Sorghum and millet are first crushed to remove the seed coat and then boiled like white rice.

Processing of pulse noodles A wide range of pulses, except for a few such as black gram, lablab bean, and soybean, can be used to make noodles. Selection of suitable varieties depends upon the quality of the finished product and local prices of the pulses. Thus, the cheap pulses are often mixed with better quality pulses such as chickpea in a ratio of 1:2 for making noodles. There are four stages in the processing of pulse noodles, including soaking, grinding and extraction, noodle formation, and drying and packing. Selected pulses are mixed into the required ratio of chickpea and other varieties of pulses and soaked in warm water. The water is changed every 8 hours with fresh warm water, for a minimum of 3 changes. The soaked grains are ground by a grinding stone driven by electric motor or other power source. The resulting paste is mixed with fermented liquid and stirred to get a homogenous liquid, then filtered through a sieve. The coarse material left on the sieve can be used as animal feed. The filtrate is then left for about 30 minutes to settle. The upper clear liquid can be fermented. The middle suspension is transferred into a barrel to make noodles. The residue that settles on the bottom can be used as animal feed. The middle suspension is left for 8 hours to settle out the particles. Then it is filtered through cloths. The paste left on the filter cloth is put into wooden trays and these trays are placed in an air tight room where sulfur smoke treatment is applied for 4 hours. The trays are then brought outside for sun drying for about 2 days. After drying the clumps are crushed by hand forming a fine powder. Then one percent by weight of cassava starch flour is dissolved in warm water and this solution is mixed into the sun dried pulse flour to form a sticky thick paste. This paste is put into a noodle pot which has small holes at the bottom. The pot together with pulse paste is brought over a boiling water pan and the paste is pushed through the small holes of the pot to form thread-like noodles which fall into the boiling water. These noodles are then transferred into cold water and washed. After this the noodles are taken out of the water and left to air dry on bamboo sticks. The air dried noodles are again brought into the air tight room for sulfur smoke treatment. After 2 hours treatment, the noodles are taken outside for sun drying for one or two days. After sun drying the noodles are pressed into small bundles with a hand operated press and these bundles are wrapped with paper and sent to the market.

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The cost of production, income and daily labour requirement for a medium scale noodle mill with a daily capacity of 50 baskets of pulses (72 lb/basket) are given in Table 4. Most of the process is done by manual labour. A medium scale mill requires about 50 labourers daily

Table 4 Daily economics of a medium scale noodle mill. Component Quantity Kyat Expenditure 1. Pulses 1,760 kg 26,300 2. Cassava starch 17 kg 350 3. Sulphur 7 kg 250 4. Fire wood (sawdust) 1 ton 500 5. Electricity 25 6. Labour charges 50 mandays 2,025 Total expenditure 29,450 Income 1. Pulses noodles 376 kg 30,000 2. By-products (animal feed) 500 Total Income 30,500 Profit 1,050 US $ 1 a 6.3 Kyat (1991/92).

According to the data collected by the Myanmar Agriculture Service, there were 20 noodle mills in upper Myanmar in the last decade. Now more than 50 mills are working daily. One mill can produce 125 tons of dry noodle per year. The increase in annual production within one decade is about 3,750 tons of dry noodles. The increase in daily labour employment within one decade is about 1,500.

Chickpea grinding Chickpea is crushed in grinding mills for the local market. The grinding process includes the following steps: moistening the grains, sieving and grading, crushing, and sieving and winnowing. It is important to apply the correct amount of moisture to the grain before crushing. The labourers are well experienced in checking the grains without a moisture meter. The grains are moistened with a small amount of water and left a few hours. There are 6 stages of sieves to remove the impurities and to grade the grain size. The first sieve is to remove stones and earth clumps and dust. Other sieves grade the grain according to size. In the third sieve, immature, small grains are removed. The fourth sieve removes other foreign matter. Crushing is done by power driven grinding stone. Grains of uniform size should be ground at the same time. The crushed grain is then passed through a sieve and winnower to separate fragment sizes and to remove seed coats. Then the crushed grains are put into gunny sacks and sent to the market. A small scale grinding mill requires an electric motor of 10 HP. The capacity for daily crushing is 100 baskets of chickpea, and the daily labour requirement is 5 labourers. The milling output is 75% crushed grain, 10% small crushed, 10% seed coat, 2% immature grains, and 3% other foreign matter. The price for grinding one basket (72 lb) is 10 kyats.

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Pulse processing cottage industries Fermented soybean chips (pe poke) Most Myanmar people prefer salted fish paste or fermented soybean chips as a staple side dish in their meals. Fermented soybean is made by many rural people as a cottage industry. First, the soybean grains are cleaned by pounding and sieving manually. Then the grain is washed to remove dust and other impurities. The clean grains are boiled for about 6 hours. After boiling the grains are transferred into a bamboo basket to remove water. The grain in the basket is covered with a cloth and pressed by a stone over the cloth. This basket is left for two to three days in the sun for fermentation. The fermented grains are then mixed with small amounts of salt, garlic, ginger, and chili and pounded with a mortar and pestle. The crushed grains form a paste which is made into flat circular pieces and sun dried for two or three days. These fermented soybean chips can be eaten after frying or roasting. Two kilograms of fermented chips can be made from 2 kilograms of soybean grains. The cost of production is 50 kyats and the price of fermented cake is 100 kyats. The total labour requirement is one manday. Fermented bean paste (pon ye gyi) Sultani, pigeonpea, and horse gram can be made into fermented bean paste. The grains are washed and boiled until the boiling water turns red and viscous. This boiled liquid is removed, fresh water is added to the grains, and the boiling process is continued two or three times. The boiled liquid is collected in a pot, a small amount of salt is added, and the liquid is allowed to ferment for 3 days in the sun. The fermented liquid is then boiled until it becomes a thick paste. After cooling, the paste is put into an air tight glass jar and sun dried for 3 days to complete the process. The finished product is weighed, packed in plastic bags, and sent to the market. The output and labour requirement is the same as that for fermented soybean chips. The fermented bean paste can be used in vegetable salad mixed with onion, chili, and vegetable oil or cooked with fried fish or meat. Roasted lablab bean Lablab bean is cleaned, soaked for 10 minutes and left over night to achieve uniform moisture content in the grains. On the next morning 2 visses (7.2 lb) of ordinary salt is put into a frying pan and preheated. Then one pyi (4.5 lb) of moist bean is roasted in the salt pan for 10 minutes. The roasted bean and salt are separated with a bamboo sieve. The salt can be reused many times. The roasted bean is eaten as a snack. Germinated grains Green gram and black gram are commonly used as germinated grains. The fresh and mature seeds are washed, soaked for 6 hours, and then incubated in an earthen pot covered with soaked straw. The time of incubation depends upon the temperature. In warm weather three days is enough, but in cold weather five to seven days incubation is necessary. The germinated grains are then washed again and sent to the market. People eat fresh or fermented germinated grains.

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Fried lablab bean Lablab bean, butter bean, or sultani can be used for frying. The beans are soaked for about one hour until the seed coat shrinks. Then the beans are brought out of water and incubated overnight. The next morning the beans are washed in fresh water and the seed coats are removed by hand. Then the seeds are sun dried. A suitable amount of rice flour is mixed with water to get a thick liquid batter. The dry seeds are then thoroughly mixed with the rice flour batter to get a thin film coating the seed. Then it is fried in hot vegetable oil in a frying pan until the seed colour turns a light brown. The fried beans are removed from the oil and cooled. Fried beans are commonly used in the traditional pickled tea salad.

General discussion Food legume and coarse grain cultivation is increasing gradually in Myanmar. The market demand becomes greater every year as export and local consumption increase. The income of individual farmers also increases as production increases. The marketing and processing of food legumes and coarse grains are thus expanding annually. This affects expanding rural employment, not only of persons concerned directly in the production, but also of persons concerned indirectly, for example in transportation, marketing, and animal husbandry using the processing by-products. However, the post harvest activities described in this paper are mainly traditional processes. To obtain better quality products to expand the market, it is important to introduce improved post harvest activities for these crops immediately.

Economics of Production and Marketing of Soybean in Ha Bac Province, Viet Nam

Tran Van Lai *

Soybean production in Viet Nam

Soybean has a long history of cultivation and utilization in Viet Nam. The technology of soybean growing and the importance of this crop were described by Le Quy Don in ancient literature "Van Dai Loai ngu" in 1773. Soybean is the second most important legume crop after groundnut in Viet Nam. Rich in protein (40-50%) and oil (20-25%), soybean is utilized mainly for human food and animal feed. Soybean is very good for multiple cropping, inter-cropping, lapping and soil improvement. The area planted to soybean in Viet Nam increased from 39,400 ha in 1976 to 110,000 ha in 1990. Although the soybean area increased in recent years, growth rate was rather low. In recent years, the annual area planted to soybean has fluctuated around 100,000 ha. Soybean yield is also low. The average yield of soybean increased from 525 kg/ha in 1976 to 830 kg/ha in 1987. These figures indicate that research and technology transfer for improvement of soybean production is still limited. As a result, the productivity of soybean in Viet Nam has never reached 100,000 t (Table 1).

Table 1 Soybean area yield and production in Viet Nam.

Year Area (000 ha)

Yield (kg/ha)

Production ('000 t)

1976 39.4 525 20.7 1977 42.3 508 21.5 1978 41.7 523 21.8 1979 36.2 551 20.0 1980 48.8 657 32.1 1981 74.3 743 55.0 1982 103.0 750 76.9 1983 96.7 660 63.9 1984 90.5 760 69.2 1985 102.0 780 79.1 1986 106.5 800 84.7 1987 118.1 810 95.8 1988 103.0 830 85.3 1989 100.2 818 82.0 1990 110.0 790 86.9 1991 115.4 860 99.2

In North Viet Nam, soybean is presently grown in most areas including the highlands, midlands, Red River delta, and north-central regions (Table 2). In the highland region, Cao Bang is the largest soybean growing province with an annual area of 7,700 ha. Ha Bac is the

* Legume Research and Development Center, National Institute of Agricultural Sciences, Viet Nam.

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most important soybean producing province of north Viet Nam. In 1987, the area planted to soybean in this province reached 11,000 ha. Soybean is also grown sporadically in different areas of both north and south Viet Nam. In North Viet Nam, three soybean crops can be grown in the year (spring, summer and autumn-winter crops). Soybean can be planted as the sole crop or inter-cropped with maize, sugarcane, fruit crops, and other cash crops. The area which can be used annually for soybean growing without difficulty is estimated at about 500,000-600,000 ha. If the economic return from soybean production is improved, farmers in Viet Nam can readily expand the area of soybean up to 1,000,000 ha/year.

Table 2 Soybean area, yield, and production in some provinces of Viet Nam in 1991

Area Yield Production Region C000 ha) (kg/ha) ('000 tons) Whole country 115.4 860 99.24 By province 1. Ha Tuyen 3.6 600 2.16 2. Cao Bang 6.3 510 3.22 3. Lang Son 4.0 650 2.60 4. Bac Thai 4.1 700 2.87 5. Lai Chau 3.2 650 2.08 6. Son La 4.1 620 2.55 7. Yen Bai 3.3 680 2.25 8. Quang Ninh 1.9 621 1.18 9. Vinh Phu 3.7 703 2.61 10. Ha Bac 7.5 880 6.60 11. Ha Noi 1.5 860 1.30 12. Ha Son Binh 4.6 920 4.23 13. Hai Hung 2.8 1,130 3.18 14. Ha Nam Ninh 3.1 1,050 3.25 15. Thanh Hoa 2.6 980 2.55 16. Nghe Tinh 1.0 789 0.79 17. Dac Lac 5.8 920 5.34 18. Lam Dong 2.9 630 1.83 19. Dong Nai 29.0 720 20.88 20. Dong Thap 6.0 1,350 8.10 21. Kien Giang 1.6 1,250 2.00 22. An Giang 2.1 1,400 2.94 23. Other provinces 10.7 1,375 14.73

Utilization and marketing of soybean in Viet Nam The highest per capita productivity of soybean in Viet Nam was obtained in 1987 at only 1.4 kg, which is the lowest figure in South-East Asia. In spite of this, marketing and utilization of soybean in the country are facing many problems. After harvest and assembly of soybean, wholesale traders and collectors buy the largest proportion and transport it to the consumption centers in highly populated areas where the demand for soybean is often high. Most of the soybean is processed by one of two methods; non-fermented and fermented (Table 3). Non fermented products include towfu, soymilk, and soybean oil. Some factories produce a nutritional powder for children by mixing soybean with mungbean and rice powder. Fermented products include high quality traditional ones such as soysauce and soypaste. In general, soybean processing in the country is still under-developed. One of the most important constraints to processing and utilization of soybean is the lack of processing.

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facilities, especially in mountainous and rural areas. Because of the rather low living standard of the population, the demand for processed soybean products is very low. In Viet Nam, soybean cake and low quality seeds are largely utilized for poultry and animal feed.

Table 3 Products of soybean processing in Viet Nam. Method Products Capacity Fermented Soysauce 1,000 - 3,000 1/day Soypaste 500 - 1,000 1/day Soycheese 500 - 800 kg/day Non-fermented Soymilk 100 - 2001/day soycurd 50,000 - 70,000 t/year soyoil 15 - 30 t/day ,fullfat flour 12,000 t/year

In the past only a limited quality of soybean (20,000- 40,000 t annually) was exported to other countries, such as Thailand, Hong Kong, and Indonesia. The limitation of soybean export can be explained by the fact that soybean quality does not meet the requirements of importers and the price does not meet the production costs of farmers. Since the economic return from soybean is rather low, soybean production is stagnant or increasing very slowly. The growth rate of soybean production cannot meet demand or solve protein deficiency problems. Thus, it is clear that research on constraints to soybean production is needed urgently. This research will contribute to the improvement of soybean production in Viet Nam. Initially, research should be conducted in a specific soybean growing area/province of the country. The results of surveys and analysis on different aspects of soybean production, economy and marketing in the province studied (Ha Bac) will be helpful in identification of priorities for solving strategic problems of soybean production in Viet Nam in the coming years.

Survey on production and marketing of soybean in Ha Bac Objectives The survey was conducted in Ha Bac province, the major soybean producing area of Viet Nam, to study the current status of soybean production and identify the key constraints to soybean production, processing and marketing in this province (Figure 1). The survey results should serve as a reference for analyzing the future prospects of soybean production and priorities for improvement of soybean production in Ha Bac particularly, and in Viet Nam generally. Methodology and respondents The survey was conducted in September 1992. The survey team consisted of staff members from the Agriculture Department of Ha Bac province and agriculture offices of Lang Giang and Hiep Hoa districts and Vietnamese scientists from different disciplines such as economists, breeders, plant pathologists, processing and post-harvest specialists from the four research institutes of north Viet Nam:

• Legumes Research and Development Center, National Institute of Agricultural Sciences, Hanoi,

• Institute of Agricultural Economics, • Institute of Food Industry, and • Post-harvest Research Institute.

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Figure 1 Map of Viet Nam.

Trung Quo-c

The survey team interviewed 62 farmer households in Dong Thanh village (Lang Giang district) and 38 households in Danh Thang village (Hiep Hoa district). Of the respondents 76 were men and 24 were women. Their ages ranged from 18 to 60. The respondents were people participating directly in soybean production, processing or marketing; 28 respondents were engaged in processing of soybean for family use and 6 respondents were engaged in processing of soybean for selling and use by-products of processing for animal feed. Main characteristics of surveyed area Ha Bac is situated in the north-east of north Viet Nam, 50 km from Hanoi, with a population of 2,100,000 people. Ha Bac has 147,780 ha of agricultural land, of which 138,236 ha or 94% is cultivated annually. The area planted to rice in Ha Bac occupied 124,904 ha, or 90% of the total arable area. The per capita cultivated area of Ha Bac is rather small (only 680 m2/person). Annual rainfall is about 1,746 mm, and the temperature ranges from 13 to 29°C depending on the season (Table 4). Based on the micro climatic conditions, landscape and soil characteristics, Ha Bac can be divided into 3 main ecological regions.


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Table 4 Average monthly rainfall and temperature in Ha Bac. Month Rainfall (mm) Temperature ("C) January 23 13.0 February 32 17.0 March 58 17.5 April 120 21.7 May 268 27.4 June 320 29.0 July 320 29.0 August 249 28.5 September 176 27.7 October 133 24.5 November 43 21.0 December 4 17.5 Total 1,746

The highland region occupies 30.6% of the arable area (43,331 ha). The main soil type is hard loam. This is a rainfed region, lacking an irrigation system. The region has good conditions for short duration industrial crops such as sugarcane, tobacco, and spring soybean. The midlands region has 34,490 ha of arable land or 25% of the total arable land in Ha Bac. This is an intermediate region situated between the highlands and the delta region. Soil types are mainly loam with slight texture, sandy loam, and degraded soils. In general, soils in this region are poor. The main crops are rice, maize, sweet potato, groundnut, and soybean. Soybean is grown mainly in summer (May-July) between two rice crops. The delta region has 61,497 arable ha or 44.4% of the total arable land of Ha Bac. There are four rivers crossing the territory of Ha Bac: Thuong, Cau, Luc Nam, and Duong rivers. The most important is the Duong river. Being a branch of the Red river, Duong river supplies irrigation water containing fertile alluvia to fields in this region through large electric pumping stations and active irrigation canals. This region grows two rice crops per year. Major winter crops include potato, tomato, beans, vegetables, and soybean grown after early summer rice. The diversity of land and climatic conditions of Ha Bac allows this province to diversify agriculture production with 3 main crops per year: spring (March-June), summer (July-October) and winter (November-February). The major food crops of the province are rice, maize, sweet potato, and short-duration cash crops such as groundnut, soybean, sugarcane, beans, and vegetables. Agriculture plays the most important role in the provincial economy contributing 61% of GNP in Ha Bac (Table 5). The average growth rate of provincial gross agriculture products is about 3.1% annually. Land use in the province improves every year through rational use and increasing rotation coefficient/index. From 1986 to the present the arable area planted to different crops has increased by 10%.

Table 5 Structure of social products in survey districts of Ha Bac, Viet Nam. Production branch 1986 1987 1988 1989 1990 Ave 1986-90/

1981-85 Ave rate of increase

Total (million D) 6,231 6,595 6,664 7,080 7,158 6,745 122.2 5.1 Industry (%) 21.13 22.74 23.74 24.03 27.50 23.93 141.5 10.9 Building (%) 3.56 3.18 3.20 3.00 3.49 3.29 97.4 3.6 Agriculture (%) 64.35 62.31 60.88 60.92 56.53 60.88 119.5 3.2 Forest products (%) 0.34 1.13 2.68 2.56 2.48 1.88 450.9 38.8 Communication and 1.28 1.73 1.76 1.45 1.43 1.43 147.6 4.2 transport (%) Post (%) 0.03 0.07 0.15 0.11 0.13 0.09 87.8 5.8 Commerce (%) 7.99 7.58 6.80 6.47 6.48 7.04 97.1 -3.0 Other products (%) 1.32 1.26 1.29 1.46 1.96 1.46 80.2 11.8 Total (%) 100 100 100 100 100 100

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Due to research findings, such as new rice varieties with short duration, high yielding groundnut varieties, and extra-short soybean duration varieties, appropriate cropping systems have been established in Ha Bac. Therefore, new crop rotation patterns give higher economic returns than the old ones. The area planted to soybean may be expanded by planting of appropriate summer rice varieties. Status of soybean production in Ha Bac Ha Bac is the second largest soybean growing province of Viet Nam after Dong Nai. The average annual area planted to soybean in Ha Bac is about 7,500 ha. Three soybean crops can be grown in the year: spring, summer and winter crops (Table 6). Ha Bac contributes 1012% of the total soybean production of the country. In 1987 Ha Bac planted the largest soybean area of 11,014 ha which was equal to 9.5% of the rice area in the province. In Ha Bac, soybean is largely grown in the rice-based cropping system (between or after two rice crops). Summer soybean is dominant and occupies 78-80% of the total soybean area. Winter and spring soybeans occupy 13% and 8% of the total area of soybean respectively. Despite different weather conditions, soybean yields of all three crops in Ha Bac are almost equal. However, summer soybean tends to give a higher yield (Table 7). Although Ha Bac has a very old tradition of soybean growing with a large area, soybean yield in the province is still rather low. Average soybean yield in Ha Bac fluctuates from 0.6 to 0.8 t/ha. Annual soybean production ranges from 5,000 to 9,000 tons. Ha Bac obtained the highest production of soybean in 1987 (Table 8). Soybean is planted in all 16 districts of Ha Bac (Table 9). Lang Giang and Hiep Hoa, the largest soybean-growing districts, are located in the midlands. The main soil types in Lang Giang and Hiep Hoa are sandy loam and degraded soils. The average rice yield in these districts is about 2.8 t/ha; groundnut yield is only 1.0 t/ha. In Lang Giang 14,000 ha is planted to rice annually. Of this, 6,000 ha is covered by spring rice and the remaining by summer rice. Major non-rice crops include groundnut (700 ha) and tobacco (500 ha) but soybean is the most important with an annual area of 1,000 ha, which is mainly planted in summer between two rice crops. The most popular soybean variety is Lo-75 with a duration of 70-75 days and a yield of 0.95-1.20 t/ha. There are some 300 ha of river beds planted to soybean variety DT 76. The area planted to soybean in Lang Giang seems to be decreasing. The main reason for this situation is the lack of a market. If this constraint is overcome, Lang Giang can expand its soybean area up to 2,000 ha annually.

Table 6 Some major cropping systems on soil types in survey districts of Ha Bac. Cropping system Two rice crops Spring rice-summer soybean-autumn rice-sweet potato Spring rice-early summer rice-winter sweet potato (maize) Two rice crops Spring rice-summer soybean-autumn rice-vegetable (irrigated region) Spring rice-early summer rice-winter soybean Highland Spring soybean-summer soybean-autumn rice (loamy sand - Spring groundnut-summer soybean-autumn rice depleted) Spring soybean-sweet potato (maize, vegetable) Hill land and Spring soybean-soybean riverbank Spring groundnut-winter vegetable


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Table 7 Soybean yield of three seasons in Ha Bac. Yield (kg/ha) Year Average Spring Summer Winter 1986 685 585 720 750 1987 815 810 790 860 1988 663 620 720 640 1989 829 800 970 800 1990 881 800 900 760 1991 884 892 880 850 Average 802 788 840 785

Hiep Hoa is the largest soybean-growing district of Ha Bac. In 1990 Hiep Hoa planted 1,304 ha of soybean (almost equal to the groundnut area of the district). Summer soybean grown between two rice crops is dominant (1,200 ha). In Hiep Hoa soybean variety Lo-75 gives a higher yield (1.4-1.6 t/ha on average) compared to Lang Giang district. Farmers in Hiep Hoa consider the Lo-75 variety the most appropriate for the summer crop. In case of good prices and markets for soybean, farmers are willing to greatly expand the area planted to soybean.

Table 8 Annual soybean production, yield, and area in Ha Bac, 1986 to 1991.

Year Area (ha)

Yield (kg/ha)

Production (tons)

Production (kg/capita)

1986 7,753 685 5,313 2.5 1 987 11,011 815 9,315 4.4 1988 6,807 663 4,518 2.1 1989 7,155 829 5,935 2.8 1990 7,173 881 6,586 3.1 1991 7,543 884 6,668 3.0 Average 7,907 793 6,389 3.0

Because of poor and degraded soils, lack of irrigation systems, and low rice yield, farmers in Hiep Hoa often have to grow winter sweet potato to obtain an additional source of food for themselves and feed for their animals.

Table 9 Soybean area, yield, and production in Ha Bac, 1991.

Region/District Area (ha)

Yield (kg/ha)

Production (tons)

Highland Region 2,899 750 2,180.0 1. Luc Ngan 541 540 292.0 2. Luc Nam 850 720 612.0 3. Son Dong 750 900 675.0 4. Yen The 325 810 263.2 5. Tan Yen 433 870 337.3 Middle Region 2,910 1,000 2,907.1 6. Bac Giang 50 820 41.0 7. Viet Yen 510 1,000 501.0 8. Hiep Hoa 1,314 1,100 1,445.5 9. Lang Giang 1,045 880 919.6 Delta Region 1,734 910 1,581.1 10. Bac Ninh 21 1,000 21.0 11. Yen Dung 112 760 85.1 12. Que Vo 98 1,090 106.8 13. Thuan Thanh 476 1,000 476.0 14. Gia Luong 410 900 369.0 15. Yen Phong 392 980 384.1 16. Tien Son 225 620 139.1 Total 7,543 6,666.0

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In recent years soybean production in Ha Bac province has had a tendency to decrease in area, yield, and productivity. The major reasons for this are unstable markets (or lack of markets) and low price of soybean. Farmers are facing difficulties in marketing their soybean because the national processing industry requires an insignificant quantity, and there is no export market. These constraints make the farmers unwilling to grow soybean or to invest in soybean production. Ha Bac possesses great potential for soybean production, if the above socio-economic constraints are removed. Ha Bac can expand the soybean area up to 25,000 ha, equal to 18% of rice area in the province. In that case, soybean would be mainly grown in summer and spring crops, replacing some spring groundnut. It was noted that soybean yields in Ha Bac differ greatly from farmer to farmer. In fact, with traditional technology and the local variety, many farmers can obtain a yield of 1.6-1.8 t/ha. Therefore, if the farmers apply advanced technologies and new varieties, they can obtain much higher yields ad soybean production in Ha Bac will grow rapidly. Socio-economic aspects of soybean production in Ha Bac Results of the analysis of soybean production in Ha Bac reveal that soybean can bring a high economic return (Table 10). The data indicate that in the rice-based cropping system soybean gives higher economic return than maize, sweet potato, potato, and other dry land crops. Furthermore, being a low input crop soybean is very suitable for the majority of farmers. Economics of major crop rotation patterns in Ha Bac In Ha Bac province farmers grow crops in a variety of different rotation patterns. Data on the six most popular patterns, presented in Table 11, show that crop rotations with summer and spring soybean give the highest economic returns (number 1 and 4). Therefore, selecting appropriate cropping patterns may be a good solution in the improvement of economic returns from agriculture in Ha Bac province. The cropping systems with 4 crops per year should be encouraged. In this way, Ha Bac can increase the income from each hectare of arable land by 20-25% annually in comparison to the traditional 3 crop per year patterns as seen in the past.

Table 10 Economics of major crops In surveyed districts of Ha Bac (per ha). Production cost

Total Material Labour Yield Production Income for Net (‘000 D) (‘000 D) Labour Labour cost (kg/ha) value labour income Crop

(days) (‘000 D) ('000 D) (D/day) ('000 D/ha) Spring rice 4,013.5 2,164 411 1,849.5 4,050 4,455.5 2,291.5 442.0 Summer rice 3,676.5 1,899 395 1,777.5 3,460 3,806.0 1,907.0 129.5 Late summer rice 3,263.0 1,653 380 1,710.0 2,990 3,289.0 1,636.0 26.0 Soybean 2,562.0 1,284 284 1,278.0 880 3,168.0 1,884.0 606.0 Potato 5,387.5 3,610 395 1,777.5 8,120 6,480.0 2,870.0 1,092.5 Sweet potato 2,632.0 1,345 286 1,287.0 12,000 3,000.0 1,655.0 368.0 Spring groundnut 2,579.0 1,211 304 1,368.0 980 3,136.0 1,925.0 557.0 Maize 2,496.0 1,101 310 1,395.0 2,350 2,580.0 1,484.0 89.0 US $ 1 = 10,890 D (Sept. 1992)

It is clear that soybean is a very important crop for Ha Bac province. Soybean not only gives a high economic return but also plays an important role in improvement of poor and degraded soils. Since soybean does not require high inputs, it is suitable for low-input farmers. Furthermore, by growing short duration soybean farmers create an additional crop for more income and help solve the problem of employment. This is a major approach to overcoming the socio-economic constraints to agricultural development in the country.


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.Table 11 Economics of major cropping systems* in surveyed districts (per ha) Indicator 1 2 3 4 5 6 Production value ('000 D) 17,907 11,624 9,960 11,576 9,217 11,915 Production costs ('000 D) 15,164 10,322 8,959 10,279 8,734 10,252 Material (000 D) 8,711 5,408 4,445 5,023 4,284 5,343 Labour ('000 D) 6,453 4,914 4,504 5,256 4,450 4,905 Income for labour (D/day) 9,196 6,216 5,505 6,553 4,933 6,572 Net profit (D) 2,743 1,320 1,001 1,297 483 1,663 Profit/input (%) 18.1 12.6 11.2 12.6 5.5 16.1 Profit/material cost (%) 31.5 24.1 22.5 26.0 11.2 31.1 * Cropping systems: 1 - Spring rice - summer soybean - late summer rice - potato 2 - Spring rice - autumn rice - winter sweet potato 3 - Spring groundnut - summer rice - winter sweet potato 4 - Spring groundnut - summer soybean - late summer rice - vegetables 5 - Spring soybean - summer rice - winter maize 6 - Spring rice - summer rice - winter soybean Prices of the products: Groundnut 3,200 D/kg (pod) Soybean 3,600 D/kg Rice 1,100 D/kg Maize 1,100 D/kg Potato 800 D/kg Sweet potato 250 D/kg

Comparison between soybean and other non-rice crops grown in Ha Bac province leads to the following conclusions:

• Soybean gives high economic returns. • Soybean can be planted in all 3 seasons; however summer and winter soybean give the

highest economic returns. To improve the economy of agricultural production in upland areas where irrigation is lacking, rice should be partly replaced by soybean, both in spring and summer crops. In the delta region, high rainfall in summer and bad drainage limit the area planted to summer soybean. However, soybean can be grown in this region in winter after two rice crops with relatively high economic returns. The above analysis reflects the economic importance of soybean only in terms of raw produce and economic return in different cropping patterns, compared to some other crops. Despite the important role of soybean, production of this crop is stagnant. The constraints, especially the socio-economic ones responsible for this stagnancy, have not yet been clarified. Therefore, there is an urgent need to identify the key constraints to soybean production in Ha Bac, and in Viet Nam generally. Constraints to soybean production in Ha Bac The economy of soybean production is the result of different stages and their interactions. To obtain high economic returns producers have to increase their yield and reduce production costs. Products of soybean processing need to be of high quality to meet the requirements of consumers, and soybean also needs stable national and international markets. In other words, soybean production only gives high economic return if a closed "producerconsumer-producer" circle is effectively created. Although soybean has been grown in all 16 districts of Ha Bac for many years, soybean producers are still following traditional low-input technology based on their local knowledge (Table 12).

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Most of the farmers are poor and lack cash for inputs. The results of a previous survey revealed that 59% of interviewed households lacked cash for inputs. This is also one of the major socio-economic constraints to soybean production Ha Bac. The most important constraint to soybean production in Ha Bac is the lack of high-yielding varieties which should be heat tolerant (for summer crop) or cold tolerant (for winter crop). For several decades, the farmers in Ha Bac have been growing only their local varieties, such as Cuc and Lo-75, without shifting to new varieties because the traditional varieties are heat tolerant and suitable for growing in summer between two rice crops. Research stations and institutes still cannot satisfy the demand of farmers for new varieties. Because of the change to a market economy, there is no working system for maintaining pure seed of improved cultivars. Lacking pure seed, the farmers have to use their own seed continuously for many years. Summer soybean is planted between two rice crops, therefore it requires sowing in a very short period. This situation also limits the area of summer soybean. Soybean diseases and insect pests are also important constraints. However, only 27% of farmer households have knowledge on plant protection measures and 73% of households lack knowledge on soybean diseases and pests. Land limitation is also a constraint to soybean production. Although summer soybean gives a high economic return this cropping pattern cannot be applied everywhere. Only a limited amount of arable land in Ha Bac can be sown to summer soybean. To avoid competition with rice, it is necessary to study the possibility of expanding the area of winter soybean planted after two rice crops. Winter soybean in Ha Bac may have great potential. Besides, spring soybean can also be grown in a relatively large area if this crop gives higher economic returns compared to rice.

Table 12 Soybean production constraints in Ha Bac.

Constraint Priority Ranking

Production 1. Lack of cash to intensify High 2. Low price of soybean High 3. Lack of output High 4. Lack of high yielding, short duration varieties High 5. Low quality seed ium 6. Lack of seed production company edium 7. Short growing period Medium 8. Pests and diseases Medium Processing 1. Lack of cash to purchase equipment High 2. Lack of new processing factories High 3. High price of products Medium 4. Low quality products Low Utilization 1. Lack of utilization knowledge High 2. Lack of utilization habits High 3. Lack of utilization method improvements Medium 4. Lack of product diversification Medium Marketing 1. Lack of incountry marketing High 2. Lack of foreign country marketing High 3. Price fluctuations Medium 4. Poor communications infrastructure Low 5. Low economic profit Medium


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Processing and post-harvest constraints Soybean needs to be processed into different products with various processing methods ranging from simple to sophisticated. All of the processing methods need specific facilities, and high quality products need modern facilities. At present, the local processing factories in Ha Bac lack funds to purchase modern facilities although the present facilities are too old. Therefore, all the processed products of soybean are of low quality with high costs. Because of low living standards, farmers still cannot afford to buy nutritious soybean processed products such as soymilk and soybean powder for daily consumption. Therefore, the soybean processing industry lacks a local market because of very low demand for its products. The soysauce and soybean oil processing factories even have to reduce their production capacity. There are two factories producing animal and poultry feed using soybean in Ha Bac. However, because of low demand for their products these factories are operating only at 10% of their capacity, producing about 2,000 t of feed annually. In general, the local processing industry can rapidly increase the economic return of soybean production by creating a good market. Improvement of soybean processing means improvement of soybean production. This can be the main solution in solving the problem of soybean marketing. In Ha Bac, annual per capita consumption of soybean is only about 4.4 kg/person which is equal to average per capita consumption in South East Asia. Marketing Marketing directly affects the growth rate of soybean production. The results of the survey indicate that farmers have to sell their soybean with unstable prices which range considerably (from 2,500 to 4,000 dong/kg). At harvest the price of soybean is often very low. The highest price of soybean is observed at sowing time, when it often increases by 50-60%. This is one of the disadvantages to farmers. Calculations indicate that soybean production will be more profitable than rice production if the price of soybean is higher than 3,400 dong/kg. If the price of soybean is lower than 2,500 dong/kg soybean production will be unprofitable. Since the international market price of soybean is about US$ 350/t, the local price of soybean is still higher than the international price and export of soybean is difficult. Export of soybean may be a good way to solve market constraints. For this purpose, there is no other way but to breed and grow high yielding and high quality varieties to reduce production costs. Of course, most attention should be given to the local market. Markets and price are the main factors determining the growth rate of soybean production. If the government agencies responsible for purchasing and processing soybean cannot ensure a good market for soybean, the price of soybean will be unstable and will depend on private traders. In that case, the processing factories and the consumers in non-soybean areas have to buy soybean from the private traders at high prices. This is the cause of high costs of soybean products in the local market. In general, soybean markets include two forms of soybean products, raw and processed products. The main markets of soybean are local markets (including both soybean and non-soybean growing areas, highly populated and industrial areas). Export markets may be the countries with high demands for soybean in Asia, such as Indonesia, Hongkong, and Japan. Impact of government economic policy on soybean production The new mechanism of economic management recognizes farmer households as an independent economic unit. Present economic policies of the government pay great attention to stimulating farmers to improve agriculture production on the way of commercialization. At present, however, soybean is still considered a secondary crop in Ha Bac because two rice crops

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are the most important. Based on this fact, the government stimulates farmers to produce more soybean by making the best of their land and growing more crops in different ways, such as: Soybean planted in summer and winter is free of tax. Free irrigation is provided to farmers growing summer and spring soybean. Farmers are encouraged to get more land to grow summer and winter crops. Loans are provided to farmers in case of need, especially poor families. However, soybean production is facing many difficulties. At sowing, the farmers have to buy soybean seed at high cost. Seed production agencies need government subsidies to provide soybean seed to farmers, but there is not yet such a policy. In addition, there is still no suitable price policy; at harvest the soybean price is determined by private traders who often buy at a very low price.

Priorities in solving the constraints to soybean production The highest priority should be given to breeding and selecting of suitable high-yielding and short duration soybean varieties for summer and winter crops. The seed supply system needs be improved. Other priorities include: rational utilization of fertilizers to increase soybean yield, especially on poor soils; Rhizobium seed inoculation, use of different microelement fertilizers and growth stimulants/regulators to increase soybean yield; and identification of highly effective chemicals/insecticides. Three levels of processing industry need to be studied and encouraged:

• Household-scale processing: Farmers need encouragement to process soybean products such as soymilk, soysauce, and towfu at the household scale for family consumption.

• Village-scale: A small processing machine with a daily capacity of 0.5-0.8 t is needed for each village.

• Large-scale processing: Good facilities are needed to process 12-15 t/day. Main products would include soybean oil, nutritious powder for children, feedstuffs or starch.

Marketing The highest priority should be given to local markets. At present per capita consumption of soybean is only 4.4 kg in Ha Bac and in Viet Nam only 1.4 kg. This means that the local market is still far from saturated with soybean. It is clear that knowledge on utilization of protein- rich soybean products for human and animal consumption should be spread among the population. If utilization of soybean products becomes habitual soybean will have a large local market. To access the international market a program for variety improvement is urgently needed. The local varieties of soybean do not satisfy the requirements for export. Processed products of soybean may be exported only if the processing facilities give high economic efficiency. However, large investment which is rather difficult to obtain is required.

Conclusions and recommendations This study on the economy of soybean production and marketing was conducted over three months (September-December 1992) in Ha Bac, the largest soybean growing province in


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north Viet Nam. Here, soybean plays a very important role in the economy and social life of people. Summer soybean is the main legume crop' in Ha Bac, giving a higher economic return than other crops. Nevertheless, soybean production in Ha Bac is decreasing. The key constraints responsible for this situation are:

• Production aspects: Lack of high-yielding, short- duration soybean varieties. Seed supply is poor. Technology transfer is limited so that the advanced technologies for soybean growing cannot reach the farmers.

• Processing limitations: Lack of processing facilities. • Marketing: The price of soybean is controlled by private traders. There is no subsidy

policy for soybean marketing. Both local and export markets are limited and unstable. The major priorities in solving these constraints to soybean production, economy, and marketing have been discussed. However the survey covered only two districts where summer soybean is dominant. To better understand the status of winter and spring soybean crops it is necessary to conduct additional surveys in at least two other districts where these crops are popularly grown. To identify the constraints to the economy of soybean production nationally, it is necessary to expand the surveyed area to include central and South Viet Nam.

Post Harvest Processing and Utilization of Food Legumes and Coarse Grains in the Dry Zone of Sri Lanka

W.H.D. Kularatne*

Introduction

The agricultural sector of Sri Lanka contributes about 26% to the gross domestic product (GDP) and makes up to about 60% of total export earnings of the country. In addition, the agricultural sector generates about 15% of government revenue and provides employment for about 45% of the total work force of the country. Rice is the staple food crop of Sri Lanka and it is the predominant crop in the rural agricultural sector in terms of area cultivated, the total value of product, and the employment opportunities provided for the nation. At the same time the importance of food legumes and coarse grain (FLCG) crops is by no means negligible in terms of the same indicators. Table 1 presents the details of cultivated area under major FLCG crops in the country for the last twenty years. FLCG crops have been grown and consumed by Sri Lankans from ancient times, especially in the dry zone. The number of FLCG crops widely grown in Sri Lanka has changed from time to time. In the 1960s there were ten types of coarse grains and seven types of legume crops adopted by Sri Lankan farmers. However, according to the present status of FLCG crop cultivation in the country, only two types of coarse grains, namely maize and finger millet, and six types of food legumes, i.e. green gram, cowpea, black gram, soybean, groundnut and pigeonpea, are important and are grown in substantial amounts by Sri Lankan farmers, especially in the dry and intermediate zone areas of the country (Figures 1 and 2). According to the findings of the survey of "Household Economic Activities of 1984/85" about 72% of farmers in the dry zone districts of Sri Lanka cultivate at least one of the above listed FLCG crops during the maha, the major cultivation season (September - February) when the whole island receives substantial amounts of rainfall. Also, on average at least 32% of the annual household income of rural farmers comes from the cultivation of these crops. Furthermore, cereals supply over 50% of the protein requirement of Sri Lankans and at about 20% of this comes from FLCG crops grown locally. For the agricultural areas of the dry zone, these percentages may be even higher. FLCG crops are important to rural farmers in Sri Lanka not only from the household income point of view, but also as a means of supplying much needed food for the family. While finger millet is mainly important as food, cowpea, green gram and maize serve both as food and income generating crops for the farm family. Black gram, soybean and groundnut are produced mainly for the market with limited consumption by farmer households. As the majority of Sri Lankan farmers, especially in the dry zone areas of the country, practice agriculture which is semi-subsistence in nature, i.e. their agricultural production is used both

* Agricultural Economics Division, Regional Agricultural Research Center, Maha Illuppallama, Sri Lanka.

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for consumption at home and sales purposes, FLCG crops have a prominent place in their cropping systems.

Figure 1 Distribution of FLCG crops in Sri Lanka

Coarse Grains and Food Legumes in Sri Lanka 93

Figure 2 Agro-climatic zones of Sri Lanka.


Table 1 Area under food legume and coarse grain crops in Sri Lanka, 1971-1990.

Year Food legumes (000 ha)

Coarse grams ('000 ha)

1971 3,42 25.73 1972 3.80 21.76 1973 7.09 32.68 1974 16.37 67.48 1975 21.16 66.91 1976 33.41 50.25 1977 57.40 62.35 1978 55.80 46.28 1979 52.42 34.65 1980 49.20 32.40 1981 68.58 42.38 1982 70.55 48.14 1983 105.79 67.16 1984 106.03 62.29 1985 58.73 48.79 1986 63.49 47,81 1987 77.22 49.74 1988 83.86 61.51 1989 60.53 42.22 1990 100.52 48.69 Source: Department of Agriculture.

During the last two three decades agricultural development programs and plans of Sri Lanka have stressed the improvement of the FLCG crops sector in the national agricultural strategy. However, the performance of post harvest processing, marketing and utilization aspects of this sector was less efficient, compared to rice and some other popular cash crops such as chili and onions. The uses of many FLCG crops are limited at present mainly due to the non or limited availability of processing facilities at the village level. The value adding process by post harvest processing of FLCG crops is at very low levels. Therefore, it is very important to develop and improve the post harvest processing facilities and diversity of uses of FLCG crops at the village level. By doing this, FLCG crop production can be popularized among farmers and at the same time the part of the present marketing margins enjoyed by traders and intermediates could be transferred to the hands of the rural population of the country. Also, new employment opportunities could be generated at the village level and the general well-being of the rural population could be enhanced. Therefore it was felt that a study on current status of post harvest processing and utilization of FLCG crops at the farm level and identification of the main constraints to improvement of this important sector would be beneficial for the farming community and the agricultural sector as a whole.

Objectives of the study The prime objectives of the study are as follows:

• To assess the current status of post harvest processing and utilization of major FLCG crops grown in the dry zone of Sri Lanka;

• To identify the prevailing socio-economic and technological problems that are associated with post harvest processing and utilization of FLCG crops at the village level in the dry zone of Sri Lanka; and


• To suggest appropriate measures to encourage FLCG farmers, traders and others involved to improve post harvest activities and popularize the utilization of FLCG crops in the country.

Methodology This study was mainly based on primary data collected from a survey in three major FLCG crop growing representative districts of the dry zone of Sri Lanka and consisted of:

• A review of existing information about production, post harvest processing and utilization of FLCG crops in the dry zone of Sri Lanka;

• A survey of 180 FLCG farmers at seven Agrarian Service Center (ASC) ranges in three selected districts, namely Anuradhapura, Kurunegala and Puttalam; and

• A survey of fifteen millers and forty-five village level traders and collectors of FLCG crops in the. same ASC ranges where the sample survey of farmers was conducted.

The districts of Anuradhapura, Kurunegala and Puttalam were selected for the study of their relatively large areas under FLCG crops and the large number of farmers who Merde crops. The ASC areas in the sample were also picked purposely, considering the be areas under FLCG crops and large numbers of farmers involved in growing these tarit in those ASC ranges during the last four cropping seasons (1990 yala, 1990/91 maha, 1991 yala and 1991/92 maha). Two different sets of questionnaires were used for the collection of data from farmers and tradersj/millers. The questionnaires were structured on the basis of preliminary information on FLCG crops production, marketing and post harvest processing in the dry zone areas of the country. Both sets of questionnaires were pretested at the field level and revised according to field requirements. The questionnaire for farmer interviews was administered to 180 randomly selected FLCG farmers from the areas selected for the study. Fifteen millers and 45 village level traders and collectors who dealt with FLCG crops processing and marketing were interviewed using the second questionnaire. While the farmers for the survey were selected randomly the respondents from the millers/traders group were selected using a mixture of random and non-random sampling techniques. The distribution of sample of farmers, millers and traders across the areas surveyed in the study is shown in Table 2.

Table 2 Number of FLCG farmers, traders and millers sampled across different ASC ranges

District ASC range Farmers Traders Millers Anuradhapura Tirappane 34 8 3 Nochchiyagama 28 7 2 Ipalogama 26 7 2 Kurunegala Galgamuwa 24 6 2 Giribawa 28 7 2 Puttalam Ihalapuliyankulama 18 4 2 Sevukele 22 6 2 Total 180 45 15

Data collected for the study covered both cropping seasons of maha 1991/92 and yala 1992. To obtain the required supplementary information, informal, unstructured interviews and discussions were held with some relevant government, semi-government and private sector officials serving the FLCG crops production and marketing systems in the study area.


Description of the study area The study covered three administrative districts namely Anuradhapura, Kurunegala and Puttalam (Figure 3). All of these districts can be considered as important and diversified agricultural areas with substantial land under FLCG crops.

Figure 3 Location of areas surveyed.

Anuradhapura district has an area of 729,030 ha of which about 68% is agricultural land (Table 3). Agriculture in the district is served by twelve major reservoirs and more than 3,200 minor tanks. The entire district of Anuradhapura falls within the north central dry zone part of the country. The highly fertile reddish brown soils of the district have tremendous production potential and are suitable for cultivation of a variety of agricultural crops. The district has about 70,000 ha under rice of which about 65% is cultivated under small tanks (reservoir) or under rainfed conditions. The rainfed rice crop is cultivated only in the maha season. Even under most minor tanks, the yala rice crop is planted at considerable risk.


Food legumes and coarse grains (FLCG) are grown on about 16,000 ha in the Anuradhapura district, primarily under rainfed conditions during the maha season in uplands. The district is an important place for production of a number of FLCG crops such as soybean, maize, finger millet, cowpea, green gram and pigeon pea. The total population of the district of Anuradhapura was about 887,700 (mid 1989), 85% of which lives in rural areas. The majority of rural farmers in the district cultivate and consume most of the popular FLCG crops.

Table 3 Land use pattern in Anuradhapura district. Crop Area (ha) Coconut 850 Other permanent crops 2,620 Rice (irrigated) 87,749 Rice (rainfed) 32,418 Seasonal crops 80,512 Unused agricultural land . 22,410

Total agricultural land 246,560 Total land 729,000 Source : Land Use Division, Kahcheri, Anuradhapura

According to the Department of Census and Statistics of Sri Lanka, Kurunegala district has an area of 477,790 ha of which about 62% is agricultural land (Table 4). The district is served by ten major irrigation tanks and more than four thousand small scale village tanks. Three major agro-ecological regions the dry, Intermediate and wet zones occur in this district. The light fertile soils of the intermediate and dry zone parts are very suitable for cultivation of a number of food crops, including the FLCG crops. In the drier part of the district a number of seasonal crops are grown mainly during the maha. According to the district agricultural extension staff there is a good potential to expand agricultural production in the dry zone part of the district. Kurunegala district, with about 83,000 ha under rice surpasses all other districts of Sri Lanka in extent and production of rice. The district ranks first in production of such important pulses as cowpea and green gram which belong to the FLCG group of crops. Most FLCG crops in this district are grown under rainfed conditions during the maha season.

Table 4 Land use pattern in Kurunegala district. Crop Area (ha) Tea 379 Rubber 5,149 Coconut 149,167 Other permanent crops 9,882 Rice 79,190 Temporary crops 59,682 Unused agricultural land 4,295 Total agricultural land 307,741 Total land 477,790 Source: Department of Census and Statistics 1989.

Approximately 35% of the total 303,580 ha of land in the Puttalam district is under different agricultural crops. As in Kurunegala district, coconut is the main permanent crop found in this district. Temporary or seasonal crops including the main FLCG crops covered by


the study are produced primarily under rainfed conditions and occupy approximately about 24,700 ha of upland. Rice is grown on about 20,000 ha and about 20% of this is under rainfed conditions. There are many small village tanks for irrigation purposes in this district, but only a few major irrigation schemes. Subsidiary food crops including all leading FLCG crops are grown in this district. These crops are grown predominantly as rainfed cultivation in uplands in Puttalam district as in the other two districts. Groundnut is an important crop in the district, especially in the Serukele area. The land use pattern and the cultivation of major subsidiary food crop in the district is presented in Tables 5 and 6 respectively.

Table 5 Land use pattern in Puttalam district. Crop Area (ha) Coconut 53,183 Other permanent crops 3,840 Rice 19,900 Temporary food crops 24,720 Unused agricultural land 3,180 Total agricultural land 104,823 Total land 303,580 Source: Central Bank of Sri Lanka 1986.

Socio-economic conditions of FLCG farmers in the study area The age and civil status of fanners are important characteristics for socio-economic analysis as they can be related to farmers working capacity, their attitudes towards new technology and decision making at the farm level. Most of the FLCG farmers covered by the study were married (159 of 180). The average age of a farmer for the whole sample was 42.1 years (Table 7).

Table 6 Cultivation pattern of subsidiary food crops in Puttalam districk1990-1991. Area (ha) Crop Maha Yala Annual total

Chili 115 55 66 Red onion 1,500 50 2,00 Big onion - 3 3 Maize 800 80 Finger millet 125 1 13 Green gram 3,000 1,30 4,30 Cowpea 4,250 2,70 6,95 Black gram 850 10 95 Groundnut 1,550 90 2,45 Ginger 300 50 80 Soybean 50 3 8 Potato 20 2 Source: District Agricultural Implementation Program 1991.

The literacy rate, defined as the percentage of the population 10 years and above able to read and write at least one language, is around 88% for the whole sample of 180 farmers. Thirty-nine percent of FLCG farmers in the study area had primary education which is up to grade five. Another 49.4% had a level of education ranging from fifth to tenth standard. Only 11.7% of farmers has a tertiary level education (Table 8). However, the education and literacy


level of family members was higher and there were even university graduates and a number of under graduates among the family members of some FLCG farmers.

Table 7 Age and civil status of FLCG farmers (%) Anuradhapura Kurunegala Puttalam Total Age group (years) Married Single Married Single Married Single Mamed Single Below 25 6.8 3.4 5.8 1.9 10.0 5.0 7.2 3.3 26 - 35 18.2 4.5 25.0 3.8 22.5 7.5 21.1 5.0 36 - 45 21.6 2.3 40.4 3.8 30.0 2.5 28.9 2.8 46 - 55 30.7 - 13.5 1.9 17.5 - 22.8 0.6 over 56 12.5 - 3.8 - 5.0 - 8.3 - Total 89.8 10.2 88.5 11.5 85.0 15.0 88.3 11.7

As mentioned earlier farming is the dominant form of employment in all areas covered by the study. Since all three districts are high potential agricultural areas the majority of farmers are engaged in full-time farming. Most of the farmers (86.4%) in the total sample were reported as full-time farmers while the rest (13.6%) practiced part-time farming. Among those who were engaged in part-time farming were a few office clerks, teachers, traders and agricultural labourers. In the sample about 92.5% of married farmers had children (Table 9).

Table 8 Education level of farmers (%). Education level Anuradhapura Kurunegala Puttalam Total No education 6.8 5.8 7.5 6.4 1st - 5th standard 40.9 26.9 22.5 32.8 6th - 8th standard 27.3 42.3 45.0 35.6 GCE(O/L) Examination 20.5 17.3 20.0 19.4 GCE(A/L) Examination 3.4 7.7 2.5 4.4 Other qualification 1.1 - 2.5 1.1

Of the farm families covered by the survey only 27.3% had an average of 1.6 males over 16 years of age contributing to the agricultural activities on a full-time basis. Many male children (24.9%) over 16 years of age worked part-time in agricultural activities. From the total sample about 70.2% of housewives were engaged in agricultural activities mainly on a part-time basis.

Table 9 Family composition of FLCG farmers* Children over Children under All ages

16 years 16 years Ave no. per Percent Ave no. per Percent Ave no. per Percent

family families family families family families Sex

reporting reporting reporting Male 1.7 48.4 1.6 63.2 2.3 82.3 Female 1.4 38.7 1.9 58.7 2.1 86.4 Both sexes 2.3 58.1 2.9 74.8 4.1 92.5 * Excluding farmer and wife

Only 33.1% of farmers in the sample were found to be engaged in any kind of animal husbandry: 19.4% of farmers possessed dairy cattle, 13.6% buffaloes, 7.9% poultry and 4.6% goats. In the district of Anuradhapura, where there is sufficient land to rear animals, more farmers owned cattle herds compared to farmers in the other two districts. Farmers rarely used animal power for land preparation or any other activity in FLCG crop production.


Except for some basic farm tools such as mammitis, sickles, knives, and axes, only 4.4% of FLCG farmers owned equipment such as two wheel tractors. Only two farmers from the total sample reported having a four wheel tractor while 13 (7.2%) of farmers had water pumps and 21 (11.7%) farmers had manually operated sprayers. The majority of farmers hire farm machinery when it is required from owners, mainly the richer farmers and shopkeepers in the village.

Production of FLCG crop in the study area Production of FLCG crops is not uniform throughout the three districts included in the study. Large areas of individual crops are grown in the dry zone areas of Kurunegala and Puttalam districts and in many parts of Anuradhapura, with some ASC ranges dominating the production of some crops. Table 10 presents the distribution of cultivated areas under different FLCG crops in the three districts for two seasons. Less FLCG crop is grown in the yala season because of lower rainfall during this season than in the maha season. The survey shows that in all three districts FLCG crops are mainly cultivated on chena (slash and burn) lands or uplands under rainfed conditions coarse grains, maize and finger millet are found exclusively as maha season crops. According to the farmers interviewed in the study chena cultivation was the most common form of cultivation of FLCG crops in the past. This was possible because of low population pressure in rural areas and availability of large areas of forest land for cultivation in those days. Also these conditions permitted farmers to have a lengthy fallow period of several years after cultivation in one chena. However, rapid population increase and introduction of large irrigation and settlement schemes in the dry zone areas of the country have resulted in greater pressure on land availability for chena cultivation. During the 1991/92 maha season chena land accounted for only 14% of FLCG cultivated area in Anuradhapura, and 12 and 15% in dry zone parts of Kurunegala and Puttalam districts respectively. The classical system of chena cultivation of FLCG crops has little prospect in these areas in the future.

Table 10 Distribution of cultivated area under different crops in the study area. Average area per farmer (ha)

Anuradhapura Kurunegala Puttalama Maha Yala Maha Yala Maha Yala Crop

1991/92 1992 1991/92 1992 1991/92 1992 Green gram 0.27 0.19 0.41 0.28 0.19 - Cowpea 0.36 0.21 0.37 0.23 0.22 0.09 Black gram 0.49 - 0.18 - 0.21 0.16 Soybean 0.35 - 0.17 - - - Groundnut 0.22 - 0.31 - 0.42 0.21 Pigeon pea 0.21 0.13 0.14 - - - Maize 0.42 - 0.38 - 0.26 - Finger millet 0.41 - 0.22 - 0.21 -

Most of the farmers surveyed in this study prepared their land for FLCG crops manually with a mammoty. Draught power or tractors were used rarely and only when a holding was very large and the family labour supply was poor. Use of tractor or draught power for land preparation was relatively high in the case of black gram and groundnut cultivation. The majority of farmers in the study areas prepared their lands for FLCG crops in the dry period during July- August in maha season and February-March in the yala season. This is done in order to establish the crop with early maha rains which usually begin in mid September or early October, and yala rains, in late March or April. This practice favors control of weed


growth as well. Above 80% of farmers in the study area reported that they planted their coarse grain or pulse crops in the maha season during the months of October-November. The yala cultivation of pulse crops is usually planted during April - May and in limited locations the planting time is even extended up to mid June depending on rainfall. The most popular method of planting among food legume farmers in the survey area was the dibbling method. Row seeding was practiced predominantly by black gram farmers, while the broadcasting method was used by 100% of finger millet farmers. The popularity of the dibbling method seems to be associated with the spreading of improved varieties of many FLCG crops in these districts. FLCG farmers in the study area seem to be aware of the value of improved varieties of food legume crops. Very few farmers (less than 20%) stated that they prefer local varieties. In the case of coarse grains non or poor availability of improved varieties has resulted in predominant use of local traditional varieties by farmers. However, over 70% of surveyed farmers reported that they used their own seeds in the last cultivation season. A few obtained seeds from neigors or purchased them from village shops, nearby towns or from the Agrarian Service Center of their area. Almost all farmers practiced hand weeding for all crops included in the study with the exception of finger millet. This was a labour intensive activity which required about 20 to 45 man-days per hectare depending upon the crop. Farmers in the study areas used almost no fertilizer for most of the FLCG crops and believed that the soil was sufficiently fertile. This practice may have resulted in poor or marginal yield of most of the FLCG crops in these areas. Soybean and groundnut farmers have sometimes used fertilizer for their crops but not at adequate rates. Most FLCG crops were harvested and threshed manually. Harvesting generally involved heavy use of female and child labour, while men did the threshing in the majority of cases. The amount of labour required for these operations varies with the crop, the number of pickings and the yield. According to our study of labour use for cultivation in the study areas, almost all FLCG crops covered by the study can be considered as medium intensity crops with respect to labour use, averaging about 80 - 115 man days per hectare for cultivation under rainfed conditions. By comparison chili and onion cultivation in the same area required a total of 280 and 240 man days respectively for one hectare.

Table 11 Average yield of FLCG crops in the study area. Average yield (kg/ha)

Anuradhapura Kurunegala Puttalama Maha Yala Maha Yala Maha Yala Crop

1991/92 1992 1991/92 1992 1991/92 1992 Green gram 684 539 632 412 418 487 Cowpea 602 581 694 536 548 319 Black gram 568 486 520 527 609 586 Soybean 621 - 434 - - - Groundnut 646 - 798 685 736 482 Pigeon pea 541 418 488 - - - Maize 738 - 618 - 506 - Finger millet 487 - 330 - 337 -

Although most FLCG crop production in all three districts is market oriented, excluding the finger millet crop, the yields obtained by farmers are not high (Table 11). The average yield of the yala season in all areas confirms that the yield levels of most of FLCG crops under rainfed conditions are always lower in the yala season than in the maha season. A majority of farmers claimed that drought during the growing period and excessive rain during the period


of harvest were the main reasons for low yields. However, agricultural extension workers and our own field observations during the survey indicated that low yield of many FLCG crops may be a result of low input use and poor crop management. Nevertheless, the survey indicated that 68, 72 and 62% of farmers in Anuradhapura, Kurunegala and Puttalam districts, respectively, favored food legume production because they are the most suitable crops that can be grown under rainfed conditions and prevailing market possibilities. Green gram and cowpea were considered to provide cash income as well as home consumption compared to some other field crops by 48, 42 and 34% of farmers surveyed in Anuradhapura, Kurunegala and Puttalam districts, respectively. Among the reasons given by farmers for preference of these crops over other high value cash crops, such as chili and onion, were lower capital requirement, opportunity for family participation and consumption ability.

Post harvest processing and utilization of FLCG crops Products originating from FLCG crops have to go through a number of stages before they reach the consumer. There stages can be grouped under three broad categories, the production, processing and marketing stages. The post harvest processing of FLCG crops has very close and interrelated links with both production and marketing stages. The final products that originate from FLCG crops can also be categorized under three broad groups depending on the type of processing. They are crops with limited or no processing, traditional processing, and industrial processing. The crops that come under the first two categories are of prime importance in rural agricultural situations in most developing countries. The FLCG crops covered by this study mainly fail into these two groups. As clearly revealed by this study, there is no widespread adoption of post harvest processing for most FLCG crops at the farm level in the dry zone of Sri Lanka, except for the initial processing activities such as threshing, winnowing, drying and cleaning, etc. These basic processing operations account for very limited use of farm family labour and can be considered as micro requirements of the harvesting, marketing or consumption activities. De-hulling and splitting of food legume crops and grinding of flour from finger millet are the most common processing activities that take place at the village level but only on a very limited scale. Most of the FLCG crops are consumed by farm families or sold to village traders or collectors. It was also evident that most of the FLCG farmers are engaged in rice cultivation which utilizes most of their time. Therefore they seldom practice post harvest processing of FLCG crops even through some can be practiced at home, manually. Many farmers in the study area indicated willingness to pay greater attention to post harvest processing if better marketing facilities were made available in their villages. Post harvest processing of FLCG crops at the farm level and marketing of processed products by farmers seem to be feasible if they were provided with appropriate training. A further alternative is to support village level organizations such as a rural development society or young farmers society, thus enabling them to do some post harvest processing and disposal of FLCG crops in a more attractive manner. The later alternative should be closely linked into the state sponsored processing centers or marketing outlets. Although most farmers agreed that proper post harvest processing practice could give them quality products for both home consumption and markets they were not really interested in paying attention to this aspect. Many of them do not even properly dry or sort their product after harvesting. It was observed that most of these farmers are under tremendous pressure during the harvesting period so they want to sell the surplus product even at a lower price to obtain cash for their immediate needs.


Farmers in all areas of the study stored their FLCG crops mainly in gunny sacks or on the floor if the period of storage was not lengthy (Table 12). In very few cases (9 out of 180) crops such as green gram and cowpea were stored in large earthenware pots, a type of grain storage generally used in ancient times. The finger millet storage by some farmers (32%) was in special storage places in the pod form without threshing. Many respondents of the survey reported heavy losses from insects and rodents during storage. The survey showed that the main constraints to on farm storage of FLCG crops were lack of storage facilities, cost and scarcity of gunny sacks and inadequate knowledge of proper post harvest protective measures. In addition to the need for immediate cash, these reasons favor the sale of a major portion of FLCG products immediately after harvest. Most of the FLCG crops contain between 12 and 34% protein and are important sources of protein in the diet of people who can ill afford animal protein or whose religion or social customs discourage consumption of animal products. They are a major source of protein in many developing countries especially among the poorer sectors of the population. In the dry zone areas of SriaLanka, from ancient times farmers have consumed a lot of coarse grains and pulses. In early periods, in miffed upland cultivation, under the slash and burn system of cultivation a major portion of the land was devoted to cultivation of finger millet, maize and other pulse crops. The farmer's family morning meals, and sometimes even all three meals of the day, were based on coarse grains and/or pulses. Still, in remote village areas of the dry zone of the country, the rural population prefers to have at least one meal from coarse grains or pulses. They believe that these diets provide all the nutrient requirements for their day.

Table 12 On farm storage of FLCG crops (% of farmers reporting). District Crops Anuradhapura Kurunegala Puttalama

Gunny sacks 83 76 91 Clay pots 4 5 0 Wooden boxes 3 4 2 On the floor 10 15 7

The survey revealed that there is no practice at the farm level in dry zone of Sri Lanka of processing the FLCG crops for commercial purposes or as village level small scale processing industries. In fact farmers use traditional soaking, drying and manual grinding or pounding methods to de-hull, split and mill most FLCG crops as required for home consumption. As already mentioned sales of FLCG crops are currently made as whole grains and seeds. Consumption of food legumes was mainly as the breakfast meal or in the preparation of curries for which green gram and cowpea were the most popular. Preparation of various traditional and new sweet meals was also reported by farmers as an important form of utilization of FLCG crops at the farm level. Of the reported total production of green gram, about 13.5% is consumed by farmers in all three districts. In some areas this percentage increased up to 22%, where the total production figures were not very high. Most of this consumption was after simple boiling. About 12% of farmers stated that they split green gram, cowpea and black gram in small amounts using a grinding stone at home. Another 7 % of farmers reported they obtained split green gram cowpea or black gram from rice mills for curries and some sweet meals during the festival times. Consumption of these crops at home is noticeably higher for all farmers during the harvesting period and a few weeks thereafter. About 92% of FLCG farmers stated that they prefer to eat green gram and cowpea and to sell black gram, soybean and groundnut while about 64 and 47% expressed their willingness to consume maize and finger millet, respectively. Many complained that they cannot keep these products for a long period since


pest damage is very high and their financial difficulties would not allow lengthy storage even if it were possible. Many farmers are still not very familiar with cultivation, processing and consumption of soybean and pigeonpea as these are relatively new crops. Only a small number of farmers who have attended workshops or training programs conducted by the Department of Agriculture or other organizations have some knowledge about new technologies of production, processing and utilization of these two crops. Thus soybean and pigeonpea farmers who were few compared to the number of green gram, cowpea, black gram, maize and finger millet farmers, have consumed only a small portion, about 4 and 5.6% of their soybean and pigeonpea crop production respectively, at home. Maize and finger millet crops were also popularly consumed at the village level. Among the three districts Anuradhapura ranked as number one with respect to the cultivation as well as consumption level of these two crops. Maize in many instances was consumed after boiling of fresh cobs. Only 8% of farmers in Anuradhapura district reported that they have taken maize seeds to grain mills (in an average amount of 26 kg per farmer), milled them and consumed them as roti or pittu, two famous local preparations made from these crops. For these farmers the milling cost which averages Rs 8.76 (US$ 0.21) per kg is very high. Finger millet, or kurakkan as it is known locally, is a favorite traditional meal in rural areas of the dry zone of Sri Lanka. There are a number of preparations of this crop, all based on finger millet flour. Most finger millet farmers (over 90%) grow this crop for home consumption only. Many rural farmers belonging to the elder generation prefer this crop, but it was observed that only a few young farmers like the crop for cultivation as well as for consumption. Milling of finger millet was predominantly done at home using a grinding stone, generally on a meal to meal basis. This activity was handled by women and according to 58% of sampled farmers processing and milling of finger millet by manual methods is labour consuming and difficult. However processing and milling facilities are insufficient for many of these crops at the village level and those in towns are expensive and difficult to access from the farmers point of view. Some elder farmers claimed that the unwillingness of the younger female farm generation to manually process these crops serves as a constraint to increase production of these crops. Many believe that it is more practical to sell their FLCG crops as whole grains and purchase imported wheat flour from the market. Considering the amount of foreign exchange required for the importation of large quantities of wheat flaira, it is obviously wise to think about developing processing facilities for these crops at the village level.

Marketing of FLCG crops in the study area The study attempted to identify the areas in which FLCG crops are commercialized and the opportunities available for farmers to dispose of their products. Economists define markets as any organization whereby the buyers and sellers of goods are kept in close touch with each other. In other words, the market is a place where the suppliers and buyers of a good interact. In the context of agricultural products, supply denotes the quantities of product available for consumption or use by the non-farming population, which has a demand for the same produce. According to the market research unit of the Agrarian Research and Training Institute of Sri Lanka first-hand marketing of most of agricultural products in Sri Lanka is done through two main channels, namely institutional and non-institutional or private. The main institutional channels are multipurpose cooperative societies, the Paddy Marketing Board, regional or district depots of the Cooperative Wholesale Establishment (CWE) and the Marketing Department.


The non-institutional channels which are most prominent in marketing of agricultural products include village shopkeepers, traders from nearby townships, weekly fairs at the village and visiting collectors. Most farmers in all three districts sold their FLCG crops to village shopkeepers and to traders in nearby towns (Table 13). Village shops are frequently located at a central junction of the village and serve a hinterland of 2 to 12 km depending upon the location and the size of the village. In addition to the purchasing of agricultural products these village shopkeepers supply a variety of commercial goods to the villagers while some of them even extend credit, cultivate land and provide transportation too. The majority of FLCG farmers who sold their produce to village shopkeepers in the study area sold in small lots varying from 5 to 30 kg for cash to meet their immediate needs. Shopkeepers in their turn reserved as much product as possible hoping the price of the product would be higher in the future. They sell these reserved commodities without any further processing to wholesalers in larger cities or their agents who come to the village. Almost all shopkeepers dealing with FLCG crops confirmed that the selling of FLCG crops to them peaks immediately after the harvest in both cultivation seasons. The buying price set by the shopkeeper is mainly based on the current market price in the closest township for the particular product of similar quality. The price offered by the shopkeeper to the producer is usually the final price. The farmer has very little or no bargaining power because of his need for immediate cash and time, effort and cost required to take the produce to the nearby township or back home. Thirty-six of forty-five village level traders of FLCG crops in the study areas had no direct information on current prices in wholesale markets. They received only second-hand information from traders from nearby towns with whom they had contacts. A few (about 18%) of these traders had their own trucks or tractors to transport purchased product to the selling point and the reminder hired transportation as required. As mentioned earlier most of the food legume crops grown in the study area were produced for market (Table 14). A good portion of coarse grain production especially the finger millet is consumed at home. Many farmers surveyed sold most of their marketable surplus of FLCG crops immediately after harvest to obtain cash to operate the household and farm. Lack of adequate storage facilities and heavy post harvest losses due to insect damage were constraints. The practice of selling the product soon after the harvesting denied farmers the benefits of higher off-season prices. However with regard to some FLCG crops, especially cowpea and green gram, farmers appeared to be price responsive and sometimes transferred their stocks for seed or consumption to sales or vise versa depending on the market price.

Table 13 Farmers use of various marketing outlets for FLCG crops (%). Marketing outlet* Anuradhapura Kurunegala Puttalama Village shop 61 54 49 Traders in nearby town 16 21 37 Village fair 12 7 9 Visiting collectors 8 13 8 Cooperative and 3 5 7 government transportation * Some farmers used two or more marketing outlets. In such cases only the Major outlet was noted.


Over 68% of farmers reported that they kept a portion of their FLCG crops for seed purposes. It appears that this practice is insurance against high prices and unreliable supply of seed at the planting time. Additional profits from seasonal variations in prices of many FLCG crops were realized by about 48% of village shopkeepers surveyed in the study. However another 26% complained of severe losses due to price fluctuations. Lack of proper market information and supply forecast was identified as the main reason for such situations. The scale of purchases by traders is given in Table 15.

Table 14 Farmers (%) reporting cultivating of FLCG crops for consumption and sales purposes*.

Anuradhapura Kurunegala Puttalama Crop a b c a b c a b c Green gram 18 12 70 8 16 76 8 24 68 Cowpea 16 18 66 12 14 74 14 12 74 Black gram 0 90 10 - - - 0 76 24 Soy bean 0 94 6 - - - 0 92 8 Groundnut 6 28 66 24 32 44 4 68 28 Pigeon pea 0 84 6 0 76 24 0 92 8 Maize 24 8 68 32 12 66 28 14 68 Finger millet 62 0 38 38 0 62 90 0 10 * a = consumption only; b = sale only; c = consumption and sale

Grain dealers at the nearby township are the next important marketing outlet for some FLCG farmers. The amounts of FLCG crops sold to this group of traders by FLCG farmers surveyed in the study area were 28% and 18%, respectively, in 1991/92 maha and 92 yala seasons. Farmers used bicycles, bullock carts and private and public buses to transport FLCG crops to the nearby township.

Table 15 Scale of FLCG crop purchases by traders surveyed. Quantity purchased (t)

Number of purchases (maha 1991/92)

Number of traders (yala 1992)

< 1 9 12 1- 5 14 20 5 - 10 12 8 10-20 5 1 20 - 50 4 4 > 50 1 0 Total 45 45

The village fair is another important place for FLCG fanners in all three districts surveyed. Farmers use this market outlet to sell their products and to purchase different necessities. However, many farmers interviewed (78 out of 180) expressed their dissatisfaction with prices offered at village fairs and made many allegations, including incorrect weighing of their products, against village fair buyers. Private marketing outlets are well spread and used by the majority of farmers as institutional marketing channels are not available in many places and even when available they are inactive and inefficient compared to the private sources. The majority of traders interviewed were satisfied with both buying and selling prices, present methods of procurement and the available transportation facilities (Table 16). The most serious problems for many of them are storage and insect damage, timely availability of credit and high interest to be paid on cash loans.


Table 16 Opinions of 45 traders of FLCG crops on different aspects of their business in 1992. Number of traders stating:

Opinions Problem detected Consideration Good Satisfactory None Few Many

Price paid to the producer 12 19 8 6 - Price received for the product 5 16 2 19 3 Method of collection 6 18 6 10 5 Transport availability 10 23 12 1 - Cost of transport 6 18 2 18 2 Cash loan availability - 6 4 32 5 Interest on loans - 8 - 30 7

Visiting traders/collectors also purchase FLCG crops from fanners. During the two seasons covered by the study only about 14% of farmers in maha season and 8% of farmers in yala season sold their FLCG produce through this marketing channel. Institutional marketing channels for FLCG crops were weak in all areas of survey. Some institutional market outlets actively participated in purchasing soybean and pigeon pea which are relatively new crops produced in small quantities. Hence, with regard to the marketing of FLCG crops, the only competition to purchase was among private sector buyers. It was observed that few new buyers enter the market of FLCG crops because of capital constraints and the risk due to seasonal fluctuations in supply of these products and prices. However the survey revealed that 66, 68 and 58% of FLCG farmers from Anuradhapura, Kurunegala and Puttalam districts, respectively, still prefer to market their FLCG crops, through institutional market channels. This is because the institutional market outlets offer a fair price and their weighing of produce is more accurate and acceptable. However, private channels are used by the majority of farmers because they offer immediate cash payments and accept products of any quality without much sorting or grading. None of the traders reported any restrictions on the quantity they could buy except for availability of cash to make immediate payments. All 45 traders stated that they have quality requirements for purchase of commodities. Moisture content and purity levels of the products were assessed by finger touch, bite or visual inspections. None of the traders used instruments to measure these qualities. Most of traders were satisfied with the quality of green gram, maize, soybean and black gram, but many of them complained about groundnut and cowpea (Table 17).

Table 17 Quality of FLCG crops bought from farmers by traders in the study area (1992).

Number of traders reporting Crop Satisfactory Not satisfactory No response Green gram 29 11 6 Cowpea 9 32 4 Soybean 21 6 18 Groundnut 11 25 9 Black gram 24 5 16 Maize 19 6 20

More than 33% of traders in the sample reported lack of quality control measures for the FLCG product as a major problem. Many of them reported that products they purchased especially groundnut and cowpea, are a mixture of different varieties. Another important quality defect identified is the presence of impurities. Immaturities are also a problem for many of traders (Table 18).


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Table 18 Quality defects in the produce as reported by traders Crop Defect Green gram mixed varieties, discolored seeds Cowpea discolored seeds, immaturities and mixed varieties Soybean discolored seeds and insect damage Black gram mixed varieties and impurities Groundnut shrinkage, impurities and mixed varieties Maize insect damage and mixed varieties Finger millet impurities

Conclusions The complex problems of agricultural and rural development in developing countries such as Sri Lanka cannot be solved by biological research alone. Socio-economic studies among others are required to identify constraints and feasible opportunities for development of rural agricultural sectors in these less developed countries. Such was the intent of this study. The findings of the study confirmed that the dry zone of Sri Lanka continues to be the main FLCG crop producing area of the country, particularly during the maha season under rainfed conditions. The majority of the farmers surveyed preferred cultivation of FLCG crops over other subsidiary food crops because of perceived economic returns, family consumption and possibility of cultivating these crops almost exclusively with family labour. Most FLCG crops are produced under rainfed conditions on upland or chena land where uncertain and variable weather conditions result in unstable low yields and poor economic returns. In addition, up to 25% of total production may be lost due to poor post harvest handling and processing. Institutional and private sources of inputs, supply and technical assistance support especially with regard to the post harvest processing, are very limited for FLCG farmers. At present these services are almost exclusively directed to support rice and other high value cash crops. Lack of effective and aggressive extension programs and services at the village level results in continued use of traditional technologies in the production, processing and utilization of most of FLCG crops grown in the study areas. The limited resources at the farm level are often allocated to rice and other high value crops at the expense of FLCG production. As a result, yields of many FLCG crops are well below the potential yield levels as are the economic returns per hectare. Markets and marketing opportunities are restricted for most FLCG crops. Many farmers sell their FLCG production immediately after harvest because of a need for immediate cash. Lack of proper storage facilities and lack of market information are constraints. Most purchases of FLCG crops are made by a few private traders at the village level. Institutional purchasing is too little or sometimes too late to be an effective catalyst of competition in the local market. Thus, prices are depressed during the harvesting time. With regard to the post harvest processing, dehulling, splitting and grinding of FLCG crops and production of a limited number of local food preparations on a small scale are the most common ventures that can be identified in the dry zone rural areas. However, it is thought that value added to FLCG products can be increase by introducing various small scale processing industries. This added value can serve to transfer part of the present marketing margin of traders into the hands of the rural population which is under-employed or unemployed. Nevertheless, more extension activities remain to be undertaken in order to achieve success.


In the dry zone in Sri Lanka, there is clear potential for improving the production, post harvest processing and utilization aspects of FLCG crops. Through such activities the income levels of the rural agricultural sector and the quality of life of farm families could be enhanced. Since the education and literacy levels of FLCG farmers and their family members are at satisfactorily high levels, introduction of new technologies and improved cultural practices with regard to the production, post harvest processing, marketing and utilization among farming community will not be difficult.

Recommendations Any program or plan to motivate the increased production, improved post harvest processing and better utilization of FLCG crops at the village level must include improved technical, financial and institutional support, better marketing opportunities and provision of more information on marketing and consumption. Production support services, including transfer of improved appropriate technologies and use post harvest processing, need attention. Specific and easier credit facilities and insurance schemes for processing and marketing of FLCG crops will permit increased capital inflow to this sector and improved technologies in this area, especially at the village level. This will definitely make the production, processing, marketing and utilization of FLCG crops much more efficient, popular and sustainable at all levels. Farmers should be aware of the various market opportunities for FLCG crops. Prices and other market information should be made available to them on a regular basis. Knowledge of post harvest processing and protective measures that should be taken is also very important. The extension services should help farmers in this regard and should train them to use credit and market information in their decision making. As farmers have to produce increasingly for the market a commercialized type of production and post harvest processing of FLCG crops should be encouraged. Development of low cost post harvest technology and small scale facilities for on farm storage and processing of FLCG crops would reduce the post harvest losses which are very high at present. Also this will help to improve the supply of FLCG products in the market, and may provide additional income to FLCG farmers by allowing them to increase sales and permitting them to wait for better prices rather than selling just after the harvest. The extension services on food technology and farm women should organize training programs and demonstrations for women on preparation of different new FLCG-based foods. This will help to increase FLCG consumption and improve the nutrition and health of villagers, especially village children. More research on post harvest technologies for FLCG crops is necessary to produce clean, uniform, quality products at reasonable price. Export market requirements and quality standards for FLCG crops of importing countries should also be investigated. The study's objectives will have been met if some measures are taken to alleviate the major constraints faced by the FLCG farmers with regard to the production, post harvest processing and marketing in these areas so as to enhance their present poor standards of living.


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Vol. 117. Agricultural Implementation Programs. 1988-1990. Kurunegala district, Anuradhapura district

and Puttalam district. Ariyaratne, H.P. 1991. Grain legume improvement in Sri Lanka. Proceedings of Workshop on

Improved Production and Utilization of Food Legumes in Sri Lanka. Peradeniya, Sri Lanka.

Atapattu, N.K. and Chandrsekara, C.M. 1989. Marketing of agricultural products in Sri Lanka. Country report presented at the Colorado University, U.S.A.

Bernsten, R. Design and management of survey research. A guide for agricultural researchers. CRIA/IRRI Cooperative Program. Bogor, Indonesia.

Central Bank of Sri Lanka. 1985, 1986, 1989. Economic and Social Statistics of Sri Lanka. Colombo, Sri Lanka.

Kularatne, W.H.D. 1988. Production and marketing of green gram in north western province of Sri Lanka. Research report no. 4. Diversified Agricultural Research Project, Peradeniya, Sri Lanka.

Kularatne, W.H.D. 1991. Socio-economic aspects of food legume and coarse grain production in Sri Lanka. Paper read at RAS/89/040 Working Group Consultative and Planning Meeting, August, Chiang Mai, Thailand.

Navarro, L. and Suraweera, E. 1988. Trends and geographical distribution of subsidiary fieldcrop production in Sri Lanka. Department of Agriculture, Peradeniya, Sri Lanka.

Ranaweera, N.F.C. 1990. Paddy production in Sri Lanka: past, present and future. Paper readat the Rice Congress, September, Kandy, Sri Lanka.

Schultz, T.W. 1969. Economic growth from traditional agriculture. In Agricultural Science for the Developing Nations. A. H. Mossman, ed. Washington DC, USA.

Vignarajah, N. 1978. Mungbean research and production in Sri Lanka. The First International Mungbean Symposium. Taiwan: AVRDC.

Production, Marketing, and Utilization of Soybean in Thailand

Pinit Kulamongkon *

Introduction

Soybean is a major economic crop with continuously increasing production targets in the National Economic and Social Development Plans I-VII, 1961 to 1996. Initially, a target of 35,000 tons of soybean was set in Plan I. A much expanded production of 470,000 tons was targeted in Plan VI (Table 1) as the domestic demand for direct consumption increased. The demand for simple processed products such as soy curd, soy paste, soy sauce and soy milk rose steadily from 64,773 tons in 1987/88 to 79,886 tons in 1991/92. In addition, soybeans are required in the vegetable oil crushing industry which simultaneously produces soybean oil and meal for further manufacturing, in particular for animal feeds. The industrial demand for meal in the feed industry also rose sharply to 401,629 tons in 1991/92 from 281,526 tons in 1987/88 and is expected to increase further (Table 2). The demand for soybean as raw material for crushing is estimated at 80% of the total production. Thus, since supply in Thailand grew at a slower rate than demand, it is expected that Thailand will continue to depend more and more on imports of soybean and products, particularly soybean meal. In fact, in early and mid 1992, 160,000 tons of soybean were imported. The value of imports of soybean and its products was 1,362 million baht in 1987 and rose to 2,403 million baht in 1991 (Table 3).

Table 1 Soybean production target and actual production under the NationalEconomic and Social Development Plans*.

Period Production Target Actual Production Plan I (1961-1966) 35,000 tons 40,000 tons Plan II (1967-1971) 50,000 tons 54,000 tons Plan III (1972-1976) 300,000 tons 114,000 tons Plan IV (1977-1981) 431,000 tons 132,000 tons Plan V (1982-1986) 229 kg/rai 203 kg/rai Plan VI (1987-1991) 470,000 tons 530,112 tons Plan VII (1992-19961 254 kg/rai ? Source: Government of Thailand, National Economic and Social Development Board,

Office of the Prime Ministry Office of Agricultural Economics. * Figures are for the final year of each period

There is clearly great potential for export-led soybean production where Thailand's prospective markets would centre around Asia, including Japan, Taiwan, Hong Kong, Malaysia and Singapore. These countries have been dependent on importation from major producers such as the United States, China and Brazil. Some at these suppliers are located far from Thailand, entailing significant freight costs as well. It remains to be seen whether Thailand is able to produce more soybean for export.

* Office of Agricultural Economics, Ministry of Agriculture and Cooperatives, Bangkok, Thailand.

Case Study 112

Table 2 Soybean balance sheet (in grain equivalent). Supply (ton) Demand (ton) Year Production Import Total Export Crushing Seeds Consumption Total

1987/88 337,745 31,207 368,952 49 281,526 22,604 64,773 368,952 1988/89 516,812 2,077 518,889 16 402,989 25,078 90,806 518,889 1989/90 672,368 10 672,378 21 543,548 48,133 80,767 672,378 1990/91 530,112 36 530,148 288 375,995 39,858 114,007 530,148 1991/92 435,587 79,200 514,787 640 401,629 32,632 79,886 514,787 1992/93* 429,000 125,000 554,000 - 440,376 33,624 80,000 554,000 1993/94* 492,500 107,500 600,000 - 484,480 35,520 80,000 600,000 Source: Office of Agricultural Economics * Estimate/forecast.

Table 3 Quantity and value of imports of soybean and its products, 1987-1992. Soybean Soybean meal Soybean oil Value of imports

Quantity Value Quantity Value Quantity Value Year (t) ('000 B) (t) ('000 B) (t) ('000 B) ('000 B)

1987 0.06 21,078.00 239,563.95 1,277,056.55 2,472.38 63,393.68 1,361,528.23 1988 33,277.27 265,940.62 225,416.41 1,496,996.63 7,304.06 107,272.72 1,870,209.97 1989 8.55 1,985.61 171,601.80 1,395,518.63 7,601.31 128,498.78 1,526,003.02 1990 16.05 2,971.50 340,030.78 1,941,837.80 5,498.54 101,249.33 2,046,058.63 1991* 33.82 8,068.73 428,244.51 2,300,147.20 3,826.38 94,571.14 2,402,787.07 1992 158,044.98 996,862.68 515,800.22 3,329,972.90 5,834.06 158,783.41 4,785,618.99 Source: Customs Department. * For the period January to October 1992 Problem justification Although Thailand has continued to set enhanced production plans for soybean import substitution, these were successful only in the periods of the National Economic and. Social Development Plans I and II. The successive plans failed to reach the soybean production targets; for example, production of 114,000 tons at the end of Plan III was 38% of the goal set. Again, production of 132,000 tons was recorded in Plan IV, but it was 31% of the target set. In the period of Plan VI, the national effort was successful with the soybean output 13% above the goal, resulting from extensive use of high yielding seeds, application of chemical fertilizers and Rhizobium. Nonetheless, the unpredictable and uncontrollable environment with a long period of drought during the growing season, floods and infestation of soybean pests and diseases have caused the crop output to vary from year to year. It is therefore necessary to studying the main production, marketing and processing components which affect the drive to increase domestic soybean output and to increase farmer income. Objectives of the study Major objectives of the study are:

1. To analyze the components of soybean production costs and returns; 2. To study the soybean marketing system comprising of the market structure, marketing

channels, marketing cost, price variations at different marketing levels and certain major soybean processing industries; and

3. To make feasible recommendations for raising soybean productivity as specified in the national economic and social development plan and subsequently to raise farm income.

Soybean in Thailand 113

Two main sets of data were collected. Primary raw data were gathered by field survey of soybean growers, dealers and processors who were selected for questionnaire interview. Secondary time series data were obtained from agencies such as the Customs Department, the National Economic and Social Development Board, and the Office of Agricultural Economics. Data analysis involved descriptive methods backed up with simple statistical calculations of average, percentage, etc. The sample consisted of 60 soybean farmers, 20 dealers and 2 processing plants. The study attempted to cover the main soybean producing areas. In the north, they are amphoe San Pa-Tong and Hang Dong, Chiang Mai province and amphoe Sawankaloke and Srisatchanalai, Sukhothai province. In the northeast, the study areas are amphoe Muang and Ubonratana, Khon Kaen province. Lastly, in the central region, the study covers amphoe Chai-badan, Lopburi province.

Production of soybean In the period 1987/88-1992/93 which fell in the National Economic and Social Development Plan VI when the soybean technology transfer campaign was in full swing, the soybean planted area was 2.5 million rai on annual average, giving rise to an output of 0.50 million tons and a yield per rai of 200 kilograms (Table 4). Based on 1992/93 statistics, the producing areas in the north constitute 77.7% of the national planted area, followed by the northeast, 15.3%, the central plains, 6.6%, and the south 0.5%.

Table 4 Planted area, production and yield of soybean in Thailand, 1987/88-1992/93.

Year/region Planted Area (rai)*

Production (ton)

Yield (kg/rai)

1987/88 2,260,391 337,745 149 1988/89 2,507,771 516,811 206 1989/90 3,208,876 672,368 210 1990/91 2,657,216 530,112 199 1991/92 2,175,475 435,587 200 1992/93 2,241,600 429,100 191 1993/94 (estimate) 2,368,000 429,500 208 Region North-eastern 342,400 65,300 191 Northern 1,740,700 330,200 190 Central plain 147,300 31,700 215 Southern 11,200 9,000 170 Source: Office of Agricultural Economics *1 hectare = 6.25 rai

. With respect to the actual soybean planted area under study, the Chiang Mai and Sukhothai producing area was 690,600 rai or 39.7% of the total planted area of 1,740,700 rai in the northern region. The Khon Kaen soybean producing area in the northeast was 63,000 rai, i.e. 18.4% of the total regional planted area. Lastly, the Lopburi soybean producing area of 57,100 rai was 38.7% of the regional planted area of 147,300 rai in the central plains.

Case Study 114

Table 5 Socio-economic aspects of soybean farmers in the study areas. Item Chiang Mai Sukhothai Khon Kaen Lopburi General Characteristics Family members (head) 4 4 6 5 Male (head) 2 2 3 3 Female (head) 2 2 3 2 Education Family heads - Compulsory primary level (%) 22 18 18 15 - Higher than primary level (%) - 2 2 4 - Lower than primary level (%) 7 - 2 Family members - Compulsory primary level (%) 31 30 30 24 - Higher than primary level (%) 28 30 39 35 - Lower than primary level (%) 12 15 11 20 Age distribution of family heads and members Over 40 years old (%) 48 27 35 23 15-40 years old (%) 40 60 56 58 Below 15 years old (%) 12 13 9 19 Occupation of family heads and members Farming 76 65 74 56 Off-farm jobs 13 7 15 18 Studying 11 28 11 26 Off-farm income (baht/family) 23,000 14,000 23,000 34,000 Farm characteristics Farm size (rai/family) 7 21 30 136 Owned (rai/family) 4 10 27 56 Rented (rai/family) 3 - 69 Free of charge (rai/family) - 7 3 11 Area planted to soybean 6 24 8 128 Early season soybean (rai/family) - 1 - 128 Late season soybean (rai/family) - 4 - - Dry season soybean (rai/family) 6 2 8 - Growing/Harvesting period Early season soybean - (May-Mg) - (Jul-Oct) Late season soybean - (Sep-Dec) - - Dry season soybean (Dec-Jan) (Jan-Apr) (Jan-Apr) - (Mar-Apr) Soil characteristics Sandy loam (%) 58 80 50 58 Clayish soil (%) 42 20 50 21 Sandy soil (%) - - - 21 Water supply Irrigation water (%) 70 10 67 - Rainfed (%) - 90 33 100 Creek/weir (%) 30 - - - Use of Seeds and Rhizobium Inoculation Use of variety SJ 2 (%) - 30 - - SJ 4 (%) 8 - 67 - SJ 5 (%) 26 - 22 - SJ 9 (%) 16 - - - Sukhothai 1 (%) - 60 - - Chiang Mai 60 (%) 50 10 11 100


Table 5 (continued) Item Chiang Mai Sukhothai Khon Kaen Lopburi Rate of seeding (kg/rai) 14.9 23.93 8.44 27.21 Rhizobium inoculation (kg/rai) 0.0 - 0.20 0.09 Land preparation Cutting and burning rice straw (%) 56 - - - Cutting, burning straw, and tillage (%) 33 - - - Manual tillage (%) 1 - - - Ploughing (%) - 100 100 100 Planting Bamboo dibbling x - x - Dibbling x x - - Inverted- T seeder x - - - Tillage (by tractor) - x - x Cultural practices Manure, chemical fertilizer (time/season) 1-2 1 1 1 Spraying pesticide/insecticide and soluble fertilizer (time/season) 1-2 6 2 5 Spraying herbicide (time/season) 1-2 1-2 1 1 Manual weeding and tilling (time/season) 1 1 1 1 Water applications (time/season) 8-10 1-2 5-7 - Threshing Threshing cost (baht/bag) 50-60 35-40 49-50 50-60 (baht/kg) 0.43-0.52 0.30-0.35 0.39-0.43 0.43-0.52 Source: Field survey US$1-25baht.

Soybean production system in the Chiang Mai area Socio-economic and production system information on soybean farmers in the four study areas is summarized in Table 5. Farmers in the soybean producing areas generally practiced the following four cropping systems:

• major rice - dry season soybean • major rice - dry season soybean-dry second rice • major rice - dry second rice • garlic - dry season soybean.

The growing season for soybean begins in December to January. Consequently harvesting begins in March to April. The certified and recommended soybean seeds were popular. Soybean was harvested by cutting the stalks and sun drying them in the field for a few days. They were then put in bundles for mechanized threshing. Custom threshing was provided at farms and charged at a rate of 50-60 baht per jute sack of soybeans (about 115 kg). This was equivalent to 0.43-0.52 baht per kilogram. The dry season soybean crop for 1990/91 grown in the Chiang Mai area cost 1,469.72 baht per rai to produce, compared to 1,367.30 baht per rai in the previous year, or a rise of 7.5% for increasing wages for preparing the plot, planting and caring (Table 6). Soybean production systems in the Sukhothai area The cropping systems in practice in the Sukhothai area include:

• early rainy season soybean - late rainy season soybean • early rainy season soybean - black gram • early rainy season soybean • late rainy season soybean - black gram

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• early rainy season soybean - late rainy season soybean - dry season soybean • major rice • sugarcane.

The harvesting activities in this area begin with cutting of the soybean plants, sun-drying, making bundles, piling up and waiting for a mechanized custom thresher. The custom threshing operation came to the farmers' fields and charged 35-40 baht per jute sack, i.e. 0.30-0.35 baht per kilogram. A cost comparison between 1989/90 and 1990/91 crop years indicated that they similar. The production cost incurred by the farmers in 1989/90 was 1,187.05 baht per rai while in the following year it was 1,144.66 baht per rai (Table 7).

Table 6 Production costs of dry season soybean, Chiang Mai province1989/90 and 1990/91 crop years.

ProductionCosts(baht/rai)* Item 1989/90 1990/91 Variable Costs (1+2+3) 1,169.83 1,253.19 1. Labour costs 717.95 839.07 Land preparation 189.92 212.35 Planting 107.14 130.90 Cultivating 140.60 174.70 Harvesting and threshing 280.29 321.12 2. Input costs 405.32 364.14 Seeds 220.78 185.52 Manure and fertilizer 77.83 69.02 Insecticide & herbicide 58.93 62.70 Equipment and other 47.78 46.90 3. Other 46.56 49.98 Equipment repairs 3.98 4.17 Interest and opportunity cost 42.58 45.81 Fixed Costs 197.47 216.53 Land use/land tax/land rent 191.73 211.92 Equipment depreciation 5.74 4.61 Total Costs 1,367.30 1,469.72 Yield (kg/rai) 205 240 Source: Office of Agricultural Economics. t 1 hectare = 6.25 rai. US$l-25 baht.

Soybean production systems in the Khon Kaen Area There were five field cropping systems in the Khon Kaen area:

• mjor rice - dry season soybean • major rice • dry season soybean • cassava • maize - red bean.

The Khon Kaen soybean growers used the same harvesting produce as in Chiang Mai and Sukhothai. With respect to the threshing activity, the custom threshers came to the farms and charged 45-50 baht per bag for the service, or 0.39-0.43 baht per kilogram. The production costs in two successive years were similar: 1,157.10 baht in 1989/90 and 1,135.72 baht per rai in 1990/91 (Table 8).


Table 7 Production costs of soybean in Sukhothai province. Item Production Costs (baht/rai)* 1989/90 1990/91 Variable Costs (1+2+3) 1,037.50 981.08 1. Labour costs 708.96 626.09 Land preparation 183.46 153.68 Planting 99.19 80.84 Cultivating 138.51 124.55 Harvesting and threshing 287.80 267.02 2. Input costs 289.25 314.07 Seeds 201.71 182.31 Manure and fertilizer 25.58 35.22 Insecticide & herbicide 49..51 84.90 Equipment and other 12.45 11.64 3. Others 39.29 40.92 Equipment repairs 1.64 5.20 Interest and opportunity cost 37.65 35.72 Fixed Costs 149.55 163.58 Land use/land tax/land rent 146.02 159.53 Equipment depreciation 3.53 4.05 Total Costs 1,187.05 1,144.66 Yield (kg/rai) 223 200 Source: Office of Agricultural Economics. * Average costs of both rainy season and dry season soybean. US$1-25baht.

Table 8 Production costs of dry season soybean, Khon Kaen province1989/90 and 1990/91 crop years.

Item Production Costs (baht/rai)* 1989/90 1990/91

Variable Costs (1+2+3) 991.70 987.38 1. Labour costs 658.62 656.31 Land preparation 125.08 147.09 Planting 135.80 129.74 Cultivating 109.85 111.91 Harvesting and threshing 287.89 267.57 2. Input costs 296.05 293.59 Seeds 183.48 194.04 Manure and fertilizer 32.44 33.95 Insecticide & herbicide 68.09 51.95 Equipment and other 12.04 13.65 3. Other 37.03 37.48 Equipment repairs 1.82 1.61 Interest and opportunity cost 35.21 35.87 Fixed Costs 165.40 148.34 Land use/land tax/land rent 154.36 142.54 Equipment depreciation 11.04 5.80 Total Costs 1,157.10 1,135.72 Yield (kg/rai) 204 202 Source: Office of Agricultural Economics 1 hectare = 6.25 rai. US $ 1 25 baht.

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Soybean production systems in the Lopburi area The cropping systems in practice in the area were:

• early rainy season soybean • early rainy season soybean - sorghum • maize - sorghum • early rainy season soybean - chili • major rice.

The production costs of 1,164.82 baht per rai in 1989/90 and 1,106.68 baht per rai in the 1990/91 crop year were similar (Table 9). Distribution of the soybean production After threshing, the soybean available from the four study areas went to certain outlets, i.e. 2.0% was kept for seed, 0.5% was home consumed, and the rest (97.5%) was sold, of which 59.7% was sold to village traders, 26.9% to local dealers and another 10.9% went to the farmers' groups/agricultural cooperatives.

Table 9 Production costs of early season soybean, Lopburi province 1989/90 and 1990/91 crop years.

Item Production 1989/90

Costs (baht/rai)* 1990/91

Variable costs (1+2+3) 1,020.31 931.64 1. Labour costs 609.66 595.91 Land preparation 137.00 137.61 Planting 88.83 100.52 Cultivating 130.54 129.88 Harvesting and threshing 253.29 227.90 2. Input costs 368.95 295.79 Seeds 273.92 219.44 Manure and fertilizer 29.36 22.76 Insecticide & herbicide 52.42 43.81 Equipment and others 13.25 9.78 3. Others 41.70 39.94 Equipment repairs 3.86 4.95 Interest and Opportunity cost 37.84 34.99 Fixed Costs 144.51 175.04 Land use/land tax/land rent 141.78 172.31 Equipment depreciation 2.73 2.73 Total Costs 1,164.82 1,106.68 Yield/rai (kg/rai) 224 179 Source : Office of Agricultural Economics 1 hectare = 6.25 rai. US$1-25baht.

Credit requirement in soybean production Fifty-one percent of the soybean growers in the four producing of Chiang Mai, Sukhothai, Khon Kaen and Lopburi required credit for soybean production as well as for family expenditure. The rest (49%), however, used their own capital. Based on the types of borrowing, 32% of the farmers borrowed in cash, 9% in kind of seeds, fertilizers, herbicides and insecticides and the remaining 10% of the borrowers were combinations of both cash and


in kind. Farm credit for the soybean enterprise was as high as 53,000 baht, with another 16,000 baht for household expenditure per family. The sources of farm credit can be divided into 6 categories; 30% from village traders, 28% from cooperatives/farmers groups, 14% from commercial banks, 10% from the Bank for Agriculture and Agricultural Cooperatives, 10% from relatives and 6% from the local traders. The interest rates made from the village and local traders were commonly varying from 36 to 60% per year. The rest of the credit sources normally set their interest rates in the range of 12.5-17.5% per annum.

Soybean marketing Markets for soybean comprise the village trader, local traders and/ or cooperatives/farmer groups, Bangkok dealers, processors and crushers. Soybean trading in the village was run, more or less, by the family type business dealing with several kinds of field crops. Seventy percent of the traders purchased soybeans solely and the remaining 30% dealt broadly with rice, mungbeans, cotton, peanuts, etc. With respect to the trading in the district/province, 70% of the dealers operated their business by partnership and the other 30% by sole proprietor. About 80% of the business in was crops trade while the other 20% of the business was retailing fertilizers and agro-chemicals. The soybean share of the local trader's volume of purchase was 48% and that of other crops, 32%. The cooperatives/farmer groups also bought crops and sold farm inputs as multipurpose businesses, purchasing 60% of the soybeans and 40% of the other crops. Many Bangkok dealers not only operated wholesale businesses in the purchases of crops, but also played a role as brokers for village traders who collected beans for crushers and other food processors. The soybean processors, aside from the crushing plants, normally used soybean for processing into soy paste, soy sauce, soy milk, soy curd and coagulant films of soymilk. They are either corporations or partnerships and have been operating for about 25-30 years. Marketing Behaviour The buying and selling prices of soybean in the markets were set by the oil crushers in Bangkok, who take into consideration such variables as world market prices for soybean and its products, prices for certain other types of vegetable oils, e.g., palm oil, rice bran oil, and the quality of domestic beans. It should be noted that almost all (99%) of the soybean growers sold their crops as mixed grade, as did the village traders (Table 10). At the local marketing level, grading was commonly practiced (87.5% of traders), with consideration of the grain size (14%), uniformity (7%), the moisture content (58.6%), and foreign materials (7.9%). The soybeans were generally bagged in jute sacks brought in by the traders. A sack of beans normally weighs 115 kilograms. The delivery to the processors was in sacks too, while to the crushers it was in bulk. Most soybean growers made sales promptly after harvest because they were in need of debt repayment and family expenditure, or they had no storage. The growers had no bargaining power whereas traders kept the beans in storage for delayed sales or made immediate transactions to reduce marketing risks on storage costs and weight loss from high moisture content. After harvest, soybeans were promptly sold to regular traders and or to occasional buyers. Furthermore, it was found that 52.3% of the growers sold their crops at the farm gate and the rest hauled their soybeans to either the trader's or cooperative office. The burden of transport costs went to the growers. The transportation cost varied with the distance, i.e. in

Case Study 120

the boundary of 1-10 kilometers it cost 0.05-0.08 baht, but over 10 kilometers it cost 0.09-0.12 baht per kilogram (Table 10). Before selling their produce, 83% of the soybean farmers monitored the price movements; 43.3% through their neighbors, 33% through their regular dealers and 6.8% through the cooperatives/village headmen/district agricultural extension officers. Seventeen percent of the growers did not check the soybean price before making their marketing decisions. Marketing news was sought by 80.5% of the farmers; 40.5% on television programs, 23.5% on radio and 16.5% in newspapers and information released by related government agencies. Again, 19.5% of the soybean growers did not seek any news. The traders monitored prices by telephone, facsimile and telex. Marketing channels The overall soybean marketing channels in the four study areas are shown in Figure 1. Sixty-one percent of the soybean output was offered to village traders, 27.6% sold to the local traders and 11.1% of soybean supplied to the farmers group/cooperative if such an institution was established. In addition to buying and collecting the soybean crops, village traders also provided farm credit. Some of them even acted as immediate collecting agents of the processors and crushers. The soybeans collected by the farmer groups/cooperatives were usually forwarded to feed millers, to crushers, to other processors and local dealers. The Bangkok wholesalers have close business contracts with the local dealers. Their soybean supply was virtually all forwarded to the crushers. The brokers acting for the local dealers get a 1% service commission from the soybean sale price. The Bangkok brokers forward their supplies to the crushers and to other processors.

Figure 1 Marketing channels of soybean in Chiang Mai, Sukhotai, Khon Kaen and Lopburi, 1991/92.


Table 10 Selling activities of soybean growers. Item Percent Sales Prompt 95 Delayed sale 5 Reason for sale Debt repayment and family 52.00 expenditure No storage facilities 38.75 Other 9.25 Point of sale Farm gate 52.25 Dealer's office 47.75 Type of buyer Regular 77.25 Occasional 22.75 Sale Practice Graded 1.25 Mixed 98.75 Transportation costs (baht/kg) Within 10 km 0.05-0.08 More than 10 km 0.09-1.12 Source : Field survey. US$1-25 baht.

Cost structures and marketing margins The 1990/91 soybean cost of production of 5.913 baht per kilogram with an additional marketing cost of 0.068 baht makes a total cost of 5.981 baht to soybean growers. The price received by farmers was 6.908 baht per kilogram or 84.1% of the soybean price ex-crushing factory. After subtracting farm production and marketing costs, farmers received a net profit of 0.927 baht per kilogram, or 11.3% of the ex-crushing factory price. The marketing margin between the village traders and the oil crushers was 1.31 baht per kilogram. Of this, 0.60 baht of margin was contributed to the village and the local traders, and 0.71 baht per kilogram of soybean margin was for the local traders and end users (Table 11). Among the marketing cost items, the transport expense was as high as 46% of the total cost while the labour cost accounted for 18.4%. In addition, the cost of interest and fees shared 12%, the office overhead cost was 11.8% and the sales tax, bags and broker charges shared 11.8% (Table 12). The soybean growers gained a highest return of 16.8% to investment without taking into account the farmers' marketing costs if they sold their produce at the farm, 4.2% of the return contributed to the local dealers and lastly, 3.9% went to the village traders (Table 13). Operating capital for soybean purchases Most soybean dealers (80%) used credit for their operation and only 20% had their own source of funds. Sixty percent of the village traders sought credit from commercial banks and the rest used their own funds. With regard to the local dealers, 83.4% of them borrowed from several sources: 68.5% from banks, 6.6% from the BAAC and 6.6% from cooperatives. The remaining 16.6% of the local assemblers operated with their own money. The average interest

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rate charged against the soybean assemblers was 17.5% by commercial banks and 12.5% from BAAC and cooperatives.

Table 11 Marketing costs and marketing margins of soybean, 1991/92. Item Costs % (baht/kg) 1. Production costs 5.913 71.95 Transportation costs 0.065 0.79 Labour costs 0.003 0.04 Farmer Profit 0.927 11.28 2. Average price received by farmers 6.908 84.06 Transportation costs 0.095 1.16 Labour costs 0.069 0.84 Interest costs and fees 0.040 0.49 Sales tax and other 0.013 0.16 Bagging charge 0.057 0.69 Office expenses 0.042 0.51 Profit of buyer at village level 0.282 3.43 Marketing margin 0.598 7.28 3. Average price received by village traders 7.506 91.34 Transportation costs 0.192 2.34 Labour costs 0.069 0.84 Broker's commission 0.005 0.06 Bagging charge 0.001 0.01 Interest costs and fees 0.052 0.63 Sales tax and other 0.014 0.17 Office charge 0.048 0.58 Profit of buyer at local level 0.331 4.03 Marketing margin 0.712 8.66 4. Average price ex-crushing plant 8.218 100 Source: Field survey. US$1-25baht.

Table 12 Marketing costs of soybean from farm to oil crushing plant. Item Costs % (baht/kg) Transportation costs 0.352 46.01 Labour costs 0.141 18.43 Interest costs and fees 0.092 12.03 Sales tax and other 0.027 3.53 Bagging charge 0.058 7.58 Broker's commission 0.005 0.65 Office expenses 0.090 11.77 Total 0.765 100 Source: Field survey


Table 13 Price, costs and profits to farmers and dealers. Item Price Costs Profit % (baht/kg) (baht/kg) (baht/kg/) Farmers 6.908 5.913 * 0.995 16.83 Village assembler 7.506 7.224 0.282 3.90 Local assembler 8.218 7.887 0.331 4.20 Source: Field survey. *Includes transportation and labour costs

Soybean price movements Movement of soybean prices relies heavily on the market demand and supply. The movements of the farmers' price, Bangkok wholesale prices and world prices are depicted in Table 14 and Figure 2. The farmers' prices are influenced largely by the wholesale prices in Bangkok as it is the largest soybean terminal market. In addition, imports of grains, soy meal and soy oil have some impact on the terminal market price movement.

Figure 2 Annual price movements, 1972-1992.

Domestic price variations are still apparently high, the coefficient of variation (CV) for the price received was 0.344, the CV for the Bangkok wholesale price was 0.310, but the world soybean price CV was only 0.152. These data indicate that production and marketing of soybean involve great risk. Aside from the annual price movement, the price also fluctuates seasonally (Figure 3). Comparison of fluctuations of the price received during 1988-1992 with the monthly marketed soybean supply indicates that the price did not exactly follow the usual supply and demand relationship. The price was highest at time of greatest output because the crushers' demands were greater than the local output, causing a rush to buy for stocking. This effect was compounded by the government policy if permitting bean import by crushers with a minimum price not below 8 baht per kilogram at the farm gate (the most recent permission of bean imports in March 1992).

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Table 14 Price of soybean, 1972-1992.

Year Farmgate

price (baht/kg)

Bangkok wholesale price

(baht/kg)

Price in Rotterdam (baht/kg)

1972 1.9 2.95 3.1 1973 2.8 5.33 5.5 1974 3.2 5.16 5.4 1975 3.1 5.34 5.5 1976 3.6 5.85 5.8 1977 4.6 6.66 7.1 1978 4.3 5.82 6.3 1979 4.6 6.11 7.0 1980 5.8 7.16 5.8 1981 6.0 7.77 5.9 1982 4.7 7.39 5.8 1983 5.7 7.58 6.9 1984 6.1 8.16 5.7 1985 6.0 7.48 5.1 1986 6.1 8.21 5.4 1987 7.4 9.86 7.1 1988 8.6 12.33 7.4 1989 8.2 11.29 6.3 1990 7.2 10.04 6.1 1991 7.4 10.71 6.0 1992 7.8 10.61 6.0 CV (%) 0.34 0.310 0.15

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Table 15 Cost of processing soysauce and soy paste, Chiang Mai province, 1991/92. Cost by enterprise Total cost of Item (baht/kg) joint products Soy sauce Soy paste Labour costs 0.703 0.703 0.755 1.Cleaning and soaking 0.417 0.417 0.417 2. Cooking and sieving 0.104 0.104 0.104 3. Fermenting with yeast and brine 0.078 0.078 0.078 4. Filtering 0.052 0.052 0.052 5. Sugar adding and boiling 0.052 - 0.052 6. Meal mixed process(2) with sugar and boiling - 0.052 0.052 Input costs 11.404 11.575 11.438 1. Beans 9.000 9.000 9.000 2. Wheat flour 0.258 0.258 0.258 3. Rice flour 0.059 0.059 0.059 4. Salt 0.006 0.006 0.006 5. Sugar 0.750 0. 750 0.750 6. Containers 0.229 0.400 0.263 7. Equipment 1.102 1.102 1.102 Other 2.505 2.535 2.520 1. Interest 17.5% per year 2.119 2.149 2.134 2. Depreciation 0.386 0.386 0.386 Total costs* 14.612 14.813 14.713 Total costs per enterprise/factory (baht/litre) 4.465 4.526 4.496 Profit (baht/litre) 4.509 4.363 4.458 Production (litre) 157,090 157,090 157,090 Production price (baht/litre) 8.974 8.889 8.954 Total Revenue (baht) 1,409,097 1,396,530 1,406,584 Soutce : Field survey * Cost per kg of the raw material, excluding land and building value. Soybean use as raw material equaled 48,000 kg/year for soysauce (80%) and soy paste (20%) US $ 1-25 baht

Soybean utilization The utilization study was directed towards the uses of soybean in such food processing as soy sauce, soy paste, etc, while grain crushing was excluded due to time constraints in gathering the data from the crushers. The processes from producing soysauce, etc are outlined in Figures 4 and 5. The processes of producing the sauce, paste, milk, coagulant and curd films are closely related activities, so the cost analysis was complex and rather difficult. For simplicity the costs of individual products were estimated and then averaged to a total cost by existing proportional weights taken of those joint products. Results of the analysis indicated that the cost of making the soy sauce and soy paste from the grains was 14.71 baht per kilogram or 4.50 baht per litre of the ready product. The return was 4.46 baht per litre or 49.8% of the cost (Table 15). The total cost of processing the grains to soy milk, curd and coagulant films was 12.78 baht per kilogram or 5.01 baht per kilogram of the ready products, yielding a profitability of 6.10 baht or 54.9% (Table 16).

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Table 16 Cost of soy milk, soy curd and coagulant film of soy milk, Chiang Mal province, 1991/1992. Cost by Enterprise (baht/kg) Total cost of Item Soy milk Soy curd Coagulant film joint products Labour costs 0.180 0.184 0.187 0.191 1. Shelling and soaking 0.043 0.043 0.043 0.043 2. Wet milling 0.087 0.087 0.087 0.087 3. Filtering 2 times 0.043 0.043 0.043 0.043 4. Boiling 0.007 0.007 0.007 0.007 5. Coagulating by MgC1 and MgSO4 0.004 - 0.004 6. Scooped up and dried - - 0.007 0.007 Input costs 10.019 10.241 10.019 10.057 1. Beans 9.000 9.000 9.000 9.000 2. MgCl2 - 0.020 - 0.020 3. MgSO4 - 0.018 - 0.018 4. Equipment 1.019 1.019 1.019 1.019 Other 2.526 2.565 2.527 2.534 1. Interest 17.5 %per year 1.785 1.824 1.786 1.793 2. Depreciation 0.741 0.741 0.741 0.741 Total costs* 12.725 12.990 12.733 12.782 Total costs per enterprise/factory 1.591 baht/litre 11.547 baht/kg38.585 baht/kg 5.008 baht/kg Profit per enterprise/factory 3.409 baht/litre 8.453 baht/kg 61.415 baht/kg 6.097 baht/kg Production 1,440,000 litre 202,500 kg 59,400 kg 459,441 kg Source : Field surney. * Cost per kg of the raw material,excluding land and building value. Soybean use as raw material was 180,000 kg/year. One k of soybean can be converted to 8 litres of soy milk, 1.125 kg of soy curd or 0.33 kg of coagulant film of soy milk, which are produced by this factory in the ratio soy milk: soy curd: coagulant film of soy milk of 0.25 : 0.61 : 0.14.

Conclusions and recommendations This study on soybean production, marketing and utilization by farmers, dealers and processors in four areas of Chiang Mai, Sukhothai, Khon Kaen and Lopburi has identified some problems and led to several recommendations. Production problems:

• shortage of improved soybean seeds. In fact the farmers' seed purchased from the traders reflects the insufficiency of the government seed distribution program. The seeds bought in the market were often mixed among varieties with low rates of germination, forcing the growers to apply more seeds than recommended (10 kg/rai or 62.5 kg/ha). Moreover, the harvest cannot be done at one time involving more labour use due to the seed impurity.

• slow adoption of modern technologies such as fertilizer, inoculation of the Rhizobium and use of seeder and planter.

• climatic uncertainties of drought and flood during vegetative growth and harvesting activities.

• lack of irrigation water sources, expensive farm inputs, infestation of soybean pests and unavailability of low interest credit.

• Marketing problems: • lack of bargaining position for farmers in the soybean trade. Therefore, low price offers

were usually made by the traders often with false claims of poor grains, high


moisture content, etc. The problem was even more serious when a large number of the soybean growers had to borrow and make contract sales with those businessmen.

• fluctuation of soybean prices from year to year, posing a high farm investment risk. • limited access to timely soybean market and price information at the farm.

Processing problems:

• a shortage of high quality beans to feed requirements of the food processing industries. • high cost of soybeans.

Recommendations to alleviate the above problems include:

1. Adequate soybean seed production should be encouraged by inviting more private sector participation to complement the existing government endeavors.

2. Varietal improvement should be supported and existing varieties developed to become more area-specific.

3. The development and dissemination of soybean production technology packages should be more extensive.

4. The organization of farm cooperatives has to be promoted for several reasons, eg. to assemble the crop in bulk and to create bargaining power for settling business with dealers.

5. Business-oriented farm level processing of soybean should be supported for intensive use of farm resources, in particular family labour, and generating more income from farm production.

Bibliography Fukushima, D. and Hashimoto, H. 1979. Oriental Soybean Foods. Published in cooperation with

North Carolina State University. FAO. 1990. Special issue on soybean processing and utilization. No.11, Jalan Merdeka 99,

Bogor, Indonesia. Office of Agricultural Economics, Ministry of Agriculture and Cooperatives. 1990. Agricultural

statistics of Thailand crop year 1989/90. No. 422, Bangkok. Somsak, P., Jeerakiat, A. and Samit, K. 1984. Soybean production and marketing in Thailand:

overview, problems and solutions. Research Report No. 53, Kasetsart University, Bangkok.

Suphun, T. and Rodvinit, P. 1979. An analysis of soybean price and price effect to soybean production. Research Report No.46, Kasetsart University, Bangkok.

The Processing and Marketing of Fresh Soybean Milk as an Income and Employment Generator in the Klang Valley, Malaysia

T. Y. Tunku Mahmud and A. Abu Kasim *

Introduction

The food processing industry in Malaysia has been identified as one of the priority sectors for industrial development under the Industrial Master Plan of 1985. It is important to note that the food processing industry is still heavily reliant on imported raw materials such as maize for animal feed, raw sugar for sugar confectioneries, wheat for flour mills and milk powder for milk products. The food legumes and coarse grains (FLCG) contribution in this subsector comprises the manufacturing of sauces, essences, flavours, products from soybean, maize, sorghum and barley, traditional cakes and other products that cannot be classified elsewhere. A large proportion of this subsector is made up of small-scale industries (MIDA/UNIDO 1985). In 1987, the number of people employed in this subsector was 68,620 and the salaries and wages paid amounted to M$ 478.1 million (US $148 million). In 1990, the number of people employed increased to 75,088 and the salaries and wages paid amounted to M$ 582.8 million or US $224 million (Department of Statistics 1991). An interesting development that is taking place in the food processing industry is the increase in number of fresh soybean milk retailers in night and farmers' markets. Entry into this business is relatively easy because it requires low initial capital outlay and the raw materials are readily available. It appears that Malaysian consumers are acquiring a taste for this relatively new product. This is very encouraging and, if the demand continues to increase, the market will expand and thus generate more employment and income. Malaysia imports substantial amounts of soybean for use in the food and animal feed industries. In 1991, the total import of soybean and soybean products (including soybean meal, soybean oil, soysauce and soybean flour) was M$ 551.1 million compared to only M$ 15.1 million in 1970. The import of soybean alone amounted to 512,209 tons valued at M$ 334 million (Department of Statistics 1992). In the food industry, soybean is used to produce fermented and non-fermented products. The fermented products include soysauce, soybean paste and tempeh. Non-fermented products include soybean oil, soybean milk, various types of soybean curd (hard, soft, firm and fried), taufu fah, yuba products (fucok), soybean sprouts and yong tau foo products. Large companies, such as Yeo Hiap Seng, produce soybean milk in tetrapaks or bottles that are generally available at most retail outlets. However, they are not generally found in night and farmers' markets. This study looks at the fresh soybean milk retailers at these markets in Kuala Lumpur and Petaling Jaya and assesses their background and performance.

* Malaysian Agricultural Research and Development Institute (MARDI), Malaysia.

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Objectives There are three main objectives of this study:

• To determine the number of establishments involved in the processing and marketing of fresh soybean milk and the employment generated in the Klang Valley.

• To determine the income and expenditure of processors and retailers of fresh soybean milk in the Klang Valley.

• To estimate the market size of fresh soybean milk in the Klang Valley.

Data and methodology Primary data were required for the study. The targeted respondents were the fresh soybean milk retailers at night and farmers' markets. In order to make a random selection of the respondents, a listing of the fresh soybean milk retailers was requested from three government agencies responsible for issuing permits or licenses for these businesses. The Federal Agricultural Marketing Authority (FAMA), the agency responsible for farmers' markets, listed twelve fresh soybean milk retailers at the various locations. City Hall, the agency responsible for issuing licenses to businesses at night markets in Kuala Lumpur, did not have a listing of fresh soybean milk retailers because most of these businesses were registered as beverage businesses. Nevertheless, City Hall was able to provide a schedule of night markets for 86 locations in Kuala Lumpur. Similar to the Petaling Jaya municipality, there was no listing for the fresh soybean milk retailers. A schedule or timetable of the night markets for 16 locations was provided. The study sample was selected by taking all twelve fresh soybean milk retailers from the farmers markets and two at each location of the night markets in Petaling Jaya and Kuala Lumpur. Cross checking between the enumerators was necessary to avoid surveying the same retailer twice. All together, the total number of respondents was 79. Prior to the survey proper, structured questionnaires were prepared and pretested. The questionnaires were modified and adjusted to suit the understanding of the retailers. The survey was conducted between the months of August and October 1992. At the time of the study, US $1 was equivalent to about 2.6 M$.

Results of the analysis: background of respondents The respondents surveyed can be classified into three groups. The first group (6%) is classified as processor cum wholesaler cum retailer. The second group (60%) is the processor cum retailer. The third group (34%) consists solely of retailers. About 60 percent of the respondents started their businesses in 1988 and later. The earliest reported business started was in 1972, and the latest was 1992 (Table 1). Sixty-seven percent of the respondents are full time fresh soybean milk businessman and 33 percent are part-timers. Among the part-timers, about 40 percent are doing other business, 21 percent are government agency staff and the rest include labourers in construction or manufacturing and housewives (Table 2).

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Table 1 Year business on soybean products started.

Year Percentage Cumulative Percentage

1972 1.3 1.3 1977 1.3 2.6 1980 1.3 3.9 1981 2.5 6.4 1982 2.5 8.9 1983 2.5 11.4 1984 5.1 16.5 1985 6.3 22.8 1986 12.6 35.4 1987 5.1 40.5 1988 15.2 55.7 1989 7.6 63.3 1990 8.9 72.2 1991 13.9 86.1 1992 13.9 100.0

About 58 percent of the respondents started their business by trading in multiple products, i.e. fresh soybean milk, taufu fah and other beverages. Nineteen percent reported starting off with fresh soybean milk and other beverages, 15 percent with various soybean products and only 8 percent reported starting off with fresh soybean milk alone. Currently about 65 percent of the respondents are trading in multiple products and only 4% specialize in trading fresh soybean milk only (Table 3).

Table 2 Other jobs of part-timers (N=27).

Table 3 Products traded in 1992. Job Percentage Products Percentage Business 39.3 Fresh soybean milk, taufu fah Government staff 21.4 and other beverages 64.6 Manufacturing labour 14.3 Fresh soybean milk and Firm 14.3 other beverages 17.7 Housewife 7.1 Multiple fresh soybean products 13.9 Construction labour 3.6 Only fresh soybean milk 3.8

Most of the processors (72%) initially learned their processing techniques from friends. Thirteen percent reported they initially learnt the technique by themselves, 11 percent claimed from MARDI and 4 percent through other means. Although 72 percent of the respondents acquired the processing technique directly from friends, it is also possible that their friends acquired the processing technique from MARDI. The average age of the respondents is 36. The youngest respondent was aged 17 and the oldest 66 (Table 4). About 58 percent of the respondents have gone through secondary education and the rest have finished primary education only. Most of the respondents are males (81%) and Malays (72%) (Table 5). The average number of family members staying with the respondents is 5 (Table 6).

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Table 4 Age of respondents.

Table 5 Race of respondents. Age Percentage Race Percentage < 21 years 2.5 Malay 72.2 21 - 30 years 21.5 Chinese 27.8 31 - 40 years 57.0 41 - 50 years 10.1 > 50 years 8.9 N=79;SD=9.7

The number of establishments involved in processing and marketing of fresh soybean milk and the employment generated The study revealed that the average number of fresh soybean milk retailers in each location of night and farmers' market is 3. At the bigger night markets, fresh soybean milk retailers number about 114 locations of night and farmers' markets in the Kiang Valley, the estimated total number of fresh soybean milk retailers operating in these markets is 361. If we include the number of other fresh soybean milk hawkers operating during the day at public places such as shopping malls, the busy shopping streets of Kuala Lumpur and Petaling Jaya and also at hawker stalls that sprout every night around these places, the number could increase to about 500. .

Table 6 Number of family members staying with respondents.

Table 7 Number of fresh soybean milk

retailer operating in one market. Number Percentage Number of retailers Percentage < 4 20.3 1 19.2 4-6 51.9 2 25.6 7 - 9 25.3 3 12.8 > 10 2.5 4 23.1 N =79 SD =2.17 >5 19,2 Mean = 5.43 Range = 1-14 N =78 SD=1.8 Mean = 3.2 Range = 1-10

The average number of fresh soybean milk processors in each location of these markets is 2. In other words out of every three retailers, two are processors cum retailers. The number ranges from one processor to a maximum of 6 in some locations (Table 8). The estimated total number of fresh soybean milk processors in these markets is 242. Using the ratio of 2 processors out of 3 retailers, from the 500 retailers in the Kiang Valley, the number of processors is 300.

Table 8 Number of fresh soybean milk processors operating in one market.

Number of processors Percentage 1 51.0 2 16.3 3 12.3 4 12.3 >5 8.1 N =49 SD= 1.4 Mean = 2.1 Range = 1-6

Employment generated can be estimated as follows. The average number of process, in each night market is 2, and the average number of workers involved in a process operation products is 2, usually a husband and wife team (Table 9). There are 114 night


farmers' markets in Kuala Lumpur and Petaling Jaya. This will give rise to employment of about 456 people. If we consider 300 fresh soybean milk processors in the Kiang Valley, then the number of people involved in processing is 600. In the case of retailers, the average number of retailers in each night market is 3. The average number of workers involved in retailing is 1.3 (Table 10). This gives a total employment from retailing fresh soybean milk of 445 people. Taking the estimated figure of 500 retailers in the Kiang Valley, the employment generated from retailing is 650 people.

Table 9 Number of workers for processing soybean Products

Table 10 Number of workers for retailing fresh soybean

products Number of workers Percentage Percentage Year started 1992 Number of workers Year started 1992 1 42.0 36.5 1 72.0 69.2 2 42.0 46.2 2 28.0 30.8 >3 16.0 17.3 N 25 26 N 50 52 Mean 1.3 1.3 Mean 1.9 2.0 SD 0.46 0.47 SD 1.01 1.16 Range 1-2 1-2 Range 1-5 1-7

Income and expenditure of processors and retailers of fresh soybean milk The variable costs, the gross revenue and the fixed costs for the three groups of respondents were aggregated and average figures found. Tables 11 to 13 present the average of the variable costs, fixed costs and gross revenues for the three groups.

Table 11 Income and expenditure of processor cum wholesaler cum retailer. Variable Costs ' M$ per month Total material costs for processing 2,32 Total other costs for processing 51 Total other costs for retailing 43 Labour cost for processing 1,04 Labour cost for retailing 75 Total variable costs 5,06 Gross Revenue Sales of soybean milk from retailing 2,30 Sales of soybean milk from wholesaling 1,06 Sales of other fresh soybean products from retailing 2,74 Sales of other fresh soybean products from wholesaling 1,36 Total Gross Revenue 7,47 Earning per month M$ 7,475 - M$ 5,068 2,40 Fixed Costs Depreciation on machine and equipment 4,16 Interest on capital 4,16 Annual Fixed Costs 8,33 Monthly Fixed Costs 69 Net earnings per month M$ 2,405 - M$ 695 1,71

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1. Processor cum wholesaler cum retailer The variable cost of this group is M$ 5,068 per month. About 46% of the variable cost is due to the material cost. Another big component is the labour cost for processing (21%). Other costs such as processing cost, other cost in retailing and the labour cost for retailing constitute the remaining percentage (Table 11). The gross revenue for this group is M$ 7,475 per month. Almost 70% of the gross revenue comes from retailing. The retail value of sales from fresh soybean milk alone is about equal to the retail value of sales from other fresh soybean products. Based on the above figures, the average earnings calculated was M$ 2,407 per month. Note that no allowance was made for interest payment or depreciation on the equipment used so far. In terms of investment on the processing machine, the average cost is M$ 21,301. The amount varies from a small inexpensive machine of M$ 3,270 to a more sophisticated machine costing M$ 65,150 (Appendix A1). The initial cost on retailing equipment averaged about M$ 20,376. This ranges from a low of M$ 669 to a high of M$ 32,695 (Appendix A2). Therefore, the total initial capital outlay for group one averaged about M$ 41,677. Assuming an average life span of the machine and equipment at 10 years and no salvage value, the straight line depreciation is M$ 4,168 per year or M$ 347 per month. This is the amount to be amortized over the ten year period. Taking the interest payment at 10 per cent of the total initial capital outlay, the yearly interest payment will be similar to the amount for depreciation. Summing these two values gives the fixed cost incurred for the machines, equipment and interest on capital, which amounts to M$ 8,336 annually or M$ 695 per month. Subtracting this amount from the average earning of M$ 2,407 per month gives the net earning per month for group one of M$ 1,712. This group also reported increased sales now than when they first started the business. The average total retail sales in the year started was M$ 3,700 (Appendix A3). The average total retail sales per month in 1992 had risen to M$ 5,048 (Appendix A4). In terms of the average total wholesale sales per month there was a decline. Initially, the average total wholesale sales per month was M$ 2,625 (Appendix A5). In 1992, it declined to M$ 2,153 (Appendix A6).

2. Processor cum retailer The bulk of the respondents (60%) come from this group. The variable cost for group two is M$ 2,092 per month. About 31% of the cost is due to the material cost, 25% due to the labour cost for retailing, 20% due to the labour cost for processing, followed by other retailing and processing costs (Table 12). The gross revenue from retail sales amounts to M$ 2,668 per month. The revenue from the sale of fresh soybean milk is equal to the sale of other fresh soybean products. The average earning generated by this group is about M$ 576 per month. Considering the labour costs accruing to the operator himself, the returns to him can be M$ 1,521 per month. In terms of the initial capital outlay for the processing machines, the average cost obtained was M$ 3,217. This ranged from a low value of M$ 200 to a high of M$ 13,410 (Appendix B1). About 60% of the respondents in this group spent about M$ 2,000 and less on the processing machines. In terms of the retailing equipment, the average initial cost incurred was M$ 13,529. The values ranged from a low of M$ 214 to a high of M$ 46,190 (Appendix B2). About 50% of the respondents spent less than M$ 10,000 on the retailing equipment.


The total initial capital cost for group two is M$ 16,746. Assuming again an average life span of 10 years for the equipment and machines, the straight line depreciation gives a value of M$ 1,675 per year or M$ 140 per month. Considering interest payment equal to the amount for depreciation, the fixed cost amounts to M$ 3,350 per year or M$ 279 per month. Subtracting this amount from the average earning per month of M$ 576, gives a net earning of M$ 297 per month.

Table 12 Income and expenditure of processor cum retailer. Variable Cost M$ per month Total material costs for processing 651 Total other costs for processing 168 Total other costs for retailing 328 Labour cost for processing 419 Labour cost for retailing 526 Total variable costs 2,092 Gross Revenue Sales of fresh soybean milk 1,336 Sales of other fresh soybean products 1,332 Total Gross 'Revenue 2,668 Earning per month MS 2,668 - M$ 2,092 576 Fixed Costs Depreciation on machine and equipment 1,675 Interest on capital 1,675 Annual Fixed Costs 3,350 Monthly Fixed Costs 279 Net earnings per month M$ 576 - M$ 279 297

This group also reported an increase in the total retail sales per month compared to the year they started. Initially, the average total retail sales per month was M$ 1,441 (Appendix B3). In 1992, the average total retail sales per month was M$ 2,206 (Appendix B4).

3. Retailers The variable cost of the retailers is M$ 1,165 per month. The material cost accounts for about 52% of the total variable cost, while other costs for retailing account for 21% and labour cost the remaining percentage (Table 13). The gross revenue amounts to M$ 1,556 per month. The contribution of revenue from fresh soybean milk is about 56% compared to 44% from other fresh soybean products. The average earning per month is M$ 391. The initial cost outlay on retailing equipment, was M$ 9,298. This ranges from a low of M$ 207 to a high of M$ 36,280 (Appendix C1). Assuming an average life span of the equipment at 10 years and no salvage value, the straight line depreciation is M$ 930 per year or M$ 78 per month. Adding the interest payment (10%) of the total initial capital outlay to the depreciation gives the fixed cost of M$ 1,860 per year or M$ 155 per month. Subtracting this amount from the average earning per month of M$ 392 gives a net earning of M$ 236 per month. This group also reported an increased total retail sales per month now as compared to the initial year, when the average total retail sales was M$ 1,123 (Appendix C2). In 1992, the average total retail sales was M$ 1,401 (Appendix C3).

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Table 13 Income and expenditure of retailers. Variable Cost M$ per month Total material costs for retailing 60 Total other costs for retailing 24 Labour cost 31 Total variable costs 1,16 Gross Revenue Sales of fresh soybean milk 87 Sales of other fresh soybean products 68 Total Gross Revenue 1,55 Earning per month M$ 1,556 - M$ 1,165 39 Fixed Costs Depreciation on equipment 93 Interest on capital 93 Annual Fixed Costs 1,86 Monthly Fixed Costs 15 Net earnings per month MS 391 - MS 155 23

The market size of fresh soybean milk It was reported in the survey that the average sales per month of fresh soybean milk was MS 1,371 (Table 14). If there are 500 fresh soybean milk retailers in the Klang Valley, the'. the total sales per month is M$ 685,500. On the other hand, if we consider the average number of retailers in each market as 3 and the average sales per month of fresh soybean milk at one location is M$ 902, the! considering 114 locations, the market size is M$ 308,484 (Table 15). If the number c locations is extended to include other places besides the farmers and night markets, say by 20 locations, then the market size is M$ 541,200 per month.

Table 14 Overall average sales per month of fresh soybean milk

Table 15 Average sales per month of fresh

soybean milk at one location Value (M$) Percentage Value (M$) Percentage < 1001 55.7 < 501 38.0 1001 - 2000 25.3 501 - 1000 25.3 2001 - 3000 12.7 1001 -1500 20.3 3001 - 4000 2.5 1501 -2000 11.4 > 4000 3.8 2001 - 2500 2.5 N = 79 SD = 1267 > 2500 2.5 Mean = 1371 Range = 160-7000 N = 79 SD = 687.1 Mean = 902 Range = 80-3400


Discussion and conclusions Our findings show that group one performs better than groups two and three. The net earning per month from this group is M$ 1,712 while the monthly net earning from groups two and three are M$ 297 and M$ 236 respectively. The income generated from this business is considered commendable especially for the group one entrepreneurs. The figure compares favourably with the national mean household income of M$ 1,167 in 1990. Although the monthly net earning of group two is lower than the national average, the labour charges accrue to them, raising their income to M$ 1,521 per month. However, the monthly income for group three from this activity is M$ 547 which is lower than the national average. The findings show that 33% of the respondents are part-timers. None of them fall into group one. All of them venture into this business to supplement their household income. The majority of respondents are in group two i.e. processor cum retailer. This could be due to more retailers moving into processing. The decline in the wholesale value from group one indicates that some of the retailers who were formerly buying from them have graduated into processors themselves, since processing is relatively simple and the technology is easily accessible, especially from MARDI. Group one uses a higher level of processing technology. For example, 60% use the more advanced cooking technique of steam injection whereas only 9% of the respondents in group two use this technique (Table 16). The average investment of group one on the processing equipment alone amounted to M$ 21,301 compared to M$ 3,217 for group two.

Table 16 Types of stoves used. Type of stove Processor cum Processor cum wholesaler retailer (%) cum retailer (%) Steam injector 60.0 8.7 Gas 20.0 78.3 Kerosene 20.0 8.7 Firewood 0 4.3

In terms of total fixed capital outlay, group one spent M$ 41,677 followed by M$ 16,746 and M$ 9,298 for groups two and three, respectively. This indicates that group one is more receptive and willing to invest in new technology. They are more committed and determined to succeed in this business. The majority of the respondents (65%) are trading in multiple products, 14% in multiple fresh soybean products and 4% specialize in fresh soybean milk only. Since the study concentrates on fresh soybean products, the actual income of those involved in trading multiple products is certainly more than that reported in this paper. The existing market size for fresh soybean milk is estimated to be about half a million M$ a month in the Kiang Valley. As more people acquire a taste for soybean products, the market will expand, thus generating more income and employment opportunities.

Case Study 140

References

Government of Malaysia. 1991. The second outline perspective plan 1991-2000. Department of Statistics. 1991. Annual survey of employment and wages, estates, mi transport. Kuala Lumpur. Department of Statistics. 1992. External trade statistics import and export. Kuala Lumpur. MIDA/UNIDO. 1985. Food processing industry. Medium and long term industri plan. Malaysia, Volume II Part 3.


Appendix A Income and expenditure of processor cum wholesaler cum retailer.

Table Al Total machine cost for processing.

Table A2 Total costs on retailing equipment. Cost (M$) Percentage Cost (M$) Percentage 3270 20 669 20 3850 20 11493 20 16530 20 26015 20 17705 20 31008 20 65150 20 32695 20 N = 5 SD = 25436.6 N = 5 SD = 13819.1 Mean = 21301 Range = 3270-65150 Mean = 20376 Range = 669-32695

Table A3 Total retail sales/month (year started).

Table A4 Total retail sales/month (1992). Value (M$) Percentage Value (M$) Percentage 200 20 1600 20 800 20 4560 20 4000 20 4800 20 5500 20 5040 20 8000 20 9240 20 N = 5 SD = 3258.83 N = 5 SD = 2727.69 Mean = 3700 Range = 200-8000 Mean = 5048 Range = 1600-9240

Table A5 Total wholesale sales/month (year started).

Table A6 Total wholesale sales/month (1992). Value (M$) Percentage Value (M$) Percentage 500 25 150 20 1500 25 720 20 3500 25 2000 20 5000 25 3000 20 N = 4 SD = 2015.56 4896 20 Mean = 2625 Range = 500-5000 N = 5 SD = 1892.77 Mean = 2153.2 Range = 150-4896

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Appendix B Income and expenditure of processor cum retailer.

Table B1 Total machine cost for processing.

Table B2 Total costs on retailing equipment. Cost (MS) Percentage Cost (MS) Percentage < 2001 58.7 <5001 40.4 2001 - 4000 10.9 5000 - 10000 8.5 4001- 6000 8.7 10001 - 15000 8.5 6001 - 8000 8.7 15001 - 20000 19.1 > 8000 13.0 25001 - 30000 8.5 N = 46 SD = 3668.38 > 30000 14.9 Mean = 3216.77 Range = 200-13410 N = 47 SD = 12425.8 Mean = 13529.1 Range = 214-46190

Table B3 Total retail sales/month (year started).

Table B4 Total retail sales/month (1992). Value (M$) Percentage Value (M$) Percentage < 501 14.9 < 1001 31.9 501 - 1000 38.3' 1001 - 2000 25.5 1001 - 1500 14.9 2001 - 3000 23.4 1501 - 2000 12.8 3001 - 4000 6.4 > 2000 19.1 > 4000 12.8 N = 47 SD = 1096.11 N = 47 SD SD = 1909.52 Mean = 1440.85 Range = 180-5500 Mean = 2206.17 Range = 240-12000

Appendix C Income and expenditure of retailers.

Table Cl Total costs on retailing equipment

Table C2 Total retail sales/month (year started). Cost (M$) Percentage Value (M$) Percentage < 5001 53.8 < 501 15.4 50001 - 10000 15.4 501 - 1000 50.0 10001 - 15000 3.8 1001 - 1500 19.2 15001 - 20000 15.4 1501 - 2000 3.8 20001 - 30000 3.8 > 2000 11.5 > 30000 7.7 N = 26 SD = 814.557 N = 26 SD = 10249.7 Mean = 1123.46 Range = 250-3500 Mean = 9298 Range = 207-36280

Table C3 Total retail sales/month (1992). Value (MS) Percentage < 500 11.1 501 - 1000 33.3 1001 - 1500 37.0 1501 - 2000 3.7 > 2001 14.8 N = 27 SD = 1099.97 Mean = 1401.11 Range = 200-4500

Labour Employment and Income Generation in Maize Production, Marketing and Processing in Pakistan

M Manzoor Ali, Muhammad Iqbal, Muhammad Sharif, A. Hayee Qureshi, Muhammad Shafiq and Umar Farooq *

Introduction

As in other countries of the region, agriculture is the predominant sector playing a key role in the growth of Pakistan's economy. Although its contribution to gross domestic product (GDP) is declining over time due to greater expansion in other sectors, it contributed about 22.3% to the GDP during the year 1990/91 (GOP 1992a). Among various subsectors of agriculture, the crops subsector dominates in terms of its contribution to total income as 60% of the income generated by agriculture comes from this sector (GOP 1992a). This is primarily because the crop subsector is receiving more attention in public policies. The presence of diverse agro-ecological regions permits cultivation of virtually all types of crops in the country (PARC 1980). Demographically, the majority (72%) of Pakistan's population is rural. Therefore, agriculture not only employs more than half of the rural labour but also serves as a reservoir of labour for manufacturing, industrial and service sectors. Labour employed in agriculture makes up 51% of the total labour force in the country (GOP 1992a). Thus agriculture is the largest sector for labour absorption, and improvement of living conditions in rural Pakistan is imperative (Zaman 1988; Baqai 1988). Food legumes and coarse grains (FLCG) constitute a significant part of the crop subsector, sharing about 15% of the total cropped area in the country during 1990/91 Appendix 1). Maize, sorghum, millet, mungbean, mash, chickpea, lentil and peanut are the main crops belonging to FLCG group in Pakistan. Thus FLCGs, as a group, contribute substantially to the GDP generated in the crop sector. The total production of FLCGs accounted for 12% of the total production of food grains during the same year. In the FLCG group, maize is the most important coarse grain of the country occupying about 4% of the total cropped area. During 1990/91 maize was grown on 845 thousand hectares which is about 26% of the total area under FLCG crops in Pakistan (GOP 1992b). Total maize production was more than 50% of the total production of FLCG crops during the same year. Given this scenario, FLCG crops provide ample employment and income generating opportunities to rural labour through various operations/activities involved in their production, marketing and processing. Maize being the most important FLCG crop in Pakistan provides the major share of such opportunities. In addition to employment opportunities in production, maize processing and poultry feed industries have also emerged as important labour absorbing sectors in the recent past,

* Pakistan Agricultural Research Council, Islamabad, Tarnab and Faisalabad, Pakistan

Case Study 144

both for rural and urban areas. There was no maize processing industry prior to 1952 and all requirements were met by imports (Chaudhry 1989). The major maize processing units such as Rafhan and Fauji Cereals were established during the early fifties, and Glaxo and Sethi during the mid and late sixties. The poultry feed sector has experienced phenomenal growth during the last decade, especially after the mid 1980s. As a result, there are now eight maize processing firms and over 70 poultry feed mills in the country (Saleem et al. 1992). The growth in maize processing is subsequent to changes in maize consumption patterns. Although wheat is the staple food of the population, maize grain is consumed to supplement wheat supplies (Ali et al. 1979). Therefore, a major portion (75%) of all maize grown in the country is traditionally consumed as human food (CIMMYT 1989). However, a steady shift in the pattern of maize consumption as direct human food has been observed and maize is consumed more in processed forms such as corn oil, starch, glucose, sweetener for soft drinks and as a component of poultry feed. The establishment of a large number of feed mills during 1986/87 and increases in installed capacity of processing units is a fair reflection of the change in the maize consumption pattern. Consequently, the demand for maize as food has declined in the recent past while demand in the processing and poultry feed sectors has risen sharply. Therefore, future demand for maize in the commercial market will mainly be for industrial uses and manufacturing poultry feed. The demand for maize as a poultry feed is expected to increase rapidly in the future as it is growing at a rate of 7% per year compared with a 2% rate of growth in demand as a human food during the period 19852000 (Ali et al. 1992). Further investments to increase plant size indicate that there is a great demand for industrial maize byproducts and with the increase in population and rural to urban migration, industrial demand for maize will accelerate (Amir 1986). Considerable research, both biological and socio-economic, on maize and other FLCG crops has been underway at national and provincial levels. The socio-economic research has been deficient on aspects of production, marketing and processing of these crops. In particular, little information is available on the extent of opportunities for employment and income generation in production, marketing and processing of these crops. The available studies at best present a partial description of maize processing and marketing without treatment of labour absorption in this area. The major purpose of the present exercise is to assess the employment opportunities and the extent of income generation in maize production, marketing and processing through study of a sample of farmers and the poultry feed industry.

Objectives The objectives of this endeavor are:

• To study the production, marketing and processing of maize in Pakistan; • To identify the labour employment and income generating opportunities in production,

marketing and processing of maize; and • To estimate the extent of labour employment and income generated in production,

marketing and processing of maize.

Methodology This study is based on primary data collected from three major sources: maize growers, maize processors, and poultry feed millers.

Maize in Pakistan 145

The provinces of Punjab and North West Frontier (NWFP) are the principal maize producing areas. Statistics show that area and production of maize in NWFP is greater than that of Punjab and that home consumption of maize in NWFP is higher. Consequently the maize marketable surplus available for the processing industry is greater in Punjab. In addition, the spring maize mainly grown in Punjab is used for processing purposes, while the summer crop is consumed as food. Therefore, almost all the major maize processing and other maize utilizing industries such as poultry feed mills are located in the Punjab, except for a few in other provinces, eg. NWFP and Sindh. Therefore, this study was conducted in Punjab province and maize growers of the two major spring maize producing districts (Okara and Toba Tek Singh), eight maize processing firms, and 68 feed manufacturing firms in the Punjab were included in the study. To design proper questionnaires for collection of the information needed on labour employment and income generation from maize, an informal survey of 10 spring maize growers, one maize processor and four poultry feed millers was carried out in the study area. Information regarding different operations involved in maize production and processing and labour employed in various operations was collected. On the basis of this information, comprehensive questionnaires were designed for maize growers, processors and feed millers. These questionnaires were pre-tested and the survey was undertaken after finalizing the questionnaires. For the formal survey, a sample of 50 maize growers was interviewed. Characteristics of the sample farmers are given in Table 1.

Table 1 Characteristics of the sample farmers. District Item Toba Tek Singh Okara All PERSONAL Average Age (yr) 41 40 41 Farming Experience (yr) 23 18 21 Education (%) 1lliterate 31 29 30 Up to 10 yr of schooling 66 47 52 > 10 years of schooling 13 24 18 Family Size (no) 12.9 11.9 12.5 FARM RELATED Farm/Cultivated Area (ha) 15.9 31.2 22.3 Power Source (Percent Farmers) Own bullock 3 - 2 Own tractor 79 86 82 Rented tractor 7 14 10 Bullock + rented tractor 10 - 6 Tenancy Owner 41 38 40 Tenant 35 48 40 Owner/tenant 24 14 20 Irrigation Source Own tubewel - 24 10 Canal + own tubewell 76 76 76 Canal + rented tubewell 2 - 14 Source: Survey data 1992

Of the total of six operational maize processing firms/units, four were studied. These processors were M/s. Rafhan Maize Products, M/s. Fauji Cereals, M/s. Sethi Maize Products and M/s. Glaxo Laboratories. In the poultry feed sector 68 poultry feed mills of different installed capacities are operating in the study area. To select an adequate representative

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sample, the feed mills were classified on the basis of their manufacturing capacity and a sample of 21 poultry feed mills of different categories was selected for the formal survey. Over 61% of the sample mills had an installed capacity of up to 10 metric tons per hour. The study is mainly concentrated on analysis of the maize production system with emphasis on labour employment and income generation opportunities at three levels: firstly, at the farm level to see labour participation in maize production and marketing; secondly, in maize processing with reference to the size of maize processing industry and its capacity to absorb rural/urban labour; and thirdly, labour participation in the poultry feed industry. Maize marketing has been described with respect to farmers' marketing channels and their labour inputs. The maize market situation has been discussed with reference to the number of mills, their operational capacity, the nature of competition and thereby market performance in maize processing and the feed industry to understand the possibilities of expansion in the industry and availability of increased opportunities of labour absorption in the future. The market description, however, does not present an in-depth analysis of the theoretical compatibility. The study is, therefore, mainly descriptive and the results should be interpreted in view of this limitation. At the time of the study, US$ 1 was equivalent to about 25 PRs.

Maize production scenario The area and production figures presented in Table 2 show that despite increased domestic and commercial uses of maize, area and production remained stagnant over the last decade. Area and production grew at average annual rates of 2.1 and 2.9% from 1947 to 1988 (Mahmood and Walters 1990). However, another study showed that yield per hectare increased considerably (11.2%) in 1977/78 over the yield in 1970/71 (Chatha 1982). Similarly, yield per hectare has not improved much in the last decade.

Table 2 Maize area, production and yield in Punjab, NWFP and Pakistan, 1980/81 to 1989/90. Province Item( Unit) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 PUNJAB Area ('000 ha) 347.1 325.0 337.3 336.3 342.1 338.6 346.1 336.7 345.5 345.2 Production ('000 mt) 444.7 405.3 450.1 450.0 460.0 415.0 453.3 404.8 455.3 455.0 Yield (kg/ha) 1,281.2 1,247.1 1,334.4 1,338.1 1,344.6 1,225.6 1,309.7 1,202.3 1,317.8 1,318.1 NWFP Area ('000 ha) 396.3 391.8 431.4 439.5 442.9 440.9 444.7 494.6 495.4 493.5 Production ('000 mt) 510.9 512.2 542.9 550.9 554.0 580.6 643.5 709.3 735.1 710.5 Yield (kg/ha) 1,289.2 1,307.3 1,258.5 1,253.5 1,250.8 1,316.9 1,447.0 1,434.1 1,483.9 1,439.7 ALL PAKISTAN Area ('000 ha) 769.0 739.1 789.8 798.0 808.8 803.9 816.2 853.9 865.8 862.9 Production ('000 mt) 970.4 930.4 1,005.4 1,013.5 1,027.6 1,009.4 1,111.2 1,125.9 1,204.1 1,179.3 Yield/Hac (kg/ha) 1,261.9 1,258.8 1,273.0 1,270.1 1,270.5 1,255.6 1,361.4 1,318.5 1,390.7 1,366.7 Source: Agricultural Statistics of Pakistan 1990/91. Information regarding the cropping system of the sample maize growers (Table 3) reveals that spring maize, after potato and wheat, was the most important crop occupying 21.4% of the total cropped area. The normal summer crop was cultivated on about 6.5% of the cropped area. The cropping intensity was over 190% in the study area, with little variation between the two study districts. Cropping intensity on farm size and tenure basis was comparable (Table 4).


Labour employment Employment of labour in maize production was estimated for various operations. It was noted that harvesting and threshing of maize were the most important operations providing maximum (about 505 man-hours per hectare, mh/ha) employment to farm labour. Harvesting and threshing operations consist of several activities, of which picking of cobs and removal of sheaths from cobs are the major ones. The next important operation was application of irrigation consuming about 232 mh/ha, followed by thinning (53.3 mh/ha) and tillage (11.5 mh/ha), respectively (Appendix 2).

Table 3 Cropping patterns of the spring maize growing sample farms.

Season/Crop T.T. Singh Okara ---(percent area)-- All

RABI/ZAID RABI Wheat 26.37 27.82 27.19 Sugarcane 8.63 0.56 4.06 Fodder 5.20 2.91 3.90 Spring Maize 17.53 24.30 21.37 Rabi Potatoes 34.85 39.90 37.71 Sunflower 1.34 - 0.58 Other Vegetables 3.19 2.39 2.75 Orchard 2.80 - 1.21 Fallow 0.09 2.11 1.23 KHARIF/ZAID KHARIF Cotton 25.36 23.76 24.51 Sugarcane 19.32 0.39 9.24 Fodder 12.40 6.87 9.46 Kharif Maize 1.76 10.60 6.47 Rice 0.19 14.75 7.94 Kharif Potatoes 1.98 1.35 1.64 Other Vegetables 3.51 10.41 7.17 Other Crops 0.10 6.12 3.31 Orchard 5.05 0.00 2.36 Fallow 30.32 25.74 27.88

Table 4 Cropping intensity in the study area. Item Cropped Area

(ha) Cultivated Area

(ha) Cropping 1ntensity

(%) DISTRICT T.T. Singh 2,278.75 1,138.00 200.2 Okara 2,872.75 1,560.50 184.1 All 5,151.50 2,698.50 190.9 TENANCY Owners 1,492.50 804.50 185.5 O-C-T 2,665.75 1,418.00 188.0 Tenants 993.25 476.00 208.7 All 5,151.50 2,698.50 190.9 FARM SIZE Small 560.00 281.50 198.9 Large 4,591.50 3,417.00 190.0 All 5.151.50 2.698.50 190.9

Labour employment on a tenure basis indicates that owner- cum-tenants were putting in more labour on harvesting and threshing (about 535 mh/ha), irrigation (243.4 mh/ha) and

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thinning (63.7 mh/ha) compared to other tenurial categories (Appendix 3). A similar situation emerged for labour use on a farm size basis (Appendix 4). In general, three types of labour were employed in maize production, i.e. family labour, permanently hired and temporarily/casually hired labour. The family labour consisted of both male and female labour while permanently hired labour always comprised of males only. The study reveals that family labour was employed in almost all operations. However, irrigation and harvesting/threshing operations consumed a larger number of family labour hours. Tillage operations were mainly carried out by permanent hired labour, while this labour also participated in application of irrigation (81.7 mh/ha), harvesting and threshing (42.1 mh/ha) and pesticide application (13.2 mh/ha). Temporary hired labour was mainly employed in harvesting/threshing operations, in which case female labour was employed for 389.5 mh/ha but male labour only for 23.1 mh/ha. Studies on female participation in maize production operations showed that 70-80% of the female respondents took part in harvesting and removal of sheaths from maize cobs (Mi et al. 1986). During peak periods of labour use, demand for labour exceeds that of supply and wage rates paid are higher than the average for the whole year (Ellahi 1984). Temporarily hired female labour also performed the thinning operation (37 mh/ha) (Appendix 5). This shows that employment opportunities were available to varying degrees for all types of labour. Temporarily hired labour, including female labour, was more attracted by the one-time operations of harvesting and threshing. Maize marketing In the study area, spring maize growers retained a negligible portion of maize for fodder and virtually all the maize produced was marketed. It was also found that area under kharif (normal summer) maize was on the decline in Punjab province and was being shifted mostly to sugarcane production, whereas area under the spring crop was increasing mainly due to crop rotation (best fit after winter potato crop) and relatively low returns from wheat production. The curl leaf virus problem in cotton crop, if not controlled in the near future, is likely to induce changes in cropping patterns of the affected areas causing an increase in area under kharif maize in future. In a recent study, Mi et al. (1992) found that home consumption of maize was declining rapidly in NWFP. Since NWFP is the major home consumer of maize, a larger marketable surplus may become available from that province. At present, it is difficult to predict the net result of the above mentioned forces affecting the availability of maize. Maize marketing was well organized in the study area, especially amongst the contract growers of Rafhan Maize Products. This company procures 35% of its total requirements from spring crop contract growers, while the remaimng portion is procured from the open market (CIMMYT 1989; Akhtar and Byerlee 1986; Tetlay et al. 1987). The main marketing channel of maize consisted of direct purchase by Rafhan Company from the farms of its contract growers. Contract growers of maize were satisfied with the present procurement procedures and prices received from Rafhan, their extension services and production campaign. However, as the spring maize was mainly grown by large farmers, only they benefited from contract-farmer approach to maize production. Other companies buy maize through the village dealers. Non-contract growers usually sell their maize surplus to commission agents directly or through village beoparies. In addition, these farmers also sell their surplus maize to Rafhan's authorized agents located in the grain market if market prices are lower than Rafhan's prices, otherwise they sell to other commission agents in the market.


Labour employment in production and marketing Labour employment in maize marketing activities was mainly activity and grower specific. Contract growers provided labour only for loading of maize at the farm level. In the case of non-contract growers, male family labour participated in transportation of maize from the farm to the market. Temporary hired labour loaded and un-loaded in the factory/market only (Table 5).

Table 5 Labour employment in spring maize marketing by contract And non-contract growers

Item Contract Non-Contract Growers Growers Family Permanent Temporary Male Hired Hired Loading (open/bags) (man-hours/100 kg) 0.03 - 0.01 0.02 Transportation (man-hours/1000 kg) N.A 0.50 0.50 - Unloading/bagging at factory/markets * (mh/bag) N.A - - 0.12 * Labour for this job is employed in the markets.

Total time for various types of labour employed in production and marketing and its wage rates are presented in Table 6. The table shows that maximum hours of family labour (45.2) were utilized in maize production, while permanent hired labour was also mainly employed in this operation spending 161.6 mh/ha. Both male and female (temporary hired) labour was used primarily in maize production, female 658 mh/ha, and male 52 mh/ha. Wage rates are also given in Table 6.

Total 6 Labour employment in maize production and marketing and their wage rates.

Type of Labour Item Family

male Permanent

Hired Temporary

Male Hired

Female Labour employed for maize production (man-hours/ha) 45.2 161.6 52.1 658.0 Labour employed for maize marketing (man-hours/ha) 1.95 2.33 5.45 - Average wage rates* Driver (PRs/hr) - 6.1 - - Labourer (PRs/hr) - 4.58 4.58 2.73 * Wage rates for permanent labourers calculated by considering 24 working days per month and 8 hours of daily work

Income generated from different activities for all categories of labour is given in Table 7. Returns to family labour were PRs 222 per hectare while permanent hired labour earned PRs 782 per hectare for maize cultivation. Female temporarily hired labour, however, got the highest return since women were involved in the most labour-intensive activity of harvesting/threshing and thinning. Overall, all types of labour received reasonable remuneration from all operations involved in production and marketing of maize.

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Maize processing Market description As indicated earlier, by now six major maize processing firms are fully functional. Of the six processing mills, four are located in the study area and have been studied. Capacity-wise, Rafhan, Faisalabad was the major maize processor followed by Glaxo, Lahore. Rafhan enjoyed the strongest position in the market as indicated by its present concentration ratio (a measure of market power) of 0.8. This market power has grown over time from 0.7 (Amir 1986). Thus, Rafhan Maize Products had captured 80% of the market, while the remaining three held only 20% of the market (Table 8).

Table 7 Income by different categories of labour employed per hectare from spring maize production and marketing on the sample farms

Type of Labour Item Family Permanent

Hired Temporary

Male Hired

Female (man-hours/ha) 210 768 253 1,164 Labour employed for maize marketing (man-hours/ha) 12 14 25 - Total labour income (PRs/ha) 222 782 278 1,164

Table 8 Daily and annual maize requirements by processing units in 1991/92. Name of Installed Utilization (mt) Present Utilization (mt) Industrial Unit Daily Annual Daily Annual Rafhan Maize 25 8,500 375 127,500 Glaxo 90 16,000 90 16,000 Sethi 10 3,600 25 9,000 Fauii Cereals 3 6,500 3 6,500 Source: Survey data 1992

The above market structure shows that one major firm was dominating the whole market on both supply and demand sides. The concentration ratio of the major maize processors resulted in squeezing the business of two processing establishments in another province of Pakistan (not in the study area). This is a fair reflection of the conduct of the maize processing market. However, despite dominance of one major firm it was observed that the maize processing market was performing quite satisfactorily in terms of supply of a variety of quality processed items, though at relatively high prices compared to consumer incomes. Labour employment Overall, Rafhan Maize Products provided more job opportunities than by Sethi and Glaxo (Table 9). The table shows that Rafhan had the largest annual capacity, employing 773 man-years of labour, The number of employees at Glaxo was comparable with that at Sethi. Various processing units had three major operational divisions, namely, production. utility and engineering, and general administration and sales. Annual labour employment by


divisions of labour in the main maize processors revealed that overall, more labour was engaged in the production division compared to the utility and engineering and general administration and sales divisions.

Table 9 Annual labour employment (man-years) by division in major maize processing units in Pakistan

Nill Production Utility & General Admin. Total Division Engineering Div. and Sales Div. Rafhan Maize 246 296 231 773 Glaxo 75 35 20 130 Sethi 80 25 23 125 Fauii Cereals 65 19 17 101 Source: Survey data 1992

Labour was categorized into three types i.e. skilled, semi-skilled and unskilled. Management was categorized separately. Labour employment by skill revealed that unskilled labour utilization was approximately three times greater than that of semi-skilled and skilled labour (Table 10).

Table 10 Annual labour employment (man-years) by skill in processing units in Pakistan.

Mill Unskilled Semi-skilled Skilled Management Rafhan Maize 510 190 59 14 Glaxo 81 34 12 3 Sethi 85 20 16 4 Fauii Cereals 67 25 7 2 Source: Survey data 1992,

The major opration in maize processing is griding. The capacities of the various sample unit showed that, 7.1 man-years were cosumed for grinding one thousand metric tons of maize.Labour utilization for maize grinding per thaousand metric tons ranged 6.1 to 15.5 man-years (Table 11)

Table 11 Labour utilization for maize grinding in different processing units. Mill Production Utility & General Admin. Total Division Engineering Div. and Sales Div. (man-years /'000 t) Rafhan Maize 1.9 2.3 1.8 6.1 Glaxo 4.7 2.2 1.3 8.1 Sethi 8.9 2.8 2.6 13.9 Fauji Cereals 10.0 2,9 2.6 15.5 All Punjab 2.9 2.4 1.8 7.1 Source: Survey data 1992,

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The utilization of various types of man-power in different processing units per thousand metric tons is presented in Table 12. Overall, the man-years of labour employed to process one thousand metric tons of maize were the highest in the case of unskilled followed by semi-skilled and skilled labour.

Table 12 Labour utilization for maize grinding by type of labour in different processing units. Unskilled Semi-skilled Skilled Management

(man-years/ '1000 t) Rathai Maize 4.0 1.5 0.5 0.1 Glaxo 4.4 2.1 0.8 0.2 Sethi 9.4 2.2 1.8 0.4 Fauji Cereals 10.3 3.8 1.1 0.3 All Puniab 4.6 1.7 0.6 0.1 Source: Survey data 1992.

Income generation Questions about the monthly wages offered to labour of various skills by these processing units were observed to be very sensitive and complex because of high variation in the technology involved for maize processing by various units. However, to present a fair assessment of income earned by the labour employed in maize processing, the information was computed on the basis of broad categories of labour, i.e. skilled, unskilled, semi-skilled and management (which ranges from a highly specialized management level down to ordinary worker). Accordingly, minimum and maximum monthly salaries of labour of different skills engaged are presented in Table 13. Salaries ranged from PRs 1,425 to PRs 2,000 for unskilled, from PRs 2,000 to PRs 2,500 for semi-skilled, from PRs 2,500 to PRs 10,000 for skilled labour. Management was getting from PRs 10,000 to PRs 40,000 per month in the sample feed mills.

Table 13 Monthly wage rates of labour of in major maize processing units in Pakistan.

Level of Skill Minimum (Prs) Maximum (PRs) Unskilled 1,425 2,000 Semi-skilled 2,000 2,500 Skilled 2,500 10,000 Management 10,000 40,000 Source: Survey data 1992

Poultry feed industry market description The establishment of the majority of poultry feed units took place during mid 1980s. Out of the total of over 68 units in the country, 21 have been studied for the present analysis. The feed units have been categorized according to the installed capacity and annual maize and gluten requirements. The four major categories consist of capacity up to 5 mt/hour, 6 to 10 mt/hour, 11 to 15 mt/hour and 16 mt/hour or above. According to this classification it was observed that feed units falling in the installed capacity categories of up to 10 mt/hour captured about 62% of business volume in the sample market, followed by the category with capacity between 11 and 16 or above. The distribution shows that more than three-fifths of the sample feed mills had the installed capacity up to 10 mt/hour (Table 14)


Table 14 Distribution of feed mills by installed capacity. Installed Capacity Frequency Percentage Up to 5 mt/hr 6 28.6 6 to 10 mt/hr 7 33.3 11to15mt/hr 4 19.0 16 mt/hr and above 4 19.1 All 21 100.0

The operational area of a majority of sample feed mills was within their district of location. However, five large feed mills were also operating in other provinces. The poultry feed market structure shows that the feed industry was fairly competitive with regard to price setting and other market functioning. Because of this competitive structure, the industry was still growing, showing ease of entry of new feed units, especially those meeting feed requirements of their own poultry farms. Furthermore, the performance of the market was reasonably satisfactory with regard to supply of quality feed at fairly competitive prices. Although small feed units did not have a formal feedback mechanism for the products marketed, acceptance of their products by poultry farmers and lack of complaints about quality served as a satisfactory indicator of market performance. The feed units thus continued to produce and expand their capacity. Feed selling agencies and poultry farmers reported that maize was the preferred cereal for use in poultry feed. Therefore, demand for maize in this sector is virtually unlimited. However, due to increases in the price of maize relative to other cereals such as wheat, barley and sorghum, feed producers have sharply reduced the total use of maize in feed preparations. Amir (1986) also confirmed this finding. The poultry sector is passing through a critical period of adjustment due to increased prices of feed, seasonal demand fluctuations, and reduced profits as a result of unplanned rapid expansion. Typical feed formula Poultry feed ration formulae have been developed by the Poultry Research Institute, Rawalpindi, Pakistan separately for layers and broilers (Tables 15 and 16). Cereals like maize, wheat, rice, jowar and bajra constitute the major portion, 52 and 49% of the ration, respectively of which maize is the major ingredient followed by wheat. Broken rice is another important component of the feed ration. Feed manufacturers, however, try to use damaged cereals usually unfit for human consumption. Among these cereals, wheat serves as a cheap substitute for maize due to the high price of maize. This practice affects efforts to achieve self sufficiency in food, of which wheat is the staple, and quite often wheat imported for human consumption as a food security measure goes into feed manufacturing. It is, therefore, quite pertinent to expand maize production to increase the supply to the feed industry at a cheaper, or at least, competitive price to avoid the use in feed of wheat which could have been used for human consumption. Information about the proportion of maize and gluten (of different protein concentration level) used in their feed by feed mills of various installed capacities (Table 17) indicates variation between mills. Gluten 60% was mainly used by all mills but the amount decreased with increase in installed capacity. Use of maize varied between 6.33 to 7.71% by various mills, except for mills in the category of 11 to 15 mt/hr capacity in which case it was only 3.75%. The obvious reason for this low use was manufacturer's choice due to high prices.

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Table 15 Typical layer feed formulas used in Pakistan.

Ingredient Layer Starter (%)

Layer Grower (%)

Layer Finisher (%)

Cereals (Maize/rice/jowar/bajra/wheat). 38.90 24.00 52.13 Wheat Bran - 2.12 Broken Rice - 24.00 - Sorghum - 24.00 - Toria Meal - - 5.34 Cotton Seed Meal - - 5.45 Cotton Seed Cakes Without Bran 14.87 4.20 - Till Cakes - 4.90 Ulsi Cakes - - 3.18 Corn Gluten 30 % 5.3 - - Rice Polish 6.05 - - Corn Gluten Meal Feed 9.6 - 5.30 Corn Gluten 60% Meal - 2.80 - Dry Blood Meal 4.8 - 2.65 Dry Fish Meal 4.25 3.50 6.18 Dry Beef Meal 12.93 4.20 - Bone Meal 1.3 - - Poppy Meal - - 2.21 Guar Meal - - 4.31 Limestone 0.69 4.90 5.30.., Molasses - - 3.53 D.C.P. - 1.40 1.77 Table Salt - - 0.09 Salt Mixture 0.35 0.18 - Vitamin Mixture 0.69 1.93 0.44 Source : Poultry Research Institute, Livestock and Dairy Development Department, Rawalpindi, Pakistan.

Table 16 Typical feed formulas for broilers used in Pakistan.

Ingredient Broiler Starter (%)

Broiler Finisher (%)

Maize/Rice/Wheat 45.94 49.40 Rice Polish 3.11 3.11 Toria Meal 4.97 4.97 Cotton Seed Meal 13.75 10.29 Till Cakes 4.15 .4.15 Gluten Meal 2.59 2.59 Corn Gluten Meal Feed 2.59 2.59 Dry Fish Meal 8.65 8.65 Poppy Meal 6.11 6.11 Guar Meal 2.59 2.59 Limestone 0.86 0.86 D.C.P. 1.56 1.56 Table Salt 0.09 0.09 Vitamins & Salts Mixture 0.43 0.43 Source: Poultry Research Institute, Livestock and Dairy Development Department, Rawalpindi, Pakistan

Information about the annual gluten and maize needs of various groups of feed mills is presented in Table 18. The highest total annual needs of gluten 60% were reported by feed mills of 6-10 mt/hr followed by feed mills of more than 15 mt/hr capacity. On the other hand, the highest total annual maize needs were reported by feed mills of more than 15 mt/hr followed by feed mills of 6-10 mt/hr and those of 11-15 mt/hr capacity, respectively.


Table 17 Percentage of gluten and maize utilized by installed capacity group in Pakistan.

Installed Capacity Gluten 30% Gluten 60% Maize Up to 5 mt/hour - 3.17 6.33 6 to 10 mt/hr - 3.14 7.71 11 to 15 mt/hr 1.25 1.25 3.75 16 mt/hr and above - 0.50 6.75 Overall percentage 0.24 2.29 6.38

Table 18 Total annual needs (mt) of gluten and maize by installed capacity groups in Pakistan.

Installed Capacity Gluten 30% Gluten 60% Maize Up to 5 mt/hour - 1,056 2,569 • 6 to 10 mt/hr - 4,108 13,292 11 to 15 mt/hr 3,000 818 4,613 16 mt/hr and above - 2,336 30,061 Total annual needs 3,000 8,318 50,535

Labour employment Labour use has again been analyzed with reference to various divisions of the firms to see their employment capacity and labour needs. The distribution of labour among different divisions in the sampled feed mills shows that the largest manpower group was engaged in production, followed by sales and management divisions. The sales division included more veterinary professionals to promote feed sales (Table 19).

Table 19 Labour employment in various divisions of the sampled feed mills. Management Production Sales Installed Capacity Sk Unsk Sk Unsk VD VAC PO OSO Up to 5 mt/hour 17 4 7 28 7 9 8 - 6 to 10 mt/hr 22 7 22 122 19 21 - - 11 to 15 mt/hr 15 14 33 70 21 42 3 - 16 mh/ht and above 20 3 80 77 40 110 31 2 Total Labour 74 28 142 297 87 182 42 2 SK = Skilled Unsk = Unskilled VD = Veterinary Doctor VAC = Vaccinator PO = Promotion Officer OSO = Sales Officer

The data regarding the extent of labour engaged per thousand metric tons of maize in various divisions show that the greatest number of man-years was employed in the production division (i.e. 5.9 of unskilled and 2.8 of skilled) followed by sales (Table 20).

Table 20 Labour utilization for maize grinding for feed by various divisions in Pakistan. Installed Capacity Management Production Sales Sk Unsk Sk Unsk VD VAC. PO OSO (man-years/ '1000 t) Up to 5 mt/hour 6.6 1.6 2.7 10.9 2.7 3.5 3.1 - 6 to 10 mt/hr 1.7 0.5 1.7 9.2 1.4 1.6 - 1 to 15 mt/hr 3.3 3.0 7.2 15.2 4.6 9.1 0.7 - 16 mt/hr and above 0.7 0.1 2.7 2.6 1.3 3.7 1.0 0.1 Total Labour 1.5 0.6 2.8 5.9 1.7 3.6 0.8 - SK = Skilled Unsk = Unskilled VD = Veterinary Doctor VAC = Vaccinator PO = Purchases Officer OSO = Sales Officer

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Income generation The question of the monthly wages paid to the labour of various skills employed in different divisions by the feed mills was again observed to be very sensitive and complex because of large variation in the technology used by various mills. So, the wages were computed with reference to the broad categories of labour, i.e. skilled, semi-skilled and unskilled, and minimum and maximum monthly salaries are presented (Table 21).

Table 21 Monthly wage rates of labour of various skills in Pakistan. Type of Skill Minimum (PRs) Maximum (Rs) General Skilled 5,000 15,00 Semi-skilled 1,200 2,50 Unskilled 1,000 2,00 Production Skilled 3,000 25,00 Semi-skilled 1,000 7,00 Unskilled 1,000 3,00 Sales Skilled 3,000 25,00 Semi-skilled 1,400 10,00

It was observed that in the general administration division, the salaries ranged from PRs 5,000 to PRs 15,000 for skilled, from PRs 1,200 to PRs 2,500 for semi-skilled and from PRs 1,000 to PRs 2,000 for unskilled labour respectively. In the production division, the salaries ranged from PRs 3,000 to PRs 25,000 for skilled, from PRs 1,000 to PRs 7,000 for semi-skilled and from PRs 1,000 to PRs 3,000 for unskilled labour respectively. The salaries ranged from PRs 3,000 to PRs 25,000 for skilled and from PRs 1,400 to PRs 10,000 for semiskilled labour working in the production division.

Summary The study was carried out in Punjab province of Pakistan on a sample of 50 maize growers, 4 processing firms and 21 poultry feed manufacturers.

• In the study area spring maize served as the main source for processing food and feed items as growers retain a negligible portion of maize for domestic consumption.

• In maize production, harvesting and threshing operations absorbed the most labour at the farm level, followed by application of irrigation. Permanent hired labour constituted the major share of total labour.

• Female labour was a prominent part of temporary hired labour in maize production. • Permanent hired labour received the maximum income in maize production/ marketing

among all categories of labour. • Temporary hired female labour earned the maximum wages per hectare. • The maize processing and feed sector serves as an important source of labour

employment, both skilled, and unskilled. Rafhan Co. was the major employer with 773 man years of labour of various types.


• In the feed sector, labour of various types is employed in the main activities, i.e. management, production and sales of which the production activity is the major labour employer.

• With regard to returns from feed manufacturing, labour employed in production and sales earned the highest income of all categories.

Conclusions The study shows that maize served as a source of labour employment both in the farm and industrial sectors with great potential of expansion. The contribution of maize as an employment generator has been less than satisfactory due to stagnant growth of area and production, although great potential exists for increasing production and yield. In view of the low yield of maize and consequent high prices, the food industry is using wheat as a substitute for maize, which is affecting the wheat supply for human consumption. By increasing maize production, we could improve the wheat supply and also reduce import bills for wheat. Maize production, processing and feed sectors also provide opportunity to female labour which could help improve the family income. In addition, the maize industrial sector provides jobs to professionals such as veterinarians, especially in poultry feed manufacture and sales promotion, thus reducing unemployment of educated people in the country. When framing policies and taking corrective measures to improve maize production, the whole sector including production, processing and the feed industry needs to be kept in view. To do so, it would be appropriate to: Improve production and management practices by adoption of packages of technology, increasing farmers' access to new knowledge and technology and input/out put markets. Appropriate policy support is needed regarding prices, marketing, imports and improvements in the feed sector.

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Tetlay, K. et al. 1987. Maize in the irrigated farming systems of the Central Punjab: farmer's production practices. PARC/CIMMYT Paper No. 87-15, Islamabad: PARC.

Zaman, A. 1988. Rural employment strategies and policies in Pakistan. Pakistan Manpower Review Vol. XIV No. 1.


Appendix 1 Area under various food legumes and coarse grain (FLCG) crops in Paldstan, 1980/81-1990/91. Year Total Area Under FLCG Crops (million hectares) Cropped Maize Sorghum Millet Gram Mash Mung- Total Area Area bean Lentil Groundnut Under FLCG1980/81 19.33 0.769 0.394 0.406 0.843 0.068 0.067 0.073 0.046 2.666 1981/82 19.78 0.739 0.393 0.559 0.902 0.066 0.066 0.074 0.060 2.859 1982/83 20.06 0.790 0.390 0.438 0.893 0.074 0.079 0.082 0.069 2.815 1983/84 19.99 0.798 0.391 0.553 0.920 0.071 0.091 0.049 0.073 2.932 1984/85 19.92 0.809 0.395 0.606 1.014 0.084 0.094 0.049 0.059 3.110 1985/86 20.28 0.804 0.372 0.561 1.033 0.089 0.104 0.057 0.055 3.075 1986/87 20.60 0.816 0.399 0.509 1.082 0.078 0.114 0.081 0.063 3.142 1987/88 19.52 0.854 0.320 0.293 0.821 0.075 0.094 0.076 0.066 2.599 1988/89 21.82 0.866 0.431 0.510 0.979 0.079 0.097 0.076 0.068 3.106 1989/90 21.89 0.863 0.440 0.512 1.035 0.086 0.144 0.068 0.080 3.228 1990/91 21.89 (est.) 0.845 0.417 0.490 1.092 0.079 0.142 0.063 0.083 3.211 Sources : Economic Survey, 1991/92, Finance Division, Economic Advisor’s Wing, Government of Pakistan,

Islamabad,1992. Agricultural Statistics of Pakistan 1990/91, Ministry of food , Agricultural and Cooperatives, Government of Pakistan, Islamabad, 1992

Appendix 2 Labour employment for various operations of spring maize. Operation T.T. Singh Okara All (man-hours/ha) Tillage 1.84 11.32 11.47 Disc ploughing .07 5.76 5.46 Tractor ploughing .04 3.95 4.35 Tractor planking .73 1.61 1.66 Sowing and Bund Making 5.16 4.52 4.74 Drill sowing 3.36 2.59 2.87 Bund making 1.80 1.93 1.88 Interculture 12.55 9.61 10.03 Bullocks 8.43 4.87 5.51 Tractor 4.13 4.74 4.52 Fertilizer Application 6.87 7.51 7.39 Transport 2.25 2.77 2.62 Spreading - DAP 1.46 2.03 1.88 - urea 3.16 2.72 2.89 Thinning 57.87 50.88 53.30 Irrigation 227.80 152.58 231.58 Canal 55.15 42.80 48.33 Tubewell 93.65 103.16 103.19 Canal + tubewell 74.11 0.00 74.11 Water course cleaning 4.89 6.62 5.96 Pesticide Application 21.70 31.09 27.01 Dusting 11.61 16.98 14.43 Spraying 10.08 14.11 12.58 Harvesting and Threshing 505.20 506.21 504.90 Picking cobs 180.70 165.16 170.92 Collection of cobs 28.74 44.40 38.70 Transpt. to drying field 25.72 26.66 26.07 Removal of covers 190.49 180.95 184.58 Drying of cobs 15.30 22.31 19.30 Threshing / shelling 31.95 33.53 32.84 Bagging. 32.30 11 10 32.99 Source: Survey data 1992

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Appendix 3 Labour employment for various operations of spring maize by tenancy status.

Operation Owner Owner-cum - Tenant Tenant All

(man-hours/ha) Tillage 11.02 11.81 10.77 11.47 Disc ploughing 4.69 6.05 4.45 5.46 Tractor ploughing 4.55 4.18 4.57 4.35 Tractor planking 1.78 1.58 1.75 1.66 Sowing and Bund Making 5.73 3.95 5.56 4.74 Drill sowing 3.11 2.55 3.48 2.87 Bund making 2.62 1.41 2.08 1.88 Interculture 14.01 10.38 8.25 10.03 Bullocks 10.01 5.14 4.94 5.51 Tractor 4.00 5.24 3.31 4.52 Fertilizer Application 7.98 7.24 7.54 7.39 Transport 2.57 2.69 2.35 2.62 Spreading - DAP 2.20 1.83 2.30 1.88 - urea 3.21 2.72 2.89 2.89 Thinning 39.86 63.68 42.80 53.74 Irrigation 193.58 243.39 187.57 231.58 Canal 40.62 47.05 73.61 48.33 Tubewell 74.11 115.62 33.36 103.19 Canal + tubewell 74.50 74.01 74.13 74.11 Water course cleaning 4.35 6.72 6.47 5.96 Pesticide Application 21.74 29.73 25.50 27.01 Dusting 11.27 15.89 13.52 14.43 Spraying 10.48 13.84 11.98 12.58 Harvesting & Threshing 457.1 534.63 509.99 505.39 Picking cobs 152.51 175.84 187.25 170.92 Collection of cobs 31.70 45.89 28.39 38.70 Transpt. to drying field 21.65 29.16 24.29 26.07 Removal of covers 164.62 194.22 185.70 184.58 Drying of cobs 17.87 18.56 . 23.40 19.30 Threshing / shelling 38.55 29.70 35.98 32.84 Bagging 30.29 39.78 24.98 32.99 Source: Survey data 1992


Appendix 4 Labour employment on spring maize growing by farm size in the mixed cropping systems of irrigated Punjab

Small Large All (man-hours/ha) Tillage 12.21 11.34 11.47 Disc ploughing 4.79 5.51 5.46 Tractor ploughing 5.51 4.20 4.35 Tractor planking 1.83 1.63 1.66 Sowing and Bund Making 5.58 4.62 4.74 Drill sowing 3.16 2.82 2.87 Bund making 2.42 1.80 1.88 Interculture 15.20 9.61 10.03 Bullocks 11.44 4.99 5.51 Tractor 3.76 4.62 4.52 Fertilizer Application 7.61 7.81 7.39 Transport 2.59 2.62 2.62 Spreading - DAP 2.17 1.95 1.88 - urea 2.84 3.24 2.89 Thinning 50.73 53.67 53.74 Irrigation 201.24 233.86 231.58 Canal 32.81 50.80 48.33 Tubewell 80.93 1Q4.42 103.19 Canal + tubewell 80.55 72.80 74.11 Water course cleaning 6.94 5.83 5.96 Pesticide Application 25.28 27.26 27.01 Dusting 14.58 14.41 14.43 Spraying 10.70 12.85 12.58 Harvesting and Threshing 466.60 509.84 505.39 Picking cobs 161.58 172.25 170.92 Collection of cobs 28.91 40.01 38.70 Transpt. to drying field 23.28 26.49 26.07 Removal of covers 174.63 183.50 184.58 Drying of cobs 12.63 20.26 19.30 Threshing / shelling 35.19 32.25 32.84 Bagging 30.39 35.09 32.99 Source: Survey data 1992.

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Appendix 5 Labour employment by labour type for growing spring maize.

Operation Family Labour

Permanent Labour

Hired Labour Male Female

(man-hours/ha) Tillage 1.11 9.17 0.69 - Disc ploughing 0.30 4.45 0.22 - Tractor ploughing 0.57 3.41 0.37 - Tractor planking 0.25 1.31 0.10 - Sowing and Bund Making 0.59 3.73 0.42 - Drill sowing 0.35 2.17 0.35 - Bund making 0.25 1.56 0.07 - Interculture 0.37 3.81 0.34 - Bullocks - - - - Tractor 0.37 3.81 0.34 - Fertilizer Application 0.27 6.3 - - Transport 0.15 2.5 - - Spreading - DAP 0.02 1.0 - - - urea 0.12 2.7 - - Thinning 2.50 1.95 10.01 36.97 Irrigation 26.44 81.69 0.07 - Canal 1.90 18.5 - - Tubewell 21.84 45.4 - - Canal + tubewell 2.15 12.3 - - Water course cleaning 0.54 5.36 0.07 - Pesticide Application 1.51 13.20 7.61 - Dusting 0.62 4.30 5.14 - Spraying 0.89 8.90 2.47 - Harvesting & Threshing 12.40 42.08 23.10 389.48 Picking cobs 4.92 0.20 8.43 157.38 Collection of cobs 0.94 5.81 2.74 28.89 Transpt. to drying field 1.26 7.88 3.39 13.52 Removal of sheath 2.72 3.43 0.12 172.92 Drying of cobs 0.02 15.89 0.64 - Threshing / shelling 1.98 6.38 5.46 6.75 Bagging 0.57 2.50 2.32 10.03 Source: Survey data 1992

Economics of Soybean Processing in Nueva Ecija, Philippines, 1992

Romeo R. Huelgas and Elsa G. Tuiza*

Introduction

Agriculture plays an important role in the ailing economic situation in the Philippines. Various agricultural products can be promoted to contribute significantly to the economy. One of these is soybean which is tagged as the wonder crop of the 20th century due to its diverse uses. Several studies attested to the high potential for producing this crop locally since the country has a climate and soils suitable for soybean production. The successful results of production trials showed that this crop can be grown well in the countryside. The local production of soybeans will help the country save much needed foreign exchange by reducing the importation of soybeans and soybean products. The country has paid as much as US$ 127 million in 1990 for soybean meal importation alone. Moreover, the establishment of additional soybean farms will create job opportunities and lessen the unemployment problem. Furthermore, the income generated from soybean farms can improve the quality of life of farmers, and more productivity in terms of production, trading and processing will provide more revenue for the government in terms of taxes generated. It is a fact that the soybean industry is closely tied to the feed and food processing industries which show an increasing demand for soymeal and soybeans, both of which are heavily imported. The availability of local soybeans will reduce dependence on other countries for raw material requirements and ensure continuous supply for feed production, which in turn is essential for the livestock industry. Soybean plantations will help maximize the utilization of rich and fertile but idle agricultural lands suitable for soybean. Furthermore, the establishment of soybean farms can encourage forward integration, such as processing factories producing soymilk, taho, tokwa, soyvoron and other soyfoods even on a village level. This forward integration will add value to soybeans. This will not only result in employment and income generation, but also help solve the widespread malnutrition problem in the Philippines. While extensive soybean production will mean various benefits for the country, this could not be sustained unless there is a strong back-up of technologies for processing and utilization both for human and livestock consumption. Presently, however, the use of soybean as food in the Philippines is virtually nil except in the manufacture of soy sauce (toyo), fermented soybean (tausi), soybean cheese (tokwa), soft. curd (taho), roasted soybean powder (soy coffee), and Nestles' soya-based products. There is then a need to study the economic viability of soybean processing and utilization for food as village level agribusiness ventures to generate more income and increase employment opportunities among the rural people, and subsequently promote the consumption of soya-based products in Filipino homes.

* Department of Agricultural Economics, College of Economics and Management, University of the Philippines at Los Banos, Laguna, the Philippines.

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The Philippine soybean industry The prospect of producing and processing soybean is highly encouraging. Soybeans have a variety of uses. Among these include the following: Soyfood. Soybeans, as green and mature beans, are made into substitute viands, snacks, health drinks and desserts. With all the important food nutrients present, especially protein, soybean is highly recommended as a food crop. Soybean can be eaten as a green vegetable or mixed with other vegetables. Mature dried beans can be made to sprout and cooked the same was as mongo sprouts. Soybean can be made into soybean rice, soybean milk, soybean coffee, soybean flour, soybean curd or tokwa which in turn can be made into textured vegetable protein (TVP) or "vegemeat", taho, and others. Whole beans can be processed into fermented products such as tausi (canned salted beans), toyo (soy sauce), miso (soy paste), tahuri (soy curd) and others. Soymeal can be made into embutido, hotcake, burger and cookies. Soybean oil can be refined for the manufacture of cooking oil, margarine, salad dressing, vegetable shortening and lecithin. Animal feeds. Soybean, due to its high protein content and quality measured in terms of amino acid composition, is also utilized in poultry and livestock feeds. Soybean meal is the most frequently used protein source in animal rations due to its high quality protein. It has the most complete amino acid profile of any of the vegetable proteins. Industrial raw materials. Furfural, which is used as a solvent and in making dyes, lacquers and synthetic resins, is derived from the soybean plant. Soybean meal by-products have potential applications for paper coating, insulation, fire retardent, foam and textile sizing. The oil is used in the manufacture of soap, paint, candles, artificial rubber, linoleum, water-proofing of goods such as cement cloth, umbrellas and lanterns, lacquer and printing ink, disinfectant, fuel, glycerin, insecticide, and others. Others. The soybean plant can be used as an agricultural fertilizer and as a medicinal plant, too. Furthermore, soy protein isolate and soy flour are used in producing Nutrilite Lecithin E, which is a vitamin E supplement. Recently, the use of soybean oil as a transport fuel has been investigated. With the high nutritional value of soybean and the multiple uses, soybean is indeed the crop of the future in the Philippines. The volume and value of soybeans required by the soyfood industry cannot be quantified accurately because no government or private agency maintains statistical data on soybean food usage and the large soy sauce and soy product companies are scattered geographically, making it difficult to collect primary data from them. Large companies prefer to maintain confidentiality about their raw materials used, while most soyfood producers are small backyard firms operated by Chinese entrepreneurs on low overheads. Furthermore, there is little information on the volume and value of soybeans used for industrial raw materials and other purposes. It is estimated, nonetheless, that roughly 90% of the total supply of soybeans is used as animal feed. This leaves only 10% for purposes such as soyfood and industrial raw materials.

Status of soybean production

In the Philippines, soybean production has a wide potential. It can be grown in any part of the country, except in areas with heavy rainfall. It can be cultivated as a major or alternative crop. It can be profitably grown in lowland rice-based cropping systems or upland corn-based cropping systems. Soybean is also one of the most suitable crops for multiple cropping. Planting is done by broadcast or drill methods.

Soybean in the Philippines 165

Figure 1 Area harvested, average yield and total production of soybean, the Philippines, 1980-1990.

—Q-- Production —X— Area harvested ---U--Yield

Figure 1 and Appendices 1-3 show the performance of local soybean producers over the past 11 years. Soybean production has generally been on a downward trend. Soybean production increased at an average rate of 7% per annum (pa) during the first quarter of the 1980s and then declined by 6% pa in 1983 and 1984. Production subsequently declined (-7% pa) beginning in 1986. The trend in area devoted to soybean followed a similar declining trend. Over the decade, soybean area decreased by 4%. Soybean yield is low, averaging only 0.91 t/ha for the period 1980-1990. Southern Mindanao has been the single most important soybean-producing region in the Philippines for more than a decade (Appendix 1). This region alone accounted for about 67% of the total volume of soybean production in 1990. Central Mindanao comes next contributing about 23%. Northern Mindanao which used to be the second leading soybean producing region has lately shown declining trends of production and area planted (Appendix 2). The rest of the country contributes only a trickle to the total production. All regions in Mindanao, except Western Mindanao, have fair yields per hectare ranging from 0.60-1.5 t/ha (Appendix 3). Mindanao's soil and climatic conditions may be more suitable for soybean production.

Supply and demand for soybean The big buyers of soybeans are food processors and feed millers. The bulk of the domestic soybean supply is processed for human consumption in the form of soy curd (taho), soysauce (toyo), soy cheese (tokwa), soy paste (miso), fermented/salted soybean (tausi), soymilk, textured vegetable protein (TVP), or as a coffee substitute. Table 1 lists soybean-based food products popularly used in the Philippines. Much of the soybean meal required for commercial animal feed, however, is not supplied locally. Soybean meal demand for this purpose is largely met through imports. There are about 152 feedmills in the country with a collective rated capacity of 1.94 million t/year. Most of them operate below their rated capacities. The General Milling Corporation (formerly owned by the Philippine Asia Food Industries Corporation) in Tabangao, Batangas City, previously shut down its soybean crushing operation because of losses incurred due to below-capacity utilization but it has resumed operation. Robina Corporation is still involved in soybean crushing, but it is also operating below capacity. Because of inadequate supply of soybean, soybean crushing has become unviable.

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Table 1 Soybean-based food products popularly used In the Philippines. Product (Local Name) Description Common Way of Serving A.Fermented Products 1. Soy Sauce Liquid seasoning which has Used as an all-purpose (toyo) light to dark brown color. seasoning agent or as Flavour depends on the table condiment. fermentation and aging processes. 2. Fermented Finished product is blackish Cooked with vegetables, Soybean Curd (often referred to as meat or seafood as a (tausi) fermented black beans), flavouring agent. salty, and has a flavour resembling soy sauce. 3. Tempeh A pleasant and mild tasting Eaten as finger food (tempeh) cake-like product made from during Filipino parties. soybean grits and covered with mold mycelia (Rhizophus oligosporus) at the end of the fermentation. It is of Indonesian origin. 4. Soybean Paste A creamy white to yellow Used in soups or as (miso) paste made from soybean ingredient in some plus cereal that has meat, fish and vegetable smooth texture and a dishes. typical salty, distinctive flavour and aroma. 5. Soybean Curd Soft cheese-type product Eaten as a relish or (tahuri) made from fermented cooked with meat and soybean curd cubes, salty vegetables. but mild in flavour. B.Non-Fermented Products 1. Soybean Sprouts Produced by germinating Considered as vegetable; (toge) soybean in the dark for cooked or sauteed with 10 days or until the meat, vegetables and sprouts reach 1.5 cm. seasonings. 2. Soybean Cheese A bland-tasting Ingredient for vegetable (tokwa) coagulated mass of white and meat dishes. soybean solids, similar to cottage cheese in texture; prepared by adding a coagulant and pressing out whey. 3. Geerlings Cheese Soft, white and smooth Served as a favorite (taho) textured; prepared by dessert or snack food adding less coagulant for children. than tokwa and not separating curd from whey. Sweet tasting. 4. Soybean Milk An aqueous extract of Served either as a (soymilk) soybeans; normally breakfast beverage white with strong or as refreshing characteristic flavour. drink. 5. Roasted Soybean Roasted dry beans, Served as coffee Powder medium brown in substitute. (soy coffee) color, ground into powdered form. Source: Escano et al. 1992


Soybean importation and exportation The Philippines has incurred a deficit of about US$ 494M in soybean and soybean products annually due to the chronic shortage in the domestic soybean market. In fact, domestic production is slight compared with the requirements of local industries. In 1990, for instance, total production amounted to only about 4.47 thousand tons whereas total imports of soybean reached around 670 thousand tons. About 93% of the total dollar outlay for soybean and soybean products in 1990 was spent on soybean meal ($127M). The rest was spent on soybean oil, soybean, soybean powder, and soybean-based food preparations in the form of hypo-allergenic soy food, soy paste, soy curd, soy sauce, and fermented soybean. As per Central Bank (CB) data, soybean meal importation doubled from 364 thousand t in 1986 to 624 thousand t in 1990, while soybean oil importation tripled from 9,666 t in 1986 to 21,906 t in 1990. CB data also showed that raw soybean importation has risen by almost five times from only 5,923 t in 1986 to 24,036 t in 1990. Considering these commodities alone (soybean meal, soybean oil, raw soybean) importation totaled around 670 thousand t which had almost doubled for the period 1986 to 1990. The start up of the General Milling Corporation's soybean extraction plant in Tabangao, Batangas in April 1991 is expected to reduce the country's escalating importation of soybean meal and soybean oil. However, raw soybean importation is expected to rise further in the following year. The initial raw soybean requirement of the plant is 500 t per day, to be expanded to 1,000 t per day. A total of 17,000 tons of imported soybeans from the United States will be shipped into the country before the end of 1991. According to National Agriculture and Fishery Council officials, this soybean importation is part of the United States soft loan facility that is open to developing countries including the Philippines. Data from the Department of Agriculture showed that the country would continue to import soybean meal and other soybean products because local production could not meet the increasing demands of the food and feed industries. The bulk of soybean meal came from India (38%), the United States (33%) and China (23%). Philippine soybean exports are composed mainly of soy sauce, fermented soybean, soy paste, soy curd, and soy cheese. Although export volumes remain meager, the marketability of export products, particularly of soy sauce which accounts for about 95% of annual foreign earnings from soybean, seems to have become bullish in the last few years. Soy sauce has penetrated the market of about 26 countries in different regions of the world.

Market potential Owing to strong economic growth, the demand for poultry and livestock meat is vigorous. Demand is likely to expand even more as the economy continues to grow. This trend supports the development of the soybean industry, since a buoyant livestock sector means a greater feed requirement (Table 2). Soybean meal accounts for a significant part (5 to 30%) of commercial feed mixes. Other bright prospects for the soybean market lie in the growing popularity of soybean-based food products. Taho, for instance, is fast becoming a favorite snack among urban and rural folk alike. Protein-fortified cereal made from soybean, a combination of soy and cow's milk, and pure soymilk for infants allergic to cow's milk are slowly carving niches in the local market. For the current year, Nestle Philippines Inc. alone will need about 5,500 t of freshly harvested local soybean to manufacture the products mentioned. While soy sauce already has its established market, tokwa is gaining popularity as a cheap substitute for expensive livestock and poultry meat.

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Table 2 Soybean requirements and poultry and swine populations, the Philippines, 1987-1991.

Population ('000 head) Soybean Requirements* ('000 kg) Year Poultry Swine Poultry Swine Total 1987 53,248 7,038 292,864 929,016 1,221,880 1988 60,322 7,581 331,771 1,000,692 1,332,463 1989 65,921 7,909 362,566 1,043,988 1,406,554 1990 69,539 8,190 382,465 1,081,080 1,463,545 1991 70,825 8,272 389,538 1,091,904 1,481,442 * Based on a per capita consumption of poultry feeds (layers and broilers at 5.5 kg) and swine feed at 132 kg/year. Soybean was assumed to be 80% and 12% in the feed for poultry and swine, respectively.

Thus it is not unrealistic to predict that soymilk may someday partially replace expensive imported whole cow's milk in dairy products such as ice cream, as is now being done with tokwa and TVP in meat dishes. The use of tokwa to replace 30% of the meat content in beef loaf and 20-30% in frankfurters, TVP's current use as a partial substitute to beef, and as an additive in fish patties and pork sausages, already account for up to 75% of the content of those foods.

Objectives of the study

• The present study generally aimed to assess the profitability of operating a small scale soybean processing plant in Nueva Ecija, the Philippines. Specifically, it sought to:

• describe the nature of the soybean industry in the study area; • analyze the economic profitability of soybean processing; and • prepare an implementation plan for horizontal and vertical linkages of the soybean

production system in the study area.

Methodology Taho processors in the province of Nueva Ecija were the respondents of the study. Lists of these processors were obtained from local government units as well as from the Central Luzon State Universities. Complete enumeration of the respondents was undertaken. The data needed for the study were gathered through personal interview with the respondents using a questionnaire. The interview schedule included soybean processors' business activities, operations and requirements and other relevant socio-economic information. Related secondary information was also collected from various government offices in the study area. The data gathered were analyzed using both descriptive and quantitative techniques. Several measures were employed in the economic data analysis.

The study area Nueva Ecija is the largest province in Central Luzon, with a total area of 550,718 hectares. The province occupies the eastern rim of the broad Central Luzon Plain. Nueva Ecija's present boundaries are Pan ' asinan and Nueva Vizcaya on the north, Pampanga and Bulacan to the south, Quezon on the east and Tarlac to the west. It is bounded on the three sides by mountain ranges: Sierra Madre on the east, Caraballo on the north, and Cordillera on the west. The province is divided into four congressional districts which consist of 32 municipalities and 823 barangays.


According to the May 1990 NCSO Census, Nueva Ecija has a population of 1,311,153. The growth rate for the period 1980-1990 has been 2% per annum. About 62% of the total population are in the labour force, of which the majority (58%) are engaged in agriculture. The climate has two pronounced seasons, the wet (May to November) and the dry (December to April). Temperature ranges from 16.0°C to a high of 38.5°, for a mean average temperature 27.3°C. Generally, the soil of the province is from complex materials and alluvial soil. The latter is good for agriculture. More or less one third of the total land area is categorized as annum clay loam, which is for general use. It is adaptable to most kinds of plant growth, including agricultural crops, root crops, vegetables and fruit trees as well as for forage production. Nueva Ecija has a total land area of 550,718 hectares of which 60% or 330,726 hectares is not useable. Lands devoted to agricultural production cover an area of about 298,742 hectares, inland fishery 1,420 hectares and 30,564 hectares for residential, commercial and industrial purposes. Irrigated land covers an area of about 120,959 hectares. Agriculture has remained the prime industry of the province. Agricultural lands devoted to various activities cover about 55% of the total provincial area.

Socio-economic profile of taho processors

Twenty-four taho processors in Nueva Ecija constituted the respondents of the study. Ten of these processors are located at San Leonardo, twelve at Penaranda and one each at Munoz and San Jose City. All but two respondents were family heads and considered taho processing another major occupation or a source of additional livelihood. Most of the respondents also worked part-time on the farm. Others were also processing tokwa, although on a smaller scale. Tokwa is made on an order basis, or when the taho was not all sold, the water was extracted and the taho transformed into tokwa. On average, the respondents were 38 years old and were mostly elementary school graduates. The majority (85%) of the respondents were engaged in this activity for more than 5 years and had acquired their skills from their former employers when they worked in Manila as taho vendors. The economic viability of taho processing had convinced them to start their own business in their homeland. All respondents were classified as sole proprietors, who provided their own capital and operated a small scale business. Location-wise, all these taho processors were concentrated in areas of heavy consumer population. The location is influenced by the supply of raw materials and the perishability of taho.

Capital investment

Taho processing requires minimum capital investment. Tools and equipment are simple and affordable. The most important tool/equipment is the stainless taho container set which costs about P500-P1,500 and lasts for more than 15 years. The vat or tilyase and ladle were the important tools, costing on average P300 and P30, respectively. These tools also have long life spans. The soybean grinder is another important piece of equipment in taho processing, but it is quite expensive. Its value ranges from P700 to P1,500 for a machine with a capacity of 50-75 kg of soybean per hour. Only three respondents had acquired this kind of equipment. All of them were processing only 1 to 4 kg of soybean per day or an average of 3 kg per day. Hence, this equipment is considered dispensable. Respondents without grinder use the grinding services in the market where they pay about P4 per kg of soybean. Table 3 provides the capital investment requirement in taho processing. Distinction between processors with and without grinders was made since capital investment of those with grinder was about 48% higher than that of processors without grinder.

Case Study 170

Marketing functions All the respondents procured the raw materials, i.e. soybean, sugar, and calcium sulfate from market vendors. Payments were all made in cash. Material inputs except for soybeans were bought every day. In the case of raw soybeans, the majority of respondents (70%) purchased them everyday (70%) while the rest, who could afford to buy in large quantity, purchased soybeans either once (15%) or twice (15%) a week. The volume of soybean purchases varied depending on the frequency. Respondents who procured soybeans on a daily basis bought an average of 3 kg while those who bought less frequently bought one half to one cavan (50 kg) of soybean. The total soybean requirement of all the respondents was computed to be about 72 kg per day, valued at P1,440 from an average buying price of P20 per kg. On an annual basis, the soybean requirement was about 17,568 kg, with a value of about P351,360. Sources of soybeans include retailers in Cabanatuan city market for taho processors in San Leonardo while those in Penaranda obtained soybeans in the Gapan market. Taho processors in San Jose city and Munoz, Nueva Ecija, obtained their legumes from the city market and the Central Luzon State University, respectively.

Table 3 Average capital investment (P) of taho processors in Nueva Ecija, Philippines, 1992.

Item With Grinder (n=3)

Without Grinder(n=2)

Land* 1,000 1,000 Building 500 500 Grinder 1,017 Taho container 867 879 Vat or tilyase 625 332 Ladle or sandok 24 22 Total 4,033 2,733 * Land is assumed to be P500/sq. meter. US$ 1- P25.5 (1992)

Taho is usually sold early from 8 to 10 in the morning as a snack for children. All respondents disposed of all their product within the day. In rare cases, when the product was not sold out, the processors revealed that the taho is converted into tokwa by extracting the water. Taho processors usually marketed their product in their own locality and nearby towns. Payment for the taho was in cash. A kg of raw soybean can produce about 7 to 8 kg of taho. On average, the daily total volume of sale is about 540 kg taho valued at about P8,280 for all the respondents. The annual real demand for taho is approximately 131,760 kg, catering for about 313,715 persons. More detailed discussion on the demand for processed soybean products is presented later.

Problems in taho processing Several problems were cited by the processors. These include the low quality of soybeans which could not be easily detected by just inspecting the seed size and appearance; slow formation of curd, observed in some batches of soybeans; and lack of enough capital to purchase raw materials. The processors also claimed that sometimes they were not able to purchase inputs because their funds were spent for basic family needs especially the schooling of their children.


Economic analysis of taho processing To determine the profitability of taho processing, cost and return analysis was employed on per day, per month and per year bases for every kg of raw soybean. On average, three kg of raw soybeans are processed into taho by each respondent daily. The respondents processed taho 24 days per month and 244 days per year. The activity is undertaken for only half the day. Comparative profitability analyses were made between processors with and without grinders. This was to determine whether the ownership of a grinder would reduce the cost or provide a higher return. Table 4 provides these cost and return analyses for taho production by type of processor i.e. with and without grinder.

Taho processors without grinder Taho processors without grinder realized average total returns of P27,875 and a net return of P6,451 annually for every kg of raw soybean (Table 4). Since three kg of soybean were processed daily, total net return was about P19,353 per year. The annual cost of processing taho was about P21,424 per kg of raw soybean processed. The bulk of the cost (26%) accounted for the unpaid family labour (no hired labour was employed). It was followed by the cost of materials, particularly raw soybeans (24%) and sugar (16%). Marketing costs (which include transportation costs of purchasing raw materials and selling the finished product and the cost of plastic cups used in selling) comes third in rank contributing about 14% to the total expenses.

Table 4 Average annual costs and returns (Pesos/kg) for taho processing based on 21 taho processors without grinder, 3 taho processors with grinder, Nueva Ecija, Philippines 1992.

Item Without Grinder With Grinder A. Cash Costs Material costs Soybeans 5,214.28 5,287.48 Solidifier 368.44 297.68 Sugar 3,447.72 4,499.36 Sago 1,154.12 1,410.32 Fuel 1,220.00 1,220.00 Marketing Cast 3,023.16 2,493.68 Others Grinding fee 944.28 0.00 Water and electricity 48.80 507.52 Sub-total 15,420.80 15,716.04 B. Non-cash Costs Family Labour 5,490.00 5,490.00 Depreciation 185.00 304.00 Interest on investment 328.00 484.00 Sub-total 6,003.00 6,276.00 Total Cash and Non-Cash Costs 21,423.8 21,992.00 Total Return 27,874.56 Net Returns 6,450.76 6,663.32 Returns above cash cost 12,453.76 12,939.32 Return on investment 236% 165% US$ 1 - P25.5 (1992).

Case Study 172

Among the cash items, material costs share the biggest chunk (74%).Cash costs contribute about 72% of the total cost of producing taho. The percent return on investment, the most commonly used indicator of profitability, was computed to be 236%. Thus this small scale business is profitable since its percent return on investment is very high compared to the opportunity cost of money of 15-28%.

Taho processors with grinder Due to the high cost of a grinder, only three respondents claimed ownership. It appeared from the analysis that cash costs are higher compared to those processors without grinders (Table 4). The difference could not be attributed solely to the presence of grinder; some of the material inputs as well as the marketing costs varied significantly. Those with grinders incurred a lower total cost. This factor compounded with a slightly higher total return brought about a significantly higher net return to processors with grinders. A lower return on capital investment was, however, received with grinder. Similar observations on the contribution of each cost component to the total cost were made. Family labour constitutes the largest component (25%) of the total cost. The cost of the material inputs, particularly raw soybeans and sugar, and the cost of marketing are second and third in rank. Cash cost share of the total cost is about 72% which is not different from the previous analysis. Based on the cost and return analysis for processors with and without grinder, it is clear that taho processing is a worthy investment. Ownership of a grinder does not make any significant economic contribution. Nonetheless, both types of processors gained highly favorable economic returns out of their small business ventures. In addition, this activity provides self employment. Thus, an expansion of this activity will mean more employment. Furthermore, the number of taho processors has increased over the years, which suggests that the product is being accepted by consumers and demand is increasing. There was only one taho processor who had started this business in 1975 in the area. At present, there are 24 processors.

Horizontal and vertical linkages of the soybean production system Prior discussion on the economics of soybean processing showed the great potential it had in alleviating the ailing economic situation of the country particularly in the rural areas. Taho processing brings about favorable economic returns. The processing of tokwa, another soybean-based product, is also envisioned to yield the same economic return. Tokwa, an ingredient of vegetable and meat dishes, is processed in a similar way to taho, but with a lower water content (hard curd). Tokwa ranks second to taho in terms of popularity among the soybean based processed products. A favorable economic return from soybean processing suggests that attention be given to development of the soybean industry. The development of a soybean industry requires an efficient production-marketing system, efficient in the sense that it could provide an assured market and maximum return to the producer. At present, the production-marketing system of soybean and soybean products in the study area is considered inefficient. Soybean farmers often complained of low prices and no market for their produce. This happens because most of them own only a small parcel of land and have no bargaining power for selling their produce. If they were organized into a cooperative, they would become strong not only in terms of selling their produce but also in buying their inputs.


Creating a ready market for farm produce will definitely aid in the efficient production-marketing system. The establishment of a soybean processing plant will serve as a sure market for the farmers' produce. If this processing plant were owned and managed by the farmers, it would mean a better opportunity for the farmers themselves. A farmers' cooperative owning and managing a processing plant will be involved in the procurement and disbursement of their own produce. Farm produce will be processed by farmers themselves thereby creating added value to soybeans. Excess produce, on the other hand, will be sold at a more competitive price. Moreover, this strategy creates a means by which marketing intermediaries are eliminated, resulting in reduction of cost of marketing the products. The cooperative will provide the farmers with strong bargaining power in selling their produce and buying the production inputs. Likewise, the cooperative will enable farmers to apply for loans or credits extended by the government, because loans/grants are usually released to cooperatives. Another benefit of forming a cooperative is the patronage refund which can be obtained whenever the cooperative sells their produce. The organization will have a certain mark-up and any amount in excess of the mark-up after deducting all expenses in the operation will go back to the fanners by way of the patronage refund. In addition, the dissemination of technical and other relevant information to the soybean farmers is facilitated through a farmers' cooperative. Essential in the implementation of a developmental plan for an improved soybean production-marketing system are the horizontal and vertical linkages of the soybean production system in the area. Basic to this plan is the knowledge of the demand for soybean products in the area, the potential to supply the required soybean for a continuous processing operation, the financial profitability of the processing plant, and the economic impact of the processing plant.

Demand and supply for soybean The demand for soybean was derived from the demand for tokwa and taho, two soybean-based products consumed in the study area. Soysauce is another soybean-based product which is also popularly used. Its soybean content, however, was relatively small, so it was not included in the analysis. The actual number of tokwa pieces consumed was determined from the traders in selected municipalities of Nueva Ecija. These municipalities were classified into small, medium and large according to the population. The other municipalities were then classified accordingly. Simple arithmetic was employed to calculate the annual per capita consumption for tokwa (Table 5). It was computed to be almost 40 grams per head per year based on a total consumption of 48,888 kg and a population of 1,265,962. The consumption of taho, on the other hand, was determined from the responses of the sample respondents from Lupao (consumption 0.30 kg/year) and Bongabon (consumption 0.55 kg/year). On average, 425 grams of taho was consumed by each individual annually. Since taho was found to be a snack food popular among the youth, the population age distribution was obtained and the number of people 1-19 years old was used to determine the total demand for taho (Table 6). The total demand for tokwa, on the other hand, was based on the population one year and older. The rationale behind excluding those who are less than one year old is that this food item is a meat substitute and therefore is not eaten by children who are less than one year old. The total demand for taho and tokwa was calculated to be 311,237 kg per year. The survey showed that raw soybean requirement for taho and tokwa was 51,259 kg per year (Table 7). This indicates that about 50 hectares of soybean farm are necessary to supply the annual requirements of the soybean processors, assuming a yield of one ton of soybean per hectare. Survey results gathered by PCARRD showed that this yield level is readily attainable (Table 8). The province of Nueva Ecija has a wide area potential for soybean production (Table 9), so the area requirement poses no real problem.

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Table 5 Consumption of tokwa, by size of municipality, Nueva Ecija, 1991. Size of municipality Number of municipalities Pieces consumed

x weight Total amount (kg)

Small 10 14,400 x 70 gm 10,080 Medium 1 I 21,600 x 70 gm 16,632 Large 11 28,800 x 70 gin 22,176 Total 32 48,888

Table 6 Demand for taho and tokwa, Nueva Ecija, 1991. Item Per capita consumption Population Demand (kilogram) (age) (number) (kilogram) Taho 0.425 1-19 years 613,174 260,599 Tokwa 0.040 1 year & above 1,265,962 50,638

.

Table 7 Raw soybean requirement for Nueva Ecija, 1991 Item Conversion per

kg/raw material Raw soybean per day (kg)

Requirement per year (kg)

Taho 6.5 110 40,006 Tokwa 4.5 30 11,253 Total 140 51,259

.

Table 8 Average yield of soybeans, Lupao and Bongabon, Nueva Ecija, 1991 Type of fanner Lupao (kg) Bongabon (kg) Low yielders (<0.9 t/ha) 886 827 Medium yielder (0.9-1.2 Vita) I,077 959 High yielders (>1.2 t/ha) 1,239 1,782 Average 1.067 1.189

Table 9 Number of farmers and area devoted for irrigated and rainfed rice production, Nueva Ecija, 1991.

Item Number of farmers Area (ha) Irrigated Farm 70,918 149,317 Rainfed Farm 22,291 48,150 Total 93,839 197,467

Financial cost and return analysis The investment for establishing a processing plant for taho and tokwa in Nueva Ecija was estimated to be P2.08 million. This includes the acquisition of land, building, transport facility, equipment and the initial working capital (Table 10). The annual operation and maintenance cost was calculated to about P840 thousand (Table 11). Material inputs which consist of soybean, calcium sulfate, sugar, sago and plastic bags cost about P211 thousand per year (Table 12). The value of taho and tokwa sales was estimated to be P3.3 million (Table 13) while the expenses totaled about P2.4 million (Table 14). Given these estimates, it can be deduced that taho and tokwa processing is a profitable activity. The percent return on investment is greater than 40%, which is very much higher than the opportunity cost of capital or the prevailing interest rate of 15-28% (Table 15). This means that a higher return can be obtained if a medium processing plant were built instead of leaving the


investment capital in the bank. The internal rate of return, on the other hand, was calculated to be greater than 50% suggesting a sound economic investment (Table 16).

Economic impact of establishing soybean processing plant The establishment of a medium-scale soybean processing plant with taho and tokwa as final products will provide direct and indirect benefits. The direct benefits derived from a taho and tokwa processing plant would be primarily in terms of stimulating trading activities of various sectors, i.e. farmers, traders, sellers, consumer and manufacturing goods and others. The government will likewise derive benefits from permits, taxes, etc. During the construction phase of the processing plant, employment will already be generated. Assuming that the labour cost during the construction phase is 30% of the building cost, this portion of the labour cost will roll over in the community as income (Table 16). Increased employment opportunity is one of the economic impacts of the soybean processing plant in the area, and more people will derive additional income, i.e. taho vendors and tokwa dealers. Again, the multiplier effect of such transactions rebounds to increase income of the municipality where the processing plant is established.

Table 10 Investment cost of soybean processing plant (taho-tokwa), Nueva Ecija 1992. Item Number Price/unit Total Life Depreciation (P) value (P) span (P)

Land 300 sq m 1,000/sq m 300,000 - -

Building 200 sq m 4,000/sq m 800,000 20 40,000

Transport facility 1 400,000 400,000 10 40,000 Refrigerator/freezer 2 25,000 50,000 10 5,000 Grinder 1 35,000 35,000 10 3,500 Seed cleaner 1 30,000 30,000 20 1,500 Taho molder set 30 1,500 45,000 20 2,250 Weighing scale 2 8,000 16,000 10 1,600 Taho container set 100 1,500 150,000 15 10,000 Containers 20,000 10 2,000 - - Office furniture/equipment - - 50,000 10 5,000 Sub-total 1,896,000 110,850 Working capital* 180,000 Total P 2,076,000 110,850 * Based on month operation. Residual value of investment from ten year project life was estimated at 10% with land and working capital as 100% valued at P640,000. US 1 = P25.5 (1992).

Table 11 Operation and maintenance of medium-scale taho-tokwa processing plant, Nueva Ecija, 1992.

Operation Per month Per year Labour Manager 6,000 72,000 Clerk/bookkeeper 5,000 60,000 Driver/mechanic 4,000 48,000 Labourers (6) 3,000 216,000 Water/electricity 2,000 24,000 Fuel and oil 3,000 36,000 Repair and maintenance 1,000 12,000 Miscellaneous 1,000 12,000 Depreciation 110,850 Interest 249,120 Total P839,970 US$ 1 = P25.5 (1992).

Case Study 176

Table 12 Daily raw material requirement for taho and tokwa processing, Nueva Ecija,1992.

Item Amount Cost (P) A. Taho Soybean 110 kg @ P15/kg 1,650 CaSO4 5.5 kg @ P35/kg 192 Brown sugar 110 kg @ P 15/kg 1,650 Raw sago 14 kg @ P20/kg 280 B. Tokwa 3,772 Soybean 30 kg @ P15/kg 450 CaSO4 1.5 kg @ P35/kg 53 Brown sugar 15 pcs. @ P5 75 578 US$ 1 = P25.5 (1992).

Table 13 Volume and value of taho and tokwa sales, Nueva Ecija, 1992

Product Daily (P) Per year (P) Taho 110x6.5xP10 7,150 2,609,750 Tokwa 30 x 4.5 x P0.80 1,836

670.140

Total 3,279,890 US$ 1 = P25.5 (1992).

Table 14 Costs and returns and value added of taho and tokwa processing, Nueva Ecija, 1992.

Cost Item Value (P) Materials Taho 1,376,780 Tokwa 210,970 Water/electricity 24,000 Fuel and oil 36,000 Repair and maintenance 12,000 Miscellaneous 12,000 Depreciation 110,850 Interest 249,120 Sub-total 2,031,720 Labour 396,000 Total cost 2,427,720 Total Income 3,279,890 Taho 2,609,750 Tokwa 670,140 Net Income P 852,170 Value Added 1,248,170 Labour Income Share 32% US$1 = P25.5 (1992)

The establishment of a medium-scale processing plant is highly recommended given the apparent economic opportunities that it could provide.


.Table 15 Financial profitability of taho and tokwa processing plant, Nueva Ecija, 1992

Item Value (P) Total income 3,279,890 Total expenses 2,427,720 Net income 852,170 Average investment 2,020,575 Return on investment (%) 42 US$ 1= P25.5 (1992).

Table 16 Estimated benefits and costs of taho - tokwa processing plant Nueva Ecija, 1992 ('000 P).

Item 0 Year 1 2-10

Benefits Income - 3,280 3,280 Multiplier effect - 5,726 5,726 taho-5474* tokwa-251 ** Employment*** 240 396 396 Total Costs 240 9,402 9,402 Investment costs 2,07 - - Operation and maintenance - 2,428 2,428 Total 2,076 2,428 2,428 Net Benefits (1,836) 6,974 6,974 * Estimated as 100 vendors earning an average of P150 per day at one year operation. ** Estimated as the margin received by vendors at P0.30 per piece for one year operation *** Before operation 30% estimated cost of construction will go to construction labour. After operation this represents the value of employment (labour).

Summary and conclusion This investigation of the uses of soybean as well as the production status, market potential and projected demand, indicates a good potential for helping the Philippine economy. However, the processing component is critical in boosting the development of the soybean industry. Soybean can be processed into several products. One of the products with high potential which is gaining a widespread acceptance is taho or soft curd. The technique for producing taho is quite simple. Twenty-four taho processors from Nueva Ecija who were interviewed for this study were mostly elementary school graduates who started as former taho vendors. The good economic return to taho processing had influenced the respondents of the study to get into this business. Taho processing proves to be a profitable venture which could serve as major source of livelihood. Cost and return analysis was employed to attest to the economic benefit from processing soybean into taho. The capital requirement is minimal. Tools and equipment, including a taho container set, vat or tilyase and ladle or sandok, are simple and affordable. The soybean grinder is another important piece of equipment in taho processing, but it is quite expensive. Only three of the respondents claimed ownership of a grinder. Taho processors with a grinder required an average of P4,033 capital investment in order to get into the business, whereas those without grinder needed only P2,733. The cost and return analysis showed that family labour constitutes the highest contributory factor (24-25%) to the total cost. The cost of the material inputs particularly raw soybeans and sugar and the cost of marketing are second and third in rank. Cash cost's share to the total cost is about

Case Study 178

72%. Ownership of the grinder does not make any significant economic contribution. Nonetheless, both types of processors gained highly favorable economic returns out of their small business ventures. In addition, it was noted that this activity provides self employment. Tokwa is another product made from soybean. The process involved in tokwa making follows the same procedure as for taho, but tokwa has a lower water content. It is used mainly as an ingredient for vegetable and meat dishes. Processing of tokwa is envisioned to give a favorable economic return like taho. Results of the economic analysis of soybean processing, in particular the processing of taho and tokwa, support the contention that development of the soybean industry should be given immediate attention. Improvement of the production-marketing system through vertical and horizontal integration between the producer and the consumer will undoubtedly support efforts towards the development of the soybean industry. Essential to this developmental plan is the establishment of a medium scale processing plant owned and managed by a farmers' cooperative. Survey results revealed an increasing demand for soybean products, particularly taho and tokwa. The annual per capita consumption for taho and tokwa was calculated to be 425 grams and 40 grams, respectively. This means that about 51 tons of raw soybeans are required to meet the demand, and that about 50 hectares of farmland should be devoted to soybean production. Since Nueva Ecija has a wide potential area for soybean production, this requirement poses no real problem. Financial analysis showed that the establishment of a medium-scale plant for taho and tokwa is a profitable investment. The internal rate of return was calculated to be greater than 50%. The establishment of a medium-scale processing plant could provide direct and indirect economic benefits. It can stimulate trading activities in the study area which will mean additional income and/or benefits to the farmers, consumers, traders and even the government, and bring about increased employment opportunities.

Bibliography Brown, E. O. and Librero, A. R. 1991. Measuring the economic viability of agricultural

technologies. Los Banos, Laguna: PCARRD (Book Series No. 118). Cardenas, D.C. 1990. Status of the Philippine soyfood industry. Crops Research Division,

PCARRD, Los Banos, Laguna, Philippines. Central Bank of the Philippines. 1987-1990. Central Bank Statistical Bulletin.Escano, C.R.,

Gaddi V.Q., Carlos, M.A. and Magpantay, D.Z. 1991. Soybean technology commercialization program. PCARRD, Los Banos, Laguna, Philippines.

Escano, C.R., Gaddi, V.Q. and Tuiza, E. G. 1992. Status and prospects of the soybean industry in the Philippines. In Priorities for Soybean Development in Asia, Proceedings of a Workshop held in Bogor, Indonesia, pp. 365-379.

Librero, A.R 1981. Soybean production in the Philippines: Socio-Economic Research Division, PCARRD, Los Banos Laguna, Philippines.

Librero, A.R. 1987. Study on the production and marketing of peanuts and soybeans; a source of crop oils in the Philippines, PCARRD, Los Banos Laguna, Philippines.

PCARRD. 1986. The Philippines recommends for soybean. Technical Bulletin. Series No. 14A.Los Banos, Laguna, Philippines.


Appendix 1 Soybean: total production by region, the Philippines, crop years 1980-1990 ('000 t). Year Philippines Illocos Cagayan Central Southern Bicol Western Central Eastern Western Northern Southern Central valley Luzon Tagalog Visayas Visayas Visayas Mindanao Mindanao MindanaoMindanao1980 9.39 0.04 0.04 - 0.06 0.02 0.37 0.18 0.01 0.06 2.25 6.28 0.08 1981 10.04 0.03 0.03 - 0.05 - 0.28 0.15 0.01 0.06 2.21 7.11 0.11 1982 11.47 0.01 0.01 - 0.06 - 0.29 0.14 0.01 0.05 3.65 7.14 0.1 f 1983 8.10 0.03 - - 0.05 0.01 0.25 0.05 0.02 0.03 1.81 5.75 0.10 1984 7.61 0.02 - 0.56 0.05 - 0.17 0.13 0.02 0.03 1.60 4.89 0.14 1985 8.48 0.02 0.01 0.53 0.02 - 0.12 0.18 0.02 0.02 2.23 4.71 0.62 1986 6.49 0.01 0.01 0.02 0.02 - 0.06 0.20 0.02 005 0.69 4.83 0.58 1987 5.72 0.01 0.02 0.01 0.21 - 0.05 0.14 0.02 0.07 0.57 4.06 0.56 1988 5.57 - 0.01 0.01 0.06 - 0.05 0.21 0.0 - 0.51 3.85 0.86 1989 4.27 0.01 0.01 0.01 0.10 - 0.06 0.15 0.0 - 0.45 2.52 0.95 1990 4.4 - - - 0.11 - - 0.35 - - 3.00 1.01 (-) means no data Source: Bureau of Agricultural Economics, Department of Agriculture, the Philippines

Appendix 2 Soybean: area harvested by region, the Philippines, crop years 1980-1990 ('000 ha). Year Philippines Illocos Cagayan Central Southern Bicol Western Central Eastern Western Northern Southern Central valley Luzon Tagalog Visayas Visayas Visayas Mindana Mindanao Mindanao Mindanao1980 9.58 0.07 0.19 0.01 0.09 0.03 0.41 0.20 0.01 0.08 1.47 6.93 0.09 1981 10.04 0.06 0.17 - 0.08 0.02 0.37 0.17 0.01 0.08 1.59 7.76 , 0.10 1982 11.90 0.02 0.04 - 0.08 0.01 0.38 0.17 0.01 0.08 2.82 7.14 0.15 1983 8.59 0.02 0.01 - 0.08 0.02 0.35 0.08 0.02 0.10 1.59 6.19 0.13 1984 7.74 0.01 0.01 0.27 0.04 0.02 0.25 0.15 0.02 0.10 1.40 5.27 0.16 1985 8.43 0.01 0.01 0.28 0.04 0.01 0.20 0.20 0.02 0.07 1.88 5.06 0.65 1986 6.86 0.02 0.01 0.02 0.05 - 0.10 0.23 0.02 0.14 0.72 4.95 0.61 1987 6.49 0.02 0.01 0.01 0.05 - 0.08 0.24 0.02 0.12 0.65 4.68 0.61 1988 6.16 0.01 0.01 001 0.05 - 0.08 0.25 0.02 - 0.44 4.38 0.93 1989 6.59 0.01 0.01 0.02 0.05 - 0.09 0.25 0.01 0.15 0.50 4.55 0.95 1990 6.35 0.01 0.02 0.01 0.06 - 0.10 0.22 0.02 0.12 0.49 4.32 0.98 (-) means no data. Source: Bureau of Agricultural Economics, Department of Agriculture, the Philippines

Appendix 3 Soybean: yield by region , the Philippines, crop years 1980-1990 ('000 ha). Year Philippines Illocos Cagayan Central Southern Bicol Western Central Eastern Western Northern Southern Central valley Luzon Tagalog Visayas Visayas Visayas Mindana Mindanao Mindanao Mindanao1980 0.98 0.57 0.21 0.00 0.67 0.67 0.90 0.90 1.00 0.75 1.53 0.91 0.89 1981 0.96 0.50 0.18 - 0.63 0.00 0.76 0.88 1.00 0.75 1.39 0.92 1.10 1982 1.05 0.50 0.25 - 0.75 0.00 0.76 0.82 1.00 0.63 1.29 1.00 0.73 1983 0.94 1.50 0.00 - 0.63 0.50 0.71 0.63 1.00 0.30 1.14 0.93 0.77 1984 0.98 2.00 0.00 2.07 0.63 0.00 0.68 0.87 1.00 0.30 1.14 0.93 0.8& 1985 101 2.00 1.00 1.89 0.50 0.00 0.60 0.90 1.00 0.29 1.19 0.93 0.95 1986 0.95 0.50 1.00 1.00 0.50 - 0.60 0.87 1.00 0.36 0.96 0.98 0.95 1987 0.88 0.50 2.00 1.00 4.20 - 0.63 0.58 1.00 0.58 0.88 0.87 0.92 1988 0.90 0.00 100 1.00 1.20 - 0.63 0.91 0.5 - 1.16 0.88 0.92 1989 0.65 1.00 1.00 0.50 2.00 - 0.67 0.60 1.00 0.00 0.90 0.55 1.00 1990 0.70 0.00 0.00 0.00 1.83 - 0.00 1.59 0.00 0.00 0.00 0.69 1.03 (-) means no data Source: Bureau of Agricultural Economics, Department of Agriculture, the Philippines

Processing and Marketing of Soybean to Expand Rural Incomes and Job Opportunities in West Java, Indonesia

Made Oka Adnyana and Amar Kadar Zakaria*

Introduction

Indonesian long-term development is directed towards the achievement of a balanced and harmonious progress of community welfare. It is carried out according to five-year development plans (Repelita). The aim of each stage of development is to improve living standards and prosperity of the people. One objective is to develop a balanced economic structure between agricultural and industrial sectors. Development of agro-industry in Indonesia has focused on enhancing agricultural development to achieve resilient agriculture, increasing added value of agricultural products, generating more job opportunities, promoting agricultural export, and achieving better income distribution (Simatupang and Purwoto 1990). Small scale agro-industry managed by a cooperative may be the most appropriate for the benefit of rural people, and its development may achieve a modern and resilient agriculture and progressive industrial sector. This approach may be able to reduce the duality in the rural economy. In terms of agro-industry, the soybean industry in Indonesia is mostly developed for food industries, such as tofu, soysauce, and fermented products (tempe, tauco, and oncom). The food industry share is about 80% of the whole soybean industry, while the feed industry and other uses take less than 20%. However, the future demand for soybean for feed is projected to grow faster than the demand for food industries. Improvement of the nutritional status of the population is one of the most important government programs which has raised the standard of living and education of the Indonesia people. Food Balance Sheets for Indonesia show that there has been sufficient per capita production of calories and protein for consumption since 1973, based on a daily average of 2,100 calories and 45 grams of protein per capita. In this connection, people are increasingly aware of the importance of their daily diet. Since animal protein is relatively expensive for most Indonesian people, 88% of protein is obtained from vegetable sources (Table 1). Soybean has great potential as a major source of protein for Indonesian people. It has long been known and used in a great variety of food products. Soybean provides as much, if not more, protein and calories than animal products. According to Hermana (1985), consumption of soybean products as a replacement for meat, as a source of protein in the daily diet or as an improvement to a menu consisting mainly of vegetables will be beneficial for health. The nutritive composition of soybean products compared to meat can be seen in Table 2.

* Central Research Institute for Food Crops (CRIFC), Bogor, Indonesia

Case Study 182

Table 1 Balance sheet for major food sources, 1990. Consumption per capita Food source kg/year g/day cal/day g protein/day g fat/day

Cereals 185.22 507.44 1,779 35.86 5.91 (rice) (146.25) (400.68) (1,442) (27.25) (2.80) Starchy foods 52.58 144.05 161 1.46 0.42 Sugar 14.77 40.46 148 0.05 0.6 Pulses and seeds 27.51 75.37 271 14.35 19.78 (soybean) (10.47) (28.68) (95) (10.01) (5.19) Fruit 29.18 79.74 41 0.49 0.19 Vegetables 14.63 40.08 14 0.81 0.18 Meat 4.24 11.62 29 1.96 2.25 Eggs 2.35 6.43 10 0.74 0.71 Milk 3.74 10.25 6 0.33 0.36 Fish 12.91 35.37 24 4.15 0.71 Vegetable oils 8.78 24.06 215 0.06 23.94 Animal fat 0.14 0.39 - 0.38 Tota - - 2,701 60.26 56.12 Vegetable source - - 2,629 53.08 51.71 Animal source - - 72 7.18 4.41 Source: Central Bureau of Statistics 1990

The high priority on improvement of nutritional status of the people, particularly protein consumption, and better income distribution has caused demand for soybean for food as well as for the feed industry to continuously increase. For example, demand for the food industry was 1,378 million tons in 1988 and is expected to increase to 1,984 million tons by the year 2000, increasing more than 3% per annum (Table 3).

Table 2 Nutrient composition of various kinds of meat, eggs and soybean Protein Fat Carbohydrate Minerals (mg/ 100 g) Vitamin BI- Commodity (g/100 g) (g/100 g) (g/100 g) P Ca Fe (mg/100 g)

Beef meat 18.8 14.0 0 170 11 2.8 0.08 Goat meat 16.6 9.2 0 124 11 1.0 0.09 Chicken meat 18.2 25.0 0 200 14 1.5 0.08 Eggs 12.8 11.5 0.7 180 54 2.7 0.10 Fish 17.0 4.5 0 200 20 1.0 0.05 Tempe 18.3 4.0 12.7 154 129 10.0 0.17 Tofu 7.8 4.6 1.6 63 124 0.8 0.06 Bean sprouts 7.7 1.8 8.0 - 52 1.1 0.19 Source: Department of Health, Indonesia 1979

Table 3 Projected demand (food and feed) for soybean*. Year Food Feed Total --------(thousand ton)------------ 1988 (base year) 1,378 359 1,737 1995 1,701 542 2,243 2000 1,984 735 2,720 2005 2,319 1,005 3,324 2010 2,716 1,384 4,099 % increase per annum 1988-1995 3.1 6.1 3.7 1095-2000 3.1 6.3 3.9 2000-2005 3.2 6.5 4.1 2005-2010 3.2 6.6 4.3 * Real GDP 5.0 percent per annum Source: World Bank 1992.

Soybean in Indonesia 183

These figures indicate that the soybean food industry will still provide the most important vegetable protein for the Indonesian diet. In addition, the soybean food industry, particularly in rural areas, is expected to play an important role in providing job opportunities for the rural labour force. On the other hand, demand for soybean for the feed industry is projected to increase at about 6.1%-6.6% per annum within the same period. These two major soybean industries will cause the total demand for soybean to increase at 3.7% per annum in the period of 1998-1995 and at 4.1% per annum during 2005-2010. If there is no special effort, domestic production may not be able to meet the increasing demand in the years to come. Given the existing technology and production program, domestic production is projected to increase at only 3.8% per annum during 1990-1995 and 1995-2000. Expansion of soybean area will be the main contributor to increased production, since yield (ton/ha) is projected to increase at a lower rate (1.5% per year). This pessimistic figure should be overcome through more intensive research on soybean, particularly plant breeding research employing bio-technology to increase soybean productivity (Table 4). The imbalance between domestic production and demand must be met by imports from the world market. For example, Indonesia imported about 408 thousand tons of soybean in 1990 to meet domestic demand. Imported soybean is projected to further increase in the future, given that projected domestic production will grow at a lower rate than demand.

Table 4 Projected soybean production* and import.

Year Production('000 t)

Yield (t/ha)

Area ('000 ha)

Demand C0001)

Imports ('000 t)

1990 (base year) 1,487 1.115 1,334 1,895 408 1995 1,769 1.201 1,473 2,243 474 2000 2,104 1.294 1,626 2,720 616 2005 2,442 1.394 1,752 3,324 882 2010 2,834 1.502 1,887 4,099 1,265 % increase per annum 1990-1995 3.8 1.5 2.1 3.7 3.2 1095-2000 3.8 1.5 2.1 3.9 6.0 2000-2005 3.2 1.5 1.5 4.1 8.6 2005-2010 3.2 1.5 1.5 4.3 8.7 * Real GDP 5 percent per annum. Source: Directorate General of Food Crops

In 1995 for instance, imports could reach 474 thousand tons. Imports are projected to increase at 3.2% per annum in the period of 1990-1995 and 6.0% per annum in 1995-2000. If there is no breakthrough in research on soybean, imports will reach 1,265 thousand tons by the year 2010.

Soybean performance in Indonesia This section provides some background information on soybean development in Indonesia based on secondary data and various research findings, with discussion focused on domestic production, utilization and processing. Indonesia has been a soybean importing country for two decades. However, in the Sixth Five Year Development Plan (1994-1998), the government has set a goal of achieving soybean self-sufficiency. Production trends Agriculture is the largest sector in Indonesia's economy. More than half of the labour force is engaged in agriculture and about 19% of the gross domestic product (GNP) is contributed by this sector. The contribution is projected to decline continuously to about 9.5%

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by the year 2010 (Affif 1991). Among agricultural subsectors, the largest contribution to the GNP is provided by food crops. Despite its decline in share of GNP, the agricultural sector will continuously play a vital role in supplying food and in earning foreign exchange. It is thought that most of the population will still directly depend on agriculture for its livelihood in the Second Long Term Development Plan (1994-2018). In addition, the high rate of population growth indicates a steady increase in the demand for food. In order to attain national food self-sufficiency, the government has provided various supports as part of its development plans. During Repelita 1 to 3, the supply of the main staple foods, particularly rice, improved significantly (Mears 1982). In Repelita 4 (1984-1988), a program was launched to increase the production of secondary (palawija) crops. Attention is now being focused not only on carbohydrate content, but also an protein-rich foods. In this regard soybean is recognized as a high protein food and feed crop. The government has made various efforts to increase soybean production by intensification, extensification, diversification and rehabilitation programs. The most significant development in soybean production in the Fifth Repelita was the rapid expansion of area under soybean. The strategy of future agricultural development is sustaining rice self-sufficiency and increasing farm income of rural households in the rapidly growing economy. With utilization of advanced technology such as modern varieties, better insect pest management, efficient fertilizer application, and the use of legumes for increasing productivity of land and increasing soybean yield, self-sufficiency in soybean may not be difficult to realize. Production of soybean more than doubled from 1969 to 1990 (Table 5). However, this increase still could not meet the growing domestic demand, and the government had to import more than 0.6 million tons recently. Indonesia was once known as a soybean exporting country, and up to 1974 was still able to export thousands of tons of soybean (Table 6). Regional production The major producing areas are concentrated in Java, especially East and Central Java. Over half of the national harvested area and production of soybean in 1990 was contributed by these regions. There is still great potential for expansion in other provinces. About 60%, of soybean in Indonesia is harvested from wetland and the remaining 40% is produced on dry land. For the future of soybean development, both wetland and dry land are potentially important. Out of 3 million hectares of wetland in Java, more than 1 million ha (especially in the coastal area of Java) is left fallow during the dry season. This area is suitable for soybean. In dry land, the transmigration areas are particularly promising for soybean cultivation since farmers that migrated from Java are already experienced with the crop. In general, the major constraints to soybean production are:

• low yield potential and high susceptibility to pests and diseases of existing varieties, • frequent severe incidence of diseases and insects, • limited seed supply, • poor crop management, • significant losses in post harvest handling and rapid deterioration of seed viability, • and • socio-economic constraints.


Table 5 Soybean area harvested, yield and production in Indonesia, 1969-1990. Area Harvested ('000 ha) Production ('000 t) Yield (t/ha)

Year Java Off Java

Total Indonesia Java Off

Java Total

Indonesia Java Off Java

Total Indonesia

1969 476 79 555 341 48 389 0.72 0.61 0.70 1970 597 98 695 429 69 498 0.72 0.70 0.72 1971 581 98 683 452 64 516 0.78 0.65 0.76 1972 582 115 698 447 72 518 0.77 0.62 0.74 1973 598 145 744 439 102 541 0.73 0.70 0.73 1974 612 156 768 457 132 589 0.75 0.85 0.77 1975 601 151 752 468 122 590 0.78 0.81 0.78 1976 499 147 646 406 116 522 0.81 0.79 0.81 1977 517 129 646 418 104 523 0.81 0.81 0.81 1978 594 139 733 509 107 617 0.86 0.77 0.84 1979 619 165 784 545 135 680 0.88 0.82 0.87 1980 586 146 732 529 124 653 0.90 0.85 0.89 1981 653 157 810 579 120 704 0.89 0.79 0.87 1982 . 462 145 608 403 118 521 0.87 0.81 0.86 1983 475 165 640 399 137 536 0.84 0.83 0.84 1984 618 241 859 565 204 769 0.91 0.85 0.90 1985 582 314 896 593 277 870 1.02 0.88 0.97 1986 689 431 1,120 721 394 1,115 1.05 1.91 0.97 1987 657 504 1,161 657 504 1,161 1.07 1.03 1.05 1988 743 527 1,177 743 527 1,270 1.13 1.01 1.08 1989 795 520 1,198 795 520 1,315 1.16 1.00 1.01 1990 874 617 1,334 874 613 1,487 1.21 1.01 1.12 Source: CBS 1992

Table 6 Production, total supply, export and import of soybean.

Year Production ('000 t)

Total Supply ('000 t)

Export ('000 t)

Import ('000 t)

1969 389 388 1 - 1970 498 494 4 - 1971 516 515 1 - 1972 528 525 3 - 1973 541 505 36 - 1974 586 582 4 - 1975 590 59 - 2 1976 522 70 - 183 1977 523 62 - 103 1978 617 77 - 160 1979 680 88 - 218 1980 653 88 - 233 1981 704 95 - 253 1982 521 75 - 229 1983 536 94 - 412 1984 769 1,44 - 695 1985 870 1,50 - 691 1986 1,115 1,60 - 772 1987 1,161 1,69 - 672 1988 1,270 1,84 - 576 1989 1,315 1,88 - 565 1990 1,487 1,89 - 408 Source: CBS 1992

Table 5 shows the trends of yield of soybean on Java and off Java. The national yield average of soybean has increased from 0.7 t/ha in 1969 to 1.2 t/ha in 1990. Yields, however, vary greatly according to location and season. Soybean could yield as much as 1.9 t/ha from

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an intensification program covering an area of 960,000 ha (Sihombing 1985). The recommended technology packages are presented in Table 7.

Table 7 Recommended packages for soybean production in Indonesia. Component Package I Package II Package III Variety Local Improved Improved Seed quality Improved Improved Improved Seed quantity (kg/ha) 60 - 70 60 - 70 60 - 70 Rhizobium inoculation Legin Legin Legin Weed control Hand weeding Hand weeding Hand weeding Mulching Mulching Mulching Insecticide 4-6 1/ha 4-6 I/ha 4-61/ha Fertilizer Urea 0-50 kg/ha Urea 0-50 kg/ha Urea 0-50 kg/ha TSP 75 kg/ha TSP 75 kg/ha KCI 50 kg/ha KCI 50 kg/ha KCI 50 kg/ha Type of land Wetland Wetland Wetland Dry land Limin - - + 2 t/ha Source: Sihombing 1985

Domestic utilization Soybean has been used for centuries and still forms part of the indigenous diet. The low cost of soybean protein compared to animal protein and the simple processes by which it can be fashioned into palatable high protein food make its use as a protein source particularly relevant to developing countries (Wang 1984). Consumption of soybean has increased rapidly since the end of the 1970s. The Indonesian Ministry of Agriculture (1988) projected per capita consumption of soybean to rise from 7.93 kg/year in 1986 to 8.58 kg/year in the year 2000. Soybean food products are available in a variety of popular processed forms, such as tempe, tofu, tauco and kecap (soysauce), and in a number of less popular foods, such as bean sprouts, sere in Bali, Yuba, and soybean milk. A small but increasing amount of soybean especially imported soybean cake is used for animal feed, due to its low price. The Directorate General of Livestock Production has recently estimated that the rate of growth of demand for soybean cake will be 12.8% per month, matching the planned targets of livestock production. Soybean cake is a major ingredient in animal foodstuffs and domestic demand cannot be met because of limited domestic soybean production. Indonesia, therefore, has imported large quantities of the cake, which has spurred the government to embark on a comprehensive feed production program. Table 8 shows the trends of soybean and cake imports from 1969 to 1989.


Table 8 Import of soybean grain and cake, 1975-1989. Import of soybean grain Import of soybean cake

Year Quantity ('000 t)

Cost t) (million Rp

Quantity ('000 t)

Cost t) (million Rp

1975 17.8 389 1.2 29 1976 171.7 8,436 8.1 259 1977 89.1 9,333 9.2 466 1978 130.5 23,549 20.6 1,416 1979 160.9 32,057 18.3 1,985 1980 193.5 40,166 26.6 4,434 1981 351.5 68,742 169.8 26,908 1982 354.8 85,776 71.8 13,029 1983 391.7 110,749 103.9 26,795 1984 400.1 139,385 206.1 56,562 1985 301.9 88,427 175.2 34,062 1986 359.2 107,148 313.1 83,517 1987 286.7 103,875 289.4 111,764 1988 465,8 233,157 99.2 41,987 1989 390.4 229,518 130.1 67,338 Source: CBS 1992

Soybean is used for human consumption, animal feed, and seed. The Food Balance Sheets of the Central Bureau of Statistics show 90% of the soybean in the country is used for food. However, these reports do not include use for animal feed. The trends of total supply and domestic utilization from 1975 to 1990 in Indonesia can be seen in Table 9. The per capita availability of soybean for food has more than doubled from 4.68 kg in 1980 to 10.47 in 1990. However, the aggregate demand for the food industry almost tripled from 1980 to 1990. This rapid increase in demand should be met by increasing domestic production under the perspective of optimal resource allocation.

Table 9 Supply and domestic utilization of soybean ('000 t) in Indonesia (1980-1990).

Domestic Supply Utilization of soybean for Available for food

(kg/capita) Year Supply Seed Food Industry Waste 1980 754 32 684 - 38 4.68 1981 703 35 633 - 35 4.23 1982 531 34 470 - 27 3.07 1983 768 34 696 - 38 4.45 1984 1,142 44 1,041 - 57 6.51 1985 1,143 34 1,052 - 57 6.44 1986 1,602 47 1,466 9 80 8.80 1987 1,411 42 1,298 - 71 7.63 1988 1,528 46 1,408 - 74 8.12 1989 1,698 51 1,562 1 80 8.80 1990 2,053 55 1,894 1 71 10.47 Source: CBS 1992

Processing of soybean foods Soybean has been an important source of protein and calories for Asian people for thousands of years. The foods which have been developed from soybean can be classified into two groups, fermented and non-fermented products. The development of fermented foods, which depend on rather sophisticated microbiology, was a remarkable achievement in the early history of China.

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The main fermented soybean products in Indonesia are tempe, oncom, tauco and kecap (soysauce). Non-fermented products include tofu, tauge (soybean sprouts), soybean milk, fried beans (eaten as a snack), beans boiled or cooked as vegetable or as an ingredient in soups. An enormous variety of traditional foods, both fermented and non-fermented, is easily found stationary in the market place and peddled by street food vendors. The production trends of tofu and tempe in the period of 1985-1989 by medium and large scale industries has increased dramatically (Table 10). Kecap production has also increased but tauco industries showed a decrease in the same period. However, the value of both products increased (Table 11).

Table 10 Tofu and tempe production in Indonesia, 1985-1989. Tofu Tempe

Quantity Value Quantity Value Year (unit) (million Rp) (unit) (million Rp)

1985 17,856 9,818.0 496 263.1 1986 16,388 12,638.4 413 297.2 1987 22,568 14,098.9 471 372.8 1988 23,352 16,879.0 537 453.8 1989 26,837 22,033.3 624 539.7 Increase (%/year) 12.0 22.6 6.9 19.8 Source: Central Bureau of Statistics

Table 11 Domestic production of kecap and tauco in Indonesia, 1985-1989.

Kecap Tauco Quantity Value Quantity Value Year ('000 I) (million Rp) ('0001) (million Rp)

1985 16,248 12,607 694 247 1986 17,004 12,884 625 254 1987 15,896 13,342 703 314 1988 15,262 15,036 716 434 1989 17,760 18,802 569 442 Trend (%/year) 2.6 10.9 -4.0 16.6 Source: Central Bureau of Statistics

Tempe empe is one of the most popular fermented soybean foods in Indonesia consumed by all income groups. For some low and medium income groups, tempe serves as a major source of protein, calories, and vitamins. Even though tempe has been produced and consumed in Indonesia for centuries, there is no written documentation of its origin. West, Central and East Java are still the major tempe producers. range of tempe preparation methods have been reported for different regions and countries. However, the major steps for preparation of tempe are the same everywhere, that is similar to the study area (Cianjur district, West Java). The technology of traditional tempe making is simple with low cost of production (Figure 1). Tempe is a general name applied for soybean fermented with Rhyzopus oligosporus as the predominant microorganism. The availability of an appropriate starter culture is essential for producing a good quality of tempe (Winarno and Yusuf 1985). However, traditionally, tempe processors prefer to use small pieces of previously fermented tempe as starter. The pieces of tempe are air or sundried, ground to a powder and used as inoculum. In some cases, the surface of a previously fermented tempe cake, where most of the mycelium is found, may be sliced, sundried, ground and used as inoculum


Figure 1 Processing of soybean foods.

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Tauco Tauco is prepared through fermentation and processing of yellow soybean. The fermentation process consists of two steps: mold fermentation and brine fermentation. The microorganisms which are responsible for the mold fermentation are Rhizopus oryzae, Rhizopus oligosporus, and Aspergillus oryzae. Bacteria are responsible for the brine fermentation process. Winarno (1978) reported that mixed culture of Rhizopus oryzae produced better quality tauco. The essential steps for traditional preparation of tauco can be seen in Figure 1. Soybean is dehulled either by roller mill or by hand after boiling for 3 hours. Then it is washed and soaked in the cooking water for 24 hours. The soybean is then cooked for 1-2 hours or until soft, cooled and drained. After inoculation with tempe mold, it is incubated at room temperature for 2-5 days, and then blended to loosen or disintegrate the mass. The blended soybean is then placed in a cement fermentation tank and mixed with salt up to 25%50%. After thorough mixing it is fermented at room temperature for 10-20 days. The fermentation tank is open during the day, and covered if it rains and at night. The fermented product is cooked with palm sugar until a homogeneous viscous mixture is obtained. This is ready to sell, or the mixture may be sundried to produce dried tauco which is wrapped in plastic. Kecap Kecap (soysauce) can be prepared in three different ways by processes of fermentation, hydrolysis in acid, or combinations of both. Kecap produced by fermentation usually has better flavor and aroma than kecap prepared by hydrolysis. Thus, kecap produced by hydrolysis is rarely found (Winarno 1976). The essential steps for traditional preparation of kecap are shown in Figure 1. The soybean is first washed, then soaked for one night and boiled until soft. The drained soybean material is inoculated with Aspergillus oryzae, and incubated at room temperature for 5 days for the first fermentation step. Then the soybean is soaked for 3-4 weeks at room temperature in 20% salt solution in a wooden tank (fermentation 2). The fermented soybean salt solution is boiled and then filtered. The filtrate liquor is then diluted 2-3 times with water, cooked and mixed with caramel and other spices. The mixture is filtered and the filtrate is ready to be bottled or packed. Tofu Tofu or tahu in Indonesia is a traditional non-fermented soybean food. Because of its high protein and fat content, it can make a substantial contribution to nutrition. Tofu is a protein precipitate obtained from the water extraction of ground soybean. It is usually made from yellow or green soybean (Figure 1). The preparation of tofu begins with soaking the soybean for 10-12 hours, followed by grinding using an electric machine while small quantities of water are added to make a soybean paste. The ground soybean is then heated by adding hot water near boiling and then filtered to produce soy milk. Calcium sulfate is added to this milk to cause coagulation into curd. The curd is then pressed, and cut into small pieces (the size of tofu depending of market demand) and boiled for the last time. For yellow tofu, salt and natural yellow ginger colour may be added during the last boiling. Tauge Tauge (soybean sprouts) is made by soaking soybean until soft and then keeping the moist beans in the dark at 22°C to 23°C. The beans begin to sprout within 24 hours, and after 3-5 days the sprouts are ready to be marketed.


Research methodology This study aims to identify the linkage of agriculture with markets and agro-industry, taking soybean as an example. More specific objectives of this study are:

• To identify the complete marketing channel of soybean and processed products at the local level in West Java,

• To identify the income and labour opportunity generated by the soybean industry in the study area, and

• To evaluate processor behavior with respect to price fluctuations. In general, this study is focused on soybean processing, marketing and job opportunities generated from this food industry. Tofu, tempe, tauco and oncom are the main processed soybean products in Cianjur. The study was conducted in Cianjur districts, West Java (Figure 2). Data were collected by interviewing processors, peddler agents, peddler retailers, consumers and government officials. Secondary data were also collected from the Bureau of Statistics, Office of Industrial Extension, and other related agencies either at national or the regional level. The field work was conducted in 1992 and completed in six months. The survey was conducted using a structured questionnaire for 30 processors of tempe, inquiring about their processing activities. Data on input, output and marketing of the product were collected. Thirty tofu processors, 5 tauco processors and 1 soysauce processor were also interviewed. To complete the study, 32 peddlers were intensively interviewed using a different questionnaire. Partial financial analysis was employed to evaluate the economic feasibility of tofu, tempe and tauco industries in Cianjur. The Cobb Douglas profit function model was used to determine processor behavior with respect to price fluctuation.

Figure 2 Location of study area.

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The study site Historically, the original tempe producers in Cianjur came from Pekalongan, Tegal, and Banyumas, Central Java. The tofu processors mostly came from Bandung, Cirebon, Sumedang, and Garut, West Java and from Cilacap, Central Java. Farming is the dominant economic activity in Cianjur. The trends of area harvested, production and yield from 1986 to 1990 in Cianjur and West Java were evaluated in connection with the soybean supply and regional demand for food industries such as tofu, tempe, tauco and kecap (Table 12). According to the Cianjur Office of Industry, local production could not meet demand for the soybean industry, so the shortage had to be imported from other regions. The demand for soybean is related to the trend in the number of soybean food processors. KOPTI (Koperasi Produsen Tempe dan Tahu Indonesia/Indonesia Tempe and Tofu Processors Cooperative) in Cianjur reported that the number of tempe and tofu processors increased 3.1% and 4.6% per year respectively from 1987 to 1991 (Table 13).

Table 12 Harvested area, production and yield of soybean in study area, 1986-1990. Year Harvested area (ha) Production (ton) Yield (ton/ha) Cianjur West Java Cianjur West Jav a Cianjur West Java 1986 3,737 88,656 3,552 83,517 0.95 0.94 1987 3,517 53,215 3,819 52,187 1.01 0.98 1988 4,894 61,077 5,342 66,419 1.09 1.09 1989 4,645 64,278 5,293 71,310 1.14 1.11 1990 6,796 82,508 7,857 96,019 1.16 1.16 Average increase (%/year) 18.4 2.1 23.7 8.0 5.1 5.4 Source: Statistics Office of West Java

Table 13 Number of tofu and tempe processors and the soybean demand by members supplied by KOPTI in Cianjur, 1987-1991.

Year Number of processors Soybean supplied Soybean Shortage tempe (unit) tofu (unit) by KOPTI (t) demand (t) (t) 1987 82 52 1,500 2,534 1,036 1988 87 52 1,560 2,622 1,062 1989 90 54 1,644 2,717 1,073 1990 98 59 1,800 2,963 1,163 1991 101 60 1,872 3,036 1,164 Average increase (%/year) 3.1 4.6 5.0 Source: KOPTI, Cianjur

In the period of 1986-1990 soybean production in Cianjur increased 23.7% per year, much higher than in West Java (8.0%). This tremendous increase in soybean production was mostly generated from area expansion (Table 12). The processors Based on classification of the Department of Manpower in the study area, the average age of tofu and tempe processors is in the range of productive labour (Table 14). The production of tofu and tempe in Cianjur is mostly done as home industries, where all activities take place in the processors' house. The labour is mostly provided by family members, who contribute about 60% of the total labour employed in tofu processing. For tempe processing all labour was provided by the family.


.

Table 14 Characteristics of respondent tofu and tempe processors in Cianjur, 1992

Tofu processors Tempe processors Characteristic range average range average Age (years) 29-57 40.9 26-54 40.0 Education (years) 3-12 5.2 3-9 5.2 Experience (years) 2-33 12.6 4-36 17.4 Number in family 3-7 4.6 4-7 4.6 Source: primary data 1992

The processors are usually located in villages which consist of 6-8 processors, some of whom are related. This relationship makes the collective handling and transportation of raw materials easier. Since most processors are members of KOPTI, they pick up their soybean two or three times per month. About 60% of the quantity of soybean required by members was provided by KOPTI and the remainder was fulfilled by local markets. The capacity of tofu processing is around 35-130 kg of grain soybean, with an average of 63 kg/unit/day. For tempe processing the average is 51 kg/unit/day. The price of soybean from KOPTI is cheaper than from the local free market. This price includes Rp 150 deposit for every kg of soybean purchased. The total deposit can be withdrawn after one year, and future withdrawals can be made every third or fourth month. The price of soybean at the local markets ranges from Rp 850 to Rp 1,100 per kilogram depending upon the supply situation. The price trends for soybean and its products (tempe and tofu) in Cianjur for the period 1981-1990 are shown in Table 15. New processors of both tofu and tempe are mostly the relatives of experienced processors. To become a tofu or tempe processor one requires at least three million rupiah for tools and equipment, and an additional amount of Rp 100,000 to Rp 150,000 for materials and operational costs for tofu and Rp 200,000 to Rp 250,000 for tempe processors. This amount is a major problem for prospective processors since they are not able to apply for credit from banks. They prefer to generate the capital themselves since the lending rate is quite high and the procedure quite complex.

Marketing of soybean products Market place situation In general, the processing and local marketing activities of soybean products in the study area were carried out by informal agents who do business on a small scale with few permanent employees. This situation is typical of the informal sector. There are a large number and variety of processors and peddlers in the marketing of soybean products (Hayami et al. 1987). The bazaar is a market set up in a space usually provided by government, and it is common not only in Java but all over Indonesia (Dewey 1962). In the study area, accessible market places for processors are the bazaars of Cianjur which consist of bazaar Muka, Ampera, Joglo, Terminal and Bojong Meron, Cipanas and Ciranjang.

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Table 15 Price of soybean, tempe and tofu in Bandung, West Java, 1981-1990

Average price (Rp/kg) Year Soybean Tempe Tofu 1981 348 489 531 1982 374 572 550 1983 430 649 642 1984 490 742 699 1985 514 758 757 1986 587 823 881 1987 670 999 1,085 1988 761 1,103 1,263 1989 782 1,281 1,338 1990 861 1,368 1,360 Source: Central Bureau of Statistics

In the marketing of tofu and tempe, the processor has been fixed in relation to market place and product distribution to peddler agent, bazaar vendor or to consumer and they choose the market place near their domiciles. This is agreed upon in order to eliminate competition among them. If a processor increased production he is free to distribute his product to two or three market places. However, the new processor should look for another market which is suitable for his product. The situation for bazaar vendors is slightly different because their number tends to increase yearly, and, therefore, they are more competitive. However, most of them are in partnership with a processor so they can do business without cash capital. The product can be taken from the processor on consignment. In the study area, most of the marketplaces are open everyday from 5 am to 5 pm. However, the processors are open only up to 9 am; then the remaining product is distributed to bazaar vendors by consignment system with commission. Marketing channels of tofu Tofu processors in Cianjur generally produce tofu with yellow colour and most of them make three sizes. The sizes and proportions produced are small (3cm x 3cm) about 20%, medium (4cm x 4cm) about 60%; and large (5.5cm x 5.5cm) 20%. Several processors also produced both yellow and white tofu, about 80% yellow and 20% white. Usually, the white tofu is provided to the peddlers of fried tofu and baso-tahu (meat is put inside the fried tofu and then steamed) by order transaction and payment by contract systems. The marketing channels of tofu in Cianjur are shown in more detail in Figure 3. The purchase price of tofu directly picked up in factories (processors' place) is different from the price in the market where the stall processor distributed the products. If the processor or agent sold the products directly to bazaar vendor, the price is lower than the price at the consumers level, even at the same market place. This price differentiation is aimed to maintain the good relationship between the processor and agent and bazaar vendor. More detailed information on the product price situation is presented in Table 16. The marketing margin for each peddler category can be seen in Table 17. The marketing margin of tofu from peddler to consumers for door to door service (pedagang dorongan and pedagang gendong) was higher than the others. However, the total income from selling tofu is lower since a smaller quantity is handled. The agent can gain a big profit if he sells the product directly to consumers in the market place. The levels of total income from different marketing agents are presented in Table 18.


Table 16 Typical prices of tofu in marketing channels of Cianjur area, 1992 Buyer Place of Selling price (Rp/piece) Seller sale Small Medium Large

Processor agent factory 17.0 30.0 55.0 market 17.5 32.0 55.0 vendor market 19.0 35.0 65.0 consumer market 21.0 40.0 75.0 Agent vendor market 19.0 35.0 65.0 consumer market 22.0 40.0 75.0 Vendor consumer market 22.5 40.0 75.0 residence 25.0 45.0 90.0 Source: Primary data 1992.

An interesting detail uncovered in this study is that many of the female tofu sellers are married to bazaar vendors. They usually offer the product to the consumer at the same market place along the road side entering the market area starting at 6 to 11 am depending on the buyer situation. On the other hand, the vendors market their tofu at the market area and pay tax of Rp 250 per day, with an additional task of keeping the place they occupy clean. Data recorded from the bazaar vendors showed that the net income from the tofu business is about

Table 17 Marketing margins on tofu by category of seller in Cianjur 1992. Marketing

margin (Rp/piece) Cost of operation

of marketing (Rp/piece) Income of seller

(Rp/piece) Transaction S M L S M L S M L

Agent to vendor 1.5 3.0 5.0 0.22 0.39 0.75 1.28 2.61 4.25 or retail peddler Agent to consumer 4.5 8.0 20.0 0.46 0.88 1.50 4.04 7.12 14.50 in market Vendor to consumer 3.5 5.0 10.0 0.90 1.50 3.20 2.60 3.50 6.80 in market peddler to consumer 6.0 10.0 15.0 1.33 2.00 4.00 4.67 8.00 11.00 at house Note: S = small, M = medium; L = large piece of tofu.

Table 18 Handling capacity, margins and total income for each category of tofu seller in Cianjur, 1992

Handling capacity Margin Total income Tofu seller by size (piece/day) (Rp/piece) (Rp/day) Agent to peddler S 3,200 1.28 4,096 or vendor M 2,100 2.61 5,481 L 600 4.25 2,550 12,127 Vendor to consumer S 400 2.60 1,040 in market M 200 3.50 700 L 100 6.80 680 2,420 Peddler to consumer S 50 4.67 234 at house M 20 8.00 160 L 20 11.00 220 614 Note: S = small; M = medium; L = large piece of tofu

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Rp 2,420 per day. The highest income was obtained by the agent at about Rp 12,127 per day, compared to only Rp 614 per day for the door to door peddler (Table 18).

Economic benefit of tofu production Cost and return analysis was performed on a sample of 30 tofu processors in Cianjur. The material cost includes grain soybean, added material, firewood, plastic bags and gasoline. Labour cost, taxes and depreciation on equipment are other cost components calculated in the study. The total cost of three categories of processor, based on observation, grain soybean from KOPTI, and from the free market, is similar (Table 19). The net income is highest if the processor sells his product directly to consumers (Table 20).

Table 19 Cost allocation of tofu processing in Cianjur, 1992. Cost (Rp) by Item Observation KOPTI Non-KOPTI Materials cost 69,200 68,300 70,000 Soybean 60,200 59,300 61,000 Added materials 3,800 3,800 3,800 Firewood 4,600 4,600 4,600 Plastics pack 300 300 300 Gasoline 300 300 300 Labour cost 14,600 14,600 14,600 Equipment depreciation 2,600 2,600 2,600 Others (tax, etc.) 1,500 1,500 1,500 Total costs 87,900 87,000 88,700


Marketing of Tempe Generally, tempe processors produced two sizes of tempe, weighing about 0.6 kg for the small size and about 1.5 kg for the large size. Processors mostly used plastic to package the tempe. .

Table 20 Cost and return of tofu processing in Cianjur, 1992 Observation KOPTI Non-KOPTI Item (000 Rp) (000 Rp) (000 Rp)

Gross revenue Sold to agent 107.4 107.4 107.4 Sold to consumer 121.0 121.0 121.0 Total costs 87.9 87.0 88.7 Net return Sold to agent 19.5 20.4 18.7 Sold to consumer 33.1 34.0 32.3

Figure 4 Marketing Channels of tempe in Cianjur, 1992

The marketing channels of tempe in study area is similar to the tofu distribution system since both are sources of protein to middle and low income groups. Approximately 60% of tempe processor in Cianjur distribute their product directly to bazaar vendors. The marketing channel of tempe are shown in detail Figure 4. The price of tempe across type of buyer (vendor, peddler and end consumer) and transaction place (factory, market and housing) for the large size was more than double that of the small piece (Table 21). On the

Tempe

Processor Processor Bazaar

Bazaar Vendor

Consumer

Peddler retailer

Consumer

(58%) (29%) (13%)

(40%)

(15%)

(100%)

(60%)

(15%)

(100%)

Factory

Market

Housing

Case Study 198

other hand, the highest marketing margin is obtained by those categories of seller such as processor, vendor, and peddler who directly sell their product to the consumer (Table 22).

Table 21 Tempe price at various marketing agents in Cianjur area, 1992. Buyer Place of Price (RP/piece) Seller transaction Small Large

Processor vendor factory 370 925 vendor market 375 950 peddler market 425 1,050 consumer market 500 1,200 housing 500 1,200 Vendor peddler market 425 1,050 consumer market 500 1,250 Peddler consumer housing 600 1,500

Table 22 Marketing margin of tempe in each channel in Cianjur, 1992. Product outlet by Marketing Marketing cost Net margin marketing channel margin (Rp/piece) (Rp/piece) (Rp/piece) S L S L S L In the market Processor to vendor 5 25 2 5 3 20 to peddler 55 125 10 25 45 100 to consumer 130 275 30 50 100 225 Vendor to peddler 50 100 15 25 35 75 to consumer 125 300 15 25 110 275 In residential area Processor to consumer 130 325 45 90 85 235 Peddler to consumer 175 450 40 60 135 390 Note: S = small size weighing 0.6 kg/pack; L = large size weighting 1.5 kg/pack

Economic benefit of tempe production Cost and return analysis was also done for tempe production based on a sample of thirty processors. The cost components of tempe production in Cianjur were similar to those of tofu. Material cost is the major component (about 84%) of tempe production, based on the source of grain soybean (Table 23). The results of cost and return analysis show that the average net return of tempe processors who directly sell the product to consumers at the market place is more than double that of processors who distribute to tempe agents under a consignment system (Table 24). In addition, the total income across marketing agent and handling capacity varied based on the number of transactions. For example, the processor who distributed his product to vendors, peddlers, as well as to consumers in the market place could earn a total of Rp 4,080 per day and about Rp 5,750 per day if he sold tempe directly to household consumers. On the other hand, vendors earned about Rp 3,675 per day selling the product to peddlers and consumers at the market place (Table 25).


Table 23 Cost allocation on tempe processing in Cianjur, 1992 Cost (Rp/day) Items Observation* KOPTI Non-KOPTI Materials cost 51,400 50,500 53,100 Soybean 47,200 46,300 48,900 Added materials 2,100 2,100 2,100 Firewood 1,300 1,300 1,300 Plastics 800 800 800 Labour cost 9,200 9,200 9,200 Equipment depreciation 300 300 300 Others 300 300 300 Total costs 61,200 60,300 62,900 * Soybean obtained from KOPTI and non-KOPTI sources

Table 24 Cost and return of tempe production in Cianjur, 1992. Items Observation

(Rp/day) KOPTI

(Rp/day) Non-KOPTI

(Rp/day) Gross revenue Sold to agent 68,000 68,000 68,000 Sold to consumer 75,200 75,200 75,200 Total costs 61,200 60,300 62,900 Net return per unit Sold to agent 6,800 7,700 5,100 Sold to consumer 14,000 14,900 13,300

Table 25 Total income by marketing chanel of tempe in Cianjur, 1992. Handling Net margin Income Total Income capacity (Rp/piece) (Rp/piece) (Rp/day) Marketing channel S L S L S L

processor to vendor 60 15 3 20 180 300 480 to peddler 30 8 45 100 1,350 800 2,150 to consumer 10 2 100 225 1,000 450 1,450 2,550 1,550 4,080 vendor to peddler 20 3 35 75 700 225 925 to consumer 20 2 110 275 2,200 550 2,750 2,900 775 3,675 In housing area processor to consumer 40 10 85 235 3,400 2,350 5,750 peddler to consumer 5 2 135 390 675 780 1,455

Marketing of tauco The district of Cianjur is famous as a tauco producing area. Our study shows that most of tauco processors in the area produced liquid tauco in bottles. Four different sizes of bottle, ie 200 ml, 240 ml, 350 ml and 475 ml are produced. The 200 ml and 240 ml bottles were preferred by consumers. These sizes, therefore, are sold out more quickly than the larger sizes. Tauco is also produced in small quality in dry form in 25 gram packs, with ten packs per bundle.

Case Study 200

Tauco processors commonly marketed their product through marketing agents in local markets and shipped to other districts including Sukabumi, Bogor, Bandung, Cirebon in West Java, as well as to Jakarta about 120 km north of Cianjur. The product movements from producer to consumer are presented in Figure 5.

Figure 5 Marketing channels of tauco in Cianjur, 1992.

The distribution of tauco is also based on consignment systems similar to the marketing systems of tempe and tofu. The processor sends the product to the agent every two weeks. At the time of the second delivery the processor collects any unsold product and payment on the first consignment. The price of tauco varied across marketing agents and by size of the bottle. For example, the price of a 200 ml bottle of tauco varied from a low of Rp 350 per bottle for the agent on consignment from the producer, to Rp 550 per bottle for cash sale to the consumer at a store. Detailed information regarding tauco prices at different marketing agent is presented in Table 26. The marketing margin of tauco also varied according to marketing agent, bottle size and location of transaction (Table 27). The margin for a 200 ml bottle ranged from Rp 25 to Rp 150. After deduction for marketing cost, the highest net margin was Rp 110 per 200 ml bottle, obtained by the vendor selling to the consumer. Based on the net margin and handling capacity, total income of each agent can be determined. The processor can get about Rp 90,000 per day if he distributes the product to stores, whereas tauco agents can get as much as Rp 97,000 per day for product distribution in


Table 26 Price of tauco at various marketing agents, Cianjur, 1992. Price (Rp/bottle)

Seller Buyer System A B C D Local distribution Processor Agent Consignment 900 600 425 350 Store Consignment 925 625 500 400 Agent Stall Consignment - - 500 400 vendor Consignment - - - 375 Store Consumer Cash 1,250 1,000 750 550 Stall Consumer Cash - 900 700 500 Vendor Consumer Cash - - - 500 Other districts Processor Agent Consignment 950 650 450 375 Agent Store Consignment 1050 700 525 425 Agent Stall Consignment - - 525 425 Store Consumer Cash - - 750 550 Store Consumer Cash - - 700 550 Note : Size of bottle: A = 475 ml; B = 350 ml; C = 240 ml; D = 200 m

Table 27 Marketing margin (Rp/bottle) on tauco sales by various agents, 1992. Marketing margin Marketing Net margin Transaction (200 ml) (240 ml) cost (240m1) (240 ml)

Local market Agent to stall 50 75 15 35 60 Agent to vendor 25 - 5 20 - Store to consumer 150 250 50 100 200 Stall to consumer 100 200 20 80 180 Vendor to consumer 125 - 15 110 - Other districts Agent to store/stall 50 75 15 35 60 Store to consumer 125 275 50 100 200 Stall to consumer 125 175 20 105 155

Table 28 Total income by marketing channel of tauco Cianjur, 1992. Marketing channel Handling Income Capacity (Rp/unit) Total income* A B A B (Rp) Local market Processor to store 2,000 800 25 50 90,000 Agent to stall 1,500 750 35 60 97,000 Agent to vendor 4,50 - 20 - 90,000 Store to consumer 50 20 100 200 9,000 Stall to consumer 30 15 80 180 5,100 Vendor to consumer 42 - 110 - 46,200 Other districts Processor to agent 1,000 500 10 10 15,000 Agent to store 400 100 35 60 20,000 Agent to stall 600 400 35 60 45,000 Agent to consumer 20 10 100 200 4,000 Stall to consumer 30 20 105 155 6,250 Note : * Total income for two weeks operation A = 200 ml bottle; B = 240 ml bottle.

Case Study 202

Finally, cost and return analysis shows that the material cost (grain soybean, added material, and firewood) of Rp 510,500 is the major cost component in tauco production or about 48.3% of the total cost of Rp 1,345,000 per each processing period. Packaging and labour costs each contribute and the 25% of the total cost. The average net income of a tauco processor for one period of processing reaches about Rp 287,000 (Table 29). Since the processor can make six batches of tauco a month, the total income per month is about Rp 1,722,000. Compared with interest from deposit in the bank, the tauco business is profitable. In one month, required capital is Rp 8,070,000 with an interest rate of 2% per month, so that a total of Rp 161,400 must be paid to the bank. However, a tauco processor can receive a net income of Rp 1,722,000 per month, almost eleven times the bank interest. Table 29 Cost and return per unit on tauco processing in Cianjur, 1992.

Item Value ('000 Rp/ processing period) % of cost Cost Allocation a. Materials cost 510.5 48.3 Soybean 315.0 Added materials 183.5 Firewood 12.0 b. Electricity cost 10.0 0.9 c. Bottle, label and package 264.2 24.9 d. Labour cost 270.0 25.1 e. Others 3.4 0.3 Total cost 1,345.0 100.0 Gross revenue 1,632.0 Net return 287.0

Profit function analysis of tempe and tofu processors and job opportunity Profit function analysis In order to evaluate the behavior of tempe and tofu processors in relation to input demands as well as profit performance, profit function analysis was employed on the survey data. Profit of tempe processors is a function of price of soybean, labour wage, unit price of added material such as yeast and tapioca byproducts, unit price of firewood, price of plastic bags, and tax. In logarithm form, the profit function of tempe processors is as follows: Log Pf= α+ ß1 logGS + ß2 logLB + ß3 logAM + ß4 logFW + ß5 logPB + ß6 logTX + E PF = profit of tempe processor (Rp/day), GS = price of grain soybean (Rp/kg), LB = wage of labour (Rp/manday), AM = added material (Rp/unit), FW = firewood (Rp/unit), PB = plastic bag (Rp/pack), TX = tax (Rp/unit), α and ßi = parameter estimates; i = 1, 2,...,6 E. = error term


Similarly, the profit function of tofu processors is as follows: Log PF = α+ß1 logGS + ß2 logLB + ß3 logAM + ß4 logFW + ß5 logTX + E where PF = profit of tofu processor (Rp/day), GS = price of grain soybean (Rp/kg), LB = wage of labour (Rp/manday), AM = added material (Rp/unit), FW = firewood (Rp/unit), TX = tax (Rp/unit), α and ßi = parameter estimates; I = 1, 2,...,5 E = error term. In general, the Cobb-Douglas profit function model used in this analysis shows quite good estimates, since the coefficient of determination is about 81.6%. In other words, about 81.6% of the profit performance of tempe processors has been explained by the profit function model used in the analysis. Profit performance of tempe processors in Cianjur is significantly affected by price fluctuations of grain soybean as well as the price of firewood. For example, if the price of soybean increases by 10%, the profit earned by the processor will decline by 16%. Every 10% increase of unit price of firewood will cause a profit decline of 5.3% (Table 30). On the other hand, unit price fluctuation of added material and the price of firewood significantly determine the profit fluctuation of tofu processors. The profit function model used in the analysis has explained about 82.4% of the tofu processors profit performance. Every 10% increase in unit price of added material and unit price of firewood could cause the profit of tofu processors to decline by 2.8% and 4.2%, respectively (Table 31).

Table 30 Profit function of tempe processors in Cianjur.

Variable Parameter Estimate

Standard Error

T for HO: Parameter=0 Prob>r{T]

Intercept 9.870695 1.172406 8.419 0.0001 Grain soybean -1.638552 0.702454* -2.333 0.0258 Labour -0.126065 0.823723 -0.153 0.8797 Added material -0.200459 0.171376 -1.170 0.2541 Firewood 0.531045 0.234229* 2.267 0.0331 Plastic bag 0.822678 0.733721 1.121 0.2738 Tax -0.120086 0.235799 -0.509 0.6154 R2 0.8162 *Significant at 1% level

Table 31 Profit function of tofu processor in Cianjur.

Variable Parameter Estimate

Standard Error

T for HO: Parameter=0 Prob >T

Intercept 6.806383 2.689545 2.531 0.0184 Grain soybean 0.847473 1.075163 0.788 0.4383 Labour -0.404271 1.000950 -0.404 0.6899 Added material 0.277071* 0.124851 2.219 0.0398 Firewood 0.424520* 0.206939 2.051 0.0513 Tax -0.327865 0.493549 -0.664 0.5128 R2 0.8241 * Significant at 1% level

Case Study 204

Input demand elasticity Input demand elasticities of tempe and tofu processors are derived from the respective profit functions following the formula of (ß1S - 1), where ß1 is the parameter estimate of profit function (Chand and Kaul 1986). Input demands for grain soybean, labour, and added material of tempe processors are price elastic, while only the demand for labour of tofu processors is price elastic. In other words, the demand for those inputs will decline more than 1% for every 1% increase in its price. Meanwhile, the demand for other inputs such as firewood and plastic bags for tempe processor and the demand for grain soybean, added material, and firewood for tofu processor are price inelastic. The demand for those inputs will decline less than 1% for every 1% increase in price (Table 32).

Table 32 Demand elasticity of inputs of tempe and tofu processors. Variable Tempe Tofu Grain soybean -2.638522 -0.152527 Labour -1.126065 -1.404271 Added material -1.200459 -0.722929 Firewood -0.468955 -0.575480 Plastic bag -0.177322 -

Labour allocation and job opportunity generated by tempe and tofu industries The development of small scale agro-industry in rural areas is expected to foster the process of structural change of the rural economy. The development of agro-industry in Indonesia should promote a sustainable and resilient agricultural sector, generate added value of processed products, create job opportunities, and improve income distribution. Labour allocation in the tempe and tofu industries based on activities and processing capacity is presented in Tables 33 and 34. The labour employed in the tofu industry in Cianjur averaged 4 mandays per day per processor with a capacity of 60 kg of soybean per day. The number of tofu processors in Cianjur has increased since this area also supplies other regions therefore the demand for labour has also increased. Similarly tempe processors employed an average of 4 mandays labour per day per processor, and the number of tempe processors also increases yearly (Table 34). Therefore, the total labour demand by both agro-industries has been increasing at 4.7% per year exclusive of the demand for labour for tauco and soysauce industries (Table 35). It can be concluded that soybean processing clearly generates significant labour opportunities.

Table 33 Labour allocation (hours) for tofu processing activities in 1992, Cianjur. Capacity of Washing Grinding Boiling Filtering Cutting Boiling Minding Total time soybean & soaking grain soymilk & pressing tofu fire (hours) (mandays) Min 35 kg 2 2 3 2 1 2 3 15 2 Max 125 kg 5 4 8 5 3 8 8 41 6 Ave 60 kg 3 3 5 3 2 5 6 27 4

Table 34 Labour allocation (hours) for tempe processing activities in Cianjur, 1992. Washing Cook- Hulling Soak- Boiling Inoculat- Weighing Fermen- Total time Capacity of & soaking ing of seed ing & ing with & talion (hours) (mandays)

soybean coats cooking starter wrapping culture Min 25 kg 1 2 2 1 2 2 2 2 16 2 Max 75 kg 2 5 4 2 4 3 5 5 34 5 Ave 51 kg 2 3 4 2 3 3 4 3 26 4


Table 35 Labour employed in tempe and tofu industry in Cianjur, 1987-1991. Year No. of processors (unit) Labour* (mandays/year) Tempe Tofu Tempe Tofu

Total (md/year)

1987 82 52 111,520 70,720 182,240 1988 87 52 118,320 70,720 189,040 1989 90 54 122,400 3,440 195,840 1990 98 59 133,280 0,240 213,520 1991 101 60 137,060 1,600 218,660 Annual increase (%) 5.4 3.7 5.3 3.7 4.7 Source: KOPTI, Cianjur and primary data. * Based on 4 mandays/day/processor operating 340 days/year.

References Affif, S. 1991. Peranan pertanian dalam perspektif pembangunan jangka panjang. 28th

Christmas Address, Bogor Agricultural University, Bogor. Indonesia. Central Bureau of Statistics. 1981-1990. Statistics of Indonesia. Jakarta, Indonesia. Central Bureau of Statistics 1985-1989. Statistics of Industry. Jakarta, Indonesia. Chand, R. and Kaul, J.L. 1986. A note on the use of the Cobb-Douglas profit function,

American Journal of Agricultural Economics 68 (1): 162-164. Dewey, A. G. 1962. Peasant Marketing in Java, New York: Free Press. Hayami, U., Kawagoe, T., Morooka, Y. and Siregar M. 1987. Agricultural Marketing and

Processing in Upland Java: A Perspective from a Sunda Village. CGPRT No. 8, Bogor: CGPRT Centre.

Hermana. 1985. Pengolahan kedelai menjadi berbagai bahan makanan. In Kedelai, Food Crops Research and Development Centre, Bogor, Indonesia. Mears, L.A. 1982. Era Baru Ekonomi Perberasan Indonesia. Yogyakarta Gajah Mada University

Press. Sihombing, D.A. 1985. Prospek dan kendala pengembangan kedelai di Indonesia. In Kedelai,

Food Crops Research and Development Centre, Bogor, Indonesia. Simatupang, P. and Purwoto A. 1990. Pengembangan agro industri sebagai penggerak

pembangunan desa. Agro-economics Research Centre, Bogor, Indonesia. Ministry of Agriculture. 1988. Supply and Demand for Foodcrops in Indonesia. Directorate of

Foodcrops Economics and Postharvest Processing. Directorate General of Foodcrops. Jakarta, Indonesia.

Wang, H.L. 1984. Tofu and tempe as potential protein sources in the western diet. Journal of American Oil Chemists Society 61: 528-34.

World Bank. 1992. Agricultural Transformation: Changes and Opportunities. Ag. Operation Division, Country Department III. East Asia and Pacific Regional Office.

Winarno, F.G. 1976. The present status of soybean in Indonesia. Fatemeta-Bogor Agricultural University, Bogor, Indonesia.

Winarno, F.G. 1978. Research on tauco, part III. Food Technology Development Centre, Bogor Agricultural University, Bogor, Indonesia.

Winaro, F.G. and Yusuf, H. 1985. Pengamatan terhadap rangkaian produksi pada kelompok produsen tempe, Bogor Agricultural University, Bogor, Indonesia.

Annex 1

PROGRAM

23 May 1993 Arrival of participants 24 May 1993 08.30 - 09.00 REGISTRATION 09.00 - 10.00 OPENING CEREMONY - Welcome address Director General, MARDI - Remarks Regional Coordinator RAS/89/040 Project - Opening address Director, CGPRT Centre 10.00 - 10.30 TEA BREAK 10.30 - 10.45 WORKSHOP GUIDELINES J.W. Taco Bottema

DAY ONE SESSION Chairperson: Dr. Saharan bin Haji Anang

10.45 - 11.45 Development and application Wang Yumin of economic matrix in decision making support for government and farmers on FLCG crop production and marketing in China 11.45 - 12.45 A study of processing and Made Oka Adnyana marketing of soybean and its potential for expanding rural incomes and job opportunities in West Java 12.45-14.00 LUNCH

Annex1 208

Chairperson: Dr. Fatimah bt. Mohd. Arshad 14.00 - 15.00 The processing and marketing Tunku Mahmud bin Tunku Yahya of fresh soybean milk as an income and employment generation activity in Klang Valley, Malaysia 15.00 - 15.15 TEA BREAK 15.15 - 16.15 Labour employment and income Manzoor Mi Chaudry generation in maize production, marketing and processing in Pakistan 16.15 - 17.15 A study on the economics of Romeo R. Huelgas soybean processing in Nueva Ecija, Philippines, 1992 20.00 Dinner. hosted by the Director of the CGPRT Centre 25 May 1993

DAY TWO SESSION Chairperson: Romeo R. Huelgas

08.30 - 09.30 Post-harvest processing and W.H.D. Kularatne utilization of food legumes and coarse grains in the dry zone of Sri Lanka: a socio-economic analysis 09.30 - 10.30 Production, marketing and Pinit Kulamongkon utilization of soybean in Thailand 10.30 - 10.45 TEA BREAK 10.45 - 11.45 Economics of production and Tran Van Lai marketing of soybean in Viet Nam

Program 209

Chairperson: Togar A. Napitupulu 11.45 - 12.15 Country paper: Bangladesh A.K.M. Altaf Hossain 12.15 - 12.45 Country paper: India G. Singh 12.45-14.00 LUNCH 14.00 - 14.30 Country paper: Lao PDR Kham Sanatem 14.30 - 15.00 Country paper: Myanmar U Myint Oo 15.00 - 15.15 TEA BREAK

Chairperson: J.W.T. Bottema 15.15 - 16.00 Marketing and processing of Gordon Prain sweet potato in Asia: the experience of UPWARD 16.00 - 16.45 Nestle's experience on soya D.T. Santos production, marketing and processing in the Philippines 16.45 - 17.30 Regional trends in marketing of Prakarn Virakul food legumes and coarse grain crops 18.00 Kuala Lumpur trip 26 May 1993

DAY THREE SESSION Chairperson: J.W.T. Bottema

08.30 - 10.00 Discussion 10.00 - 10.15 TEA BREAK 10.15 - 12.00 Discussion 12.00-13.00 LUNCH 13.00 - 19.00 Field trip Visit: Soybean processing factory-YHS (PJ), agricultural park (Shah Alam) and central market (Kuala Lumpur)

Annex1 210

27 May 1993

DAY FOUR SESSION Chairperson: Kiran Pyakuryal

08.30 - 10.30 Discussion 10.30 - 11.00 TEA BREAK 11.00 - 13.00 Optional: Visit MARDI Headquarters and Food Research Technology Centre 13.00-14.00 LUNCH Chairperson: Prakarn Virakul 14.00 - 16.00 Discussion 16.00 - 16.15 TEA BREAK 16.15 - 16.30 Closing remarks Regional Coordinator, UN/FAO-RAS/89/040 Project Director, CGPRT Centre Director General, MARDI

Annex 2

LIST OF PARTICIPANTS

A. COUNTRY REPRESENTATIVES CHINA Mr. Wang Yumin

Deputy Director, Information Centre for Agricultural Economics and Technology in Heilongjiang Province, Zhujiang Road, Harbin, P.R. China 150036.

INDIA Dr. G. Singh

Assistant Director General (Eng.), Indian Council for Agricultural Research, Ministry of Agriculture, Krishi Bhawan, New Delhi 11001.

INDONESIA Dr. Made Oka Adnyana

Head, Socio Economics and Development Research Division, Central Research Institute for Food Crops, Jalan Merdeka 147, Bogor 16111.

PDR LAO Mr. Kham Sanatem Assistant Deputy Director, Department of Agriculture and Extension, Ministry of Agriculture and Forestry, Vientiene.

MALAYSIA Mr. Tunku Mahmud bin Tunku Yahya Malaysian Agricultural Research and Development Institute, P.O. Box 12301, 50774 Kuala Lumpur.

MYANMAR Mr. U Myint Oo Deputy General Manager, Myanmar Agriculture Service, Ministry of Agriculture, Yangon.

PHILIPPINES Prof Romeo R. Huelgas Assistant Professor, Department of Agricultural Economics, College of Economics and Management, University of the Philippines at Los Banos, College, Laguna.

SRI LANKA Mr. W.H.D. Kularatne Agricultural Economist, Division of Agricultural Economics, Regional Agricultural Research Centre, Mahailuppallama.

Annex2

212

THAILAND Mr. Pinit Kulamongkon Office of Agricultural Economics, Ministry of Agriculture and Cooperatives, Bangkhen, Bangkok 10900.

VIET NAM Dr. Tran Van Lai Director, Legume Research and Development Center, National Institute of Agricultural Sciences, D7 - Phuong Mai, Dongda, Hanoi.

B. RESOURCE PERSONS Mr. Kiran Pyakuryal, Officer-in-Charge, Agricultural and Rural Development Division, UN-ESCAP, United Nations Building, Rajadamnern Avenue, Bangkok 10200, Thailand. Mr. Prakarn Virakul, Senior Agricultural Economist, Office of Agricultural Economics, Ministry of Agriculture and Cooperatives, Bangkhen, Bangkok 10900, Thailand. Dr. Gordon Prain, Coordinator, User's Perspective with Agricultural Research and Development (UPWARD), P.O. Box 933, Manila, The Philippines.

C. OTHER AGENCIES Dr. Michael Morris, Regional Economist for Asia, Centro Internacional de Mejoramiento de Maize Y Trigo (CIMMYT), P.O. Box 10900, Bangkok 10900, Thailand.

Mr. T.C. Ti, Regional Economist, Regional Office for Asia and the Pacific (FAO-RAPA), Maliwan Mansion, Phra Atit Road, Bangkok 10200, Thailand.

Dr. Fatimah bt. Mohd. Arshad, Faculty of Economics and Management, University Pertanian Malaysia, Serdang, Malaysia.

Mr. D. T. Santos, Assistant Vice President, Agricultural Service Department, Nestle Philippines Inc., Administrative Office, 335 Gil J. Puyat Avenue, Makati, Metro Manila, the Philippines.

D. RAS/89/040 PROJECT Dr. D.M. Tantera, Regional Coordinator, FAO-RAS/89/040 Project, Jalan Merdeka 145, Bogor 16111, Indonesia.

E. OBSERVERS Dr. Ramli bin Mohd. Noor, Horticulture Division, MARDI, Serdang. Mr. Abdul Aziz bib Atta Mohamad, Horticulture Division, MARDI, Bertam. Mr. Leong Chee Onn, Horticulture Division, MARDI, Bertam.

List of Participant

213

Mr. Tengku Arrif bin Tengku Ahmad, Techno-Economic and Social Studies Division, MARDI, Serdang. Mr. Samin bin Sukir, Techno-Economic and Social Studies Division, MARDI, Serdang. Ms. Rashilah binti Mohamad, Techno-Economic and Social Studies Division, MARDI, Serdang. Mr. Abdullah Halim bin Hamat, Technology Promotion Division, MARDI, Serdang. Mr. Abu Bakar bin Adam, Technology Promotion Division, MARDI, Serdang. Ms. Faridah binti Abd. Aziz, Food Technology Research Centre, MARDI, Serdang. Ms. Siti Meriam binti Ahmad, Food Technology Research Centre, MARDI, Serdang. Mr. Yaakop bin Hashim, Manager of Agricultural Services, Nestle, Malaysia. Mr. Zanil Abidin bin Yusof, Department of Agriculture, Malaysia. Ms. Teoh Poh Im, Yeo Hiap Seng, Sdn. Bhd., Malaysia. Dr. Aminah binti Abdullah, Universiti Kebangsaan Malaysia. Mr. Mohd. Tamin bin Yusof, Ministry of Agriculture, Malaysia.

F. ORGANIZING COMMITTEE MARDI Dr. Saharan bin Haji Anang, Chairman. Dr. Ibrahim bin Abdullah, Transport and air ticket reservations. Mr. Jamil bin Ahmad, Passports and visas. Mr. Jainuddin bin Abdullah, Field trip. Mr. Kamaruddin bin Saleh, Finance. Mr. Tunku Mahmud bin Tunku Yahya, General matters. Ms. Ramlah binti Md. Isa, Public relations. Mr. Abu Kasim bin Mi, Program and papers.

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G. SECRETARIAT/CGPRT CENTRE Dr. Seiji Shindo, Director, CGPRT Centre Dr. Togar A. Napitupulu, Agricultural Economist, CGPRT Centre. Mr. J.W.T. Bottema, Program Leader, Human Resources Development - Information Services, CGPRT Centre. Dr. Charles E. van Santen, Human Resources Development, CGPRT Centre.

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