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NAIP, Component-2, Market Survey Report

Contents
CHAPTER-I ............................................................................................................................ 2
PROJECT BACKGROUND ........................................................................................................................... 2
1.0 Introduction: ................................................................................................................................. 2
1.2 Production Overview: ................................................................................................................... 2
1.3 Reasons for low production and value addition of Ginger ........................................................... 5
1.4 Proposed Solution to improve the plight of poor ginger farmers ................................................ 5
1.5 Bridge up the Gap ......................................................................................................................... 6

CHAPTER-II ....................................................................................................................................... 7
Market survey ..................................................................................................................................... 7
2.0 Market Player of the Project Area: ............................................................................................... 7
2.1 Farmer: .......................................................................................................................................... 7
2.1.1 Solution: Upgrading of local market .......................................................................................... 8
2.2 Middle Man ................................................................................................................................... 8
2. 3.Whole Sellers ............................................................................................................................... 9
2.3.1 Proposed Solution ...................................................................................................................... 9
2.4 Retailers/Vegetable Vendors: ....................................................................................................... 9
2. 5.Supermarkets/Distributors: ....................................................................................................... 10
2.6. Exporters .................................................................................................................................... 12
2.7 Other Data Analysis..................................................................................................................... 16

CHAPTER-III .................................................................................................................................... 18
CONSUMER SURVEY ............................................................................................................................. 18
3.0 Consumer surveys can advise us on: .......................................................................................... 18
3.1 Consumer Demand Projection and Analysis based on consumer survey ................................... 18
3.2 Preference for ginger - ................................................................................................................ 19
3.3 Opportunities- ............................................................................................................................. 20
3.4 Steps to capture the market ....................................................................................................... 20
3.5 Demand Projection and Setting Target Market Based on Market Survey .................................. 21
3.5.1 Ginger Paste: ............................................................................................................................ 21
3.5.2Ginger Pickle: ............................................................................................................................ 21
3.5.3 Dried/Powdered or Ginger Oil ................................................................................................. 21
3.5.4 Production and Value addition of Ginger in Project Areas ...................................................... 22
3.6 Demand and Supply Gap Analysis............................................................................................... 23
3.7Conclusion:................................................................................................................................... 24

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NAIP, Component-2, Market Survey Report

CHAPTER-I
PROJECT BACKGROUND
1.0 Introduction:
Market Survey Reports elucidate the Present Market Potential as well as future scope of the
product. Ginger is a tropical species native to South East Asia. Botanically known as Zingiber
officinale, it is the most popular hot spice in the world. India has a predominant position in
ginger production contributing 26 per cent of the total world production, but accounts to only 6
percent of the global ginger trade. Ginger is a low-volume, high-value tropical crop. Its
rhizomes, (continuously growing, usually horizontal, underground stems, which puts out
lateral shoots and extraneous roots at intervals), also referred to as hands in the trade,
produce an aromatic spice widely used in India. Ginger is one of the most important spices
traded the world. It is highly valued for its medicinal uses. Other uses vary from an important
cooking ingredient to ginger ale and ginger beer.
Fresh ginger is viewed as a vegetable and not generally considered as a spice. Major by-products
are dried ginger, ginger powder, ginger oil and ginger oleoresin. Dried ginger is sold as whole
rhizomes (hands) commonly known as ginger root, either peeled or unpeeled. Ginger grows well
in the tropics at altitudes ranging from sea level to 1500m. The best ginger yields are achieved
in rich, medium textured, fertile soils using large amounts of good quality water, fertilizer and
other organic matter. Too much water can cause water-logging as ginger does not resist this
very well. If cultivated in shaded areas prolific growth can be attained. The production of ginger
is both capital and labour-intensive. If adequate care is taken, yields of up to 30-45 MT per ha of
fresh ginger are possible. Cleaning the harvested ginger of excess soil, roots and stems is very
labour intensive. In smaller areas stools are snapped off by hand. Surplus soil and roots are
removed before the rhizomes are placed in bulk bins. Weight loss during harvesting is
minimized by expediting the handling process and by covering the collection bins or by storing
the newly harvested ginger in the shade. This is where the rhizomes are washed, peeled,
washed again then sun-dried to produce peeled and dried ginger. The process takes anything
from 8-10 days during the dry season and a little longer if there are intermittent rains.

1.2 Production Overview:


Ginger is one of the important spices grown in Orissa mostly by traditional method by the tribal
farmers of Koraput, Khandhmal and Keonjhar district of Orissa. In Orissa the production of
ginger accounts to be 31400 tonnes which comes from an area of 16070 hectares. Orissa
contribute the highest area/acreage under ginger cultivation in India (17.9%) but in terms of
production it ranks 8th (only 8.47%) in the country.

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NAIP, Component-2, Market Survey Report


Table 1, Production overview

World
India
Orissa
Koraput
Phulbani

and

Area (ha)

As a percentage of
previous one

Production
(mt)

429481
105900
16070
6328

100 %
24.66%
15.17%
39.38%

1387445
370300
31400
13033

As a
percentage of
previous one
100%
26.69%
8.48%
41.51%

Yield
(mt/ha)
3.23
3.5
1.95
2.06

Source: 2006-07 statistics from FAO, www.indiastat.com, www.orissastat.com

Fig-1, Ginger Area -World vs


India (in ha)

Fig-2 Area Under Ginger Cultivation


120000

429481

India

105900

I
n
d
i
a

100000

105900

Area in ha.

World

80000
60000
40000
20000
0
India

Orissa

Koraput and
Kandhamal

This is again because of low productivity which is 1.95tonnes/ha in Orissa as compared to


national average of 3.5 tonnes/ha. The reasons are same as stated above. When we take a close
look on the district wise data of ginger area and ginger production of Orissa, we can perceive
that Koraput and Kandhamal which are considered hotspot of ginger production in Orissa as
they are major contributor of around 39.38% in terms of ginger growing area and 41.5% of
ginger production. The details are stated below in table 2:
Year

Table 2, Year wise Production of two Project District


Area (ha)

2003-04
2004-05
2005-06
2006-07

2040
2180
2200
2424

Koraput
Production
(tonne)
4104
4386
4426
4993

Yield
(tonnes/ha)
2.01
2.01
2.01
2.06

Area (ha)
3840
3724
3865
3904

Kandhamal
Production Yield
(tonne)
(tonnes/ha)
7909
2.06
7670
2.06
7960
2.06
8040
2.06

Source: Collected from www.Orissastat.com (www.Indiastat.com)

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NAIP, Component-2, Market Survey Report

Area under ginger cultivation

Fig-3, Area under Ginger cultivation in Koraput and


Kandhamal
4500
4000
3500
3000
2500
2000
1500
1000
500
0

3840

2040

2003-04

2180

2004-05
Year wise

3904

3865

3724

2200

2424

2005-06
2006-07
Koraput Area (ha)
Kandhamal Area (ha)

From the above statistics it can be easily figured out that area and production of ginger are
increasing day by day because some of the budding entrepreneurs have realized the potential of
ginger production and its value addition. But the worst sufferers are the poor tribal farmers
who are at the mercy of village traders or local Sahookars for selling their ginger produce.
These farmers neither have technical knowhow to boost their production nor have any
storage facility to sale the produce in off season at fairly good price.
In addition to this, these farmers do not possess any information regarding current
market price due to lack of infrastructural and communication facilities.
Apart from this farmers are not able to negotiate or bargain with the traders for better
price due to their poor economic and social status.
Nevertheless if we see the percentage of Indias share in world ginger trade its just
meagre amount of 6% instead of more than one fourth of the world ginger production.
Again if we try and look into data of India and Orissa in context of percentage of value addition
of ginger, it one can notice that contribution of Orissa in value added ginger production is just a
negligible amount of 2% against the national average of 30%. Dry ginger is produced mainly in
Kerala, a major share of which is exported. Thus the huge gap in value addition of ginger
products can be easily noticed.
Table 3, Use of Ginger in India and Orissa
Percentage of Ginger Used As
Seed purpose
Fresh ginger
Value
added
ginger
(dried/powdered/oil)

India
20 %
50 %
30 %

Orissa
30 %
68 %
2%

Source- Market survey by Dr A.T.N Abu backer-HOD Dept Of Economics, Dr. Zakir Hussain College, TN

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NAIP, Component-2, Market Survey Report

Fig-4, Comparison of usage pattern in India and Orissa

Value added ginger


(dried/powdered/oil)

Orissa

2%

India

30%
68%

Fresh ginger

50%
30%

Seed purpose

20%
0%

20%

40%

60%

80%

1.3 Reasons for low production and value addition of Ginger


Ginger is usually produced as an additional crop in conjunction with other crops. But in project
districts farmers are cultivating separately mainly in upland and medium land. The major
factors inhibiting the production, productivity and value addition of the ginger crop in these
areas include poor quality planting material, timely non availability quality planting materials,
poor pest and disease management practice, poor post-harvest techniques, no value addition,
lack of well netted value chain and lack of market support price. The number of Kandhamal
farmers that produce ginger has declined drastically during the last few years due to severe
rhizome rot and poor management.

1.4 Proposed Solution to improve the plight of poor ginger farmers


Understanding the necessity of giving better prices to ginger growers and avoid distress sale,
NAIP has suggested the PPCP (Public Private Community Partnership) business model for
linking the tribal ginger farmers by both backward linkage and forward linkage with the help of
all consortium partners. Public partner would be government agency like OUAT (Orissa
University of Agriculture and Technology) which would give necessary support in terms to
farmers about best cultivation practices of to enhance their production and productivity. It will
also give all its technological support in doing R & D operations for various ginger value added
products through its food processing and engineering arm. So, the present proposal aims at
bringing improvement in value chain on Ginger and Ginger Products to leverage and
provide better income to the ginger growers.
The project will not only provide policy leverage but also will ensure better income to ginger
growers. To implement this PPCP model a consortium was formed. The consortium comprise of
government institute OUAT (Orissa University of Agriculture and Technology), premier
consultancy agency CTRAN (Complete Transformation), regional NGOs (KASAM and IAEET) and
private market player NRPL (Natural Remedies Private Limited) .

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NAIP, Component-2, Market Survey Report

1.5 Bridge up the Gap


The project aims at filling up identified gap with following ways:
Problems
Low productivity of ginger

Post harvest loss


Distress Sale

Cause
Use of indigenous variety

Proposed Solution
Introducing
new HYV like
Suruchi, Suprabha and Surabhi
Ridge and furrow method of Formation of Ridge broad beds
planting
Rhizome rot and scale insect Seed treatment with dithane-45
and other measures
No storage facilities
Storage in pits after treating
ginger with dithane-45 and zero
energy cool chambers
a. No value addition
Value addition at cluster level by
establishing primary processing
unit.
b. No market support

1. Market linkage with private


companies
like
NRPL
and
marketing federation like ORMAS.
2. Product branding.

Each consortium partner will contribute to fulfilment of project in their respective unique and
innovative ways. Let us see the list of the innovationsActivities

Status

Baseline Survey

Ongoing

Identification of HYV

Done

Details
1. Data regarding farmers profile,
traders profile, cost of cultivation.
2. Identification of beneficiaries.
Suprabha variety

Distribution of HYV Done


16 quintals
planting materials to
the beneficiaries
Disseminating
best In
next
1. Cultivation in raised bed
package of cultivation month
2. Seed treatment
and post harvest
3. Mulching
practices to farmers
4. Pest
and
nutrient
management
Value chain Analysis Going on
1. Conducting Market Survey
of Ginger products
2. Preparation of B plan for
and preparation of B
different value added ginger
plan
products
3. Research and Development
in value added product
acceptable
by
local
consumers
Going on
Formation of producers company at
farmers level

Contributor
CTRAN
along
with OUAT and
IAEET & KASAM
Do
OUAT
OUAT,
CTRAN,
IAEET, KASAM

CTRAN
CTRAN
OUAT

IAEET &
KASAM

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NAIP, Component-2, Market Survey Report

CHAPTER-II
Market survey
India is the world's largest producer and consumer of ginger. Our marketing system is not well
defined to meet need of farmers. Farmers are disorganized, getting no reliable market
information and domination by speculative middlemen. Moreover, there is no quality
management, no quality standards and no grading. The ginger market chain appears to be in a
deadlock. Farmers are reluctant to invest because their market outlets are unreliable and
market agents are unwilling to invest because farm production is sub-optimal. Cultivation of
ginger is started long back in the Kandhamal and Koraput region. Indigenous varieties of ginger
were found in all most all areas in Kadhamal district. But Koraput farmer are more innovative
than Kandhamal because of Mali community. Influence of KVK, RRTTS and HARS make Koraput
farmer more progressive and innovative.
Market survey was done across the state of Orissa to study current demand, production and
value addition of ginger. Study was also done to prepare a Business model and analyse the value
chain of ginger products. Therefore market was studied right from farmers, middleman,
whole seller, retailer, supermarkets and exporters to the end consumers.

2.0 Market Player of the Project Area:

Exporters
Super Market
Retailer
Whole
Seller
Middleman

Farmers

2.1 Farmer:
The producer (Farmer) is operates at the lowest level of market player of the value chain. He
directly or indirectly sells his produces in the local market or local trader in the vicinity. Price of
ginger depends on market demand and situation. To realize these new market opportunities
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NAIP, Component-2, Market Survey Report


farmers must dry and slice their raw ginger product. Ginger provides about 30 per cent of the
income in the Koraput district. Any improvement in the ginger market chain will have huge
impacts on the local economy and quality of life. For farmers and other producers to get their
fair share of the added value created in the value chain an understanding of the roles and the
contribution of the different actors is necessary.

2.1.1 Solution: Upgrading of local market


Local producers are more competitive in their local markets; strategies have been developed to
address the marketing problems;

Forming of producer and/or marketing groups: Using marketing involves costs that will
often be impossible for one producer alone to cover. Apart from the common benefits of
being organised, such as easy learning, better bargaining power, reduced transaction cost,
collective marketing etc., it will strengthen the impact of the marketing efforts if a steady
supply is available for the market.

Improvement of Quality: When products from several producers are sold under the same
label a consistent level of quality is necessary for higher price.

Collecting and analysing market information: Information about competitors prices and
products as well as buyers preferences is crucial when marketing decisions are to be made.

Training in broader commercial oriented skills among farmers and service


providers: A market-oriented and entrepreneurial way of thinking is important for the
long run sustainability of the local marketing strategy.

Changing the organisation of the market: Efforts to organise (local) market more
efficiently in a dialogue with all the stakeholders often result in benefits for producers and
market actors.

2.2 Middle Man


These are the village intermediaries who procure entire produce of farmers at very lower rate
around Rs. 8-10/ kg or sometimes below that and source it to whole sellers. They earn the
maximum amount through storing the produce and selling it at higher price. Farmers are again
the worst sufferer.

2.2.1 Proposed Solution- Formation of a farmers organisation would be only solution to


minimize the effect of middleman. Producer Company/cooperative would be best form of
farmers organisation to be formed. Producer Company is a hybrid of cooperative and a private
firm as it contain goodness of both, individual farmer would be the owner just like that in
cooperative and it will be a profit oriented company just like private company.

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NAIP, Component-2, Market Survey Report

2. 3.Whole Sellers
Ginger is sold in Orissa at wholesale rate in Aiginia, a place in Bhubaneswar and Chatra Bazar, in
Cuttack. It is market full of godowns and trucks. Every where we can see unloading or uploading
of major vegetables for Bhubaneswar and Cuttack market. This is the market for major
vegetable vendors of Bhubaneswar and sometimes even Cuttack. This market procures hard
selling vegetables like potato, onion, garlic and ginger from different places where ever its
available in plenty. The entire godowns are held by Sahookars. They procure on daily basis from
different parts of country based on the demand and supply.
As far as ginger is concerned only 10-12 Sahookars or wholesellers are involved. Each Sahookar
is able to sell half or one truck load of ginger daily which comes around 18 tonnes. Customers
are vendors (retailers) located in unit-1 market, unit-4 market, IRC village market and several
others. They procure ginger mainly from Silchur (Assam) in this season, after 2 months from
now they told they will procure from Kandhamal and Koraput ginger. They also procure from
Bangalore and they prefer Bangalore ginger over local ginger from Kandhamal and Koraput
because of low procurement price though the transportation charges are higher for Bangalore.
They do not store fresh ginger. They procure fresh ginger from local traders or agents or
Sahookar located at that area. They used to do business in cash basis and the existing rate of
fresh ginger they used to sell @ Rs. 32-34/kg to the retailer. Each retailer used to take 1 quintal
to 5 quintal per day. One Sahookar (local traders) told that it cost them around 5 lakhs per truck
load of ginger + Rs. 50000 for transportation .So if we calculate , cost price per kg of fresh ginger
for these big traders would be around Rs. 30/kg. So we can see the gap clearly. When we asked
them weather they supply ginger to any processing unit, one of the Sahookar told that some
person from Ranchi used to procure from him for making ginger flakes. Another Sahookar told
that one ginger pickle manufacturing unit used to procure from him but now they are not
procuring. When we asked why dont they procure directly from farmer or farmer group, they
told that a farmer does not a loadable quantity firstly and even if they have loadable quantity of
around 16-18 tonnes they are not willing to sale all their produce at a time. So it is always better
for these traders to procure from an agent who dont have any of these issues.
2.3.1 Proposed Solution Producer Company/Cooperative will directly get orders from these
whole sellers and thus earn a better price.

2.4 Retailers/Vegetable Vendors:


a. Jaidev Vihar Local MandiSale Price per kg of fresh ginger= Rs. 60/kg
Sale per day= 1-1.5 kg
Procure from unit 1 market
Procure once in 4-5 days

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NAIP, Component-2, Market Survey Report


b. Unit-1 Market
Quantity of fresh ginger sale per day- 1 quintal to 3 quintal (big retailer)
Sale Price per kg = Rs 40-50/kg
Quantity of fresh ginger sale per day- 10 kg to 25 kg (small retailer)
SP per kg = Rs 50-55/kg
Procurement is from Aiginia market on daily basis or sometimes ones in 2 days.
Around 30-40 ginger seller
Transaction on cash basis, no dues
No storage required.
Procurement rate @36/kg
Transportation charges per quintal =Rs 30-40 in auto.
c. Unit- 4 Market
Quantity of fresh ginger sale per day- 0.5 quintal to 1 (big retailer)
SP per kg = Rs 40-50/kg
Quantity of fresh ginger sale per day- 10 kg to 25 kg (small retailer)
SP per kg = Rs 50-60/kg
Procurement is from Aiginia market or unit 1 market on daily basis or sometimes ones
in 2 days.
Transaction is on cash and carry basis, no dues.
No storage required.
Procurement rate @36/kg (Aiginia) or 38/kg (unit 1)
Transportation charges per quintal =Rs 30-40 in auto.

2. 5.Supermarkets/Distributors:
a. Big bazaar at forum MartSelling price of fresh ginger @ Rs. 60/kg
Table 4, Status of Big bazaar Ginger Products
S.N
1.
2.

Ginger product
Ginger paste
Ginger garlic paste

Brand
Mothers Recipe
Mothers Recipe

Size of SKU
50gm
50 gm

Type of packet
Pouch
Pouch

Price per unit (Rs.)


5
5

3.
4.
5.
6
7.
8
9.
10.

Ginger granules
Ginger Paste
Ginger Paste
Ginger Paste
Ginger Paste
Ginger garlic paste
Ginger pickle
Ginger pickle

Ruchi masala
Priya
Smith n Jones
Smith n Jones
Smith n Jones
Smith n Jones
Priya
Mothers Recipe

75 gm
200gm
250 gm
200gm
100 gm
100gm
300gm
300gm

Jar
Pouch
Bottle
Pouch
Pouch
Pouch
Bottle
Bottle

NA
25
29
24
11
11
69
59
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NAIP, Component-2, Market Survey Report


It was around 171 packets per day. They have 5 stores in Bhubaneswar so if we take
150 also then 150*5= 750 packets per day. Sale of ginger pickle is 30 pcs per month.
There are 13 stores in total in Orissa, 5 in Bhubaneswar and 8 in Cuttack. Fresh ginger
sale is around 100 kg per store per month.
b. Reliance Fresh Store
Visited the store located near Aakash Institute. First of all we took a note on the selling price of
fresh ginger, it was Rs 70 per kg. Fresh ginger is procured once in 2 day along with other
vegetables. Fresh ginger sale is just 2-3 kg per day per store. Then we went to spices segment of
the store to find out different varieties of ginger value added products. We found following one:
S.N
1.
2.

Ginger product
Ginger paste
Ginger garlic paste

Table 5, Reliance Fresh Ginger Products


Brand
Size of SKU Type of packet
Mothers Recipe
50gm
Pouch
Mothers Recipe
50 gm
Pouch

3.
4.

Ginger Paste
Ginger pickle

Priya
Priya

200gm
300gm

Price per unit (Rs.)


5
5

Pouch
Bottle

25
69

We could not find any dried ginger, sliced ginger and ginger powder in the store.
The total sale per day for ginger is around 20 pieces of ginger paste
So 15 store *20 pieces per day = 300 pieces per day (ginger paste)
Ginger pickle sell is very less as compared to mango, lemon and chilli pickle. On an
average they sell 2 bottles of ginger pickle, so 30 bottles for 15 stores in Bhubaneswar.
Their major distributor are Uday trading, Ajit Bishnoi and Ruby marketing etc.
c. Spencers DailyFresh ginger price is Rs 50 per kg
Table 6, Spencers Daily Ginger value added products
S.N
1.
2.
3.
4.
5.
6.

Ginger product
Ginger paste
Ginger
garlic
paste
Ginger Paste
Ginger pickle
Ginger pickle
Sweet
ginger
pickle

Brand
Mothers Recipe
Mothers Recipe
Priya
Priya
777 brand
777 brand

Size of SKU
50gm
50 gm
200gm
300gm
300gm
300gm

Type of packet
Pouch
Pouch

Price per unit (Rs.)


5
5

Pouch
Bottle
Bottle
Bottle

25
69
40
55

Daily sale of fresh ginger is 500gm. Procure from local market.


They were reluctant to share other information regarding sales figure.

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d. Visit to Priya Foods Depot located in BJB Nagar
Ginger paste:
Monthly sale =3.5 tonnes
So yearly sale =42 tonnes (3.5*12)
Ginger pickle:
Yearly sale = 2.5 3 tonnes
Major sale is during winter.
This depot provides ginger paste and ginger pickle throughout Orissa through its
distributors and agencies.
Major distributor in Bhubaneswar is Uday Traders and in Cuttack it is Cuttack Match
Supply. Major sale comes from Bhubaneswar.
They are also promoting the products in supermarkets through modern trade channel
which is gives slightly higher commission to the agents.
Ginger products is still existing in Niche Market mostly as a convenience food consumed
mostly by urban working class population but depot Manger was sure that they will be
able to capture new markets also.

2.6. Exporters
The Govt. of Orissa has signed a MOU with APEDA (Govt. Of India) for setting of a Agro Export
Zone for ginger in the district of Koraput and Kandhamal in Orissa. Under this AEZ scheme
organised production, certification and value addition of ginger is done involving 12000 tribal
farmers under one federation KASAM in an organised way. Export of organic ginger and ginger
products from Orissa to USA, Germany, Netherland, Australia through KASAM was started from
2004-05. More than 50% of area and production of ginger in Orissa is concentrated in tribal
farmer occupied districts. Most of the tribal farmers are resource poor marginal farmers and
cultivate ginger in traditional methods under rainfed conditions in the podu cultivated eroded
hill areas. The details are stated below in table 7.
Table 7, Export Price Scenario
Company

Fresh
ginger
Rs./kg

Dried
ginger
Rs./kg

Powdered
ginger
Rs./kg

125-130

Organic
ginger
powder
Rs. /kg
240-250

Indian Commercial
Company
Asian Food
Industry
Asian Alimento &
Especials Ltd.
Universal Oleoresin
Elixir Extracts

25
28

110-130

220-240

120-135

Ginger
oleoresin
Rs. /kg

Ginger Oil
Rs. /kg

1300-1600
1200-1500

6500-7500
6500-7000

125-140

110-130

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Bio-sourcing Pvt.
Ltd.
Prasad Perfumery
KASAM

200-230

8000-10000
(organic)
5000-6000

130-160

Most of these exporters sell ginger products to USA, UAE, UK, Spain, Sweden, Philippines,
Bahrain and South Africa. All of them sell these ginger products through their own website or
getting registered in trading websites like India mart and Amazon etc.
2.6.1 Opportunity and Profitability
There is huge market for ginger across world due to increased use in pharmaceutical industries
and food industry. India exports only 6% of its total produce though it accounts for one fourth of
total world production. Among exporters if we see, 50-60% of ginger and ginger value added
products export comes from Kerala. In Orissa, the scenario is gloomy as only one exporter was
identified to export dried and powdered ginger. This gives me immense opportunity to venture
into the growing ginger business and adding to foreign exchange basket with gainful
employment of local resources and manpower.
2.6.2 Issues with the Exporters:

Issue 1 -Most of the fresh and dried ginger exporters are


facing huge price competition from their Chinese, Ethiopian
and Nigerian counterparts. These competitors are quoting
lesser price to the ginger importing clients.

Solution proposed- Increasing ginger productivity would


reduce the cost of production of ginger which in turn will
allow them to quote lesser price to their buyers.

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Issue 2- Ginger oil and oleoresin exporters are facing


problem in getting organic and quality certification in
terms of cumbersome and expensive process.

Solution Proposed- Process should be made easy and cheap.

2.6.3 Visit to Bio sourcing Company Pvt. Ltd., Sahid Nagar, Bhubaneswar
Bio-sourcing is a company with varied value added organic products right from spices,
medicinal herbal powders to essential oil. Company was originally in trade business of spices
and NTFP but later in the year2004 it started processing all these valuable crops and products.
They are also in the business of developing skin care and herbal care products. Clients are
mostly outside the country. Their clients are spread across the world .Some of them are from
USA, UK, Sweden, Holland, South Africa, The Philippines, Malaysia, South Korea. As far as ginger
is concerned, they have started processing ginger 3 year back. They process ginger and produce
ginger value added products like dried ginger, ginger flakes and ginger powder. Till now they
are not in the extraction of ginger oil but very soon they will be doing so. Annual turnover from
ginger products alone is 85 lakh (2007-08) with a procurement of 60- 70 tonnes of fresh ginger.
This year their target is to achieve 4 crores worth from sale of ginger product. Bio-sourcing
company has very unique type of organisational structure which allows it to maintain the
international standards and quality of the products. It has divide its business in 5 SBU (Small
Business units) namely:
SBU
AdministrationFarmers managing unit

Function
Maintains and coordinated the all SBU
Training to farmers regarding organic cultivation practices and
procurement of fresh ginger

Laboratory team

Analyses different composition of alkaloids, test the samples


Very important SBU ,Backbone of the company

Online team

Updates information regarding new products, advertise for getting


orders, coordinate with marketing team

Marketing team

Market the products through different channels , sometime also visit


foreign clients

Farmers managing groups are located in Koraput and Kandhamal districts of Orissa. They also
have their own land in which they cultivate ginger in purely organic way. These groups directly
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procure fresh ginger from farmers. They also provide them training on organic farming
practices and persuade the farmers to continue in the same way and not to switch over to
fertilizers and pesticides. They even face problems with the local trader or village agent for
giving slightly higher price for the organic produce. Fresh ginger is procured at the rate of Rs.
15/ kg. It is mostly procured in the month of February when ginger is available in plenty and
they store it for 4-5 months in brine solution.

2.6.3.1 Certifications- Bio-sourcing has got organic certification from USDA and India organic
as well. The certifying agency comes frequently to farmers field to monitor the soil health and
crop plants. This certification cost a lot to the company but it ensures organic way of cultivation
which gives remunerative prices for its products.

2.6.3.2 Storage- The Company has devised a special method of preserving ginger for more than
4 months without any wastage through its R& D Department. They keep fresh ginger in brine
solution.
2.6.3.3 Processing of Ginger

Ginger

Packaging

Washing through
jet water

Pulverising in
different sizes
ginger flake &
ginger powder

Curing

Sun drying (best) or


hot air drying

2.6.4 Ratio of value addition


Bio sourcing company sells its ginger value added product (ginger powder, ginger flakes, ginger
teakert) not less than 200/kg and dried ginger at Rs. 150/kg. So we can clearly observe the ratio
of change in the value of same ginger procured at Rs. 15/kg from farmers field to an
international trading company like bio sourcing to Rs. 150- 200/kg. The ratio of value addition
is not less than 10 times. Though this seems to be an attractive venture, it needs a lot of
expertise and experience to start up such business.

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2.7 Other Data Analysis


Ginger export was quite high during 1993-94 from India. But the rate of export was gradually
slow down in 2007-08 due to demand and supply.

Year
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08

Table 8, Export of Ginger From India (1993-94 to 2003-2004)


Quantity (000' Tonnes)
Value (Rs. Lakhs)
Unit Value (Rs/Kg)
18,442
2478.12
13.44
12,022
1673.03
13.92
18,483
3892.13
21.06
29,737
5924.41
19.92
28,268
7262.73
25.69
8,683
4058.32
46.74
8,923
3253.55
36.46
6,288
2682.06
42.65
6,464
2311.47
35.76
8,461
2396.59
28.33
9,104
426158.2
46.81
9,411
453892.5
48.23
13,890
49,902.92
35.92
9,661
4,777.77
49.45
8,333
3,296.08
39.55

Sources-FAO estimates and Spice board of India

Table 9, Ginger Export of India vs World (1997-98 to 2006-07)


Year
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07

India

World
28,268
8,683
8,923
6,288
6,464
8,461
9,104
9,411
13,890
9,661

1,74,185
1,55,985
2,04,055
2,43,173
2,49,933
2,90,992
3,11,405
2,91,484
3,79,630
3,85,406

India as a % of
world production
16.2
5.6
4.4
2.6
2.6
2.9
2.9
3.2
3.7
2.5

Sources-FAO estimates and Spice board of India

These data are indicating the faster growth of ginger export market. If we compare the world
export data, it can be noticed that there is 147% growth from year 1998 to 2006-07, i.e. one and
half times increase. But when it comes in Indian context, growth rate in the same period is just
11%.One can imagine the potential of growth of ginger products in export market.

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Price per kg of fresh ginger

Fig 5, Indian Ginger Export Price Trend


60
50
40
30
20
10
0

46.74
36.46
19.92

42.65

49.45

46.81 48.23
35.76

25.69

35.92

28.33

Years

If we try and look into the ginger export price for the last 10 years we can find that there is no
fixed trend. Every alternate year there is a rise and fall in the price of export market.

Fig 6, Yearwise Price Trend of Unbleached Ginger


Source-Spice board of India

150.00
Average Price

130.36
100.00

99.40

90.54

68.56

54.81

50.00

60.31

0.00
2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Year

If we analyse the year wise price trend of unbleached ginger we can find that there is a trend of
sudden price increase after every 3 year and then again price starts decreasing.

Average monthwise Price

Fig 7, Monthwise Price Trend of Unbleached Ginger


100.00

Source-Spice Board of India

80.00
60.00
40.00

20.00
0.00
APR MAY JUN

JUL AUG SEP OCT NOV DEC JAN FEB MAR


Months

Month wise distribution of price if we see, the price dips down during the month of Jan-April,
this may be because market is ready with fresh ginger harvested crop.
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CHAPTER-III
CONSUMER SURVEY
A consumer survey gives an idea to assess the particular market and the attitude of its
consumers. Making assumptions is simply not enough. That is why regularly conducting
consumer survey is essential to analyze the market demand and business trend.

3.0 Consumer surveys can advise us on:


The demographics of your target audience, including:
age, gender, income, marital status, educational level and leisure activities
Why people make certain purchasing decisions

When and where people shop

Use of ginger products

Untapped market for products

Current awareness on product brand versus competitors

People's buying habits

3.1 Consumer Demand Projection and Analysis based on consumer survey


Ginger is one of the indispensible ingredients of Indian kitchen basket. It was quite evident from
the result of market survey conducted in Bhubaneswar .100% household uses fresh ginger and
weekly consumption of fresh ginger per household is 200 gm. Survey was done in Bhubaneswar
partially in residential areas and partially in supermarkets and retail store. Sample size was
taken 50 representative households considering the target consumer.

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Fig 8, Consumers' Usage Pattern for different Ginger Products


100%

80%
60%
40%

100

84

88

88

96

96

92

16

12

12

20%
0%

If we try to visualize the number of users of ginger based value added products, we can observe
that the total households uses fresh ginger to prepare ginger paste for culinary purpose but if
we see other products like pickle only 12% of the total respondents use fresh ginger to prepare
ginger pickle at home. The number of respondents using other ginger products (like ginger tea
(8%), Ginger candies (4%) and powdered ginger (4%) ) are very less, so looking into the
potential market we would now concentrate on production of two products for our target
customer namely ginger paste and ginger pickle based on the consumer survey .
It was also noticed that only 16% of households consume ginger paste and 12% ginger garlic
paste but the entire households prepares ginger paste at their home. The reason why they do
not prefer packaged ginger paste is are numerous like unawareness about ginger products,
availability issues, costly, added chemicals, not habituated to use such product, not like ginger
taste etc. Around 34% of the total respondents who have already used some of the ginger value
added products are reluctant to use these ginger products because they have felt that these
products contains lot of chemical preservative and also they do not taste like ginger. In addition
to this, it was heartening to know that 26% of the respondents are willing to buy the
product but they are not using these value added products due to unawareness (6%),
unavailability of products (6%) and not habituated (16%).

3.2 Preference for ginger - Out of 50


respondents only 8 preferred ginger value
added product like ginger paste, ginger pickle
and ginger tea due to easy to use and saving
cooking time. Rest 42 respondents prefer fresh
ginger over ginger value added products. The
reasons for non preference were not habituated
to use the packaged products, unaware about
such products in the market, unavailability of
these products at every places, costly, fear of
added chemical and lack of freshness.

Fig 9, Preference for Fresh


Ginger
Yes
16%

No
84%

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3.3 Opportunities-

Fig 10, Reasons for non preference of value added


So based on the
packaged ginger products
consumer survey , we
can see that there is
Others
7
huge market potential
Not like ginger
19
of ginger value added
Added chemicals
21
products
especially
Not in Habit
19
ginger
paste
and
Costly
19
ginger pickle as it is
Availability Issues
7
one
of
the
Unawareness about ginger
7
indispensible item for
every kitchen. This is
0
5
10
15
20
25
indicated
by
Percentage of respondents
unawareness
about
product, availability issues and not in habit of the consumer to use value added products.
3.4 Steps to capture the market
In our business model, in the first year we would concentrate on production and marketing of
ginger paste and ginger pickle which has got a lot of market potential. Following points have to
be kept in mind before producing these consumer products of ginger1. As one third of respondents have expressed concerns regarding added chemical
preservatives and lack of freshness (not like fresh ginger), so we would concentrate on
research and development of such a product with less preservative and medium shelf life of
around one month under the guidance of CFTRI and OUAT. If we look into the socioeconomic class of our target market, majority of them belong to SEC1 (Socio Economic Class
1), where consumers are well educated and high income group. So they are highly health
and quality conscious, so again we need to produce a good quality product. If possible the
product may be certified by AGMARK or HACCP then it would attract more consumers. This
will convert the non-consumers into consumers.
2. Though one fourth of the respondents are willing to buy the existing products especially
ready to use ginger paste and ginger pickle but unfortunately these people are not using
these products due to following reasons like not habituated to use the packaged products,
unaware about such products and unavailability of these products at every places, So once
again we find ample of opportunity to capture the untapped market by converting the non
user into users. For this we need extensive marketing propaganda through OMFED, KASAM,
ORMAS and also routing these products in pouch format in all the major sabji mandis apart
from the retailers and supermarkets. This is because 100% of the respondents buy fresh
ginger from sabji mandis and daily sabji stalls.
3. Another issue is regarding price sensitivity among consumers. Around 16% of the
respondents found it costly to use ginger paste, so we would like to give better price to
consumer with good quality. Ginger paste is available in few selected areas due to poor
demand.
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3.5 Demand Projection and Setting Target Market Based on Market Survey
Based on all the above studies, it was found that the producer company which will establish its
own processing unit will be responsible for production, marketing and managing the resources
and man power. This processing unit will produce following products of ginger:
Table 10, Ginger products and its purpose
Purpose
Selling place
Household consumers of
Socio-Economic Class A, B and C
Cuttack and Bhubaneswar
Ginger Pickle
Household consumers of
Socio-Economic Class A, B and C
Cuttack and Bhubaneswar
Dried/powdered ginger Export purpose/Bulk sale
USA, UK, UAE etc
Ginger oil
Export purpose/Bulk sale
USA, UK, UAE etc

SN Ginger products
1 Ginger paste
2
3
4

3.5.1 Ginger Paste:


Our target market is the urban middle and higher income class SEC (socio economic class A and
B) and upper middle class SEC C of Bhubaneswar and Cuttack. If we look into total urban
population of Cuttack and Bhubaneswar, it is about 11 lakh. We assume family size of 5 per
household, so number of household becomes 2.2 lakh. Out of 2.2 lakh, 25% of household will
constitute higher income class SEC A and SEC B i.e. 55000 HH and upper middle class 10% i.e
22000 in Bhubaneswar and Cuttack. So it becomes 72000 HH out of which we want to convert
50% of them from non consumer or irregular customer to regular customer, i.e. 36000 HH. Out
of these 36000 customer we want to capture around 1/3rd of the market thus 12000 HH in the
first year of operation and then to 45% in next year and then to 2/3rd at the end of 2nd year.
Thus our brand will be selling around 13300 packs of ginger paste monthly which accounts to
12 tonnes of ginger paste sell annually.

3.5.2Ginger Pickle:
Similarly ginger pickle would go to serve the same market SEC A, B and upper middle class C of
Bhubaneswar and Cuttack. Again out of 72000 HH , 10% of HH (7200 HH) are willing to buy
ginger pickle but due to major players like Priya pickle and Nilsons pickle, we would like to
cover 20% of the market which is around 1440 packs i.e. around 1500-1600 packs per month.
So it comes around 2 tonnes annual production.

3.5.3 Dried/Powdered or Ginger Oil


There is huge market for dried and powdered ginger and also ginger oil. Based on the
marketable surplus the quantity or volume of production will be finalised.

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Fig 11, Export of Spice Oil and Oleoresin from India


Quantity and volume

60000

50000
40000
30000

20000
10000
0
2003-04

2004-05

2005-06

Years

2006-07

2007-08

Qty. in tonnes

Value in lakhs

3.5.4 Production and Value addition of Ginger in Project Areas


Table 11, Production and value added products as per demand
Fresh
ginger
Total no. beneficiary farmer under NAIP
Avg. land holding per farmer
Total ginger production from farmers field
under NAIP /acre
Total ginger production under NAIP

Annual
productio
n in
tonnes

Price per
kg

Value in
lakhs

200 no
1 acre
7 tonnes

1400
tonnes
15% of produce kept as seed
210 tonnes
Ginger surplus with farmers
1190
1200
20
238.00
tonnes
tonnes
Value addition to a tune of 40%
476 tonnes 480 tonnes approximately
Remaining ginger sold with primary value 720 tonnes
720
25
180.00
addition (60%)
Ginger required annually for various ginger value added products
Ginger paste (annual)
12 tonnes
12
100
12
Ginger pickle(annual)
2 tonnes
1.5
166.67
2.50
Dried ginger(annual)
250 tonnes
50
130
65.00
Ginger oil(annual)
216 tonnes
0.864
7000
60.48
Total value addition
480 tonnes
139.98
Value of by products
50
20
10.00
Total sales
329.98
In both the districts 200 farmers have been selected for NAIP project and supplied ginger seed
for ginger production. If the average production is 7 tonnes per acre, as a result total production

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of 200 farmers will be around 1400 tonnes. Normally farmers stored 15 percent for seed
purpose and remaining quantity sold at market.

Primary Value addition or value added

products gives more profitable than direct sell. To achieve success in agriculture, marketing of
agricultural produces need to be emphasised upon. Apart from production aspects, a holistic
approach need to be taken up including the product value addition and remunerative market for
the produces addressing the persisting gap between both the two. Various studies advocate the
fact that the role of small farmers is important in order to meet the increasing domestic demand
of horticulture products. Linking small farmers with high value urban and export markets
would lead to the development of the rural sector. Farmers usually procure inputs from the
retail market and end up selling their produce in the wholesale market. Buying at retail price
and selling at wholesale price is the most uneconomic way of doing the business. Thus the
involvement of an institutional structure in coordinating the demand of individual farmers can
reduce the total cost of inputs to them which the project can promote at regional / local area
level by promoting product based marketing Organisations and/or producers Organisations.
The main thrust of the Agriculture sector is on diversification of traditional cereal crops to more
remunerative crops and development of horticulture. The new Agriculture Policy is in a
formative stage. The main objective of the Policy is sustainable development in agriculture and
horticulture with target growth of 4% per annum.

3.6 Demand and Supply Gap Analysis


The aggregate production of ginger is 31400 mt during 2006-07. Assuming that if only 60 % of
this capacity is being used for addressing the domestic demand and only 7% ginger is exporting
outside during peak season due to poor storage facility. The HH consumption rate of ginger is
quite high due to their food habits in Costal Orissa than Western Orissa. However the existing
production capacity even at 100% capacity utilization would not be able to meet the
requirements.
If we will take into account that the total ginger demand of Orissa:
Total households of Orissa = 7738065 HH
If we will take per HH monthly consumption rate 0.5 Kg
Then yearly consumption per HH will be 6 Kg.
Total demand will be = 7738065 X 6 =46428390 Kg
If we convert into Tonnes-46428390/1000=46428.39 mt
Demand supply gap=46428.39 - 31400=15028.39 mt
The demand is fulfilled by traders exporting ginger from Kerala, Karnataka, Assam and West
Bangal. The demand projections are highly conservative. Considering the vast potential that
ginger offer for supplementing and replacing the conventionally propagated method for
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improving agricultural productivity, the potential demand is expected to be significantly higher
than the projected figures. This potential can be tapped by creating large-scale awareness about
the benefits of ginger and reduction of the cost of production.
Increased demand for raw ginger has reduced the production of dry ginger and other value
added products in the state as it has led to short supply for quality ginger suitable for drying.
This has, in turn, pushed up prices of dry ginger to Rs 125 to Rs 130 a kg. High cost of
production is said to be a reason for farmers not taking up the high quality less fiberous ginger
cultivation, especially in Kerala which was hitherto growing the famous Cochin Ginger. The
spices, oils and oleoresin extraction units are importing ginger from Kerala, Assam and
Karnataka, at lower price.

3.7Conclusion:
Most of the products sold by the farmers do not fetch them a good price mainly due to lack of
primary processing such as cleaning, grading etc. and results in distress sale. Promotional
activities by the project have resulted in production of a sizable quantity of certain products by
now and as projected, it will increase significantly in coming three years. There is need to
promote value addition and marketing to avoid distress sale and loss of confidence of the
farmers. In addition to 30% higher returns on farm income, this would generate a lot of
employment opportunities for the land less families in the area, which can prevent distress
migration.
Presently there is high distress sale of ginger. Before 3 to 5 years, Ginger was sold for 15/- to
20/- per Kg. This phenomenon is not due to surplus production, but due to lack of organizations
among the producers, lack of Market information and lack of Infrastructure for storage. In
Orissa this sector has been highly neglected by the Govt. and the trading communities are taking
advantage of this. Hence, there is a need for the project to organize the producers, build up
infrastructures, provide regular market information and build market linkages. Hence, the
farmers are trained on primary processing, value-addition and storage. These benefits in many
ways such as:
Prevention of post-harvest losses
Value addition to products
Maintain or improve the quality
Better utilization of surplus products
Availability in off-season
Opportunities for income and employment generation
Time to time market survey is essential to know the market situation and price trend. Marketing
environment and competitor analysis will be done through various tools i.e. SWOT analysis,
PEST analysis and Five Forces analysis methods. The SWOT will indicate internal strength and
weaknesses along with persisting opportunities and threat in the external environment. PEST
analysis will basically deal with Political, Economic, socio-cultural and Technological factors.
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The project looks at producing value added products from ginger for which two primary and
secondary processing units will be established at the cluster level. Chemical analysis of ginger
and ginger products will be done with certification and branding. With all these initiatives, the
project foresees to augment the income level of ginger producers by at least 10-15% from its
present level. With the increasing scope for entrepreneurship, 5% employment growth is
expected through direct and indirect means at associated farmers level. On farm value addition
will increase to 20% of the production from the present stage.

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