THE VALUE CHAIN OF BETEL LEAVES

Group 8
Mr.Abhishek Singh (10P062) Ms. Asees Singh (10P070) Mr.Deepak Malpani (10P074) Mr.Shubham Narayanan (10P092) Mr.Nitin Mahajan (10P094) Mr.Sethu Ramalingam M (10P108)

Table of Contents
1. Introduction.......................................................................................................................................01 2. Value Chain......................................................................................................................................01 2.1. Primary activities...............................................................................................................01 2.2. Secondary Activities..........................................................................................................05 3. Value Chain of Betel Leaves.............................................................................................................06 3.1. Inbound Activities..............................................................................................................07 3.2. Operations........................................................................................................................07 3.2.1. Land Preparation..............................................................................................08 3.2.2. Construction of Boroj........................................................................................08 3.2.3. Planting of Vines...............................................................................................08 3.2.4. Irrigation............................................................................................................09 3.2.5. Fertilizers and Pesticides..................................................................................09 3.2.6. Pruning/training.................................................................................................10 3.2.7. Yield..................................................................................................................10 3.3. Outbound Activities...........................................................................................................11 3.3.1. Storage.............................................................................................................11 3.3.2. Distribution..12 3.4. Marketing and Sales.........................................................................................................12 3.4.1. Uses..................................................................................................................13 4. Managing Waste...............................................................................................................................13

5. Value Chain Diagram........................................................................................................................14 6. Conclusion........................................................................................................................................15 7. References........................................................................................................................................16

1. Introduction: The betel leaves, commonly called as pan in India, is the green gold of India. The betel vine is a creeper with glossy heart shaped leaves and white catkin. It is grown under shade which is made especially for the cultivation of betel leaves. It is widely cultivated in India in places like West Bengal, Orissa, Tamil Nadu, Uttar Pradesh, Madhya Pradesh. Betel is used in India since ages. In olden days, it had more of a religious significance. Betel is consumed by 15-20 million people in the country. There are 100 varieties of betel in the world. In India there are 40 varieties and out of which 30 are in West Bengal. They are grown in about 55,000 hectares in the country and produces an income of `9000 million. Betel leaf is one of the most promising commercial crops capable of attracting substantial amount of foreign exchange to the country. 2. Value Chain Analysis: The value chain is a chain of all the activities that go into making a particular product available at the market. The idea behind value chain is the fact that a product gains some value while all of the activities in the chain are executed. These activities are the activities which might help the company gain a competitive edge over its competitors. Based on the statement, post sales operations are also considered a part of the value chain as it helps the manufacturer or the service provider improve the quality of the product while increasing its share in the market by gaining customer satisfaction. Value Chain analysis is the analysis of the various activities mentioned in the value chain. The idea behind the analysis is not to reduce the cost that is incurred but to improve the efficiency of each of these processes so that the product as a whole gains more value. The idea is to increase the value of the product for the customer. The value chain analysis is considered to be a very important tool for strategic planning. In order to better analyze the various activities, the activities are classified into two major categories namely Primary Activities and Support Activities. 2.1. Primary Activities: These are activities that are directly related with the production of the product. The Primary activities of a firm include Inbound Logistics, Operations, Outbound logistics, Marketing, Sales and Services.

The following are the explanations of the various primary activities and the reason as to why they should be analyzed and how can each of these activities add value to the firm. 2.1.1. Inbound Logistics: These are activities that are concerned with receiving the input and the raw materials that would be required for the production of the final product. They are also responsible for the storage of the input materials and providing these materials to the operation team as and when demanded. If the input materials are not provided in time to the operations team, It might lead to a reduction in the number of products manufactured while improper storage and mishandling of goods will impact the final quality of the product. It will also lead to an increase in the cost of production. 2.1.2 Operations: These are activities that are related to the production of the products and services. The Operation is the most important part of the value chain. The operation unit may be further divided into a number of units depending upon the size of the firm. The operations team is held responsible for the quantity and the quality of the products. There are a lot of issues faced during operations and each of these issues should be addressed at the earliest possible to avoid any impact on the final product. 2.1.3 Outbound Logistics: These are activities concerned with the distribution of the final products and services. The unit is also responsible for activities related to warehousing. The Unit is to ensure that the product is made available at a particular place at the time specified. They are also supposed to ensure that there is no damage to the product during warehousing and during transportation of these products to the final destination. They are more involved in the supply chain management of the firm 2.1.4 Marketing and Sales: The marketing and sales department is concerned with estimation of the demand in various places. The department is also responsible for marketing the product to the intended customers and ensuring that details regarding the quality of the product is passed on to the customer. They are responsible for analyzing the various market trends and are supposed to provide the required information to the management and the operations team so that they can meet the customer demands.

2.1.5

Service: The department is concerned with providing services to the customer if required thus adding to the customer satisfaction. They are also responsible for getting the feedback of the customers and attending the customers as and when they face difficulties with the usage of the product. They are also responsible for the pre installation of the product. They have to ensure that the customer is satisfied with the quality of the service.

2.2. Support activities: These are activities that provide the background for the effectiveness and efficiency of the firm. The Support activities consist of Firm infrastructure, Human resource management, Technology Development and Procurement. 2.2.1 Firm infrastructure: They are responsible for maintaining the infrastructure of the firm. This includes planning and control systems such as finance, accounting, corporate strategy etc. They are also responsible for maintaining the assets of the firm. They are also responsible for providing the infrastructure other than the raw materials to the various other departments of the firm. 2.2.2 Human Resource Management: The department is concerned with all the activities related to human capital. They are concerned with the recruitment, training, motivation and addressing the various issues that are faced by the employees that might hinder their efficiency. They are also responsible for the formation of various policies to be followed in and by the organization. They are supposed to ensure that the employees abide to the rules and regulations and are supposed to maintain a positive work culture within the organization. 2.2.2 Procurement: The department is concerned with the procurement of various input devices and raw materials that are required by the firm. They are generally referred to as the purchasing department which is supposed to ensure that the inputs are purchased at the minimum cost available while ensuring the quality is not sacrificed. They are also supposed to ensure that the demands of the other departments are met in the time period specified and the input materials are in accordance to the specifications.

2.2.3

Technology Development: The department is generally referred to as the R&D(Research and Development) department whose primary purpose is to experiment and innovate. They are expected to come up with innovations that can help in increasing the efficiency of the firm and quality of the product. They are also responsible for training the employees. The department is considered very important for the survival of the firms due to the heavy competition that is faced. They are supposed to provide the firm with an technical advantage over the competitors. The following diagram shows the various activities that are a part of the value chain activities

that are considered for analysis.

3. Value Chain of Betel Leaves: The value chain of the betel leaves also consists of some of the above described activities. The value chain mostly consists of the primary activities like Inbound logistics, Operations, Outbound Logistics, Sales and secondary activities are not so prevalent in this industry of betel cultivation. 3.1. Inbound Logistics: The various raw materials that are required by the farmers are as follows 1. Bamboo 2. Manure and Fertilizers 3. Pesticides 4. Basket The raw materials are generally procured from the local market in most of the cases. However in order to reduce the cost of the input materials, the farmers in the neighboring places might team up and get some of the materials for a lesser cost. The farmers do not maintain a huge inventory and generally purchase the items on a regular basis depending on the needs. Bamboo is not required on a frequent basis and hence is procured on a yearly basis while the pesticides and fertilizers are procured as and when needed. The baskets are used during sales and are required only when plucking begins. 3.2. Operations: The operations are nothing but the cultivation of the betel leaves. The advantage of betel cultivation for farmers is that it does not have any competition with the other major crops which are grown in the country. Almost 43% of the farmers in the country cultivate betel for this reason, 40% because of the climatic advantage for betel cultivation in their place and the remaining because of prior experience or family business. The cultivation involves the following processes. The requirements of environment for a good cultivation is as follows Grows best under shade Tropical forest ecological conditions Rainfall of about 2250-4750mm Relative humidity of 40-80% Temperature ranging from 15-40c Well drained fertile soil with pH range of 5.6-8.2 In areas of low rainfall(1500-1700mm), small and frequent irrigation is required

Adequate drainage is required during rainy season

The processes happening in Operations are as follows 3.2.1. Land Preparation The Land preparation is a very important process in betel cultivation because the quality, taste and smell of the leaf depend largely on the soil. It is noted that Bengal leaf has a different flavour than that of Orissa leaf. This is because of the land characteristics. Lot of time and labour is required for this process. First, the land for cultivation is chosen as per the requirements as mentioned above. Then one deep ploughing is done for opening the surface and the sub soil. This land is left open for few days to get sufficient air and sunlight exposure. Then the plant beds are dug and is filled with canal silt and Farm yard manure (FYM). To keep the plant healthy and vigorous, it is necessary to assess the nutritional requirement of the plant. The soil fertility levels have to be maintained. Hence FYM is applied to the soil. This will enrich the quality of the betel leaf produced. 3.2.2 Construction of Boroj The vine is raised by vegetative propagation under partially shaded and humid environment inside the boroj. The Boroj is a small hut like structure of 2m height and 0.02 hectare area (ha). The Boroj is constructed using locally available materials like bamboo, paddy straws and leaves of banana. The vines are grown on elevated beds. The height of the beds increases due to the frequent unearthing of the vines. 3.2.3. Planting of Vines The planting season varies with the location of cultivation. It is important to estimate the distance and mark the places where plants are to be grown. The soil from a shallow hole in the marked is taken out. The terminal cuttings are placed in furrows one meter apart having a distance of 10-15 cm, between 2 cuttings. The cuttings are covered with paddy after planting. Only one variety is planted in one shade. This helps in maintaining uniform operations. The betel vine is a creeper so it needs a support for growing. For the purpose of support, both live and dead supports can be used. In India only live supports are used. It is mostly a tree or a long pole. Farmers in traditional places use

strategies like terracing and trellises for support. Studies have said that the yield and the size of the leaves depend on the support material used too.

EFFECT OF THE SUPPORT MATERIALS ON TOTAL YIELD Treatment Teak sticks Kooratiya sticks Gliricidia sticks Coir ropes Total Yield/plot (24 sticks)/harvest 894.61 923.56 947.31 1085.97

EFFECT OF THE SUPPORT MATERIALS ON PERCENTAGE OF LARGE BETEL LEAF Treatment Teak sticks Kooratiya sticks Gliricidia sticks Coir ropes Percentage of Large leaf/plot 55.734 54.847 47.556 46.863

EFFECT OF THE SUPPORT MATERIALS ON THE WEIGHT OF BETEL LEAVES Treatment Teak sticks Kooratiya sticks Mean Weight/plot (grams) 535.43 496.13

Gliricidia sticks Coir ropes

542.47 625.87

The farmers are usually concerned about the weight and size of the leaves because the cost of the leaf depends on these factors. Hence the support material used also add value to the product

3.2.4.

Irrigation The irrigation is usually done mechanically. In case the area of cultivation is small, the irrigation is done manually. Sufficient care must be taken for the amount of water fed to the betel leaves as more than adequate amount of water would lead to dampening of leaves and less amount of water would lead to drying of the leaves and it is a loss to the farmer in both the cases. The betel leaves are so brittle that the watering of the leaves should be done delicately to avoid damages.

3.2.5.

Fertilizers and Pesticides There are no specifications or standards for applying fertilizers to the betel leaves. The farmers use fertilizers adequately as per their own experience and the area of land. Usually 6-9 bags of DAP and 3-5 bags of nitrate per hectare. The use of excess fertilizers do not cause any harm but the excess will not be taken by the crop and it will be wasted which will eventually gets volatilized. So use of adequate amount of fertilizers is important to avoid unnecessary money wastage. The fertilizers should be a right mix of N, K and P. There are lot of pests that affect the crops such as mealy bugs, mites, aphids etc. And the diseases which destroy the crops are foot and leaf rot. The pests and the diseases should be avoided so that the quality, which is a great value, does not get lost. So fertilizers and pesticides utilisation is a very important part in adding value to the product.

3.2.6.

Pruning or Training After one month of planting the vine creepers, the vines begin to sprout. When the vines grow above 2m height, they are trained with bamboo splint. They are bent down to the ground level in the process. The farmers believe that the growth of vines above 8 feet of height is a bad sign and reduces the value of the crop. So the farmers throughout India never let the crop sprout the vines above 8 ft.

3.2.7.

Yield

The yield is done after 8 months of planting. This period is very important as the leaves after 8 months of planting will have a high quality. In a month, 3 rounds of harvesting is done. When the first harvest is done in a newly formed land, low yields are produced and subsequently the yield increases in the next rounds of harvesting. The maximum yield is got during the 2
nd th th

to 4 year. The quality of the leaves will also be the maximum. The 5 year will

give a low yield and also poor quality leaves. So farmers unearth these vines and plant new vines. This adds value to the product. As can be seen, the operation is the main stage which adds a greater amount of value is added to the product. The Costs associated with the process or operations of betel cultivation is shown below. Even though the cost factor does not have a role in the value chain, this data is usually used by the farmers to make sure that the value addition happens with low cost.

a) Fixed Costs

Ploughing Leveling Layout Labour cost of planting Cost of Betel leaf plants Shade making Total initial costs

5600 1680 800 1000 312500 166250 487830

b) Variable cost

FYM Fertilizer Irrigation Pesticide Interculturing Pruning/training Labour charges Total variable cost

10400 6525 8125 7480 15240 3315 36540 87625

c) Marketing costs

Transportation charges Commission charges Loading/unloading

215 240 110

Total Marketing costs 3.3. Outbound Logistics:

565

The outbound logistics consists of two divisions- Storage and Distribution 3.3.1. Storage: The Storage that is mostly done by the local farmers is so outdated. They sprinkle water over the leaves and keep it in a basket in a cold place. But the latest technology that is being used by few betel leaf cultivators is called Modified Atmosphere Packaging.MAP involves storing the leaves in modified atmosphere. Modified atmosphere packaging has low levels of oxygen(6-7%) and high level of carbon dioxide(11-13%). The betel leaves are packed in perforated normal propylene film packages. It is stored at 20C for approximately 10 days in 0order to maintain the pigments and phenolic levels. 3.3.2. Distribution of Betel Leaves: The distribution of the betel leaves is one area which requires attention as it is the phase which accounts for 30-50% wastage of the betel leaves. This is mainly due to the delay in logistics and the mode of transportation used. The farmer generally sells the betel leaves in baskets at the local markets. The number of betel leaves per basket varies with the area in which it is being sold. The baskets are auctioned and the price is generally determined in accordance to the supply and demand. The farmer also pays for the dealer commissions associated to the auctioning of the betel leaves. The leaves that are unsold are sold at throw away prices. The distributors in turn sell it to the dealers as per the terms of contract. The dealers are spread across India and the baskets containing betel leaves are transported in trains. The cost associated with transportation of leaves is estimated to be around Rs. 575 / ha The betel leaves are received in bulk by the dealers who in turn distribute it to the various wholesalers. The dealers store the leaves and sell them when there is high demand for betel leaves in their area for maximizing the profits. The wholesalers in turn distribute the betel leaves to the various vendors in the area they operate. The vendors do not purchase leaves in bulk as the leaves get infected if not consumed in time. The wholesalers on their part sell the leaves that are about to get spoilt to the vendors. The condition of the leaves is determined by practice. It is told that when the leaves finally reach the paan vendors, the life of these leaves is reduced to 3-4 days. The betel leaves that get spoilt during the entire process are transported back to the people who extract oil from the betel leaves. The leaves that cannot be used are buried deep under in order to avoid the hazards of pollution. Since the distribution involves a huge chain and since the leaves are distributed throughout India, there is a lot of wastage of leaves during the entire process. Moreover since the diseases

spread from one leaf to the other, care should be taken to ensure that the leaves dont get damaged or infected during the process of distribution. Moreover the betel leaves are very delicate and tend to get spoilt by minimal pressure. By adopting better techniques, there is a huge room for reducing the wastage and henceforth adding value to the betel leaves during the process of distribution. Unimaginable amount of money is wasted during the process. 3.4. Marketing and Sales: There is no specific marketing done for the sales of the betel leaves. The betel leaf is a basic commodity which is used in various areas. The demand for the leaves is always there and the farmers do not do anything to increase their sales by marketing. There will always be people to buy the product, especially the panwallahs. 3.4.1. Sales: The sales of the betel leaves are done to the consumers who use the product for various purposes. Understanding the purpose of the product is very important to increase the value of the product. The uses of betel leaves by the consumers are given below. Medicinal Uses: 1. Betel leaf is traditionally known to be useful for the treatment of various diseases like bad breadth, headache, hysteria, gingivitis, boils, swelling of gums, constipation. 2. The leaf is supposed to have anti fungal, anti protozoan and anti bacterial properties. 3. It is also used as a mild appetizer and a digestive. 4. A compound found in betel leaf is also proven to be anti cancerous according to studies. 5. Chewing of betel leaf gives positive physiological effects like increased alertness, energetic feeling and a sense of well being. 6. The leaves are very nutritive and contain substantial amount of vitamins and minerals. 7. The leaves also contain the enzymes like diastase and catalyse besides a significant amount of all the essential amino acid except lysine, histidine and arginine. 8. The oil kills or inhibits growth of dreadful bacteria causing typhoid, cholera, tuberculosis etc. Betel Nuts: 1. They are used for preparation of no smoke cigarettes 2. In India betel nuts also have a variety of uses during religious and marriage ceremonies, where it takes on fertility symbolisms. Decorative and religious purposes: 1. The betel leaves and areca juices are used ceremonially in Vietnamese weddings. 2. The betel leaf and areca are such important symbols of love and marriage in Taiwan.

3. The betel leaf is considered highly auspicious and hence often exchanged in all social and religious ceremonies in India. 4. Managing waste: As Mentioned earlier there is a lot wastage that occurs during the process of storage and distribution of the betel leaves. The estimated wastage of betel leaves is 50%-70% in India and it amounts to thousands of millions. Moreover betel leaves are considered to be perishable and cannot be stored for a long period of time. The leaves are generally spoilt due to the following 1. Dehydration 2. Fungal infection 3. Dechlorophylation During glut seasons, the farmers try to avoid wastage by not plucking the betel leaves from the betel vine. However the leaves have to plucked after a certain period of time and there is a loss in the amount of production. The farmers in order to avoid wastage end up selling the leaves at throw away prices. The leaves that are spoilt during storage and transportation cannot be consumed in the form of paan (A product in which chewable stuff is wrapped in a betel leaf). These leaves however can be used for the extraction of betel oil which can be used in a variety of products varying from soaps, shampoos to mints. The leaves that are wasted have to be disposed as they are considered as pollutants. The wasted leaves are generally fed to cows or are buried. 5. Value Chain Diagram

6. Conclusion: The major problems in betel leaf cultivation were identified as the following High Initial Cost Lack of Knowledge Poor management Operations Low Input use Controlling Insects, pests and Diseases Underutilized labor, fertilizers and manure Improper storage Techniques Improper Distribution Channel

The crop has tremendous scope for further development and expansion. The amount of betel leaves being consumed is going to increase at a very rapid pace as there are a lot of medicinal values that are being associated to it. However, there is very little research that is being conducted in this

field in spite of the fact that there is tremendous opportunity. Educating the farmer is the need of the hour as this can help him achieve higher rates of production and enhance the quality of production. Till date the farmers have been cultivating the crop out of practice without taking into account the scientific explanations and solutions to the various problems that they encounter during the production. Better cultivation and harvesting methods have to be adopted in order to increase efficiency. As of now most of the operations are carried out manually and machines are not considered as an viable option for processes like irrigation, plucking, packing etc. The Storage techniques and distribution channels have to be made more efficient and better techniques have to be used in order to ensure that the leaves do not get spoilt during the process. Considering the size of the industry, the government has to intervene and help the farmers increase the value associated with the various activities and scientists have to show more interest in order to help the farmers and the sector as a whole to derive more value out of betel leaves.

7. References Weben.wikipedia.org/wiki/Betel www.sja.aup.edu.pk/Data/Study%20on%20betel-AMK-57-03=FINAL.pdf www.tradewindsfruit.com/betel_leaf.htm www.krepublishers.com ContactsMr. Dabbu and Mr. Ashok. (Wholesale dealers in Betel Leaves)