Marketable Surplus and Supply Chain Analysis of Wheat in the Mid Hills of Kangra Valley, Himachal Pradesh, India
Abstract
An attempt has been made in this research to identify the major supply chains in the mid-hills of Kangra valley involved in the wheat business and the different functionaries transferring the produce from producer to consumer, along with their marketing costs, margin, price spread, efficiency, and the producer’sshare in the consumer’srupee. The supply chains were identified on the basis of form, place, time, and possession utility. Three marketing channels were found. Channel II (producer → primary wholesaler → secondary wholesaler → retailer → consumer) was the most preferred, with 56.86 percent of the total wheat traded through it. Price spread was highest in Channel III (producer → local trader/commission agent → flour miller → retailer → consumer) due to the highest marketing margin (19.84%). The producer’sshare was highest in Channel I (97.73%) where cultivators sold directly to consumers, and lowest in Channel III (62.88%). Marketing efficiency was highest in Channel I (42.99%) as reduced intermediation lowered costs. The study concludes that a larger number of intermediaries increases marketing cost and margin, reduces the producer’sshare, and makes the channel less efficient.
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Introduction
Wheat is the most important food crop in H.P. and is primarily cultivated during the rabi season across most of the state. The state has seen a reduction in the total area under wheat cultivation. In early 2024, the sowing area was reported to have dipped by 7,500 hectares in the northern zone, which includes Kangra, Una, Mandi, Hamirpur, and Chamba districts. In Kangra valley, a large portion of the agricultural land (around 80%) is rain-fed, making it highly vulnerable to rainfall deficits. A prolonged dry spell during December and January 2024 significantly impacted the crop, with the agriculture department estimating a potential 5-7% dip in wheat output.
The importance of a marketable surplus lies in providing farmers with income, while efficient supply chain management ensures this surplus reaches the market effectively, securing better prices and reducing losses. Together, they are crucial for farmer profitability and preventing distress sales, especially given challenges like lack of irrigation and market infrastructure. With this background, this research identifies the major supply chains and actors involved in transferring wheat from production to consumers in Kangra valley, along with an analysis of marketing cost, margin, price spread, efficiency, and the producer’sshare.
Conclusion
The study on the marketable surplus and supply chain of wheat in the mid-hills of Himachal Pradesh yields key conclusions. First, the marketable surplus was high at 78.73% of production. Second, three main marketing channels were identified. Channel II (Producer → Primary Wholesaler → Secondary Wholesaler → Retailer → Consumer) was the most predominant, handling 56.86% of the wheat. Third, the producer’sshare in the consumer’srupee was highest in Channel I (97.73%) and lowest in Channel III (62.88%). Fourth, marketing efficiency was highest in Channel I (42.99) and lowest in Channel III (2.25), with price spread directly correlating with the number of intermediaries.
All findings indicate that extended, multi-layered supply chains involving several functionaries reduce the farmer’sshare in the consumer’srupee. The presence of excessive middlemen increases marketing costs and lowers producer margins. To ensure fair prices and improve efficiency, it is essential to reduce unnecessary intermediaries. This can be achieved by promoting direct sales through local farmers' markets, strengthening Farmer Producer Organizations (FPOs) for collective bargaining and aggregation, and leveraging digital platforms to connect growers directly with consumers and bulk buyers. CONFLICT OF INTEREST The authors declare no conflict of interest.
