Profitability and Value Addition in Wheat Supply Chain in Kangra Valley of Himachal Pradesh, India

DOI: 10.22161/ijeab.106.15

Abstract:
Wheat is a critically important crop in the Kangra district, serving as a primary source of food security and livelihood for a large portion of the population. The need to analyze its processing costs, returns, and value addition stems from the necessity to improve farmer incomes and make the local agricultural economy more resilient. Thus, an attempt has been made in this research script toanalyse the costs and return from processing of wheat and degree of value addition at each stage of the supply chain in wheat in mid hills of Himachal Pradesh. The results revealed that processing of wheat in the study area incurred both variable and fixed costs, which influenced the overall cost structure. Study indicated that raw material (grain), energy expenses, labour and packaging costs, staff salary were the important components of variable costs which accounted to Rs. 2,619,95 per quintal while, interest on term loans and depreciation were the constituents of variable costs which amounted to Rs. 135.68 per quintal. As a result, the total processing cost was Rs. 2,755.63 per quintal. The returns from processing in the study area showed processing add value to the final product. The processing unit was functioned at a utilization capacity of 0.96, which means the unit is operated at 96 per cent of its capacity. The gross return was Rs. 3400 per quintal. After deducting processing and marketing costs from gross return, the net revenue was Rs. 494.37 per quintal. The degree of value addition in wheat differs across the different supply chains. According to the results, at processor’s stage, the degree of value addition in channel III was highest which was worked out to be 23.79 per cent and lowest at trader’s level which was found to be 4.9 per cent. Consequently, the highest degree of value addition was exhibited in the processing channel i.e. channel III. In channel II, the intermediaries added 5.50 per cent value at retailer level to 7.28 per cent value at secondary wholesaler level whereas in channel III, it varied from 4.90 per cent at traders stage to 23.79 per cent at flour millers stage before reaching to retailer and then to ultimate consumers. This suggested that longer marketing chain involving traders and processors exhibited higher degree of value addition in wheat in the study area. Therefore, farmers can and should be encouraged to directly link with processors or flour mills so that they can take part in value added activities that can augment their returns and revenues by effectively capturing value along the chain.

Keywords:
costs and returns, mapping, wheat, value chain, value addition, Kangra Valley.

Article Info:
Received: 13 Nov 2025; Received in revised form: 13 Dec 2025; Accepted: 18 Dec 2025; Available online: 28 Dec 2025

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