SCM ASSIGNMENT

7/31/2011 IIFM BHOPAL

LEMONGRASS SUPPLY CHAIN MANAGEMENT

Shobhana Singh
ID no 1084

Supply chain of Lemon grass ( Cymbopogan spp.)

Introduction:Lemongrass is mostly used as a herb. It has a subtle citrus flavor and can be dried and powdered, or used fresh. It is mostly used in teas, soups and curries. Its oil is used as a preservative and a pesticide. The lemongrass oil has anti-fungal properties. The species are used for the production of citronella oil. The principal chemical constituents of citronella, geraniol and citronellol are antiseptics . It is mostly found in South India. The farmers growing this NTFP are poor and face many constraints in attempting to increase their farm income, such as poor infrastructure, unscrupulous middlemen and the absence of reliable market for their crops. Traditionally, the rural poor, especially women, collect and dry the wild medicinal plants and transport these raw materials to the market. There is a growing demand for high quality, certified, and/or organic herbal products and this has created an unsustainable harvesting of medicinal and aromatic plants. Supply chain: In the traditional supply chain of lemongrass which is mostly followed by many villagebased marginal farmers and homestead growers, the primary and secondary markets are mostly dominated by middlemen who causes inflated prices due to lack of competition in the medicinal plant value chain. The plant is usually gathered by collectors from wild sources or the farmers growing it. The value chain used is very long, with as many as six marketing stages (where value addition occurs) involving primary producers, local contractors, regional wholesalers, divisional wholesalers, processors and retailers. Such a long chain contributes to the low prices that primary producers receive for their products.

Forest

Collectors Traders Exporters Regional wholesaler Divisional wholesalers

Herbal
garden

Cultivators

Processors

Manufactures

Traditional Medical Practitioners

Retailers

Consumers

In the above supply chain the wholesalers and manufacturers do not have strong linkages with the primary producers and the flow of market information is non-prevalent between them. Primary producers i.e . Farmers or growers, though, are the principal actors in the value chain but play a minimal role and enjoy the smallest margin of profit. Lacking market intelligence and virtually unaware of the product demand and the identity of the potential buyers, these producers are enchained by the local collecting agents and therefore do not possess the enough bargaining power to realize a maximum or fair value for their products. IMPROVEMENT IN THE SUPPLY CHAIN Integration of an NGO or any agricultural technology in the supply chain can provide the support in production and ensure the producers fair market prices. This will help in making them all the information available and also strengthening their bargaining power.
Training /technology

Forest Collectors/ Cultivators Herbal Garden

Bulk R.M

Development promoter (NGO or other)

Assured quality and Ensured supply

R.M= raw material F.P= Finished product

F.P

Manufactures
F.P

Exporters

Traditional medical practitioners

Retailers

Consumers

Assured market------assured quality material Assured rate----------assured supply Here the development promoter helps the farmer in providing the training and input materials for the processing of the lemon grass. This supply chain ensures a fairer price for both the producers and the processors as the price benefit derived by the elimination of the middlemen could be shared between them. This creates a win win situation both for the producers and processors in terms of price, quality, supply and continuous improvement.