An Economic analysis of Value Chain and Marketing Efficiency of Tomato in Davanagere District of Karnataka, India

Abstract

This study examined value addition and marketing efficiency in the tomato value chain in Davanagere district, Karnataka, using primary data from 60 farmers and 15 market intermediaries. A multistage sampling procedure was used, and three marketing channels were identified: Channel I (Producer → Commission Agent → Wholesaler → Retailer → Consumer), Channel II (Producer → Retailer → Consumer), and Channel III (Producer → Reliance Retail Limited → Collection Centre → Supermarket → Consumer). Marketing costs, gross value addition, price spread, producer’s share in the consumer’s rupee, and Acharya’s marketing efficiency index were estimated for comparison. Channel III provided the highest net price to farmers (₹2702.50/qtl), total gross value addition (₹3495.00/qtl), producer’s share in the consumer’s rupee (65.91%), and marketing efficiency (1.93). Channel II recorded the lowest price spread (₹1117.50/qtl) and a marketing efficiency of 1.23, while Channel I recorded the lowest marketing efficiency (0.52) and producer’s share (33.90%). The results indicate that channels with fewer intermediaries or organised retail linkages were associated with higher producer returns and improved marketing efficiency. However, the continued use of the traditional channel reflects farmers’ dependence on commission agents for credit, advance payments, market support, and the sale of ungraded produce. Strengthening direct market linkages, organised procurement, grading, storage, cold-chain facilities, transportation, and institutional credit may improve value-chain performance and farmers’ market outcomes.