The strong growth in packaged foods and in particular snacks as a category, has been the saving grace in an otherwise slowing FMCG industry. Within that, thanks to rising health awareness and the resulting change in consumption habits, the health foods category, albeit small, is growing rapidly. Whilst millets have emerged as a healthy alternative for staple cereals like rice and wheat, ‘makhanas’ or fox nuts have been a favourite of the health conscious snacker. In this long read in the Mint, Alisha Sachdev talks about the fast-emerging industry of makhanas, its supply chain and challenges thereof.

“The $20-billion snacking category, and the fast-growing $2.5-billion healthy snacks category, which is dominated by products such as protein bars, health drinks, and millet or jowar (alternative cereal-based) snacks, is highly lucrative, thanks to demand from health-conscious millennials growing exponentially. A report by financial advisory firm Avendus puts the size of the ‘health food’ market at a potential $30 billion by 2026, and companies in the snacking space want a slice of the pie.…Apart from DS Group, Better Snack, Tata Consumer’s Sampann, Marico’s Saffola, Rajdhani Besan, and RPG’s Too Yumm brand have ventured into selling packaged makhana. Industry estimates suggest the flavoured makhana category is growing at 30% year-on-year.”

And the demand for makhanas is not just in India but global:

“…despite India’s vast urban population, nearly half of the entire annual production of makhana is exported to countries such as the US, Canada, Australia, the UAE, and the UK.

In the US, just before the pandemic, a brand called Bohana was pitched on Shark Tank, where its Lebanese founder said the brand’s mission was to “bring popped water lily seeds to the world”. Needless to say, the small $3.99 pack ( ₹332) was sourced from Indian fodis.”

But the supply chain still remains cottage industry like and largely restricted to one of India’s least developed states – Bihar:

“The makhana is a product of intense manual labour, demanding precision, endurance, and skill. A hundred thousand mallah families from the Madhubani and Darbhanga districts in Bihar are the only ones engaged in this work, even though the crop is cultivated widely across Asia. Sahni’s family is from the banpar caste of fishermen and boatmen, known as mallah, who migrate to the nine makhana-growing districts each season. The districts, mostly in north Bihar, include Katihar, Purnia, Araria, Sitamarhi and Kishanganj. There, the families pop the gudiya, seeds of the prickly water lily, into makhana, which today has found global appeal as a gluten-free, protein-rich and low-fat snack. Indeed, makhana could emerge as the crown jewel of the $20 billion-plus snacking market (a size estimated by various reports) in India. And Bihar, which accounts for nearly 90% of the world’s makhana production, according to the Agricultural and Processed Food Products Export Development Authority, holds that crown jewel….

…The prickly water lily, the seeds of which are popped into makhanas, has traditionally been a ‘wild crop’ occurring naturally in marshy ponds with stagnating water 4 feet up to 10 feet deep. But now, nearly 70% of the cultivation of the crop is in the ‘field system’, which requires water only 6-12 inches deep. And, the plant can be intercropped with rabi or kharif crops such as wheat, paddy and maize.

The fields are prepared by enriching the soil with lime between December and January, with seeds sown from January to March. The harvest occurs in three phases between July and October. Despite being a staple in Bihar’s culture, makhana cultivation faced limitations until scientific methods introduced by local agricultural colleges began to transform its production.”

But much like elsewhere in agriculture there are attendant problems with growing demand for a crop:

“…the makhana supply chain continues to face significant hurdles as its cultivation and stocking practices are still concentrated in the hands of a few traders.

This concentration creates price fluctuations, disadvantaging farmers and small processors, who cannot benefit from peak market prices. The first challenge is that nearly 90% of the crop’s supply comes from Bihar alone. And within the nine large districts in the state where the crop is cultivated, monopolistic forces hoard the popped seed on a large scale, leading to the price being artificially inflated.

“New players entering the makhana business are facing problems because the crop isn’t part of the Essential Commodities Act or linked to any commodity index, so there is no provision at present to prevent large-scale hoarding. From July to October, large agents with deep pockets create stocks; the moment the pop and seed in the market is depleted, the stock is released at inflated prices,” says Anil Kumar.

…“The fodi is not economically sound, nor is the farmer, to break out of this process. The producers and fodis can’t keep stocks of the popped seeds because they aren’t wealthy, and are forced to sell the stock cheap.”

But change is underway. The article talks about how free market is doing its bit once again with modernisation of both cultivation and processing as snack food makers backward integrate their supply chains to keep as much of the value from the rising demand for this super food.

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