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Ashutosh Singh MBA, Ph.D. College of Agribusiness Management GBPUA&T, Pantnagar-263415 India 1 Welcome to the Experience.

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Presentation on theme: "Ashutosh Singh MBA, Ph.D. College of Agribusiness Management GBPUA&T, Pantnagar-263415 India 1 Welcome to the Experience."— Presentation transcript:

1 Ashutosh Singh MBA, Ph.D. College of Agribusiness Management GBPUA&T, Pantnagar-263415 India email: drashutoshcabm@gmail.com 1 Welcome to the Experience Sharing Session on Delisting F&Vs from APMCs: Uttarakhand Perspective

2 College of Agribusiness Management05/09/2014 I NDIA …….. A LAND OF OPPORTUNITIES 52% cultivable land as against 11% world wide Unsurpassed Natural Advantages All the 15 major climates of the world 46 out of the 60 soil types 17% animal, 12% plant and 10% fish genetic resource of the world Second largest producer of fruits and vegetables Aims to double its horticulture production to 350 million tonnes by 2015 Horticulture contributes nearly 28 per cent of GDP and 54 per cent of export share in Agriculture from the cultivated area share of 8.5% only Tremendous scope of increasing production and exports in Horticulture The marketing of F&V in India is changing drastically Change from the traditional markets to modern formats Entry of Reliance Fresh, Choupal Fresh, Namdhari’s Fresh, Premium Farm Fresh etc. 2

3 College of Agribusiness Management05/09/2014 G ROUND R EALITY - A C ONTRAST  The largest grower of fruits – 15% of world output  Low share of global Exports at 0.5%  The second largest grower of vegetables – 11 % of world output  Low share of global exports at 1.7%  High Cost of Production fruits, vegetables & flowers  Low farmer income  Cold storage facility available for only 10% of produce  Farmer sells immediately due to perishability & absence of proper infrastructure to keep it for longer period  Post Harvest wastage of fruits & vegetables – 18 to 30% valued at over Rs 45,000 crores  Losses as above in India is more than consumption of same in UK  Farm gate price 25% of domestic consumer retail price against 50% in developed countries. 3

4 College of Agribusiness Management05/09/2014 W HAT A F ARMER T HINKS ?  Agrees that a lot is being done for ‘Reviving Agriculture’  But of what use if he can not be facilitated to sell his produce? Wish to have ………  A Remunerative Price for his blood and sweat  Decide over his Buyers  At a Place and Time Convenient to him  Escape the fleecing of multiple intermediaries 4

5 College of Agribusiness Management05/09/2014 A GRICULTURAL M ARKETS IN I NDIA  No. of Regulated Markets – 7246  No. of Principal Market Yards- 2433  No. of Sub Market Yards - 4813  No. of Rural Primary Markets - 21238  No. of Wholesale Markets - 6,539 Availability of MarketsArea Served  Average area Served by a Market115 sq. km  Av. Area Served by a Regulated Market 454 sq. km  Area served per Regulated MarketVaries from 103 sq km in Punjab to 11,215 sq km in Meghalaya  Recommendations by National Farmers Commission - Availability of Markets within 5 km radius Average approx. 80 Km 5 As on 31.3.2011 CSO, Govt. of India

6 College of Agribusiness Management05/09/2014 S TATE WISE P ROGRESS OF A MENDMENTS IN APMC ACT 6

7 College of Agribusiness Management05/09/2014 U TTARAKHAND : S NAP SHOTS 7  Geographical Area- 53484 Sq. Km.  Population- 1.01 Crore  Decadal Growth Rate – 19.17 %  Density of Population- 189/Sq. Km.  Urban to Total Population- 30.49 %  Sex Ratio (Females/ 1000 Males)- 963 against 940  Literacy Rate- 79.60 against 74% NA  Per Capita Income-Rs. 90843 (FY 2012-13) against Rs. 74920 NA  4.6 million ha (86%) is hilly area and 0.74 million ha (14%) is plain area.  Only about 14 percent of the geographical area is cultivable  Agriculture contributes 23.4% in State Domestic Product  The average size of land holding in the state is 0.95 ha against NA of 1.57 ha. Statistics

8 College of Agribusiness Management05/09/2014 APMC SET UP IN U TTARAKHAND 8  25 PMYs, 31 SMYs, 27 WMs  Revenue generated 61.31 Cr in 11-12 and 90.32 Cr. in 12-13  3 WSM under Mini Mission-III at Dehradun, Haldwani, Haridwar  Established Uttarakhand Horticulture Marketing Board  FCI has 02 Lakh MT storage capacity in the state with utilization level of 82%  Total 15 cold storages (1 in Co- operative, 2 in Public and 12 in Private sector)  One CA storage of 1000 MT for Apples in Naugaon, Uttarkashi

9 College of Agribusiness Management05/09/2014 APMC J OURNEY S O F AR ….  To ensure selling of agricultural produce only in the government regulated markets  APMC Act has helped mainly the medium and small farmers to access orderly market places  Farmers have to transport their produce over long distances  Most of these markets have limited facilities — only 9 per cent offer cold storage, and only 33 percent have grading facilities.  Private Sector is willing to invest in agriculture sector but regulations such as the APMC Act pose a major hurdle  As a consequence, private investment in agriculture and allied sectors has remained negligible  Many of the APMCs don’t have adequate infrastructure to support efficient trading 9

10 College of Agribusiness Management05/09/2014 H AS THE APMC BEEN ABLE TO SERVE THE PURPOSE ?  Limited interest have been served of small farmers  In many states, the regulated markets are non-functional.  Out of 35 states and UTs only 17 has amended it by November 2012.  The catchment area of regulated markets also varies drastically ranging between the plain, hilly and NE states  Impose substantial taxes on buyers over and above the commissions and fees  Only registered traders/commission agents can transact in the markets  Without amending APMC Act, the entry of private players is restricted, No Contract farming, No Farmer-Consumer Market 10

11 College of Agribusiness Management05/09/2014 F OCAL P OINTS FOR T ODAY …  Will it enable farmers to sell directly to consumers/buyers and avoid traders/commission agents?  Does the farmer sell at the APMC market even today?  Will the buyers get F&V at a cheaper price?  Revenue generated by Mandi Board?  Is there any threat from corporate buyers to procure directly from the farmers?  How will they reach farmers immediately?  What happened in Bihar and Andhra Pradesh ? 11

12 College of Agribusiness Management05/09/2014 F&V S UPPLY C HAIN C ONSTRAINTS Predominantly marginal or small farmers – Hence small marketable surpluses and limited bargaining power Poor availability of markets & monopolistic tendencies of APMCs Inadequate infrastructure in wholesale markets/ rural primary markets Lack of fair price discovery mechanism Multiple and exploitative intermediaries – low returns Fragmented supply chain, poor cold chain & high post-harvest losses Lack of cleaning, grading, standardization, packaging & quality certification facilities Limited access to market information and marketing opportunities available Leading into:  Low Exportable Produce  Farmers getting very less share in consumers’ rupee 12

13 College of Agribusiness Management05/09/2014 Pictures speak better than words…………… 13

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18 College of Agribusiness Management05/09/2014 T RANSPORTATION OF FRUITS AND VEGETABLES 18

19 College of Agribusiness Management05/09/2014 F&V SUPPLY CHAIN : I NDIA V / S D EVELOPED COUNTRIES India Developed countries High investments – Low wastage - better margins High wastage and low margins Commission agent Consolidator Trader Wholesaler/Retailers Consumer Retailer Wholesaler Farmer 19

20 College of Agribusiness Management05/09/2014 F&V PRODUCTION SCENARIO IN U TTARAKHAND Year FruitsVegetable Area (000’ha) Production (000’MT) Productivity (MT/ha) Area (000’ha) Production (000’MT) Productivity (MT/ha) 2008-09171.71725.274.2281.821077.5513.16 2009-10193.80723.603.7382.60997.2012.07 2010-11197.62752.563.8086.871023.4511.78 2011-12200.73802.124.0089.291066.7112.00 2012-13200.85805.674.0188.031059.5712.03 Source: NHB, 2012 20

21 College of Agribusiness Management05/09/2014 F RUIT PRODUCTION SCENARIO IN U TTARAKHAND (000'MT) Fruits2009-102010-11 % growth over previous year 20011-12 % growth over previous year Mango120.8135.312.00147.799.23 Citrus126.6134.56.2138.452.93 Apple114.0135.919.21122.65-9.74 Pear102.78105.452.59108.102.51 Peach47.3448.562.5749.682.30 Plum40.0140.561.3741.221.62 Khumani30.6731.342.1832.262.93 Wallnut20.5621.193.0621.822.97 Litchi15.718.719.1019.011.65 Source: Directorate of Horticulture, Uttarakhand 2012-13 21

22 College of Agribusiness Management05/09/2014 V EGETABLE PRODUCTION SCENARIO IN U TTARAKHAND (000'MT) Vegetable 2009-102010-11 Growth over previous year (%) 2011-12 Growth over previous year (%) Tomato95.6097.11.56102.395.44 Pea71.086.922.3978.05-10.18 Cabbage68.170.53.5272.703.12 Reddish55.3456.452.0057.962.51 Frenchbean38.4539.542.8340.052.56 Onion40.5038.0-6.1739.273.34 Cauliflower34.634.0-1.7336.677.85 Okra24.627.110.1627.902.95 Brinjal24.625.95.2827.044.40 Source: Directorate of Horticulture, Uttarakhand 2012-13 22

23 College of Agribusiness Management05/09/2014 P OST HARVEST LOSSES IN FRUITS AND VEGETABLES ActivityLosses (in kg.) per quintal MaltaTomatoPea S and MLargeS and MLargeS and MLarge Physical losses at the level of farmers Harvesting2.231.125.123.233.462.87 Sorting and Grading 0.140.060.210.19 0.11 Packaging0.240.120.840.780.350.24 Loading0.190.080.590.560.450.43 Transportation12.787.7819.5815.879.786.43 Unloading0.980.781.281.871.090.89 Weighing and losses at wholesale level 0.670.091.340.980.910.78 Total loss17.2310.1228.9623.4816.2311.75 23

24 College of Agribusiness Management05/09/2014 Experiences in the Other States …… 24

25 College of Agribusiness Management05/09/2014 P UNE E XPERIENCE  National Initiative for Vegetables in Urban Clusters  Maharashtra State Agricultural Marketing Board (MSAMB) was to help the farmers’ groups market their products directly in Pune, Mumbai and Nagpur.  MSAMB’s role was to help groups identify potential markets and provide subsidies in setting up kiosks, refrigerated vans and logistic support  68 farmers’ groups are directly selling their products at 226 locations in Pune and Pimpri-Chinchwad  Lack of proper marketing and awareness is making it difficult 25

26 College of Agribusiness Management05/09/2014 A PNI M ANDIS  After studying the concept of “Saturday Market” prevalent in U.K and U.S.A, the Punjab Mandi Board decided to organize “Apni Mandis” 1987 at S.A.S Nagar, Mohali (Punjab)  The number of farmers participated - 10,278 (1988) which has been increased to 4,14,610 (2012).  Sale of produce - Rs. 2,96,24,761/- (1988) which has been increased to Rs. 82,13,49,474/- (2012) 26

27 College of Agribusiness Management05/09/2014 R YTHU BAZAAR  Rythu bazaar is run by Government of Andhra Pradesh for small farmers with small landholdings.  No market fees is collected from the Farmers of Rythu Bazars.  All facilities are provided to Farmers with free of cost  Rents are being collected from Self-Help Groups & Govt. Agencies only 27

28 College of Agribusiness Management05/09/2014 S AMRIDDHII : MBA SABZIWALLAS STRIKE GREEN GOLD  Samriddhii (Jan,2008) is capable of creating livelihood opportunities to ensure economic empowerment of hitherto marginal farmers.  Touched the lives of more than 7,000 farmer families and 500 vendors.  Samriddhii Rs. 7,50,000 (2008-09) - Rs. 2.60 crore (2011-12) 28

29 College of Agribusiness Management05/09/2014 I NTERVENTIONS : AC CARTS  Keeps vegetables fresh for longer period  Maintain the temperature of 5 to 15 degree Celsius depending on the surrounding temperature  Light weight ( only 70 Kg)  Carry more weights ( can carry upto 200 kg vegetables)  Better display of vegetables ( 10 different compartment)  Easy to pull & push  Space for advertisement – helps vendors in earning more income per month 29

30 College of Agribusiness Management05/09/2014 C ASE OF A PPLE G ROWERS OF H IMACHAL P RADESH To assess the awareness and perception level of apple growers towards amended APMC Act To analyze the impact of amended APMC Act on production practices, post harvest management practices and marketing practices of producers and To evaluate the efficiency of traditional and modern supply chain. 30

31 College of Agribusiness Management05/09/2014 A NALYSIS OF M ARKETING C HANNELS 31

32 College of Agribusiness Management05/09/2014 M ARKETING C OST AND N ET R ETURN UNDER D IFFERENT M ARKETING C HANNELS IN G ROUP 1 32 N=58

33 College of Agribusiness Management05/09/2014 M ARKETING C OST AND N ET R ETURN UNDER D IFFERENT M ARKETING C HANNELS IN G ROUP 2 33

34 College of Agribusiness Management05/09/2014 G ROWER ’ S S HARE IN C ONSUMER ’ S R UPEE AND P RICE S PREAD 34 TRADITIONAL C HANNEL C ORPORATE C HANNEL

35 College of Agribusiness Management05/09/2014 U TTARAKHAND ’ S INITIATIVE  Opening 50 Apnu Bazar  One is operating at Nanurkhera  Three more are planned at Danda Lakore, Maziri Grant and Garuda  Shed, Godown and Electronic Weighing  No other retail outlet within the 100 meters  No Marketing Fee as against 2% Marketing fee and.5% Development cess charged in APMCs  Delisting of 93 agriculture produces (fruits and vegetables)  Mandis at least in seven places in hilly areas  Loss of Rs 8-9 crores on the revenue generated 35

36 College of Agribusiness Management05/09/2014 A PPLE S ERVICE PROJECT OF UTTARKASHI Pilot basis in April 2007 in Syuri-Nogoan and Dhari-Kafnol village of Uttarkashi Consortium partners Fresh Food Technology (FFT), Agriculture & Organic Farming Group (AOFG) and Shri Jagdamba Samiti (SJS) under the financial assistance of SHGW (A Private Dutch foundation) Initially 880 apple growers were covered under social business model Eliminate well organized intermediaries who controlled the entire process from credit supply for farm inputs, transportation to the marketing of the produce Engaged small and marginal farmers in the apple value addition business chain Four collection centers and five grading centres (2 in Naugaon, 1 in Purola, 1 in Chakrata) Farmer organizations become equal business partners with the private sector parties and a social investor Resulted in creating more employment, income, technical skill and local capacity for the apple growing farmers Apple from Harsil, Taknor, Tyuni, Parola and Naugaon is now being sold in cities like Delhi, Varanasi, Kanpur and Lucknow 36

37 College of Agribusiness Management05/09/2014 B USINESS PREPOSITION During the apple season of 2011-12 880 participating farmers got prices of Rs 40 to Rs 55 per kg from the collection point companies. A total of 430 MT of apples were procured and these apples were sold to the storage company at the rate of Rs 55 to Rs 65 per kg. FFT Himalayan Fresh Fruit sold these apples between February and April 2012 in the markets of Varanasi, Delhi, Dehradun and Jaipur at the rate of Rs 75 to Rs 85 per kg. A net profit of Rs 7 lakh (Rs 1.80 per kg) was earned in this regard by the company. The collection centres also earned a net profit of Rs 5 lakh (Rs 1 per kg) Out of Rs 1, the collection point joint venture distributed a premium of Rs 0.25 per kg in cash on August 15, 2012, with a shareholding of Rs 0.25 per kg. The remaining Rs 0.50 went to the collection point company for capitalization Out of the total profit of Rs 7 lakh earned by the FFT Himalayan, a premium of Rs 0.50 per kg was given to the farmers. Besides, a shareholding of Rs 1 per kg was given to the 880 participating farmers. The farmers got Rs 2 per kg as added price as additional payment for their apples, besides other benefits like immediate cash payments, training support, saving of time and risk in selling apples to the middlemen 37

38 College of Agribusiness Management05/09/2014 R EACTIONS ON THE MOVE ……….. 38 “APMC is needed for all classes of farmers. While arhatiyas provide finance and assurance of a fair price for agriculture produce, they also provide funds to farmers in dire need. Small farmers cannot afford to hire a vehicle and bring their produce for direct selling; arhatiyas bring these to APMC.” Sanjay Bhujbal, Arhatiya for vegetables at the Vashi APMC in Navi Mumbai “ An APMC yard is an important place for small vendors to sell their produce. However, the Act must allow free flow of goods across the country. The farmer must have the right to decide the buyer of his produce. The APMC yard must be made modern, with excellent handing facility, ripening and cold chambers” K Radhakrishnan, Director, Freskins Retail Chain “Waiving of market fee and cess will put an additional burden of Rs 7.25 crore on the state exchequer. We expect the prices of vegetables and fruit to fall by 10 per cent. The government is yet to implement the Act in its spirit, which seeks to promote contract farming, bring reforms in agriculture, provides for better regulation of marketing agricultural produce and establish a more efficient marketing system.” Harak Singh Rawat, Agriculture Minister, Govt of Uttarakhand

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40 College of Agribusiness Management05/09/2014 D IGITAL SCREEN AT MANDI GATE 40

41 College of Agribusiness Management05/09/2014 W HOLESALERS ARE UPLOADING FRUITS AND VEGETABLES AT MANDI 41

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43 College of Agribusiness Management05/09/2014 T RADER ’ S P LATFORM 43

44 College of Agribusiness Management05/09/2014 FARMERS Access of Farmers to Consumers Facility for Loans and Advances Time Consumed in Transaction Grading and Sorting Packaging Cost Fluctuating Demand due to Seasonality Rejection Rate Transportation Cost Fair Price Realization Price Awareness before Sale Squeezed Commission INTERMEDIARIES EXPECTED IMPACT OF DELISTING OF F&V 44

45 College of Agribusiness Management05/09/2014 Loss of Revenue Lack of Consistent Supply Lack of Post Harvest Handling Infrastructure Availability of Quality Raw Material Consistent Supply Just in Time Logistic Issues Private Cartels Availability of E&V at Cheaper Price Point of Purchase Economy in Procurement MARKETING BOARD PRIVATE PLAYERS CONSUMERS 45 Loss of Revenue Role in Private Yards

46 College of Agribusiness Management05/09/2014 R OAD M AP FOR F UTURE ….  Ensuring Direct Contact between Farmer and Consumer  Limiting the role of Intermediaries  Avoiding Distress sale  Continuous Supply to Processors  Market Intelligence  Contract Farming Challenges  Developing linkages with farmers  Restricting Marketing Cartels  Linking small farmers to the modern food retail chains  Promoting multi mutually independent players  Farmer’s training in pre and post harvest management practices  Economical packaging technology for F&V  Integrated cold chain & logistics infrastructure  MIS Support at Village Panchayat level  Enabling regulations Strategies 46

47 College of Agribusiness Management05/09/2014 THANKS! 47


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