Ashutosh Singh MBA, Ph.D. College of Agribusiness Management GBPUA&T, Pantnagar-263415 India email:...

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Ashutosh Singh MBA, Ph.D.College of Agribusiness Management

GBPUA&T, Pantnagar-263415 Indiaemail: [email protected]

Welcome to the Experience Sharing Session on Delisting F&Vs from APMCs: Uttarakhand Perspective

College of Agribusiness Management 05/09/2014

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INDIA …….. 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.


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GROUND REALITY- A CONTRAST

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.


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WHAT A FARMER THINKS ?

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


AGRICULTURAL MARKETS IN INDIA

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 Markets Area Served Average area Served by a Market 115 sq. km Av. Area Served by a Regulated

Market 454 sq. km

Area served per Regulated Market Varies 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

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As on 31.3.2011 CSO, Govt. of India


STATE WISE PROGRESS OF AMENDMENTS IN APMC ACT

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UTTARAKHAND: SNAP SHOTS

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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


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APMC SET UP IN UTTARAKHAND

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


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APMC JOURNEY SO FAR….

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


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HAS 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


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FOCAL POINTS FOR TODAY…

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 ?


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F&V SUPPLY CHAIN CONSTRAINTS

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


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Pictures speak better than words……………


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TRANSPORTATION OF FRUITS AND VEGETABLES


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F&V SUPPLY CHAIN: INDIA V/S DEVELOPED COUNTRIES

India

Developed countries

High investments – Low wastage - better

margins

High wastage and low margins

Commission agent

ConsolidatorTrader

Wholesaler/Retailers

Consumer

ConsumerRetailerWholesaler

Farmer

Farmer


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F&V PRODUCTION SCENARIO IN UTTARAKHAND

YearFruits Vegetable

Area

(000’ha)

Production

(000’MT)

Productivity(MT/ha)

Area

(000’ha)

Production

(000’MT)

Productivity (MT/ha)

2008-09 171.71 725.27 4.22 81.82 1077.55 13.16

2009-10 193.80 723.60 3.73 82.60 997.20 12.07

2010-11 197.62 752.56 3.80 86.87 1023.45 11.78

2011-12 200.73 802.12 4.00 89.29 1066.71 12.00

2012-13 200.85 805.67 4.01 88.03 1059.57 12.03

Source: NHB, 2012


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FRUIT PRODUCTION SCENARIO IN UTTARAKHAND (000'MT)

Fruits 2009-10 2010-11 % growth

over previous

year

20011-12 % growth

over previous

year

Mango 120.8 135.3 12.00 147.79 9.23

Citrus 126.6 134.5 6.2 138.45 2.93

Apple 114.0 135.9 19.21 122.65 -9.74

Pear 102.78 105.45 2.59 108.10 2.51

Peach 47.34 48.56 2.57 49.68 2.30

Plum 40.01 40.56 1.37 41.22 1.62

Khumani 30.67 31.34 2.18 32.26 2.93

Wallnut 20.56 21.19 3.06 21.82 2.97

Litchi 15.7 18.7 19.10 19.01 1.65

Source: Directorate of Horticulture, Uttarakhand 2012-13


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VEGETABLE PRODUCTION SCENARIO IN UTTARAKHAND (000'MT)

Vegetable2009-10 2010-11 Growth over

previous year

(%)

2011-12 Growth over

previous year

(%)

Tomato 95.60 97.1 1.56 102.39 5.44

Pea 71.0 86.9 22.39 78.05 -10.18

Cabbage 68.1 70.5 3.52 72.70 3.12

Reddish 55.34 56.45 2.00 57.96 2.51

Frenchbean 38.45 39.54 2.83 40.05 2.56

Onion 40.50 38.0 -6.17 39.27 3.34

Cauliflower 34.6 34.0 -1.73 36.67 7.85

Okra 24.6 27.1 10.16 27.90 2.95

Brinjal 24.6 25.9 5.28 27.04 4.40

Source: Directorate of Horticulture, Uttarakhand 2012-13


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POST HARVEST LOSSES IN FRUITS AND VEGETABLES

Activity Losses (in kg.) per quintal

Malta Tomato Pea

S and M Large S and M Large S and M Large

Physical losses at the level of farmers

Harvesting 2.23 1.12 5.12 3.23 3.46 2.87

Sorting and Grading

0.14 0.06 0.21 0.19 0.19 0.11

Packaging 0.24 0.12 0.84 0.78 0.35 0.24

Loading 0.19 0.08 0.59 0.56 0.45 0.43

Transportation 12.78 7.78 19.58 15.87 9.78 6.43

Unloading 0.98 0.78 1.28 1.87 1.09 0.89

Weighing and losses at wholesale level

0.67 0.09 1.34 0.98 0.91 0.78

Total loss 17.23 10.12 28.96 23.48 16.23 11.75


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Experiences in the Other States ……


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PUNE EXPERIENCE

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

http://indianexpress.com/article/cities/pune/direct-marketing-by-farmers-not-yielding-desired-fruits/


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APNI MANDIS

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)


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RYTHU 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


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SAMRIDDHII: 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)


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INTERVENTIONS: 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


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CASE OF APPLE GROWERS OF HIMACHAL PRADESH

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.


ANALYSIS OF MARKETING CHANNELS

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MARKETING COST AND NET RETURN UNDER DIFFERENT MARKETING CHANNELS IN GROUP 1

N=58


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MARKETING COST AND NET RETURN UNDER DIFFERENT MARKETING CHANNELS IN GROUP 2


GROWER’S SHARE IN CONSUMER’S RUPEE AND PRICE SPREAD

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TRADITIONAL CHANNEL

CORPORATE CHANNEL


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UTTARAKHAND’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


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APPLE SERVICE 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


BUSINESS 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

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REACTIONS ON THE MOVE ………..

“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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DIGITAL SCREEN AT MANDI GATE


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WHOLESALERS ARE UPLOADING FRUITS AND VEGETABLES AT MANDI


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TRADER’S PLATFORM


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

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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

CONSUMERS45

Loss of RevenueRole in Private Yards


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ROAD MAP FOR FUTURE ….

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 farmersRestricting Marketing Cartels Linking small farmers to the

modern food retail chains Promoting multi mutually

independent playersFarmer’s training in pre and post

harvest management practices Economical packaging technology

for F&V Integrated cold chain & logistics

infrastructureMIS Support at Village Panchayat

level Enabling regulations

Strategies

http://indianexpress.com/article/cities/pune/protests-likely-against-delisting-of-onion-and-potato-from-apmcs/


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THANKS!

Ashutosh Singh MBA, Ph.D. College of Agribusiness Management GBPUA&T, Pantnagar-263415 India email:...

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