Farmer Price RealizationJaved Akhtar KhanAnans S. Thokal

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Current Scenario in F & V Market• 10% of total Indian agriculture

• 81.285 million metric tones of fruits and 162.19 million metric

tones of vegetables produce in 2012-13

• 2nd rank in world production

• 1% share in world market

• Dominated by intermediaries in supply chain

• Poor infrastructure, poor linkages in supply chain, lack of price

transparency

• Poor resultant price realization by producers

• High prices for consumers with lesser value

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Stats at Indian Market

Price/kg of:- Tomato Potato Cabbage Cauliflower Bnana

Price paid by consumer(INR)

8.2 12 9 9.5 12

Price received by farmer(INR)

2 6.6 5 5.5 4

Markup % 310 82 80 73 200

Price Realization % 24.5 55 55 58 33.5

Yet Risk taken by farmers is highest!!!

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Field Study on

• Price received by farmers and consumers

• Wastage at various stages

• Role of each intermediary and risk vs realization

• Operations at agricultural market yards

• Quality, hygiene, and shelf life of produce

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Price

• Lack of price transparency

• Compulsion on selling due to poor logistics

• Smaller harvest lots, higher carrying costs

• Pilferages in SC (stealing money)

• Mix of size, shape, quality undifferentiated

• 1 farmer fooled and trapped by so many factors

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Wastages

• Poor infrastructure, poor logistics

• 24% for potato to 40% for tomato across SC

• Poor multiple handling

• Improper bagging; no crating

• Lack of temperature controlled vehicles; storage facilities

Tomato Potato Cabbage Cauliflower Banana

Wastage % 40 24 36 24 306

Risk vs RealizationRisk Taken Cycle Time Margin

Farmer 4 ~3 months~11 months banana

55% cabbage;33.5% banana;24.5% tomato.

Consolidator 1 ~2 days 5%-10%

Market Wholesaler 3 ~2 days ~7% cabbage; ~28% banana

Semi-wholesaler 2 ~2 days ~2% cabbage; ~14% banana

Retailer 2 ~4 days ~10.5% cabbage;~55% banana

Considerably lesser margin as compared to the risk taken by producers

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Quality

• Congested market

• Lack storage capacity for daily arrival volume

• Unsanitary conditions

• Accumulated wastage and poor drainage etc.

• Lack of preservation under cold storage

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Operations at Market Yard

• Set of regulatory agents

• Unionized labors

• Regulated transportation system

• Results in Red-Tapism

• Auctions with prices by commission agents/traders

• Retailers pay fixed price and not the quoted one

• Dominant role of agents and traders

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Suggestions by WriterModern System in Tomato

ProducerPrice: Rs.2

Wastage: 10%

ConsolidatorCommission: 10%

Wastage: 2%

Processor

Organized DistributorsP: Rs. 3.33

W: 5%

RetailersP: Rs. 6.5W: 10%

ConsumerP: Rs. 6.5

Markup 225%;P Realization up

by 25%

Total Wastage= 27%

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Benefits to Farmers

Realization/qtl Tomato Potato Cabbage Cauliflower Banana

Traditional(INR) 79.15 561.6 426 390 342

Modern(INR) 98.76 583.44 430.13 474.36 353.4

Improvement % 25 4 1 22 3

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Solution

Farmer Producer Company(FPC)

PRODUCER GROUPS

PRODUCER ORGANIZATIONS

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What is Producer Group

• Farmers Producer Company (FPC) is a legal form of the

company. In 2002 an Act was passed in Parliament

• Only farmer – producers can be members of the FPC and the

farmer members themselves will manage this company.

• Paid staff can be employed

• Producers run the FPC.

• Promoted by the farmers, run by the farmers and for the

benefits of the farmers.

• Surplus would be shared among the farmers only.

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Why FPC

• Collective inputs purchase

• Collective marketing

• Processing

• Increasing productivity through better inputs

• Increasing knowledge of farmers

• Ensuring quality

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Impact on SCFPC System in Tomato

ProducerPrice: Rs.2.2

Wastage: 10%Processor

Organized DistributorsP: Rs. 3.33

W: 5%

RetailersP: Rs. 6.5W: 10%

ConsumerP: Rs. 6.5

Markup 196%;P Realization up

by 35%

Total Wastage= 25%

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Impact Cont.

Realization/100kg Tomato

Traditional(INR) 79.15

Modern(INR) 98.76

FPC(INR) 106.85

Improvement % 25

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Advantages of FPC

• Let’s take a look at the problems faced by farmers

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THANK YOU

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