SARDAR VEGETABLE CO-OPERATIVEAssessment of net value realisation

Presented by:Anupama Tripathi (29010)Ashutosh Shekhar (29013)Avinash Dwarapu (29014)

Francis C. Verghese (29017)Shashikant Patil (29030)

Suman Kumar Gope (29033)

CURRENT SCENARIO

• India: Second largest producer of vegetables(109 million MT).

• 1st position in the world production of Peas.• 2nd position in the world in Cauliflower,

Cabbage, Brinjal. • 4th position in the world production of

tomato.

STATE SCENARIO(2005-06)

• 6th largest producer of vegetables in India.• Total production of vegetables in state: 6.3

million MT.• Total cultivated area(vegetables): 0.38 mha.

Total Area Cultivated - Gujarat

Area and Production of Vegetables

ANAND VEGETABLE MARKET

• Total area cultivated(2005-06): 12930 hectares.

• Total production(2005-06):315870 MT.

DYNAMICS OF VEGETABLE MARKET

• Price Fluctuations• Seasonality• Perishability• High Weather Dependence• Bulkiness

PRESENT VALUE CHAIN

Farmer APMC Dealer

APMCTrader

Retailer

6%

1%

10%

10 %CONSUMER

EXAMPLE

(Rs)

% age Distribution of Price rise

Farmer's Take home Price (Rs) 98.00Unloading Charge (Rs per unloading) 2.00 5.89Farmers's Price (Rs) 100.00APMC Dealer commission 6% (Rs) 6.00 17.67Cost to the Trader (Rs) 106.00APMC Commission 1% Rs 1.06 3.12Loading Charge (Rs per Loading) 2.00 5.89Final Cost to the Trader (Rs) 109.06Trader Margin (10%) 10.91 32.11Cost to the Retailer Rs 119.97Retailer Margin 10% 12.00 35.32Cost to the consumer Rs 131.96Increase in cost 33.96Percentage Increase in cost 34.66 100.00

WHY CO-OPERATIVE??

• Bargaining power• Economies of Scale • Assistance to farmers• Shielding small farmers from the market price

fluctuations

FACTOR MARKET CONDITIONS

• Concentrating on Nawali and surrounding villages in the initial stage.

• High volume of vegetable production in small area.

• Better price realization in markets of Surat and Ahmedabad.

• Farm input supply from Gujarat State Seed Corporation, IFFCO and NDDB.

PRODUCTION RISKS

• Seasonality• Perishability• Quality/ Grading• Demand - Supply mismatch• Improper Handling• Input Supply Risk

- Fertilizer- Seed

MARKET RISKS

• Price Fluctuations• Demand Fluctuations• Transportation Costs• Lack of Bargaining Power• Rejection of Lot due to Lack of Quality

MARKET SEGMENT• Institutional• Domestic• Grading of produce – Premium Quality- High price market– Medium Quality- Local market– Low Quality- Local or Institutions.

LOCATION OF CO-OPERATIVE

• Village: Nawali (7 kms from Anand)• Average Land Holding : 1.5 – 2 acres.• Vegetables: Cabbage, Cauliflower, Brinjal, Bottle

gourd, Ridge gourd, Lady’s finger.• Climate: Sub tropical semi arid climate• Soil: Sandy Loam• Income generating Activities – Farming, Dairy,

Poultry• Average Rainfall: 950 mm

Seasonality

Month Tomato Brinjal Cauliflower Cabbage Gourd Okra

June            

July            

Aug            

Sep            

Oct            

Nov            

Dec            

Jan            

Feb            

Mar            

April            

May            

INCENTIVE TO FARMERS

• Reduction in- Costs- Risks

• Increase in production • Better value realization• Timely availability of farm inputs • Assistance in production process by specialist

ECONOMIC VIABILITY

• Scale of operation: 2% of Anand vegetable production i.e. 6200 MT.

• Total fixed cost (annual): Rs 5,00,000. • Expected additional margin: Rs 0.25/ kg.• Contribution: Rs 15,50,000.• Surplus: Rs 10,50,000.• Number of members: 500.• Additional benefit to members: Rs 2100/ year.

GROWTH AND SUSTAINABILITY

• Economies of Scope- Organic cultivation- Cold Chain: Cold storage, Refrigerated Vans

• Retailing through Hand Cart Hawkers• Tie up with Retail Chains (Institutional Buyers)

CO-OPERATIVE RELATIONS

• Farmer segmentation – Large Farmers (30%) and Small Farmers (70%).

• Member participation at different levels.• Type C proposals:

1) Insurance for produce, 2) Reserves contribution on daily basis.

• Type D proposals:1) Payment to members from reserves.

OPERATIONS

• Pooling, Grading, Sorting, Bagging etc.• Distribution according to demand in different

markets of major cities such as Ahmedabad, Baroda, Surat.

• Transportation• Input Supply – Seeds, Fertilizers etc.• Technical Assistance to the farmers

BUSINESS MODEL

• Pooling System• Payment based on patronage (proportionate

to produce contributed)• Contribution identified through proportion in

each grade lot.• Payment: (Price realized –cost)- 5% as reserve

NET VALUE ADDITION

• DISTANCE/PLACE• PRICE• FORM

PROBLEMS

• Horizon Problem: Expansion for cold chain• Portfolio Problem: Addressed by keeping

separate account for farmers who are producing different vegetables.

• Control Problem: Addressed by training and educating directors.

• Influence Cost: Long term asset creation like premises.

CENTRALITY OF CO-OPERATIVE

• Member Centrality: Members derive 30-40 per cent of their income from vegetable production.

• Domain Centrality: Contribution to the economy of the area and the state.

• Patronage Centrality: Commands 2 per cent of vegetable production in Annad, and nearly 90 percent of production in the operational area.

Sources of Information

• APMC Market, Samarkha.• Secretary, APMC, Sardarganj.• Farmers of Nawali, Jakharia, Samarkha, Barod,

Ajarpura, Asodhar.• Ekta Vegetable Co, Samarkha.• Mansa Ji Vegetable Co, Station Road, Anand.• Big Bazar, More.

Literature and Web Link

• www.agmarknet.in• www.agri.gujarat.gov.in• www.indiastat.com• www.aau.in• www.nhb.gov.in • Co-operative Marketing of Fruits and

Vegetables in India, Subrahmanyam K. V.• Indian Horticulture Database 2006, NHB.

THANK YOU!