Efficient Agricultural Marketing System andModern Infrastructure Required for Minimizing the losses While Handling the Agri. Produce

N.S.RanawatDeputy Director

National Institute of Agricultural Marketing(NIAM)

JAIPUR

Part-I

Efficient Marketing

System

Agricultural Scenario – Present Status

All major Climates of world. There are 20 agro-climatic regions and nearly 46 out of 60 soil types in the country. Potential to cultivate vast range of agricultural produce, a large and varied raw material base for food processing.

Increase in production from 50 million tonnes (1951) to 204 million tonnes (2004-05).

Significant increase in marketed surplus.(110.04 million tonnes, 2001-02).

Subsistence to commercial agriculture. First in pulses, tea, jute & milk and second in rice, wheat,

fruit & vegetables.

Agricultural Scenario – Present

Status

India’s annual food production stands at 550 million metric tonnes Second highest fruit and vegetable producer in the world with a

cold storage facility available only for 10 per cent of produce Second Highest producer of milk India has highest cattle population (185/1345 million (13.8%),

Largest buffalo population 98/174 million(56%), second highest sheep and goat population(183/1839million)(9.95%) producing about 6million Mt of meat with a Cold storage capacity 184,000 tonnes.

Fifth largest producer of eggs. Projected requirement of investments in cold storage required to store 20 per cent of surplus of meat and poultry products.

Sixth largest producer of fish with harvesting of 5.2 million tonnes The estimated area under flowers (2005-06) is 0.126 million

hectors with a production of 0.694 million tonnes loose flowers and 2762 million cut flowers.

Agricultural Production-2007-08 (Ministry of Agriculture, GOI)

S.No.

Commodity Production (2007-08)

Production (2007-08)*Estimates

1 Rice 96.43 92.35

2. Wheat 78.40 75.81

3. Course Grain 40.75 33.92

4. Pulses 15.11 14.20

5. Food Grains 230.67 (124 million Ha)

217.28

6. Oil seeds 28.83 24.29

7. Sugar Cane 340.55 355.50

8. Cotton 25.81 22.63

9. Jute & Mesta 11.18 11.27

10. Fruits 62.85 58.92

11. Vegetables 116.03 122.25

12. Flower (Loose)Flower ( Cut)

178778

805177

13. Spices 39.82 43.07

Production status change over last fifty year- (2001-02)

Commidity 1950-51,Mt 2000-2001,Mt

Food grain 50 206 (99-2k)

Oil seeds 5 24.5

Fruits 12 41

Vegeatble 10 72

Potatoes 1.7 25(24.2) (1998)

Onion 1.0 5.5(4.75)

Mushroom 40kt

Livestoc & Poultary

Milk 17 78(99-2k)

Meat 0.7(1971-72) 4.6

Eggs 10 bn (#) (1980-81) 30 bn (#) (99-2k)

Fish 0.75 5.6 (99-2k)

Marine 2.9

Fresh water 2.7

Honey 0.7 kt (1963-64) 5.5kt

Coconut 4.5 bn (#) 15bn (#)

Spices 3

Sugarcane 57 309.4

Certified seeds 0.75

Lac 40 kt 20 kt

Fibre crop

Cotton 0.7 2.5

Jute 0.67 1.67

Coir 0.13 (1954-55) 0.34

Wool 32 kt (1980-81) 45 kt

Market Regulation in India – An Overview

It goes without saying that marketing and production of agricultural produce are inextricably intertwined with each other. In the post WTO regime, an effective agricultural marketing system is the key driver of the agricultural economy of a country.

An effective marketing system aims at ensuring remunerative prices to the producers at cost effective marketing costs and smooth supply of commodities to consumers at reasonable prices.

In order to protect the interests of the various stakeholders of the agricultural marketing system of the country a number of governmental interventions have been taken from time to time.

However, the present agricultural marketing system of the country leaves much to be desired.

Some reform measures by the government have already been initiated to address these issues and some are in pipeline.

Agricultural Markets

Apani Mandi / Farmers market / Raythu Bazars Rural Primary Hats/ Periodic Rural Markets Market Sub yards Primary Market Yards/ Agri. Produce Market Committee

(APMC)/ Mandi, Secondary Market Yards/ Secondary Markets Modern Market yards Wholesale markets-Perishables Terminal Market yards-Perishables Future Markets

CHARACTERISTICS OF TRADITIONAL AGRICULTURAL MARKETING SYSTEM

Heavy Village Sales of Agricultural Commodities

Farmers were hard pressed for money to meet their social and other: obligations, and are often forced to sell their produce right in the villages.

Most of the perishable products need to be marketed in the villages because of their low “keeping” quality and the non-availability of quick transport means.

Many farmers disliked city markets mainly because of their lack of knowledge about prevailing market practices, the possibility of theft or robbery in transit and problems faced by them for selling their produce in city markets.

The information on the prices obtaining in the nearby primary and secondary wholesale markets was not readily available to the farmers.

CHARACTERISTICS OF TRADITIONAL AGRICULTURAL MARKETING SYSTEM

Inadequacy of Institutional Marketing Infrastructure and Lack of Producers’ Organizations

Multiplicity of Market Charges

Existence of Malpractices

Lack of Reliable and up-to-date Market Information

Low Marketable surplus of a Large Variety of Products

Absence of grading and Standardization of Produce

Absence of Quick Transport Means

Strong Associations of Traders and Market Functionaries

Post-Harvest Immediate Sales by Farmers

A majority of the cultivators tend to sell their produce immediately after the harvest at the low prices prevailing at that time.

Because of substantial supplies, Indian markets are glutted in the post-harvest season.

Traders often take advantage of this situation. About 60 to 80 percent of the food grains are still marketed in the first quarter of the harvest season

Farmers have to travel for markets beyond 5 Kms for sale of their agricultural produce.

•Fledgling Rural Primary Markets.

•Absence of common trade language and multiple Food Laws.

•Variation in market fees and other market charges.

•Controls under Essential Commodities Act, 1955.

•Poor Pledge Financing and Marketing Credit. Farmers dependent on money lenders for their credit need.

CHARACTERISTICS OF TRADITIONAL AGRICULTURAL

MARKETING SYSTEM

Long and multiple marketing channels. Farmers share in consumer’s Rupee

- Fruit and vegetables – 32 to 68%- Paddy – 56 to 89%- Wheat – 72 to 88%- Coarse grains – 72 to 86%- Pulses – 79 to 86%

Hidden marketing cost and margins are also common – Rs. 15/- for 20 Kg. box of apple and Rs. 12/- for 50 cabbage bag from Shimla to Delhi by road – a study reveals.

Contd…..

Regulation of Agricultural Marketing :-

The features like high marketing cost, unauthorized deductions, false payment and prevalence of various malpractices prompted to regulate agricultural marketing by the state.

Establishment of regulated markets has been able to overcome the problems of traditional marketing system to greater extent. However, these problems still persists in the case of village sales.

Definition of Regulated Market:-

Regulated market is one which aims at the elimination of the unhealthy and unscrupulous practices, reducing marketing charges, and providing facilities to the producer seller in the market.

Any legislative measures design to regulate marketing of agriculture produce may be termed as one which aims at the establishment of regulated markets.

Establishment of regulated markets is not intended at creating alternate marketing system. The basic objective is to improve the efficiency in the marketing system.

Basic Amenities available at APMCs

Auction platforms only in 2/3rds markets Drying platforms in 1/4th markets Traders modules in 63% Cold storage only in 9% Grading facilities in 1/3rd markets Internal roads in 80% Farmers amenities in 50% of markets

Objectives of Regulated Market

To prevent the exploitation of farmers by overcoming the handicaps in the marketing of their products.

To make the marketing system most effective and efficient so that, farmers may get better prices for their produce and the goods are made available to consumers at reasonable prices.

To provide incentive prices to farmers for inducing them to increase the production both in terms of quantity and quality.

To promote an orderly marketing of agricultural produce by improving the infrastructural facilities.

Crops Directorates (8) [Wheat, Jute, Cotton, Rice, Sugarcane, Millets, Pulses, Tobacco]

Technology Mission on Horticulture

Coconut Development Board

IFFCO Network

Area Office

Area Office

Automatic Data Downloading

Data validation

Database updation

Trend Analysis

Monitoring Reports

Commodity profiles for production planning

Data Warehouse & Data Mining

GIS based National Atlas

Kiosk

DMI Hqs.

AGMAKRNEThttp://agmarknet.nic.in

Area Office

Farmers

Markets

DMI State Offices(27)

IFFCO

Local News papers

Notice Board / Electronic Board

Regional Office

Regional Office

Regional Office

IFFCO Network

CDB

CDB Network

Farmers

Call Centres

Agri-clinics

Mobile Operators

farmers

State Mkts./ Directorates

(50)

Regional Portals (8 already

approved)

Farming Community

Public Access

Mobile users

Agri-Markets in India as on 31.03.2007

6261 Wholesale Markets in India (majority are regulated markets)

20870 Rural Primary Markets (about 15% are regulated markets

Total – 27131

2459 Principal Regulated Markets

5006 Regulated Markets Sub-yards

Total – 7465

(Only 286 regulated markets in 1950)

Part-II

Modern Infrastructure Requirements

& Minimization of PHM

Losses

Other Other treatmentstreatments

Pre-coolingPre-cooling

DryingDrying

Selection,Selection,cleaning cleaning

and and disinfectiondisinfection

ReceptionReception

Grading Grading

Packing and Packing and packagingpackaging

StorageStorage TransportTransport

HarvestingHarvesting

Post Harvest Management

Farm Level- Harvesting Harvest maturity Indices Harvesting Methods- Manual/ Mechanized Harvesting tools/ kit Collection- sorting/grading at farm Harvesting Containers/Packing material Farm level Storage

Other important factors Waxing, Drying Grading and sorting Packaging –CFB Pre-cooling Ripening / De-greening treatments Cold storage at low temperature Reefer transport

Market level Mode of Transportation Road conditions Cleaning and grading at mandi Weighment -Digital/ Pan balance Storage at mandi Packaging material/Bagging etc

Quality factors GAP certification, GHP, GMP & HACCP Vapour heat treatment Pesticide residue level Irradiation Packaging specifications Product Standardization Food safety at Farm, APMC, Storage,

Distribution / transportation and at retail mkting

Agricultural Produce

Agri Produce can be classified in a broad way in two categories

Non-perishables /Durables:- Cereals, Millets, Pulses, Oilseeds, and seed spices etc. They are subjected to some unit operations before marketing, some of them are as following i.e. Cleaned, Grading, Sorting, De-hulling, Decorticating, De-husking, Polishing, Bagging and ware-Housing.

Perishable / Non-Durables:- Fruits, vegetables, flowers, herbs, spices, Eggs, Poultry products, Meat and fish etc. They are also subjected to some unit operations before marketing, some of them are as following i.e. Curing, Washing, Grading, Sorting, Waxing, Drying, Pre-cooling and packing /Bagging and storage in Cold storage

Present level of production of different types of food commodity and their estimates of post-harvest losses

S.No.

Type of food Commodity

Present level of production

Post-harvest losses

Quantity

(Mt)

AveragePrice (Rs./t)

Value(Rs. In Crore)

%* Quantity(Mt)

Monetary value

(Rs.in Crore)

1 Durables (cereals pules, oilseeds, etc.)

230 10,000 230,000 10 23.0 23,000

2 Semi-perishables (Potato, tapioca etc)

40 3,000 12,000 15 6.0 1,800

3 Perishables (fruits, vetetables. Milk, meat, fish,eggs etc.)

210 15,000 315,00 20 42.0 63,000

Total/Average 480 11,604 557,000

14.8

71.0 87,800

* On Conservative Scale

(Ref: Agro-processing Industries in India-Growth, Status and prospects- Kachru, R.P)

Different hurdles for direct marketing including infrastructure;

Traditional marketing-Long marketing channel, low share in consumer’s rupee, high costs and margins, irrational marketing fees etc.

Infrastructural Bottlenecks- Rs. 11172 crore investment requirement

low per capita infrastructure limits the access of small and marginal farmers to the market

Small & marginal farmers 80%

Need for reforms for congenial policy for private investment in infrastructure

Marketing infrastructure A.O. Hirschman- four characteristics of

infrastructure i) the services facilitate economic activity

ii) the services are public goods because of economic externalities

iii) the services cannot be imported;

iv)investments tend to be indivisible or lumpy In this context, marketing infrastructure consists

of a combination of national assets, sustaining the addition of place, time and form utilities

Marketing infrastructure Can be classified as physical facilities and

institutional facilities;

physical facilities--roads, railways,transport, postal,telecommunication facilities, electrification,storage structure,market yard and processing facilities etc;

institutional infrastructure—cooperatives,banking institutions, extension agencies, marketing Organisations and marketing intelligence network

Vapur Heat Treatment plant at Vashi

Pack house

Exporti

Cooling

Infrastructure Development

Post Harvest Infrastructural requirements

Marketing infrastructure-Gaps The expert committee, Government of India(June 2001)

made an assessment of investment requirement of Rs.268742 crore for investment in agricultural marketing.Bulk of the funds to be mobilized through pvt.sector.

For a complete supply chain of perishable horticulture produce, from farm to market:-

small pre-cooling units or zero-energy cool chambers at production areas to remove field heat of the produce

collection centers near to the farms Medium to small cold storages(multi-product & multi-

chamber) as transit godowns Specialized cold storages with facility of built in pre-

cooling, high humidity and controlled atmosphere for storage of produce for a longer period

Other components like ripening chambers close to market places and display cabinets at retail outlets

Linkages for conversion of fresh produce into other marketable forms

Marketing infrastructure-Gaps

The integrated pack houses catering to farms in respect of regions around 5000-10,000 hectare for washing, sorting, grading , packing, cold storing etc.

E-trading for direct marketing through kiosks in the market yard

Telephones:- only 59% of villages covered(2001) , 3.5% tele-density against world average of 16, target is 15% by 2015. Examine WCL technology.

Rural connectivity:- Only 47.83% of villages covered till mid 90s. Av. road length is 4 km. To connect each village with main road. Investment requirement is Rs 74000 cr.

Physical facilities in regulated markets:- auction platforms, shops and godowns etc; Rs 6026 crore during next 10 years

Marketing infrastructure-Gaps

Specialised markets :- fruits and vegetables, 241 places in the country; 970 crore.

Farmers’ markets:- Apni Mandis in different states. Should be in every district at least.

Rural periodic market- 27294 RPMs; investment requirement is Rs. 2146 cr.

Storage/ warehousing:- 52 million tonnes storage capacity available , need for creating storages for additional 20 million tonnes now stored in the form of CAP( Covered and Plinth ), investment requirement of Rs.5400 crore

Cold storages:- 135 Million tonnes of fruits and vegetables, 30% post harvest losses, during next ten years cold storage capacity of 45 million tonnes for investment of Rs.27000 cr.

Marketing Infrastructure-Gaps

Reefer Vans/ Containers- During next ten years 3000 units with a capacity of 8 tonnes each; Investment requirement is Rs.600 crore

Cleaning,grading and packaging:- Grading facility available in only1321 markets out of the 7300 regulated markets. Rs.2000 crore investment during the next 10 years.

Export oriented Agri-zones and Food parks:- estimated public investment (common facilities)-Rs 200 crore and private investment is Rs.400 crore on 50 EOAZs.

Processing and value addition:- Now 7% value addition and 2% processing; Target 355 Va. Addi. and 10% processing; investment of Rs150000 cr.

Ideal market – Infrastructure Requirements

Core Facilities Support InfrastructurePlatforms for Automatic weighing Water Supply Auction Platforms Power Packaging & Labeling Equipments Veterinary Services Drying Yards Sanitary Facilities Loading, Unloading & Dispatch Facilities Posts & Telephones Grading Facilities Banking Standardization Facilities Input supply and Necessity

OutletsPrice Display Mechanism POL Information Centres Repair/Maintenance Service Storage/Cold Rooms Office Ripening Chambers Computerized Systems Public Address System Rain Proofing Extension and Training to Farmers

Service Infrastructure Maintenance Infrastructure

Rest Rooms Cleaning and SanitationParking Garbage Collection & Disposal Sheds for Animals Waste Utilization Market Education Vermi-Composting Soil Testing Facilities Bio-gas Production PowerDrainage

Grading

Grading of Onians

Air in the internal Cavity

Wax layer restricts the gases interchange.

Waxing and Grading of fruits

Pallet pre-cooling and transition to CA rooms

Ripening Chambers

Receiving,inspection

Initial coolingCold storage

Bin dump presize Wash / scrub

Specialoperations

Dry Waxfungicide

Hand sort

Cull and byproduct

Automatic Sorting & sizing

labeling

Hand sort

Hand sort

BoxFill

BoxFill

palletize

Cooling & storage

Schematic of the typical unit operations in a mechanized packinghouse

PACKINGHOUSE OPERATIONS

To protect the product from direct sun light.Quick transport to the packaging.

Minimize delays before pre-cooling. Uniform product’s cooling.

Store the product at optimum temperature conditions .Practice first in first out rotation.Ship to market as soon as possible.

Use refrigerated loading area.Cool truck before loading.Load pallets towards the center of the truck. Avoid delays during transport.Monitor product temperature during transport.

High Humidity Air Handlers

Maintains up to 95% RH in the Cold Store.

Advantage is to increase shelf life of the fresh harvested produce.

Because 1 hour lost in pre-cooling may result in 8 to 24 hour loss in shelf life

Objective:Objective: to remove the field heat. to remove the field heat.

Movement of the caloric energy from the product to the cooling substance.

Pre-Cooling Chamber

Refrigerated storage

Packaging of Horticultural Crops

Packaging Basics…..from the viewpoint of the product

Protect product from injury

Help to maintain quality

Reduce water loss

Traceability

Ease of transportation

Convenience

Provides consumer information - labeling

Marketing product

point of sale packaging

Packaging Basics…..from the viewpoint of the package

Must be strong enough for the job

Moisture resistant

Low Cost – (costs to buy and dispose – OR REUSEABLE )

Compatible with unitized handling operations

Compatible with packing line machinery / automation

Facilitate special treatments

Package Diversity

> 500 different packaging formats used for horticultural produce

Transportation

Vibrations-Road Transportation

Collection Centre

Modern Terminal Market

Producers/ Farmers and their Associations

Infrastructure:Washing, grading, sorting, weighment, transport to TMServices:Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport

Infrastructure:Packhouse, Quality Testing Facility, Palletisation

Services:Transport (incl. cool chain), Settlement of Payments, Banking, Market information

Electronic Auction

Banking Institution

Storage:Cold Storage, Temperature controlled warehouse,Ripening Chamber

Processor Exporter Wholesaler/ Trader/Retail chain operator

Direct Selling