Dr. Satyen Yadav & Dr. Ishan Yadav
Horticulture Produce Management Institute
HPMI House 30-B, Sector 93-B, Noida, Gautam Budh Nagar, 201301 India
INTRODUCTION:
India, being agrarian country with varied agro-climatic conditions having over 700 million people i.e. 69% of the population depends upon the rural economy for their livelihood but it is not sustainable and consistent with a low per capita income due to various reasons e.g. low productivity, lack of post-harvest infrastructure, timely availability of agri-inputs, finance and market access.
GENESIS:
Ministry Of Agriculture, Govt. of India and APEDA gave an assignment with one line objective to develop a model, which should ensure the win-win situation for all value chain partners and availability of produce and products at a competitive price to the consumer and remunerative prices to the farmer or producer.
CONCEPT:
Based on the desk research and market survey, it has been found that the value chains of all the agriculture/horticulture produce are long having four to five value chain partners and share approximately 15% to 25% margins at each level depending upon the market situation and some times it increases exorbitantly, if the intentions of any value chain partner turns bad which gives a tough time to managers to manage the circumstances i.e. market inflation and consequently the various turmoil’s are observed and some times these turmoil’s give sleepless nights to our policy makers and political leaders.
Plate 1.0: Glut situation of 2000-2001 in Punjab & UP, which made potato
price as low as Rs 0.20 per Kg
So, the one line solution to one problem came to minimize the value chain and I came with a model with shortest value chain and used a common term and named it “FARM TO FORK” model.
METHODOLOGY:
The study was divided into following sections:
01-Understanding the value Chain and role of stack holders
02- Inter-dependability of value chain partners on each other
03-Method to address and empower the two ends of value chain
04-Suggested Model
05-Testing of the models
All the above sections are explained below in one paragraph, respectively:
The existing value chain has four to five links which are called middle-men and sharing 15% to 25% or some times more, if the market is more volatile and the cost is loaded on consumer and consequently neither farmer/produce gets the right price nor the consumers gets goods at competitive price and the value chain is just sustaining the middle men instead of the two ends i.e. farmers/producers and the consumers. Therefore, the efforts were made to minimize the value chain by eliminating all the middlemen and study claim that this is the shortest vale chain, ever practiced.
Sensitivity of each value chain partner on each other or inter-relations to be examined with reference to model to be formulated and tested.
Plate 2.0: The existing value chain versus shortest proposed value Chain
The strengthening of both the ends of value chain will strengthen the whole rural economy because the effect will be visible on the whole value chain from “FARM TO FORK” in terms of it’s sustainability which will ensure the consistency in the value chain in terms of price stability and quality parameters and availability.
In India, the cooperative network has been tried and tested for integrating farmers and producers with consumers after independence and recently in 2008 the farmers producer companies act which was amended in 2002 came in force due to a push by Govt. of India through a nodal agency of Ministry Of Agriculture & Cooperation called SFAC (Small Farmers Agribusiness Consortium). Therefore, two models have been conceptualized which are presented below through graphical representations, which have been tested at various levels.
Plate 3.0: The model is based on existing cooperative network
The above model is conceptualized to integrate the farmers/producer and consumers through existing Cooperative Network and the model presented below has been conceptualized with reference to newly amended Company’s Act in 2002 and coined a new term called Farmers Producer Organization and if it is registered under Company’s Act, it is called Farmers Producer Company.
Testing of the models was done in Punjab and UP with the patronage of Punjab Markfed at Chandigarh and Indian Oil corporation in Noida.
Plate 3.1: The model is based on Farmer Producer Organization concept
ISSUE BASED EXPLANATIONS:
If we start discussing the issues starting from “FARM TO FORK” from the beginning and step-by-step, it will help in understanding the roles and responsibilities of the value chain partners and their inter-connectivity.
01-Farmer’s operations: Farmers operations involve the critical components e.g. agri input, finance, human resource and the technology/knowledge. Most of the farmers know the standard packages and practices being followed but if we are introducing new crops, we need to sensitize, orient and adopt the technology and the science.
02-Fiscal and technological interventions: There are various fiscal benefits under various schemes, approved by Govt. of India to be implemented through State Govt. agencies as well as few nodal agencies like SFAC and NABARDS need to be identified and farmers should be assisted to claim them or avail them. Regarding technological interventions, operating agency or adopting agency should ensure the follow up, monitoring and need based follow-ups and updates by involving their in-house team or out-sourcing from KVK’s or Agriculture Universities.
Timely agri-input, finance and genuine seeds and other inputs are the few problems which are identified as critical issues at this level and proposed “AGRI MART” to address these issues as one stop solution.
A tripartite agreement among Bank, Agri Mart and the farmers can solve all these problems smoothly if transparency in the operation is maintained.
02-Farmers Interest Groups: There is a need to develop “FARMERS INTEREST GROUPS”(FIG) which should be based on their social status, their interest in activity and their resources. In one group ten-fifteen farmers can be integrated and managed with convenience.
03-Farmers Producer Organization: Farmers Producer Organization (FPO) is a informal body consisting of farmers or farmers interest groups which can be converted into formal group and registered under Company Act and register Farmer Producer Company (FPC) to claim various benefits and avails the support through SFAC (Small Farmers Agribusiness Consortium, promoted by Ministry of Agriculture & cooperation, Govt. of India for strengthening various activities undertaken by the farmers and agriprenures.
Though, it is bit difficult for farmers to manage FPC and deal with SFAC due to very complicated modus operandi of SFAC, which is currently being run like proprietary activity as it is being managed by last many years by one bureaucrat designated as Director which is assisted by his own team, which is out-sourced either as agency or junior contractual executives. But, still, it is working contributing for strengthening rural economy of India and Govt. of India has imposed all the responsibilities on this agency as Nodal Agency.
4-Special Purpose Vehicle: Govt. of India has been advocating about special purpose vehicles (SPV) under PPP (Private-Public Partnership) or need based joint ventures but this effort could not create a visibility due to lack of understanding of this concept at the level of policy, clarity about the sensitivity and clear operating guidelines to agencies who are willing to participate to promote an SPV. I am not aware about others but Horticulture Produce Management Institute, which is working to empower rural economy of India tried with various organizations/agencies but burnt their fingers at the cost of their money and time and returned back to “SQUARE ONE”. The attempts were made with “Punjab Markfed” (Self-proclaimed as Largest Marketing Federation of Asia), a state University named “Narendra Dev University of Agriculture & Technology, Kumarganj, Fiazabad, U.P.; UP State Horticulture Marketing Federation, Lucknow; Punjab Agri-export Corporation Ltd. and many more.
But, we strongly feel that if this “CARD” is played with honesty, commitment level and transparency, it will certainly change the face of India but certainly not, the way it is being done.
5-Marketing Access: Our model was based as case study of Uttar Pradesh where UP STATE MARKETING BOARD, a apex body does not believe in adopting APMC reforms as it is a “CASH COW” for the top managers of the State Govt. Highly politicized and mis-managed organization in the state which has only one point agenda to strengthen it’s top managers and executives right from top to bottom. The agency is least bothered for any benefit of farmer. If we see the current position, it is chaired by Hon’ble Chief Minister himself, which is self-explanatory about its importance and contribution in the development of state’s rural economy.
The entire marketing is depending upon the middlemen and controlled by Artiyas, who have been enjoying the patronage from the State Govt. at all, the levels.
One example to be quoted here that a project in Noida, District Gautam Budh Nagar, UP was promoted by UP Mandi Board, which was funded by Govt. of India’s apex body for export promotion, called APEDA, Ministry Of Commerce, Govt. of India. This high profile project did not run for a single day even on the day when trials of plant and machinery were being conducted. There are numerous examples like this.
Another example for promoting dispensing of citrus juice and sugar cane juice through HACCP certified units was approved on the interventions and recommendations of the office of the HE, The Governor of Uttar Pradesh but again, it could not see the day of light due to highly self-motivated officials of Department of Horticulture with a focus on self-strengthening rather the straightening the farmers and agriprenures.
Plate 4.1: Citrus/Pomegranate juice machine as per the HACCP norms
Plate 4.2: Cane sugar machine as per HACCP norms
So, we have not any good experience to share about market access in UP and it is absolutely at the mercy of the ruling Govt. which never gets interested in improving it.
POSSIBLE SOLUTION: Based on the above study, three issues emerged i.e. Remunerative prices to the farmers, competitive process for the consumers and additional income option for the farmers through agribusiness options. Though, there are few other options to increase the income of farmers by increasing the productivity and reducing the input cost etc. but our concern is to provide agribusiness models as a tool for additional income option farmers and for livelihood options of the agri-prenures. Few models for food retails have been shown below out of sixty five models starting from Rs 50,000/- to Rs 2,00,00,000/- for the retailing of various kind of food stuff including fresh fruits, vegetables, grocery, ready to cook foods through dispensing outlets, cooked food having a back up from central facility, ready to serve beverages and other category of convenience foods with a hand holding support to ensure the sustainability with commercial feasibility right from concept till market access development. This model was named as Food Mart.
Similarly hand holding to registered beneficiaries through Agri Mart can be provided to ensure the right adoption of appropriate technologies and knowledge base management of pre-harvest and post harvest handling having a tripartite agreement among Farmers, Bank & Agri Mart for a smooth bank to bank transaction which will ensure hundred percent recovery of bank loan from the famers.
Plate 4.2: Various food mart options with different financial outlay
Plate 4.3: Fresh fruits and vegetable selling model which cost about Rs. 1,50,000/- and
ensures about 16,000/ to 20,000/ income per month
The shortest value chain based on direct selling to the consumer and home delivery of the food stuff with a 24 hours advance notice with a predefined price which is notified for every three days will certainly satisfy the consumer’s expectations because the price will be competitive rather 12-15% cheaper than the sector market or corner shops with a unconditional quality guarantee.
SUMMARY:
If we quantify the above model and it’s value chain, which comes to about 35% in comparison to the existing value chains for processed foods at 65-100% and for fresh produce 100% to 300% .The value chain cost of 35% includes all the operating cost and the business margins of promoters and the self-employed beneficiary who adopts any of the models.
NOTE: The above research paper is based on senior authors, fifteen years of experience of working on a model, which can eliminate the middlemen and create a win-win situation among all value chain partners. Therefore, no one should feel offended as it is based on the records and studies carried out by the senior authors.
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