Changing Face of Fresh Produce Sector in India

Report
PerishableProduce Wholesale
Markets in India: Their role
and making them deliver
Sukhpal Singh
Centre for Management in Agriculture (CMA)
Indian Institute of Management (IIM)
Ahmedabad (Gujarat)
Landholding profile of farmers
in India
 138 million farm holdings (2010-11) with 60% area rainfed.
 Marginal – Below one hectare (65%); Small – 1 - 2 hectare (20%)
 Marginal and small operate 44% area
 All India average size of landholding:1.16 hac in 2010-11
 Average farm size-3.77 and 2.25 hac in Punjab and Haryana and
only 0.22 and 0.77 hac in Kerala and West Bengal
 Only in Punjab, average size increasing due to ‘reverse tenancy’
 Focus on high value crops
Changing face of agribusiness
policy and practice
APMC Act amendment – direct purchase, private markets,
contract farming ((Agriculture a state (provincial) subject))
Warehouse Receipts Act
Organic farming and organic produce standards
Integrated food law (Food safety and standards Act,
2006):FSSAI
Corporate alliances with NGOs/Co-ops, Farmer Clubs
(NABARD)
Institutional innovation: Producer companies
Role of wholesale fresh
produce markets
 Much less attention paid to fresh produce wholesale markets than
needed
 Traditional wholesale markets have not changed adequately to meet
new (modern retail and consumption) needs in developing countries
(unlike Europe where wholesalers supply to supermarkets as third
generation markets)
 Increasingly being replaced by contract farming and direct purchase
from growers
 But, traditional wholesale (APMC) markets still important for small
retailers and small growers
Fresh Produce Markets
(wholesale) in India
 Through regulated (APMC) markets or
Unregulated local F&V markets
- F&V markets much less effectively regulated than grain
markets
- High marketing/transaction and spoilage cost due to nonregulation (in Mah, farmer pays commission) and large
number of intermediaries involved (CAs-kaccha and pucca)
- No/very little appreciation of quality (F&V washing machine
for consumers due to chemical residues)
- Lack of hygiene and convenience
5
The Model APMC Act
Non-Contract Farming Aspects
 Single point registration and levy of market fee
 Direct purchase from farmers
 Private wholesale markets
 Prohibition of commission agents (Only MP has done it)
New stakeholders in
Wholesale markets
 Wholesale cash ‘n’ çarry players
 Food retail supermarkets (domestic and foreign)
 Processors
 Institutions
 Small and marginal farmers
Typical supply chain of a fresh food retail chain
(Contact Farming)
Vendor
Pay
me
nt
Producers
(contact)
(30-40%)
Procured by mandi buying
team
APMC
(60-70%)
Collection
Centre
(procurement
from farmers)
Distribution
Centre (receival,
grading, and
dispatch)
Retail Store
Consumer
Mechanisms for Making
APMCs Vibrant
 Understand Implications of FDI in retail for wholesale markets and traders/CAs
therein
 More efficient and lower cost APMC markets needed.
 Ensure open auction system,
 buyer competition with more licenses,
 better facilities
 e-payment of market fee,
 Producer Company representation in APMC mgt.,
 denotificationof CAs/Arthiyas like in MP, (APMC markets serve as competitors to
contract and ‘contact’ farming (practiced by retail chains) and can help improve the terms
offered by retail chains to growers as contract/contact prices are benchmarked to APMC
prices
12
Mechanisms for Making
APMCs Vibrant
 APMC markets are important for small farmers as
they serve as competitors to Contract farming and
retail chain/supermarket buyers and help improve
terms
 Make warehouse receipts applicable to less
perishable produce like potato/onions
 Exempt F&V crops from APMC rules only for CF
and Direct purchase
 Role of the state: case of Bihar APMC Act
Thank You

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