Fruits And Vegetable Sector In India
Exports of fruits and vegetables from the country (India) have been rising over the past few years. The reason behind this is the increase in demand for the fruits and vegetables not only in the fresh but also in the processed form. The sad part to this is the low export competitiveness in the Indian producers which is hampering the supply chain of these commodities.
Exports have expanded rapidly since the 1980s. Recently India exported 3.66 lakh tones of fruits valued at Rs911.85 crore and 1.36 million tons of vegetables valued at Rs1, 525.27 crore in 2007-08.Due to boom in the technology there has been a stupendous diversification in production methods. Increase in disposable income is one of the factors which is driving the supply in the market. Production of fruits in the country rose to 69.45 million tons in the financial year 2008-09 from 65.60 million tons in 2007-08 and 59.56 million tons in 2006-07.Production of vegetables stood at 133.07 million tons in 2008-09 against 129.26 million tons in 2007-08 and 115.01 million tons in 2006-07*.
There has been a tremendous increase in the number of commodities produced and exported during the last 25 years with the aid of modern marketing initiatives. The good news for the sector is that there has been a markable reduction in the wastages resulting from the poor infrastructure facilities such as storage and transportation.
Supply constraints, which yield gaps and huge logistic costs, hamper our competitive and relative advantage in world trade market. Produce worth Rs 50,000 crore gets wasted every year due to the lack of a appropriate food processing chain. The government is working on umpteen number of cold chain routes countrywide to enable integration of the sector from farms to the retail outlet. Last but not the least many private sector companies have also taken initiatives to bridge this gap, namely Safal, Pepsi, Bharti, Reliance, Bayer and etc.
FRESH FRUITS AND VEGETABLES – CHARACTERISTICS
- Perishability of products: Involvement of many bio-physic-chemical processes make it's highly vulnerable to damages at short intervals and thus contributes to product's limited shelf life.
- Seasonability of production: The inconsistent supply due to the close involvement of many biotic and a biotic factors of production break the cycle of the produce availability in the market throughout the year.
- Bulkiness of products: The bulkiness of the fresh produce adds to the transportation, handling and packaging charges. Along with makes its prone to pre and post harvest damages in the supply chain accounting up to the extent of 20-40 percent.
- Quality variation of products: No adherence to GAP practices leads to variation in quality
- Irregular supply of products: Seasonability and non planned insufficient production creates gluts and shortages in the market.
- Small Holdings size & scattered production processing: As majority of the Indian farmers falls in marginal and small category.
FRUITS AND VEGETABLE SUPPLY CHAIN IN INDIA
INTERMEDIARIES IN THE MARKET
Almost all the producers are involved in the marketing functions. They either sell the excess in the village or in the local market. There are some large farmers though, who consolidate the produce of small farmers, and sell it in the nearby market thus making a profit for themselves.
These are the individuals who specialize in executing and implementing the varied marketing functions and thus provide services in the marketing of goods.
Village commission agent
Market commission agent
Village commission agent:
These are agent which directly purchase from farmers, these agents are appointed by marketing commission agent to purchase on their behalf.
Marketing commission agent:
These agent are appointed by government to do purchasing, this is because to ensure that fair price in market prevails
In India government have prohibited wholesalers to directly purchase goods from farmer. They can purchase good from market commission agent. Whole selling is the core activity that encompasses activities of other individuals as well. He plays the role of an intermediary for the manufacturer and retailer. They can be classified as:
- Local wholesalers: the one who supply their goods to local retailer.
- Provincial wholesalers: also referred to as the distributor who sells his goods to a particular district or state retailer.
- National wholesalers: they are involved in distributing goods all over the nation.
- Sub Wholesaler: are smaller wholesaler who work under larger wholesaler.
The ultimate node in the chain of the middleman, who is involved in directly selling to the consumers. He takes the ownership and transfers it to the consumers. He has all his dealings directly with the wholesalers.
- They form an integral part of the supply chain.
- They also are involved in breaking the bulk.
- They provide storage facilities for labeling and storing.
- They also pass on information to the customers.
THE OTHER PLAYERS
The role of actual purchaser in the market is played by him. He can also act as a dummy for other people. They also place orders on others behalf. When he does trading for his own needs, he clears away his stock through dealers across the country.
The Katcha Arhatia is involved in lending money to the villagers on a precondition such that the output should be cleared via him alone, and therefore has a very nominal rate of interest for the money lent. He also works on commission basis.
He plays the role of the collector and is considered of vital importance when the local mandi is far-off from the village. He also lends money on credit or in regards for some commodity.
THE ISSUES AND CONSTRAINTS IN FRUITS AND VEGETABLES MARKET:
- Lack of basic infrastructure for example cool chains, logistics and supply chain management. The infrastructural problems, pertaining to the cold storage facilities are dual as some places don't have the cold storage while some places have the problem of underutilization of the existing cold storages. The utilization is even lower than 30 per cent of the total capacity in many cases. Development of competitive international transportation, linked to domestic air transport or road and rail transport would help in reduction of post harvest losses.
- Preponderance of Intermediaries in the channel results in unfair and exploitative practices in marketing of fresh produce is very common.
- Lack of proper grading and quality control system.
- Scattered productions and sometimes in isolated places where even the transportation facilities and other infrastructure is not sufficient for the perishables.
- Lack of unity and organization skill among the farming community, which proves a major impediment in the formation of cluster groups and co-operatives.
- Inefficient & Imperfect markets: Due to prevalence of many intermediaries and malpractices followed by them in the price fixation and auction of the perishables in between the marketing channel results in upraise of consumer's price in the producer's share.
- Concept of consumer packaging practically unknown in domestic markets : Improper pre and post harvest handling without any sound packaging leads to heavy loss ranging from 20-40 percent of the produce at the time when its reaches the final consumer.
- Lack of forward & backward linkages: Absolute lack of the much needed quality inputs and extension backup at proper time and after harvest processes.
- Ignorance to new methods of cultivation and dependence on traders for extension knowledge.
- Perishability and Storability: Having limited shelf life due to its typical bio-physic-chemicals constitutions, fresh fruits and vegetables penetration is restricted to the certain niche markets and stakeholders. Besides the presence of insufficient numbers of storages and cool chain facilities adding to the woes.
- Low exports : Emergence of many competitive markets with comparative advantages in awake of the globalization and the imposition of different Tariff and Non-tariff barriers to save the domestic industry by the protection list nations using sanitary and phytosanitary measures (SPS) as their benchmark resulting in the limited exports of the perishable commodities. The window of international demand for the horticultural products is very small. Thus a planned strategy is to be made to target the markets during that period.
- Freight charges: High air freights are also hindrance for cost effective exports. For the exports large fluctuations in the production of fruits and vegetables causes problem in being a regular trade partners.
- Long marketing channel: Prevalence of many of the intermediaries in between the supply chain robbing the lion's share of the producer's by deeply penetrating the consumer's pocket
- Non-functional AEZ: Even after 10 years of starting of the Agri-Export-Zones in deferent specific production pockets of different produces, full implementation is at its nascent stage due to many socio-political reasons. Thus the final benefit doesn't reaching to the destined.
- Poor Post harvest care & handling of the produce: Improper pre and post harvest care and handling leads to heavy loss ranging from 20-40 percent of the produce.
- Absolute lack in co-ordination b/w production targets of concerned department & action plan of the marketing directorate
- Prevalence of primitive methods of selling and price fixation like, secret sale, private negotiation, under cover etc.
- Meager involvement of Government & other co-op. marketing agencies alike to the private agencies
What is cold chain?
Cold chain may be defined as atemperature-controlledsupply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range and helps in extending and ensuring theshelf lifeof products such as fresh agricultural produce*. This is generally absent, but is a critical segment of the logistics infrastructure.
Why are we suddenly talking about Cold Chain?
- We have realized that there is great amount of wastage happening post Harvest.
- This wastage is being estimated at 25% of total produce or approx Rs. 50000 Cr US $ 10 Billion.
- Indian Agriculture sector accounts for 26% of country's GDP, produces 64% employment and 18% of country's export.
- India is 2nd largest producer of Fruits & Vegetable in the world.
- India is the 2nd largest vegetable Exporter.
- India's share is only 1% of World trade.
- Shortages of Cold Storage facilities and Refrigerated transport lead to inefficiency in handling perishables which manifest it into wastages.
- Some estimates say that the post harvest losses of fruits and vegetables alone in India is more than the total production of fresh fruits and vegetables in Great Britain.