Fruits and vegetables Sector of India



* Drawing the supply chain for the industry

* A study of the various intermediaries involved in the process

* The issues and obstacles faced by the industry

* Cold Chain


* The various Government initiatives taken

* Public Private Partnership (PPP)

* The presence of Private sector

* Also I would like to add some successful cases (models) with regards to modern infrastructure and supply chain.


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.


1. 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.

2. 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.

3. 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.

4. Quality variation of products: No adherence to GAP practices leads to variation in quality

5. Irregular supply of products: Seasonability and non planned insufficient production creates gluts and shortages in the market.

6. Small Holdings size & scattered production processing: As majority of the Indian farmers falls in marginal and small category.



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.


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:

1) Local wholesalers: the one who supply their goods to local retailer.

2) Provincial wholesalers: also referred to as the distributor who sells his goods to a particular district or state retailer.

3) National wholesalers: they are involved in distributing goods all over the nation.

4) 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.

Main function:

1) They form an integral part of the supply chain.

2) They also are involved in breaking the bulk.

3) They provide storage facilities for labeling and storing.

4) They also pass on information to the customers.


Pucca Arhatia:

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.

Katcha Arhatia:

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.

Village Merchants:

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.


1. 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.

2. Preponderance of Intermediaries in the channel results in unfair and exploitative practices in marketing of fresh produce is very common.

3. Lack of proper grading and quality control system.

4. Scattered productions and sometimes in isolated places where even the transportation facilities and other infrastructure is not sufficient for the perishables.

5. Lack of unity and organization skill among the farming community, which proves a major impediment in the formation of cluster groups and co-operatives.

6. 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.

7. 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.

8. Lack of forward & backward linkages: Absolute lack of the much needed quality inputs and extension backup at proper time and after harvest processes.

9. Ignorance to new methods of cultivation and dependence on traders for extension knowledge.

10. 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.

11. 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.

12. 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.

13. 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

14. 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.

15. 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.

16. Absolute lack in co-ordination b/w production targets of concerned department & action plan of the marketing directorate

17. Prevalence of primitive methods of selling and price fixation like, secret sale, private negotiation, under cover etc.

18. 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.

Why there are Losses in Post Harvest of Horticulture produce?

* 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.


Employment Generation

More job opportunities are created owing to the value addition being done in the food processing industry. This would also boost the purchasing power of the consumers.

Better Price Realization for Farmers

The wastage that happens due to the loopholes in the cold chain i.e. inefficient transportation and infrastructure facilities which further leads to bad pricing, suicides can be curtailed.

Improvement in Quality

Apart from containing the loss of agri and horticultural produce, one of the larger benefits would be improvement in the quality of the produce. The improved quality would result in increasing export of horticultural products and indirectly realizing in better prices for the farmers.


PPP has been successfully applied in Finance/BOT, large scale infrastructure and Social service with better efficiency. But, has limited application so far in agriculture, which is limited to Rural Roads & Irrigation. There is a Need to motivate more private investment into the agriculture sector Not only to start new projects but also to support and maintain the existing public structure. We need to attract private participation in agriculture by

* Defining Clear Priorities

* Ensuring a fair transparent process

* Providing incentives for the investor

Procurement Models: PPP

* Deeper engagement and facilitative role of government

* Enable robust private sector participation in procurement

* Role play against defined mandate

* Focus on building alternate mechanism for product evacuation

Critical Parameters for Success

* Sustainable

* Value creating

* Physical infrastructure

* Regulatory environment

* Superior value proposition

PPP Impact

* Rise in farm incomes

* Large scale credit access

* Increasing farm productivity

* Improvement in Quality

* Increased employment generation at farm-gate

* Major exports drive

* Social/Economical welfare of rural markets


NABARD, in one of the occasional papers published in 2003, stated that nine non-public sector agencies are mainly involved in Indian agriculture. There are-input agencies, large agri-business houses, agri-processing firms involved in contract farming, farmer organizations and producer

Co-operatives, non-government agencies, media and web-based agri service providers, financial agencies, agri-consultants and informal extension agents.

The private investment in agricultural sector is on the rise and several agribusiness companies have developed new models to reach to farmers. A few models have been discussed here:

* e-choupal

* Tata Kisan Kendra

* Mahindra Krishi Vihar

* Hariyali Kisan Bazaars

* Indiagriline

* Pepsi Co Contract Farming

* Private Media


Traditionally, the farmer bought the agricultural inputs from the market and sold produce to the market through the agents or brokers. In doing so, they pay more for the agricultural inputs and also had the uncertainties whether they can sell produce at the desired or at least the minimum cost which could repay their agricultural input costs. Moreover, the farmers also did not get the good return even if the quality of the produce was good.

To solve the above mentioned problems, ITC in June 2000 launched the concept of e-choupal. Initially, it faced a big resistance from agents and the brokers in implementing this concept. This model came into picture because of the challenges faced by Indian agriculture. These challenges are fragmented farms, weak infrastructure and the involvement of numerous intermediaries and marketing of the produce in a reasonable price. But ITC made these agents as the important element in its value chain called as Sanchalaks who now supervise and coordinate the activities in e- Choupal. Thus ITC deleted Pakka (large traders) and Kaccha (small traders) from the traditional value chain.

ITC has now 4100 choupal in six states, covering 23,000 villages, providing services to 2.3 million farmers. It targets to cover 1 lakh villages, 25 million farmers, and to establish 20,000 more e-choupal in 15 states by 2010. It basically utilizes the information and communication technologies to deliver the farmers needs related to cropping information, commodities pricing. It also procures the agricultural produce at the assured price for the quality product and decreases the wastage in weighing and procuring crop produce from the field to the factory. In a nutshell, e-choupal:

* Makes the agriculture supply chain more efficient and enables in delivering a value to its customer.

* It eliminates the existing marketing inefficiency in agricultural marketing caused by multiplayer structure of intermediaries.

* Provides good infrastructure and technologies to cater the agriculture sector.


A wholly-owned subsidiary of tractor major Mahindra Shubhlabh came into existence to provide total farm solution to the Indian farmers. There were two aspects to the business, one was the commodity trading and second one was to provide one stop shop to the farmers for all his needs. This is like providing total solution to almost all the problems of Indian farmers. The constituent of the Shubhlabh model was to provide: (1) Arrange all agri-inputs such as seeds, fertilizers, and pesticides and so on to farmer, (2) Rent out farm machinery like tractors, transplanters and other special machinery that helps to reduce the cost to the farmer, (3) Provides commercial agricultural extension by bi-weekly visits to the farms, (4) Offer crop spraying, harvesting and post harvesting services, and (5) Provide commodity trading in final produce of the farmers. Initially these both aspects of business were supposed to be highly IT driven. Based on a white paper by a leading consulting giant, Mahindra and Mahindra identified provision of total farm solution to Indian farmers a great opportunity. Both commodity and farm solution were suppose to be highly Information technology driven models.

In order to increase its reach to remote off villages, it adopted a hub and spoke model.

The first total farm solution shop was opened by MSSL in Madurai. Tamil Nadu was favored to other states as spillover effects in case of a problem were expected to be less. It was also an ideal selection because MSSL wanted to begin its work in paddy. Mammoth investments were made at Madurai (the first center). The super market for farmers should have a good area, a place in the outskirt of Madurai was identified, some material placed. Tie-up with the input companies was not difficult on account of the Mahindra brand name and the fact that this was an experiment. Investment in IT was also made.

Initially, hub and the spokes were to be operated with the help of franchises. Franchises were expected to make huge investments, and pay a non-refundable sign up fees. Franchises were to reach the villages. The initials model's project was approximately 1 crore rupees. This included almost everything, the cost of property equipments land for carrying out agri R&D, computers, tractors, other implements office space and working capital required. The sign-up fees were rupees 5 lakh. This fee was non refundable. Mahindra also had had to invest to set up systems and procedures. Mahindra expected a lot up sign up by prospective dealers (franchises), the belief was that the franchises was getting (1) definite sale through registered farmers, and also the products recommended by Mahindra's for farming. They were obviously of high quality and had relatively better margins. (2) Money will be made through farm consultancy fee that the farmers will pay. (3) The franchises were getting the distributorship of sorts of various companies in one shot without paying deposits. (4)He would earn money through equipment rental.

Theoretically, this sounds fine; such models of total farm solution operating in western economies ignore the ground realities of the Indian agricultural economy. The non-refundable sign-up fees came as a major stumbling block, most dealers in agri-input industry have to give only security deposits against which they either get a fixed deposit interest or get materials worth that amount immediately. Many of the dealers, which had the capability to invest, were already one stop shop themselves dealing with a whole host of input companies as distributors, giving farmers advice informally from their shops and doing farming themselves. They also had field assistants and contract employees from companies like BASF, Bayer and other agrochemical majors who do field trials demonstration too.

The input industry is a highly credit driven industry. The credit given in this industry is quite high and often span from 90 days to 180 days. The dealers rotate five lakh and can do a business worth a crore. Any new business model should provide that opportunity. MSSL seems to be adamant and their belief that they were creating value for the franchises played havoc with their business model. Instead of educating and developing dealers they relied on their brand equity and were taken aback when there was not a single sign up in the first phase. In just eight months the sign up fees was brought down to 47 lacks, though the sign up fees was maintained at Rs 5 lacks. During the same period IT model was abandoned, as they realized that franchises viewed it as a useless investment. The new young and dynamic team recruited by MSSL could not make this model work.

After two years MSSL was at around 5 to 8 percent of its projected revenue. Only five centers were operational against the projected forty. In the third year of its existence, the e-agri the commodity trading where nothing was going right was shut down. Employees adjusted in one stop shop. Even the separate offices were shut down and the staff was told to share the offices of Mahindra and Mahindra tractors. With the lowering of the project costs at the end of the third year there were around 12 centers operating. Four of them were joint ventures in Kota, Madurai, Miralguda and one more. There were around 8 sign-ups in all and turnover was around Rs.6 crores. It had a total manpower of 65.

At the end of the third year, the business model was redefined once again. MSSL brought down the signup fee from Rs.5 lakh to Rs.3 lakh. Project cost was brought down from 47 lakh to 27 lakh; with an inbuilt flexibility of it being brought down further to facilitate new sign-ups.

Having shut e-agri, the fund released was used for business development of MSSL. The company expanded again to other territories viz., Gujarat, Madhya Pradesh, Maharashtra and Chhattisgarh. While these sign-ups were taking place the old centers with higher investments were expecting high services and were getting impatient. This led to many legal cases and closures of centers. The model was tinkered once again and the sign-up fees were brought down to Rs.1 lakh and that, too, it was refundable. The sub franchises were given only one tehsil as against one district earlier. The number increases on one hand closures too increase on another.

In the meantime, the IFC funding of 11 crores has come at the right time. This funding with its well-laid conditions may not be sufficient. Mahindra Shubhlabh is now trying to rework both operational and strategic intent of the model so that Farmer's appreciation of farm solution and the entire process improves.


The agriportal ( was developed* by using in-house expertise (EID Parry's Sugar and Farm Inputs Division and Corporate Research & Development Lab). So far, EID Parry has set up Internet kiosks in 26 villages around its Nellikuppam factory in the Cuddalore district in Tamil Nadu on a pilot scale. It fashioned a franchise-based business model to meet the demand for information and connectivity. These kiosks are owned and operated by franchisees trained to operate the system.

Franchisee-Based Model

In this model, EID Parry allows the franchisees to use its brand, procure commodities on its behalf, and sell its products or services.

Risk Distribution

By adopting a franchise-based business model, EID Parry has been able to keep its fixed costs low. Although EID Parry covers the cost of establishing the infrastructure for voice and data connectivity, each franchisee invests approximately Rs. 50,000 to cover the cost of the computer and all related equipment. The operating costs of running the kiosks, such as electricity and connectivity charges, are covered by the franchisees.

Scale-Up Efficiency

For EID Parry, franchising is a cost-effective way to build a chain of many kiosks all operating under their banner. This cooperative relationship builds a win-win situation for both parties involved. It provides the incentives each party needs to contribute to the other's potential success.

Potential of the Small-Scale Entrepreneur

This model makes an attempt to leverage the potential of the small-scale entrepreneur. The franchisee partner owns the business and shares with EID Parry the risks and rewards of operating the kiosk. For the entrepreneur, franchising greatly reduces the risk of business ownership when compared to launching a new business from scratch. The franchisees can leverage the EID Parry brand name to attract customers to their location for selling products or services. They also benefit from a wealth of knowledge transferred to them by EID Parry on how to successfully manage and operate the Parry's Corners. EID Parry also offers assistance in financing the franchisees through arrangements with third-party lending institutions such as Indian Bank.

Franchising in the Rural Context

A Parry's Corner franchisee bears business risk and is likely to be motivated to operate a profitable kiosk. He is likely to play an active role in marketing the products and services offered, identify and bring in products and services demanded by the community, and look for innovative ways to increase his revenue stream. In a rural setting where literacy rates are low and fear of and resistance to technology are high, an enthusiastic and profit-minded entrepreneur willing to influence the people can play a vital role.


In 1989, PepsiCo started contract farming in India. PepsiCo provides machines and other inputs for tomato, chilly, basmati rice and peanuts contract farming. The practice was started at Zahura village in Hoshiarpur district and now covers different districts of Punjab. Contract farming is one of the options to create a friendly environment within the private sector for agriculture development and extension of services which deals with the system for the production and supply of agricultural and horticultural produce under forward contracts between producers/ suppliers and buyers. To win the confidence of the local farmers, PepsiCo partnered with Punjab Agricultural University (PAU). Because of contract farming in Punjab, the yield of tomato and chilly has increased by three and two folds respectively.

In the views of PepsiCo, land preparation, mechanization of operations, local extension service team, supplying the agricultural equipment free of cost, maintenance of proper logistic system and procurement of the output at the right time are among the key elements of contract farming.

Contract farming in this case can be regarded as rural development solution to improve agricultural productivity along with the promises to provide the assured price. The contractor also gets the quality output and maintains a long-term partnership with the farmers.

However, the contract farming is not successful because of certain bottlenecks. Among these are high transport costs, inadequate cold storage facilities, unreliable suppliers of raw materials etc. Moreover, the government must abolish the taxes, duties on procurement materials and should exempt taxes and duties in the import of agri-equipment which will bring down the input cost.


There are several private media which disseminate the information to the target audiences like agricultural graduates, farmers, agri-entrepreneurs etc. A few examples are:

* The Hindu allots one page for agriculture on every Thursday.

* Teja TV in AP telecasts live phone programs on agriculture.

* E-TV telecasts a daily program on agriculture in local languages.

* releases the newsletter on agriculture.

* provides the agriculture related information by internet kiosks.

* Websites like, and provide information on the production and marketing of agricultural commodities.


Two case studies discussed in this section show, how certain models have helped in managing the constraints of infrastructure, credit availability and extension services and have built up a smooth supply chain.


Structure and Functioning

To modernize the marketing of horticulture produce, an alternative system was introduced by the National Dairy Development Board (NDDB). This is a terminal wholesale market that operates parallel to, and in addition to, the present system of four wholesale markets in Bangalore. This market was setup to bring in transparency and provide a common platform for the buying and selling of the agricultural produce by connecting growers through Growers' Associations with farmers and the bulk buyers present all over the country (SAFAL website). This model involves establishment of an alternative marketing structure that provides incentives for quality and productivity, thereby improving farmers' income. Through this approach, an increased integration is expected between growers, wholesalers and retailers into the market system.

The SAFAL Market is an establishment with an auction facility through clock auction; backward linkage through farmer associations; and forward linkage in the form of cash and carry semi-wholesale and retail stores. SAFAL Market as a terminal market is capable of handling approximately 1,600 tonnes of fresh fruits and vegetables per day at full capacity, catering to about 30 per cent of the estimated demand of Bangalore (Chengappa and Nagaraj, 2005). The market infrastructure has facilities of cold storage, grading, sorting and distribution.

Backward and Forward Linkages

The market is supported by 250 Horticultural Farmers' Associations organized throughout India with more than 20,000 members. These farmers' associations are linked to 40 collection centers that are equipped to meet the specific or special requirements of buyers, in terms of quality control, packaging and weighing. Individual growers are being trained on quality management and are provided extension services. Logistics support in terms of packaging and transportation of produce is also arranged on behalf of the growers on pre-fixed charges. More than 200 varieties and qualities of fresh fruits and vegetables are sourced in SAFAL Market. The farmers are made aware about the demand of the produce in advance by the procurement department of SAFAL and this ensures a consistent supply of produce in line with its quantity and quality specifications. Farmers as well as the wholesale purchasers have to register themselves with SAFAL Market on a very nominal charge and become its member, to involve themselves with the daily transactions. This enables the SAFAL management to have a chain of consistent suppliers and buyers and also in planning of their future demand.

Farmers' cost on marketing of their produce through the collection centers of SAFAL has been found to reduce by almost half. A traditional commission agent was charging them 8-10 per cent of the selling price, while the handling charges at SAFAL Market are only 4.25 per cent (Chengappa and Nagaraj, 2005). Farmers are given payment for their produce on weekly basis through an account payee cheque. Farmers selling their produce to SAFAL could realize 10-15 per cent higher profit than that through the traditional channel (Chengappa and Nagaraj, 2005). The gains were through proper weighing of produce, low transaction cost, less input cost, efficient transportation, less wastage, right price and extension services. Farmers were found ready to supply even more than the indent given by SAFAL. Farmers had appreciation for the technical service rendered by the SAFAL.

On the forward linkages side, wholesalers participate in auctions at the Auction Market Complex or can even bid using Remote Electronic System. The auction takes place in two parallel set-ups of clock auction halls. Wholesalers find it an added advantage in coming to the SAFAL terminal market, where all the produce is auctioned at the same place rather than at fragmented four product-specific wholesale markets in Bangalore. Although the SAFAL Market is located very far from the city and auction takes place early in the morning, the purchasers find themselves in advantage dealing through SAFAL terminal market. Forward linkage is carried out through 10 to 12 cash and carry stores, owned by the auction market and constructed at strategic locations in the city to cater to the requirements of the local retailers. Four distribution centers at the Auction Market Complex cater to the requirements of the large institutional buyers. Cold storage facility is also available for the wholesalers and other market users on payment basis. Incentives to the wholesalers are assured in terms of availability of quantity and quality of fresh fruits and vegetables, graded and quality checked in wholesaler/retailer - friendly packs for easy handling and transport. The state-of-the-art fruit ripening facility, assured quick and efficient dispatch of produce per auction and online wholesale price information of all items in major markets are also made available at the SAFAL Market to help buyers and suppliers in their decision-making.

Benefits and Constraints

The SAFAL Market, by and large, has helped in establishing a smooth Supply chain involving the producer, wholesaler and consumer. But, there are still certain constraints which, if taken care of, will further strengthen the SAFAL Market model and provide a good example to be repeated in other parts of the country.

Since SAFAL procures only that produce which complies with certain grade standards, farmers depend on the commission agents or local merchants for selling of their remaining produce. Therefore, it is highly desirable that the entire marketed surplus is collected by SAFAL, which will earn it farmers' support in the long-run. Introduction of direct procurement from the field would be an added incentive to farmers. Some farmers have not been able to gain full faith in the working of SAFAL so far, as they believe that if they start transacting through SAFAL, then they might lose the market through the traditional commission agents and may land themselves in trouble if this initiative fails. Because of better transportation and cold storage facilities, traders prefer to purchase highly perishable commodities from the SAFAL Market while the less perishable commodities (like onion, potato and garlic) are largely procured from the regulated market. Also, location disadvantage to traders, inconvenient auction timings and grading procedures keep many of the traders away from the SAFAL Market. The biggest challenge is to break the long prevailing and very strong link between farmers and commission agents. If introduction of this system impacts their incomes, it will be even more difficult to de-link them from the supply chain.

The SAFAL Market needs to mobilize large buyers like hostels of educational institutions, community hostels, hospitals, canteens of commercial establishments/ factories and other food retail chains, etc, in and around Bangalore to increase their traded volumes and run at full capacity. This might come through in the next few years once more awareness is generated among the farmers and wholesale buyers. A brand image will help them run the organization on higher volumes. More aggressive setting up of semi wholesale outlets is needed in and around Bangalore to mobilize small buyers. The existing market outlets of Khadi and Village Industries Commission (KVIC), Horticultural Produce cooperative Marketing Societies (HOPCOMS), Super Bazaars, etc. should be used rigorously. SAFAL should try to meet the credit needs of buyers as well as farmers, and play a role more than just being a wholesale marketer.

To sum up, the SAFAL Market initiative is an example of improving the Supply chain leading to the development of all the stakeholders, with special benefits to the farmers. If the above suggestions are implemented, the possibility of adoption of such a model market will be large and will provide a key to the success of horticulture sector in India. The SAFAL Market in a short span of time has been able to increase integration among growers, wholesalers and retailers into the market system in contrast to the present traditional wholesale markets. The SAFAL Market being a one-stop shop for buyers and sellers of fruits and vegetables needs to create awareness in both buyers and sellers to congregate at a point.


Structure and Functioning

Namdhari Fresh is a part of the Namdhari Seeds, who are the market leader in the Indian vegetable seed industry and are gradually moving towards becoming the market leader in organized retailing of fresh fruits and vegetables also. Namdhari Fresh gets fruits and vegetables cultivated through contract farming, on their own land and green houses and handle more than thousand tonnes of fresh vegetables and fruits per day at domestic and international markets. Availability of sufficient infrastructure, technical manpower and the applications of advanced technology in production, processing, quality controlling, grading, packaging, storing, transportation, communication and dedicated skilled laborers enable them to meet the international standards.

This unit of Namdhari Seeds was started in the year 2000 with a view to exporting of fresh vegetables and fruits and later, the vision was enhanced to provide a premium quality produce to domestic customers also. Presently, more than 40 different vegetables and fruits are being cultivated by Namdhari Fresh at various productions centers across the country (Namdhari Fresh Website). European standards of good agriculture practices (EUREPGAP) are strictly followed at the production level. Their agri-products are mainly destined to Europe, Australia and the Middle East. Namdhari Fresh is also involved in natural farming to produce and supply ‘organic' vegetables and fruits in the international market. To ensure quality, an effective extension team monitors the farms and advices the growers. Namdhari Fresh also performs shelf-life test of the produce under different temperature conditions, and these results will be used to improve the shelf-life of the produce. The packaging section is geared up to hygienic handling of the produce so that the consumers receive a clean, hygienic product. The presence of international airport in Bangalore facilitates them to deliver a quality produce to the international clients in time.

Backward and Forward Linkages

Namdhari Fresh follows the model of contract farming through a strong network of over 2000 farmers and own capital farms in different parts of the country. The procurement of produce from farms in different regions enables them to get a continuous supply of various fruits and vegetables round the year. Complex of Namdhari Fresh is located in a village called Bidadi on the highway connecting Bangalore and Mysore. It enters into an un-written contact with the farmers for cultivation of fruits and vegetables for it. These farmers were earlier engaged in production of rice mainly for self-consumption, and pulses and some oilseeds for marketing and earning income. Merely 5-10 per cent of the total land was being allocated to horticultural produce earlier, but after the contracts with Namdhari, a significant portion of the land is being diversified towards production of fruits and vegetables, with some area for production of staple foods for self-consumption. The members of the farmer's family, especially women, also get employment at the Namdhari procurement house for carrying out activities like sorting, grading and packaging. The educated youths who were earlier migrating to urban cities in search of jobs, now get employment at the Namdhari Fresh, as per their ability. Besides providing employment, Namdhari extends some social benefits also to the farmers and their families like transportation facilities to children for going to school, heavily subsidized mid-day meals, and loans at low interest rate for marriages, etc. Seeds, fertilizers, pesticides and other necessary inputs are also provided by Namdhari at wholesale rates. In the case of crop failure, the farmers are given financial assistance at very low rate of interest. The long-term association of farmers with Namdhari has enabled them to earn sustainable high income and protects them from market fluctuations and risks. Also, diversification to horticulture has empowered them to en-cash the gains that this sector is getting in the economy at present. The improving socio-economic condition of the farmers is encouraging them to work more efficiently and productively. Namdhari produces several vegetables like ladyfingers, bottle gourd, bitter gourd, brinjal (different varieties), bird-eye chilies, and capsicums (of different colors'); fruits such as pineapples, custard apples, Chinese and Australian pears, kiwi fruit, watermelons, Japanese melons, muskmelons, cantaloupes, grapes and Californian plums. Some exotic vegetables are also grown on its farm in Bidadi; these include baby corn, asparagus, zucchini, broccoli, cherry tomatoes, sugar peas, lettuce, etc. If a farmer under the verbal contract betrays and sells his produce to someone outside, then he is debarred and never allowed to deal with Namdhari. To ensure freshness of the horticultural produce till it reaches the consumer, the company has a strong cold chain network right from the farm gate. The transportation of produce in refrigerated trucks helps in the removal of field heat before transferring it to the pre-cooling room. The grading and packing of produce are done under cool conditions. The packed fruits and vegetables are stored in the cold rooms before being air lifted to the destinations, largely to United Kingdom, The Netherlands, France, Italy, Germany, and other EEC countries as well as Far-East and South East Asian countries. During transit in the air also, the product is stored at lower temperatures. Thus, an uninterrupted cold chain network makes Namdhari Fresh to deliver the quality vegetables with optimum freshness. The whole process is supervised and checked by the trained agricultural graduates. The retail outlets of Namdhari Fresh cater to the demand of organic and non-organic horticultural produce by the domestic consumers. In the retail outlets also, the temperature is maintained at 10 °C in the racks where produce is displayed for sale.

Benefits and Constraints

Namdhari Fresh provides a good example of a successful case, depicting improvement in the socio-economic conditions of the farmers through their sustainable development, rising income levels and more job opportunities. Contract farming, unlike corporate farming, brings farmers into the mainstream of the economy. It reduces their market risks, and enhances supply chain efficiencies by providing both knowledge and material inputs. Farmers associated with Namdhari for a long time have full faith on the system. The products of Namdhari Fresh in the domestic market are often rated as over-priced by the consumers, but Namdhari claim it to be a premium price for the quality of the produce they supply. Namdhari Fresh model operates on a very small scale, and is able to meet the administrative and infrastructural constraints to turn out to be a successful model. If this model is expanded, then the viability of this project would largely depend on the managerial capabilities and development of infrastructural facilities.

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!