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Indian horticultural produce supply chains are characterized by strict regulations and large
number of intermediaries leading to low share of farmer in consumer rupee, plethora, lack
of marketing options available to a farmer and poor MIS. In the last 5 years, private
players have started entering fruit and vegetable business in Himachal Pradesh and
started procuring directly from farmers besides providing a host of extension services and
agri-solutions to the farmers/ farming community under one roof.
The study was undertaken to compare price realization of apple farmers of Himachal
Pradesh under two different supply chain models:
1. Supply chain developed by private sector company under public-private partnership
model
2. Traditional fresh produce supply chains as has been in existence in Himachal
Pradesh for decades.
This study of the apple value chain of Himachal Pradesh is based on field visits and series
of discussions with farmers, pre-harvest contractors, consolidators, commission agents at
APMC mandis, transporters including refer truck providers, managers and members of
various NGOs, members of apple grower’s associations, representatives of various private
players like CONCORE, Reliance Fresh, Field Fresh, Mahindra Shubh Labh and owners of
Controlled Atmosphere warehouses like Adani Agro Fresh.
Grower: The apple growers take care of their orchards throughout the year, add
manure/fertilizers, remove weeds and prune their trees. A lot of new generation of
growers is now practicing scientific techniques of cultivation learnt through extension
agencies especially provided by various private players like Adani, CONCORE, FieldFresh,
Mahindras etc.
Pre-harvest contractor: These contractors travel across villages, inspect apple orchards
post flowering and fruit formation, generate production forecasts and enter into
agreements with farmers. Thereafter, they hire skilled harvesters and packers who take
care of plant protection, irrigation, wrapping of poly ethylene sheets around apple bunches
and theft prevention.
Growers’ cooperatives: It was observed during the survey that farmers in about 40
villages of Churag and Pangana divisions in Karsog valley of Mandi district in Himachal
Pradesh have formed a ‘Karsog Valley Farmers Cooperative Society’, which is a body of
around 350 growers and marketers who now intend to sell their produce directly in big
cities under their own brand name ‘North harvest’ and thus get rid from the web of
middlemen and increase their price realization
Commission agent: The commission agent facilitates the transaction process between
wholesalers and forwarding agent.
Source:
In the last couple of years various players beyond APMC like CONCORE, Reliance Fresh,
Field Fresh, Mahindra Shubh Labh and Adani Agri Fresh have starting procuring apples
directly from farmers. This has become possible as in Himachal Pradesh; reforms to APMC
Act have been done. Under the new Act amendment in Himachal Pradesh, private players
are allowed to open and operate agriculture markets, where farmers can sell their
produce. There is no compulsion on the farmers to bring their produce to the market yard
as they now have the option of selling their produce directly to private parties, food chains
and retailers.
Table 8.6B: Apple Procurement by Private Players in Himachal Pradesh
Adani Enterprises is one of the leading trading houses of agro commodities. Adani's Agro
commodities business is focused on trading in various agro products in India and
internationally, including grains, pulses, castor and soya.
Adanis realized that despite being the second largest producer of fresh fruits and
vegetables, India is a virtual non-entity on the world trade map in terms of the global trade
volumes. Due to lack of post-harvest management facilities, absence of suitable cold
stores and the lack of an organized distribution system, the wastage of fresh produce in
India is as much as 40%. The domestic market is characterized by oversupply in the peak
season and shortage in off season, resulting in off season prices that are often 3-4 times of
season prices. The lack of appropriate storage and logistic infrastructure jacks up the
prices for the ultimate consumers. As a result, neither does the produce reach the
consumer in the optimal condition nor does the producer get fairly remunerated.
Adani’s strategy is to concentrate on those fruits that are produced far from major
consumption centers, are seasonal in nature and are amendable to increase in storage life
using modern integrated cold chain facilities. This would enable them to leverage on its
logistics strength while at the same time take advantage of controlled atmospheric
storage technology to arbitrage on the price differential between peak and off peak
season. Initially the project is focused on apples and then they plan to diversify into other
fruits and vegetables like banana, grapes, lime, litchi, mango, mosambi, pineapple,
papaya, brinjal, bitter gourd, green chillies, peas, cabbage, cauliflower, ginger, garlic, etc.
In Himachal Pradesh, Adanis identified many constraints and in order to strengthen its
position aimed at the following aspects:
Adani Agri Fresh started its operations in September 2006, by contacting farmers for
procuring the produce (apple) at an announced price and with certain specifications. Since
then they have Adani Agri Fresh Ltd set up Controlled Atmospheric Storage units at three
locations (Rewali, Sainz, Rohru) in Himachal Pradesh with a capacity of around 18,000 MT.
Each site has been constructed with 7 Blocks of 6 Chambers totaling to 42 chambers at
each location. ‘Controlled Atmosphere Technology’ increases the shelf life of apples.
Adanis procure apples from the farmers’ right at the orchard site or at their collection
centers conveniently located close to the farmers. The farmers do not have to bear any
marketing cost such as cost of box, transportation to the markets, commission, and
market fees etc. This totally eliminates any risk of farmers during transportation as well as
drastically reduces his price risk. Adanis provide plastic crates to the farmers and also
impart training on scientific cultivation, pest management and post harvest management
practices. At the pack house apples are cleaned, washed, sorted, and graded for both
quality and color by sensors. Finally, the apples are put under CA storage for better shelf
life.
From Table8.6 B, we can see that the farmer’s price realization from Adanis supply chain
has increased by 34% of the wholesale price as prevailing in Delhi’s Azadpur market.
Moreover, his risk of price fluctuation and wastages also gets reduced. This helps him to
plan his future investments in upgrading his farm and accept latest scientific technologies.
Table 8.7 B: Producer’s share in Whole sale price: Adanis versus
Traditional Supply Chain
The model adapted by Adani enterprise in designing the supply chain to improve price
realization of farmers clearly explains the role of different players in the supply chain to
bridge the gap existing in the traditional agri- supply chains.
The study suggests that public private collaboration through contract/corporate farming
would help understand functioning of domestic and global market and their implications.
The private players can provide both backward and forward integration to the farmers as
well as in building the capacities of all the stakeholders. With the creation of specialized
market infrastructure, post harvest losses can be minimized if quality aspects are properly
managed and would result in higher returns to the farmers and the consumers will get
better returns. Horticulture at national and international level would meet the long felt
need of planners and private sector for better management, and safeguarding against
supply shocks and price risk.
Some of the measures that Uttar Pradesh can take to re-design the supply chain for
improving the competitiveness of the fresh produce are as follows:
i. Integrate supply chain for fresh market, processing and export
ii. Sorting, grading and packaging to be done closer to production areas
iii. Setting up of a network of ‘Collection Centers’ / ‘Value Added Centers’ with basic
postharvest
iv. facilities
v. Introduce Returnable Packaging for fresh produce to avoid multiple handling and
minimize wastages
vi. Establish common cold chain facilities for marketing perishable products
vii. Encourage Contract Farming- provide direct linkages with farmers [market by-pass]
viii. Invest in training of farmers’ especially small and marginal farmers on practical
agri-techniques, pest management and post harvest practices.