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Terminal Market

Terminal Market

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Published by garvit

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Published by: garvit on Feb 21, 2010
Copyright:Attribution Non-commercial

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09/29/2012

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Abstract
The present marketing system, characterized by a long, fragmented supply chain, highwastages, low share of producers in price, is inadequately equipped to meet the growing needs of consumers for quality and safe hygienic food. Terminal market has been envisaged to improveavailability, in terms of quality as well as quantity, from fresh foods as well as of export marketwith benefits to all in the producer to consumer chain. India has embarked upon theestablishment of terminal market with modern infrastructure and operational mechanism. Themajor requirement for a market is its location and layout. The State Government will approve thenumber and indicative location of the TMCs based on the demand, economic viability,commercial considerations etc.
Introduction
With an increasing working population, rising disposable income and greater internationalexposure, the fast growing Indian market is witnessing a paradigm shift in its aspirations andlifestyle. While, food products capture almost 53% of private consumption expenditure and their demand rises consistently at almost 8%, the consumer basket is continuously undergoing changein favour of perishables (such as fruits, vegetables, animal protein, milk etc.) and healthy,hygienic products. The Indian consumer today stands at the threshold of a competitive worldwhere the organized food retailer awaits to utilize numerous opportunities to serve this diversedemand. The present marketing system, characterized by a long, fragmented supply chain, highwastages, low share of producers in price, is inadequately equipped to meet the growing needs of consumers for quality and safe/ hygienic food. Although, India produces almost 10% of theworld’s fruits and vegetables it accounts for a mere 1% of world trade. This small market sharecan be attributed largely due to weak post-harvest infrastructure, inadequate extension support tothe farmer, quality, and hygiene control mechanisms.Thus, in order to harness the potential of the emerging consumer demand (domestic andinternational), a professionally managed competitive alternate marketing structure that provides1
 
multiple choices to farmers for sale of produce along with a comprehensive solution to meet keyneeds of the stakeholders is necessary. Such a system entails a high investment cost and efficientmanagement skills, each of which can be infused by inviting private sector participation in thesector. Thus, the Modern Terminal Markets were conceptualized with the objective of fulfillingthe above goals.The Existing Market structure of fruits and vegetables does not adequately address thecomplex problems of farmers. It has low marketing efficiency, high post harvest losses and doesnot foster competitiveness. A modern innovative system that can reduce the vested interests of alarge intermediary chain, create competition, assure quality and modernize operations with ITapplications in handling of fruits and vegetables, is necessary to raise income of actual farmers.To achieve this objective, National Dairy Development Board was asked to develop andestablish operations for a Modern Integrated Terminal Market for Fruits, Vegetables and Flowersin Bangalore by the Govt. of India. The market is popularly known as SAFAL Fruit andVegetable Auction Market (SFVAM).SFVAM was a special endeavor to bring farmers and wholesalers to a common platform tofacilitate information sharing and to promote the spirit of cooperative movement. The StateGovernment amended Karnataka State Agricultural Produce Marketing (Regulation) Act, 1966,to pave the way for National Dairy Development Board to own, operate and manage fruits andvegetables auction market in the State. The venture facilitates the organization of more than 200horticultural farmers’ associations with around 50,000 grower members for planned and assured production and supply of agricultural produce for wholesale marketing.The SAFAL Market was designed on the lines of European Auction Markets. It offers aclean and hygienic market environment. Components of the marketing system includeestablishment of Wholesale Auction Market, Backward Linkages with Farmers, and ForwardLinkages with the Retailers and Consumers. The market is designed to handle 1600 MT tones of fresh fruit and vegetables per day, operating 312 days in a year.2
 
Terminal Market would endeavor to integrate farm production with buyers by offeringmultiple choices to farmers for sale of produce such as electronic auctioning and facility for direct sale to exporter, processor and retail chain network under a single roof. In addition, themarket would provide storage infrastructure thus offering the choice to trade at a future date tothe participants. It is envisaged to offer a one-stop-solution that provides Logistics supportincluding transport services & cool chain support and facility for storage (including warehouse,cold storage, ripening chamber, storage shed), facility for cleaning, grading, sorting, packagingand palletisation of produce and extension support and advisory to farmers. Each of theseservices would be provided in lieu of a user charge. The TM would be built, owned and operatedin a Public-Private-Partnership Mode by a Corporate/ Private/Co-operative entity (hereinafter called as Private Enterprise) either by itself or through adoption of an outsourcing model.However, implementation and successful operation of this path-breaking initiative wouldnecessitate State Government support. Thus, the creation of a conducive regulatory and legalframework for entry & operation of the project and provision of a level playing field to the private enterprise would be integral to realization of this vision. The Union Government willlend its support to the initiative by providing financial support to the project through the VentureCapital (VC) Scheme of the Small Farmers Agri-Business Consortium (SFAC).The Terminal Market will provide a mega scale collection and sale market of agricultural produce, if established at a convenient location. A selection on pure economic consideration willensure an easy and regular supply of raw material, labour force, accessibility, public utilities likeelectricity, communication, water, etc .an ideal location may not, by itself, guarantee success; butit certainly contributes to the smooth and efficient working of an organisation. A bad location, onthe other hand, is a severe handicap for any market and it finally fails. It is, therefore, veryessential that utmost care should be exercised in the initial stage to select a proper place.A market should be properly designed for its efficient working. The efficiency of themarket depends upon proper usage of allocated space, Circulation and movement patterns,Utility and service distribution. In a properly laid market processing bottlenecks and delays arefew, and material handling costs are reduced.3

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