Garlic Forward Buying Project

Garlic Overview
• India Produced 2920 Thousand MT of Garlic in 2019-2020.
• Madhya Pradesh and Rajasthan are the leading producer of Garlic with approximately 75% share.
Production Regions

Production State Major Producing Cities

Madhya Pradesh Mandsaur, Neemuch, Ratlam, Ujjain

Gujarat Junagarh, Dahod, Rajkot, Jamnagar

Rajasthan Kota, Baran, Chittorgarh, Pratapgarh

Haryana Karnal, Sirsa

Karnataka Bijapur, Belgaum, Haveri, Dharwad

Telangana Medak, Nizamabad, Adilabad

Bihar Pashchim Champaran, Araria, Samastipur • Garlic is a Rabi crop in majority of the
producing belts.
Uttar Pradesh Coochbehar, Hoogly, Medinipur East
• Garlic arrivals after the harvesting season is
generally from the storage, nearly 70% of the
Garlic produced is stored.
Crop Calendar - Garlic

• Garlic is a Rabi Crop which matures in 110–160 days depending upon the variety –

➢ Sowing period – Oct to Nov mid

➢ Vegetative Growth – Nov to Jan
➢ Maturity – Jan to Feb
➢ Harvesting – Feb mid to March
➢ Curing – March
➢ Storage- April to May
Garlic - Varieties

Variety Shelf Life Size Characteristics

Desi (Yamuna/Amleta) High 25-50 High pungency, high disease resistance

G2 Medium 30-55 Similar to Desi variety, larger clove

Ooty Low 35-65 Low pungency, high moisture

• Desi Variety Garlic is best suited for storage owing to its better shelf life and
disease resistant characteristics
 Garlic Value Chain Analysis

• Farmer’s
1.79% 0.79% 4.74% 7.47%
• Mandi • Packaging • Wastage • Retailer
Realization • Aadhati Tax • Labor • Logistics • Destination
Commission Trader

44.7% 0.67% 0.57% 8.98% 30.2%

• Stakeholders and their percentage share in consumer’s rupee

Previous Year Price Trends & 2021 Outlook

Prices in 2021 are expected to follow the general trend

(lowest during the harvesting season (Mid Feb - Mid April)
and then gradually rise across the year) due to following
reasons -
1. Sowing is 40%-50% higher than the previous year.
2. Untimely Rainfall in early days of crop in many parts of Malwa
region has caused yellowness in the crop which will lead to
lower yield.
3. Damage in crop due to thrips.
4. Less rainfall in many parts of Malwa region will result in lower
sustenance of crop.
5. Owing to its immunity boosting capabilities demand of garlic is
expected to be high for this year.
6. Overall production of garlic is going to be on similar lines
as that of previous year ~ 2900 thousand MT

Above mentioned points suggest 2021 to be an ideal year for storage

Garlic – factors that will influence Garlic Prices
• Export Permission – Incase government gives export permission prices will increase
• Virus & thrips on crop – If higher proportion of crop is affected it will lead to higher prices.
• Smaller size of Garlic in 2021 – This year due to less rainfall in certain Garlic sources size
of garlic is expected to be smaller, thus it will lead to high prices of acceptable quality Garlic.
• Total Production – In a survey conducted among farmers regarding Garlic production,
nearly 50% out total 1800 voters said that production is nearly half of last year’s.
Garlic Storage
Storage Facility - Garlic

• Garlic does not require sophisticated storage facility;

thoroughly cured garlic bulbs are stored well for long durations
in ordinary well-ventilated rooms.

• Garlic packed in Nylon netted bags have less storage losses

because of good ventilation.

• Single stacking of bags is found to be optimum for storage,

more the layers of greater the weight losses. Ideal height of
stacking should be ~ 3 Feet.
 Storage Location - Mandsaur
• Why Mandsaur and not Neemuch?

• Better quality of product in terms of shelf life and color.

• Larger availability of MP Garlic as compared to Neemuch which also has

arrival of Rajasthan Garlic which is inferior to MP Garlic.

• Relative proximity to southern city of Bangalore, Hyderabad and Chennai

where majority of supply will happen.

• At par with Neemuch in terms of connectivity and infrastructure availability.

 Supply Chain – Consolidator Procurement
Consolidator’s area of involvement

Resell of
Udaan’s S&G before Storage Dispatch
Farmer Consolidator unacceptable
Procurement storage Phase Stage
stock

Consolidator’s Role – • Constant movement of material

• Procurement of Garlic in storage in every 10 days.
• Resell and realization of unacceptable lot • FIFO based withdrawal and
• Spot Payments Re-Inventorization.
• Local Liasoning – Labor, Packaging,
Transportation to Storage
• S&G of material
 Supply Chain - Farm Procurement

Liquidation of
Procurement Sorting and Packing of Storage Withdrawal
Unacceptable
from Farmers Grading S&Ged Garlic Phase Phase
lot in Mandi

• For S&G material will be taken to S&G vendors facility.

• Unacceptable lot will be liquidated in Mandi.
• Packaging will be done at S&G facility.
 Procurement - Farmers
• Approaches –

• Procuring from farms

• Setting up a private procurement facility (At Storage Facility).

• Challenges -

• Low maintenance Required by Garlic – Unlike Potato and Onion which require specialized storage facility Garlic is generally
stored by farmers in their home. Therefore, by and large tendency of farmers to sell at lower prices is less, instead they store
and wait to sell at higher prices.
• Low average acreage under production – Generally farmers grow Garlic in 0.5 – 2 Acres (1.5 – 6 Tons) of production.
• Basic S&G is done by farmer at farm level in Potato & Onion, In Garlic due to higher value farmer brings smaller cloves as well.
• Liquidation of unacceptable lot – Commission Agent’s/Merchant’s help will be required for the same.
• In order to attract farmers to bring their lot to our facility and sell, perception of higher realization needs to be built.
• Unavailability of Infra and Farmer’s network as of now.
 Udaan Platform’s Monthly Demand of Garlic

Planned Cities

Bangalore Hyderabad Delhi Chennai Mumbai Ahmedabad Jaipur Others Total

January 42.0 10.9 14.3 6.8 10.1 6.1 1.2 10.3 101.7
February 44.6 11.6 15.2 7.2 10.9 6.5 1.3 11.0 108.4
March 47.2 12.4 16.2 7.7 11.8 7.1 1.4 11.6 115.5
April 49.6 13.1 17.1 8.2 12.6 7.6 1.6 12.2 121.9
May 52.1 13.7 18.0 8.7 13.5 8.1 1.7 12.8 128.6
June 54.7 14.4 19.0 9.2 14.4 8.7 1.9 13.4 135.7
July 56.9 15.0 19.9 9.7 15.1 9.1 2.0 14.0 141.6
August 58.6 15.6 20.6 10.2 15.9 9.5 2.2 14.4 147.0
Demand to be September 60.3 16.2 21.4 10.7 16.7 10.0 2.3 14.8 152.5
fulfilled through
stored Garlic October 62.1 16.7 22.1 11.1 17.5 10.5 2.5 15.3 157.9
November 63.4 17.2 22.7 11.6 18.4 11.1 2.7 15.6 162.5
December 64.6 17.7 23.2 12.0 19.3 11.6 2.9 15.9 167.3
Planned Numbers – Platform Sales
• To leverage on the expected rise in prices after harvesting season.
• Planned storage of ~400 Tons Garlic to fulfill city demands from July - November

July - November Quantity (tons) Share

Total Udaan's Demand (as per AOP) 761.5 100%
Planned Cities Demand 688 90.4%
48% of Demand of Planned Cities 328 43.1%

Total Quantity to be procured considering 18%

400 -
wastage

• Planned Cities – Bangalore, Hyderabad, Chennai, Delhi NCR, Mumbai, Ahmedabad and Jaipur

Planned Cities Bangalore Hyderabad Delhi Chennai Mumbai Ahmedabad Jaipur Total
Planned (Vol) 143.0 38.5 50.7 25.6 40.2 24.2 4.3 328
% Contribution 44% 12% 15.5% 8% 12% 7% 1.5% 100%
Planned Numbers – Bulk Sales

Overall Bangalore Hyderabad Chennai

Total Procurement Quantity 100 50 20 30

• Planned Procurement of 100 Tons for bulk Sales.

• Cities considered for bulk Sales – Chennai, Hyderabad and Bangalore due to expected higher realization
in these cities.

Bulk Sale
Particulars Numbers
Total Procurement (Tons) 100.00
Total Quantity Received at Destination (Tons) 82.00
Total Cost (In Lacs) 65.45
Withdrawal Schedule

Contribution Bangalore Hyderabad Delhi Chennai Mumbai Ahmedabad Jaipur Total

July 15% 21.5 5.8 7.6 3.8 6.0 3.6 - 48.3
August 20% 28.6 7.7 10.1 5.1 8.0 4.8 1.3 65.8
September 25% 35.8 9.6 12.7 6.4 10.1 6.1 1.5 82.1
October 30% 42.9 11.6 15.2 7.7 12.1 7.3 1.5 98.2
November 10% 14.3 3.9 5.1 2.6 4.0 2.4 - 32.2
Overall 100% 143.0 38.5 50.7 25.6 40.2 24.2 4.3 327

• This plan is formed keeping expected rising trend of Garlic in mind, with withdrawals rising month on month.

• In late November we might see lower temperature, therefore inventory is planned to end by mid November.

• Withdrawal schedule might also have an impact of opportunistic buying for re- inventorization.
Storage Grading Split
75% 25%

Regular Garlic (Laddu / Phool) Premium Garlic (BOM / Jumbo)

• Size - 35-40 mm • Size - 40-44 mm

• Quantity – 375 MT • Quantity – 125 MT
PnL & Costing – Garlic Storage
 Costing
Farm Procurement Consolidator Procurement
40% 60%
Premium Regular Premium Regular Weighted Average
Weights 10% 30% 15% 45% 100%
Product Cost Per Kg 47.84 39.56 52 43 43.80
APMC @ 1.5% for Cons. | 0.5% for Farm 0.24 0.20 0.78 0.645 0.49
Commission Agent @4% for Cons | 1.5% for Farm 0.72 0.59 2.08 1.72 1.34
Transport P & S @ Rs 0.15 for Cons | 0.75 for Farm 0.75 0.75 0.15 0.15 0.39
Labor L & Bag filling @ Rs 0.15 Per Kg 0.15 0.15 0.15 0.15 0.15
Labor & Grading/Sorting by Machines @ Rs 0.30/kg 0.3 0.3 0.3 0.3 0.30
Kachchi Hamali @ Rs.0.30/kg 0.3 0.3 0.3 0.3 0.30
S&G Machine Charges 0.55 0.55 0 0 0.22
Pkg Material Cost -Plastic Mash Bag Rs.20/per bag 0.4 0.4 0.4 0.4 0.40
Pkg Material Cost -Sutali Rs.0.07/kg 0.07 0.07 0.07 0.07 0.07
Pkg Material Cost -Gard & Tag Rs 0.07/kg 0.07 0.07 0.07 0.07 0.07
storage Cost @ Rs 0.90/kg 0.9 0.9 0.9 0.9 0.90
Manpower - 2 for 3 months, 1 for 6 months @15000 pm 0.36 0.36 0.36 0.36 0.36
Storage Facility Landing Cost 52.65 44.20 57.56 48.07 48.79
Wastage Dump & Shrink at Storage period (April to Nov 18%) per Kg 9.48 7.96 10.36 8.65 8.78
Interest Cost 5% (6 months) 3.11 2.61 3.40 2.84 2.88
Transport from source to Destination 5.00 5.00 5.00 5.00 5.00
Final Cost 70.23 59.77 76.32 64.55 65.45
 PnL Scenarios
Platform Sales - Quantity - 400 Tons
Particulars Most Likely Best Case Worst Case
CP for cities in case of Regular Supplies 80 95 55
CP for cities in case of Storage Supplies 65.45 65.45 65.45
Gross Goodness Per Kg 14.55 29.55 -10.45
Goodness % 18.19% 31.11% -19.00%
Total Storage Goodness (in Lacs) 47.73 96.93 -34.27

Bulk Sales - Quantity - 100 Tons

Particulars Most Likely Best Case Worst Case
CP for cities in case of Regular Supplies 75 90 50
CP for cities in case of Storage Supplies 65.45 65.45 65.45
Gross Goodness Per Kg 9.55 24.55 -15.45
Goodness % 12.74% 27.28% -30.90%
Total Storage Goodness (in Lacs) 7.83 20.13 -12.67

• Year wise SP = Mandsaur, Neemuch & Kota weighted average prices. Weights – (0.5 Max Prices, 0.5 Average Prices) + Average Transportation Cost.
Owing to our higher QC specs same has been considered.

• Median, Max and Min = Data Considered of last 6 years.

Timelines
Summary
Platform Sale
Particulars Numbers
Bulk Sale
Total Procurement (Tons) 400
Particulars Numbers
Total Quantity Received at Destination (Tons) 328
Total Procurement (Tons) 100
Total Cost (In Lacs) 261.79
Total Quantity Received at Destination (Tons) 82
Most Likely Goodness 47.73 Total Cost (In Lacs) 65.45
Best Case 96.93 Most Likely Goodness (In Lacs) 7.83
Worst Case -34.27

• Total Investment - 262 (Platform) + 65 (Bulk) = 327 Lacs

• Expected Goodness – 47.7 (Platform) + 7.8 (Bulk) = 55.5 Lacs
• Storage Locations – Mandsaur, Jaora, Bhadnawar
• Storage Facility Size – 17000 Sq ft (6.75 sq ft per 4 bags)
• Variety – Desi (25% : 40-45 mm | 75% : 35 -40 mm)
• Consolidator Options – Shri Nath Ji Trading, Anil Trading Company
THANK YOU