You are on page 1of 41

MORE THAN 1,300,000 TONNES OF FOODGRAIN

WORTH MILLIONS OF DOLLARS


WENT ROTTEN IN STORAGE OVER THE PAST
DECADE IN INDIA,
FOOD CORPORATION OF INDIA (FCI) OFFICIALS
ADMIT.

"SURPRISINGLY, OF THE TOTAL WASTAGE


ALMOST 50% OF THE FOOD GRAIN WAS
DAMAGED IN PUNJAB,
ONE OF THE LEADING STATES IN
AGRICULTURAL PRODUCTION.
AND THERE'S NO HISTORY OF FLOODS OR
NATURAL CALAMITIES IN PUNJAB

More than 72 per cent of the vegetable and


Fruits are wasted in the absence of proper
retailing,
Agriculture Minister Sharad Pawar
The sector is constrained by widespread
fragmentation in the supply chain,
low productivity levels, and huge post
harvest losses arising out of inadequate
storage, cold chain and transport
infrastructure, logistics and supply chain
management,

Indias Food grain wastage is more than


UKs Total consumption
India stands No 1 in Production of Fruits and
Vegetable together
It contributes to 10% of the worlds Fruit
production & 14 % of the Vegetable production
OF EVERY 10 FRIUT 1 IS FROM INDIA
OF EVERY 7 VEGETABLE 1 IS FROM INDIA

More than 72 per cent of the vegetable and


Fruits are wasted in the absence of proper
retailing,
Agriculture Minister Sharad Pawar
OF EVERY 4 F&V PRODUCED 3 ARE
WASTED / TROWN / ROTTEN OR NOT
CONSUMED

India has 5 to 6 middlemen in fruits


and vegetable trade,
while all developed counties has
2 to 3 middlemen in the supply chain

Farmer
Retailer
Customer

In bridging the farm gate to the dinner plate, more and


more Indian retailers are now adopting the farm to fork model.
Most of the retailers are in the process of putting up elaborate
logistical chains to enable a smooth transition of goods from the
farm to the consumer.
Farm to fork, as this model is known, aims at minimizing the steps
from the farmer to the retail store.
A farm-to-fork model either sets up a logistical chain owned by the
Retail Company or outsourcers it to a logistics company.
The chain includes small wholesale markets, or mandis,
where the farmer can come and get a good price for his produce.
This produce is then carried directly to the nearest supermarket of the
chain, or the warehouse from where it is shipped to the cities.
There is an imperative need for synergy in the pre-harvest, harvest and
post-harvest process to bring in value addition to the efforts of
the farmers.

Actual Grower

Market Yard
Farm
collector
Regional
Conglomerate

Local Market Yard

Retailer

APMC
Broker
Customer

Semi -Wholesaler

In order to successfully run the Farm to form model the elimination


of middlemen like farm collector, regional conglomerate and
semi-wholesaler is essential.
The farmer brings the produce to the collection centre where the
generally payment is in cash.
The produces are graded / sorted / peeled / cleaned / cut / de-husked
/ chopped etc.
Then transported to the stores via Distribution Centre (DC) through
APMC market

Actual Grower

Market Yard
Farm
collector
Regional
Conglomerate

Collection Centre

Retailer

Customer

Semi -Wholesaler

Wet
Distribution Centre

Actual Grower
Reliance
C. Centre
Reliance Customer

Reliance Store

Reliance DC

Actual Grower

Market Yard

Collection Centre

Collection Centers Pan India (188)

as on Dec 2010

Some Challenges still need to be overcome.


The volume of the produce, inconsistency in terms of availability,
size, shape, color and clearness (spotlessness).
Stringent rules in most of the APMC (Agriculture Produce Market
Committee) or commonly known as Market yard, long waiting
period in Octroi nakas
Non-standardized and expensive packing material
Unskilled human capital
Fragmented suppliers
An inconsistent and unpredictable weather condition makes this
models attempt unsuccessful.

A survey reveals that a farmer or a grower gets 1/15th to 1/10th


of the value paid by the consumer (exceptions are Alphonso
Mangoes, Grapes, exotic vegetables etc; where the
grows earns 1/4th to 1/5th of the consumers purchase price)
The fast moving SKUs in fruits are 20 to 25, while the veggies
have around 30 to 40 (except onion, potato and tomato)
When we purchase Tomatoes at Rs 20 per kg from a hawker,
the grower gets meager value of Rs 0.75 to Rs 2.00, while a
retailer earns around Rs 2.00 to Rs 4.00.
Major amount is swiped by the transportation and middlemen.

If a farm to fork model if successful there will be a win-win situation


for both the growers and the retailers.
In Tomatoes, assuming the grower-retailer consortium, further
assuming that there is no contract farming and not air lifted, average
selling price for the grower will be to the tune of Rs 2.50 to Rs 3.50.
While landing cost of the retailers will be Rs 11.00 to Rs 14.00
(depending on the distance).
In such situation retailers can safely mark down and can adopt a
leadership pricing.

The gist of this model is based on the backward integration of


the retailer.
Taking into consideration the constraints like of widespread
fragmentation in the supply chain, low productivity levels,
and huge post harvest losses arising out of inadequate storage,
cold chain and transport.

The model can be successfully only if a retailer has


1) Pan Indias penetration of 3000 to 4000 stores of around
3000 sq ft, with a dedicated F&V sections of 300 sq.ft in
each store
2) A strong quality conscious grower- retailer consortium.
3) Catering to not more than 15 to 20 fruits and vegetables.

FLOWER TRADE
IN HOLLAND/
NETHERLAND

Some Challenges still need to be


Overcome
Regulatory Barriers
Labour Legislation
( Shop & Estb. Act, Minimum Wages, Maternity Benefits Act etc.)

Differential Tax System


( VAT, Sales Tax, Octroi, Entry Tax)

Stringent compliance of APMC


Skilled Human Capital
Fragmented Suppliers
Effective Private Label Strategy

Thanks !
Created and conceived by : Sugam Chaubal
9821 252542