AGRICULTURE AND PROCUREMENT

Procurement

• Procurement is the term that is used to refer

to the process or the act of sourcing or
obtaining services or goods for a business. ... It
is important to the success of the buyer's
business to procure the best quality of goods
or services procured at the most competitive
rates.
 Nature of Agricultural Commodities

• Food procurement – how and from

whom food is purchased by an organization
and institution – offers an opportunity for the
public sector toattach its purchasing power to
create more equitable food systems by
expanding the farm-to-institutional model to
support small and mid-sized family
farmers, food entrepreneurs of
 Nature of Agricultural Commodities

• . Retailing of processed agro-based products,

fresh fruits and vegetables and other
agricultural commodities has further created
demand for professional procurement
managers.
 Nature of Agricultural Commodities

• Purchasing is an integral, important and profit-

making part of business management.
• All these individually and interactively,
influence organisational pattern and
management structure of procurement
system as well as processing units, and
organized retailing.
 Nature of Agricultural Commodities
• Perishable
• Some of the agricultural commodities, such as milk, green leafy vegetables,
and some fruits are highly perishable. These have to be procured as soon as
produced, marketed/processed immediately so that quality is not lost and
wastage is minimized before these reach the consumer.
• Season Specific
• Some of the agricultural raw materials are produced during specific season.
• For example, wheat is produced in winter (Rabi season), harvested in March-
April and arrives in mandis, April onwards.
• Paddy is cultivated in rainy season (Kharif) and generally harvested in
November (though in some regions of the country it is cultivated all the year
round. Similarly, there are fruits and vegetables that are available only in
certain seasons. Thus, the seasonality of production determines the timing of
procurement.
 Nature of Agricultural Commodities

• Region and Agro-climatic Specific

There are certain crops which grow only in
certain locations having the needed agro-
climatic conditions, e.g., apples in Kashmir and
cherry in Chaman.
 Nature of Agricultural Commodities
• Essential Commodities
• There are certain commodities which are considered as essential
commodities as this form a major part of the food and consumption.
• These commodities are essential for survival and health of the
people. These are cereals, pulses, oilseeds, oil, milk, sugar, salt, etc.
• Central and State governments keep a constant watch on
production, movement, availability and prices of such commodities.
It keeps large buffer stock of cereals and controls the prices of many
essential commodities
• . A procurement manager has to be aware of government policy and
regulations, while dealing with such commodities.
 Nature of Agricultural Commodities
• Price Variations
• These said reasons, agricultural commodities are subjected to high price
variations.
• The price variations greatly affect the purchasing decision in terms of
quantity purchased for production of finished products, fixation of price for
the consumable products, difficulty in competing with alternate products,
• • The characteristics/nature of commodities
• • The place of production
• • The location of mandis where a particular raw material can be purchased
• • Government policy and regulations related to marketing of agricultural
commodities especially, essential commodities
• • Price variations
 Scope of Agriculture

• The scope of “Agriculture” is very vast as it

encompasses entire bio-mass produce by
plants, livestock and other animals (both land
and aquatic) insects and micro-organisms, each
covering numerous species and subspecies.
• Every primary agricultural commodity and
organic remains, animal by-products and waste,
fishery and forest byproducts have potential for
developing a series of industries
 Scope of Agriculture
• Major Products
• Major Products from Paddy Subsequent
processed products from the major products
Rice products (puffed rice, noodles, starch)
Husk ( Cementhusk board, furfural oil, Silica).
Straw ( Straw board, paper, handicraft products)
 Scope of Agriculture
• Similarly, various products can be produced from
other commodities like sugarcane, groundnut,
coconut, maize, cotton, castor, forest produce,
animal and fish, and insects like silkworm and
honeybee
• Commercial enterprises could also be developed
from cultivation/procurement of wild plants
(especially medicinal crops) and rearing of wild
animals like rabbit, crocodile, snake and butterflies.
 Scope of Agriculture
• Common among these are sugarcane, cotton, maize, castor,
etc. While the basic concepts and principles of material
management are applicable to procurement of agricultural raw
materials, while applying these concepts you should be aware
of the above mentioned differences between the industrial
raw materials (Examples of raw materials include: steel, oil,
corn, grain, gasoline, lumber, forest resources, plastic, natural
gas, coal, and minerals) and agricultural raw materials.
• agricultural commodities should be handled with due care by
considering its perish ability, seasonality, productivity, quality
of agricultural commodities