UNIVERSITY OF PETROLEUM & ENERGY STUDIES DEHRADUN INDIVIDUAL ASSIGNMENTA Comparison of Transportation Cost of various modes of Transport for any Food Grain for a specific route QUANTITATIVE TECHNIQUES (MBCQ 721) Submitted to: Dr. NEERAJ ANAND Associate Professor & HOD – QT/RM/Operations CMES Submitted by : AYUSH MEHROTRA (R600212011) ASTHA KHANDELWAL (R600212010) MBA (LSCM) Sem I
A Comparison of Transportation Cost of various modes of Transport for any Food Grain for a specific route 1. INTRODUCTIONA trade route is a logistical network identified as a series of pathways and stoppagesused for the commercial transport of cargo. Allowing goods to reach distant markets, asingle trade route contains long distance arteries, which may further be connected tosmaller networks of commercial and noncommercial transportation routes. What we are transporting? Rice From KOLKATA to Delhi 2. Rice Production Scenario in West BengalWest Bengal is the largest producer of rice. Rice occupied almost 53% of the total agriculturalcrop areas of the state during and it contributed the same percentage (53%) towardsthe total production of all agricultural crops during the same period. In West Bengal, thearea and production under food grains were 63.70 lakh hectare and 160.61 lakh metrictonnes respectively, out of which percentage share of rice (total) alone was 91 in thecase of area and 93 in production. Rice grows in the state in 3 different seasons viz., Aus(autumn rice), Aman (winter rice) and Boro (summer rice). The percentage shares ofthese three categories of rice during 2007-2008 were 4.92, 68.65 and 26.43 with respectto area and similarly 3.84, 62.69 and 33.47 in production of total rice respectively.
Table 1: Rice cultivation in major rice producing States of India STATE AREA YIELD (million hectares) (kg/hectares) West Bengal 5.78 2509 Uttar Pradesh 5.58 1996 Orissa 4.48 1531 Andhra Pradesh 3.98 2939 Punjab 2.64 3858 Tamil Nadu 2.05 2546 Karnataka 1.49 3868 Haryana 1.05 3051Source: Government of India VARIOUS FOOD GRAIN’S SALES IN WEST BENGAL
Sales 3% 6% RICE 6% 4% FRUITS VEGETABLES 8% POTATO 53% FIBRE CROP OIL SEED 18% WHEAT 3. IMPORTANT ASSEMBLING MARKETS The following are the major assembling markets for paddy/rice producing states in thecountry. Despatches from major paddy producing states in India States Despatches to states apart from local markets1.Andhra Pradesh : Karnataka, Kerala, Tamil Nadu, Gujarat, Maharashtra, West Bengal2.Bihar : Uttar Pradesh, West Bengal, Madhya Pradesh, North Eastern States3.Gujarat : Kerala, Maharashtra4.Haryana : Assam, Bihar, Delhi, Madhya Pradesh, Maharashtra, Orissa, U. P.5.Karnataka : Maharashtra, Andhra Pradesh, Tamil Nadu, Kerala6.Madhya Pradesh: Andhra Pradesh, Maharashtra, Assam, Gujarat, Orissa, West Bengal7.Maharashtra : Madhya Pradesh, Uttar Pradesh, Gujarat, West Bengal, A. P., Orissa8.Orissa : West Bengal, Madhya Pradesh9.Punjab : Assam, Bihar, Delhi, Uttar Pradesh, West Bengal, Madhya Pradesh, Maharashtra, Rajasthan, Andhra Pradesh10.Tamil Nadu : Kerala, Karnataka, Gujarat, Pondichary, Orissa11.Uttar Pradesh : Assam, Delhi, Bihar, Haryana, Uttaranchal, Rajasthan, Maharashtra,13. West Bengal : Delhi,Bihar, Uttar Pradesh, Orissa, North Eastern States
4. Availability of cheaper and convenient modes of transport There are different modes of transport used in paddy/rice transportation. Road and railtransport are normally used for internal markets.1) Road transportation : Road transport is the most predominant mode of transport used in the movement of paddy/rice. Road transport is used in right from the producing fields to the ultimate consumer. The initial movement of paddy/rice is done on village roads, which are generally non tarred (Kachha), and mostly tracks wind through the fields. Over the years, road transport has expanded phenomenally, due to the development of roads in rural areas, as well as by the increase of numbers and efficiency of different types of vehicles i.e. trucks and tractors etc. The following means of road transport are employed in different parts of the country to transport paddy/rice. a) Head load b)Tractor trolley c) Bullock carts d) Trucks 2) Railways : Railway is one of the most important means of transportation ofpaddy/rice. Railway is cheaper than road transport and more suitable for longer distance, as wellas for large quantity of paddy/rice. The rate charged for the transport of paddy/rice depends ondistance, quantity etc. Railway transportation requires more handling cost, as it requires loadingand unloading charges and local transportation cost. However, losses are more in case oftransport by railways.3) Water transport : This is the oldest and cheapest mode of transportation. This form of transport is used in case of cities situated on or near the bank of a river, canal or in coastal parts. The export of paddy/rice is mainly done by sea transport. This transport system is slow but cheap and suitable for carrying large quantity. The following means of water transport are used in paddy/rice transport :4) River transport : This system is used in some states like Uttar Pradesh, Bihar, Orissa, Kerala, Tamil Nadu, West Bengal, Assam, etc.5) Canal transport : Canals are used for paddy/rice transportation to certain extent in Uttar Pradesh, West Bengal, Bihar, Orissa, Tamil Nadu and Andhra Pradesh.6) Sea transport : The coastal trade is in practice mainly in Maharashtra, Orissa, West Bengal, Tamil Nadu, Kerala and Goa. 5. Selection of mode of transportation
For the selection of mode of transportation, following points may beconsidered:1) The mode of transportation should be comparatively cheaper among available alternatives.2) It should be convenient during loading and unloading of paddy/rice.3) It should protect paddy/rice during transportation from adverse weather conditions i.e. rain, floods etc.4) It should be insured against any accident.5) It should be safe from pilferage etc.6) The delivery of paddy/rice to consignee should be made as per specified time schedule.7) It should be easily available particularly during post harvest period.8) It should be producer friendly for the payment of transportation. 6. MARKETING CHANNELS Criteria for selection of channels There are many marketing channels involved in marketing of paddy/rice. The followingare the criteria for the selection of efficient marketing channels.1. The channel, which ensures reasonable return to producer, is considered to be good or efficient.2. Transportation cost in that channel.3. Commission charges and market margins received by the intermediaries, such as trader, commission agent, wholesaler and retailer.4. Financial resources.5. The shorter channel with minimum market cost should be selected. The following are the important marketing channels existing in themarketing of paddy/rice.
1) Producer ó Miller ó Wholesaler ó Retailer ó Consumer 2) Producer ó Commission Agent ó Miller ó Wholesaler ó Retailer ó Consumer 3) Producer ó Itinerant Merchant ó Miller ó Wholesaler ó Retailer óConsumer 4) Producer ó Wholesaler (Paddy) ó Miller ó Wholesaler(Rice) ó Retailer ó Consumer 5) Producer ó Miller ó Retailer ó Consumer 6) Producer ó Miller ó Consumer. 7) Producer ó Procuring Agency (FCI/State Govt./Co-operatives) ó Miller (FCI/Co-operatives/Private) ó Distributing Agency (State Govt.) ó Fair price/Ration shop ó Consumer.7. TRANSPORTATION FROM KOLKATA TO DELHI Time taken : 18hrs 12 min Distance : 1390.5 Km Route : NH-2 MODES OF TRANSPORTATION OF RICE FROM KOLKATA TO DELHI
ROADWAYS TRUCK TRAILER TRACTOR (used within distribution in delhi)Amount in Kg 90,000 50,000 700 Amount (Rs.) 25,000 80,000 5000-6000 Distance(KM) 1390.5 1390.5 50-100 RAILWAYSCOMMODITY RISK RATE BASE CLASSFOOD GRAIN (RICE) Railway Risk Rate(RR) 130For Base Class 130 cost of transportation is Rs. 1326.80/tonne for (1301-1400)KM.8. Storage facilities I) Producers’ storage Producers store paddy/rice in bulk at farm godown or own house using various types oftraditional and improved structures. II) Rural godowns
Considering the importance of rural storage in marketing of agricultural produce, theDirectorate of Marketing and Inspection initiated a Rural Godowns Scheme, in collaboration withNABARD and NCDC. Its objective is to construct scientific storage godowns with allied facilities inrural areas and to establish a network of rural godowns in the States and Union Territories. III) Mandi godowns Most of the paddy/rice is moved to the market after the harvest. Generally, paddy isstored both in bulk and in bags in every State, while the rice is kept in bags. Most of the Statesand U.Ts. have enacted Both in producing and consuming centers/markets, traders also possesspermanent storage in the form of godowns or warehouses, or on hire basis. IV) Central Warehousing Corporation ( CWC ) CWC was established during 1957. It is the largest public warehouse operator in thecountry. Apart from storage, CWC also offers services in the area of clearing and forwarding,handling and transportation, distribution, disinfestation, fumigation and other ancillary serviceslike safety and security, insurance, standardization and documentation. V) State Warehousing Corporations (SWCs) Different States have set up their own warehouses in the country. The area of operationof the State Warehousing Corporations is district places of the State. The total share capital ofthe State Warehousing Corporations is contributed equally by the Central WarehousingCorporation and concerned State Government. The SWCs are under the dual control of the StateGovernment and the CWC. VI) Cooperatives Cooperative storage facilities are provided to the producer at cheaper rates, whichreduces the storage cost. These cooperatives also provide pledge loan against the produce andstorage is more systematic and scientific than traditional storage.9. Reference www.agrarianstudies.org Agarwall Movers and Packers,Dehradun www.Indianrailway.gov.in