Better price realization by farmers and quality realization by end consumers with a small but significant change in the supply chain of the produce. The main role is of Farmer Producer Companies(FPC), which proves to be quite dependable for the corporate contractors too.

1. Farmer Price
Realization
Javed Akhtar Khan
Anans S. Thokal
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2. Current Scenario in F & V Market
• 10% of total Indian agriculture
• 81.285 million metric tones of fruits and 162.19 million metric
tones of vegetables produce in 2012-13
• 2nd rank in world production
• 1% share in world market
• Dominated by intermediaries in supply chain
• Poor infrastructure, poor linkages in supply chain, lack of price
transparency
• Poor resultant price realization by producers
• High prices for consumers with lesser value
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3. Stats at Indian Market
Price/kg of:- Tomato Potato Cabbage Cauliflower Bnana
Price paid by
consumer(INR)
8.2 12 9 9.5 12
Price received by
farmer(INR)
2 6.6 5 5.5 4
Markup % 310 82 80 73 200
Price Realization % 24.5 55 55 58 33.5
Yet Risk taken by
farmers is highest!!!
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4. Field Study on
• Price received by farmers and consumers
• Wastage at various stages
• Role of each intermediary and risk vs realization
• Operations at agricultural market yards
• Quality, hygiene, and shelf life of produce
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5. Price
• Lack of price transparency
• Compulsion on selling due to poor logistics
• Smaller harvest lots, higher carrying costs
• Pilferages in SC (stealing money)
• Mix of size, shape, quality undifferentiated
• 1 farmer fooled and trapped by so many factors
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6. Wastages
• Poor infrastructure, poor logistics
• 24% for potato to 40% for tomato across SC
• Poor multiple handling
• Improper bagging; no crating
• Lack of temperature controlled vehicles; storage facilities
Tomato Potato Cabbage Cauliflower Banana
Wastage % 40 24 36 24 30
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7. Risk vs Realization
Risk Taken Cycle Time Margin
Farmer 4 ~3 months
~11 months banana
55% cabbage;
33.5% banana;
24.5% tomato.
Consolidator 1 ~2 days 5%-10%
Market Wholesaler 3 ~2 days ~7% cabbage;
~28% banana
Semi-wholesaler 2 ~2 days ~2% cabbage;
~14% banana
Retailer 2 ~4 days ~10.5% cabbage;
~55% banana
Considerably lesser margin as compared to the risk
taken by producers
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8. Quality
• Congested market
• Lack storage capacity for daily arrival volume
• Unsanitary conditions
• Accumulated wastage and poor drainage etc.
• Lack of preservation under cold storage
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9. Operations at Market Yard
• Set of regulatory agents
• Unionized labors
• Regulated transportation system
• Results in Red-Tapism
• Auctions with prices by commission agents/traders
• Retailers pay fixed price and not the quoted one
• Dominant role of agents and traders
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10. Suggestions by Writer
Modern System in Tomato
Producer
Price: Rs.2
Wastage: 10%
Consolidator
Commission: 10%
Wastage: 2%
Processor
Organized
Distributors
P: Rs. 3.33
W: 5%
Retailers
P: Rs. 6.5
W: 10%
Consumer
P: Rs. 6.5
Markup 225%;
P Realization up
by 25%
Total Wastage= 27%
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11. Benefits to Farmers
Realization/qtl Tomato Potato Cabbage Cauliflower Banana
Traditional(INR) 79.15 561.6 426 390 342
Modern(INR) 98.76 583.44 430.13 474.36 353.4
Improvement % 25 4 1 22 3
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12. Solution
Farmer Producer Company(FPC)
PRODUCER GROUPS
PRODUCER ORGANIZATIONS
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13. What is Producer Group
• Farmers Producer Company (FPC) is a legal form of the
company. In 2002 an Act was passed in Parliament
• Only farmer – producers can be members of the FPC and the
farmer members themselves will manage this company.
• Paid staff can be employed
• Producers run the FPC.
• Promoted by the farmers, run by the farmers and for the
benefits of the farmers.
• Surplus would be shared among the farmers only.
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14. Why FPC
• Collective inputs purchase
• Collective marketing
• Processing
• Increasing productivity through better inputs
• Increasing knowledge of farmers
• Ensuring quality
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15. Impact on SC
FPC System in Tomato
Producer
Price: Rs.2.2
Wastage: 10%
Processor
Organized
Distributors
P: Rs. 3.33
W: 5%
Retailers
P: Rs. 6.5
W: 10%
Consumer
P: Rs. 6.5
Markup 196%;
P Realization up
by 35%
Total Wastage= 25%
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16. Impact Cont.
Realization/100kg Tomato
Traditional(INR) 79.15
Modern(INR) 98.76
FPC(INR) 106.85
Improvement % 25
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17. Advantages of FPC
• Let’s take a look at the problems faced by farmers
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19. THANK YOU
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