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Cold Chain 1

Apr 08, 2018

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Achal Venkatesh
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    Increasing Farm Income

    More production with better marketing

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    Production stagnating, big

    scope for better marketing

    Double the income through more efficient marketing

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    But the present day markets are not efficient

    Infrastructure for marketing of perishables

    Primary grading/ collection centers - non existent

    Warehousing and cold storage - inadequate

    Cold chain - non existent

    Quality certification system - non existent

    Transportation for perishables - non existent

    Rural markets - complete lack of infrastructure

    Wholesale markets - in government control, lack modern facilities

    Private / direct markets - not permitted

    Post harvest losses: 25 to 30 % in perishables

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    Present Scenario in Value Chain

    Cost Build Up For One Kg. Basket Of Fruit

    FARMER TRADER WHOLESALER RETAILER CONSUMERPRICE

    3.3

    4.1

    1.72.5 11.6

    Retail Markups

    FARM GATE PRICES MILK FISH FRUITS &VEGETABLES

    350

    220160

    100

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    Terminal markets

    Catalysts for transformation

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    Concept

    Modern terminal markets:

    A professionally managed competitive structure

    To provide market services

    to farmers at their door step

    Comprehensive solution to meet needs of stakeholders

    Auction

    Processing industry

    Exports

    Retail chain and Consumers

    Requiring high investment and efficient management skills

    Can be infused by private enterprise

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    Structure of Terminal market

    Hub-and-Spoke Format: Terminal Market (the hub) to be

    linked to number of collection centres (the spokes)

    Collection centres (Spokes) to be conveniently located at key

    production centres to allow easy access to farmers

    Provide state of art facilities for

    electronic auction,

    grading, washing and packing lines,

    processing and exports,

    banking etc.

    Commodities to be covered include

    Fruits and vegetables, Flowers, aromatics and herbs

    Meat & Poultry

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    Collection Centre

    Terminal Market

    Producers/ Farmers and theirAssociations

    Infrastructure:Washing, grading, sorting, weighment, transport toTM

    Services:Collection & Aggregation of produce, Settlement ofpayment, advisory on inputs, prices, quality, multi-modal transport

    Infrastructure:

    Packhouse,Quality Testing

    Facility,PalletisationServices:

    Transport (incl.cool chain),Settlement ofPayments,

    Banking, Marketinformation

    ElectronicAuction

    Banking Institution

    Storage:Cold Storage,Temperaturecontrolledwarehouse,RipeningChamber

    Processor Exporter Wholesaler/Trader/Retail chainoperator

    Direct Selling

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    Salient Features of the Terminal Markets

    Feature Mumbai Nasik Chandigarh Rai Patna Bhopal Kolkata Nagpur

    Area of market (in

    acre)

    200 100 100 88 75 59 55 100

    Yearly handling

    capacity (lac MT)

    6 3 2.25 3 2 2 5.47 2.4

    No. of collection

    centres

    60 20 20 30 26 25 12 25

    Peak throughput

    (MT/day)

    3000 1500 800 1000 800 1000 1500 800

    Cold Store

    Capacity (in MT)

    15000 5000 3000 5000 2550 2000 10000 2000

    Total cost of

    project (Rs. crore)

    120 60 53.6 65.6 59 49.6 93.4 54.5

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    Financial Parameters of Nasik Project

    Total Cost ofProject ( in Rs. Crore) 60.00

    Debt Equity Ratio 1.60

    Debt Service Coverage Ratio 1.82

    Pay Back Period ( years) 10.00

    Break Even Point( %) 46.68

    Cash Break Even Point(%) 28.79

    IRR ( % ) 17.25

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    Key expectation from the private enterprise

    Provide envisaged infrastructure at the TM and the CC in the

    hub- and- spoke format

    Establish backward linkage with growers in the catchment

    area of the TM through establishing the collection centers.

    Progressively involve farmers and their organizations in the

    operation and management of the collection centers

    Facilitate direct supply to processing units, retail chains and

    exporters, in addition to auction facility via the collection

    centers and terminal market

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    Key expectation from the private enterprise

    Provide advisory services to farmers on inputs, prices, quality,multi modal transport and exports

    Project DPR only illustrative. Project should, however, bedesigned to handle the minimum quantity of peak throughput

    (MT/day) and yearly handling capacity as prescribed. Private enterprise at liberty to

    Prepare own business model with regard to Size of market and Scale ofoperation

    Set up additional facilities to provide complimentary services(input supply, processing, consumer goods etc.)

    Collect user charges for the infrastructure and services provided

    For basic services of aggregation at CC and auction at TM

    User charge not to exceed 2% of the produce value

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    Expectation from the State Government

    Reforms in APMC Act

    To allow the private enterprise:

    Establish collection centres in the catchment area of the

    TM

    Source material from farmers field directly in the

    catchment area of the TM

    Organize supply to traders, retail chain, processing industry

    and to institutional buyers throughout the country

    Cold storage/ warehouses of TM to act as delivery point for

    trading in perishables on the commodity exchanges

    Pack house of the TM to act as exit point for exports

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    Expectation from the State Government

    Regulatory clearances: Single license to operate in the entire State/adjoining States

    Single point levy & collection of market fee

    Autonomy in commercial operations of TM

    Clearance of land use for the TM/CCs

    Provision of Civic amenities (including drinking water,

    municipal waste disposal, police security, post office etc)

    Statutory clearance from

    Local authority

    Town planning & Urban development

    Revenue department

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    Expectation from the State Government

    Play a pro-active role:

    Appointment of a Nodal Officer/Empowered Committee

    to facilitate securing regulatory compliance

    to remove difficulty in operation of the project

    Identification of land for the TM/CC

    Provision of Government land on long term lease, subject to

    availability and suitability

    Infrastructure support to TM/CC

    road connectivity, power and water supply etc.

    States free to participate in the equity ofProject

    Direct funding

    Land/infrastructure support

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    Role of the Central Government

    Support the project through participation in its equity capital

    Terms for financing:

    Up to 49% of project equity, including contribution from State

    NHM/State will have the option to allocate its equity to farmersorganisations actively participating in the business of the project

    Private enterprise to be selected through an open, transparent

    competitive bidding process.

    Project to be awarded to bidder with the request for minimumGovernment equity participation.

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    Outlay in 2006-07

    Approved outlay for NHM

    X Five Year Plan Rs.2300 crore

    During 2006-07 Rs.1000 crore

    Outlay for Terminal Markets

    Participation in Equity Capital Rs.148.00 crore

    Project Development Assistance Rs. 1.00 crore

    General Awareness & Publicity Rs. 1.00 crore

    Total Rs. 150.00 crore

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    Parameter Baseline status Expected outcome

    Tradetransparency

    Non-existing Transparent auctions throughelectronic auction system

    Cold chaininfrastructure

    poor Setting up of cold storage at eachmarket ranging from 2000 to 15000 MTcapacity

    Backward-forwardlinkages

    poor Minimum of 20 collection centersnearer to the farmers field will be setup. The farmer will have alternativeoptions to supply to the supply chains,processing, export of commodities etc.

    Monopoly ofAPMCMarkets

    prevalent Farmer is provided with alternativeoption of taking his produce to terminalmarkets.

    Multipleintermediaries

    prevalent Length of the chain of commissionagents will substantially be reducedwith an ideal situation of eliminating thecommission agents completely.

    Beneficiaryfarmers

    -- 16000 to 20000 farmers under eachterminal market.

    Share of thefarmer in theconsumerprice

    Varies from 30 to 60% forperishables depending onthe location, season,demand and supply etc.

    Farmers share is expected to increaseto 50 to 70% of the consumer price.

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    Risk Factors

    Attractiveness to Private Enterprises

    Availability of Suitable Land

    Success in establishing backward linkages with farmers

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    Process so far

    General Council of the NHM approved the concept on 14.12.05

    Honble FM announced in the Budget Speech of 2006-07 for

    setting up of Terminal Markets with an outlay of Rs.150 crore

    National Conference on Terminal Markets held on 20.02.2006

    discussed with States and Private Enterprises

    There is adequate enthusiasm among Private Enterprises on

    the proposal as seen in the responses to Expression ofInterest

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    Way Forward

    Approval of the proposal by October end

    Finalization of Bid Process/ Bid documents by NIAM

    Inviting the bids by States and selecting the private enterprise

    National Executive Committee of NHM approves & releases

    the equity

    Project Execution

    General Council of NHM monitors the progress

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    Agri Export Zones

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    Milk

    Largest Producer91 Mn T

    F & V#2 in the world

    151 Mn T

    Food Grains

    #2 in the world(220 Mn T)

    Cattle / buffaloes

    Largest in the world

    283 million

    Tea

    Largest Producer

    (0.85 Mn T)Sugarcane

    # 2 in the world

    (245 Mn T) Goat & Sheep

    182 million

    Fisheries

    Marine: 2.7 Mn T

    Inland : 3.1 Mn T

    India is the front ranking producer of many perishable commodities

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    15%

    11%

    0% 5% 10% 15% 20%

    Frui

    l

    India's shar in glo bal pro duction (2001-03)

    %

    53%

    0% 20% 40% 60% 0% 100%

    Frui

    l

    Indian prices as a % of world prices (2001-03)

    0.5%

    1. %

    0.4%

    2.1%

    0% 2% 4% 6% % 10%

    Frui

    l

    India's s hare in globa l expo rts

    (2001-03)

    (1 1- 3)

    Sourc : UN COMTRADE S i ic , Wo rld B nk S ff E im

    Indias competitiveness in global markets

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    Exports of Agricultural Products, Why ?

    Inherent Indian strength in Agriculture

    Opportunities emerging out of WTO Regime

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    How did the concept of AEZ come about ?

    Analysis of existing export promotion measures foragri exports

    Inability to address the entire value chain

    Hence, the policy of Agri Export Zones announced on 31st

    March, 2001 under Exim Policy

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    What is Agri Export Zone ?

    Agri export Zone attempts to take a look at anAgri export Zone attempts to take a look at anidentified produce/ product or a group or a group ofidentified produce/ product or a group or a group of

    produce/ products sourced from a geographicallyproduce/ products sourced from a geographicallycontiguous area with a view to comprehensivelycontiguous area with a view to comprehensivelyaddressing all the issues relating to each stage of theaddressing all the issues relating to each stage of theentire value chain, from farm to the ultimateentire value chain, from farm to the ultimate

    consumerconsumer

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    Agri Exports activities

    MARKET IDENTIFICATION OF

    RODUCT

    & QUALITY

    ARAMETERS

    MARKETING INPUTS SEEDS, FERTILIZER, NUTRIENTS

    WATER,

    ESTICIDES, CREDIT

    TRANSP

    RATI

    N RESEARCH & PRE HARVEST TECHNOLOGY & RACTICES

    DEVEL

    PMENT

    PACKAGING

    PR

    CESSING

    S

    RTING & GRADING

    TRANSP

    RTATI

    N P

    ST HARVEST HARVESTING TECHNOLOGY & RACTICES

    1. APEDA 1. DOA

    2. NHB PARTNERSHIP 2. DOH

    3. MFPI 3. MARKETING BOARDS

    4. SFAC 4. SIDC

    5. DGFT 5. SEB

    6. MOA 6. FINANCE DEPTT.

    7. RESEARCH AGENCIES

    STATE GOVT. &

    ITS AGENCIES

    CENTRAL GOVT.

    & ITS AGENCIES

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    What does AEZ entail ?

    Utilise existing interventions in a coordinatedUtilise existing interventions in a coordinated

    manner to promote exports (Convergence)manner to promote exports (Convergence)

    Partnership of farmers, processors, exporters, StatePartnership of farmers, processors, exporters, StateGovernment agencies and Central GovernmentGovernment agencies and Central Government

    agencies.agencies.

    Focus on important issues.Focus on important issues.

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    What does AEZ entail ?

    Fiscal

    Financial

    Monetary

    Administrative

    Legal

    Tariff & Non

    tariff Related

    issues

    Excise, Custom, Sales Tax, Mandi Tax etc. rebate by central and Stateagencies

    : Schemes of APEDA, NHB, MFPI, MOA etc.

    : Reduction in interest on credit by banks

    : Manpower requirement for research & extension related activities

    : Amendment of regulations with regard to movement of goods,institutional arrangement for consistent supply of produce etc.

    : Import of duties, product standards, pesticide residues, Codex, etc.

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    Stages for setting up of AEZ ?

    Preparation of proposal by the State Governments.Preparation of proposal by the State Governments.

    Clearance by the Steering Committee chaired by Commerce Secretary.Clearance by the Steering Committee chaired by Commerce Secretary.

    Signing of MoU between Central (APEDA) and State Govt. undertakingSigning of MoU between Central (APEDA) and State Govt. undertaking

    commitmentscommitmentsNodal Officers appointedNodal Officers appointed

    Detailed action plan for each activity and monitoring by the inter departmentalDetailed action plan for each activity and monitoring by the inter departmentalCoordination Committee.Coordination Committee.

    Notification by DGFTNotification by DGFT

    Advertisement by State Govt./Agencies inviting private investmentAdvertisement by State Govt./Agencies inviting private investmentDPR and the execution of the detailed action plan.DPR and the execution of the detailed action plan.

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    ConclusionAEZs on a MAPAEZs on a MAPAEZs on a MAP

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    Monitoring System

    A web based monitoring system has been evolved wherein

    Each activity as a part of detailed action plan is clearly

    defined ;

    The agency responsible for undertaking such activity isidentified ;

    The time within which such activity has to be performed is

    clearly indicated.

    State governments have committed a nodal agency for thepurpose of coordination and the progress is monitored at the

    level of Chief / Addl Chief Secretary.

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    SOME SUGGESTIONS

    Restructuring of Project Monitoring System (Single Window Concept for

    disbursement)

    Blue Print Project Reports for attracting Investments

    Market Intelligence Reports

    Funding Mechanism to give liberty to state nodal agencies

    Income Tax Incentive

    Higher scale of Financial Assistance

    Direct Finance by NABARD on concessional terms

    Rebate on premium for crop insurance

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    Thanks for your attention!

    This is not an end This is not an end