Innovations in Post- Harvest Management of Agriculture produce- Case studies Aravind T.GRIITProf. Anil Gupta By
Innovations in Post-Harvest Management of Agriculture produce- Case studies
By
Aravind T.GRIITProf. Anil Gupta
INTRODUCTION
This report talks about three organizations which tried to bring innovations into the management of post-harvest management of agriculture produce. These three are selected in terms of scale they would be needing for replicability in other areas or scenarios. All talks about vegetable produce and this should be noted.
WHY IS THIS IMPORTANT?
The current annual production of fruits and vegetables combined in India
is 227 million tonnes (77 for fruits and 150 for vegetables) and the
compounded annual growth rate for the same ranges between 5-6 percent.
As per Bennett’s law, as the economy grows and per capita income rises,
the consumers shift from staple dietary products to high value products
like fruits and vegetables. So, the demand of fruits and vegetables is going
to grow exponentially in the coming years. However on the other hand,
India is incurring post-harvest losses of more than 2 lakh crore every year
and only 22% of the fruits and vegetables produced reach the wholesale
market.
Clearly, there is a significant need for alternative marketing channels for
reducing Post-Harvest losses. While there are production constraints,
research also shows the following supply chain post-harvest constraints:
1) Post harvest losses resulting in huge economic loss
2) Unplanned and non-existent infrastructure
3) Unable to build economies of scale
4) Insufficient cold storage space
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5) Inefficient transportation
6) Imperfect markets
Along with it, the case of multiple intermediaries in post-harvest supply
chain management adds up to marketing cost which reduces the share of
farmer in the final price is not sustainable.
The typical marketing infrastructure (supply-chain till reaching the
market) for the marketing is as follows:-
1) Farmers
2) Agents or Auctioneers
3) Wholesalers
4) Cart vendors or retailers
5) Consumer
Keeping this in mind, three models are discussed further.
KAUSHALYA FOUNDATION- KNIDS GREEN PVT. LTD.
Kaushlendra Kumar, an IIM-Ahmedabad alumnus started this venture to
increase the potential and income of small farmers. NGO team works
towards capacity building of farmers whereas KNIDS try to provide
assured market for the produce of small and marginal farmers.
In this model, NGO kaushalya foundation provides all the back end
support. The details of their intervention is as follows:-
1) Baseline study to understand key aspects such as crop suitability,
production volume potential, understanding existing infrastructure
and present marketing platforms available to farmers.
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2) The specific clusters based on their potential discovered through
baseline study are identified and customized implementation plan
is formulated.
3) Execution of plan starts in which they call as Farmer interest
Groups (FIG’s) are formed.
4) These FIG’s are trained and exposed to field demonstrations of
scientific practices.
5) In recent times, the model has evolved to form Farmer producer
companies also.
Why does this evolution towards FPO’s?
Aggregation models holds major significance for small and marginal
farmers in increasing their income and making them economically viable.
Actually aggregation brings in both cost reduction and increase in price
realization. Cost reduction through minimization of input costs and
resource pooling. Price realization as scale builds up the larger access to
markets and also further increasing the bargaining power. Apart from this,
the aggregation models in the form of FPO’s can attract incentives and
policy assistance from institutions like SFAC (small farmer’s Agri-
consortium). FPO’s also increases the access to finance and already
discussed availability of inputs at competitive prices.
Role of NGO in the model
Kaushalya foundation’s concept is collective production and marketing
through farmer’s organizations. Presently, its operations are in four blocks
in Bihar with an estimated base of 3500 farmers. Farmer Producer
Company in each block is headed by a block project manager with 8 local
resource personnel supporting him. Interestingly, the block project
manager designate is a farmer himself with track record of leadership. He
monitors the field activities and acts as a liaison between NGO and farmer
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Producer Company. The local personnel do all the extension services like
imparting technical training for scientific crop management. The NGO
plays a critical role in linking farmer to KNIDS which acts as the ultimate
link of the value-chain in this model.
The role of KNIDS Green
Knids Green bare-beginnings were with an idea of selling pre-packaged
branded vegetables through refrigerated pushcarts. The model scaled up
through association of NGO as it strengthened the procurement.
Knids Green primary processing and distribution centre is located in Patna
with an area of 10,000 square meters. This point is the aggregation point
and cleaning, sorting, grading, packaging, branding and bar coding
happens at this place. It has storage capacity of 200 metric tonnes and cold
storage capacity of 10 tonnes. Cold storage is of low cost innovation.
KNIDS Green uses 1 ton capacity pickup trucks to bring produce from
collection centre to distribution centre. KNIDS GREEN also possesses 30
push carts and a vegetable retail store.
The operations
At present, KNIDS Green is procuring around 45% from farmers (total
statistics given later) and 55% from the whole sale market. It particularly
procures certain vegetables like Potato, Onion and Tomato from whole
sale market. Procurement from farmers (direct procurement) is a daily
activity and it happens through 15 collection centres which are located in a
50 km radius in four blocks. Payments are made weekly. Patna mandi
price is the base for price fixation to make payments.
The vegetables are cleaned and sorted in primary processing centre and
then packed in plastic bags. The vegetables are branded as “Samridhi” and
bar coded.
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The vegetables are sold through refrigerated push carts using low cost
technology of temperature control. Presently existing 30 push carts are
operated by road side vendors (hired employees). The carts location is a
strategic placement considering the potential sales. Each cart is estimated
to sell Rs.3000 to Rs.4000 per day. The company also runs a retail store
by name “Bihar Fresh.” Customers can buy through the website and can
avail home delivery. The institutional sales are also a proportionate chunk
where hotels, restaurants and caterers form the pie. These sales are
through a forward contract of one year. The contract agreements doesn’t
contain the price and it depends on referral price i.e., Patna mandi.
From farmers’ perspective, KNIDS model seems superior to traditional
mandi model as farmer doesn’t incur transportation cost, transportation
losses, shrinkage losses and commission agent charges. These costs are
expected to be 25% - 40% of the final price realization thus catering a
huge value to the customer. (Commission agent himself charges 10% of
the final price realization).
Advantages of this model
Aggregation and cluster based approach is building up scale and it’s
easy to disseminate technology as communication becomes quite easy.
Spot pick up of the produce offering both comfort and value to the
farmer. Forward Contracts with Ho-Re-Ca segment adds certainty to
the model and also provides chance to cultivate high-value exotic
vegetables suitable to the agro-climatic conditions. Sale through
refrigerated carts gives required mobility to strategic locations, provides
advertisement for brand Samridhi. Refrigration is a low-cost innovation
providing value to customers in the form of fresh vegetables. Branded
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and bar coded products providing assurance to customers in terms of
quality and eliminating the inconvenience of bargaining which is high in
vegetable sales.
Final take on the model
KNIDS achieved break-even in a few initial years only and this model
brings in certain value to both farmer and customer by reducing layers of
intermediaries in the model. This also brings new things to vegetable sales
like branding, barcoding etc.
But the point also to be noted is that the further scaling up of model
requires more investment in infrastructure. The front player which is a
private player determines the scalability of this model. In short, this model
suffers from scalability issues as of now because of limited procurement
capability of the front-end KNIDS GREEN and this is the top reason for
not being able to procure the entire produce from the farmer
Financi
al year
Volume
(in
metric
tonnes)
Growt
h
Revenue
(in ’s)₹
Refriger
ated
carts
contribu
tion (in
’s)₹
Growth
in
refriger
ated
carts
segmen
t
Refriger
ated
carts
contribu
tion in
total
revenue
in %age
Instit
ution
al
sales
(in
’s)₹
Growth
in
institutio
nal sales
segment
Institut
ional
sales
contrib
ution
in total
revenu
e in
%age
2007-
08 75 758580 379290 50%
3792
90 50%
2008- 720 860% 8658885 4762387 1156% 55% 3896 927% 45%
6
09 498
2009-
10 1540 114% 20881641
1232016
8 159% 59%
8561
473 120% 41%
2010-
11 2310 50% 34883867
2162799
8 76% 62%
8218
639 -4% 24%
2011-
12 2650 15% 41220082
2679305
3 24% 65%
1442
7029 76% 35%
2012-
13 2320 -12% 38016901
2281014
1 -15% 60%
1520
6760 5% 40%
Analysis based on the Financial Summary
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
0500
10001500200025003000
Volume (in metric tonnes)
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2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
0
10000000
20000000
30000000
40000000
Revenue
2009-10 2010-11 2011-12 2012-13-50
0
50
100
150
200
Revenue Vs Volume Growth
Volume Growth Revenue Growth
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2008-09 2009-10 2010-11 2011-12 2012-130
5
10
15
20
Per tonne Growth percentage
MARKET LED EXTENSION BY SYNGENTA FOUNDATION INDIA
Syngenta Foundation India is a not for profit entity supported by Syngenta
Foundation for Sustainable Agriculture and Syngenta India. Apart from
many other programmes, Syngenta Foundation India (SFI) is running a
program called “Market led extension” in which it is raising small and
marginal farmer’s (Vegetable growers mainly) income through collective
marketing.
Though SFI works in 6 project locations, we chose to look at SFI-Jawahar
as it is the most successful among other project locations.
In Jawahar area, the tribals are more tilted towards subsistence paddy
farming and it educates farmers about vegetable crops as they fetch higher
income. It follows a cluster based approach and it identifies potential
villages based on the farmer profile, possible acceptance for scientific
practices and then it intervene in those villages to support vegetable
cultivation.
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The surveys are also conducted to assess the demand of vegetables in the
nearby markets. Crop planning actually happens in link to the demand of
various vegetables across various time-lines. They do sensitivity analysis
to link harvest times and market demand to fetch optimal price for the
farmer.
SFI works in 6 clusters of villages in Jawahr with 3 NGO’s. A field officer
for every cluster is appointed by NGO through the funding received from
SFI. A support of 7 member expert team in Agriculture is provided by SFI
who takes care right from sowing, intercultural activities, and marketing
issues.
SFI supports farmers in different ways and in different stages which can
be broadly classified as following:-
Pre-production Support
Primarily, this model works on the basis of aggregation model. SFI forms
groups with 10-15 farmers and these groups are formed based on the
farmer’s cultivation interests mainly. Training related to procurement of
inputs, raising seedlings, managing nurseries etc., are given through
different techniques. Improved techniques are shown to them through field
demonstrations, pre-sowing exposure visits etc.
Production support
Crop planning is a function of agro climatic zone, resource availability and
marketability analysis. In Kharif, slopy areas (Jawhar is a hilly-area) will
be used for vegetable cultivation. Field preparation, spray schedules of
pesticides, fertilizer use are closely monitored.
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Marketing Support
Price information is the important market support in this model. The
regular price information in the nearby mandis is being provided to the
farmers thus aligning the post-harvest activities of the farmers towards
better price realization. The contacts with commission agents at mandis
helps SFI in getting timely price information which is provided to farmers
through field staff. Generally the group leaders coordinate with field staff
in these activities. This helps farmers in making decisions such as
harvesting time, location to sell etc., other support in the form of
consultancy for packaging material, transportation of the produce.
For aggregation of produce, a low cost collection centre has been
constructed which is used by various groups. The pickup trucks of 2
tonnes capacity are available to farmer groups to use on shared basis and
the produce is transported to mandis through these. Farmers groups bear
all the costs though credit support may be provided in same cases.
Though at very minimal scale, SFI also provides export linkage to chilli
farmers. The export linkage is estimated to increase the returns by 10- 12
%. In case of this linkage, the produce is also collected from farms thus
no transportation cost incurred by farmers.
Analysis
In short, the model is such that SFI builds the scale of the activities
through aggregation model. It enables the farmers to procure inputs in
aggregation thus making them avail certain discounts. On the other hands,
farmers to sell their produce to mandis through collective transportation.
The before-hand available price information brings the certainty in
decisions regarding transportation of produce. This reduces the cost of
irrelevant transportation which is quite common and significant for other
farmers. Sometimes, high transportation cost makes the economies
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unviable because of the prevailing market prices. The support of
packaging material and handling material (like crates in case of tomatoes)
reduces the wastage during transportation.
Impact analysis of the model
The aggregation model which on back-end becomes collective farming
and marketing of produce in clusters on front-end increases the production
scale and brings down the costs due to sharing of resources in every form.
Cluster approach being crop-specific makes market linkage quite feasible.
The target of this model being poor tribal farmers, it takes a lot of effort to
make it a feasible standalone sustainable enterprise. But cluster based
marketing approach and collective production considering the
marketability and pooling of resources keeps this model scalable.
Presently SFI is trying to focus on institutional building by converting this
into Farmer Producer Organization on one side and micro-enterprises on
other side like poly house nurseries, agri-entrepreneurs on other side. Still,
Price volatility in vegetables is an issue and the institutions addressing this
issue is a highly optimistic take.
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KRISHI STAR MODEL
(Identifying niche products for price stabilization)
The idea is to identify products suitable for niche markets and to
develop them in house from the raw material available with
farmers.
The first product identified was “peeled tomatoes” which is used in
pastas. The restaurants used to import.
Krishi star team identified that the peeled tomatoes can be
developed in India with minimal cost and identified 400
restaurants in Mumbai alone as a market in which they could
capture around 40 restaurants till now.
Krishi star procure tomatoes from a BAIF supported FPC’s and
peel them in a mango-pulp factory which they hire for the time
when it is not used for mango pulp processing.
Then they market the product through “Krishi Vita”
Recently they got funding of 18 lakhs from a CSR arm of an₹
MNC to identify and develop more such products
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REFERENCES1. Kaushalya Foundation-KNIDS, Rekha Kumari,
http://www.kaushalyafoundation.org/
2. Krishi star, Bryan Lee, www.krishistar.com
3. Syngenta Foundation India, Baskar Reddy, Executive Director,
http://www.syngentafoundation.org/index.cfm?pageID=182
4. http://www.fao.org/fileadmin/templates/ess/documents/
meetings_and_workshops/GS_SAC_2013/
Improving_methods_for_estimating_post_harvest_losses/
Final_PHLs_Estimation_6-13-13.pdf
5. http://tnau.ac.in/eagri/eagri50/HORT381/pdf/lec01.pdf
6. http://articles.economictimes.indiatimes.com/2013-09-01/news/
41663310_1_fruits-vegetable-production-harvest
7. http://www.apcoab.org/uploads/files/1312289562PHT
%20Proceedings.pdf
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