Abstract The present marketing system, characterized by a long, fragmented supply chain, high wastages, low share of producers in price, is inadequately equipped to meet the growing needs of consumers for quality and safe hygienic food. Terminal market has been envisaged to improve availability, in terms of quality as well as quantity, from fresh foods as well as of export market with benefits to all in the producer to consumer chain. India has embarked upon the establishment of terminal market with modern infrastructure and operational mechanism. The major requirement for a market is its location and layout. The State Government will approve the number and indicative location of the TMCs based on the demand, economic viability, commercial considerations etc. Introduction With an increasing working population, rising disposable income and greater international exposure, the fast growing Indian market is witnessing a paradigm shift in its aspirations and lifestyle. While, food products capture almost 53% of private consumption expenditure and their demand rises consistently at almost 8%, the consumer basket is continuously undergoing change in favour of perishables (such as fruits, vegetables, animal protein, milk etc.) and healthy, hygienic products. The Indian consumer today stands at the threshold of a competitive world 1
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Abstract
The present marketing system, characterized by a long, fragmented supply chain, high
wastages, low share of producers in price, is inadequately equipped to meet the growing needs of
consumers for quality and safe hygienic food. Terminal market has been envisaged to improve
availability, in terms of quality as well as quantity, from fresh foods as well as of export market
with benefits to all in the producer to consumer chain. India has embarked upon the
establishment of terminal market with modern infrastructure and operational mechanism. The
major requirement for a market is its location and layout. The State Government will approve the
number and indicative location of the TMCs based on the demand, economic viability,
commercial considerations etc.
Introduction
With an increasing working population, rising disposable income and greater international
exposure, the fast growing Indian market is witnessing a paradigm shift in its aspirations and
lifestyle. While, food products capture almost 53% of private consumption expenditure and their
demand rises consistently at almost 8%, the consumer basket is continuously undergoing change
in favour of perishables (such as fruits, vegetables, animal protein, milk etc.) and healthy,
hygienic products. The Indian consumer today stands at the threshold of a competitive world
where the organized food retailer awaits to utilize numerous opportunities to serve this diverse
demand. The present marketing system, characterized by a long, fragmented supply chain, high
wastages, low share of producers in price, is inadequately equipped to meet the growing needs of
consumers for quality and safe/ hygienic food. Although, India produces almost 10% of the
world’s fruits and vegetables it accounts for a mere 1% of world trade. This small market share
can be attributed largely due to weak post-harvest infrastructure, inadequate extension support to
the farmer, quality, and hygiene control mechanisms.
Thus, in order to harness the potential of the emerging consumer demand (domestic and
international), a professionally managed competitive alternate marketing structure that provides
multiple choices to farmers for sale of produce along with a comprehensive solution to meet key
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needs of the stakeholders is necessary. Such a system entails a high investment cost and efficient
management skills, each of which can be infused by inviting private sector participation in the
sector. Thus, the Modern Terminal Markets were conceptualized with the objective of fulfilling
the above goals.
The Existing Market structure of fruits and vegetables does not adequately address the
complex problems of farmers. It has low marketing efficiency, high post harvest losses and does
not foster competitiveness. A modern innovative system that can reduce the vested interests of a
large intermediary chain, create competition, assure quality and modernize operations with IT
applications in handling of fruits and vegetables, is necessary to raise income of actual farmers.
To achieve this objective, National Dairy Development Board was asked to develop and
establish operations for a Modern Integrated Terminal Market for Fruits, Vegetables and Flowers
in Bangalore by the Govt. of India. The market is popularly known as SAFAL Fruit and
Vegetable Auction Market (SFVAM).
SFVAM was a special endeavor to bring farmers and wholesalers to a common platform to
facilitate information sharing and to promote the spirit of cooperative movement. The State
Government amended Karnataka State Agricultural Produce Marketing (Regulation) Act, 1966,
to pave the way for National Dairy Development Board to own, operate and manage fruits and
vegetables auction market in the State. The venture facilitates the organization of more than 200
horticultural farmers’ associations with around 50,000 grower members for planned and assured
production and supply of agricultural produce for wholesale marketing.
The SAFAL Market was designed on the lines of European Auction Markets. It offers a
clean and hygienic market environment. Components of the marketing system include
establishment of Wholesale Auction Market, Backward Linkages with Farmers, and Forward
Linkages with the Retailers and Consumers. The market is designed to handle 1600 MT tones of
fresh fruit and vegetables per day, operating 312 days in a year.
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Terminal Market would endeavor to integrate farm production with buyers by offering
multiple choices to farmers for sale of produce such as electronic auctioning and facility for
direct sale to exporter, processor and retail chain network under a single roof. In addition, the
market would provide storage infrastructure thus offering the choice to trade at a future date to
the participants. It is envisaged to offer a one-stop-solution that provides Logistics support
including transport services & cool chain support and facility for storage (including warehouse,
and palletisation of produce and extension support and advisory to farmers. Each of these
services would be provided in lieu of a user charge. The TM would be built, owned and operated
in a Public-Private-Partnership Mode by a Corporate/ Private/Co-operative entity (hereinafter
called as Private Enterprise) either by itself or through adoption of an outsourcing model.
However, implementation and successful operation of this path-breaking initiative would
necessitate State Government support. Thus, the creation of a conducive regulatory and legal
framework for entry & operation of the project and provision of a level playing field to the
private enterprise would be integral to realization of this vision. The Union Government will
lend its support to the initiative by providing financial support to the project through the Venture
Capital (VC) Scheme of the Small Farmers Agri-Business Consortium (SFAC).
The Terminal Market will provide a mega scale collection and sale market of agricultural
produce, if established at a convenient location. A selection on pure economic consideration will
ensure an easy and regular supply of raw material, labour force, accessibility, public utilities like
electricity, communication, water, etc .an ideal location may not, by itself, guarantee success; but
it certainly contributes to the smooth and efficient working of an organisation. A bad location, on
the other hand, is a severe handicap for any market and it finally fails. It is, therefore, very
essential that utmost care should be exercised in the initial stage to select a proper place.
A market should be properly designed for its efficient working. The efficiency of the
market depends upon proper usage of allocated space, Circulation and movement patterns,
Utility and service distribution. In a properly laid market processing bottlenecks and delays are
few, and material handling costs are reduced.
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Objectives
The main objectives of setting up Terminal Markets Complex (TMC) are:
To link the farmers to the markets by shortening the supply chain of perishables and
enhance their efficiency and thus increase farmers income
Provide professionally managed competitive alternative marketing structures that provide
multiple choices to farmers for sale of their agricultural produce.
To drive reforms in the agricultural marketing sector resulting in accelerated
development of marketing and post harvest infrastructure including cool chain
infrastructure in the country through private sector investment.
To bring transparency in the market transactions and price fixation for agricultural
produce and through provision of backward linkages to enable the farmers to realize
higher price and thus higher income to the farmers.
Salient Features
The TMC will be set up in those States that undertake reforms in their laws dealing with
agricultural marketing to provide direct marketing and permit the setting up of markets in
private and cooperative sectors.
The TMC would operate on a Hub-and-Spoke Format wherein the Terminal Market (the
hub) would be linked to a number of Collection Centers (CC) (the spokes).
The spokes would be conveniently located at key production centers to allow easy farmer
access and the catchment area of each spoke would be based on meeting the convenient
needs of farmers, operational efficiency and effective capital utilization of the
investment.
TMC would establish backward linkages with farmers through the collection centers and
forward linkages through wholesalers, distribution centers, retail cash and carry stores,
processing units and exporters.
Collection Centers in the villages would integrate producers and retailers, processing
units and exporters into the market system.
An electronic auction system would be established to ensure transparency in price
fixation and competition.
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The Scheme will attract and facilitate private sector investment in the agribusiness sector,
by assisting the key stakeholders – entrepreneurs, producers, processing industry and
exporters
Producers, farmers, their associations, and other market functionaries from any part of the
country may use the infrastructure and facilities of the TMC directly or through the
collection centers.
TMC would provide one-stop solution in terms of providing logistics support including
transport services and cool chain facility.
Review of literature
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The government has decided to set up seven modern terminal markets in Punjab, Haryana,
Chandigarh and Madhya Pradesh in the next year under public-private partnership (PPP). The
first terminal market will be set up in Chandigarh.
Modern terminal market complexes would work on the “hub-and-spokes” concept as
prevalent in the United States. The terminal market referred to as the hub” would be linked to a
number of collection centers (the spokes). The spokes would be conveniently located in major
production centers.
The programme for setting up of terminal markets would be taken under the US-India
Knowledge Initiative in Agriculture, said the agriculture minister-counselor in the US embassy
in India, Holly Higgins.
She said that when the US-India Knowledge Initiate Board met for the first time in
Washington in December 2005, it was decided to focus on four key areas—agro-processing and
post-harvest management, biotechnology, water management and capacity building in education
and curriculum development.
Some farmers’ groups and NGOs have been critical of US-India Knowledge Initiative
signed in March, last year on the occasion of President Bush visit to India.
“Our capacity building and joint applied research projects would address impediments to
successful agricultural growth, market development, trade, domestic and foreign investments,”
she said and added that work has already begun in the National Institute of Agricultural
Marketing in Jaipur and in Himachal Pradesh, Karnataka and Rajasthan.
According to the additional secretary for agricultural marketing, Karnail Singh as many as
12 state governments have sent their proposals for setting up of terminal markets.
Punjab has offered to set up terminal markets in four locations, including Ludhiana and
Hoshiarpur. The government’s equity in terminal markets will not exceed 49%. Reliance group
has shown keen interest in setting up of terminal markets.
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“Studies show that organised markets benefit farmers. Booming retail market and mass
population of consumers offer good scope for terminal markets in India,” said Rebecca Black,
director, economic growth in the US Agency for International Development. The executive
director of the Centre for International Trade in Agriculture and Agro-based Industries (CITA),
Vijay Sardana is, however of the view that upgradation of the existing marketing infrastructure
would be a viable option than setting up of new terminal markets.
Features of the Terminal Market
TM would operate on a Hub-and-Spoke Format wherein the Terminal Market (the hub)
would be linked to a number of collection centers (the spokes). The spokes would be
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conveniently located at key production centers to allow easy farmer access and the catchment
area of each spoke would be based on meeting the convenience needs of farmers, operational
efficiency and effective capital utilization of the investment. The commodities to be covered by
the markets include fruits, vegetables, flowers, aromatics, herbs, meat and poultry.
The services and infrastructure that are planned to be provided to farmers, traders,
consumers and other stakeholders, at the TM and the Collection Centers (CCs) are presented in
Figure.
Collection Centre
Terminal Market
Producers/ Farmers and theirAssociations
Infrastructure:Washing, grading, sorting, weighment, transport to TMServices:Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport
Infrastructure:Packhouse, Quality Testing Facility, PalletisationServices:Transport (incl. cool chain), Settlement of Payments, Banking, Market information
Electronic Auction
Banking Institution
Storage:Cold Storage, Temperature controlled warehouse,Ripening Chamber