Vegetable Cooperative

SARDAR VEGETABLE COOPERATIVE Assessment of net value realisation

Presented by: Anupama Tripathi (29010) Ashutosh Shekhar (29013) Avinash Dwarapu (29014) Francis C. Verghese (29017) Shashikant Patil (29030) Suman Kumar Gope (29033)

CURRENT SCENARIO • India: Second largest producer of vegetables(109 million MT). • 1st position in the world production of Peas. • 2nd position in the world in Cauliflower, Cabbage, Brinjal. • 4th position in the world production of tomato.

STATE SCENARIO(2005-06) • 6th largest producer of vegetables in India. • Total production of vegetables in state: 6.3 million MT. • Total cultivated area(vegetables): 0.38 mha.

Total Area Cultivated Gujarat

Area and Production of Vegetables

ANAND VEGETABLE MARKET • Total area cultivated(2005-06): 12930 hectares. • Total production(2005-06):315870 MT.

DYNAMICS OF VEGETABLE MARKET • • • • •

Price Fluctuations Seasonality Perishability High Weather Dependence Bulkiness

PRESENT VALUE CHAIN 6%

APMC Dealer

Farmer 10%

Trader Retailer 10 %

APMC 1%

CONSUME R

EXAMPLE (Rs) Farmer's Take home Price (Rs) Unloading Charge (Rs per unloading) Farmers'sPrice (Rs) APMC Dealer commission 6%(Rs) Cost to the Trader (Rs) APMC Commission 1%Rs Loading Charge (Rs per Loading) Final Cost to the Trader (Rs) Trader Margin (10%) Cost to the Retailer Rs Retailer Margin 10% Cost to the consumer Rs Increase in cost Percentage Increase in cost

98.00 2.00 100.00 6.00 106.00 1.06 2.00 109.06 10.91 119.97 12.00 131.96 33.96 34.66

%age Distribution of Price rise 5.89 17.67 3.12 5.89 32.11 35.32

100.00

WHY CO-OPERATIVE?? • • • •

Bargaining power Economies of Scale Assistance to farmers Shielding small farmers from the market price fluctuations

FACTOR MARKET CONDITIONS • Concentrating on Nawali and surrounding villages in the initial stage. • High volume of vegetable production in small area. • Better price realization in markets of Surat and Ahmedabad. • Farm input supply from Gujarat State Seed Corporation, IFFCO and NDDB.

PRODUCTION RISKS • • • • • •

Seasonality Perishability Quality/ Grading Demand - Supply mismatch Improper Handling Input Supply Risk - Fertilizer - Seed

MARKET RISKS • • • • •

Price Fluctuations Demand Fluctuations Transportation Costs Lack of Bargaining Power Rejection of Lot due to Lack of Quality

MARKET SEGMENT • Institutional • Domestic • Grading of produce – Premium Quality- High price market – Medium Quality- Local market – Low Quality- Local or Institutions.

LOCATION OF COOPERATIVE • Village: Nawali (7 kms from Anand) • Average Land Holding : 1.5 – 2 acres. • Vegetables: Cabbage, Cauliflower, Brinjal, Bottle gourd, Ridge gourd, Lady’s finger. • Climate: Sub tropical semi arid climate • Soil: Sandy Loam • Income generating Activities – Farming, Dairy, Poultry • Average Rainfall: 950 mm

Seasonality Month

Tomato

Brinjal

Cauliflower

Cabbage

Gourd

Okra

June

 

 

 

 

 

 

July

 

 

 

 

 

 

Aug

 

 

 

 

 

 

Sep

 

 

 

 

 

 

Oct

 

 

 

 

 

 

Nov

 

 

 

 

 

 

Dec

 

 

 

 

 

 

Jan

 

 

 

 

 

 

Feb

 

 

 

 

 

 

Mar

 

 

 

 

 

 

April

 

 

 

 

 

 

May

 

 

 

 

 

 

INCENTIVE TO FARMERS • Reduction in - Costs - Risks • Increase in production • Better value realization • Timely availability of farm inputs • Assistance in production process by specialist

ECONOMIC VIABILITY • Scale of operation: 2% of Anand vegetable production i.e. 6200 MT. • Total fixed cost (annual): Rs 5,00,000. • Expected additional margin: Rs 0.25/ kg. • Contribution: Rs 15,50,000. • Surplus: Rs 10,50,000. • Number of members: 500. • Additional benefit to members: Rs

GROWTH AND SUSTAINABILITY • Economies of Scope - Organic cultivation - Cold Chain: Cold storage, Refrigerated Vans • Retailing through Hand Cart Hawkers • Tie up with Retail Chains (Institutional Buyers)

CO-OPERATIVE RELATIONS • Farmer segmentation – Large Farmers (30%) and Small Farmers (70%). • Member participation at different levels. • Type C proposals: 1) Insurance for produce, 2) Reserves contribution on daily basis. • Type D proposals:

OPERATIONS • Pooling, Grading, Sorting, Bagging etc. • Distribution according to demand in different markets of major cities such as Ahmedabad, Baroda, Surat. • Transportation • Input Supply – Seeds, Fertilizers etc. • Technical Assistance to the farmers

BUSINESS MODEL • Pooling System • Payment based on patronage (proportionate to produce contributed) • Contribution identified through proportion in each grade lot. • Payment: (Price realized –cost)- 5% as reserve

NET VALUE ADDITION • DISTANCE/PLACE • PRICE • FORM

PROBLEMS • Horizon Problem: Expansion for cold chain • Portfolio Problem: Addressed by keeping separate account for farmers who are producing different vegetables. • Control Problem: Addressed by training and educating directors. • Influence Cost: Long term asset creation like premises.

CENTRALITY OF COOPERATIVE • Member Centrality: Members derive 30-40 per cent of their income from vegetable production. • Domain Centrality: Contribution to the economy of the area and the state. • Patronage Centrality: Commands 2 per cent of vegetable production in Annad, and nearly 90 percent of production in the operational area.

Sources of Information • APMC Market, Samarkha. • Secretary, APMC, Sardarganj. • Farmers of Nawali, Jakharia, Samarkha, Barod, Ajarpura, Asodhar. • Ekta Vegetable Co, Samarkha. • Mansa Ji Vegetable Co, Station Road, Anand. • Big Bazar, More.

Literature and Web Link • • • • • •

www.agmarknet.in www.agri.gujarat.gov.in www.indiastat.com www.aau.in www.nhb.gov.in Co-operative Marketing of Fruits and Vegetables in India, Subrahmanyam K. V. • Indian Horticulture Database 2006, NHB.

THANK YOU!