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

8

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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