Structural and Functional Peculiarities of Wholesale Markets in India J.S Yadav C.E.O. Premium Farm Fresh Produce Ltd. New Delhi, India Key Facts Green Revolution ( ) transformed India from a food deficient to a surplus food market. In a span of 3 decades, India established itself as a net exporter of food grains. India is the largest producer for milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. 2nd largest producer of wheat, rice, sugar, groundnut and inland fish. Third largest producer of tobacco. India is home to 10 % of the world fruit production ( lakh MT) with first rank in the production of fruits like Banana and Sapota while it ranks 2 nd in terms of vegetable production (1, lakh MT). Green Revolution ( ) transformed India from a food deficient to a surplus food market. In a span of 3 decades, India established itself as a net exporter of food grains. India is the largest producer for milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. 2nd largest producer of wheat, rice, sugar, groundnut and inland fish. Third largest producer of tobacco. India is home to 10 % of the world fruit production ( lakh MT) with first rank in the production of fruits like Banana and Sapota while it ranks 2 nd in terms of vegetable production (1, lakh MT). Top 10 markets of the country in terms of Arrivals, handle 74% of total throughput of F & V of all the markets shows strong interdependency Top 10 F & V account for 80% of the total arrival in a market. Top 5 Fruits constitute : Apple, Mango, Banana, Citrus fruits, Guava Top 5 Vegetables : Onion, Potato, Tomato, Brinjal, Cabbage/ Cauliflower On the basis of production, the top 5 fruits constitute of 75% of the total fruit production and the top 5 vegetables constitute 60% of the total vegetable production. (Source: Country Level Action Plan) Top 10 markets of the country in terms of Arrivals, handle 74% of total throughput of F & V of all the markets shows strong interdependency Top 10 F & V account for 80% of the total arrival in a market. Top 5 Fruits constitute : Apple, Mango, Banana, Citrus fruits, Guava Top 5 Vegetables : Onion, Potato, Tomato, Brinjal, Cabbage/ Cauliflower On the basis of production, the top 5 fruits constitute of 75% of the total fruit production and the top 5 vegetables constitute 60% of the total vegetable production. (Source: Country Level Action Plan) Commodity Basket Population Served by the Markets (Source: Country Level Action Plan) STRUCTURAL Dynamics of Traders Profile There are 1/3 rd (33%) of the cities where 50 % traders are without premises. 66% cities offer less than 40 sqm for average shop area (including display, sorting and cleaning, office and storage etc)to traders. In 75% cities traders are operating with inadequate shop area. Population of City (in million) No. of CitiesNo. of Markets No. of Traders No. of Traders per Market No. of Traders per City & above Total Avg. = 459Avg. = 1326 (Source: Country Level Action Plan) Transport Utilization Pattern 29% of the total cities (16) witness more than 1000 vehicles entering the market on a normal day. The share of medium trucks (10 tonne) in total vehicular entries is less than 10% in majority of the cities. Only in 8% of the cities (4), large trucks (10MT) dominate with a share of more than 50% of total vehicular traffic. 82% of the trucks operate in seven big cities of first category. The ratio between outgoing and incoming vehicles is 1:4 and 1:5 (Source: Country Level Action Plan) Existence of Commission Agents in Indian Agricultural Marketing Out of the total shops, majority of them are owned by Commission Agents. All Auction Sheds are allotted to Commission Agents with no rentals (free of cost). Commission Agent is the highest gainer (8-10%) in the entire supply chain with least contribution to value addition. Mark-ups in Agricultural Value Chain Aggregator/ Iterant Merchant Primary,Secondary,Tertiary/Transit Markets 9/6 Fold Classification 25-30%8-10% 15-20%25-30%100% Source: Study by PFFPL Alternative Roles of CA In a study by PFFPL, conducted in 61 markets of 8 states in the country, where the sample size of 310 farmers and 305 traders was selected, perception regarding essential alternative roles of CAs was taken. Alternative RolesFarmersTraders Give credit Facilities without interest52%56% Give credit Facilities with interest33%39% Supply of inputs especially seeds.37%18% Provide market information72%94% Immediate cash payment92%89% If the commission agents are prohibited, there is a question as to who will provide credit and who will risk lending of money without any co- lateral guarantee. Source: Study by PFFPL Differentiating Facts About Market Operators There are more than 7000 wholesale markets managed by APMCs. India is a country where Auctions are compulsory. Market 1% (average) is levied for every transaction (ad valorem) and retained by market operators. Market operators (APMCs) are not allowed to participate in buying and selling. The National Horticulture Mission, India has provided a list of Market, Non- Market and Essential Services which can be considered as a benchmark for Pvt Markets, but current status of facilities in APMC Markets is as under: Category of ServicesAvailability Status in Markets Market Services29.17 % Non-market Services25.45 % Essential Services52.86 % Avg of total facilities33.33 % Current Status of Market Infrastructure in apmc markets Most of the markets are old, to suit conditions very different from those of the present day. Towns are growing at a rate of more than 5% per year leading to a doubling of urban population within few years. Shifting of trade from old to new market is a gigantic task and takes around 5-6 years (hence always an apprehension of under-utilization) (Source: Premium Study) Return on Investment calculated for Services available in Wholesale Markets To make the project viable and sustainable, the government is providing subsidies for the private investors so as to encourage them for investment in the sector (Source: Premium Study) Market-wise Top 5 facilities/services with high ROI (Source: Premium Study) HIGH DEGREE OF INTERDEPENDENCY BETWEEN MARKETS (SELECTED 19) NAME OF THE MARKET DEPENDENT UPON (Name of Market)For CommoditySeasonVolumeInterdependency AhemdabadNashikPomegranate 100% strong NashikOnionMay-Dec80% strong BhavnagarOnionJan-Mar50% strong AmritsarPotatoNov-feb100% strong Jaipur,Amritsar,AzadpurTomatoMay-June100% strong NashikTomatoJune-Oct ton/day strong MehsanaAmritsarPotatoNov-Jan80 ton/day strong NashikOnion (Nashik Red)Nov-Mar60-70% strong Onion (Nashik White/Peela)June-Oct90% strong VadodaraNashikOnion(Nashik white/Peela)May-Oct80-90% strong Onion (Nasik red)Nov-Mar100% strong BhavnagarOnionJune-july20% weak Mysore,BelgaumOnionAug-Nov Qtl./day weak MehsanaPotatoMar-May70% strong NashikTomatoApr-June70% strong Kolar,BangaloreTomatoMay-June30% medium Jaipur,AmritsarTomatoMay-June50 ton/day (56%) strong AmritsarNashikOnion(Nashik Red)Jan-Mar ton/day strong Onion(Nashik White/Peela)Sept-oct60% strong BhavnagarOnionJan-Apr15% weak AhemdabadOnionJan-Feb5% weak JaipurOnionJune-sept20% weak AhemdabadTomatoJan-Mar10% weak NashikTomatoSept-Dec15-20% weak Jaipur(Chomu)Tomatomar-MayNot Specific weak JaipurPeaJan-Mar10% weak AhemdabadMangoMay-June10-15% weak Mumbai(Vashi Market)NashikOnionSept-May40% medium Chandigarh,Amritsar,JaipurPotatoOct-Dec12% weak Kolar,Hassan,Mysore,BelgaumPotatoAug-Nov30% medium HassanTomatoJune-Nov15% weak Ahemdabad,Mehsana,Vadodara, Surat,Bhavnagar,RajkotPotato 22% medium BhavnagarNashikTomatoMay-Dec80% strong JaipurTomatoMay-Dec20% weak RajkotNashikTomatojuly-Nov90% strong HassanTomatojuly-Nov10% weak NashikOnion(Nashik Yellow)mar-Apr65% strong NashikCabbage 15% weak BelgaumCabbage 5% weak BelgaumNashik,PuneOnionMar-May40% medium Kolar NashikOnionOct-May 70%strong HassanPotatoSept-dec 30%medium Commodity Specific Important Markets in Country (on the basis of Arrival and Dispatch) S. No.Name of CommodityName of MarketDuration 1.Onion NashikMay-Oct, Nov-Mar BhavnagarJune-july JaipurApr-Oct BelgaumAug-Sept 2.Tomato NashikJuly-Nov AmritsarApr-Jun JaipurMay-June ChandigarhJune-Nov KolarJune-Nov 3.Potato AmritsarNov-Jan ChandigarhNov-Jan HassanSept-Dec Ahmedabad, MehsanaMar-May Apple: Chandigarh (dispatch to seven markets) Banana: Surat,Vadodara (production & arrival round the year) Pomegranate: Nashik (arrival and dispatch) Mango: Krishnagiri (Production, dispatch to 7 markets), Bombay, Gujarat(Saurashtra) Grapes: Nashik, Theni (arrival throughout year) Potential Markets for Fruits (Source: Premium Study) FAO RECOMMENDATIONS ON LAND USE PATTERN FOR F&V WHOLESALE MARKET S.No.Particulars% of Total Area 1General pedestrian circulation, such as main walkways 10%. 2Parking Area50-60% 3Covered space for Marketing Activities25-33% 4other Administration uses including drain reserves 10-20% Source: FAO Planning and Designing Manual COMPARISON OF MARKETS VIS-A- VIS FAO STANDARDS ( Source: Premium Study) AVERAGES FOR VARIOUS PARAMETERS (Source: Premium Study) THANK YOU! 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