C H I N A ON

AGRICULTURAL MARKETING (Some Lessons to Learn)

Presentation toNational Council of State Agricultural

Boards (COSAMB) at Mount Abu, Rajasthan on 30th August, 2012

BYDR. J.S. YADAV

Chief Operating Officer

Premium Farm Fresh Produce LimitedLGF, World Trade, Centre, Barakhamba Lane, New Delhi –110001

Phone: 11-44447896 ; e-mail: jsyadav@rediffmail.com

CONTENT

BACKGROUND - 1

Development History of China’s Agricultural Products Wholesale Markets

BACKGROUND - 2

Essential Turning Point of China’s Agricultural Products Wholesale Markets (3RD Generation Reforms 2010 onwards)

BACKGROUND – 3

Distinct Difference Between India & China

BACKGROUND – 4

HIGHGREEN– The Most Modern Market–A Result of Third Generation Reforms

1.Platform of Production and Marketing (case-1)

2.Platform of Production and Marketing (case-2)

3.HiGREEN– Efficient and Environmental friendly Hardware Facilities (case-3)

4.HiGREEN– Efficient and Environmental-friendly –Recycling and Green Energy (case-4)

5.HiGREEN– Wise Information System (case-5

6. HiGREEN–Logistics Network System (Case-6)

7. HiGREEN–Management Services of All the- way- Supply Chain -Production and Retail Terminals(case-7)

8. Management Services of All-the-way Supply Chain-Electronic Business model and Payment settlement solutions(case-8)

9.HiGREEN-Traceable Food Safety System (Case 9)

10.HiGREEN-An Independent Third Party Testing Center (case-10)

FIRST GENERATION OF AGRICULTURAL PRODUCTS WHOLESALE MARKETS

Background

• The county allowed the purchases and sales on negotiations well as free purchase and sales of some farm products.

• Land collectives system: fix farm output quotas for each household

• Low level circulation organization

• Not well organized of products distribution• In the late 1980s, the inflation was serious.• In 1988, the ministry of agriculture proposed the “Food basket" project.• Mass market and intensive use of land•The level of circulation organization was increasing continuously

Market Features

• Formed marketing groups among people, especially farmers.

• Most of the sellers were farmers and self-employed individuals

• Developed by group or villages

• Supply store or professional company

First Generation ofAgricultural ProductsWholesale Markets(Upto the Reform andOpening Up in 1991)

Advantages

• Circulation of goods in each place

• Models of farm produce market begin

• Farmer distributors appeared

Advantages

Disadvantages

• Problems of large scale production and small circulation

• Prices were not clear and extortion appear.

• No orderly management in the market.

FIRST GENERATION OF AGRICULTURAL PRODUCTS WHOLESALE MARKETS

• Promoted by county

• Floor space increases

• A large number of wholesalers and distributors- appeare

Market Features

Advantages

• Corporate organization gradually becomes the subject of management

• Farm product wholesale market becomes the major channel for farm product circulation

• The large-scale wholesale markets has improved function and complete supporting facilities

SECOND GENERATION OF AGRICULTURAL PRODUCTS

WHOLESALE MARKETS

Second Generation ofAgricultural ProductsWholesale Markets(1991-2010)Until 2010, the marketnumber has been4150.

• Requirements of customers about food safety could not be satisfied by some wholesale markets

• Information asymmetry weakened the functions of wholesale markets

• Pell-mell development and disorderly competition

• Poor circulation means and low circulation efficiency increased the product circulation cost.

• The traditional markets could not satisfy requirements of new circulation patterns such as E-commerce

• Serious inflation made the public responsible that too much circulation drives prices to rise.

Disadvantages

SECOND GENERATION OF AGRICULTURAL PRODUCTS WHOLESALE MARKETS

ISSUES THROWNUP DURING SECOND GENERATION (1991-2010)

__________________________

• Food Safety: Our Great Responsibility• Multi-ways-Fight for Price• How to protect “Vegetable Basket” ?• Why the Circulation of Farm Products Cannot

Go Smoothly?• Henan Cabbage Comes into Beijing-Longistics

Costs is the big Problem• Needs to Promote Farm Products (Quality)• Farm Products Logistics Needs to be Solved

TURNING POINT OF CHINA’S AGRICULTURAL PRODUCT MARKETS

Prime minister of the State Council, Wen Jaibao, held the standing conference on 8th October, 2010 to deploy the establishment of circulation system of fresh farm products.

The Council clarified the immediate essential tasks:

1. Improve the organization and modernized level of agricultural products distribution

2. Promote the jointing of production and marketing to reduce circulation and cost.

BACKGROUND-3

Distinct Difference Between India & China– Where we stand ?

1000 Crores USD China India

1. No. of Private Wholesale Markets 400 -2. Joint Venture with MNGs 20 -3. Investment in Pvt. Wholesale Markets USD

800 cr-

4. Reforms taken place in year 1991 2004

5. Whether Commodities are regulated No Yes 6. On an average No. of goods &

Commodity traded in a Private market2000 100

BACKGROUND-3

District Difference Between India & Chian – Where we stand

1000 Crores USD China India

7. Average area of Pvt market 50 Ac NA

8. Percentage of Land use earmarked for market, nonmarket services

Free 15-20 (Non market

services)

9. Notification & Demarcation of Market Area

Free Notified

10. National Regulatory Authority Yes No

11. Level Playing Field Yes No

Background 4

‘HiGREEN- The Most Modern market of China

Shenzhen Agricultural Products Company Limited (SZAP) positively responded the national policy and promoted HiGREEN Market for operations and social responsibility in ONE year only.

Established efficient, convenient, safe and orderly distribution system of fresh farm products in one year (construction & development in 12 months (November, 2010-October, 2011)

THIRD GENERATION PRODUCT WHOLESALE MARKET – OPERATIONAL ON GROUND

Shenzhen HiGREEN Agricultural Product Logistics Park - Promoting HiGREEN

“HiGREEN”- FUTURE STANDARDS SET

HiGREEN – Platform of Production and Marketing (Case

1) From production to marketing, it will provide the multilevel and mutimode trading platfrom, which can truly connect the field and dining table.

Multilevels

B2B

B2C

C2C

Multimodes

Trading

Through

Auction and matching

Field Dinning Table

HiGREEN – Platform of Production and Marketing (Case 2)

Retail Vans at fair prices in Shenzhen: 300 moveable retail cards, which covers 900 communities in Shenzhen

HiGREEN – Efficient and environmental-friendly Hardware Facilities (Case 3)

Convenient and efficient hardware facilities and logistics management could not only reduce energy consumption, but reduce the secondary pollution of food.

HiGREEN – Efficient and environmental-friendly Hardware Facilities (Case 4)

HiGREEN – Wise Information System (Case 5)

HiGREEN – Wise Logistics Network System (Case 6)

HiGREEN – Management Services of All – the-way Supply Chain (Case 7)

Perfect management services of supply chain makes all the services completed

Value-added

Services

Platform

Publish production information & producing area Quality Control

Transportation Accounting Sorting and Package Inventory Management Financing Guarantee Services

Retail

Terminal

Production

Terminal

Front-end Services

Individual Services

Consultant Services

Outsourcing Services

Whole Services

HiGREEN – Management Services of All-the-way Supply Chain (Case 8)

HiGREEN - Traceable Food Safety System (Case 9)

HiGREEN- An independent third party testing center(Case 10)

The third party testing center makes subsidiary agricultural productsDistributed from HiGREEN market safer and reliable.

INSTATANT PESTICIDES RESIDUE TESTING MECHANIE

GPS CONTROLLED MOVEMENT OF VEHICLES

AUTOMATIC PAYMENT RECEIPT FOR FARMERS

ELECTRONIC WEIGHING AND PAYMENT SETTLEMENT MECHANIE

MOBIEL BIDDING EQUIPMENT

AUTOMATIC MONEY TRANFER MECHINES PLACED IN MARKETS

A VIEW OF MARKET FROM TOP FLOOR

Thanks!