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Increasing Farm Income
More production with better marketing
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Production stagnating, big
scope for better marketing
Double the income through more efficient marketing
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4
But the present day markets are not efficient
Infrastructure for marketing of perishables
Primary grading/ collection centers - non existent
Warehousing and cold storage - inadequate
Cold chain - non existent
Quality certification system - non existent
Transportation for perishables - non existent
Rural markets - complete lack of infrastructure
Wholesale markets - in government control, lack modern facilities
Private / direct markets - not permitted
Post harvest losses: 25 to 30 % in perishables
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Present Scenario in Value Chain
Cost Build Up For One Kg. Basket Of Fruit
FARMER TRADER WHOLESALER RETAILER CONSUMERPRICE
3.3
4.1
1.72.5 11.6
Retail Markups
FARM GATE PRICES MILK FISH FRUITS &VEGETABLES
350
220160
100
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Terminal markets
Catalysts for transformation
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Concept
Modern terminal markets:
A professionally managed competitive structure
To provide market services
to farmers at their door step
Comprehensive solution to meet needs of stakeholders
Auction
Processing industry
Exports
Retail chain and Consumers
Requiring high investment and efficient management skills
Can be infused by private enterprise
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Structure of Terminal market
Hub-and-Spoke Format: Terminal Market (the hub) to be
linked to number of collection centres (the spokes)
Collection centres (Spokes) to be conveniently located at key
production centres to allow easy access to farmers
Provide state of art facilities for
electronic auction,
grading, washing and packing lines,
processing and exports,
banking etc.
Commodities to be covered include
Fruits and vegetables, Flowers, aromatics and herbs
Meat & Poultry
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Collection Centre
Terminal Market
Producers/ Farmers and theirAssociations
Infrastructure:Washing, grading, sorting, weighment, transport toTM
Services:Collection & Aggregation of produce, Settlement ofpayment, advisory on inputs, prices, quality, multi-modal transport
Infrastructure:
Packhouse,Quality Testing
Facility,PalletisationServices:
Transport (incl.cool chain),Settlement ofPayments,
Banking, Marketinformation
ElectronicAuction
Banking Institution
Storage:Cold Storage,Temperaturecontrolledwarehouse,RipeningChamber
Processor Exporter Wholesaler/Trader/Retail chainoperator
Direct Selling
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Salient Features of the Terminal Markets
Feature Mumbai Nasik Chandigarh Rai Patna Bhopal Kolkata Nagpur
Area of market (in
acre)
200 100 100 88 75 59 55 100
Yearly handling
capacity (lac MT)
6 3 2.25 3 2 2 5.47 2.4
No. of collection
centres
60 20 20 30 26 25 12 25
Peak throughput
(MT/day)
3000 1500 800 1000 800 1000 1500 800
Cold Store
Capacity (in MT)
15000 5000 3000 5000 2550 2000 10000 2000
Total cost of
project (Rs. crore)
120 60 53.6 65.6 59 49.6 93.4 54.5
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Financial Parameters of Nasik Project
Total Cost ofProject ( in Rs. Crore) 60.00
Debt Equity Ratio 1.60
Debt Service Coverage Ratio 1.82
Pay Back Period ( years) 10.00
Break Even Point( %) 46.68
Cash Break Even Point(%) 28.79
IRR ( % ) 17.25
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Key expectation from the private enterprise
Provide envisaged infrastructure at the TM and the CC in the
hub- and- spoke format
Establish backward linkage with growers in the catchment
area of the TM through establishing the collection centers.
Progressively involve farmers and their organizations in the
operation and management of the collection centers
Facilitate direct supply to processing units, retail chains and
exporters, in addition to auction facility via the collection
centers and terminal market
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Key expectation from the private enterprise
Provide advisory services to farmers on inputs, prices, quality,multi modal transport and exports
Project DPR only illustrative. Project should, however, bedesigned to handle the minimum quantity of peak throughput
(MT/day) and yearly handling capacity as prescribed. Private enterprise at liberty to
Prepare own business model with regard to Size of market and Scale ofoperation
Set up additional facilities to provide complimentary services(input supply, processing, consumer goods etc.)
Collect user charges for the infrastructure and services provided
For basic services of aggregation at CC and auction at TM
User charge not to exceed 2% of the produce value
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Expectation from the State Government
Reforms in APMC Act
To allow the private enterprise:
Establish collection centres in the catchment area of the
TM
Source material from farmers field directly in the
catchment area of the TM
Organize supply to traders, retail chain, processing industry
and to institutional buyers throughout the country
Cold storage/ warehouses of TM to act as delivery point for
trading in perishables on the commodity exchanges
Pack house of the TM to act as exit point for exports
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Expectation from the State Government
Regulatory clearances: Single license to operate in the entire State/adjoining States
Single point levy & collection of market fee
Autonomy in commercial operations of TM
Clearance of land use for the TM/CCs
Provision of Civic amenities (including drinking water,
municipal waste disposal, police security, post office etc)
Statutory clearance from
Local authority
Town planning & Urban development
Revenue department
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Expectation from the State Government
Play a pro-active role:
Appointment of a Nodal Officer/Empowered Committee
to facilitate securing regulatory compliance
to remove difficulty in operation of the project
Identification of land for the TM/CC
Provision of Government land on long term lease, subject to
availability and suitability
Infrastructure support to TM/CC
road connectivity, power and water supply etc.
States free to participate in the equity ofProject
Direct funding
Land/infrastructure support
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Role of the Central Government
Support the project through participation in its equity capital
Terms for financing:
Up to 49% of project equity, including contribution from State
NHM/State will have the option to allocate its equity to farmersorganisations actively participating in the business of the project
Private enterprise to be selected through an open, transparent
competitive bidding process.
Project to be awarded to bidder with the request for minimumGovernment equity participation.
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Outlay in 2006-07
Approved outlay for NHM
X Five Year Plan Rs.2300 crore
During 2006-07 Rs.1000 crore
Outlay for Terminal Markets
Participation in Equity Capital Rs.148.00 crore
Project Development Assistance Rs. 1.00 crore
General Awareness & Publicity Rs. 1.00 crore
Total Rs. 150.00 crore
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Parameter Baseline status Expected outcome
Tradetransparency
Non-existing Transparent auctions throughelectronic auction system
Cold chaininfrastructure
poor Setting up of cold storage at eachmarket ranging from 2000 to 15000 MTcapacity
Backward-forwardlinkages
poor Minimum of 20 collection centersnearer to the farmers field will be setup. The farmer will have alternativeoptions to supply to the supply chains,processing, export of commodities etc.
Monopoly ofAPMCMarkets
prevalent Farmer is provided with alternativeoption of taking his produce to terminalmarkets.
Multipleintermediaries
prevalent Length of the chain of commissionagents will substantially be reducedwith an ideal situation of eliminating thecommission agents completely.
Beneficiaryfarmers
-- 16000 to 20000 farmers under eachterminal market.
Share of thefarmer in theconsumerprice
Varies from 30 to 60% forperishables depending onthe location, season,demand and supply etc.
Farmers share is expected to increaseto 50 to 70% of the consumer price.
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Risk Factors
Attractiveness to Private Enterprises
Availability of Suitable Land
Success in establishing backward linkages with farmers
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Process so far
General Council of the NHM approved the concept on 14.12.05
Honble FM announced in the Budget Speech of 2006-07 for
setting up of Terminal Markets with an outlay of Rs.150 crore
National Conference on Terminal Markets held on 20.02.2006
discussed with States and Private Enterprises
There is adequate enthusiasm among Private Enterprises on
the proposal as seen in the responses to Expression ofInterest
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Way Forward
Approval of the proposal by October end
Finalization of Bid Process/ Bid documents by NIAM
Inviting the bids by States and selecting the private enterprise
National Executive Committee of NHM approves & releases
the equity
Project Execution
General Council of NHM monitors the progress
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Agri Export Zones
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Milk
Largest Producer91 Mn T
F & V#2 in the world
151 Mn T
Food Grains
#2 in the world(220 Mn T)
Cattle / buffaloes
Largest in the world
283 million
Tea
Largest Producer
(0.85 Mn T)Sugarcane
# 2 in the world
(245 Mn T) Goat & Sheep
182 million
Fisheries
Marine: 2.7 Mn T
Inland : 3.1 Mn T
India is the front ranking producer of many perishable commodities
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15%
11%
0% 5% 10% 15% 20%
Frui
l
India's shar in glo bal pro duction (2001-03)
%
53%
0% 20% 40% 60% 0% 100%
Frui
l
Indian prices as a % of world prices (2001-03)
0.5%
1. %
0.4%
2.1%
0% 2% 4% 6% % 10%
Frui
l
India's s hare in globa l expo rts
(2001-03)
(1 1- 3)
Sourc : UN COMTRADE S i ic , Wo rld B nk S ff E im
Indias competitiveness in global markets
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Exports of Agricultural Products, Why ?
Inherent Indian strength in Agriculture
Opportunities emerging out of WTO Regime
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How did the concept of AEZ come about ?
Analysis of existing export promotion measures foragri exports
Inability to address the entire value chain
Hence, the policy of Agri Export Zones announced on 31st
March, 2001 under Exim Policy
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What is Agri Export Zone ?
Agri export Zone attempts to take a look at anAgri export Zone attempts to take a look at anidentified produce/ product or a group or a group ofidentified produce/ product or a group or a group of
produce/ products sourced from a geographicallyproduce/ products sourced from a geographicallycontiguous area with a view to comprehensivelycontiguous area with a view to comprehensivelyaddressing all the issues relating to each stage of theaddressing all the issues relating to each stage of theentire value chain, from farm to the ultimateentire value chain, from farm to the ultimate
consumerconsumer
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Agri Exports activities
MARKET IDENTIFICATION OF
RODUCT
& QUALITY
ARAMETERS
MARKETING INPUTS SEEDS, FERTILIZER, NUTRIENTS
WATER,
ESTICIDES, CREDIT
TRANSP
RATI
N RESEARCH & PRE HARVEST TECHNOLOGY & RACTICES
DEVEL
PMENT
PACKAGING
PR
CESSING
S
RTING & GRADING
TRANSP
RTATI
N P
ST HARVEST HARVESTING TECHNOLOGY & RACTICES
1. APEDA 1. DOA
2. NHB PARTNERSHIP 2. DOH
3. MFPI 3. MARKETING BOARDS
4. SFAC 4. SIDC
5. DGFT 5. SEB
6. MOA 6. FINANCE DEPTT.
7. RESEARCH AGENCIES
STATE GOVT. &
ITS AGENCIES
CENTRAL GOVT.
& ITS AGENCIES
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What does AEZ entail ?
Utilise existing interventions in a coordinatedUtilise existing interventions in a coordinated
manner to promote exports (Convergence)manner to promote exports (Convergence)
Partnership of farmers, processors, exporters, StatePartnership of farmers, processors, exporters, StateGovernment agencies and Central GovernmentGovernment agencies and Central Government
agencies.agencies.
Focus on important issues.Focus on important issues.
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What does AEZ entail ?
Fiscal
Financial
Monetary
Administrative
Legal
Tariff & Non
tariff Related
issues
Excise, Custom, Sales Tax, Mandi Tax etc. rebate by central and Stateagencies
: Schemes of APEDA, NHB, MFPI, MOA etc.
: Reduction in interest on credit by banks
: Manpower requirement for research & extension related activities
: Amendment of regulations with regard to movement of goods,institutional arrangement for consistent supply of produce etc.
: Import of duties, product standards, pesticide residues, Codex, etc.
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Stages for setting up of AEZ ?
Preparation of proposal by the State Governments.Preparation of proposal by the State Governments.
Clearance by the Steering Committee chaired by Commerce Secretary.Clearance by the Steering Committee chaired by Commerce Secretary.
Signing of MoU between Central (APEDA) and State Govt. undertakingSigning of MoU between Central (APEDA) and State Govt. undertaking
commitmentscommitmentsNodal Officers appointedNodal Officers appointed
Detailed action plan for each activity and monitoring by the inter departmentalDetailed action plan for each activity and monitoring by the inter departmentalCoordination Committee.Coordination Committee.
Notification by DGFTNotification by DGFT
Advertisement by State Govt./Agencies inviting private investmentAdvertisement by State Govt./Agencies inviting private investmentDPR and the execution of the detailed action plan.DPR and the execution of the detailed action plan.
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ConclusionAEZs on a MAPAEZs on a MAPAEZs on a MAP
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Monitoring System
A web based monitoring system has been evolved wherein
Each activity as a part of detailed action plan is clearly
defined ;
The agency responsible for undertaking such activity isidentified ;
The time within which such activity has to be performed is
clearly indicated.
State governments have committed a nodal agency for thepurpose of coordination and the progress is monitored at the
level of Chief / Addl Chief Secretary.
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SOME SUGGESTIONS
Restructuring of Project Monitoring System (Single Window Concept for
disbursement)
Blue Print Project Reports for attracting Investments
Market Intelligence Reports
Funding Mechanism to give liberty to state nodal agencies
Income Tax Incentive
Higher scale of Financial Assistance
Direct Finance by NABARD on concessional terms
Rebate on premium for crop insurance
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Thanks for your attention!
This is not an end This is not an end