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Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II

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Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II FINAL REPORT Operationalising the Agribusiness Infrastructure Development Investment Program- Phase II -Maharashtra- April 2010 Prepared by Client: Asian Development Bank OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Table of Contents 1 Introduction 1 1.1 Project outline and intent 1 1.1.1 Value Chain approach 1 1.1.2 Hub and Spoke model 2 1.2 Integrated value Chain Regions 3 1.2.1 Agri‐Marketing and Infrastructure 3 1.2.2 Selection of Regions 3 1.3 Methodology 4 1.4 Structure of the Report 9 Nashik Integrated Value Chain 10 2 Focus crop: Pomegranate 12 2.1 Value chain analysis 13 2.1.1 Trade channel of pomegranate 13 2.1.2 Price build up along the value chain of pomegranate 16 2.2 Infrastructure Assessment 18 2.2.1 Post harvest Infrastructure 18 2.2.2 Marketing Infrastructure 18 2.3 Gaps identified in the value chain 18 2.4 Potential for Intervention 19 3 Focus crop: Grape 20 3.1 Value Chain Analysis 21 3.1.1 Trade channel of Grapes 21 3.1.2 Price build up along the value chain of Grapes 24 3.2 Wineries 25 3.3 Export of Grapes 26 3.4 Infrastructure Assessment 28 3.4.1 Post Harvest/Marketing Infrastructure 28 3.4.2 Institutional Infrastructure 28 3.5 Gaps in the value chain 29 3.6 Proposed Interventions 30 4 Focus Crop: Banana 31 4.1 Value Chain Analysis 33 4.1.1 Existing Post Harvest Infrastructure and Institutional Mechanism 38 4.2 Gaps in the value chain and potential interventions 42 5 Focus crop: Onion 44 5.1 Value chain analysis 45 5.1.1 Trade channel of Onion 45 5.1.2 Price build up along the value chain of Onion 47 5.2 Infrastructure Assessment 48 5.2.1 Marketing Infrastructure 48 5.3 Gaps in the value chain 49 5.4 Potential for Intervention 49 6 Focus crop: Tomato 50 i OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 6.1 Value chain analysis 51 6.1.1 Trade channel of tomato 51 6.1.2 Price build up along the value chain of Tomato 56 6.2 Infrastructure Assessment 58 6.2.1 Post harvest infrastructure 58 6.2.2 Marketing Infrastructure 58 6.2.3 Institutional Infrastructure 59 6.3 Gaps in the value chain 59 6.4 Potential for intervention 60 DPR: Nashik Integrated Value Chain Project 61 7 Spoke: Malegaon 62 7.1 Focus Crops and Estimated Throughput 62 7.2 Proposed Facilities 63 7.2.1 Pack House 63 7.2.2 Warehouse 65 7.2.3 Other Facilities 65 8 Spoke: Pimpalgaon 67 8.1 Focus Crops and Estimated Throughput 67 8.2 Proposed Facilities 68 8.2.1 Packe Hous 68 8.2.2 Pack Shed ‐Ambient 69 8.2.3 Ambient Onion Stores 70 8.2.4 Other Facilities 71 9 Hub: Nashik Road 72 9.1 Focus Crops and Estimated Throughput 72 9.2 Proposed Facilities 73 9.2.1 Pack House 73 9.2.2 Pack Shed ‐ Ambient 75 9.2.3 Banana Ripening Facility 76 9.2.4 Ambient Onion Stores 76 9.2.5 Dry Warehouse 77 9.2.6 Cold Store 77 9.2.7 Other Facilities 77 10 Spoke: Srirampur 78 10.1 Focus Crops and Estimated Throughput 78 10.2 Proposed Facilities 79 10.2.1 Pack House 79 10.2.2 Onion Storage 81 10.2.3 Other Facilities 81 11 Spoke: Sangamner 82 11.1 Focus Crops and Estimated Throughput 82 11.2 Proposed Facilities 83 11.2.1 Ambient Pack Shed 83 11.2.2 Onion Store 84 11.2.3 Other Facilities 84 12 Spokes (banana): Vivra, Chinnawal, Kajgaon, Danora 85 12.1 Focus Crops and Estimated Throughput by Cluster: 85 12.1.1 Cluster I 85 ii OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 12.1.2 Cluster II 86 12.1.3 Cluster III 86 12.2 Proposed Facilities 87 12.2.1 Pack House 87 12.2.2 Banana Ripening Facility 89 12.2.3 Other Facilities 90 13 Financial Analysis 91 13.1 IVCs in Maharashtra 91 13.2 Nashik IVC 91 13.2.1 Project Details 91 13.2.2 Project Cost 92 13.2.3 Preliminary & Pre‐operative Expenses 95 13.2.4 Means of Finance 96 13.2.5 Key Operating Assumptions 96 13.2.6 Financial Performance 99 14 Economic Analysis 101 14.1 Methodology and Assumptions 101 14.2 Quantification of Benefits 102 14.3 Quantification of Costs 104 14.4 Cost‐Benefit Statement 105 14.5 Calculation of Economic IRR (EIRR) and NPV 105 14.6 Economic Appraisal Results 105 14.6.1 Major Economic Indicators: 105 Aurangabad‐Amravati Integrated Value Chain 107 15 Focus Crop: Sweet Lime 109 15.1 Value Chain Analysis 109 15.2 Infrastructure Assessment 114 15.2.1 Post Harvest Infrastructure 114 15.3 Gaps in the Value Chain 115 15.4 Potential Interventions 115 16 Focus Crop: Kesar Mango 116 16.1.1 Value chain analysis 116 16.1.2 Price build up along the value chain of mango 119 16.2 Infrastructure Analysis 121 16.2.1 Marketing Infrastructure 121 16.3 Gaps in the value chain 122 16.4 Potential for Intervention 122 17 Focus Crop: Orange 123 17.1 Value Chain Analysis 123 17.1.1 Value Chain Actors and Functions 124 17.1.2 Grades in Orange 127 17.2 Post Harvest Infrastructure and Institutional Arrangements 129 17.3 Gaps in the value chain 130 17.4 Potential for Intervention 130 18 Focus Crop: Lemon 132 18.1 Value Chain Analysis 132 iii OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 18.1.1 Price build up along the value chain of Lemon 134 18.2 Infrastructure Assessment 136 18.2.1 Post Harvest/Marketing Infrastructure 136 18.3 Gaps in the value chain 136 18.4 Potential for Intervention 136 19 Focus Crop: Banana 138 19.1 Value Chain Analysis 138 19.1.1 Value Chain Actors and Functions 139 19.2 Infrastructure Assessment 142 19.2.1 Post Harvest Infrastructure 142 19.3 Gaps in the Value Chain 143 19.4 Potential Interventions 143 DPR: Aurangabad‐ Amravati Integrated Value Chain Project 144 20 Spoke: Warud 145 20.1 Focus Crops and Estimated Throughput 145 20.2 Proposed Facilities 145 20.2.1 Ambient Orange Pack house 146 20.2.2 Dry Warehouse 147 20.2.3 Add on/Commercial Facilities 147 21 Spoke: Anjangaon 148 21.1 Focus Crops and Estimated Throughput 148 21.2 Proposed Facilities 149 21.2.1 Banana Pack House 149 21.2.2 Ambient Orange Pack house 151 21.2.3 Banana Ripening Facility 152 21.2.4 Dry Warehouse 152 21.2.5 Other facilities 152 22 Spoke: Akola 153 22.1 Focus Crops and Estimated Throughput 153 22.2 Proposed Facilities 153 22.2.1 Dry Warehouse 154 22.2.2 Ambient Packing Shed 154 22.2.3 Business Centre 155 23 Spoke: Sangrampur 156 23.1 Focus Crops and Estimated Throughput 156 23.2 Proposed Facilities 156 23.2.1 Pack House 157 23.2.2 Banana Ripening Facility 159 23.2.3 Dry Warehouse 159 23.2.4 Other Facilities 159 24 Spoke: Jalna 160 24.1 Focus Crop and Estimated Throughput 160 24.2 Proposed Facilities 160 24.2.1 Ambient Pack House 161 24.2.2 Other facilities 162 25 Spoke: Paithan 163 25.1 Focus Crops and Estimated Throughput 163 25.2 Proposed Facilities 164 25.2.1 Pack House 164 iv OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 25.2.2 Sweet lime Ambient Pack House 166 25.2.3 Dry Warehouse 167 25.2.4 Other facilities 167 26 Financial Analysis 168 26.1 Aurangabad‐Amravati IVC 168 26.1.1 Project Details 168 26.1.2 Project Cost 168 26.1.3 Preliminary & Pre‐operative Expenses 171 26.1.4 Means of Finance 171 26.1.5 Key Operating Assumptions 172 26.1.6 Financial Performance 174 27 Economic Analysis 176 27.1 Methodology and Assumptions 176 27.2 Quantification of Benefits 177 27.3 Quantification of Costs 179 27.4 Cost‐Benefit Statement 180 27.5 Calculation of Economic IRR (EIRR) 180 27.6 Economic Appraisal Results 181 27.6.1 Major Economic Indicators: 181 Maharashtra: Integrated Value Chains 182 28 Conceptual Plans for Facilities 183 28.1 Planning Concept 183 28.1.1 Master Plan 184 28.1.2 Buildings 184 28.1.3 Services 184 28.1.4 Road & Parking 184 28.1.5 Green Area 185 28.2 Link Infrastructure 185 28.2.1 Approach and Accessibility 185 28.2.2 Linkages for Power, Water, Storm Water etc. 186 28.2.3 Design Considerations 186 28.2.4 Sanitary Installation, Water Supply and Fire Fighting Systems 189 28.2.5 Fire Protection Measures 192 28.3 Cost Estimates for IVCs in Maharashtra 193 28.3.1 Nashik IVC: 193 28.3.2 Amravati‐Aurangabad IVC 195 29 Stakeholder Consultations 221 29.1 IVCs in Maharashtra 221 29.1.1 Farmers 221 29.1.2 Traders/Wholesalers/Local processors/Cold Chain Owners 222 29.1.3 Industry Players 222 29.2 Stakeholders’ Meeting at Mumbai 223 29.2.1 Suggestions from Stakeholders on Policy Issues: 223 29.2.2 Suggestions on Proposed Interventions: 224 29.3 Stakeholder’s Meeting at Raheja Centre Point, Mumbai 224 29.4 List of Potential Investors 225 30 Assessment of Market Demand 227 v OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 30.1 Assessment of Food market in India 227 30.2 Growth drivers of value added food products 228 30.3 Assessment of Food retail Industry 229 30.4 Major players in organized food and grocery segment 231 30.5 Assessment of major consumption markets 232 30.5.1 Delhi 233 30.5.2 Mumbai 234 30.5.3 Kolkata 235 30.5.4 Patna 236 31 Impact Assessment 237 31.1 Integrated Value Chain: Envisaged Impacts 237 31.1.1 Illustrative Example: Pomegranate Value Chain 238 31.1.2 Illustrative Example: Grape Value Chain 239 31.1.3 Illustrative Example: Banana Value Chain 241 31.1.4 Illustrative Example: Sweet Lime Value Chain 243 31.1.5 Illustrative Example: Mango Value Chain 244 31.2 Other key Impacts 237 32 Capacity Building 247 32.1 Capacity Building: Needs Assessment 247 32.2 Farm/Production Cluster level 247 32.2.1 Capacity Building at Production cluster/farm‐level 248 32.3 Capacity Building at Hub‐Spoke Level 249 32.3.1 Capacity Building at hub and spoke‐level 249 32.4 Capacity Building Coverage 251 32.5
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