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Impact of Corporate Retail Chains on Traditional Retail and Wholesale Enterprises in Guntur Town of Andhra Pradesh

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Impact of Corporate Retail Chains on Traditional Retail and Wholesale Enterprises in Guntur Town of Andhra Pradesh Ind. Jn. of Agri. Econ. Vol.68, No.3, July-Sept. 2013 Impact of Corporate Retail Chains on Traditional Retail and Wholesale Enterprises in Guntur Town of Andhra Pradesh T. Prasad Rao, D.V.S. Rao and G. Raghunadha Reddy* The present study was undertaken in Guntur town of Andhra Pradesh with the following specific objectives: (i) to study the impact of corporate retail chains on unorganised traditional small retail enterprises and (ii) study the marketing efficiency in vegetable trade by corporate retail chains vis-à-vis traditional channels. A random survey of 30 regular hawkers and petty vegetable enterprises in the neighbourhood of organised retail outlets operating within a distance of 500 mts in five localities of Guntur town, viz., Koritepadu, Lakshmipuram, Arundelpet, Brodiepet and Kottapet was conducted and considered this as treatment group who are likely to most affected by corporate retail outlets. Traditional retailers in Rythu bazars and municipal markets operating at a distance of more than 500 mts from organised retail chains were considered as control group. In all, a total sample of 90 retailers comprising 30 in treatment group and 60 in control group were selected randomly. A random sample of 30 wholesalers was also selected from three wholesale markets to study the impact of market intermediaries. Z – test was employed to study the mean differences between two reference periods, i.e., 2006 (before the establishment of corporate retail outlets) and 2009 (after the establishment of corporate retail outlets) in Guntur in terms of profits, turnover and number of customer visits as well as employment during 2006 to 2009. The results of the study revealed that there was a significant decline in the number of customers visiting the traditional vegetable enterprises, decline in turnover and profits and mean percentage differences between treatment and control groups were -32.81 and -34.63 respectively and employment by 5.56 per cent in treatment group due to establishment of orgnised retail chains and no impact on control group between 2006 and 2009. The location of organised retail outlets had impacted negatively the hawkers and petty vegetable shop retailers operating within the vicinity or nearby these organised retail outlets compared to those away from the retail chain outlets. The producer’s share in the consumer’s rupee and marketing efficiency was more in Rythu bazars when compared to organised retail outlets and least in case of hawkers and petty vegetable enterprises. The major constraints faced by the unorganised market retailers were price fluctuations, low credit availability, high labour charges and high transport charges. It was recommended that the establishment of more Rythu bazars in all the residential localities of Guntur and other towns in the state will benefit both the producers and consumers to a great *Research Scholar, Professor and Head and Assistant Professor respectively, Department of Agricultural Economics, Acharya N.G. Ranga Agricultural University, Agricultural College, Bapatala-522 101 (Andhra Pradesh). 474 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS extent, improve the marketing efficiency and provide vegetables at fair and lower prices to consumers compared to other supply chains. It was also suggested to provide better and more infrastructural facilities, clean and hygienic environment, more shop space, insurance, credit facilities for retailers in Rythu bazars and organisation of retail and farmers’ co-operatives or SHGs for establishing linkages with institutional facilities in retailing as majority of the hawkers and petty vegetable retailers and producer-cum-retailers hail from poor socio-economic background and are illiterate or functional literates. It was also recommended that the establishment of organised retail outlets within the localities where traditional retailer outlets are already operating should be discouraged as they negatively affect the self employed, independent, poor and small retail enterprises. Implications of Dairy Enterprise for Poverty Reduction: Regional Analysis of Maharashtra Vishal S. Thorat and Smita Sirohi† The paper assesses the extent of household vulnerability to poverty in various regions of Maharashtra. It is generally preferred household panel data for the estimation of vulnerability which are rare in developing countries. Here, NSSO household’s consumption expenditure data was used for two periods, i.e., 1993 and 2003. The aim of this study is also to find out the implications of dairy enterprise for household’s poverty reduction. The estimates showed that significant numbers of currently non-poor households are vulnerable to expected poverty in future. Households owning dairy enterprise were less vulnerable to poverty as compared to those households not owning dairy. Further, it was suggested that government should take initiatives to implement the programmes that will enhance dairy entrepreneurship. Functional Dimensions and Management Efficiency of Agribusiness Co-operatives in Maharashtra: Assessment of a Successful Case Deepak Shah* In view of deficiencies in co-operative marketing network and recognising the significance of various emerging problems and issues facing the co-operative marketing system, the present study, was carried out in the state of Maharashtra, with a view to evaluate the functional dimensions, management efficiency and strengths of †Ph.D. Scholar, and Principal Scientist, respectively, National Dairy Research Institute, Karnal – 132 001(Haryana). *Faculty Member, Gokhale Institute of Politics and Economics (Deemed University), Pune – 411 004 (Maharashtra). AGRIBUSINESS/TRADE OPPORTUNITIES FOR INCLUSIVE GROWTH 475 a multipurpose agro-processing marketing co-operative society showing success. The performance evaluation is done for Deogad Mango Growers’ Co-operative Sale Purchase Society (DMGSS), which is located in Sindhudurg district of Maharashtra. Though it mainly deals with the marketing of mango, its functional dimensions also encompass input marketing and various other welfare activities. The evaluation of DMGSS has revealed several reasons for its efficient functioning. The major reasons that weighed in favour of the functioning of the society were timely delivery of inputs to the farmer members, reasonable rates of fertiliser, remunerative prices for the farmers’ produce, fair weighing practices followed by the society, provision of finances to the members for meeting expenses towards electricity bill, labour payment, purchase of land, illness, marriage, etc. In addition to these reasons, the existence of interest-cum-entrepreneurial groups in extending dedicated and efficient leadership was the main factor that weighed in favour of efficient functioning of the society. The DMGSS has shown autonomy/independence in its functioning and shows, by and large, perfect knowledge about the market forces and its business activities in accordance to the market situation. The roles of various members, non- members, employees, board, higher-tier bodies and outside suppliers and their influence in this respect are quite high in this case of DMGSS. The DMGSS is also able to generate allies for lobbying to safeguard as well as promoting its own interests and the interests of its members. The functional dimensions of DMGSS clearly underscore the fact that marketing management efficiency of the society is very high due to several positive features associated with it. It is quite successful not only at the farm level in terms of payment for farmers’ produce and input delivery and guidance to farmers about package of practices but also with respect to final disposal of produce at the consumer point at remunerative rates due to efficient management practices followed by it. Economic Performance and Impact of Contract Farming in Karnataka Pramod M. Chandakavate, M.G. Chandrakanth and N. Nagaraj* Contract farming of green chili production is a recent trend, which began in the southern part of Karnataka. The economic performance of contract farming in green chilli and its impact are presented. The study has selected 45 farmers each, under DCFF-domestic contract farming firm (Namdhari’s fresh, Bidadi), FCFF-foreign contract farming firm (Indo Spanish Tasty Foods Pvt. Ltd., Kunigal) and 40 non- contract farmers (NCFs) in Karnataka for the purpose. The study indicated that the contract farming firms supplied key inputs to farmers worth 36 per cent of the total cost of cultivation which was deducted in final payment. The total cost incurred per *Senior Research Fellow, Professor and University Head, Department of Agricultural Economics, University of Agricultural Sciences, GKVK, Bangalore-560 065 and Principal Scientist, International Crops Research Institute for Semi-Arid Tropics, Hyderabad-502 324, respectively. 476 INDIAN JOURNAL OF AGRICULTURAL ECONOMICS acre was Rs. 26,657, Rs. 24,484 and Rs. 23,498 for farmers under foreign firm, domestic firm and non-contract respectively. Non-contract farmers realised net return of Rs. 6,101 which was two times lower than the farmers under domestic firm (Rs. 11,108) and 1.14 times lower than farmers under foreign firm (Rs. 6,981). The transaction cost per acre was meager for contract farmers (Rs. 79 and Rs. 5.75 for farmers under FCFF farmers and DCFF farmers respectively), while it was Rs. 4,991 per acre for non-contract farmers. Production risk is relatively higher for farmers under DCFF. The saved transaction cost (of Rs. 4,991) is the implicit benefit to contract farmers since the contract
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