C H A P T E R 5
FRESH FRUIT EXPORT CO-OPERATIVE ORGANIZATIONS IN MAHARASHTRA: DEVELOPMENT AND ISSUES
5.0 INTRODUCTION:
Co-operative found in the every region of all countries and handles mostly the agriculture related business. It allows peoples to accomplish functions collectively which they couldn’t achieve on their own. Most agricultural producers have relatively little power or influence with large agribusinesses or food companies that purchase and sell their commodities. Joining with other producers in cooperation can give them greater power and benefit in the marketplace. Small producers are organized into cooperatives in order to gain the benefits of economies of scale and to compete with large producing companies (UNCTAD, 2003).
In view of significance of cooperation, India has gone through vast development in the agriculture cooperation sector. This chapter starts with the brief about the development in cooperation and cooperative agriculture marketing. The specific objective of this chapter is to review the selected cooperative export organizations and to undertake the study regarding challenges and issues with selected export cooperative organizations. The study will also focus on trade issues these cooperatives are facing. The performance of cooperative should not be measure in financial terms alone, hence the social benefits are described in this chapter.
114 I P a g e 5.1 Co-operative in India
People learned ages ago that by working together they can accomplish more
than the sum of each individual's efforts. Early cultures recognized the advantage of
collective strength and the potential of cooperation by hunting, living, worshipping,
cooking and providing shelter together in groups. The history o f human economic
cooperation is perhaps older than the history of competition. Even before agriculture
had become the basis of human economy, cooperation was a necessity.
India, since the country's independence from Britain in 1947, has seen a huge growth in Cooperative societies serving mainly the fanning sector. Co-operative movement in India is one o f the largest movements in the world. It was started with a
limited spectrum of activities or dispensation of rural credit has now entered in all fields of economic activity with social content. It covered 98 per cent villages and 75 per cent rural households. It has been playing a significant role in disbursing agricultural credit, distribution o f agricultural inputs, providing market support, processing, etc. for example, most of the sugar production in India takes place at mills owned by local cooperative societies. The members of the society include all farmers, small and large, supplying sugarcane to the mill. Cooperatives also play a great part in dairy marketing as well as banking. Cooperative banks in India serve both the rural and urban societies. Cooperatives, in all spheres, today cover approximately 99% of
Indian villages and 71% o f total rural households in the country. Their contribution to the national economy may be seen from the following table:
Share of the cooperative organizations in the economy!
Table 5.1: Cooperative share in the Economy
Cooperatives Percentage
Agricultural Credit Disbursed 18 Fertilizer Distributed 36 Production of Fertilizer 25 Sugar Produced 50 Spindleage 10 Milk Procurement to total Production 8
' Report o f the high powered committee on cooperative
115 I Page Cooperatives Percentage
Y a m Production 22 Handlooms 54 Wheat Procurement 33 Fishermen Cooperatives 21 Storage Facilities (Village Level PACS) 64
5.2 Cooperatives in Maharashtra
Maharashtra is economically important state o f India. It is also the most urbanised and industrialised State where development is found in each aspect o f the
life. Co-operative movement is widespread and has a history o f more than 100 years
in Maharashtra. It plays very important and decisive role in the economy o f
Maharashtra. The state is known for its unique development in the field o f sugar
cooperatives. Later on it spread rapidly to other areas like non agricultural credit,
housing, agro-processing and marketing etc. This has resulted in development of
growth centre across the state with adequate social infrastructure facilities. Through
cooperative movement, has experienced several developmental attempts in order to
promote the rural life from the view o f social, economic and cultural aspects. These
attempts actually brought some changes that reflect obvious improvement in the rural
population living standard. There are more than 2.24 lakh cooperative societies in
Maharashtra.
Table 5.2: Cooperative in Maharashtra Cooperative in Maharashtra
District central Cooperative banks 31
Urban Cooperative bank 517
Primary agriculture credit societies 21384
credit cooperative societies 15575
Housing cooperatives jj 85335
Cooperative sugar factories 202
Cooperative agriculture marketing organizations 1474
Ginning and pressing cooperatives 271
Other cooperatives 89780
116 I Page 5.2.1 Apex Co-Operative Institutes in Maharashtra
There are 24 apex state cooperative institutions in Maharashtra. These institutions are as follows.
Table 5.3: Apex Co-operative institutes in Maharashtra 1. Maharashtra State Co-Operative Bank Ltd. 2. Maharashtra State Co-Operative Agriculture And Rural Development Bank Ltd 3. Maharashtra State Co-Operative Housing Finance Corporation Ltd 4. Maharashtra State Co-Operative Marketing Federation Ltd 5. Maharashtra State Cotton Grower Marketing Federation 6. Maharashtra State Co-Operative Fisheries Federation Ltd 7. Maharashtra Rajya Yantramag Kapad Kharedi Vikri Sanstha Maryadit 8. Maharashtra Rajya Hatmag Sahkari Sangh Maryadit 9. Maharashtra State Co-Operative Consumer Federation Ltd 10. Maharashtra State Co-Operative Union Ltd 11. Maharashtra State Caderisation Cooperative Society Ltd 12. Maharashtra State Cotton Ginning Cooperative Processing Societies Federation Ltd. 13. Maharashtra State Agriculture Produce Market Committee Federation Ltd. 14. Maharashtra State Co-Operative Spinning Mills Federation Ltd. 15. Maharashtra Rajya Sahkari Sakhar Karkhana Sangh Maryadit 16. Maharashtra State Forest Labour Contract Cooperative Societies Federation Ltd. 17. Maharashtra State Labour Contract Cooperative Societies Federation Ltd. 18. Maharashtra State Co-Operative Bank Federation Ltd 19. Maharashtra State Urban Co-Operative Bank Federation Ltd 20. Maharashtra State Co-Operative Tribal Development Corporation Ltd 21. Maharashtra State Co-Operative Dairy Societies Federation Ltd 22. Maharashtra State Co-Operative Industrial Estate Federation Ltd 23. Maharashtra State Co-Operative Oil Seed Growers Federation Ltd 24. Maharashtra State Co-Operative Poultry Societies Federation
A quick check on Challenges and issues in general about Cooperatives
worldwide:
• Poor member participation. Inability to ensure active membership, speedy exit
of non-user members, lack of communication in members.
• Serious inadequacies in governance including those related to Boards’ roles
and responsibilities
117 1 P a g e • A general lack of recognition of cooperatives as economic institutions both amongst the policy makers and public at large
• Inability to attract and retain competent professionals
• Week economic base, Lack o f efforts for capital formation particularly that concerning enhancing member equity and thus member stake
• Lack of cost competitiveness arising out of issues such as overstaffing, a
general top-down approach in forming cooperatives including the tiered
structures
• Diluted management. Politicization and excessive role of the government
chiefly arising out of the loop holes and restrictive provisions in the Cooperative Acts
5.3 Marketing Cooperatives:
Marketing is the process that an agricultural product goes through on its way from the producer to the consumer. As per RBI, “Co-operative marketing is a co operative association of cultivators formed for the purpose of helping members to market their produce more profitably than is possible though private trade”.
According to National Commission on Agriculture, Agricultural marketing as “a process which starts with a decision to produce a saleable farm commodity and it involves all aspects o f market structure o f system, both functional and institutional, based on technical and economic considerations and includes pre and post- harvest operations, assembling, grading, storage, transportation and distribution, etc”.
Traditional marketing in India involves several intermediaries within this process. As a result, o f course, the consumer pays an exorbitant price and the producer receives a very low price for his production. Naturally, it is in the interest of both producer and consumer that the number o f steps in the marketing process be reduced as much as possible. The result; the producer will earn more and the consumer will pay less. The very initial marketing is the traditional marketing where producer sells his production at a local market which is held in his village every 5 or 6 days - this is the first stage. The intermediary who buys this production transports it. Usually on overloaded small open trucks covered with a tarpaulin, to a regional market. Another intermediary will buy these goods and transport them to an urban market. The production will then be sold and distributed at the neighbourhood
118 I P age markets where the retailers will come to get their supplies for sale to the consumers.
This way agricultural produce has undergone too many stages from producer to consumer. All intermediaries have benefited from this process, but not the producer nor the consumer.
The solution over losses because of intermediaries is a marketing cooperative owned by the producers. This cooperative's aims are to reduce to a minimum the number o f marketing stages between producer and consumer. The Structure of
Marketing Cooperatives in India is 2 Tier in general i.e. Mandi and State level. Few states are exceptional for this system.
Table 5.4: Cooperative marketing societies in India^
Type of Cooperative Marketing Societies 2008-2009 2009-2010 General Purpose 2540 2524 Specialised /Commodities 4640 4678 Fruits & Vegetable 1329 1336 Cotton 142 142 Tobacco 253 253 Arecanut 16 16 Coconut 44 44 Sugarcane Growers Cooperatives 142 150 Rubber Cooperatives 38 51 Coir Cooperatives 500 600 Oil marketing and processing Cooperatives 142 142 Tea and Coffee processing Cooperatives 29 29
5.4 Development of Marketing cooperative in Maharashtra
Cooperative marketing in Maharashtra state has four tiers o f organizational structure. The four tiers o f cooperative marketing structure^ are as: National agriculture marketing federation of India Ltd (NAFED) which functions at apex level,
Maharashtra cooperative marketing federation which functioning at state level District marketing societies functioning at district level and primary cooperative marketing societies functioning at village level
The above mentioned 24 apex cooperatives in Maharashtra are engaged in diversified activities. However if we can categorize the marketing activities, it can be broadly classified as
2 Indian cooperative movement - a statistical profile 2012 3 Deepak Shah (Cooperative marketing societies in Maharashtra)
119 I Pag 1. Agriculture marketing i.e. general purpose cooperatives
2. Processing cooperatives
3. Agriculture allied business sector cooperatives like dairy, poultry and fisheries
4. Fertilizer cooperatives
5. Tribal Cooperatives
6. Consumer cooperatives
7. Weavers cooperatives
8. Industrial cooperatives
9. Fruit and vegetable Cooperatives
5.5 Maharashtra State Agriculture Marketing Board (MSAMB)
The Maharashtra State Agricultural Marketing Board (MSAMB), Pune was established on 23''^, March 1984, under section 39A o f Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963. It is a state level organization working in the field o f export o f various fresh fruits, vegetable & processed food products. MSAMB has done pioneering work in the field of
Agricultural Marketing in the State and achieved success in various areas. MSAMB is having an important role in developing and coordinating agricultural marketing system in the State o f Maharashtra. MSAMB has experience o f export o f fruits & vegetable to Europe, USA, South East Asian Countries, Japan, and Middle East
Countries etc. as Export can provide better option for the marketing of the agro commodities & provides the alternative way of utilization of surplus production.
In Maharashtra, the Mahagrape, Mahaanar, Mahabanana are the cooperative organizations with the participation of cooperative marketing societies those are encouraged by 'Maharashtra State Agriculture Marketing Board (MSAMB), an Independent department run by Government o f Maharashtra state to manage the agriculture marketing in the state.
120 I P a g e 5.5.1 OBJECTIVES of MSAMB
As per the provision o f Maharashtra Agricultural Produce Marketing
(Development & Regulation) Act, 1963 section 39(J), the Board shall perform the following functions and shall have power to do such things as may be necessary or expedient for carrying out these functions.
• To co-ordinate the functioning of the Market Committees including
programmes undertaken by such Market Committees for the development o f
markets and market areas.
• To undertake State level planning o f the development o f the agriculture
produce markets.
• To maintain and administer the Agricultural Marketing Development Fund.
• To advice to Market Committees in general or any Market Committee in
particular with a view to ensuring improvement in the functioning thereof.
• To supervise and guide the Market Committees in the preparation o f plans and
estimates o f construction programme undertaken by them.
• To make necessary arrangements for propaganda and publicity on matters relating to marketing o f agricultural produce.
• To grant subventions or loans to Market Committees for the purposes o f this
Act on such terms and conditions as it may determine.
• To arrange or organise seminars, workshops, exhibitions on subject relating to
agricultural marketing & giving training to members and employees o f
marketing committee.
• To do such other things as may be of general interest relating to marketing of
agricultural produce.
• To carry out any other function specifically entrusted to it by this Act.
• To carry out such other functions o f like nature as may be entrusted to it by the
State Government.
5.5.2 Achievements of MSAMB:
• Commercial & trial export
• Implementation of subsidy scheme for GlobalGAP certification
• Erection and successful utilization of Export Facility centres for various
commodities in the state
121 1 P a g e • Participation in various International Commodity Specific Promotion
Programs
• Successful implementation of Agri Export Zones of Alphonso Mango, Kesar
mango, Onion, Pomegranate, Banana & Mandarins.
• Nodal Agency for implementation of Asian Development Bank & IFAD
funded projects in Maharashtra.
• Successfully organized Farmers’ Foreign Study Tour to Israel & Europe.
5.5.3 Cooperative Export Initiatives by MSAMB
MSAMB has the program to promote exports of fresh fruits, vegetables & flowers from Maharashtra to the various countries o f world with the help o f farmers & their organizations. The main products handled are grapes, mangoes, pomegranate, mandarin, banana etc. Regular guidance to the farmers and their cooperative societies is given in terms of pre-harvest, post-harvest, packaging, pre-cooling, cold storage and transportation. To boost the exports, MSAMB has assisted and promoted the following selected fresh fruit organizations.
MSAMB Promoted Export Promotion Organization:
MHAGRAPE:
Maharashtra being leading state in production o f quality grapes, hold the capacity to stand in the international market. In order to boost the export o f grapes from Maharashtra, “MAHAGRAPES”, a co-operative partnership firm has been establish on 19^'’ January, 1991 with the help o f the Maharashtra State Agricultural
Marketing Board, Pune. The head office of Mahagrapes is located at Pune.
MAHAANAR:
Keeping in view the importance to pomegranate in international level and widely growing the trade o f pomegranates in international level, an apex body named
“MAHAANAR” has been established on Auguest, 2005.
MAHABANANA:
The Directorate o f Agriculture Marketing and the Maharashtra State
Agricultural Marketing Board have initiated the efforts for co-ordination and established “Mahabanana” organization on 1^‘ January, 2002. The head o f
Mahabanana is located at Jalgaon.
122 I P a g c 5.6 Performance of the Selected Cooperative Organizations, Related Challenges and Issues; an overview
5.6.1 MAHAGRAPE
Mahagrapes came into existence in on 19th Jan 1991. Ambitious grape growers in Maharashtra follow the international trend o f fruit growers becoming exporters those days and entered the International market with their own brand.
Mahagrapes established with the contribution of National Co-operative Development
Corporation (NCDC), New Delhi., Government o f Maharashtra including Department o f Co-operation Maharashtra State Agriculture Marketing Board, Pune. Agricultural
& Processed Food Products Export Development Authority (APEDA), New Delhi,
National Horticulture Board (NHB), New Delhi. Mahagrape is a Partnership firm o f
16 co-operative societies, come together with the aim of exporting grapes and other fresh produce to the world.
Mahagrape is one of the largest exporters of fresh grapes mainly seedless grape from India. It has modem infrastructure facilities for pre-cooling and cold storage; the cooling machinery is imported from California, Mahagrape exports considerable volume o f fruit to various destinations in Europe and Middle East.
5.6.1.1 Objectives of Mahagrape
• Upliftment of fanning community.
• Growth of Co-operative Movement.
Encourage and develop agricultural export.
Maximize Foreign Exchange earnings.
Update the farmers on the latest technology in farming
Acceptance of global challenge with a commitment to quality
5.6.1.2 Functions of Mahagrape
To source and develop worldwide markets.
To provide Quality control in post harvest activities.
Provide extension services to members of co-ops for production of export
quality grapes.
Supply and supervise branded packaging.
Provide logistical support
123 I P a g c • Provide advance payment to farmers for their produce.
• Obtain best price for produce.
• Pass on the benefits to the Co-ops.
5.6.1.3 Organization structure
The grape growers in the area o f Pune, Solapur Sangli, Nasik, Latur have formed 16 cooperative societies with almost 2200 farmers. All the member cooperatives are partners o f Mahagrape. The Board o f Directors comprises o f the heads of the 16 Co-operative Societies, of which seven have been nominated to an
Executive Council. Two prominent and expert farmers from the executive council in turn have been nominated as executive partners to manage the day to day affairs. The
Executive Partners are responsible for the decision making in the organisation. The
Executive Partners are assisted by a team o f Professional Managers which constitutes
General Manager (Exports), Manager (Liaison & Logistics), Manager (Finance),
Manager (Quality Control) assisted by a team of Quality Control Officers. This team of professionals perform the delicate balancing act of locating internationally acceptable "Quality Product" on one hand & identifying the lucrative markets to increase net returns to its growers on the other hand.
Following are the member cooperative societies of Mahagrape
Table 5.5: Member Co-operative societies of Mahagrape
No. Name of the Member Society and District Chairman
1 Baglan Taluka Grape Growers Co-Op.Society J.C.Sawant Ltd.,Nasik 2 Chaitanya Grape Growers Co.Op Society S.T. Jadhav Ltd.,Sangli 3 Dhule Tal.Bagayatdar Shetkari Sahakari Sangh Namdev Rao Patil Mydt, Dhule. 4 Karmaveer Grape Growers Co.Op Society Ltd., V.M.Bedse Dhule 5 Kamdhenu Grape Growers Co.Op Society Ltd., G.B.Ekunde Sangli 6 Kanak Grape Growers Co-Op Society Ltd., Vyavahare Solapur 7 Khandoba Panan Shakari Sanstha Mydt., S.B. Mokashi Osmanabad 8 Latur Zilla Draksha Utpadak, Shetkari Sangh, R.P. Bhandari Latur
124 I Page No. N a m e of the Member Society and District Chairman
Mogi Grape Growers Co.Op, Society Ltd., Nasik T.R.Pawar 10 Malta Grape Growers Co.Op Soc., Nashik A.N. Deware 11 Poona Grape Growers Co-Op, Soc.Ltd, Pune S.S.Kanchan 12 Shri Siddeshwar Grape, Growers Co.Op.Soc Ltd, Prakash. S. Patil Sangli______13 Solapur Grape Growers, Co-Op.Soc.Ltd., Solapur T.R.Dabade
14 Shriram Grape Growers Co.Op., Nasik Shri Bhalerao.
15 Saibaba Grape Growers Co-Op, Soc.Ltd, S.D.Roham Ahmednagar______16 Vithal Grape Growers Ltd, Solapur. C.K. Deshmukh
5.6.1.4 Export trade and performance of Mahagrape:
Mahagrapes is meant for exports of fresh fruit produced by the member societies. Mahagrape cut the marketing stages in export and reduce the losses because of intermediaries in the chain of traditional trade practice which ultimately a reason to get better prices for farmer member. “Quality and Safety” is the basis of emerging trade practice. As a quality controller, it provides technical assistance, holds workshops it also provides various inputs such as its own brand of bio fertilizer, specialised materials such as S 02 pads, plastic punnets. In its earlier years,
Mahagrapes brought precooling technology to farmers that enabled them to export.
125 I P a g e 5.6.1.5 Export performance of Mahagrape
Table 5.6 Export by Mahaanar (Value in Lac) F.Y. GRAPES GRAPES POMO.POMO. TOTAL VALUE
M. TONS VALUE M. TONS VALUE OFEXPORTS
1990-91 450.00 90.00 0.00 0.00 90.00
1991-92 1800.00 800.00 0.00 0.00 800.00
1992-93 1600.00 765.00 0.00 0.00 765.00
1993-94 1078.00 415.00 0.00 0.00 415.00
1994-95 357.00 154.00 0.00 0.00 154.00
1995-96 430.00 166.00 0.00 0.00 166.00
1996-97 497.56 400.62 48.44 14.38 415.00
1997-98 295.40 163.05 3.60 1.95 165.00
1998-99 789.30 591.00 28.75 16.29 607.29
1999-00 940.00 517.00 0.00 0.00 517.00
2000-01 663.77 405.63 0.00 0.00 405.63
2001-02 907.08 487.85 0.00 0.00 487.85
2002-03 991.83 536.53 189.57 108.78 645.31
2003-04 572.12 317.86 202.41 88.76 406.62
2004-05 810.49 488.32 52.37 19.15 507.47
2005-06 1352.05 788.46 0.00 0.00 788.46
2006-07 1904.54 1176.17 0.00 0.00 1176.17
2007-08 1529.36 1047.09 0.00 0.00 1047.09
2008-09 1428.65 856.09 0.00 0.00 856.09
2009-10 1425.10 879.39 0.00 0.00 879.39
2010-11 411.73 309.88 0.00 0.00 309.88
2011-12 486.02 390.48 0.00 0.00 390.48
2012-13 434.90 354.27 0.00 0.00 354.27
TOTAL 21154.90 12099.69 525.14 249.31 12349.00
126 I P a ge Mahagrape operating in the state of Maharashtra and have started their business in FY 1991. Mahagrape started its activity by exporting grapes in FY 1990-
91. The export of 450 MT of grapes was done that time. The value of exported grape was Rs. 90 lakh. Very next year of the establishment, Mahagrape done reasonably well and exported 1800 MT of grapes worth Rs. 8 or. In FY 1996-97 Mahagrape started export of Pomegranate to recover from the declined turnover. This was also because the farmer member started growing pomegranate and there was growing demand of Pomegranate internationally.
Fig. No. 5.1 Graphical presentation of the performance
Mahagrape Export Performance 1400 « 1200 ■3 1000 > 800 S 600 g- 400 ^ 200 0 — fSr^3->/^'vOt^OOOO— —
Financial Year
The export sales has grown substantially, showing peak of export performance in FY 2006-07 Even though Mahagrape overall is a success story of export by cooperative that was very well supported by Government, political leadership, various financial institutes including APEAD, the performance has declined sharply year till date.
Over a period of time, the consignment rejections have decreased significantly, to a current average of less than 1%. Government of India and
Maharashtra state supported in the initial stages where food safety standard shocks occurred and many export consignments were rejected. National Cooperative
Development Commission (NCDC), arranged loan with subsidy to the cooperatives for the infrastructure installation of postharvest facilities those were found beneficial in bringing down the consignment rejection rates substantially. Five Cooperatives
127 (Page member societies of Mahagrape, installed pre-coolers and cold storage with partial financial aid from the state government and partial self-financing.
Initially, 29 grape growing farm er cooperatives were members o f Mahagrape, but the number fell to 16 within three years. Several cooperatives parted with Mahagrape and refocused on domestic markets after persistent consignm ent rejections
As per the policy, Mahagrape is not ready to share the financial, hence the comment and analysis of financial is not possible in this case.
5.6.1.6 Business activity process flow in export of grapes:
Fig. No. 5.2 Process flow in Grape Export.
Sealing o f Manestinsi Exports containers
Container Dispatch to Gradiiis filling destinations ir
Packing Cold Storage
Transportation Pre-cooling to Societies
5.6.1.7 Estimation of the trade issues faced by Mahagrape:
Many cooperatives have failed because its failure to understand the trade. The fresh fhiit cooperatives is non profitable not only because its problem encompass the functional aspects of cooperatives namely Membership, Governance and Operations which could be considered as internal to the organization but also because of the Lack of or ineffective trade that impacting the business performance of the cooperatives and their competitiveness.. The industry is extremely competitive and very unforgiving. This reliability factor again emphasizes why trade reputation and
128 I Page consistency in the icnowledge update is so extremely important. Compliance o f trade practice by all parties refers to the ability of each cooperative member, directors, employee, government, the importing country and even natural hurdles. The failure of any component of the cooperative to carry out the tasks outlined in their job description may cause the entire cooperative to fail.
We can imagine the export issues to the level with the example below.
The export service providers hired 13 GlobalGAP-certified packhouses for grapes in different production areas in Sangli, Nasik and Latur in Maharashtra, they pack the grapes and manage their harvesting on the registered farmers’ farms. Four packhouses are hired from one fanner, who was previously an exporter o f grapes.
Mahagrapes in Sangali have started leasing out packhouses to different exporters/service providers as some o f the farmers have moved away to private grape export companies. Even the exporter has three packhouses in Sangali out of the five leased from cooperatives, and 14 of the 16 cooperatives have packhouses in the case of Mahagrapes. Thus the situation was worsen as we seen the under utilization of the available infrastructure.
Variety of specific issues faces by the individual cooperative. Collectively, cooperatives in an increasingly competitive industry all are affected in some way by number of common issues. Researcher studied each aspect of the export trade process. Interviewed every segment involved in the process.
India: Grape exports decrease by 50% (May 11, 2011 by APEDA)
Grape exports fe ll by 50 per cent this year as farm ers preferred to sell their produce in domestic markets that offered high prices. Last year grape growers and exporters in the state suffered a m ajor loss when European
Union countries rejected grapes due to higher than perm issible residue o f a growth horm one. Farm ers had to sell these grapes at throwaway prices. In
2009-10 the country exported 47,106 tonne grapes to European Union countries and alm ost the same quantity to G u lf nations.
Here are the trade issues faced by the cooperatives in the view o f participants.
129 I P a g e 5.6.1.8 Fresh fruit trade issues in view of Ma n a g e r
1. There has been an increase in branded produce by both cooperative and non
cooperative food companies, which has important implications for the
structure o f the produce industry. If it continues, the industry will likely
become more concentrated if brands come to dominate the fresh market as
they do in processed products
2. Marketing agreements and contracts will be increasingly looked at for
facilitating better member relations by spelling out exactly what the
cooperative will do for the member, and what members’ obligations are to the cooperative.
3. Tariff and non tariff expenses literally washes out the major portion of profit o f the farmer. Being small holding/ marginal farmers these expenses matters a
lot and left a deep impact on the business overall.
4. The task before cooperatives is to organize effective marketing extension
programmes encompassing various aspects of trade and marketing functions
so as to prepare the members to meet the trade challenges. Equally important
is the role of cooperatives in market information system with a view to increase market avenues in global markets
5. India can further enhance its competitiveness by economizing on logistics by exporting from eastern port to South East Asian countries and by intensifying
production in the bulk in a saturated region.
6. Presence o f Indian originated population made the Middle Eastern markets as major consumers o f Indian grapes. However this trend doesn’t remain in
increasing line ranging less than 10%. The trade security in gulf is not to the
expectation where the high returns to the consignment is expected.
7. The trade is done on the basis of consignment; hence the rates cannot be predicted comparing the domestic market. This directly affects the willing of
the producer member farmer to supply the grape to Mahagrape.
8. International pricing is unpredictable where high returns are expected. Hence
low the risk, lower the profit is. Being a cooperative organization, mangers
cannot take risky decisions to earn opportunity profit.
130 I Page 9. Stiff trade competition from emerging private companies like Mahindra. The
manager was very sure about the losses incurred by these private giants but
these private companies can sustain due to the multi dimensional business and can recover from the other establishments.
10. The packaging and printing facility is not to the international standard. It
clearly discriminate the production in comparison with those of developed
country.
11. Being cooperative, managers cannot make use o f short term trade opportunity
when it visualise for incremental profit. They can make brilliant sales decision by perceptible demand trend but managers’ cannot make it quickly on their
own and ultimately miss the marginal profit.
5.6.1.9 Fresh fruit trade issues in view of Management
1. Absence of common brand; all these export promotion organizations can
promote the trade under common brand. This will be helpful by sharing the
promotional expenses etc.
2. Trade data shows fluctuations in trade volumes and trade flows both in case o f
regional and cross border trade. Trade information provides an idea about the
overall performance of the world economy. Trade in grape products accounts
for very less percent o f world exports but is perhaps the most volatile o f trade
issues.
3. Poor member participation and trade decision making ability. This seems to be
toughest job as mentioned by management of the Mahagrape. Once a strong set of bond with members will be developed, the private competition can be
handled boldly and effectively
4. There is growth in the international and domestic trade competition. The
ultimate effect is declining in the direct sales. The new type of exporter playing a risky role in the market by offering substantially incremental prices
which attract the Mahagrape members to supply the produce to those new
exporters. Such new exporter book losses at the end o f the year and never
131 I P a ge come up with the business. However such competition hampers the supply
chain of Mahagrape.
5. Export trading firms which were newer and also smaller generally had the
tendency to have a short term strategy with major focus on finding a foreign
buyer rather than a willingness to invest for the long term and therefore have a
much higher probability to shift in case o f trade emergency.
6. Trade term is not acceptable: A contract is not necessarily a document. If two
parties agree on something verbally, this verbal agreement is a contract
according to most European laws. However, since in the case of a verbal
contract it is very difficult to prove that something in particular has been
agreed upon, the agreement should be confirmed in writing.
7. The marginal farmers produce limited quantity of produce. Hence the
container includes grape of many types with different quality parameters. This
creates negative mindset of importing inspection authority because of mix
quality and residual characteristic o f the commodity.
8. Lack of emphasis of the government on the research related to trade.
9. Small scale producers are not able to invest in technology, quality systems,
laboratories, specialized staff and training and education and depend on
traders or cooperatives as compared to the large established units which can
absorb these costs due to economies o f scale.
10. Declining member cooperative societies and the experienced farmers those were familiar with the international market and related trade practices, quality
requirements etc. to educate new generation again is a task.
11. Government seems to be not serious in supporting the cooperative export.
Year on year the production is in increasing trend and export is declining.
Domestic prices o f the fresh fruit are growing in a line with international prices but the foreign currency rise is compensating the scenario. Local farming diverting preference to domestic cause of easy trade. Loss of foreign
trade and currency.
132 I P a g e 5.6.1.10 Fresh fruit trade issues in view of Farmer Member and member Cooperative society.
1. Payment terms on consignment basis hence limited price guarantee. Farmers
cannot predict the glut and the scarcity of the goods ultimately the price they
are going to get against the consignment basis is unpredictable. This is the
major issue farmer facing about export of Grapes.
2. Uncertain market and insecure trade.
3. Marginal exporter farmers, making meeting standards costly and
cumbersome. The expenses related export formalities are high comparing to
the large holding international competitors. The expenses like lab testing,
certifications etc are high per unit as small holding of acreage hence it is
expensive comparing to large growers’ international competitor. Heavy
expenses against the formalities to be completed for exporting the grapes.
4. Uncertain domestic market prices. Higher the domestic prices - no need to
export the goods. Resulted in wastage of expenses against export formalities
like certification, uses of bio fertilizers etc. These costs turn out as loss of
revenue.
5. Limited government support about the international trade facts. This creates
overall impact on the performance on the production. Many times famers are
unaware about the trade practices internationally and hence it affect the
produce
6. Government has to come forward to help them in providing market
intelligence service for the export o f grapes and other fruits and vegetables
round the year.
7. The rapid change in the regulatory measures, standards and notifications o f new regulations was important issue faced by the cooperative societies and
farmers in production if export quality grapes since it imposed extra costs on farmer and created uncertainty for them. The period allowed for compliance
standards turned out to be an important factor influencing compliance costs. In
many cases farmers expressed their need for longer time to comply due, in
part; to limited access to compliance resources.
133 I P a g e Fig 5.3 Overall opinions towards major trade issues faced by Mahagrape authorities, Member cooperative societies and farmer member.
I Marginal farmers, unknown about internatinal trade I Certification and trade regulation constrains
I Local and Internatinal competition
I Domastic trade simplicity and hansome returns
5.6.1.11 Benefits extended to the Society and farmers from the a ctiv ities
Mahagrape supplies inputs, technology, and extension services to farmers through cooperatives and empowers them to produce quality output conforming to food safety and quahty standards of the importing countries. Cooperatives associated with Mahagrape have refrigerated transport and cold storage facilities, for which cooperatives charge a fixed amount, on per kg basis from the farmers. (Birthal et al.;
Linking Farmers to Markets 433) In 2003-04, Mahagrape exported grapes worth US$
2.2 million, mainly to UK, Netherlands and Middle East countries. Mahagrape does not retain the profits they earn. It charges a fixed amount from farmers, on per kg basis, to meet costs of transportation, labour and other activities. The profits are passed on to the farmers. The net revenue for farmer members was about 60 per cent higher than those selling in the open market (Bakshi et al., 2006).
Mahagrape organises seminars and training to the farmer members where
information about the standards and regulations is disseminated. Mahagrape with the
help of its member cooperatives regularly publish the list of banned and approved
pesticides, fertilizers and chemical residues, which vary with time and across markets.
This information is published in a yearly handbook in the local language and
distributed free to members. The farmer members of Mahagrape cooperatives are
marginal famers, acquiring a EurepGAP certificate individually is costly for them;
Mahagrape provides cooperatives with this certification. This certification is only
134 1 P a g e valid as long as farmers are linked with Mahagrape. In the production stage,
Mahagrape provides materials and technical help along with infrastructural support to the farmers. Mahagrape is having trained technical staff and also hire such expertise to implement third party monitoring and enforce compliance. In line with the traditional benefit o f collective action for small farmers, cooperatives benefit from lower costs for the inputs needed for compliance with the standards. Mahagrape consolidates the input demands like fertilizers, growth regulators, pesticides etc o f all the cooperatives and thereby obtains inputs at lower costs than each cooperative separately. Thus, for the purchase o f specific inputs, such as biofertilizers that have to be imported, Mahagrape try level best for the best prices and negotiates with the sellers on behalf o f the farmers. In the same manner Mahagrape purchases inputs such as packaging materials. Bio-fertilizers are produced by Mahagrape itself and provided to farmers at reasonable rates along with others that are imported. These inputs can be sold to non-members but at higher prices.
Government support Mahagrape, even to the extent o f covering the initial salaries o f the board members. The government also played an important role in funding the travel o f farm group leaders to technical workshops and exhibitions both in India and internationally. This was instrumental in demonstrating to farm leaders that there was an opportunity for them to export. Mahagrape jointly with government bodies provide extension services to the farmers. Regular monitoring o f the grape plants is provided by scientists from the National Research Centre (NRC), a government agency that also trains technical leaders. The government also provides a transport subsidy to Mahagrape, although this is not exclusive, being provided to all
Indian horticultural exporters.
5.6.1.12 Awards and Recognitions
1. Institute o f marketing and management award for excellent contribution
towards agriculture exports in cooperative sector
2. The APEDA Export award for outstanding contribution to promotion of
agriculture and processed food products
3. The APEDA Export award for Export promotion o f fresh fruit
4. The certification o f merit is awarded by APEDA for export promotion of
grapes
135 I P a g e 5. The APEDA certificate of merit for contribution to promotion of agriculture
and processed food products for quality and packaging development
5.6.2 MAHAANAR
In view o f the importance to pomegranate in international level and widely growing trade o f pomegranates in international level, an apex body named
“Mahaanar” is established on August, 2005. At present there are around 3500 individual pomegranate growers are the members o f Mahaanar. To make available the technical know-how about quality production of pomegranate, training and demonstration programs has been arranged by Mahaanar with the help o f MSAMB in the different production area o f Pomegranate"*.
Mahaanar is the leading apex co-operative marketing society promoted by leading co-operative societies o f Pomegranate Growers in Maharashtra State. As this is the apex marketing co-operative society and its role is to guide the growers for cultivation o f Pomegranate (In Maharashtra state the land under pomegranate cultivation is around 83,000 hectors out o f which more than 40,000 hectors area is covered by Mahaanar) towards higher quality production and marketing of pomegranate in to the international market. Societies are having their own pre cooling as well as cold storage facility with sound network of refrigerated van for logistic of fresh pomegranate fruits from field to the cold storage and up to the air port.
Mahaanar is exporting Pomegranate since last many years.
5.6.2.1 Objectives of Mahaanar
• To promote cultivation o f pomegranate fruit crop.
• To provide technical knowhow to the farmers.
• Train the farmers towards quality production o f pomegranates.
• To undertake export o f quality fruits to different destinations.
• To provide necessary infrastructure like pre cooling, cold storage, handling
line among the farming community
136 I P a g e 5.6.2.2 Functions of Mahaanar
Training: Mahaanar arranges the visits and study tours to exhibition and
modem farm all over the world. Presently 25 Pomegranate growers are visited to
Turkey and same number o f growers can visit to Spain, Holland, France for exhibition.
Certification: Mahaanar is guiding and motivating to growers for EurepGAP certification. Organic farming certification and Nature fresh certification.
Byproduct preparation: Mahaanar is offering technology and all consulting help to preparation o f byproduct.
Consultancy: Mahaanar is offering consultancy for export o f Pomegranate, quality production and packaging.
5.6.2.3 Organization structure
We can say... The birth place o f Mahaanar is Sangola in Solapur District.
Twenty years ago, people in Atpadi and Sangola taluka in Maharashtra's drought-
prone Sangli and Solapur district, could earn their livelihoods only by migrating to
cities. Thanks to the pomegranate. They learnt how to grow pomegranate earn
handsome money and then developed groups o f farmers for cultivation and marketing of pomegranate. After sizable cultivation and volume in production, they established ‘Krushi Vikas Sahakari Sanstha’ in 1988 as a co-operative society, where the office of Mahaanar is at present. Visualizing the export potential in Pomegranate, MSAMB encouraged establishing Mahaanar in August 2005. Mr. Prabhakar Chandane, electrical engineer claims to be the first pomegranate grower from India, is the chairman o f Mahaanar. He is president o f pomegranate Growers Association o f India
as well. Mr. Prabhakar Chandane, Mr. Shahajirao Nalawade, Mr. Prataprao Kate, Mr. Rajsingh Mohite Patil, Mr. Baburao Gaikwad and Mr Anandrao Patil are the
executive partners o f Mahaanar.
It is observed that Mahaanar is working with very limited staff with hardly any higly educated and expert in International trade. However Mr. Chandane, Chairman is capable enough to make decisions and he is well verse with all the necessary know how about the international trade in pomegranate. However, there is separate staff to
take care of accounts, quality control and marketing.
137 I P a g e Table 5.7 Member Cooperative Societies of Mahaanar
Sr. No. Name of the society and address
Krushi Vikas Sahakari Sanstha Maryadit, Sangola, 1 Tal. Sangola, Dist. Solapur, 413307
Pandhariprasad Phalopadak Sahakari Sanstha Maryadit, Sangola, 2 Tal. Sangola, Dist. Solapur, 413307
Baramati Taluka Co-operative Phalotpadak Sangh Ltd., A/P. Pimpali, 3 Tal. Baramati, Dist. Pune, 413102
Shivsmruti Phalotpadak Sahakari Sanstha Sangh Maryadit 4 Akiuj, Tal. Malshiras, Dist. Solapur, 413101
Shree Gurudatta Shetimal Sahakari Prakriya Sanstha Maryadit 5 Sangola, Tal. Sangola, Dist. Solapur, 413307
Manganga Shetimal Prakriya Sahakari Sanstha Maryadit 6 Atpadi, Tal. Atpadi, Dist. Sangli. 416301
5.6.2.4 Export trade and performance of Mahaanar:
The produce o f Mahaanar reaches various destinations in Europe, Asia &
Pacific and Middle East. Mahaanar experienced the exporting its Pomegranate to the potential countries like UK, UAE, Saudi Arabia, The Netherlands, Egypt, Turkey,
Bahrain, Kuwait and Sri Lanka. The experience teaches a lot to the management and now Mahaanar prefer to export to the destinations where they experienced smoother transactions and assured receipt of payments. Mahaanar have made real developments in terms o f packaging and value addition o f the pomegranate.
138 1 P a g e S.6.2.5 Business activity process flow in export of Pomegranate
Fig 5.4 Process flow in Banana export
harvesting box packaging
pre coolign (at "ok", selected sight) for export
Transportation from farm to cold store processing unit
grading (weight moving for pre cooling shipping & apperance) shipping
S.6.2.6 Export performance of Mahaanar
Table 5.8 Export by Mahaanar
Years 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Pomegranate 2398517 13438745 17493358 16947213 9666068 6777449 18117241 sales Export 200200 78988 30100 121940 quantity (kg)
Mahaanar established in 2005 but actual export operations starts in 2006.
Initially the response of the farmer member was very encouraging. The export was in increasing trend in next three years and was highest in FY 2008-09. Later due to several issues majorly outbreak of bacterial blight and incidences of consignment rejection in other fresh fruit export globally, the supply chain was disturbed. The quantity supplied was come down like anything and the domestic prices hit to the record. Then producer farmer began selling their harvest in the farm itself to the middle man approached from northem India.
The scenario wasn’t changed even though the harvest improved over the year.
This may be the reason for poor trade till FY 2011-12. The major issue behind it was the high domestic price till FY 2011-12. Later, trade strategies that need changes, was
139 I P a g e twisted and implemented. This includes the fixed price to the goods. This means the market risk will be of cooperative organization only and not of Producer farmer member. In FY 2012-13, the domestic prices falls down that push the export to the record high. Unexpected export performance in terms of value and quantity was experienced.
Fig. 5.5 Graphical presentation of the performance of export by Mahaanar
5.6.2.7 Financial performance of Mahaanar
Table 5.9 Financials of Mahaanar 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Pomegranate 2398517 13438745 17493358 16947213 9666068 6777449 18117241 sales Pomegranate 10178552 12339854 13017047 8134262 5880676 14945704 Purchase Gross profit 162019 979211 1584018 977496 416395 104130 687278 Net profit -257665 125309 592824 125309 870144 617208 1164 Share Capital 1650500 1650500 1650500 1650500 1650500 1650500 1650500 Reserve and -262660 2649 2649 1845701 2649 2715846 3333054 surplus Precooling and 1692738 1041208 512838 419250 850099 storage expenses
140 I P a g e 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Gross 7.29 8.66 5.4 4.31 1.54 profit/turnover Net 0.93 3.24 7.68 9.1 profit/turnover
Stock in trade / 4.73 1.24 0.045 0.05 turnover
Source ; financials of Mahaanar, blank cell indicate data not available
Financial performance o f Mahaanar shows that the sales figure has been fluctuating depending upon general productivity and number of fanners participating in the co operative every year for export of their produce. Consistent profitability has attracted greater volumes, with 2012-13 being a watershed year in terms o f sales.
Reserves and surplus show wide fluctuation with accretions being more than net profit which may be on account of depreciation reserves being created or lack of consistent accounting policies. Remarkably, exports do not seem to have a substantial effect on profit margins and the increase in precooling and storage expense increase disproportionate to benefits.
S.6.2.8 Estimation of the trade issues faced by Mahaanar
Inefficiencies on the part o f small producers could lead to large and specialized producers who through the global food chain could take over control of the global food system, including agriculture^. This is the reason why trade issues in fresh fruit export are necessary to study.
The pomegranate supply chain involves the entire network of raw material handlers, cold chain, temporary storage, processing and retail marketing. This leads to an additional cost build up over and above certification cost comparing domestic market. This in turn increasing cost o f production than the domestic prices of
pomegranates which proves to be the major issue in pomegranate export. Another
serious concern is shortfall in production due to the bacterial blight. The issue was the
production was not to the level that meets domestic demand. As a result prices gone up comparing to the international market which affect a lot on export o f pomegranate.
Though Mahaanar amended its policy and started purchasing raw material by
offering predetermined cash price, its overall transaction remained limited because of
the lack o f required working capital.
' Heffeman, 1999 and Hendrickson, 2001
141 I P a g e S.6.2.9 Fresh fruit trade issues in view of Ma n a g e r
1. The trade agreement abroad is on consignment basis and purchasing o f raw
material i.e. pomegranate is as per fixed spot price in India. This is the major
issue that restricting Indian cooperative exporters to expand export trade. This
also reflects the resistance of the exporter farmer member that hesitate to take
trade risk for incremental profit.
2. Marginal farmers and limited quantity o f harvest. This means multiple farmers
collectively fulfil the required quantity o f one container. This leads to multi
quality product in a container. The problem started once the container reaches
port and import inspection starts for residues and other formalities. Trader
bargain for cheaper price if he found an inferior quality product by any of the
farmer. This hampers the pricing o f superior quality product o f the rest o f the
farmers.
3. Increasing stringency and mandatory requirements on establishment on
traceability systems in developed markets o f EU, USA and Japan has
transformed the trading system to conditional trade which is completely
uncertain and subject to the successful fulfilment of the regulatory formalities.
4. Mahaanar tries to import bio-fertilizer and bio-pesticides. In this case
Mahaanar experienced that exporters abroad demands payment 100% in advance basis and not what we export the pomegranate on consignment basis.
Government has no control on this type o f trade practice. Mahaanar managers
insist for a strong intervention by government in this regard.
5. FY 2012-13 was the year where domestic prices for pomegranate were down. This creates the pressure by the producer farmer for exporting of the
pomegranate. Ultimately many private exporters also exported the produce to
Europe and gulf. However the demand there is o f specific quantity. Additional export from India create glut in the market and this create self competition, ultimately lower price to the product. Manger believes that we should kept
market hungry for the product to get better prices. Agency like APEDA should
act effectively to create this trade environment and guide exporters about the
strategy ahead.
142 1 P a g e 6. It is observed that government emphasise only on cold chain and export
related infrastructure. However the export quantity in pomegranate is lower
comparing to other fresh fruit because of high value of pomegranate. The
processing quantity is lower comparing other product. In this case the ratio o f
turnover to processing charges is low and it is not economical to invest a huge amount in pre-cooling unit, cold storage, refrigerated van etc. because o f its
low utilization.
7. Government is not emphasizing and focus on international trade research and
trade promotion abroad.
8. Research about market and emerging trade practices is limited to the government and there is no steps observed to get it done by such cooperatives.
Proper allocations o f funds are not done in this regards.
9. Farmers are unaware about the demand of the international customer. Fanner
are not understating the market need and not preparing the goods responding
to it. Farmers are aware about the production techniques only and not about
the trade requirements abroad. Unlike the farmers in Israel and Spain, Indian farmers are illiterate about the emerging trade internationally. To sustain in the
era of tough competition by these foreign growers, famer must be well
prepared and trained about the trade knowledge.
10. Very low engagement of cooperative management with member farmers.
11. Operational inefficiency to access new market and new trading platform and fetch higher price for the member farmer.
12. Unskilled sub-staff
13. No open trade centre for procurement of pomegranate from non member
farmer in case o f high trade opportunity.
14. Lack o f proper infrastructure such as roads, storage, refrigeration units;
refrigerated transport and cargo services at airports lowered the trade ability o f
the cooperative.
143 I P a g e 5.6.2.10 Fresh fruit trade issues in view of Ma n a g e m e n t
1. Regaining confidence of the farmer members those detached from the member
cooperative societies will require a complete organizational reengineering and
accessing professional management to increase the business.
2. Members do not honour the agreement to supply the raw material. It fails the
further scheduled trade promises and creates uncertainty about the export
supply. This also encourage foreign importer to find out other options,
ultimately encourages the competition.
3. Lack o f technical expertise in international trading systems. Lack o f resources,
absolutely no knowledge to the local govt agriculture department employees
about export. No major initiative reported by government except conducting
training programme for the farmers on pomegranate productions.
4. The cooperative successfully created both forward and backward linkage for its cooperative society members and grower farmer but failed to expand
business. This was due to the tariff and non tariff hurdle and unnecessary trade
barriers in the name o f food safety management. The farmers avoid this
unnecessary burden and prefer domestic sales.
5. Well established trade-customer relations and trust built by the cooperative
recently but stringent standards and inspections from Europe and UK buyers is
a hurdle for expansion of business.
6. While Mahaanar exports mainly to Europe and the UAE, countries such as
Russia are becoming important export destinations. The main competition is
from Spain and Israel, although these countries produce their pomegranates
slightly in other season. Mahaanar hit the European market at the season
where there is no supplier,
7. But here the local competitors come in the picture which plays very unhealthy
business practices those resulted in either negative profit or reputation of the
country.
8. Management believes that the business should be led and managed by
energetic, professional and dynamic managers. A lesser capacity of the
144 I P a g e cooperative to pay the higher salary drains the resources once they got experience and expertise.
9. Improved packaging and modem trade techniques are important to enhance
the business operations in any cooperative. Lack of such facilities in India
comparing to most modem and attractive packaging by the countries like Israel devaluate the product.
10. Insufficient study and research o f consumers needs and trade trends o f market.
11. Area under pomegranate has declined by almost 50% in Atpadi, from where
the country first exported pomegranates. Mahaanar, come up with many
options but raw material is expensive due to the disease-created shortage.
Reputation in the intemational market requires consistent and timely supply
which seems to be not possible to the Mahaanar due to shortage.
12. Mahaanar wanted to expand the volume o f sales but Government should help Mahaanar to follow aggressive marketing strategy for increasing exports in
existing as well as new markets
5.6.2.11 Fresh fruit trade issues in view of Farmer Member and member Cooperative society
Bacterial blight has damaged pomegranate cultivation over more than 30,000 hectare in Maharashtra, causing a loss o f Rs 1,000 crore. About 75 per cent production is exported to the Gulf countries, Russia and Germany every year, if our scientists manage to control the blight, we may ready to export the fmit to America which is interested in importing the fruit from us. Representatives o f Schramm William and Company had met us in Pune and sought to sign a deal. That was a promise o f good days ahead but we are unable to control the disease^
By and large, following are the main characteristics o f small producer members o f the society, hampering their market competitiveness.
Weak bargaining power — low marketable surplus; Low product holding capacity — selling at glut; Indebtedness — urgency for cash; High marketing cost; Poor market information; Lack o f grading and standardization; and Non-existence of value addition.
^ “TOI” Mar 02 2007 bv Mahaanar autliDriiics 145 I P a g e 1. Major requirement to trade in European markets are Food Safety and
Traceability. There will hardly any buyer in European market if there is no
guarantee of Food Safety for human consumption. Traceability is another
issue which means that the pomegranates should be traced back to its growers
in order to know that what kind o f pesticides he used and to have his guarantee
for being safe. A list of pesticides used while growing the pomegranates is
also required for sale in the European markets. Lack o f a system o f
information / data recording causes a huge informational gap. Thus farmers
don’t have that mindset which is the basic international market requirements
and therefore they just produce for local markets o f India rather than export.
2. Lack o f operational standards, lack o f pest management that is within
specified export parameters, lack of access to finance, poor expert resources
and lack o f coordination and cooperation within cooperative organization are
the most basic constraints of pomegranate export trade.
3. Transparent trade and marketing process are possibly not followed. Need more transparency about the marketing expenses and sale value.
4. Packaging design and quality need improvement to attract the international
buyer.
5. Study on the comparative domestic and international pomegranate business is
needed. That may focus on specific study on domestic and international
markets. As this study is not available, the information about supply and
demand trend cannot be predicted. Therefore it is hard to develop export
strategies by farmer.
6. Cost of trade compliance is very high for export production. Government
subsidies are not encouraging.
7. Farmers invest all their capital and cash in production o f pomegranates. Farmers don’t have ability to spend on trade promotion activities in additional.
This is not in the case o f the farmers in Spain and Israel.
8. No assistance to small farmer member in marketing of their small stock through improved handling and trade facilities. This directly hit upon the
prosperity in their profession
146 [P a g e 9. High sorting and grading losses in the export sales, it is around 20 to 40 %.
Local traders accept all types of quality but export cooperative needs only
specific high quality fruits. This leads to lot of rejection and ultimately losses
as it fetch very low price even in domestic market.
Fig.5.6 : Overall opinion towards major trade issues faced by Mahaanar authorities, Member cooperative societies and farmer member.
■ Marginal farmers, unknown about internatinal trade
■ Certification and trade regulation constrains
■ Local and Internatinal competition
■ Domastic trade simplicity and hansome returns
■ Trade regulatbns and expenses related to trade and regulatory norms ■ Government inefficiencY
5.6.2.12 Benefits extended to the Society and farmers from the activities of Mahaanar:
APEDA data shows exports of Pomegranate have risen from 7 tonnes in 1999 to more than 35,000 tonnes in 2007-08 as European consumers have developed a taste for the premium Bhagva variety. The minimum income per acre even without any special care is Rs 2 lakh that beats profits gain from sugarcane and grapes. With proper farm management, it can touch Rs 15 lakh per acre. This was possible not only because of the potential of the crop and the prices they got against the harvest, but also because of the awareness about the farm management practices, collective efforts about the marketing of the produce. Mahaanar help a lot to create awareness about the
147 1 P a g e export market potential o f the crop. Mahaanar educate farmer about production, post harvest handling, marketing and export processes.
Mahaanar created employment not only through the export process of pomegranate but it also offers huge direct and indirect employment opportunity to their members and empowers them with assured income. This additional work opportunity includes running the centres for pomegranate fruit collection, packaging, grading and cold storage o f pomegranate.
Mahaanar ensure their dominant position in the price holding that safeguard the economic interest of common producer farmer. The prices o f the export raw material supplied by the farmers other than Mahaanar are under control only because the tough competition posed by Mahaanar. Since Mahaanar operates in the market, private exporter and even local domestic traders compelled to offer the respectable price to the farmer that is in line with the export price. The price advantage in long run will help the cooperatives to win the community support and faith.
Majority o f the cooperative members o f Mahaanar are marginal farmers. They cannot export their product on their own. Mahaanar developed a platform to have the farmers their own identity and brand Cooperative extent their horizons globally by exporting product with their own brand. Last year was the year o f drought in
Maharashtra, It was very difficult to the farmers to irrigate the pomegranate gardens.
Because o f the organized efforts o f the Mahaanar, government o f Maharashtra sanctioned 50 field tanks (shet-tali) as a special case to Sangola taluka.
Role o f Mahaanar in providing the initial International market access to the farmers is worthwhile contribution. Expansion of this cash crop among the small farmers in this area, though somewhat limited at present, could be also attributed to
Mahaanar.
Farmers reap millions by raising pomegranate (The Economic Times, ET Bureau May 3, 2010,) PUNE: Farmers in some of Maharashtra’s driest districts boast of more than Rs 1 crore in their bank accounts, thanks to the pomegranate
5.6.2.13 Awards & Recognitions
Mahaanar recognized at many political and social levels but have not received any official award. The criteria for the awards by the exporting authority like APEDA
148 I P a g e are mostly the volume o f export or the export amount. Mahaanar is not meet the criteria and hence not eligible for any o f it.
When discussed with the authorities o f Mahaanar, it seems they are not that
keen about the recognition and awards. However Mr. Prabhakar Chandane, the key person in Mahaanar, is president o f “Akhil Maharashtra Dalimb Utpadak Sanshodhan Sangh” and “Pomegranate Grower’s Association o f India”.
5.6.3 MAHABANANA
India is a leading producer o f banana It is cultivated in India in an area of
830.5 thousand hector and total production is around 29,779.91 thousand tons and out
o f that Maharashtra's is the second producer state. Besides having such a large share
in production globally, there is hardly any export o f bananas. The reasons are lack of knowledge about international market and trade practices, poor post harvest practices and logistic facilities, lack o f modem storage facilities, traditional banana handling practices, etc. It is estimated that 25 to 40% o f banana production is wasted due to poor post harvest management. Majority of the banana supply and marketing is governing by the private sectors.
Looking to the current export potential and Indian conditions. Directorate of
Agriculture Marketing and the Maharashtra State Agricultural Marketing Board have
initiated the efforts for betterment o f post harvest management in banana and subsequently possibilities of banana export. "Mahabanana" established on 1st January, 2002. Headquarter o f Mahabanana is located at Jalgaon.
5.6.3.1 Objective of Mahabanana
• To plan a strategy o f banana export and to implement export process.
• To supply tissue cultured plants of banana varieties having export potential for
export quality banana production and to provide guidance regarding
cultivation and technology.
• To organize seminars/workshops/training programmes and demonstrations for
wide spread knowledge o f exportable banana production and post harvest
technology.
• To visit banana farms along with experts for suggestions and guidance to the
farmers on control of pest, diseases and physiological diseases.
149 1 P a g e To identify new domestic markets in the country and to develop effective marketing system.
To attempt for setting up o f basic infrastructure facilities like pre cooling, cold, storage, ripening chambers etc. to boost banana export.
To attempt for production of processed and value added by-products of banana and to develop its marketing system.
To introduce effective packaging procedure o f banana.
To include more co-operative fruit sale and process societies in export process and also to make them partner members o f Mahabanana.
To make, banana growers and persons engaged in banana marketing system; the individual members o f Mahabanana.
To attempt for reforms in banana transportation system and availability of modified railway wagons in suitable types and numbers.
To arrange training for exportable banana production, pre and post harvest cares and value added products.
To attempt to get subsidies for packing material (Cartoon box. Creates and in transportation produce being exported).
S.6.3.2 Functions of Mahabanana
To identify the potential banana growers and farms, and encourage them for production o f export quality Banana. To provide them information about pre and post harvest technology and demonstrations.
Market Information Centre is working under the guidance o f Department o f
Agricultural, Govt, o f Maharashtra.
To attempt for setup of Local Marketing Centres in major banana producing areas.
To attempt for reform and research in domestic marketing system in the country.
To attempt for setup o f Retail Outlets.
To make the planning of export.
To organize training programmes seminars and camps effectively.
To attempt for setup o f Agricultural Service Centre.
150 1 P a g e • To attempt for setup o f basic infrastructure facilities i.e. pre cooling cold- storages and ripening chambers etc.
• To attempt for stabilization in banana prices.
• To guide the banana growers regularly.
• To make arrangements for the production and the marketing system of by products of banana.
• To provide membership to liable co-operative societies and individuals banana growers on large scale.
• To attempt for availability of guidance for improved varieties, tissue cultured
plants, plantation as well as pre & post harvest technology o f banana.
S.6.3.3 Organization structure
Mahabanana is established and registered on 1st January 2002. It is established
under section 20 o f the cooperative society’s act 1960. It is recorded as till FY 2008-
09 Mahabanana has joined few additional member fruit sale cooperative societies as a member and thus the total member are 24 societies with 243 members in individual capacity. As per the MOU The management set up o f the Mahabanana will be in descending order as General body o f partners. Executive partners, Divisional manager, accounts, administration technical marketing and other staff. However as of now there is no any employee with Mahabanana. The only one clerk appointed but he is not attending the office as Mahabanana is unable to pay him regularly.
Table 5.10 : List of the Member Societies of Mahabanana
Sr. No. Name o f the society and address
Shetkari Phal bhajipala va prakriya Cooperative Society Ltd. I Chinawal T a l: Raver Dist Jalgaon
Kai. Pandurang Tukram Patil Frutisale Cooperative Society Ltd. 2 Dhamboli Tal : Raver D ist: Jalgaon
Yawal taluka fruitsale Cooperative Society Ltd. 3 Yawal Tal ; Yawal D ist: Jalgaon
NImbhora station phal bagayatdar Cooperative fruitsale Society Ltd. 4 Nmbhora Tal; Raver, d ist; jalgaon
Hingone Cooperative fruitsale Society Ltd. 5 Hingone tal ; raver d ist: jalgaon
151 I P a g e Sr. No. Name o f the society and address
Kai Vamanraobapu Patil frtuits and vegetable Cooperative Society Ltd. 6 Gorgalewadi bu Tal : Chopda D ist: Jalgaon
Jalgaon fruits and vegetable sales society Ltd. 7 Jalgaon
Chinawal group Cooperative fruitsale Society Ltd. 8 Chinawal Tal : Raver d ist; Jalgaon
Sangvi bu Cooperative fruitsale Society Ltd. 9 Sangavi bu T al; Yawal D ist: Jalgaon
Bhadgaon Cooperative fruitsale Society Ltd. 10 Bhadgaon Tal : Bhadgaon D ist: Jalgaon
Kai Aabasaheb Khanderao shripat patil fruitsales society Ltd. 11 Kasoda tal : Erandol Tal : Jalgaon
S.6.3.4 Export trade and performance of Mahabanana
Mahabanana has initiated efforts for coordinated banana cultivation, transport and export. With the help o f MSAMB, Mahabanana has taken up trial export of
Banana to Dubai in the FY 2004-05. Mahabanana exported banana to UAE worth Rs.
1300000. This is as per the financials o f Mahabanana and information by Chairman as well as then government representative of cooperative department deputed for
Mahabanana.
Table 5.11 : Financial performance of Mahabanana^ Year Banana Other Share Capital Share Capital GovL Profit export sales sales (Member) (Govt.) Subsidy
2001-02 (35058)
2002-03 (116361)
2003-04 (260890)
2004-05 13,00,000 5,00,000 2,30,000 10,00,000 5,00,000 (1 0 32074)
2005-06 (384181)
2006-07 (233432)
2007-08 7,00,000 2,30,000 10,00,000 (182589)
2008-09 34,750 2,30,000 10,00,000 (142728)
^ The blank cell indicates that the information / data were not made available.
152 1 P a g e Year Banana Other Share Capital Share Capital Govt. Profit export sales sales (Member) (Govt.) Subsidy 2008-09 1,33,817 2,36,000 10,00,000 (2 3 87314)
It is obvious from the financial performance that Mahabanana was unable to make profits. Due to a low capital base and despite heavy losses year on year, the capital base neither rose nor was supplanted by government subsidy. In that case the
CO operative would be unable to make investments in capital formation/ fixed asset creation. In the above circumstances, the farmers would not see merit in collective capital pooling as return on investment is negative and tangible infrastructure promising future growth is not visible
It was demonstrated that Maharashtra is gearing up to take a share in the international banana market. The state government was hoping to promote banana export by encouraging Mahabanana. A separate representative from department of cooperative was appointed to streamline the process of export. APEDA believes that
India has tremendous potential to export banana even though there is hardly any export as o f now. APEDA declared eight traditional banana growing districts as agri export zone (AEZ). With this much o f ambitious, the preparation for export was done.
However the basics of the export were not honoured and with a very limited study on banana export, the containers sent to Dubai. It was a big failure as the payment was never received to Mahabanana.
Mahabanana exported the 16 MT o f banana in 2005 to Dubai through 40' Refer container. However it is told that till the container reaches to the port o f Dubai, the quality o f the fruit was deteriorated to the level that it got rejection. The rejection was probably due to the residual detection and over ripening o f the banana. The payment was never received from the broker. However, Chairman, Mahabanana, denies the reason given and doubt about the intension o f the broker. The Losses of
Rs. 8,47,600 was booked in FY2004-05. Additionally, MSAMB asked to treat the capital worth Rs. 10 lakhs as loan and charges cumulative Rs. 308316 as interest at 12% annually. Thereafter the financials of Mahabanana was always in losses.
Researcher was tried to know the sales figure year wise but the financials was prepared in a manner that it was not able to understand the exact sales o f the Banana.
Due to losses incurred by the society in recent years and significant fluctuations has seen in its profit after 1987-88. The losses incurred by the
153 1 P a g e Mahabanana over the past years have further worsened the situation. A significant fluctuation was seen in its marketing of input and output, which basically remained.
Not only was this, despite fall in marketing of input, there is no any steps taken for expansion of business activity.
Fig 5.7 : Business activity process flow in export of Banana:
selection of the chemical and Marking and banana plot fungicide labeling the treatment cardboard boxes
bunch covering with skirting bag Grading cold storage
Labelling fruits Transportation Loading the from farm to with brand processing unit name container
cleaning in Packing and shipping clorine water strapping
S.6.3.5 Estimation of trade issues faced by Mahabanana :
Mahabanana has shown poor grasp in terms of either studying the
International market or inefficiencies because of its own internal drawbacks in terms of production and procurement of raw material that meet the international export standards. Since the non expert and ill trained team is running the organization, there is lack of motivation in terms of growth of the society; there has been adverse impact on the working of this society. Further, because of lack of funds and losses incurred by the society coupled with no support of the Promoting organization i.e. MSAMB, the member farmers are no more interested in exporting the product through
Mahabanana. They are diverting their produce to other private traders to for domestic sell. All together it has adverse implications insofar functioning of the society even
154 I P a g e the future is concerned. Ultimately Mahabanana has not exported banana after 2005 and there is closing stages of the society.
S.6.3.6 Fresh fruit trade issues in view of Management
Mahabanana is not in its full fledged operations as on date. There is not employee that can be categorized as manager hence the view of management was taken for study.
1. Absolutely no experience about international trade. Poor knowledge about the
trade practices and trade issues internationally.
2. Neither own expert resource nor expert advice / guidelines by MSAMB, it
seems one of the major reason of failure.
3. Lack of understanding about trade contracts, regulations, business processes,
and their under-developed negotiation skill limits the chances for small
producers to enter into export agreements.
4. Mahabanana do not have any international connections. Mahabanana dealt and
depend on the broker with whom they had never experienced any business
transactions.
5. EU has special preferential agreement with African, Caribbean and Pacific
countries. Other countries exporting to EU have to pay tariff duties and thus
are not able to compete with them.
6. No secure market and assured acceptable repayment against the goods
supplied.
7. Cooperative farmer members are reluctant to invest time and money in export
quality production o f banana as it has no guaranteed market and assured rates.
8. High shipping rates for sea, long distance that requires cooled containers.
Limited availability o f sea transport, especially for smaller quantities are the
uneconomical issues in export trade.
9. Lack o f infrastructure facilities like pre cooling, cold-storages, ripening
chambers, packing house etc.
155 I P a g c 10. Lack of adoption of modem technology among banana growers. The impact is
lesser quality fruit comparing to the other countries. In such cases trade bargain doesn’t favour cooperatives.
11. High fluctuations in banana prices. Costly International marketing and
transportation. Railway wagons quota is not what it is required.
S.6.3.7 Fresh fruit trade issues in view of farmers and member cooperative societies.
1. Lack of information regarding various government support schemes and
programmes for farmers. The way government disseminates the information
about trade subventions and subsidies to co-operative societies and farmers is
not effective. Here the officials of cooperative societies refer to the news clip
from Times o f India. “The European Union had changed the norms of
chemical residue levels in December 2009, which the Union government
failed communicating to the farmers in time despite being aware o f it. Almost
95 per cent of the 50,000 tons of other fruits that were rejected by Europe were
from Maharashtra” Ultimately, if the information doesn’t disseminate
properly, the aim o f government about export trade promotion may not meet
to the planning.
2. Private groups those are dealing with the export trading o f banana produce
have bad track record. A particular private group, on several occasions failed
to make payment to the farmers. The news about non payment to Mahabanana
against the export done is also spread in the region. Members gradually lost
the faith in export business and avoid the business relations with Mahabanana.
3. Competition is one of the hurdles. India’s exports of table bananas have stuck
up because o f the fact that Philippines is able to supply in large quantities at
cheaper rates as large banana plantations are owned by multinational companies in this country and are organized in a better way in addition to
having high productivity o f banana. The farmers trading in Mahabanana are marginal and have small quantity to export. These affect in overall cost o f
production and cost certification.
4. Farmers need to be educated about export trade requirements and international quality standards. Additionally. Protocol for post harvest handling of Grand
156 I P a g e Naine, Nendran and Red banana need to be perfected/ standardized for shipping to Gulf countries by sea.
5. Mahabanana has suffered from inadequacy o f trained personnel right from its
inception. Lack o f trained personnel in international trading has been caused
by two major factors. In the first place, there has been a lack o f training by
MSAMB which is the promoter o f Mahabanana, Secondly because o f lack of
salary paying capacity o f Mahabanana. Subsequently, because o f lack o f
expert manpower, the export problems occurred in the trade transactions with Dubai shipment which force Mahabanana in losses.
6. Lack of coordination and poor management about the procurement of the raw
material to fulfil the capacity o f the container. It delays the shipment o f banana
by a week in the first export consignment as the container was called in the
field but harvesting of bunches was not done. The delay causes additional cost
o f refrigeration and container charges. This force Mahabanana to revise the
terms in trade agreement. O f course the trade agreement was not holding any
legal status and mostly the commitments was verbally made.
7. Highly perishable nature o f the product. It seems importer trader taken the
disadvantage o f the perishable nature o f the product and denies the payment of
consignment with the false reason about of deterioration in the quality of the
product.
8. High domestic demand, farmers getting handsome domestic prices for banana
crop in last few years. International prices are not that encouraging and hence farmers as well as cooperative societies are not keen for exporting.
9. Being low value trade per farmer, expenses against certification etc. are high.
Hence the export price gain is consumed by export expenses.
157 1 P age Fig. 5.8 : Overall opinion towards major trade issues faced by Mahabanana authorities, Member cooperative societies and farmer member.
I Marginal farmers, unknown about internatinal trade I Certification and trade regulation constrains
I Local and Internatinal competition
I Domastic trade simplicity and hansome returns
I Trade regulations and expenses related to trade and regulatory norms
S.6.3.8 Benefits extended to the Society and farmers from the activities of Mahabanana:
Undoubtedly the initiation of the cooperative export in banana was the impressive step of MSAMB with Mahabanana. There are positive benefits for the farmers and farming community in Maharashtra, the major banana producing area.
There are few experiments done those will be beneficial for the long-term development of the export in Banana. It is difficult to predict the future especially when there is no support and action by Maharashtra government for further implementation of the strategy of banana export.
It is first experiment of its kind where banana growers and farms were selected for export, and further unique process of export trade was done that includes covering the bunch with perforated poly bags. i.e. skirting bags, to spray suitable and standard insecticides and pesticides, provide information of pre and post harvest technology and demonstrations. For the purpose Market Information Centre was set for guidance under Department of Agricultural, Govt, of Maharashtra. Banana Handling and
Packing Centre was set up, with the aid of FAO at Shetkari Fruits & Vegetables Co operative Society Ltd. Chinawal, Tal. Raver, Dist. Jalgaon. To get the benefit of the same, Mahabanana launched a campaign for membership of co-operative societies and individual banana growers. Mahabanana has arranged funding to selected banana growers and attempted for loans with minimum rate of interest to banana growers
158 I Page through co-operative societies which was disbursed by ICICI Bank thus Mahabanana tries all o f its levels to provide maximum support to encourage the export of Mahabanana.
In additional to that Mahabanana send several proposals to meet the export requirements. That includes proposal to get the financial assistance for conducting the seminar/training/demonstration by international experts on banana export protocol and guidance to the exporters/growers o f banana in Maharashtra. Proposal to get reserve quota in railway wagons for domestic supply o f banana plantain to Delhi,
Amritsur, Jammu etc. Proposal for getting financial assistance for crates and cartoon boxes from N.H.B. Proposal for setup of pre cooling, cold-storage, ripening chamber at Raver Dist. Jalgaon. Proposal for getting the sea freight subsidy exclusively for export o f banana. Proposal for Agricultural Export Zone. Mahabanana has supplied and distributed the Tissue Cultured Banana Plants o f “Grand Naine” with the help of and in the guidance o f Marathwada Agriculture University, Parbhani.
Table 5.12 : A framework analysis of overall trade issues of the cooperatives:
Paraineters — ► Coopijrative Financial M anagement Govt and International Oi^aniizations issues issues export norms trade
Marginal No direct Lack o f efforts Lack o f fanners High profit to o f the updated per unit management. government to information expenses. silent the about most Not dedicated stringent recent trade Bank needs towards duty. importing practices. sound regulations financial to Held Non 11 fund the firm. personally Lack o f specific professional M ahagrape liable / research focus trading There is no as responsible in about such any case o f losses. International Business special trade. should be assistance by unable to Lack of driven by a pre government attract and infrastructure planned target retain facilities eg o f the quantity No Risk competent Toll tax from to be exported taking power professionals Sangli to each year. of members. Mumbai causes
159 1 P a g e Paraineters — ► Coop Hence low Only few and additional Domestic rates profit margins. not all Burdon o f Rs.l/ o f grapes members are kg of grape) decide the experts future o f Long distances export Poor to ports from business. competent production authority, poor areas. Lack of inspection Transportation positive Brand system delays incur image, overall additional cost Indian product quality and trade treated as inferior. Trade confirmed on the basis o f the consignment. High value Lack of Global Trade Tough crop. guidance from liberalization competition of government to agreements Israel and High working management should be Spain. capital about export monitored. Few requirement. trade and countries are Cost to meet emerging trade violating by the regulatory Increased practices. charging requirements turnover in additional tariff increases the FY2013,but Lack of indirect cost of profit ratio is professional No exclusive production. not. Reason is approach by promotional The overall iTXa 11 160 I P a g e Parameters Cooperative Financial Management Govt and International Organizations issues issues export norms trade property is export trade transportation. Debatable difficult. year on year. Trade term as A ssistance per EU law. A High the risk schemes are not contract is not in business. If under one necessarily a consignment umbrella. document. got rejected, Centre and state the non governm ent Lack of expert payment will have their own resource that fade all the set of schemes. can guide profit of the about society. It seem s international government is trade. not that capable to educate Indian trade is farmers about defam ed as certification peoples with and regulatory unethical requirements. business practices. Lack of govt encouragement by the means of awards and appreciations. 161 I P a g c Parameters Cooperative Financial Management Govt and International Organizations issues issues export norms trade Financial Fresh entry in Lack of support L ow value Losses since the export in terms of fruit. the trade by International establisliment m anagem ent trade directions Less profitable business. Bad debt year Lack of export Poor on year trade expertise infrastructure Professional in staff and facilities Philippine Poor book m anagem ent companies as iceeping as w ell. N o special com petitor Mahabanana benefits by govt Inefficient G ood to encourage Unfaithful gulf debt recovery producers but cooperatives clients m anagem ent bad business Stringent professionals Poor research Inadequate extensions, certification Reserve and W asted especially trade and surplus. interests like and regulations cheap international H andsom e publicity. market. dom estic returns. 162 I Page