OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

AURANGABAD‐AMRAVATI INTEGRATED VALUE CHAIN

Aurangabad‐Amravati region, Maharashtra

sFocus Crop

. Sweet Lime . Kesar mango . Orange . Lemon . Banana

DPR: Aurangabad‐Amravati Integrated Value Chain Project

. Description of Hub and Spokes

107 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

Aurangabad‐Amravati Region

IL&FS Clusters identified Aurangabad-Amravati region for Integrated Value Chains of high value/volume agricultural/horticulture produce based on combination of several factors such as agricultural production in terms of volume and variety, human and economic development, suitability for development of integrated value chains and commercial viability of infrastructure projects. This region covers Aurangabad, Amrawati, Buldhana, Jalna and Akola districts, in Maharashtra and are shown in the map below

Amravati- Aurangabad Region

The region is known in particular for sweet lime in Aurangabad and Jalna, Kesar mango in Paithan Aurangabad; lemon and banana in Buldhana, and orange in Amravati. The major orange producing districts in the state region are Amravati, Nagpur, Yavatmal and Akola, of which Amravati and Nagpur account for about 940 thousand hectares with production about 500 thousand metric tonnes. This cluster also produces about 87% of the total sweet lime grown in the state. Though the production of mango in the region is small compared to the mango-belt in North India, Kesar mango is fast cornering a niche segment of the market with its distinctive taste. Based on these considerations, and the assessed potential for development, the focus crops identified for the region are: The focus crops in this region are: . Sweet Lime . Kesar mango . Orange . Lemon . Banana

108 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

15 FOCUS CROP: SWEET LIME

Maharashtra ranks second among Indian states in production of sweet lime, producing about 23% of the total production in the country. The state has 98,400 Ha of area under sweet lime cultivation with an annual production of 678,700 MT. The table below provides details of sweet lime grown in the study region.

District Area (Ha) Production (MT) The cluster produces about Aurangabad 21617 302641 87% of the total sweet lime Jalna 19158 268212 produced in the State. The Amravati 1925 19250 Akola 200 2000 major sweet lime producing Buldhana 257 2570 talukas (blocks) in the cluster Total 43157 594673 are Ghansawangi, Ambad and Source: Directorate of Horticulture, Government of Maharashtra (FY 2007-08) Jalna in Jalna district and Aurangabad, Paithan and Kannad in Aurangabad district. The production is spread over two seasons namely Ambia bahar and Mrug bahar. Ambia Bahar accounts for 55-60 % of the production. Arrivals for this season start in the month of August and end in the month of November. Mrug Bahar accounts for the balance 40-45 % of the production and it starts in the month of February and ends in the Month of May. In case of Aurangabad, Ambia Bahar accounts for almost 65-70 % of the production with harvesting period spread between August and end of October. Mrug Bahar accounts for the balance 30- 35% of the production with harvesting period spread between February and May with March and April being the peak season. Sweet limes in the region are propagated by budding. The method of shield budding is the most popular method for propagation. The square system is used for plantation of sweet lime. The distance between plants is generally kept at 18 ft with about 125 plants per acre. The trees start getting economic yield from 3rd year onwards and the economic life of the trees is 12-15 years depending on the maintenance. Intercropping with tur, maize and cotton is carried out generally up to the first 4-5 years.

Farmer 15.1 VALUE CHAIN ANALYSIS Channel 3 Channel 1 Channel 2

The diagram explains the major channels of Pre harvest Contractor trade of sweet lime in the region:

Based on the point of sale, the supply chain Commission agent can be classified into three types:

1. At Farm Gate – Channel 1: Accounts Trader for 80-85% 2. At APMC Mandis within Production Clusters – Channel 2: Accounts for 10- Commission Agent in Distant market Retailer in Local Market 20% of the produce 3. At distant market by some big farmers- Wholesaler

Channel 3: 1-2% CONSUMER Retailer in Distant Market 109 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT The major players involved in the trade of sweet lime are farmer, Pre Harvest Contractor, local commission agent, trader, commission agent in distant market, wholesalers and retailer. The roles played by each player in the value chains are given below:

Farmer The average orchard size of sweet lime in the study region is about 1-2 Ha. One Ha of orchard accommodates about 310 plants (18 ft X 18 ft) which are maintained at a height of about 12-15 feet. The cost of establishment of sweet lime orchard is about Rs. 51,0001. The breakup of the cost is given below. Activity Cost per Ha (in Rs) Cost of sapling (310 sapling) 4960 Labour cost (levelling, digging, weeding, sapling plantation, manure spread, filling etc) 4000 Cost of irrigation (drip irrigation) 25220 Compost/fertilizers 3000 Pesticide 3000 Others 2000 Total in Rs 42180 The breakup of annual variable cost of cultivation of sweet lime is given below.

Activity Cost per Ha (Rs.) Irrigation 2500 Fertilizer + Labour 15000 Pesticide + Labour 20000 Labour (Trimming, deweeding, etc) 9000 Harvesting Labour 7500 Miscellaneous 2000 Total 56000 Each plant produces about 80 Kg of fruit and the average productivity of the region is 25 MT per Ha. Based on the existing market scenario, the price received by farmer was approximately Rs 8/Kg in the peak season which went to a high of Rs 30/ kg during lean season at farm level. In Channel 1, the produce is sold to pre harvest contractor (local agent) about 2-3 months before the harvesting. The farmer bears the cost of harvesting and loading indirectly as the pre harvest contractor deducts 10% from the value of produce during the final settlement with farmer. The reason given behind deduction is that the pre harvest contractor buys all the produce without sorting and grading the produce and he also pays for the harvesting. However, he also pays the pre agreed price to farmer irrespective of the market price of the produce. In channel 2; farmer bears the cost of harvesting, loading, un-loading at APMC, weighing, local transport to APMC market yard and commission to commission agent (6.25%).

1 Cost of land has not been taken into account for calculation of total cost of establishment of lemon orchard 110 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Pre Harvest Contractor (PHC) PHC provides assurance to farmer for buying of produce from the field itself by leveraging his linkages in the distant market. He also provides credit to farmer for cultivation. The interest cost of the credit is factored in the prices offered to the farmer and rate of interest varies between 16-20% based on borrower’s individual relation with the PHC. Price fixation between the farmer and the trader (channel-1) is by negotiation. The trader offers a price based on his information of price in the local and distant market. The difference in price in local market and the price offered to the farmer also depends on the distance of the market from the farm. Transportation cost in this case is borne by the PHC. Most of the farmers prefer to sell by this channels as there are no marketing costs, harvesting is the responsibility of the PHC and the risk is with the PHC. Almost 80-85 percent of the produce is marketed through PHC. Though a PHC is able to realize more profit through this system, it also involves a high degree of financial risk. The ownership of the produce lies with the farmers but the PHC is committed to pay a pre-fixed price to growers from whom he has sourced the produce.

Commission Agent (CA) CA facilitates the sale of farmer’s produce for which they charge a commission of 6-8% of the sale value from the farmers. A cess of 1.05% (1% market fee and 0.05% supervision fee) of value of the produce is collected from buyers by CA on behalf of the market committee. Payment is made to the growers typically on 8th day of the harvest. CAs are an important link in the value chain. They bear the financial risk as they pay to the farmer on spot after auction but receive money from wholesaler after some days depending on mutually agreed terms and conditions. They also provide financial support to farmers for cultivation of crops. Like PHC, commission agents also extend credit to growers and the interest costs are factored in the same manner as it is done by PHCs. Sometimes CAs may purchase on their own from the farmer and sell through commission agent in distant markets of Delhi, Hyderabad, Jaipur, Agra, Ludhiana etc. In this case the cost of marketing from local APMC yard to distant wholesale market is borne by CA.

Traders They are the major buyer in the APMC markets. They also bear the price risk as the produce purchased on day-1 takes about 3 days to reach destination markets and during this time price may vary both sides. Price discovery in the APMC market yards is by Open Call Auction method. The traders bear the cost of loading at local APMC yard (Rs 1100-1500/ Truck of 15 MT), market cess (1.05%), weighing charges of truck (Rs 25/ Truck), transportation cost to Delhi (Rs 27000-30000/ 15 MT truck), unloading at distant market in Delhi (Rs 1500/ Truck), Grading (Rs 1200/ Truck) and commission to CA (10%).

Wholesaler The Wholesaler is the major buyer in the distant market and has linkages with the local retailers and markets of surrounding states. He also plays the role of bulk-breaker and sells the produce in smaller units to retailers. Most of the sorting and grading takes place at this point itself.

111 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Retailer The retailer is the point of contact with the final consumer of the produce and bears the cost of local transportation and marketing of the produce. He also bears the risk of losses due to quality deterioration and marketing of the produce. These risks are factored appropriately in the retail prices to cover potential losses. After picking, the fruits are loaded in the trucks as loose by spreading paddy straw in the truck to keep the fruit safe from injuries. There is no farm level grading or packing of produce irrespective of the marketing channel used to market the produce. The fruits are generally loaded into an open truck or tempo/tractor trolley and sent to destination markets for sale. In cases of Channel 2, sweet lime brought from orchards in the APMC markets are heaped properly on the auction platform without causing any damages to the fruit. For this purpose the auction platforms are covered with paddy straw in the market yards and then the produce is auctioned for price discovery. The produce is sold by weight in all marketing channels. The grading and packaging mostly take place in consumption market only. The packaging weight depends on the market place for example the packaging weight per gunny bag is 40 Kg in Jaipur market where as it is 20 Kg/ Bag in Delhi. In all the markets grading is done manually. The grading is done based upon the size and weight of the fruit. Simultaneously, the fruits are sorted where the diseased and bruised fruits are discarded. Based on size, fruits are graded into 4 grades (no. of fruits per kg varying from 4 to 8 fruits). The traders in production clusters do not generally store the product. They operate in such a way that the product reaches the destination market within a maximum of 3 days of harvesting. Transportation is carried out in ambient temperature in open trucks. The fruit is generally not stored for off-season sales. A value chain, indicating the various activities in the value chain, actors performing the given activity and cost build-up at every step has been mapped in this section. This value chain (for 1 Kg of Sweet lime) has been mapped for the supply chain having following characteristics: 1. The marketing chain follows Channel 1, i.e, Farmer to PHC to wholesaler/Commission agent in distant market to retailer to Consumer. 2. The cost of production for the farmer is only the variable cost for maintenance of one acre orchard per year. It does not include the cost for the first five years of orchard where there are no returns. 3. The distant consumption market considered for this case is Azadpur APMC Mandi, in New Delhi 4. Cost of capital and opportunity cost for the all the intermediaries has not been considered in cost build up and for calculating the spread 5. The cost of retailing, which includes the cost of shop, wages, rent etc has not been considered 6. The prices considered are average prices for the month of September in production clusters in Jalna and Aurangabad and destination market at Delhi based on the data corroborated from traders. The same has been cross checked with the data from Agmark.net for the same period

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Retailer’s Margin

Transportation

Wholesaler’s Margin Rs 3.603.60 Rs 0.20 Transportation losses @2% Rs 2.10 Packing charges Rs 0.32 Sorting and grading Rs. 23.00 (Retailer’s Price) Rs 0.50 PHC’s Margin Rs 0.08 Rs. 19.00 We ight loss@ 5% (Wholesaler’s Price)

Commission charges Rs 3.50 @ 10% in Delhi Rs 0.80 Unloading Rs 0.80

Rs 1.60 Transportation to Delhi Rs. 16.00 Rs 0.10 (PHC’s Price) Harvesting, loading

Farmer’s Price Rs 2.00

Rs 0.80

Rs 8.00 In the above diagram, the farmer pays for the harvesting and loading labour. The PHC pays for the transportation to destination market, unloading cost in the market, commission and also bears the weight loss occurring during transit. The sorting and grading cost in the destination market is borne by the wholesaler. He also bears the loss in wastages and packing charges. The retailer buys the product from the wholesaler and pays for the transportation cost to the retail stores/points. The price build up can be summarized, as below:

Rs/MT Particular Farmer PHC Wholesaler Retailer Cost of Maintenance of orchard/ Purchase 2240 8000 16000 19000 Cost of Marketing incl. Commission Agent charges, wastages, etc. 800 4502 900 200 Sale Price 8000 16000 19000 22800 Spread 4960 3498 2100 3600 Some of the salient features of the price build up are mentioned below:

 There are four intermediaries between the farmer and the consumer in the sweet lime supply chain (including the commission agent).  The price build up from farmer to consumer is around 3 times.  The farmer earns a margin of Rs. 4960 per MT which is about 22% of the consumer rupee  PHC incurs a cost of around Rs. 4500 per MT in transportation, commission charges, weight loss, etc. The margin of PHC is about Rs. 3500 per MT which is about 15% of consumer rupee  Wholesaler incurs a cost of around Rs 900 per MT in various activities such as labour, packaging, wastages etc. The wholesaler earns a margin of Rs 2100 per MT that is around 9 paisa of a consumer rupee.  The commission paid by the farmer to the commission agent constitutes 7 paisa of a consumer rupee.

113 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT  The share of consumers rupee by various actors in the value chain emerges as shown (in % of consumer’s rupee) :

15.2 INFRASTRUCTURE ASSESSMENT

15.2.1 Post Harvest Infrastructure Sweet lime is treated as a bulk horticulture produce with limited sorting/grading and produce is handled manually throughout the supply chain. The produce is also dumped as loose by spreading paddy straw on the bed of transportation vehicle and sorting/grading in this case is carried out by the wholesaler in destination markets. Manual sorting, grading and packaging is done at the APMC markets under the sheds of the CA shops or at the destination market. Sweet lime is not stored in cold storages and the produce is sent to distant markets on the day of sale itself. There is no farmers’ cooperative or any other institution which is engaged in the marketing of sweet lime in the region. There are no sweet lime processing units in the region at present. After harvesting and packing, the produce is immediately transported to destination market mostly by trucks as the cluster does not have adequate rail connectivity. In very cases, rudimentary sorting, grading and packing at the farm level (in Auragabad district), is carried out by the PHC. The sorted/graded produce is packed mostly in gunny bags with specifications of grade marked on the outer side of bag.

Agri Tech Farm Case Study

Agri Tech India Ltd has set up a 250 acres farm at Issarwadi, Taluka: Paithan on Aurangabad-Paithan road. The company has been promoted by M/S Nath Paper Mills Ltd. The farm is an excellent example of corporate farming and showcases some of the best farm management practices. Total area in the farm has been divided in to various segments like horticulture planting area, floriculture plot, field crop planting area, cash crop planting area, seed multiplication plot, R&D plot and experimental plot. Under horticulture area, there are two large orchards of Mango and Grape has been set up in an area of 36 114 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT acres and 60 acres respectively. Entire area under horticulture crop and floriculture is under drip irrigation. Various experiments of pilot testing of certain crops are carried out under R&D area to assess the viability of commercial cultivation. The orchards are managed scientifically to ensure best yield and reduce the probability of any pest/disease occurrence. The buyers generally visit the farm during harvest period and negotiate with the farm owner for the prices. Most of the times, the owner is able to get a better realization as he is able to offer significant volumes of individual products like Mango and Grapes. Once the prices are finalized, the produce is harvested under the supervision of farm staffs.

15.3 GAPS IN THE VALUE CHAIN An assessment of the range of activities under the value chain was undertaken to understand the gaps and inefficiencies in the sweet lime value chain. A detailed structured survey was undertaken to map the existing supply chain and identification of gaps at each stage, with added focus on institutional, infrastructural and logistical barriers. After the detailed field survey, gaps identified were discussed with a range of key stakeholders to get their feedback on the analysis and understanding of issues. The following gaps are identified in the value chain:  No farm level sorting, grading, washing and other facilities in the region. There are also no de-greening facilities in the region.  There is no requirement from domestic markets for sorted, graded and packaged produce. The export market has not been catered as yet where higher prices may be obtained for these services. There is also a limited opportunity for export as the marketable surplus mostly caters to the domestic demand.  There is no sorting, grading and any type of primary processing taking place in APMC markets in the region. The packaging and grading takes place in consumption market only with only minimal sorting grading at the farm gate. Most of the produce is sold and marketed outside the APMC markets and the arrivals in APMC markets are not very high except for some places. Further, any arrivals in local APMC markets are mostly sold in the local markets by the local merchants.  No processing facility for the fruit exists in the cluster.  Many times, lack of market intelligence of farmers about prices and demand leads to lower price realization

15.4 POTENTIAL INTERVENTIONS

Two pack houses for orange in Aurangabad and Jalna districts are proposed. The proposed locations are Jalna and Paithan. The pack houses will have following facilities for orange:

 Sorting  Grading  Packaging in plastic crates The pack houses at Paithan will cater to mango as well. The details of the facilities have been captured in the subsequent chapter.

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16 FOCUS CROP: KESAR MANGO

Maharashtra produces 5% of the total production of mangoes in the country. Total area under mango cultivation in Maharashtra has marginally increased from 0.44 million Ha in 2006-07 to 0.45 million Ha in 2007-08 and the production also increased from 0.64 million MT to 0.71 million MT during the same period. Productivity of mango in Maharashtra is around 1.6 MT/Ha which is much lower in comparison to the national average, which stands at 6.3MT/Ha. Ratnagiri, Sindhudurg, Raigarh and Aurangabad are the major mango producing districts of Maharashtra. Major varieties cultivated in the state are Alphonso, Kesar and Pairi. In Amravati region, Aurangabad is the major district under mango cultivation and it accounts for 15% of the total production of the state. Total production of mango in Aurangabad district is approximately 0.1 million MT and the productivity is around 6.2 MT/Ha, which is much higher in comparison to the state’s productivity. Paithan, Aurangabad, Sillod and Vaijapur are the major talukas under mango cultivation in Aurangabad district. Among these, Paithan and Aurangabad accounts for about 20 percent of total production in the district.

Area and production of Mango

Districts Area in Ha Production in MT Kesar is the most prevalent variety of Mango in Buldhana 1263 5051 Akola 74 442 major talukas of the district. As per the Amravati 478 1912 information provided by mango growers in the Jalna 450 19 region, area under Kesar mango has increased Aurangabad 17264 108257 in the past few years. Sugarcane has been replaced by mango due to decreasing water resources in the region. Contrary to other varieties of mango such as Dasheri, Langra etc. that follow alternate bearing cycle, Kesar mango bears fruit every year. Harvesting of Kesar Mango begins from mid of April and attains peak during mid of May. It is also being exported to Middle East, USA, UK and Japan etc.

16.1.1 Value chain analysis

Trade channel of mango The following illustration depicts the most commonly observed supply chain mechanism of mango in the region:

Commission Farmer PHC Wholesaler Retailer Agent

Farmer

Various channels of the mango supply chain are mentioned below:  Direct Sourcing at Farm: Pre-harvest contract is the most commonly used sales system of mangoes in the region. Around 80% of the produce from an orchard is sold under pre-harvest contract. The contractors evaluate the orchard during the initial stage of fruiting and payment is done to the farmer on per kg basis. Some of the

116 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT farmers also negotiate price of their orchard on lump sum basis. The quantity, quality and rates are negotiated on the basis of mutual agreement between the farmer and the contractor. Cost of activities such as harvesting, packing and transportation at the farm gate are borne by the contractor.  Purchase by Processing Units: Processing units like Jain Food Park and Uni-Fruity directly procure the raw material at the farm gate. Apart from this, they also procure through agents/suppliers. Processors are more price sensitive and quality is not a major concern for them. They mostly buy grade C & D material which otherwise cannot be sold in fresh retail market. It is estimated that around 15% of Mango produced in the cluster is procured through this system.  APMC Market yards: Farmers in the catchments of nearest APMC bring their produce which is sold under open auction mechanism. It is observed that at times, farmers do not bring the produce to nearest market yards and travel to a bigger market yard in expectation of a better price. Volume of trade through this mechanism is estimated to be about 5% of the total Mango trade. The role played by major stakeholders and the value added at each stage is briefly captured below:

Farmer: Mango saplings are plan ted by the farmers in pits and the planting distance of 15mx15m is maintained by them. Around 475 plants ca n be accommodated in a hectare. Farmers incur a cost of around Rs 126252 in the 1st year in establishment of mango orchard. The cost of establishment of orchard in a hectare is repr esented in table below:

Activity Cost in Rs/Ha The tree starts fruiting from 5th year onwards. pit digging 7125 fertilisers 5000 Yield of the tree increases as the plants grows organic manure 5000 older and reaches up to 15 MT/ha. pesticides 3000 growth hormones for root setting 500  5th year: 10 kg per plant interculture operations 25000  7th year: 12-15 kg per plant irrigation 3000 planting material 19000  10th year: 20-25 kg per plant drip irrigation system 55000 Total 122625 The above trend can be seen in those orchards that are well maintained. However, average yield of mango in the cluster is only about 5-6 MT per hectare. Some farmers who supply to the exporters have Global GAP certified farms. Only 10% of the total production is of export quality and the remaining is as follows:

Grade Average fruit weight (grams) % of total production A 250‐300 20* B 200‐250 30 C <200 50 * about 50% of grade A is of export quality

2 It does not include cost of land. 117 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Besides the initial investment, farmers incur a cost of around Rs 0.15 million to Rs 0.06 million annually on maintenance of mango orchard. It includes cost of pruning of dead and diseased branches, costs involved in plant protection and fertilizer application, irrigation etc. The operational cost per Ha is represented below:

Activity With use of growth hormone Without growth hormone Operational cost per hectare Cost in Rs. Cost in Rs. fertiliser 76000 25000 kaltar (Growth hormone) 38000 0 pesticides 15000 15000 micro‐nutrients 3900 3900 irrigation 3000 3000 labour 15000 15000 Total 150900 61900 As evident from above, cost of fertiliser application constitutes a major chunk of operational cost. As mentioned earlier, orchards are leased by the farmers to the contractors at the time of fruit setting. The price received by the farmer largely depends on the stage of the orchard at which the contract takes place. Pre-harvest contract at the advance stage fetches better price to the farmers as the yield estimates are more realistic at this stage leading to lower output risk. Around 20-50% of the estimated contract value is paid in advance to the farmer.

Pre‐harvest contractor: As mentioned earlier, Pre-harvest contractors visit the farmer’s orchards in February when the fruits are of very small size and they offer a purchase price to the farmer on the basis of their own estimate of quantity and quality of the expected fruit. Due to this, the weather risk remains with farmer only. The time of harvesting is decided by the contr actor on the basis of maturity of fruit as well as price prevailing in the market. Harvesting s eason starts from May and lasts till mid June. Harvesting is done by labourers employed b y the contractor. This is done with the help of secateurs in the morning or evening hours from 6:00 a.m. to 8:00 a.m. and after 5:00 p.m. respectively. Stalk of 1-1.5 inches is left attached to the fruit while harvesting. Entire produce is harvested in 3-4 harvestings on weekly interval. 1 person can harvest up to 100 kg of fruits in 4 hours. Fruits are collected in plastic crates, which are either single layer crates or 20 kg crates. In case of export, harvesting is done in the supervision of representative from contractor and plucking is done by trained persons. The fruit is plucked manually. Sorting and grading of fruits is done both in case of export as well as Harvesting at Orchard (Includes plucking, domestic markets. Fruits are packed only after sorting & grading) sorting and grading at the field level. A small packing shed is available on most of the far ms where Packaging (in wooden and cardboard boxes fruits are collected on tarpaulin for grading and as per buyers’ specifications) packaging. Fruits are packed in CFB or wooden boxes depending upon buyer’s specification. The Transport to destination markets (mostly transit time for Delhi and Mumbai are estimated at via. road transport) 35-40 and 15-16 hrs respectively up to retail market distribution. The entire post harvest practice, carried Auction at destination market and out by the contractor, is shown in the diagram. procurement by wholesaler

118 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Commission agent: The commission agent facilitates trade between the contractor and the wholesaler and for which they charge 6-8% commission from the contractor.

Wholesaler: The wholesaler is responsible for distribution of produce to various retailers. Sec ond level of sorting/grading has also been observed at the secondary/terminal markets. Accordingly, the produce is sold to retailers based on specific grades.

16.1.2 Price build up along the value chain of mango Value chain of 1 kg of mango indicating the various activities and cost build-up at every step has been mapped, as shown below. Consumer Price

Retailer’s margin

Losses Rs 40

Wholesaler’s margin Rs 6

Wholesaler’s expense Rs 4

Rs 3.5 Contractor’s margin

Rs 3.5 Commission

Wastage Rs 0.9 Rs 30 (Wholesaler’s Price) Harvesting, grading and packaging Rs 1.4

Farm gate price Rs 1.6 Rs 23 (Contractor’s Price)

Rs 1.8

Rs 17

Some of the assumptions of the price build up are:  It is assumed that mango is traded at Azadpur (Delhi) APMC and sold in retail markets of Delhi.  The most commonly observed trade channel has been taken for price build up i.e. Farmer-Contractor-CA-Wholesaler-Retailer.  The cost of retailing has not been taken into consideration. The average cost of mango cultivation comes to around Rs 6/kg. Generally, farmers incur a cost of Rs 60,000 per Ha on maintenance of orchard and the production is around 10 MT/Ha. The farmer realizes Rs 17/kg and his net margin is around Rs 11/kg. The contractor bears the cost of harvesting, grading and packaging of mangoes, which comes to around Rs 1.8/kg. They also pay commission to the commission agent of 6%. Thus the total cost incurred by the contractor is around Rs 5. This includes wastage of around 6-8%. The contractors earn a margin of around Rs 1/kg.

119 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT The wholesaler bears the cost of transporting produce as well as loading and unloading charges. He pays a marketing cess of 1.05%. The total expenses at wholesale level is around 3.5/kg and the margin realized by him is Rs 3.5/kg. Around 10% produce is wasted at retail level and the retailers margin is around Rs 6/kg. The consumer price reaches to Rs 40/kg Some of the salient features of the value chain are:  There are 3 intermediaries between the farmer and the consumer.  The marketing of mango in major producing talukas of Aurangabad mostly happens through direct procurement at the farm gate. The local representative of the buyer in destination market acts on his behalf for price fixation and harvesting schedule. Pre Harvest Contractors take care of orchard till maturity and then dispatch the produce to destination market based on demand.  Grading is mainly based on the size and maturity of the fruits. While grading, smaller fruits are separated from the larger ones in order to achieve uniformity in specific grades. Immature, overripe, damaged and diseased fruits are graded separately and are sold to processing units. Transportation is mostly done by normal trucks in domestic markets.  In case of domestic markets, wooden or cardboard boxes are used for packaging and transportation of mango fruits. Size of the box varies to accommodate 5 to 10 kg. of fruit depending on the size.  Fruits harvested at right stage of maturity are stored for about 8 -12 days. In case of export, storage life is further extended up to a maximum of three weeks under cold storage at 12 ํ˚-14˚C. Normally, fruits are not stored beyond 3 weeks as it affects the taste and texture if stored for a p eriod more than 3 weeks.  Post Harvest loss in Mango is estimated to be around 20%. The relatively low post harvest loss is also due to h ardy nature of produce and h igh pro cessability. Grade C & D are generally bought by the processors which would otherwise cannot be sold in fresh retail market.  The price realized by the farmer is around 27 paisa of a consumer rupee.  Wholesaler’s and retailer’s constitute around 9 paisa and 15 paisa of a consumer rupee. The price build up can be summarized, as below:

Particulars Farmer Contractor Wholesaler Retailer Cost of maintenance/ Purchase price (Rs/Kg) 6 17 23 30 Cost of marketing, transport, wastage (Rs/Kg) 0 5 3.5 4 Selling price(Rs/Kg) 17 23 30 40 Price spread 11 1 3.5 6

120 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 16.2 INFRASTRUCTURE ANALYSIS

16.2.1 Marketing Infrastructure A pack house by Jai Kisan Cooperative Society was set up in Harsul near Aurangabad, which is closed now. A mango export facility centre has been built by the Maharashtra State Agriculture Marketing Board in Jalna, which is about 60 km from Aurangabad. The pack house was set up in 2005. Various facilities available at the pack house are as follows;  De-sapping tables: 5 nos.  Fork lifts: 2 nos.  Plastic crates: about 370 nos.  Wooden pallets: 120 nos.  Packing tables: 5 nos.  Pre-cooling: 5 MT  Cold storage: 2 nos. of 25 MT each  Ripening chamber: 5 MT Charges for various facilities are as mentioned below;

Activity Charges in Rs During off season, the storage facilities are given Grading & packing Rs. 1 per kg on rent for storage of dry fruits. Charges levied Pre‐cooling Rs. 0.6 per kg are Rs. 12000 per month for each store of 25 MT Storage for 24 hrs. Rs. 0.5 per kg capacities. Ripening chamber is also used as a cold store during off season and charges are Rs. Storage of packing material Rs. 1 per sq. ft. 5500 per month for 5 MT Culling / Sorting capacity.

The facility is being used by mango exporters such as K.B. Exports, Hot water wash MAHYCO, Jai universal etc. Quantity of mango handled by the pack house is mentioned below: Brushing / cleaning

Year Quantity Quantity Exported The table shows that the Processed (MT) (MT) Waxing 2007 61 32 quantity exported is 2008 63 46 lesser than total quantity Drying 2009 13 10 processed in the pack house. This shows the ratio of exportable produce to the total produce Grading procured of grade ‘A’. Remaining produce is sold in the domestic market. The process flow in the pack house is shown in the diagram: Packing Some of the exporters have established their own facilities in the neighbouring districts. For example, K.B. Exports, who was earlier Pre‐cooling using the MSAMB pack house has set up its own facility in Nevasa,

Ahmednagar. This has resulted in decrease of capacity utilization of the Ripening MSAMB pack house.

121 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 16.3 GAPS IN THE VALUE CHAIN An assessment of the range of activities under the value chain was undertaken to understand the gaps and inefficiencies in the kesar mango value chain. A detailed structured survey was undertaken to map the existing supply chain and identification of gaps at each stage, with added focus on institutional, infrastructural and logistical barriers. After the detailed field survey, the gaps identified were discussed with a range of key stakeholders to get their feedback on the analysis and understanding of issues. Some of the gaps identified in the value chain are:  Most of the mangoes produced in the region are plucked, graded and packed manually at farm level. The quantity handled at the pack house is very less w.r.t to the total production of mangoes in the district.  Chemical use for ripening in Mango is very limited as fruits automatically get ripened if stored in ambient condition. However, to accelerate the ripening process, fruits are dipped in “Ethral” solution, which helps in fruit ripening in 36-48 hrs.  Mango farmers are highly dependent on contractors for marketing their produce as well as for credit/ advance payments, which reduces their bargaining power.  Farmers’ lack of market information about prices and demand of mango results in lower value realization for them

16.4 POTENTIAL FOR INTERVENTION The following interventions are propos ed:  Setting up of a pack house for mangoes at Paithan spoke in Aurangabad district. The pack house may have facilities for: o De-sapping o Washing: may include hot water treatment and fungicidal application. o Sorting/grading o Packing in corrugated boxes o Pre-cooling o Cold storage  Modern cold stores may be set up to store unripe mangoes. Mature green mangoes may be stored at 13 degree Celsius and RH of 90-95%, which increases its shelf life b y 1-2 weeks.  Ripening chambers may be set up at hub for uniform ripening of mangoes.  Mango should be transported in reefer vans to avoid physical and quality loss du ring transit

122 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

17 FOCUS C:OROP RANGE

Maharashtra produced 796,100 MT of orange in 2007-08 and the total area under cultivation is 125,700 Ha making it the largest orange producing state of India. Maharashtra produces about 55% of India’s total orange production. The state production of orange grew from 723,700 MT to 796,100 MT in 2006-07 and 2007-08 respectively. The average productivity of orange in the state is 6.34 MT/Ha, which is close to the national average of 6.7 MT/Ha. In Maharashtra, the major orange producing districts are Amravati, Nagpur, Yavatmal and Akola, of which Amravati and Nagpur account for about 0.94 lakh hectares with production about 5 lakh metric tonnes. The area and production of major orange growing districts in the study region are as follows: AREA AND PRODUCTION (2007‐2008) Production # District Area (ha) (million MT) 1 Amaravati 51648 408584 2 Akola 4000 37768 TOTAL 55648 446352 Source: Directorate of Horticulture, Government of Maharashtra (FY 2007‐08) The major orange producing blocks in Amravati district are Warud, Morshi, Achalpur, Anjangaon and Chandur Bazaar. The major block in Akola is Akot in terms of orange production. The variety is known as Nagpur orange and it is of a loose skin variety. The variety can be processed into concentrate, jam, juice, etc. although technology (which is available) is needed for the extraction of the seeds. The production of orange is spread over two seasons namely Ambia bahar and Mrug bahar. Ambia Bahar accounts for 30-40 % of the production. Arrivals for this seaons start in the month of October and end in the month of January. Mrug Bahar accounts for the balance 60- 70 % of the production and it starts in the month of February and ends in the Month of April. The quality of fruit in Mrug Bahar is reportedly superior and is suitable for long distance transportation. Fruits are harvested when they attain full size and develop suitable colour (75% fruit surface colour changes from dark greenish into yellowish). Picking of fruits is generally done manually either in the morning or in the evening hours without damaging the fruits. Generally harvesting is carried out in either two plucking phases or single plucking phase.

17.1 VALUE CHAIN ANALYSIS The supply chain of orange in the study region with the three different marketing channels is depicted below:

123 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT The various players involved Farmer in the value chain are farmers, Channel 3 Channel 1 Channel 2 pre-harvest Pre harvest Contractor contractors/aggregators, commission agents, traders Commission agent and retailers. There is very less export directly from this Trader region to other countries. Some small volume is Commission Agent in Distant market Retailer in Local Market exported to Bangladesh and

Nepal through Kolkata and Trader Patna markets. CONSUMER Based on the point of sale, the Retailer in Distant Market above supply chains can be classified into three types:  At farm gate (Channel 1) – Accounts for 60% of the produce  At APMC Mandis within production c l usters (Channel 2) - Accounts for 35%  At Distant consumpti on market (Channel 3) – Accounts for 5% of the trade

17.1.1 nValue Chai Actors and Functions

Value Chain Actor Physical Functions Financial Functions Farmer 1. Cultivation 1. Pre‐harvest contracts with PHCs Pre‐harvest 1. Harvesting 1. Price communication to the farmer Contractor 2. Loading and Transportation of 2. Price risk between harvesting to sale in the produce to the market the Mandi or distant consumption market 3. Payment to the farmer 3. Transit losses Commission Agent 1. Payment to the farmer 1. Price discovery by auction 2. Weighing 2. Credit to the buyer 3. Cash Advances to the farmers during production 4. Payment of cess to APMC Trader 1. Sorting and grading of the 1. Price risk in the distant market as there is produce a 3 day gap between buying and reselling 2. Packaging 2. Sorting grading and moisture loss 3. Loading and transportation to 3. Transit losses consumption markets 4. Credit risk in the distant consumption market Oranges in the region are propagated by budding. The method of shield budding is the most popular method for propagation. The square system is used for plantation of oranges. The distance between plants is generally kept 20 ft. An intensive care is taken of the planted nursery up to 5 years. The trees start getting economic yield from 6th year onwards and the economic life of the trees is 12-15 years depending on the maintenance. Intercropping with pulses, soya bean, ground nut and chillies is carried out generally up to the first 5 years. The production of orange from a Ha of orchard is about 25-26 MT. The cost of establishment of orange orchard is about Rs.

124 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 52,0003 per Ha. The breakup of the cost is given below.

Activity Cost per Ha (in Rs) Cost of sapling (277 sapling) 2770 Labour cost (levelling, digging, weeding, sapling plantation, manure spread, filling etc) 6970 Cost of irrigation (drip irrigation) 35000 Compost and fertlilizers 4825 Pesticide application 1000 Others 1500 Total in Rs 52065 The breakup of annual variable cost of cultivation of orange per Ha is given below. S# Field Operations Cost per Ha (Rs.) 1 Irrigation 14000 2 Fertilizer + Labour 26400 3 Pesticide + Labour 4375 4 Labour (Trimming, deweeding, etc) 22000 5 Intercultivation 3750 6 Miscellaneous 3750 Total 74275 There is no farm level grading or packing of orange irrespective of the marketing channel used to market the product unless the farmers plan to sell their product in distant consumption markets like Delhi, Mumbai etc by themselves. The fruits are generally loaded into an open truck or tempo and sent to mandi for sale. In the cases of Channel 1 and Channel 2, oranges brought from orchards by various means of transport are properly heaped without causing any damages on the auction platforms covered with paddy straw in the market yards and auctioned for price discovery. Oranges are traded either in numbers or by weight. Each market has its own unit of trade. For example, in Kalamna APMC Market yard in Nagpur District, oranges are traded by weight while in Warud APMC Market yard in Amaravati district they are traded in numbers. The unit of trade in distant consumption markets is generally by boxes or crates. Price fixation between the farmer and the Pre harvest Contractor (PHC) is done by negotiation. The PHCs offer a price based on their information on price in the market and on their understanding of the expected supply. Generally, the unit of trade between the farmer and PHC is in numbers. The PHC visits the orchards and randomly selects some trees and the number of fruits are counted and then extrapolated for the entire

3 3 Cost of land has not been taken into account for calculation of total cost of establishment of orange orchard 125 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT garden. Though there is high approximation in this method, most of the farmers prefer to sell through this channel as there are no marketing costs; harvesting is the responsibility of the PHC and the price risk is with the PHC. Price discovery in the APMC market yards is by Open Call Auction method. In all the markets grading is done manually. The grading is done based upon the size of the fruit. While grading is done based on size, sorting is carried out based on other physical properties like colour, shape (oblong, high collared, deformed), maturity, puffiness, blemishes, physical damage (bruised and diseased). Once the diseased and bruised fruits are discarded, fruits are graded into 7 grades based on size. Traditionally, the seven grades have been identified on the basis of number of fruits of a particular size that will fill exactly a standard wooden box (details given below). After grading the fruits are packed in either wooden boxes or in plastics crates. The standard size of a wooden box is 18” x 12” x 12”. This standard wooden box can carry 22-24 kgs of frui t. The wooden box is fabricated on the spo t by specially app ointed box makers. The fruits are stacked in layers in the wo oden box. Depending on the size of the fruit, the number of layers vary from 4-6. To avoid friction between the layers of fruits and to avoid moisture loss during transit each layer is separated from the other with paddy straw and waste papers. Once the fruits are filled, the top of the box is closed with the same wooden sheets using iron nails. The box is then fastened using coconut fibre ropes. They are then marked using water soluble permanent colour with the name of the trader so that it can be identified in the destination market. Nearly 40% of the trade at present is happening through wooden boxes.

As per trade, the use of plastic crates has increased in the last 4-5 years. Mostly, plastic crates of 542 mm x 360 mm x 300 mm (outer diameter) are in use. This standard crate can carry 22- 25 kg of fruit. Though the return logistics cost adds to the cost of the product, the ease of usage, easy availability and acceptance by trade in the destination markets has increased the usage of plastic crates. Unlike wooden boxes, in case of the plastic crates, the fruit is not arranged in layers. The fruits are loosely packed in the crate and the sides and top are covered with waste paper. Then the paper is tied to the crate using nylon thread. The traders have their brand name/ trade name stencilled on the sides of the crates for identification. Apart from packing the fruits in wooden boxes and crates, oranges are transported in loose without any packing to some markets like Hyderabad and Bangalore which are 400 Km to 500 Km from Nagpur market. When fruits are packed in truck directly, they are sorted only for culling the bruised and damaged fruits. There is no size based grading. The fruits are packed in layers in the truck with paddy straw, casuarina poles and bamboo mats on the sides and in between the layers to avoid friction and pressure damage. The fruits are graded as per

126 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

size in the distant consumption market. The cost of packing for each truck is around Rs. 7500 per truck.

17.1.2 Grades in Orange

Grade name Actual number # Grade as per trade of fruits Layers of fruits Size in mm 1 Extra Large 96 Dana 96 4 layers of 24 each 75‐80 4 layers of 30 each and one 2 Large ‐ 1 141 Dana 148 layer of 28 70‐75 4 layers of 35 each and one 3 Large ‐2 171 Dana 173 layer of 33 65‐70 4 Medium ‐ 1 191 Dana 195 4 layers of 39 each 60‐65 5 Medium ‐2 205 Dana 210 4 layers of 45 each 55‐60 6 Small 245 Dana 288 6 layers of 48 each 50‐55 7 Waste All other The traders in production clusters do not generally store the product. They operate in such a way that the product reaches the destination market within 3 days of harvesting. Transportation is carried out in ambient temperature in open trucks. Orange is generally not stored for off-season sales in production clusters. If any trader wishes to store the product for off season sale, the same is done in the distant consumption market. A value chain, indicating the various activities in the value chain, actors performing the given activity and cost build-up at every step has been mapped in this section. This value chain (for 1 Kg of orange) has been mapped for the supply chain having following characteristics:

 The marketing chain follows Channel 2, i.e, Farmer to PHC to Commission Agent to Trader to Commission agent in distant market to Trader/ retailer to Consumer.  The cost of production for the farmer is only the variable cost for maintenance of one acre orchard per year. It does not include the cost for the first five years of orange orchard where there are no returns.  The distant consumption market considered for this case is Azadpur APMC Mandi, in New Delhi  The packing material is wooden box of standard dimension 18” x 12” x 12”  Net weight of oranges in each box is 24 kg  Cost of capital and opportunity cost for the all the intermediaries has not been considered in cost build up and for calculating the spread  The cost of retailing, which includes the cost of shop, wages, rent etc has not been considered

127 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT  The prices considered are average prices for the month of October in Nagpur and Delhi Market based on the data corroborated from traders. The same has been cross checked with the data from National Horticulture Board 2007-08 statistics  Wastages have been accounted at the level of packaging only. The next level of wastage is at the level of retailer, where data is not available

Retailer’s MarginMargin Market cess, loading, transportation Rs 3.00 Wholesaler’s Margin Rs 0.50 Commission charges@ 8%

Loading, unloading, Rs 1.89 transportation to Delhi Rs. 24.04 Rs 1.67 (Retailer’s Price) Wastage

Market cess, Sorting, Rs 2.50 grading, packaging Rs. 21.00 Rs 0.60 (Wholesaler’s Price) PHC’s Margin

Rs 2.25 Commission charges@ 6%

Harvesting, loading, Rs 1.12 trans portation, unloading

Rs 0.72.72 Farmer’s Price Rs 0.65

Rs 9.60

In the above value chain, after the sale of produce by the farmer, the harvesting, loading, transportation to local market and unloading charges and commission are borne by the PHC. The wholesaler bears the cost of sorting, grading and packaging along with the commission in the distant market. The retailer pays for the final transportation, loading and market cess. The above diagram can be summarized as below:

Rs/MT Trader/ Particular Farmer PHC wholesaler Retailer Cost of Production/ Buying 2857 9500 12000 20925 Sale Price 9500 12000 20925 24463 Cost of Marketing incl. Commission Agent charges, wastages, etc. 0 1380 7032 503 Spread 6643 1120 1893 3035  The price buildup from Farmer to Consumer is almost two and half times.  There are 5 intermediaries in this case  While the intermediaries are making decent profits, the cost benefit ratio for orange farmer at 1:2.3 is also good.  The APMC mandi cess accounts for close to Rs. 335 per MT, which is close to 1.5 % of the final price paid by the consumer  The share of consumers rupee by various actors in the value chain emerges as below (in % of

128 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT consumer’s rupee) :

17.2 POST HARVEST INFRASTRUCTURE AND INSTITUTIONAL ARRANGEMENTS

There are very few farm level sorting, grading, washing and waxing facilities in the region. In the entire study area, there are two orange related facilities. They have facilities for sorting- washing-waxing-grading lines, primarily set up for handling of fresh oranges for domestic and export markets. The summary of these two facilities is provided in the table below:

Particulars Warud Morshi District Amaravati Amaravati Ownership Owned by APMC, Warud Owned by APMC, Morshi sorting‐washing‐ One line of 2 MT per hour One line of 5 MT per hour waxing‐grading line Pre‐cooling 5 MT per batch yes, capacity not known Cold storage 30 MT yes, capacity not known Pack house Present Present Loading‐ unloading bay Present Present Backup power Not available Not Available Weigh bridge Not available Not Available Worker Quarters Not available Available, but in dilapidated state The facility was lying idle for many years. The facility was created by a However, the facility was used by one trader, private entrepreneur in 2006 SKC and Co, of Warud at a nominal price in and sold to APMC, Warud at Rs. 2008‐09. Interaction with the trader revealed 22 lakhs. Last year, the facility that the manual grading is both cost Usage was given out lease to Reliance effective, and more efficient. The mechanical Retail and a charge of Rs. 65 per grading line separates fruits on the basis of quintal was collected from size only, while the manual grading takes into Reliance. Approximately 200 MT account other physical parameters of the of produce was handled fruit as well. Cold Storage installations in the above facilities utilises both ammonia based and Freon DX refrigeration systems. Pre coolers were all forced air type and evidenced minimal or no use. The existing cold chain implementation is mostly unutilised.

Case: Warud Pack House In case of the Warud facility, whilst the technology worked perfectly well there were a number of barriers to its use in the market:  Insufficient export business was identified as a key impediment in full utilisation of the facility;  The customers who would buy from this facility were not correctly identified. The main target customers were domestic traders/wholesalers. An exporter would want graded, package d and pre‐ cooled produce but this wasn’t required by domestic traders and local markets;  Local traders do not need pre‐cooled orange as they were not using refrigerated transport;  Local APMC markets did not want to handle already graded oranges as traders preferred to grade themselves. Consequently the facility was sold to the APMC market authority and has been used in previous years by a supermarket chain for washing, waxing and grading. The pre‐cooler and cold store was not used.

In terms of institutional mechanism for orange in the region, the growers’ cooperatives in the region are in the nascent stage. MahaOrange is a marketing co-operative society registered under the Maharashtra State Co-operative Societies Rules 1961. It is a federal body of orange cultivators in the state of Maharashtra. It was formed in March 2008, with headquarters at Nagpur. At present 11 block level co-operative societies are members of MahaOrange. Till now, very limited volume of orange has been marketed by MahaOrange and the member cooperative societies are also very small having 15-20 members in each society.

129 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

Case: Direct Marketing to Organized Retail Chain by Farmers’ Group

In one location in Amravati district, visited during the field study, farmers had organised themselves into a group to supply to a large supermarket chain. This relationship had lasted only for a season mostly due to the following reasons:

 The supermarkets wanted only the top quality orange making it difficult to sell only the low quality to the local APMC market;

 Whilst prices paid from the supermarkets were originally acceptable, they later reduced the prices making it unattractive to the farmers.

17.3 GAPS IN THE VALUE CHAIN Based on stakeholders consultation, assessment of the orange value chain and existing post harvest infrastructure present in the region, the following gaps were identified in the value chain:  Very few farm level sorting, grading, washing, fun gicidal treatment and waxing facilities in the region. The ex isting facilities have a total capacity of about 20,000 MT which accounts for less than 5% of the total production in the region. Existing cold chain infrastructure in these facilities is mostly unutilized. There are no de-greening facilities in the region.  Even the existing facilities are not operating at full capacity as the requirement for domestic markets do not require such sorted, graded and packaged produce. The export market has not been catered as yet, where higher prices may be obtained for these services.  At APMC markets and other trading points in the region, packaging of orange is done in wooden boxes for a substantial volume. This practice is costlier in the long term and also has an adverse affect on the environment.  Packaging in wooden boxes and loose in trucks leads to wastage and loss of quality. As per trade, the loss is in the range of 5-10%, which also includes loss in moisture during transit. This loss is borne by the buyer in the distant consumption market, which is factored into his buying price. While, similar level of loss is not reported in produce packed in plastic crates  Orange processing has also not picked up in the region.

17.4 POTENTIAL FOR INTERVENTION Based on the gaps identified in the value chain process and understanding the needs of the various stakeholders, interventions have been identified. As mentioned earlier, the existing pack houses with pre-cooling and cold store facilities have not been successfully functional mainly due to reasons such as inadequate marketing/export linkages, cheap manual labour, lack of refrigerated vehicles, etc. Hence, considering the present scenario in the region, interventions are proposed keeping in mind the practicality of such interventions. As the first step, 4 pack houses for orange in Amravati district are proposed. The proposed locations are Warud, Morshi, Achalpur and Anjangaon. In case of Warud and Morshi, the existing facilities

130 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT may be refurbished and leased out to private players for the operations. The pack houses will have following facilities for tomatoes:  Sorting  Grading  Packaging in plastic crates The pa c k houses at Achalpur and Anjangaon will handle banana as well. The details of the facilities have been captured in the subsequent chapter.

131 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

18 FOCUS CROP: LEMON

Maharashtra produced about 153000 MT of lemon in 2007-08 and the total area under cultivation is 37300 Ha. The state ranks fifth in terms of production of lemon among Indian states producing about 6.3% of India’s total production of lemon. The state production of lemon grew from 139000 MT to 153000 MT in 2006-07 and 2007-08 respectively. The average productivity of lemon in the state is 4.1 MT/Ha which is much lower than the national average of 8.5 MT/Ha. The crop wise area and production in the major districts in the region is given below:

Crops Lemon The main lemon cluster identified for the project Districts Area (Ha) Production (MT) covers the blocks of Nandura and Khamgaon in Aurangabad 304 4864 Buldhana district and Balapur block in Akola Buldhana 908 8172 Amravati 500 4500 district. These are contiguous blocks and together Akola 521 4689 account for about 70-75% of the total production Total 2233 22225 of lemon in these two districts. Source: Directorate of Horticulture, Government of Maharashtra (FY 2007‐08 Lemon is harvested throughout the year but peak seasons are during the month of March-May (30% of total production), August- October (30% of total production) and December- January (20% of total production). The marketable surplus of lemon in the region is about 96%.

18.1 VALUE CHAIN ANALYSIS Operations relating to the movement of lemon shown in the pictures. The diagram below explains the major channels of trade of lemon in the Amravati-Aurangabad region: Based on the points of sale, the Farmer

Commission agent/Trader Channel 1 Channel 2 Channel 3

Commission Agent in Distant Market

Wholesaler (Trader) Retailer in Local Market above supply chain can be classified into two types:

Retailer in Distant Consumer 1. At APMC Mandis– Channels 1 Market (65-70% of the trade) and 2 (20-

132 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 25% of the trade) – Ac c ounts for 90-95% of the produce 2. At local consumption market – Channel 3 – Accounts for 5-10 % of the trade

The major players involved in the trade of lemon are farmer, commission agent (local), commission agent (distant market), wholesaler/trader and retailer. The major consumption centres for the lemon for this region are Delhi, Mumbai and Raipur, which accounts for about 90% of the total export from this region. The roles played by each player in the value chains are given below:

Farmer The average orchard size of lemon in the study region is about 0.8 Ha. A Ha of orchard accommodates about 250 plants (20 ft X 20 ft) which are maintained at a height of about 10- 12 feet. The plants start bearing fruit from the 3rd year. The cost of establishment of lemon orchard is about Rs. 51,0004. The breakup of the cost is given below.

Cost per Activity Ha (in Rs) Cost of sapling (250 sapling) 12500 Labour cost (levelling, digging, weeding,saplin g plantation, manure spread , filling etc) 5000 Cost of irrigation (drip irrigation) 25600 Compost and fertlilizers 4800 Pesticide application 1000 Others 2000 Total in Rs 50900 The breakup of annual variable cost of cultivation of lemon is given below.

Per Ha yearly variable cost for Lemon in Buldhana S# Field Operations Cost (Rs.) 1 Irrigation 1000 2 Fertilizer + Labour 5000 3 Pesticide + Labour 3000 4 Labour (Trimming, deweeding, etc) 18000 5 Harvesting Labour 25000 6 Miscellaneous 5000 Total 57000 Each plant produces about 100 kgs of lemon annually and per Ha average productivity of lemon in the region is about 25 MT per annum in suitable conditions. After harvesting of the matured fruit, farmers do the packaging in small gunny bag having a capacity of about 15 kgs. There is no sorting or grading done at the farm level. The bags are loaded in mini trucks/ auto-rickshaws/ pick-up trucks and brought to the commission agent in the nearest APMC market. The cost of harvesting, local transport and commission to Commission Agent (CA) (which is 5%) is paid by the farmer. The gunny bags used by farmers to bring the produce in the market are taken b ack by him after sale of the produce and hence the packaging cost for the farmer is negligibl e. The harvesting is done in the evening of the previous day of sale in the market. The farm er stores the bags for the night at his home.

4 4 Cost of land has not been taken into account for calculation of total cost of establishment of lemon orchard 133 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT Commission Agent (CA) There are about 8-9 CA cum traders operating in the region. In channel 1, CA acts as buyer on behalf of the wholesaler (distant market). Orders are placed with him from the wholesaler for specified quantity and quality of the produce. For facilitating trade between the farmer and the wholesaler, the CA charges a commission of 5% of the value of the produce from the farmers and collects APMC market cess of 1.05% from the wholesaler. In channel 2, CA acts as buyer himself and sell through the commission agent in distant market to the traders/ wholesaler present there. In this case he bears the marketing and other expenses such as grading, packing, loading, transport, unloading and 7% commission to the CA present in the distant market (Delhi). In channel 2 he also bears the price risk. The price discovery in the APMC markets is through open auction, where CA/traders quote their prices on per bag basis. Before quoting the price the CA/traders randomly open 2-3 bags from the lot to check the quality of the produce based on which quotes are made. The CA/traders quote their prices on the basis of information of price in the distant markets. Auctions are generally over by 11:00 AM. After procurement from farmers CA/trader pays money to farmer on the spot. He receives the amount from the distant traders after 2-3 days of sale depending upon the mutually agreed terms and conditions between CA and trader/wholesaler. After the trade, all the bags are emp tied in a heap under a shed in front of the shop area of the CA/trader. The bags are then returned to the farmers. The lemon is then sorted and graded based on colour and size. After the g rading, the lemon is packed in gunny bags again having a capacity of 15 kgs and then weighed. The inside of the bags are lined with newspaper to hinder moisture loss and also to reduce ph ysical damage during transport. Then the produce is loaded on trucks (10 MT) for transportation to the distant markets.

CA in Distant Market He facilitates the sale of produce by the local CA and the wholesaler/trader. For his service of org anising the auction and market information, he charges 7% commission from the seller.

Wh olesaler/ Traders They are the main buyers in the markets. Trader further sells the produce to the local retailers. In channel 1, he bears the cost of grading, packing, loading, transport, unloading and commission to CA.

Retailers He is the major buyer in the consumption market and the direct point of contact with customers. Retailer bears the cost of local transport from market to consumption point.

18.1.1 Price build up along the value chain of Lemon A value chain indicating the various activities and cost build-up at every step has been mapped for 1 kg of lemon. Some of the assumptions for the price build up are: . The most commonly observed trade channel has been selected for the price build up of lemon, i.e. Farmer-CA-Wholesaler-Retailer.

134 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT . Farmer’s margin has been calculated based on his annual cost of maintenance of orchard. The cost of establishment of orchard has not been taken into account. . The cost of interstate transportation has been calculated for New Delhi. . The cost of retailing, which includes the cost of shop, wages, rent etc, has not been considered.

Retailer’s Margin

Wastages @ 5%

Transportation Rs 5.20

Trader’s Margin Rs 1.23 Rs 0.20 Loading & unloading Rs 4.00 Wastages* @ 4% Rs. 24.60 (Retailer’s Price) Rs 0.16 Transportation to Delhi

Rs 0.72 Packaging Rs 2.00 Rs. 18.00 Sorting and grading (Trader’s Pr ic e) Rs 0.67 Market cess @ 1.05% Commission charges@ 5% Rs 0.33

Rs 0.10

Harvesting, loading, Rs 0.50 unloading Rs 0.50

Farmer ’s PricePrice Rs 0.33

Rs 0.80

Rs 10.00 In the above diagram, the farmer pays for the harvesting, local transport to APMC yard and commission to CA. The farmer receives a price of Rs 10-12/kg (in peak season) and he spends around Rs 2.3/kg in maintenance of the orchard. The net margin, which he gets after bearing the marketing and other expenses, is about Rs. 6.00/kg. The commission agent facilitates trade between farmer and wholesaler, for which it charges a commission of 5%. The trader/wholesaler pays for the packaging, sorting, grading, APMC cess, loading, transport and unloading. The trader/wholesaler also bears the wastages as moisture loss (2%) and physical damage during transportation (another 2%). He gets a margin of about Rs. 4.00/kg. From them, the retailer buys the products and bears the cost for labour and transport to their retail outlets. At this level the wastage is about 5%. The price build up can be summarized, as below:

Rs/MT Particular Farmer Trader/Wholesaler Retailer Cost of Production/ Purchase 2286 10000 18000 Cost of Marketing incl. Commission Agent charges, wastages, etc. 1633 3992 1432 Sale Price 10000 18000 24632 Spread 6081 4008 5200 Some of the salient features of the price build up are mentioned below:

. There are 3 intermediaries between the farmer and the consumer in the lemon supply chain (including the commission agent). . The price build up from farmer to consumer is around 2.5 times. . The farmer earns a margin of Rs. 6081 which is about 25% of the consumer rupee

135 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT . Trader/wholesaler incurs a cost of around Rs 4000 per MT in various activities such as labour, packaging, transportation, wastages etc. The wholesaler earns a margin of Rs 4008 per MT that is around 16 paisa of a consumer rupee. . The commission paid by the farmer to the commission agent constitutes 2 paisa of a consumer rupee. . The share of consumers rupee by various actors in the value chain emerges as shown in the diagram (in % of consumer’s rupee) :

18.2 INFRASTRUCTURE ASSESSMENT

18.2.1 Post Harvest/Marketing Infrastructure There is no post harvest infrastructure in the region for lemon. The initial packaging is done at the farm level by the farmers. Manual sorting, grading and packaging is done at the APMC markets under the sheds of the CA shops. Lemon is not stored in cold storages and the produce is sent to distant markets on the day of sale itself. There is no farmers’ cooperative or any other institution which is engaged in the marketing of lemon in the region. There are no lemon processing units in the region at present.

18.3 GAPS IN THE VALUE CHAIN On the basis of findings of field survey and stakeholders consultation, some of the gaps identified in the value chain are: . No farm level sorting, grading and packaging facilities in the region. Packaging is done in the open. Existing cold chain infrastructure in the region is not utilized for storage of lemon. There are also no de-greening facilities in the region. . Sorting and grading at the APMC markets are done manually. . Packaging of lemon is done in gunny bags and it is done twice (once at farm level and once at APMC markets). This practice is time consuming and the packaging is inappropriate resulting in higher losses. . Lemon processing has not picked up in the region. As mentioned, there is no processing facility in the region.

18.4 POTENTIAL FOR INTERVENTION Based on need-gap assessment and exploring the opportunities for future growth, potential areas for intervention for lemon in the region are: . Considering the distribution of production clusters in the region, Buldhana and Akola (total production of lemon in these two districts is about 13000 MT annually) are the two

136 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT districts where value addition of lemon can be done in a significant scale. Assuming 20% of the produce in these two districts is subject to value addition, there is a need to create infrastructure to handle 2,000-3,000 MT of lemon annually. . Significant volume of production happens during the rainy season and creation of farm level platforms and sheds may be a suitable intervention to protect the produce from rain during packaging. . Potential for setting up sorting and grading facilities at spoke level.

137 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT

19 FOCUS CROP: BANANA

While Jalgaon, Hingoli, Nanded, Beed, Parbhani and Pune are the major districts in banana production, Amaravati, Akola and Buldhana, the three districts of Aurangabad- Amaravati region also have some banana production. The area and production of banana in the catchment region of this region are presented in the table below:

# District Area (Ha) Production (MT) The main banana growing 1 Amaravati 394 23640 cluster in Amravati region 2 Akola 600 30000 consists of Anjangaon block 3 Buldhana 700 42000 which covers about 80% of the Source: Directorate of Horticulture, Govt of Maharashtra (FY ‘07‐08 total production of the district. Sangrampur block in Buldhana is again the largest banana growing cluster in the district having about 80% of the total production of the district. In Akola, Akot block is the main banana growing cluster.

19.1 VALUE CHAIN ANALYSIS The supply chain of banana in the study region is depicted below:

The various players involved in the value chain are Farmer farmers, pre-harvest contractors/aggregators, commission agents, Wholesalers and retailers. When the fruits are ready for harvest, the farmers Pre‐harvest contractor visit the banana supplying company/commission agent and requests for the price. The board price, Banana Supply which is the price linked to the price declared by Co/Commission agent Banana Marketing Federation, Raver, Jalgoan district is declared to the farmers. The farmer, then Wholesaler in Consumption market requests the commission agent to visit the farm and inspect the quality of the fruits. The commission Retailer agent in turn sends the pre-harvest contractor in the village/block of the farmer to visit the farm and Consumer report the quality of the fruit. This chain of activity starts with the farmer requesting the pre-harvest contractor in his village to visit his farm and who in turn contacts the commission agent for price and requirement for the day. The commission agent is in contact with the wholesalers in the consumption markets who place the orders depending on demand in their markets. The commission agent on getting a confirmed order from the wholesaler, in turn instructs the pre harvest contractor to visit the farm to match the supply (quality and quantity of produce) with demand and to arrange for harvesting. The commission charges of the commission agent vary from region to region and market to market. In case of Anjangaon in Amaravati district, the commission agent charges 6.25% as commission charges to the farmer and Rs. 16.25 per quintal as service charge to the buyer. The service charges are independent of the prevailing price in the market. Harvesting cost, transportation to the main road for loading into the vehicle, weighing charges, pre-

138 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT harvest contractor expenses a r e b orn e by the farmer. A typical cost build up for one Kg of banana in the region is indicated below:

Retailer’s Margin

Wastages

Transportat ion Rs 2.20 Rs 1.05 Wholesaler’s Margin Rs 0.25 Value addition‐ Rs 0.25 Ripening Rs 1.33 Labour charges Rs. 14.50‐ Rs 1.00 15.50 (Retailer’s Weight losses & other Price) losses Rs 0.17 Secondary Transport Rs 0.96 Rs. 11.75 Commission Charges (Wholesaler’s Price) from Buyer Rs 2.20 APMC Cess

Commission Charges Rs 0.16 from farmer Rs 0.02 PHC Service Charges Rs 0.28 Harvesting & Transport Rs 0.16 Farm er’s Price

Rs 0.25

Rs 5.5. 90

*The cost of cultivation is lower in this region as compared to Jalgaon region due to lower land lease rentals and non-inclusion of harvesting cost

19.1.1 nValue Chai Actors and Functions

Value Chain Actor Physical Functions Financial Functions Pre‐harvest . Part of the information network for the . Price communication to the farmer Contractor commission agent . Guarantor of payment to the farmer . Arranging labour for harvesting as he is the local person . Loading and Transportation . Responsible for delivery of quality of the product as required by the buyer . Weighment Commission . Supply of banana as per the quality and . Price Communication Agent quantity requirements of the buyer . Credit to the buyer . Payment to the farmer . Payment of cess to APMC collected from the buyer . Arranging labour and vehicles for transport Wholesaler . Transportation to the consumption . Price risk in the distant market as markets there is a 3-6 day gap between . Unloading buying and reselling . Ripening . Losses during ripening and other processes . Transit losses . Credit risk to the retailers There are some ripening units in the region (details given in the following section). In case of ripening units, the wholesalers in consumption markets like Nagpur, Buldhana, Warud contact the ripening unit and place order indicating the quality requirements and delivery date. On receipt of order from the wholesalers, the ripening unit contacts the farmers through the pre-harvest contractors to identify farm(s) of suitable quality. At present the ripening units are catering to markets within 300 to 400 Kms radius from Amaravati.

139 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT The board price is communicated to the farmer and if the farmer agrees to the price, the ripening unit arranges for harvesting, de- handing, washing in alum solution, treatment with 2% Bavistin solution and loading into crates. Water for washing the fruits is provided by the farmer at the farm and the utensils, which are large aluminium vessels, for washing are provided by the ripening unit. Once, the fruits are washed and treated each crate is loaded with 20 kg of de-handed banana. The crates are lined with plastic felt to avoid abrasions to the produce during transportation. The cost of harvesting is borne by the farmer. The commission Ethrel Spraying Pump to pre-harvest contractor is borne by the wholesaler. The cost of treatment is borne by the ripening unit and factored into the service cost. The cost of transportation is borne by the wholesaler and is fixed based on distance. The cost of transportation in a radius of 70 km is Rs. 10 per crate. The rent for crates is borne by the wholesaler and is factored in the ripening cost. However, if the wholesaler provides his own crates, then a discount of Rs. 7 is given in the ripening services cost. The service cost for ripening is Rs. 55 per crate of 20 kg. The breakup of the service charges for one 20 kg crate is as below:

Parameter (Rs.) Once the produce reaches the ripening unit, the crates 1 Local Transport 10 2 Farm operations – 10 containing fruits are arranged on the floor and ethrel Washing, de‐handing and solution is sprayed on the fruits using an insecticide fungicide treatment spraying hand pump. The fruits are then shifted to the 3 Loading, unloading and 3 delivery charges cold room, which is kept at 18 degrees Celsius. The 4 Telephone charges 1 crates are arranged one over the other till the roof, 5 Kitchen Charges 1 leaving a space for one crate and are then covered by 6 Power charges 2 7 Stationery charges 1 a plastic sheet. The fruits are left covered with the 8 Rent for crates 7 plastic sheet for one day and then shifted to another 9 Maintenance Charges 1 cold room at 18 degrees Celsius. The fruits are kept 10 Chemical costs 1 11 Lodging and other charges 1 for 3 to 4 days depending on the customers’ 12 Cost of plastic felt 5 requirement. The fruits turn golden yellow on the 4th 13 Profit for Ripening unit 10 day and are then loaded into trucks and transported to Total 55 the consumption markets.

Utensils used for washing fruits Fruits Arranged in Crates

140 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT These ripening units have positioned themselves as service providers and do not take any risks of quality of the product and the price risk. Further, there is a moisture loss of 0.5 kg per box (box of 20 kg) during the ripening and post ripening handling which is borne by the

Crates Ar ranged in the Crates covered with plastic Plastic Cover removed and Ripening Chamber cold room cover ‐ 1 day old the lot has been labelled wholesaler. The ripening units encourage the wholesaler to appoint his own person to oversee the buying, transportation and ripening activities. When such a person is appointed by the wholesaler they give a discount of Rs.2 per crate on the ripening service charges. The ripening units collect a security deposit from the wholesalers to avoid any risk on account of non-lifting of the ripened product. While it may appear that the pre-harvest contractors are no t adding any value, the trade feels that being local people they form an important link to establish credibility of th e f arm ers. As per trade, the wholesalers are able to sell the ban anas ripene d in ripening chamb ers at a premium of Rs.1 to 2 per Kg as compared to produce ripened by traditional methods. The trade also feels that the pro duct quality is better because of lesser handling and better ripening method. The fr uit remains on the ped icel longer by two days and he nce, the losses at retai ler level are lower in compar ison to traditional Ripened Bananas ‐ 4 day old met hods. Since the fruit has bette r colour and finishing, the product gets a premium over othe r bananas. The retailers are ab le to sell the product at a premium of Rs.1 to 2 per kg. How ever, the marketing of these ba nanas has not been welcomed by all. Retailers of bananas ripened through traditional methods have reportedly damaged the crates of such retailers and they are not being allowed to sell the produce in Nagpur. While, the ripening chambers are a vast improvement compared to the traditional methods, there is scope for improvement in ripening process and handling methods followed by the ripening chambers. For ripening, the ripening units are still using ethrel solution to induce ethylene production, which is not safe. Ethylene generators can be used by these units. Further, there is no palletisation. All the crates are handled individually, which increases the cost of labour. Palletisation can bring more efficiency in the handling. A typical cost build up in the region for one Kg of banana ripened using ripening chambers is indicated below: Comparing the ripening chamber method with traditional ripening methods, one ripening unit of 20 MT per day can achieve the following:  Ripening facility for produce of 120 Ha

141 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT  Alternative market linkages for over 150 farmers (assuming average land for banana production per farmer is around 1 Ha)  Handle 6000 MT of banana annually (assuming 300 working days)  Reduce the losses on account of moisture loss and transit losses from 25% to 12%  Increase the farmer realisation by 12% compared to traditional market linkages  Create additional employment for over 200 people  Increase the realisation of retailers, who typically use push cart for retailing and earn less than Rs.150 per day, by over 100% Retailer’s Margin

Wastages Rs 3.10 Tertiary Transport Rs 0.60 Wholesaler’sWholesaler’s Margin Rs 0.30 Transport to Consumption Market Rs 3.50 Rs. 16‐17 WeightWeight losses (Retailer’s Price) Rs 0.75 Profit of Ripening Unit Rs 0.32 Service charges by Ripening Unit Rs. 13.50 Rs 0.50 APMC Cess (Wholesaler’s Price) Rs 1.75 TrTransportansport to Ripening Unit

Rs 0.02 PHC Service Charges Rs 0.50 Harvesting

Farmer’s Price Rs 0.16

Rs 0.05

Rs 6.00

19.2 INFRASTRUCTURE ASSESSMENT

19.2.1 Post Harvest Infrastructure There is not much post harvest infrastructure present in the region for banana. There is no storing facilities and almost negligible cold chain infrastructure. Sorting and grading is minimal and mostly done manually. There are two private banana ripening units in the study region. They are Mittal Fruit Ripening Services and Utsav Kela Suppliers and Ripening services. Mittal Fruit Ripening Services has been the pioneer in the region. They had set up the banana ripening chambers in 2005 and have standardised the process. At present they have a ripening capacity of 40 MT per day. Seeing the success of Mittal Fruit ripening services, Utsav Kela Suppliers and Ripening Services has been set up in May 2009 with a ripening capacity of 20 MT per day. As per trade, there is one more ripening unit under construction in Anjangaon. There is no farmers’ cooperative or any other institution which is engaged in the marketing of banana in the region.

142 OPERATIONALISING THE AGRIBUSINESS INFRASTRUCTURE DEVELOPMENT INVESTMENT PROGRAM- PHASE II FINAL REPORT 19.3 GAPS IN THE VALUE CHAIN Based on the need gap analysis and stakeholder’s consultation, the following gaps are identified in the value chain: . As in Jalgoan area, in this region too, traditional methods of post harvest mechanism leads to damage of fingers. Similarly, there is a lack of farm level collection centres and pack houses . There is no contract farming system in the region. Pre-harvest contractor can be replaced, with contract farming arrangements. Capacity building of farmers and ripening units to enter into contract farming system may be taken up . The existing ripening chambers use dated technologies. They can be upgraded with ethylene generators, ethylene scrubbers, automated temperature control, palletisation facilities etc

19.4 POTENTIAL INTERVENTIONS The interventions proposed here are similarly to that proposed in the Jalgaon area. There is a good potential of integrated pack hoses with de-handing, washing and de-sapping, sorting, grading, fungicidal treatment and packaging facilities. Two pack houses for banana in are proposed in the region with the above facilities. The proposed locations are Anjangaon in Amravati district and Sangrampur in Buldhana district.

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