CAPSTONE PROJECT (PART (PART –I) REPORT
(Project Term August-December, 2012) (Comparative (Comparative Analysis of traditional vs modern vegetable supply chains in the states of Punjab,Himachal Pradesh and New Delhi!
Submitted by: (Akshi Prashar ) Registration Number: 1!"#$# (Pa%a& 'ahaan) Registration Number: 111111! (*aheem Ahma+) Registration Number: 1!#$" (,hisham -ohra) Registration Number: 1111"$# (Sourabh .on+) Registration Number: 1!11/ Proe0t .rou Number: 1
Under the uid!nce o" ('r2 'an+ee Singh 3a%er4 Assistant Pro5essor ) 6eartment o5 'anagement2 -o7e&% Pro5essiona& 8ni7ersit%4 Phag9ara August to 6e0ember4 #1#
6EC-ARATION
#e hereby dec$!re th!t the %roject &or' entit$ed (Tit$e o" the %roject) is !n !uthentic record o" our o&n &or' c!rried out !s re*uirements o" +!%stone Project (P!rt-) "or the !&!rd o" degree o" .A in /%er!tions( Progr!mme !me ) "rom oe$y Pro"ession!$ Uniersity, Ph!g&!r!, under the guid!nce o" (r3 !ndee% Singh 4!yer), during August to December, 2012)3 Project rou% umber: 1 !me o" Student Student 1: A'shi A'shi Pr!sh!r 5egistr!tion umber: 10607282 !me o" Student Student 2: P!y!$ !h!j!n 5egistr!tion umber: 11111196 !me o" Student Student 7: !heem Ahm!d 5egistr!tion umber: 10602879 !me o" Student Student ;: .hish!m ohr! ohr! 5egistr!tion umber: 11117082 !me o" Student Student 9: Sour!bh ond ond 5egistr!tion umber: 1060110<
(Sign!ture o" Student 1) (Sign!ture o" Student 2) (Sign!ture o" Student 7) (Sign!ture o" Student ;) (Sign!ture o" Student 9)
CERTI*ICATE
This is to certi"y th!t the dec$!r!tion st!tement m!de by this grou% o" students is correct to the best o" my 'no&$edge !nd be$ie"3 The +!%stone Project Pro%os!$ b!sed on the techno$ogy = too$ $e!rnt is "it "or the submission !nd %!rti!$ "u$"i$$ment o" the conditions "or the !&!rd o" .A in /%er!tions "rom oe$y Pro"ession!$ Uniersity, Ph!g&!r!3 !me : !ndee% Singh 4!yer U3D : 12796 Design!tion : Assist!nt Pro"essor
Sign!ture o" !cu$ty entor
IN6E 12 #2 "2 ;2 2 $2
Intro+u0tion Obe0ti7es Re7ie9 o5 &iterature Resear0h metho+o&og% Aen+i< ,ib&iograh%
AC=NO>-E6.E'ENT
A journey is easier when you travel together. This project report is the result of two months of work whereby, we accompanied and supported by many people. We would like to extend our gratitude to Mr. Mandeep ingh !ayer who kindly accepted to guide us in the project. We are thankful to him for spending his valuable hours to review and analy"e our project at every stage and suggested necessary changes. We feel our self extremely fortunate to have had the
opportunity of associating our self with him. !is constant encouragement and positive words were greatly instrumental in making this work a success. #or most, we would like to thank $od for !is grace and blessings. %ast but not the least & would like to thanks my parents and family members for their affection and inspiration all the time. A'shi Pr!sh!r P!y!$ !h!j!n !heem Ahm!d .hish!m ohr! Sour!bh ond
Intro+u0tion: *oreign +ire0t in7estment (*6I) is direct inestment into %roduction in ! country
by ! com%!ny in !nother country, either by buying ! com%!ny in the t!rget country or by e>%!nding o%er!tions o" !n e>isting business in th!t country3 oreign direct inestment is done "or m!ny re!sons inc$uding to t!'e !d!nt!ge o" che!%er &!ges, !nd=or "or s%eci!$ inestment %rii$eges such !s t!> e>em%tions o""ered by the country !s !n incentie to g!in t!ri""-"ree !ccess to the m!r'ets o" the country or
the region3 oreign direct inestment is in contr!st to %ort"o$io inestment &hich is ! %!ssie inestment in the securities o" !nother country such !s stoc's !nd bonds3 n&!rd !nd out&!rd direct inestment (D) stoc's !nd "$o&s tend to go together, !cross countries !nd oer time3 The countries th!t inest e>tensie$y !bro!d !re usu!$$y !$so $!rge reci%ients o" D3 There is $itt$e eidence th!t "$o&s o" D !re ! m!jor in"$uence on c!%it!$ "orm!tion3 /ne o" the !d!nt!ges o" "oreign direct inestment is th!t it he$%s in the economic dee$o%ment o" the %!rticu$!r country &here the inestment is being m!de3 .ut !s &e !$$ 'no& eery coin h!s t&o sides, s!me &!y D do %ossess %ros !nd cons to ! country3 t c!n be seen &hen 91? !%%ro!$ is %ro%osed by ndi!n goernment ! deb!te in %!r$i!ment is he$d &hich is conc$uded be$o&: *a7or: • • • • • • •
•
This &i$$ bring ! modern techno$ogy to ! country m%roe rur!$ in"r!structure 4e$% cre!te com%etitie m!r'et 5educe &!st!ge o" !gricu$tur!$ %roduce @n!b$e our "!rmers to get better %rice "or their jobs +onsumer &i$$ get $o& %rice commodity .iggest bene"ici!ry &i$$ be sm!$$ "!rmers, &ho &ou$d be !b$e to im%roe %roductiity !nd re!$ie higher remuner!tion by se$$ing direct$y to $!rge org!nied %$!yers !nd shorten the ch!in "rom "!rm to consumers oernment too st!nds to g!in by this moe through more tr!ns%!rent !nd !ccount!b$e monitoring o" goods !nd su%%$y ch!in m!n!gement systems3 t c!n e>%ect to receie !n !ddition!$ USB29-70 bi$$ion by &!y o" t!>es Against:
/ur interest r!tes tod!y !re !s high !s 1;? to 18? ho& do &e com%ete &ith the economies &hich h!e ! ;? interest r!te3 /ur in"r!structure our tr!de
"!ci$it!tions our $!bor $!&s, !$$ these "!ctors co$$ectie$y donCt m!'e ndi! $o& cost3 So do you &!nt ndi! to become ! center &here &e !$$o& "oreign com%!nies to come in !nd set u% these $!rge ch!ins &hich eentu!$$y inste!d o" se$$ing domestic %roducts outsourcing intern!tion!$$y the che!%est sources !nd se$$ing those %roducts3 P$e!se remember the domestic ret!i$ norm!$$y sources domestic!$$y, intern!tion!$ ret!i$ sources intern!tion!$$y bec!use the source "rom the che!%est sources3 @en i" big ret!i$ com%!nies he$% the "!rmers in resurrecting their economy, &h!t %$!n does the goernment h!s "or mi$$ions o" midd$emen &ho !re %!rt o" the business %rocess ch!in th!t ensures m!nu"!ctured %roducts re!ch end users3 #e eng!ge mi$$ions o" uneduc!ted !nd semi educ!ted %eo%$e o" !rious st!ges o" ret!i$ business s%re!d !cross to&ns !nd cities but &e !re !"r!id th!t Tesco !nd #!$-!rt &i$$ on$y eng!ge sm!rt !nd educ!ted &or' "orce in sm!$$ strength, com%!r!tie$y3 Summar% o5 the o&iti0a& +ebate on *6I:
oernment is t!'ing decision in good "!ith3 e& %ersons !nd $obbies contro$$ing the r!tes o" "ood commodities in ndi!3 And bringing more com%etition in m!r'et &i$$ bring better %rices "or buyers !s &e$$ !s se$$ers o" commodities3 P!rties %rotesting !g!inst Ds in ret!i$ h!e choice to not to !$$o& Ds in the st!tes they !re ru$ing3 oernment shou$d m!'e ! regu$!tory body "or commodity tr!de !s &e h!e "or ce$$u$!r serices3
Obe0ti7es o5 roe0t
13 To do the com%!rison o" eget!b$e %rices in modern stores ersus tr!dition!$ endors 23 To "ind out the bene"its !ccruing to "!rmer o" higher %rices 73 To "ind out the bene"its !ccruing to consumer o" $o&er %rices
FDI in India
FDI in retail
FDI in setting-up Agri suppy com chain paris ion of price s
*6I in In+ia
Source: &or$d inestment re%ort, 4AS $ob!$ nsight, +A, DPP, inistry o" in!nce, #or$d economic orum, edi! 5e%orts, .oo +om%!ny !n!$ysis, A%ri$ 200<
,ene5its o5 *6I to a 0ountr%
One of the advantages of foreign direct investment is that it helps in the economic development of the particular country where the investment is being made. This is es%eci!$$y !%%$ic!b$e "or dee$o%ing economies3 During the 1<<0s, "oreign direct inestment &!s one o" the m!jor e>tern!$ sources o" "in!ncing "or most countries th!t &ere gro&ing economic!$$y3 t h!s !$so been noted th!t "oreign direct inestment h!s he$%ed seer!$ countries &hen they "!ced economic h!rdshi%3 An e
ico in 1<<;-<93
*6I in Retai&
Source:
Source:
Pros an+ 0ons o5 *6I in retai& Rea& bene5its o5 retai& *6I are &imite+: The %o$itic!$ "!$$out o" the goernmentCs decision to incre!se the D $imit in the ret!i$ sector continues3 Fet Dee%
u'herjee, Director, ndi! 5!tings !nd 5ese!rch, ! unit o" itch 5!tings, be$iees th!t the re!$ bene"it o" ret!i$ D is $imited3 #hi$e the me!sures m!y bene"it the sector !nd the economy in the $ong run, ndi! 5!tings be$iees th!t the ne!r term im%!ct is $imited3 ndi! 5!tings !$so s!ys th!t it e>%ects ndi!n ret!i$ers to reorg!nie business o%er!tions !$ong geogr!%hic!$ $ines in order to t!'e !d!nt!ge o" the ne& ru$es
Source: .oo +om%!ny !nd A+4A Surey: DPP, $ob!$ nsightG .oo com%!ny !n!$ysis
*armers4 0onsumers 9i&& bene5it 5rom o&i0% re5orms: The bo$d %o$icy moes m!de by the goernment !re in the interest o" "!rmers, m!nu"!cturers, consumers, eerybody3 "ee$ th!t ndi! is b!c' on the moe s!id 5!j!n itt!$3 !rge inestments &i$$ %our in !nd huge em%$oyment o%%ortunities c!n be e>%ected3 5!j!n itt!$, Hice-+h!irm!n !nd !n!ging Director o" .h!rti @nter%rises, s%e!'s e>c$usie$y to DTH on ho& the %o$icy me!sures un$e!shed by the goernment &ou$d %$!n out3
Source: .oo +om%!ny !nd A+4A Surey: DPP, $ob!$ nsightG .oo com%!ny !n!$ysis
Comparison of impact of FDI in India and other Countries o$$o&ing 'ey obser!tions cou$d be m!de "rom the com%!rison o" D !nd other countries (+hin!, .r!i$, +hi$e, Argentin!, 5ussi!, Th!i$!nd, !nd erm!ny)
.r!i$, +hi$e, Argentin!, 5ussi! h!e sector!$ c!%s higher th!n those o" ndi!
im%$ying th!t their D %o$icies !re more $iber!$ The sector!$ c!%s !re $o&er in +hin! th!n in ndi! in most o" the sectors $i'e
!gricu$ture, "orestry, !nd insur!nce3 A note &orthy !s%ect is th!t +hin! %ermits 100? D in !gricu$ture &hi$e com%$ete$y %rohibits D in medi!3 n 200< st!rting o" "oreign business too' !round ;8 d!ys &ith 18 %rocedures in ndi! !s com%!red &ith << d!ys &ith 16 %rocedures in +hin! !nd 188 d!ys &ith 1E %rocedures in .r!i$3 n terms o" indic!tor!ccessing industri!$ $!ndndi!Cs %osition is mi>ed3 n
+hin! it t!'es com%!r!tie$y $ess time to $e!se %ri!te !nd %ub$ic $!nd !s com%!red to other countries inc$uding ndi!3 This becomes !n im%ort!nt "!ctor &hi$e m!'ing decisions on inestment by the "oreign com%!nies3 n terms o" the indic!tor !rbitr!ting commerci!$ dis%utes ndi! is on %!r &ith .r!i$ !nd 5ussi!n "eder!tion3 A$though the strength o" the $!&s inde> is "!ir$y good, the e>tend o" judici!$ !ssist!nce inde> is moder!te3
Source: @conomic orumG edi! 5e%orts, .oo +om%!ny !n!$ysis
Reasons 5or 5ai&ure o5 *6I in .erman%
+$e!r$y domin!ting the US ret!i$ m!r'et, Wal'Mart e>%!nded into erm!ny (!nd @uro%e) in $!te 1<treme$y com%etitie erm!n ret!i$ m!r'et3 oreoer, inste!do" !ttr!cting consumers &ith !n inno!tie !%%ro!ch to ret!i$ing, !s it h!s done in theUSA, in erm!ny the com%!ny does not seem to be !b$e to o""er customers !ny com%e$$ing !$ue %ro%osition in com%!rison &ith its $oc!$ com%etitors3 Wal'Mart $ermany(s"uture $oo's b$e!' indeed3
Re7ie9 o5 -iterature
The reie& o" %!st studies he$%s us in "r!ming objecties, dee$o%ing rese!rch design, !ri!b$e se$ection, inter%reting the resu$ts !nd in dr!&ing me!ning"u$ conc$usions3 n !ccord!nce &ith the objecties o" the study, ! brie" reie& o" $iter!ture is %resented here under the "o$$o&ing he!dings3
13 *oreign 6ire0t In7estment *&o9s to In+ia During the recent g$ob!$ crises D in"$o&s to ndi! did not sho& !s much moder!tion !s &!s the c!se !t the g$ob!$ $ee$3 4o&eer, &hen the g$ob!$ D "$o&s to @@s recoered during 2010-2011, D "$o&s to ndi! rem!ins s$uggish des%ite re$!tie$y better domestic economic %er"orm!nce !he!d o" g$ob!$ recoery3
#2 The Agri 'i&&ionaires: A ne9 generation o5 5armer entrereneurs is on the rise ? an+ it means business ndi! %roduces ne!r$y 11 %er cent o" the &or$dCs eget!b$es !nd 19 %er cent o" !$$
"ruits3 The country is the $!rgest %roducer o" m!ngoes, b!n!n!s !nd %omegr!n!tes, g$ob!$$y, though its sh!re in the intern!tion!$ tr!de o" "ruits !nd eget!b$es rem!ins ! me!gre 1 %er cent33 ndi!n "!rmers !re most$y sm!$$ !nd m!rgin!$ &ith "r!gmented $!ndho$dings3 And the sm!$$ sie is m!'ing !do%tion o" "!rm mech!nis!tion !nd modern techni*ues di""icu$t3 Unti$ %oo$ing o" $!ndho$dings becomes e!sy, !chieing economies o" sc!$e &i$$ rem!in di""icu$t, %oints out the @conomic Surey 2011-123
"2 The 6e7i& in the Retai& The %resent goernment decision to o%en u% the "!st-gro&ing org!nied mu$ti-
br!nd ret!i$ sector to D &i$$ be one o" the biggest g!me-ch!nging re"orms th!t &i$$ touch eeryoneCs $i"e: "!rmers, industries, tr!ders, ret!i$ers, job-see'ers !nd, not the $e!st, mi$$ions o" consumers3 This ch!nge m!y t!'e ye!rs, een dec!des, to %$!y out to its "u$$ %otenti!$ ;2 Obama@s *6I remark +ra9s shar 0riti0ism 5rom .o7ernment4 Oosition
Barack Obamas statement that the investment climate in India is !deteriorating! seems to have politically united India and raised hackles across party lines. On "witter# the $rime %inisters O&ce '$%O( pointed out that according to a recent )*+"AD report# India is the third most desirable destination for Foreign Direct Investment 'FDI(. !FDI in,ows to outh Asia turned around as a result of higher in,ows to India# the dominant FDI recipient in the region. "he two large emerging economies# +hina and India# saw in,ows rise by nearly per cent and by /0 per cent# respectively#! the $%O tweeted.
93Rea& bene5its o5 retai& *6I are &imite+: In+ia Ratings The %o$itic!$ "!$$out o" the goernmentCs decision to incre!se the D $imit in the ret!i$ sector continues3 Fet Dee% u'herjee, Director, ndi! 5!tings !nd 5ese!rch, ! unit o" itch 5!tings, be$iees th!t the re!$ bene"it o" ret!i$ D is $imited3 #hi$e the me!sures m!y bene"it the sector !nd the economy in the $ong run, ndi! 5!tings be$iees th!t the ne!r term im%!ct is $imited3 ndi! 5!tings !$so s!ys th!t it e>%ects ndi!n ret!i$ers to re-org!nie business o%er!tions !$ong geogr!%hic!$ $ines in order to t!'e !d!nt!ge o" the ne& ru$es 83 *armers4 0onsumers 9i&& a&so bene5it 5rom o&i0% re5orms: Raan 'itta&
"he bold policy moves made by the government are in the interest of farmers# manufacturers# consumers# everybody. I feel that India is back on the move. 1arge investments will pour in and huge employment opportunities can be e2pected. 3a4an %ittal# 5ice-+hairman and %anaging Director of Bharti 6nterprises# speaks
e2clusively
to *D"5 on
how
the policy
measures
unleashed by the government would pan out. 2 In+ia is not hosti&e to *6I 5&o9s4 sa%s Ni&esh Shah
In a discussion with *D"5 $ro7t# A2is Directs*ilesh hah shares his views on how the Indian economy is going to perform ahead. !"he economic growth is under pressure. 8owever# India is not hostile to FDI ,ows. FII ,ows may resume once concerns over 9AA3 are over#! he said. 8e feels that the rupee will depreciate further.
.*6I in retai& 9i&& bring in7estment o5 B mi&&ion: Nara%anasam% Defending FDI in retail and other sectors# )nion %inister 5 *arayanasamy on %onday said the country was e2pecting an investment of about :;<< million besides provision of huge employment and creation of agro-infrastructure. =. An investigation into the relationship between producer# wholesale and retail prices of 9reek agricultural products In this paper price relationships and patterns of price transmission among farm# wholesale and retail levels are analy>ed for potato# tomato# orange and milk markets in 9reece. 1ag length# direction of causality# and asymmetric relationships are empirically veri7ed. "he analysis is performed using the co-integration approach introduced by von +ramon-"aubadel '0==(# on monthly price data for the period 0==?-@<
"he results indicate that a long-run
relationship e2ists between each pair of producer and retail prices for all products. "he direction of 9ranger causality runs from retail to producer prices for all products e2cept oranges and milk where it runs from producers to retailers. $erfect price
transmission
between farmers and retailers is accepted in the case of potato and tomato. "he results support the hypothesis of asymmetric price transmission between farm and retail levels for all products. In contrast# symmetric price transmission between farm and wholesale levels
e2ists for all products. 6specially# for potato#
asymmetric price transmission was found between the two marketing levels. "he empirical results indicate that the inclusion
of the wholesale level in the marketing chain plays an important role in the analysis of price transmission.
12 *oo+ Retai&ers@ Pri0ing an+ 'arketing
The %!%er dr!&s on re$e!nt theoretic!$ !%%ro!ches !nd the resu$ts o" !n e>%$or!tie inestig!tion to "ind out conditions "or coo%er!tie coordin!tion o" the su%%$y ch!in "or eget!b$es3 nterie& %!rtici%!nts inc$uded 9 ret!i$ers, E &ho$es!$ers=m!r'eting
coo%er!ties
!nd
9
%roducers
in
erm!ny,
&ith
su%%$ement!ry in"orm!tion co$$ected in S&eden !nd the rish 5e%ub$ic3 T&o "und!ment!$ directions th!t "resh eget!b$e su%%$iers c!n go in order to st!y com%etitie !re: o""ering %roducts &hich "u$"i$ s%eci!$ re*uirements o" consumers or consumer segmentsG !nd g!ining !n !d!nt!ge by me!ns o" better su%%$y %er"orm!nce com%!red to com%etitors3 Some %r!ctic!$ conse*uences !re discussed "or %roducers o" eget!b$es3
112 3o9 0an the oor bene5it 5rom the gro9ing markets 5or high 7a&ue agri0u&tura& ro+u0ts
This %!%er !ims to identi"y critic!$ !re!s "or tr!de, m!r'eting, c!%it!$ m!r'et dee$o%ment !nd regu$!tory re"orms th!t c!n "!ci$it!te the integr!tion o" sm!$$sc!$e "!rmers (sm!$$-sc!$e "!rmers) in domestic, region!$ !nd g$ob!$ m!r'ets "or high-!$ue !gricu$tur!$ (4HA) %roducts in %!rticu$!r high !$ue cro%s, $iestoc', "ish !nd non timber "orest %roducts in ! sust!in!b$e m!nner !nd to incre!se !nd
diersi"y the incomes o" sm!$$-sc!$e "!rmers in the $ong-run3 The %!%er %$!ces %!rticu$!r em%h!sis on the issues th!t m!y need to be !ddressed through rese!rch !nd dee$o%ment undert!'en by the intern!tion!$, region!$ !nd n!tion!$ rese!rch communities3 5ese!rch !nd Dee$o%ment is re*uired to su%%ort !nd guide %ub$ic !nd %ri!te %o$icy interentions to im%roe the !ccess o" sm!$$-sc!$e "!rmers to 4HA m!r'ets3 4o&eer, to !chiee %oerty reduction the intern!tion!$ rese!rch community must !$so go beyond the usu!$ technic!$ so$utions in rese!rch !nd dee$o%ment to "u$$y incor%or!te %o$icy !nd interentions th!t e""ects the re*uired ch!nges3 They need to be&!re o" &h!t "!i$ed %reious$y &ith tr!dition!$ commodities such !s oer de%endence, oersu%%$y !nd dec$ining %rices in re!$ terms !nd not "ocus so$e$y on su%erm!r'ets !s ! %!n!ce! "or !gricu$tur!$ sector !nd %roduct m!r'et %rob$ems3 Su%erm!r'ets m!y not be the most %ro"it!b$e out$et "or !$$ sm!$$ "!rmers, es%eci!$$y &here the u%gr!ding o" tr!dition!$ m!r'ets is both i!b$e !nd e!si$y !ccessib$e to sm!$$-sc!$e "!rmers3
1#2 Retai&D5arm ri0e margins gro9ing rai+&% in *in&an+
The sh!re o" the &ho$es!$e !nd ret!i$ tr!de in the consumer %rice o" "ood h!s incre!sed r!%id$y in in$!nd oer the %!st "ie ye!rs3 At the s!me time, ! dec$ining sh!re o" the consumer "ood euro is !$$oc!ted to "!rmers, !ccording to m!r'eting m!rgin c!$cu$!tions "rom TT Agri"ood 5ese!rch in$!nd3 !r'eting m!rgin c!$cu$!tions by TT indic!te the sh!re o" the ret!i$ %rice going to e!ch sector !$ong the su%%$y ch!in: "!rmer, %rocessing !nd tr!de (Im!r'eting m!rgin) !s &e$$ !s goernment t!>es3 The ne& "igures "or the %eriod 1<<<-200; ree!$ consider!b$e gro&th in both unit !nd %ercent!ge m!r'eting m!rgins "or m!ny b!sic "ood %roducts3 !rmers in in$!nd, in turn, h!e been receiing !n incre!sing$y $o&er %ro%ortion o" the ret!i$ %rice o" "ood3 The "!rmerJs sh!re in the
%rice o" minced me!t, "or e>!m%$e, h!s dec$ined "rom 7738 %er cent in 1<<< to just oer 27 %er cent in 200;3 The "!rmerJs sh!re "or %or' cho%s h!e dec$ined "rom 1<3; %er cent to $ess th!n 19 %er cent oer the %!st "ie ye!rs3 5ising m!r'eting m!rgins !nd ! dec$ining sh!re "or the "!rmer h!e come during ! %eriod o" consider!b$e ch!nge in the structure o" both the ret!i$ !nd &ho$es!$e sectors3 The concentr!tion o" the ret!i$ sector, &ith "e&er out$ets !nd the gro&th o" the $!rge su%erm!r'et ch!ins, h!s been %!rticu$!r$y r!%id in in$!nd3 The t&o $e!ding ret!i$ ch!ins o" "ood !nd d!i$y goods incre!sed their m!r'et sh!re "rom 99 %er cent in 1<<0 to ne!r$y 60 %er cent by 20093 The incre!sed concentr!tion o" ret!i$ %o&er me!ns th!t $!rge ret!i$ out$ets no& e>ert signi"ic!nt$y more contro$ oer others in the "ood su%%$y ch!in3 173 Intertemora& ri0ing e55i0ien0% in agri0u&tura& markets: The 0ase o5 s&aughter hogs in >est .erman%
t is gener!$$y be$ieed th!t the structure, degree o" org!ni!tion !nd centr!$i!tion o" m!ny !gricu$tur!$ m!r'ets is such !s to &!rr!nt the %roision o" %rice in"orm!tion serices by %ub$ic bodies3 4o&eer, i" ! c!se "or in"orm!tion serices is to be "ounded on %ricing e""iciency grounds it h!s "irst to be sho&n th!t %rices do not re"$ect !!i$!b$e in"orm!tion3 n this %!%er, the hy%othesis th!t %rices re"$ect !!i$!b$e in"orm!tion is tested "or three im%ort!nt m!r'ets "or s$!ughter hogs in #est erm!ny3 5esu$ts "rom st!tistic!$ tests %er"ormed on the &ee'$y %rice series did not $e!d to rejection o" the hy%othesis3 There"ore it is conc$uded th!t since %ricing e""iciency %re!i$s in these m!r'ets, the c!se "or goernment !gencies in %roiding in"orm!tion on %rices is &e!'ened3
1;2 Organie+ Retai&ing in In+ia : Cha&&enges an+ Oortunities
The ret!i$ $!ndsc!%e in ndi! is ch!nging r!%id$y !nd is being scrutinied by $!rge sc!$e inestments by "oreign !nd domestic %$!yers3 !r'et $iber!$i!tion !nd ch!nging consumer beh!iour h!e so&n the seeds o" ! ret!i$ tr!ns"orm!tion3 ndi!n ret!i$ing is gro&ing "!st !nd im%!rting the consumer %re"erences !cross the country3 Tod!y ret!i$ing is $!rgest contributing sector to countryJs DP i3e3 10? !s com%!red to 6? in +hin!, 8? in .r!i$3 odern ret!i$ing is c!%!b$e o" gener!ting em%$oyment o%%ortunities "or 239 mi$$ion %eo%$e by 2010 in !rious ret!i$ o%er!tions !nd oer 10 mi$$ion !ddition!$ &or'"orces in ret!i$ su%%ort !ctiities3 /rg!nised ret!i$ &hich %resent$y !ccount "or on$y ;-8 %ercent o" the tot!$ m!r'et is $i'e$y to incre!se its sh!re to oer 70? by 20173t o""ers huge %otenti!$ "or gro&th in coming ye!rs3 ndi! is becoming most "!oured ret!i$ destin!tion in the &or$d3 193 'arketing -osses an+ Their Ima0t on 'arketing 'argins The e>%$icit e!$u!tion o" the %ost-h!rest $osses !t di""erent st!ges o" m!r'eting !nd their im%!ct on "!rmers net %rice, m!r'eting costs, m!rgins !nd e""iciency h!e been %resented3 t h!s been "ound th!t the e>isting methods tend to oerst!te the "!rmers net %rice !nd m!r'eting m!rgins o" intermedi!ries3 n "!ct, the m!rgin o" the ret!i$ers !"ter t!'ing into !ccount the %hysic!$ $oss during ret!i$ing h!s been "ound to be neg!tie ($oss), &hich other&ise, &!s %ositie (%ro"it) in the conention!$ estim!tion3 Simi$!r$y, the %roducers net sh!re !nd &ho$es!$ers m!rgins !$so decre!se subst!nti!$$y3 t h!s been sho&n th!t m!r'eting e""iciency is inerse$y %ro%ortion!$ to the m!r'eting $osses3 The co-o%er!tie m!r'eting h!s been "ound to be ! more e""icient system in terms o" both o%er!tions !nd %rice3
!r'eting cost h!s been identi"ied !s the m!jor constr!int in the &ho$es!$e m!r'eting ch!nne$ !nd bringing do&n the costs, %!rticu$!r$y the commission ch!rges !s demonstr!ted in the co-o%er!tie ch!nne$, &i$$ he$% in reducing the %rice-s%re!d !nd incre!sing the %roducers m!rgin3 The need "or s%eci!$ied tr!ns%ort ehic$es "or %erish!b$e commodities h!s been high$ighted3
0. +old storage chain Agriculture in A>erbai4an provides /=./ of all employment or @./ million workers 'as compared to appro2imately 0 or ?#<<< workers from oil( but only of 9D$ or C.? billion )D '@<<(. A>erbai4ans ma4or cash crops are grapes# cotton# tobacco# citrus fruits# and vegetables and all of these but cotton and tobacco are dependent upon an eEective cold chain if they are to be economically viable and sustainable. "he )* Food and Agriculture Organi>ation estimates that appro2imately C< of the value of these crops 'or over ):@ billion( is currently lost due to the lack of adeuate cold chain facilities. Accordingly# improvements in the countrys cold chain segment of ma4or cash crops such as fruits and vegetables will have a very signi7cant monetary impact. For this reason# $+6$ selected the cold chain segment of the value chain of many agricultural products as a Gcross-cuttingH independent sub-sector. Of course# it is not accurate to speak of cold chain and warehousing as one segment of the value chains. As describe below# in practice eEective cold chain operations run from immediate post-harvest handling to consumers. "he analysis and recommendations herein presented are based on e2tensive visits with 0= cold chain operators# discussions with numerous
other stakeholders. "hey are also based on the authors e2tensive e2perience in this sector worldwide# as well as a review of cold chain literature in A>erbai4an and other countries.
Resear0h metho+o&og%:
6ata 0o&&e0tion: D!t! "rom ret!i$ers, "!rmers, distributors, sho%'ee%ers "rom • • • •
di""erent st!tes3 /%inions o" ret!i$ers, "!rmers !nd sho%'ee%ers Po$itic!$ d!t! "rom medi! !nd ne&s%!%ers Hoice o" the %eo%$e
6ata ana&%sis: +om%!rison o" %rices o" eget!b$es &ithin !nd outside st!tes • Deb!tes • Sureys •
Aen+i<:
