PROJECT REPORT ON SUPPLY CHAIN MANAGEMENT OF CUT-FLOWERS IN INDIAN MARKET Masters of Business Administration BATCH (2009-2011) OF SOOLINI UNIVERSITY OF BIOTECHNOLOGY AND MANAGEMENT SCIENCES MBA-4TH Sem University Roll No. 205
Supervised By: Mr. Kuldeep Rojhe
Submitted By:Chetan Punj
PREFACE The present report pertains to research project ³Supply Chain Management Of Flowers In Indian Market´. A case study is primarily conducted to examine the significance, efficiency, advantages of scheme of participative management and ots practical validity in securing efficient supply chain in the market prevailing. The management tools and management techniques are further analyzed and further viewed for the study of the case, which would help in the up-liftment of the current market trends. The scope of study extends to all organizations which are engaged in any kind of service. Sincere efforts have been undertaken to present true picture. But certain discrepancies might have crept in because of time constraint, place constraint and certain other unavoidable circumstances, beyond my control.
Ack nowl ed g ement
³
No man lives on an Island journeying through life alone.´
The truth in this statement is not far to seek, man¶s interdependence is known to exist from times immemorial behind every successful event of our life, and we often find many hands involved. This manuscript is no exception. This page is thus dedicated to each and every one who has in some way or other helped in the successful completion of this Project. I would like to express my gratitude to Prof. J. B. Nadda, Director and all faculty members of Business School of Business Management who provide me opportunity to work for the project Supply Chain Management of Flowers in Indian Market´. Under their guidance and also for providing me invaluable guidance during the course of my study. ³
It is both my pleasure & duty to acknowledge with all regards to Mr. K.C. Rojhe ± lecturer in Marketing, My project guide for his valuable guidance My sincere thanks are due to Librarians of various libraries such as SILB Solan, Y.S Parmar University, University, Nauni, and Centre, State Library S olan. I am grateful to persons such as growers, merchants, brokers, retailers involved in the process, for their valuable support and help in collecting the required data needed for the study. No words can adequately express my debts and thanks to my friends for encouraging, helping and supporting me.
INDEX Serial No.
TOPIC
1.
Preface
2.
Acknowledgement
3.
Introduction
4.
Review of Literature
5.
Research Methodology
6. 7.
Major Cut Flowers Prevailing in the Indian Flower Market Result and discussion
8.
Marketing Marketing management
9.
Marketing cost and margin of intermediaries interme diaries
10.
Marketing Marketing problems
11.
Summary and conclusions conclusions
12.
Suggestion Suggestion and recommendation recommendation
13.
Reference
14.
Annexure
INTRODUCTION Floriculture is the art and knowledge of growing flowers to perfection. Being a branch of horticulture, it deals with the cultivation of flowers and ornamental crops from the time of planting to the time of harvesting. It also includes production of planting materials through seeds, cuttings, budding, grafting and marketing of flowers and flower produce. In Meghalaya flower lovers originally practiced floriculture as a hobby. Today, the growing demand has lead to flowers also being grown for commercial reasons. Meghalaya is known for a variety of rich flora and species of orchids that grow wild. The government has come out with a scheme to provide the growers with disease free planting material, organic/inorganic fertilizers, plant protection chemicals, garden tools and implements for a minimum area of 2000 square metres along with a package of practices for commerc ial production. A few of the recommended ornamental crops are orchids, chrysanthemums, gerberras, carnations, liliums, strelitzia reginae, gladiolus, asters, marigolds, statice, gomphrenas, helichyrsums, zinnias, roses and different kind of house plants. In Tamil Nadu, flowers such as rose, malligai, chrysanthemum, marigold, jathi malli, marikolundu and carnations are grown. Edward Rose and Andhra Red Rose are two varieties of roses grown in the plains of the State. They need well drained sandy loam soil. Consumption of flowers in the southern States is much higher than in the northern States. Flowers are used by florists, flower rentals, perfume industries and as garlands. Centres where modern flowers are in demand are big cities like Mumbai, Pune, Bangalore, Chennai, Hyderabad, Delhi, Chandigarh, Lucknow and Calcutta. In the Andaman and Nicobar Islands there are around 2000 species of flowering plants, of which nearly 215 are endemic to these islands. These flowering plants include around 110 species of orchids. Here plantation crops like coconut are used as an intercrop for growing orchids. Coconut pla nts also provide shade to the orchids. Other flowers, ferns, cycads, succulents, bamboo and ornamental medicinal plants also grow naturally in forests.
In Orissa, floriculture involves the growing of flowers like rose, crossandra, jasmine and marigold. In Punjab floriculture mainly includes the cultivation of different species of gladiolus. Village Majra, near Chandigarh and village Dappar near Patiala are main centres of gladiolus production in Punjab. Flowers that are cultivated in Andhra Pradesh for floricultural purposes are the rose, jasmine, chrysanthemum and crossandra. The main districts that produce these flowers are Hyderabad, Rangareddy, Guntur, Prakasam, Kurnool, Cuddapah, Ananthapur and Chittoor. The cool temperate climate of Jammu and Kashmir makes it the ideal place for growing flowers. Some of the flowers cultivated here are wisterias, tulips, carnations, dahlias and lilies. The pace of development of the floriculture industry in the present is very slow because it is conditioned by the poor adoption of techniqu es of production and ineffective transportation of the final produce, it is also influenced by an in appropriate market place and improper handling which decreases the shelf life of the flowers. Effective use of the factors of production is a major concern of planning at micro levels. Although, Directorate of Horticulture have done excellent work in creating awareness among the farmers of the state about the latest technique of production management but farmers are hesitant to adopt them as they are not aware about, how to market their product efficiently to achieve their goals of profitability. In spite of having niche advantages and in view of increasing demand at domestic and international markets, the state has not able to make much headway in this area. Keeping in view the above facts, an attempt has been made to understand marketing management of some flowers such as carnation, gladiolus, chrysanthemum and lilium grown in the northern region of India .in the study an attempt has been made to study the supply chain management and marketing of cut flowers in the Indian market : To study the marketing channels, cost incurred and margin of cut flowers. To prove into the marketing problems faced by the growers and suggest strategies to overcome the problems related.
REVIEW OF LITERATURE Keeping the objective of the research in to consideration, the literature has been reviewed for marketing channel and resource use efficiency aspects of flowers. Raghava (1996) reported that total area under flower corps on India was estimated to be around 34000 hectares, which included 24000 under traditional flowers and 10000 hectares under modern flowers. The returns from floriculture products were estimated then to be
`
205 crores, which includes
`
100 crores
from modern flowers.
Balasubramanayam (1997) summarized information about the technical and economical aspects of cut flowers. He laid stress on the availability of cold chain from production poin to auction center for effective and efficient marketing. According to his estimates a farmer can get more than
`
75 lakhs per
hectare in the domestic market. Net profit per hectare has been worked out to be `
40 lakhs, in the 2
nd
rd
th
year, ` 28 lakhs in the 3 year and ` 40 lakhs in the 4 year.
Gill and Aullakh (1993) reported that cut flowers production can be programmed for exports from the country. He pointed out that according to the agro-climate of Mercora in Karnataka, Pune, Nasik and Maharashtra, part of Himachal Pradesh are best suited for the cult ivation of most of popular kinds of cut flowers. Kaul and Dadlani (1995) reported that the total area under floriculture in Himachal Pradesh during 1993-94 was estimated at about 50 hectares. Important flower crops being presently grown in Himachal Pradesh are Gladiolus, Marigold, Carnation, Chrysanthemum, Lilium, Rose and other Bulbous crops. Now withstanding the potential (agro-climate, unexploited market, tourism, agricultures etc.) Existing in the state, some inherit problems like non-availability of quality planting material high incentives of the enterprise requirement of higher level of technology for commercial floriculture, absence of adequate research, development and training, infrastructure etc. have been instrumental for the slow pace of d evelopment of this important field in the state. Oberoi (1997) stated that domestic market for floriculture in India should be given due emphasis on the commission agents or wholesalers, a commission of
10-15% is charged. The study found that the domestic flower has seen a steady growth of almost 35% per annum as compared to the world flower market growth of 12%. It is predicted that by the year 2000, India will be amongst the top 5 flowers exporters in the world. For achieving the same, irregularities in the marketing and production should be removed. Regulated auction house should be setup, loans or special schemes for the domestic growers should be drafted, producers should have an access to appropriate chemicals, etc. to combat various diseases and pes ts. Back up in the form of crop insurance will go a long way in instilling confidence in the growers to invest in this trade. Preeti Sharma (1996) reported that in Himachal Pradesh floriculture farmers allocated 11.81% of their total operational holdings under flower cultivation. The share of flowers towards total family income was estimated more than 50%. In 2007-09 the National Horticulture Board has reported that area under floriculture in the country was 88000 hectares.
RESEARCH METHODOLOGY
SAMPLING DESIGN This study deals with the economics of production and marketing of commercial flowers grown in Solan district of Himachal Pradesh. Solan district was selected purposively because more than 45% of the total area under carnation and 30% area under Gladioli fall under the district. Multi stage random sampling technique was adopted in order to select the respondents. In the first stage, a list of flowers growing pockets of the district was produced from the office of the Joint Director Horticulture, Solan. In the second stage, a list of flower growers was obtained from the office of the department of the Joint Director of Horticulture Solan, from each selected pockets. Finally, the ultimate sample of 30 (15 of each flower) flower growers was drawn by adopting simple random sampling procedure. To study the Marketing management aspect the Delhi market was selected purposively to study the supply chain aspects of the selected flowers. During the course of navigation it was found that, the wholesale and retail market structure in Delhi, 5 wholesalers/commission agents and 10 retailers were selected randomly for detailed stud y.
DATA COLECTION Both primary and secondary data were used for this study. The reference period of the study was 2009-2010 the primary data were collected on the well designed and pre-tested schedules through personal interview method from the selected farm household in the producing areas and wholesalers/commission agents and retailers in local Chandigarh market, detailed information on the cost of cultivation of Marigold, Carnation and Gladioli, their yield rates and pric es, marketing function, channels, costs and problems faced by farmers were obtained from wholesalers and retailers respectively, from Chandigarh market. The second information was collected from various reports and publications of India and Director of Horticulture Shimla.
Analytical Framework
MARKETING: To estimate the marketing cost and margins of intermediaries µmode method¶ was used. To study the marketing pattern the following concept of marketing cost and margins have been used for different agencies in different c hannels:
a) Absolute Margin
(am) = ms ± (mb + me)
Where, ms =
Selling price of middleman
mb =
Buying price of middleman
me =
cost incurred by the middleman
b) Product Price
(pf) = ps ± pc
Where, ps = pc =
Producers selling price Cost incurred by the producer in marketing of the product
c) Producers share in the consumer¶s rupee (ps) : Where,
pp =
Producers price
pp/pc*100
pc = price paid by the consumer d) Total cost of marketing (tc) : pc + mci Where, pc = mci =
Cost incurred by the producer in the marketing of produce Cost incurred by the middleman
Tabular Analysis Tabular method was used to study the marketing costs, price spread etc. the results were interpreted by working out averages and percentages.
LIMITATION OF THE STUDY The study was based on the data collected for one year (2009 -10), which may not necessarily hold true for other periods as well. The data collected by the survey method may have included memory, bias of a limited type of the respondents.
MAJOR CUT FLOWERS PERVAILING IN THE INDIAN FLOWER MARKET: Carnations Carnations belong to the Dianthus genus, and are sometimes referred to as Dianthus in seed and plant catalogs. The word Dianthus comes from the Greek, and literally means the "Flowers of God". The meanings of the various colours of carnation flower often have to do with affection or love. The blossom's sweet fragrance probably has something to do with that. Three Basic Types Of Carnation - Carnations come in three basic types of plants:
Those having a single large flower on a single stem
Plants having a number of smaller blossoms on each stem
Dwarf varieties, also having several blossoms on one stem
The carnation flower you are most apt to get if ordered from a florist, will be the large blossom on a single stem. These can also be the most difficult to grow, being truly specimen plants in many instances, and a great deal of work goes into growing a carnation that can truly be a show piece. By and large, however, carnations are easy to grow in t he home garden, and the blooms, whether single or many per stem, will not disappoint. The easiest way to grow carnations is from cuttings, which can be taken in late fall or winter and simply rooted in sand and placed in pots.
ROSE
Roses are flowering perennials of the genus Rosa. You can find more than 100 species of roses, and there are countless subspecies and cultivars. Rose flower is undeniably fragrant and beautiful, and its fragrance is also among the most popular flowers in the world. Their fragrance and the beauty that they are famous for is what makes these flowers so highly sought after in all parts of the world. Most of the rose species are native to Asia, with a few native to Europe, Northwest Africa and North America. Rose flower vary quite a bit in size. The most popular color is red as those flowers symbolize love and passion. In ancient Greece, Egypt and Rome, they were associated with goddesses of love. Red roses are a favorite gift for Valentine¶s Day and the flowers come in many different shades of red. You can find roses in other colors as well, such as: blues, whites, pinks and yellows (these flowers are often hybrid). Different cultivars have been developed to emphasize color, scent, shape, size and disease resistance, among many other attributes. The edible fruits produced from this flower is called rose hips and many people believe the fruit has healing properties. An aromatic oil that is made by steam distilling petals of rose, known as Attar of Rose, has been used by people as an element in perfumes for centuries. Almost all cut roses that are sold by florists today are the hybrid tea variety. Roses can grow as vine -like climbers or as bushes, and depending, the blossoms can set singly on its individual stems or also in clusters of up to a dozen on a single spray. Artificial varieties of rose are abundantly available. They are used in displays in many homes. These favourites are often copied and then presented in a slew of different materials (often in silk material). Roses are reproduced more than any other flower.
GLADIOLUS Gladiolus is a very popular flower for the garden. Despite the extra care these tender perennials require, a great many gardeners plant, plant and replant these tall, flowering spikes every year. And who can blame them. Gladiolus makes a wonderful addition to the outdoor flower garden or the indoor flower bouquet. While gladiolus can now be found in most parts of the world, these flowers are originally from Africa and the Mediterranean. Gladiolus is normally identified by their tall flower spikes that are covered with showy funnel shaped flowers. The flowers at the bottom of the spike will open first and then the ones above them will open and so on until the entire spike is in bloom. A gladiolus can bloom from spring through autumn, which is another reason for their popularity. People commonly think that gladiolus come from bulbs. This is not true; they are actually from corms, which look very similar to bulbs. There are over 10,000 cultivars of gladioli and every year a few dozen are added to this number. Gladiolus are very easy to cross-breed, so it is almost guaranteed that if you can¶t find one in the right colour now, just wait and one will come on the market. There are three groups of Gladiolus: Grandiflorus Group: The plants in this group flower from late spring to early autumn. The gladioli in this group normally only produce one flower spike from each corm. Nanus Group: The plants in this group bloom in early summer. These are the gladiolus that are most commonly used for things like corsages and floral arrangements. Normally, each corm will produce a few spikes. Primulinus Group: The plants in this group will flower from early summer to late summer. This gladiolus will produce one very thin spike per corm. The corms of the gladiolus must be dug up and stored for t he winter in all but the warmest regions. To store gladiolus, dig up the plants 6 -8 weeks after their final bloom or before the first frost. Cut the stem off just above the corm. Dip the corm in a fungicide and allow the corms to dry for a few weeks before packing them away in a cool, dry place. Many people will only keep the corms that were produced by the plant that year and will discard any older corms.
Gladiolus is propagated from either seed or through the multiplication of their corms. Some species will grow best when grown from seed but for the most part, gladiolus do very well when grown from their corms. Gladioli grow best in fertile, well-drained soil in full sun to partial shade. Plant the corms the same way you would plant bulbs. Despite the work required to keep a garden full of gladiolus, planting some of these great cut flowers is well worth the work.
ORCHID Orchids are the second largest Natural Order in the whole world of botany, being very diverse. There are thousands of varieties of Orch id species and over a hundred thousand hybrid Orchids. There are Orchid flowers that can be found with a very wide range of characteristics, with Orchids existing in nearly every color and shade. There are many variations in size and shape of Orchids. y
y
y
Some Orchids do grow on the ground, usually in marsh land, and are called Terrestrial Orchids . Paphiopedilums and Cymbidiums ate terrestrial Orchids. Epiphytic Orchids grow mainly on rocks and trees, where they hold on with thin or thick roots and take in nutrients that fall to them, as well as absorb sunlight that reaches them. The last kind of Orchids are Saprophytic Orchids and there aren't many of these. They do not have any green leaves, and live on decayed vegetation. As they aren't very beautiful us ually, beginner Orchid growers don't normally seek these out.
There are many kinds of orchids you can choose from to grow. Here's a summary of some main orchid types:
Phalaenopsis Orchids
Care is easy, flower spike blooms for about 2-3 months, shade is preferred.
Dendrobium Orchids
Care can be easy to not so easy, flower spike blooms 2 -3 months. Bright light preferred. There are many different kinds.
Oncidium Orchids
Care is easy to intermediate to easy, flower spikes bloom 2 months, sunny window is preferred, with about a half day of sun.
Cattleya Orchids
Care is intermediate in difficulty, flowers bloom 1-4 weeks, sunny window is preferred.
Miltonia Orchids
Care is intermediate, flowers bloom about 1 -2 months, indirect sunlight is preferred.
Paphiopedilum Orchids
Warm Paphiopedilum Orchids: Care is easy to intermediate, flowers bloom a 2-3 months, shade is preferred. Warmer temperature needed. Cool paphiopedilum Orchids: Care is intermediate, flowers bloom 2 months, shade ispreferred. Cooler temperature ne eded.
Vanda Orchids
Care is intermediate to difficult, flowers bloom about 2 months, sun preferred. High humidity is important, often meaning these need to be grown in a greenhouse.
LILIUM/LILY Lily flowers are a very popular flower for the American gardener. Many people, even if they are not gardening types, have some species of lily growing in their yard. Lilies are bulbous perennials. Their bulbs differ slightly from the common bulb in that the bulbs are actually several fleshy scales that overlap to form the bulb. The lily plant is broken up into 9 Divisions. Those Divisions are: Division I ± Asiatic hybrids are lilies that are descendants of asian species. Division II ± Martagon hybrids are lilies that are primarily species that are descendants of the L. martagon species. These frequently have an unpleasant smell. Division III ± Candidum hybrids are descendant of mostly the L. Candidum species and other European species. Division IV ± American hybrids are the descendants of American species. Division V ± Longflorum hybrids are the descendants of L. formosanum and L. longiflorum species. Division VI ± Trumpet and Aurelian hybrids are descendants of Asiatic species such as L. regale, L. henryi and L. sargentiae. Division VII ± Oriental hybrids are decendants of East Asian species, including L. autatum, L. japonicum and L. speciosum species Division VIII ± This division is for Other Hybrids. These are normally combination species that are bred between species of two different divisions. Division IX ± This division is for All True Species and are and species that are original breeds.
Lilies need a cold dormant period in order to thrive. This means that they grow best in areas that get at least a cool winter. Most lily plants grow in Zones 4-8, though some from Divisions I and II will grow in Zone 3 as well. If you live in
Zones 9 or 10 and you would like to grow lilies, you will need to dig them up and cold store them for 2 to 3 months each year. The lily plant grows best in well-drained soil that has a good amount of humus or compost in it. Most lilies like acidic to neutral soil in full light, but as with any species with this many varieties, a few can be found that like either alkaline soil or shade. In general, lily flowers are in bloom from spring to autumn. Spring bloomers will flower from mid spring to early summer. Midseason bloomers will flower from early summer to midsummer. Late season bloomers will flower from late summer until first frost. Lilies are so easy to grow that some varieties can be found growing wild in large numbers. Normally, a small lily plant will mature into a full sized garden filling plant in just a few years. The lily is certainly a best pick for those who are just starting out and a proven winner for those who have been gardening some time.
RESULTS AND DISCIOUSSIONS
DELHI WHOLESALE MARKET STRUCTURE: Domestic flower trade has been totally an alien trade for the masses. In recent years, with the expansion of floriculture industry, there has been significant growth in the domestic market, Delhi market has shown tremendous growth in the past few years undoubtedly in the wholesale marketing, the number of retail outlets, varieties of products, still remains irregular and unorganized. Until now, no regulatory organization has come up in the flower marketing system to control the non-desirous activities in the market. Delhi flower market is an open type market and has not even been granted authorized place to carry out the trade. Lack of proper storage facilities, proper packing areas, and shops all stall rise to operational difficulties due to occasional rains, high humidity and heat. There is no system of membership or commission to any organization, flowers are dumped directly on the ground for exposure to the scorching heat and environment, thus damaging the quality of the product. The market is characterized by wide price variations and poor realizations. As a result the producers remain deprived of the real worth of their produce affecting their income or earning adversely. The flower business in Delhi is held under the categories of TRADETIONAL AND CUT FLOWERS. Both the flowers are sold at wholesale level in different markets and have slightly different market structure.
CONNAUGHT PLACE WHOLESALE MARKET: This market is located near coffee home, baba kharag singh marg, near cannaught place. There are about 50 wholesalers or commission agents who facilitate the sale of produce of the growers. It was found that on an average, the produce of at least 100 growers arrive in this market daily. The number of labourers who are operating in the marketing in the market was estimated around 125. The
commission agents charged a commission of 15% in the sales price from the sellers. This market is operated fron 6:00 AM to 9:30 AM. The main source of flowers are from Maharashtra, Karnataka, Sikkim, Utter Pradesh, Madhya Pradesh, Himachal Pradesh, Haryana and Punjab. The product range includes Gladiolus Carnation, and many other Exotic flowers. More verities are found to be arriving in the winters and maximum in March. Open auction method of sales was more prominent in the market, through mutual agreement method has been observed.
MEHRAULI WHOLESALE MARKET: This market is situated near Qutab Minar. The product range here was limited which mainly includes Rose, Gladioli, Tuberose and other winter season flowers. The main sources of flowers are from in and around Gurgaon, Chhatarpur areas. There were only 15-20 wholesalers or commission agents in the market. Here, most of the growers sold their produce by themselves and during peak season their number goes between 150-200.
WHOLESALE MARKET FOR TRADITIONAL FLOWERS: There is only wholesale market for traditional flowers at Fatepuri ± Khari Baoli, in Old Delhi area. It is a large market operated from 4:00 AM to10:00 AM. 11:00 AM sale of flowers is through auction and direct sale . Direct sale of flowers is more prominent in this market. In the auction system, one had to play a commission of 6.25% of sale price to the auctioneers. There were more than 12 different types of flowers marketed all around the year in this market.
MARKET STRUCTURE: The existing marketing system consists of first assembling of flowers at the central places on the main road -high ways. This is followed by the dispersion of flowers to the consuming centres like Delhi, Chandigarh, Ludhiana, Jallandhar, and North Indian markets. Flower consumers, which are located far off from producing areas, have little direct contact with producers. This gap is filled by various intermediaries working between producer and consumers including forwarding agents and retailers. They interact with each ot her to provide different marketing channels. These agencies constitute the important part of the system, whose activities evolve the mechanics of establishing the prices, various arrangements and contacts and ensure the flow of goods and services. The channels adopted by the sample respondents for the marketing of flowers of different regions are:
Producer ± Wholesaler ± Retailer ± Consumer
Producer ± Forwarding Agent ± Wholesaler ± Retailer ± Consumer
Producer ± DRDA ± Wholesale r ± Retailer ± Consumer
Producer ± Cooperative Society ± Wholesaler - Retailer ± Consumer
Producer ± Wholesaler ± Retailer ± Consumer
Producer ± Retailer ± Consumer
The individual grower generally uses either of these channels depending upon the size of business, stability of the marketing agency, economic position, monetary needs and producers engagement in work on and outside the farm.
Sale through Forwarding agents: Forwarding agents in flower marketing are the persons who have links with the growers, hotels, corporate offices, wholesalers/retailers, railways and bus transport employees and auto -rickshaw drivers in the market. These agents arranged for the transport facilities, loading, unloading and clearance of goods at various points during transportation. They charged 10% commission on the sale value of the produce from the grower.
Sale through District Rural Development Authority: District Rural Development Authority is a Government agency who takes over responsibility of marketing of flowers. This agency was found common in Mandi, Kullu and Kangra districts. This agency has developed various assembling centres in different parts of these districts according to the density of flowers growers. The produce was then carried to district centre from where it was transported to the consuming markets. Sometimes, agency is also involved in grading and repacking of the flowers at the assembling points. The transportation cost was charged from the producers in addition to 6% commission on the sale value of the produce.
Sales through Cooperative Society: These societies are the associations of the local flower growers responsible for marketing of flowers. There are about 31 registered societies in the state and out of which 23 were found to be functioning properly. They picked up the produce from the assembling points and then transportation and sales were done in their names. Societies are charged 55 commissions in lieu of their services rendered in the marketing. Due to the vested interests of few members in these societies the quantum of the sales was relatively less through this channel as reported by the growers.
Sale through Wholesalers: The growers, who had large marketable surpluses for sale, generally adopt this channel. Wholesalers in flower trade sometimes act as forwarding agents and commission agents too. These wholesalers either purchased directly or through other forwarding agents, 15% commission from the sale value of the produce
was charged from the growers. There were about 50 wholesalers found to be working in Delhi market.
Sale through Retailers: Retailers brought produce either from auction market or directly frem the producers. In floriculture trade, some retailers have their own shops, some do not have their shops (roadside florists). About 100 such retailers were reported in Delhi market, they usually seal flowers either as separate or as arrangements form also. Some retailers had export business in flower trade. The cost of transportation from wholesale market, loading, unloading, grading and arrangements cost were borne by them.
Market Information: Market Information refers to all facts and their inter pretation bearing on the present on prospective market value of commodities. Flower growers remain unaware of the prices, consumer demand and movement of actual and potential supplies of these flowers in different markets. Major source of market information to producers were reported to be wholesalers/commission agents, forwarding agents or the persons of the area visiting these markets or telephonic enquiry. Unlike other agricultural products, no systematic efforts have been in respect of flower trade in domestic ma rkets.
SUPPLY CHAIN MANAGEMENT
Supply chain management is the integration of business processes from end user through original suppliers that provides products, services, and information that add value for customers. Retailers may be the most important link in the supply chain. They connect customers with the vendors who provide the merchandise. It is the retailers responsibility to gauge customers wants and needs and work with the other members of the supply chain wholesalers, manufacturers, transport ation companies, and so on ± to make sure the merchandised customer want is available when they want it. Retailers have increasingly taken a leadership position in their respective supply chains. Not only does size generate power, but knowledge about their customers plays a vital role as well. As a result of their position in the supply chain, retailers are in the unique position to collect purchase information customer by customer, transaction by transaction. This information can be shared with suppliers to plan production, promotions, deliveries, assortments, and inventory levels.
Improved Product Availability
An efficient supply chain has two benefits for customers through, (1) Fewer stock outs (2) Assortments of merchandise that customer¶s want, where they want it. These benefits translate into greater sales, higher inventory turns, and lower mark downs for retailers. Improved Return on Investment
One measure of retailing performance is the ab ility to generate a target return on investment (ROI) An efficient supply chain and information system can increase net profit and net sales, while at the same time reducing total assets. Net sales can increase by providing customers with better assortments. Net profit can increase by either raising gross margin or lowering expenses. Its inventory management system, which is directly linked to the vendor¶s computer, is so sophisticated that the
retailer needs to carry relatively little backup inventory to stay in stock. Thus, since inventory investment, is low, the total assets are also low, and inventory turns are high. In sum, there¶s untapped opportunity for many retailers to improve their performance through better supply chain management. In the following paragraphs the various stages of marketing functions and their management is being discussed to evaluate its operational efficiencies.
STAGES INVOLVED (CARNATION) There are 7 Stages: Stage 1: Harvesting Stage 2: Pre- Cooling Stage 3: Grading Stage 4: Pulsing Stage 5: Packing Stage 6: Transportation Stage 7: Handling
Stage 1: Harvesting and Assembling Many growers, although producing high-quality carnation, do not receive premium prices, because the crop has been incorrectly harvested and incorrect postharvest practices have been applied. Good grading and bunching can enhance high quality flowers and result in increased returns. The correct stage of harvest depends on the market for which the flowers are intended. For local market, carnations should be cut when some of the flowers are fully open and the first petals are at an angle of 90° to the calyx. For export they should however be picked somewhat tighter at the paint brush stage. The vase life will be determined by the harvesting stage - if picked too tight they will not open properly, and if picked too open they will not last very long in the vase. For optimum vase life, only 1-2 flowers per stem should be open. Flowers are harvested by either snapping the stem off at a node, or cutting off with a sharp knife or small shears. Breaking at a node is generally only possible
with a young crop, but can lead to increased risk of pulling the plant and more stem rots due to a larger 'breaking wound'. Harvesting is best carried ou t in the morning when the flowers are cool and turgid, and should never be done in the heat of the day. Many growers still harvest by accumulating an armful of flowers as they move along the row. A far better method is to use small carts with detachable li ners. Alternatively, cut flower stems can be laid on the top wires or netting and collected later. This minimises handling and reduces losses from breakage.
Stage 2: Pre-cooling One of the most important factors affecting the postharvest life and quality of horticultural crops is temperature. Quality loss after harvest occurs as a result of physiological and biological processes, the rates of which are influenced primarily by product temperature. As the maintenance of market quality is of vital importance to the success of the horticultural industry, it is necessary not only to cool the product but to cool it as quickly as possible after harvest. The process of pre-cooling is the removal of field heat which arrest the deteriorative and senescence processes so as to maintain a high level of quality that ensures customer satisfaction. This paper provides a critical review to portray pre cooling as an intricate part of temperature management and to highlight the importance of its utilisation for extending the shelf life and maintaining the quality of horticultural products with emphasis on cut flowers. Various different pre-cooling methods are depicted with the benefits and ambiguities of each shown. The applicability and cooling efficiency of each are also ill ustrated. Through this review, it is aimed to promote interest in precooling and encourage its use on a more widespread basis.
Stage 3: Grading
Good grading and bunching can enhance high quality flowers and bring premium prices, but cannot improve a poor quality product. New Zealand has no grade standards for carnations. Grading is primarily done on stem length but other decisions must be made with regard to the following points: y
y
y
y
y
y
y
Freedom from pests and diseases Blemishes on flowers or foliage Sleepiness of flowers Bent stems Slab sides and bullheads Split calyces Faded colours
Flowers with split calyces should be clipped and bunched separately: they are not to be marketed as first grade flowers. Weak stemmed flowers should be cut down and sold as 'shorts'. Carnations are sold in bunches of 5 or 10 flowers. Rather than have all the flower heads (especially standards) at the one height, which increases the likelihood of damage, a staggered bunch is preferred in some markets. Growers need to check with their marketing agency as to its preference for bunching. All first grade bunches should be sleeved.
Stage 4: Pulsing Pulsing is an important treatment given to the flowers before shipment to increase their storability. Silver thio-sulphate, biocides, cytokines and sucrose solutions are recommended for enhancing the shelf life. None of our respondents have practiced this operation due to lack of knowledge. The technical knowhow was found to be lacking, among the sample growers, hence is not a common practice in the study
Stage 5: Packing
Carnations spikes are normally packed in empty packed in empty tea boxes (20´ x 18´ x 12´). Each box contained about 800 pieces, weighing about 20 kg. Beside gunny bags were also used as a packing material in carnation. Majority of the growers were found to be using gunny bags as a packing material.
Stage 6: Transportation All the respondents having less than 800 stems lot were using bus as principal means of transporting flowers.
Stage 7: Handling of Marketing Channels Of Cut Flowers Forwarding agents, cooperative societies, transporters handover the produce to commission agents/wholesalers as pointed out by producers against the receipt of the produce. In the market, commission agents sell their produce the same day it arrives in the market. In such a cases, the commission agents/wholesalers or their men proceeds the produce from the railway station or interstate bus terminals. There is no cold storage/auction centres facility available in Chandigarh market. Price, in the market is determined on the arrivals, but other factors like trains, weather conditions, etc. also effected the price determination of the produce.
ITEMS
F.A.
D.R.D.A
CHANNELS C.S. Wholesaler
Retailer
400.00
400.00
400.00
400.00
400.00
1.0 0.50 1.50 1.50 0.50 0.50
1.0 0.50 1.50 1.50 0.50 0.50
1.0 0.50 1.50 1.50 0.50 0.50
1.0 0.50 1.50 1.50 0.50 0.50
1.0 0.50 1.50 1.50 0.50 0.50
5.50
5.50
5.50
5.50
5.50
1. Pulsing 2. Packing 3. Labelling
0.70 0.25 0.20
0.70 0.25 0.20
0.70 0.25 0.20
0.70 0.25 0.20
0.70 0.25 0.20
Total (C) Transportation
25.90
25.90
25.90
25.90
25.90
19.69
19.69
19.69
19.69
19.69
(D) Commission of FA/DRDA/CS
40.00
18.00
15.00
64.00
-
3. Total Costs
91.09
69.09
66.09
115.09
51.09
4. Growers Net Price
308.91
330.91
333.91
284.91
348.91
1.
Grower Average Sale Cost
2. (A) Labour Cost 1. 2. 3. 4. 5. 6.
Pre-cooling Pulsing Grading Packing Labelling Carriage
Total (B) Material Cost
DEPCS COST AND RETURNS PER CUT FLOWER OF CARONATION
AVERAGE COST AND RETURN PER HUNDRAD CUT FLOWERS OF CARNATION REALIZED BY PRODUCER THROUGH DIFFRENT CHANNELS OF TRADE IN DELHI MARKET.
Bar-Graph 1
Bar graph depicting the Cost and Return in marketing of carnation through different channels.
500
450 400 350
300 250 Total Cost
200
ro ers et rice ¡
150
¢
£
Column1
100 50
0
Channels of Marketing:
F.A.
D.R.D.A
C.S.
Wholesaler
Retailer
Total Cost
91.09
69.09
66.09
115.09
51.09
Growers Net Price
308.91
330.91
333.91
284.91
348.91
Through the above bar we can see that, the channels of Retailer are most profitable with 85.35% Profit.
Marketing Cost and Margin of Intermediaries: More than 65% of the respondents marketed their cut flowers through wholesalers. Therefore the marketing cost of wholesalers was calculated as: Table: 2
Marketing costs and margins of cut flowers borne by Wholesalers (per 100 flowers)
ITEMS
A.Gross Price Received by the Producer
CARNATION (Per 100 Spikes)
400
B.Cost component of Wholesalers y
Communication (Phone, Mail. Etc.)
5.10
y
Labour
4.75
y
Loading and Unloading
2.10
y
Spoilage
5.10
Sub-Total
17.15
C.Selling Price of Wholesaler
480.75
D.Margin (Selling Price ± (Price Paid + Cost)
63.60
The wholesalers were not doing any processing except for assembling of the produce coming from the producing areas and further selling it to the retailer. On an average the total cost incurred by wholesalers per 100 flowers are higher in case of other flowers.
Table 3:
Marketing costs and margins of cut flowers borne by Retailers (per 100 flowers)
ITEMS
A.Buying Cost
CARNATION (Per 100 Spikes)
480.75
B.Marketing Cost Components y
Rent
35.75
y
Electricity
12.00
y
Communication and Sales Promotion
18.00
y
Depreciation
21.00
y
Local Transport
25.00
y
Labour
15.00
y
Spoilage
y
Packaging
Sub-Total Marketing Cost
Selling Price Marketing Margin
10.25 10.00
147.00
810.00 182.25
The marketing cost borne by the retailers selling carnation was 182.25 the marketing margin earned by the retailer in carnation was 22.5%.
Bar-Graph:
Bar-graph depicting the comparison between selling price and marketing margins.
900 800 700
600 500 Selli g rice ¤
400
¥
Marketi g Margi ¦
¦
300
200 100 0
By the above, we can see the difference between carnation selling price and marketing margin, that the marketing margin is less than selling price.
Marketing Problems: The Indian floriculture industry is faced with a number of challenges mainly related to trade environment, infrastructure and marketing issues such as high import tariff vis-a-vis African countries, low availability of dedicated perishable carriers, higher freight rates, inadequate support infrastructure, constraint in achieving economies of scale, and inadequate cold chain management. At the production level the industry is faced with challenges mostly related to availability of basic inputs, including q uality seeds and planting materials, quality irrigation and skilled manpower, and ageing plantations. With regard to marketing, major challenges faced by the Indian flower exporters are related to low level of product diversification and differentiation, v ertical integration and innovation, and challenges associated with quality and environmental issues. With increasing involvement of supermarkets in flower trade, organizing logistics is also becoming a critical factor for the Indian flower exporters. A low share of produce in consumer rupee is due to poor marketing practices being adopted by growers. The farmer¶s knowledge about the right post harvest treatment, packaging, storing and transport has not attained proper knowledge as yet. Few farmers adopted scientific pre-cooling and pulsing practices for reason of lack of technical know how. The packaging material was reported to be costly by the growers. Also, the procurement of packing cases invariably falls short of their demand. Instance were there that the µArhatias¶ of Delhi market devised the grower either by not reloading sale proceeds well in time or commission and other market charges rendered the producers to be dependent on intermediaries and the trade continues on good faith and at the mercy of the middleman. The growers generally remain uninformed with the latest trends in the market prices, arrivals, demands and changing consumer preferences.
Following are the major problems of MARKETING: 1. Due to the long distance, sometimes the flower spoil in the process of transport. 2. High fright rates. 3. Sometimes, the demand is less and supply is more.
4. Lack of cold stores 5. Sometimes due to the increased demand, the price fluctuates in markets. 6. Sometimes the shapes and size of the flowers are not as being expected. 7. If the packaging material is low quality, then also flower can spoil.
SUMMARY AND CONCLUSION India is endowed with different agro-climatic conditions ranging from tropical, sub tropical to dry temperature zones, has premium potential for growing cut flowers. India's floriculture exports with ¼ 35.55 million has been ranked 20th in the world exporting countries to the European Union. The share of India's total floriculture exports is only 0.42 % in the world exports to the EU. In cut flowers, it is observed that the value of Indian exports were USD 0.45 millions and that of foliage was USD 7.28 millions. India's share is 0.07 % in the total cut flowers imports in the country and in total floriculture products, India ranks 15th with 0.79 % share. In a nutshell th e prospects and forecasts of the trade: The above figures on worldwide consumption, market size, exports and growth rate of exports, worldwide imports and share of imports from the developing countries indicates that with rose imports from the developing Countries being 28.5 % thereby indicating an excellent demand and a growing market. The trade in Foliages indicate that India has emerged as the top most supplier among the developing countries and have succeed in developing a sustainable market in the EU. The floriculture industry in India can therefore continue to concentrate in this faster growing segment and undertake an aggressive marketing to increase the market share in US and in EU
The Important Channels In the Supply Chain Followed by The Growers in the Marketing of Flowers:
Producer ± Wholesaler ± Retailer ± Consumer
Producer ± Forwarding Agent ± Wholesaler ± Retailer ± Consumer
Producer ± DRDA ± Wholesale r ± Retailer ± Consumer
Producer ± Cooperative Society ± Wholesaler - Retailer ± Consumer
Producer ± Wholesaler ± Retailer ± Consumer
Producer ± Retailer ± Consumer
Producer± Consumer
Forwarding agent channel was found to be the most popular, since 55.885 carnation flowers reached Delhi market through this channel. The survey of the market further revelled that the produce of at least 100 growers arrived in this market daily and there were more then 150 wholesalers/commission agents and about 155 labourers operating in the market structure was studied by analyzing the degree of business concentration in respect of cut flower crops.
Objectives Of The Study:
To understand the supply chain management involved in the process of marketing of flowers.
To understand the problems faced by cut flower growers and suggest ways and means to overcome them.
To estimate the marketing cost and returns.
Findings of the Study:
The marketing channels or retailers are profitable for cut flower growers as it yields 85.35% of profits.
Suggestions
Setting up of a common market by the government
Setting up of a common price level
Government policies should be modified as per farmers needs
Provision of location specific
Provision of cold storage
Introduction of refrigerated transport system
Development of regulated domestic market
Introduction of crop insurance scheme against natural calamities
Training in grading of flowers as international standards
Liberal financial assistance to the floriculture
