Abstract The present marketing system, characterized by a long, fragmented supply chain, high wastages, low share of producers in price, is inadequately equipped to meet the growing needs of consumers consumers for quality quality and safe hygienic hygienic food. Terminal Terminal market market has been envisaged envisaged to improve improve availability, in terms of quality as well as quantity, from fresh foods as well as of export market with with bene benefi fits ts to all all in the the prod produc ucer er to cons consum umer er chai chain. n. Indi Indiaa has has emba embark rked ed upon upon the the establishment of terminal market with modern infrastructure and operational mechanism. The major requirement for a market is its location and layout. The State Government will approve the numb number er and and indi indica cati tive ve loca locati tion on of the the TMCs TMCs base based d on the the dema demand, nd, econo economi micc viab viabil ilit ity, y, commercial considerations etc.
Introduction With an increasing working population, rising disposable income and greater international exposure, the fast growing Indian market is witnessing a paradigm shift in its aspirations and lifestyle. While, food products capture almost 53% of private consumption expenditure and their demand rises consistently at almost 8%, the consumer basket is continuously undergoing change in favour of perishables (such as fruits, vegetables, animal protein, milk etc.) and healthy, hygienic products. The Indian consumer today stands at the threshold of a competitive world where the organized organized food retailer retailer awaits to utilize utilize numerous opportunities opportunities to serve this diverse demand. The present marketing system, characterized by a long, fragmented supply chain, high wastages, low share of producers in price, is inadequately equipped to meet the growing needs of consumers for quality and safe/ hygienic food. Although, India produces almost 10% of the world’s fruits and vegetables it accounts for a mere 1% of world trade. This small market share can be attributed largely due to weak post-harvest infrastructure, inadequate extension support to the farmer, quality, and hygiene control mechanisms.
Thus, in order to harness the potential of the emerging consumer demand (domestic and international), a professionally managed competitive alternate marketing structure that provides 1
multiple choices to farmers for sale of produce along with a comprehensive solution to meet key needs of the stakeholders is necessary. Such a system entails a high investment cost and efficient management skills, each of which can be infused by inviting private sector participation in the sector. Thus, the Modern Terminal Markets were conceptualized with the objective of fulfilling the above goals. The Existing Market structure of fruits and vegetables does not adequately address the complex problems of farmers. It has low marketing efficiency, high post harvest losses and does not foster competitiveness. A modern innovative system that can reduce the vested interests of a large intermediary chain, create competition, assure quality and modernize operations with IT applications in handling of fruits and vegetables, is necessary to raise income of actual farmers. To achieve this objective, National Dairy Development Board was asked to develop and establish operations for a Modern Integrated Terminal Market for Fruits, Vegetables and Flowers in Bangalore by the Govt. of India. The market is popularly known as SAFAL Fruit and Vegetable Auction Market (SFVAM).
SFVAM was a special endeavor to bring farmers and wholesalers to a common platform to facilitate information sharing and to promote the spirit of cooperative movement. The State Government amended Karnataka State Agricultural Produce Marketing (Regulation) Act, 1966, to pave the way for National Dairy Development Board to own, operate and manage fruits and vegetables auction market in the State. The venture facilitates the organization of more than 200 horticultural farmers’ associations with around 50,000 grower members for planned and assured production and supply of agricultural produce for wholesale marketing.
The SAFAL Market was designed on the lines of European Auction Markets. It offers a clea clean n and and hygi hygien enic ic mark market et envir environ onme ment nt.. Comp Compon onen ents ts of the the mark market etin ing g syst system em incl include ude establishment of Wholesale Auction Market, Backward Linkages with Farmers, and Forward Linkages with the Retailers and Consumers. The market is designed to handle 1600 MT tones of fresh fruit and vegetables per day, operating 312 days in a year.
2
Terminal Market would endeavor to integrate farm production with buyers by offering multiple multiple choices to farmers farmers for sale of produce such as electronic electronic auctioning auctioning and facility facility for direct sale to exporter, processor and retail chain network under a single roof. In addition, the market market would provide storage infrastruct infrastructure ure thus offering offering the choice choice to trade at a future future date to the participants. participants. It is envisaged to offer a one-stop-s one-stop-soluti olution on that provides Logistics Logistics support support including transport services & cool chain support and facility for storage (including warehouse, cold storage, ripening chamber, storage shed), facility for cleaning, grading, sorting, packaging and palletisation of produce and extension support and advisory to farmers. Each of these services would be provided in lieu of a user charge. The TM would be built, owned and operated in a Public-Private-Partnership Mode by a Corporate/ Private/Co-operative entity (hereinafter called as Private Enterprise) either by itself or through adoption of an outsourcing model.
However, However, implementat implementation ion and successful successful operation of this path-breaking path-breaking initiative initiative would necessitate State Government support. Thus, the creation of a conducive regulatory and legal framework for entry & operation of the project and provision of a level playing field to the private enterprise would be integral to realization of this vision. The Union Government will lend its support to the initiative by providing financial support to the project through the Venture Capital (VC) Scheme of the Small Farmers Agri-Business Consortium (SFAC).
The Terminal Market will provide a mega scale collection and sale market of agricultural produce, if established at a convenient location. A selection on pure economic consideration will ensure an easy and regular supply of raw material, labour force, accessibility, public utilities like electricity, communication, water, etc .an ideal location may not, by itself, guarantee success; but it certainly contributes to the smooth and efficient working of an organisation. A bad location, on the other hand, is a severe handicap for any market and it finally fails. It is, therefore, very essential that utmost care should be exercised in the initial stage to select a proper place. A market should be properly designed for its efficient working. The efficiency of the market market depends upon proper usage of allocated allocated space, space, Circulatio Circulation n and movement patterns, Utility and service distribution. In a properly laid market processing bottlenecks and delays are few, and material handling costs are reduced.
3
Objectives •
The main objectives of setting up Terminal Markets Complex (TMC) are:
•
To link the farmers to the markets by shortening shortening the supply chain of perishables and enhance their efficiency and thus increase farmers income
•
Provide professionally managed competitive alternative marketing structures that provide multiple choices to farmers for sale of their agricultural produce.
•
To drive reforms in the agricultural marketing sector resulting in accelerated development of marketing and post harvest infrastructure including cool chain infrastructure in the country through private sector investment.
•
To bring transparency in the market transactions and price fixation for agricultural produce and through provision of backward linkages to enable the farmers to realize higher price and thus higher income to the farmers.
Salient Features •
The TMC will be set up in those States that undertake reforms in their laws dealing with agricultural marketing to provide direct marketing and permit the setting up of markets in private and cooperative sectors.
•
The TMC would operate on a Hub-and-Spoke Format wherein the Terminal Market (the hub) would be linked to a number of Collection Centers (CC) (the spokes).
•
The spokes would be conveniently located at key production centers to allow easy farmer access and the catchment area of each spoke would be based on meeting the convenient needs needs of farm farmer ers, s, oper operat atio ional nal effi effici cien ency cy and and effe effect ctiv ivee capi capita tall util utiliz izat atio ion n of the the investment.
•
TMC would establish backward linkages with farmers through the collection centers and forward linkages through wholesalers, distribution centers, retail cash and carry stores, processing units and exporters.
•
Collection Centers in the villages would integrate producers and retailers, processing units and exporters into the market system.
•
An electronic auction system would be established to ensure transparency in price fixation and competition. 4
•
The Scheme will attract and facilitate private sector investment in the agribusiness sector, by assisting the key stakeholders – entrepreneurs, producers, processing industry and exporters
•
Producers, farmers, their associations, and other market functionaries from any part of the country may use the infrastructure and facilities of the TMC directly or through the collection centers.
•
TMC would provide provide one-stop one-stop solution solution in terms terms of providing providing logistics logistics support support including including transport services and cool chain facility.
Review of literature
5
The government has decided to set up seven modern terminal markets in Punjab, Haryana, Chandigarh and Madhya Pradesh in the next year under public-private partnership (PPP). The first terminal market will be set up in Chandigarh. Modern Modern termin terminal al market market comple complexes xes would would work work on the “hub-a “hub-and-s nd-spok pokes” es” concept concept as prevalent in the United States. The terminal market referred to as the hub” would be linked to a number of collection centers (the spokes). The spokes would be conveniently located in major production centers. The programme for setting up of terminal markets would be taken under the US-India Knowledge Initiative in Agriculture, said the agriculture minister-counselor in the US embassy in India, Holly Higgins. She said that when the US-India Knowledge Initiate Board met for the first time in Washington in December 2005, it was decided to focus on four key areas—agro-processing and post-harvest management, biotechnology, water management and capacity building in education and curriculum development. Some farmers’ groups and NGOs have been critical of US-India Knowledge Initiative signed in March, last year on the occasion of President Bush visit to India. “Our capacity capacity building building and joint applied applied research research projects would address address impediment impedimentss to successful agricultural growth, market development, trade, domestic and foreign investments,” she said and added added that that work work has already already begun begun in the Nation National al Instit Institute ute of Agricu Agricult ltura urall Marketing in Jaipur and in Himachal Pradesh, Karnataka and Rajasthan. According to the additional secretary for agricultural marketing, Karnail Singh as many as 12 state governments have sent their proposals for setting up of terminal markets. Punjab has offered to set up terminal markets in four locations, including Ludhiana and Hoshiarpur. The government’s equity in terminal markets will not exceed 49%. Reliance group has shown keen interest in setting up of terminal markets.
6
“Studies show that organised markets benefit farmers. Booming retail market and mass population of consumers offer good scope for terminal markets in India,” said Rebecca Black, director, director, economic growth in the US Agency for International International Development. Development. The executive director of the Centre for International Trade in Agriculture and Agro-based Industries (CITA), Vijay Sardana is, however of the view that upgradation of the existing marketing infrastructure would be a viable option o ption than setting up of new terminal markets.
Features of the Terminal Market TM would operate on a Hub-and-Spoke Format wherein the Terminal Market (the hub) woul would d be link linked ed to a numb number er of colle collect ctio ion n cente centers rs (the (the spoke spokes) s).. The The spoke spokess woul would d be 7
conveniently located at key production centers to allow easy farmer access and the catchment area of each spoke would be based on meeting the convenience needs of farmers, operational efficiency and effective capital utilization of the investment. The commodities to be covered by the markets include fruits, vegetables, flowers, aromatics, herbs, meat and poultry.
The servic services es and infras infrastru tructu cture re that that are planned planned to be provid provided ed to farmer farmers, s, trader traders, s, consumers and other stakeholders, at the TM and the Collection Centers (CCs) are presented in Figure.
T
Electronic Auction
Processor
Fig 1: Structure of Terminal Market
This infrastructure and services to be provided by the TM and CC would be in conformity with any recognized national/ international standards and can also be outsourced. While many features of the TM have been incorporated in the Project DPR (supplied by the National Institute of Agricultural Marketing, Jaipur), it would be the prerogative of the Private Enterprise to 8
prepare prepare its own Business Business Model and determine determine the size of the market market and scale of its operation operation based on financial financial viability viability and commercial commercial considerations. considerations. However, the total project cost should not be less than 75% of the cost estimated for the concerned markets in the DPRs.
BUSINESS PROCESS AND IT ENABLED OPERATIONS To run any business first we need to understand the business. After that every process should be documented. After understanding every activity of business, they are written in the form of processes in the form of workflows and steps of a ctivities. Various departments are formed and organization hierarchy is prepared. De partmental manual is prepared for every department with descriptive details of their functioning. Here business process consists of three major components: • Backward Linkage • Terminal Market Operation • Forward Linkage
Backward Linkage
In brief, brief, backwar backward d linkag linkages es are supply supply chain chain relate related d activi activitie ties. s. The develo developme pment nt and ensuring of regular supplies of adequate volume of produce to meet capacity needs for successful operation of Terminal market it is necessary to develop backward linkages. The Backward Linkages are also to ensure that produce meets end user and market requirements of quality and grade and quality besides a functional issue the Backward Linkages is also a business process of the Terminal market. It forms the first critical linkage in an integrated Terminal market. The cent centra rall driv drivin ing g forc forcee in this this is the the Colle Collect ctio ion n Cent Center er (CC) (CC).. A colle collect ctio ion n cent center er acts acts as a consolidation center and it is set up in key production areas in the area of operation – a District/s or State/s. The functionaries who form part of the Backward Linkages include: the farmers, the Farmers Association (FA), the logistics people or transporters and other service providers. The Collection Center meets the value addition needs and marketing needs of a group of farmers operating in a key production area. Considering the criticality of the Backward Linkages in the successful implementation implementation of Terminal market market a major Department is set up to look after after this aspect 9
Fig 2: Structure of Backward Linkages Department
The Backward Linkage department is primarily responsible for procurement of produce and getting it to the Terminal Market as well as sales outlets and bulk buyers. They form collection center, which are responsible for sorting and grading of produce. Once the produce is received from farmer, a receipt note is given to the farmer. Later depending the price at which the produce is sold in the market, farmer is paid by collection center. Thus the collection center plays an important role between TM as farmer as a bridge to transact. These farmers form farmers
10
association. Every collection center will have at-least three associations under them and further every association will have minimum of hundred-farmer member. Backward linkage department is also responsible for giving training, harvest plan to every collection center and in-turn to every association and their members. Details of backward linkage are given separate chapter.
Terminal Market Operations
Once the produce is received from Collection Center, then till it is sold in auction a nd dispatched to the buyer, the whole functional chain is part of Terminal Market operation. The diagram shown below depicts the business flow in the terminal market.
Fig 3 General representation of Terminal Market Operation
11
Forward linkage
For any market to be successful forward linkages, play a very important role. If forward linkages are strong or there is an assured demand, then this assures demand will bring in supply to the market. Supply to Super Stores Tie up with processing Firm Firm Export outside the Country. Forward linkage consists of following departments: I. Sales and Market Marketing ing alread already y discuss discussed ed above above II. II. Shop Shopss and and Godo Godown wnss III. Terminal Terminal Market Market owned owned retail retail shop (Cash (Cash and Carry) Carry) IV. Buyers V. Export orters VI. VI. Proce rocess ssor orss VII. VII. Forwar Forwarder derss / Trans Transpor portt Trade Trade
Fig4: Forward Linkage
12
ELECTRONIC AUCTION SYSTEM Electronic Auction Systems are sophisticated solutions to address the growing need for an efficient efficient trading method. method. EAS employs employs various various electronic electronic hardware and software software sub-syste sub-systems. ms. These These sub system systemss work work in conjun conjuncti ction on to produc producee a seamle seamless ss mechan mechanism ism for conduct conducting ing auctions. EAS provides buyers with a standardized user interface that is easy to understand and use. EAS systems are easy to manage and can generate an exhaustive database of buyers, sellers and their requirements, for the organization conducting the auctions. In markets, transaction prices may be determined in different ways. Standardized inexpensive items are often sold with posted posted prices. prices. Expensive Expensive customized customized products products or services, services, especially especially in industrial industrial markets, require negotiation and bargaining. Auctions are usually preferred in situations where enough competition exists, involving non-standardized products and/or products with unstable prices. In the most common form of auction the auctioneer is selling goods; the bidders are the potential buyers. Buyers compete by submitting bids, which state a quantity and a price. Different types of auctions exist, depending on how the transaction price is determined. With the convergence of IT and telecommunication, and the proliferation and availability of bandwidth, the impact of EAS based markets is quickly quickly expected expected to increase significantly significantly.. The effectiveness effectiveness of these markets markets depends on the EAS design. Auctions provide a central meeting place for buyers. These centers create efficient locations for gathering information on supply, price discovery, quality control, and product distribution.
Branding Branding of F&V in the terminal market of Chandigarh will create opportunities for the profitable niche markets that could operate in conjunction with the bulk marketing system of terminal market. Consumers have also expectation that fruits and vegetable, which they will purchase through the terminal market, should be different from the commodity standard and they might be willing to pay premium for that. In a commodity system there is an overall effort to minimize the cost, but there is limitation on the cost front also. In these aspects branding of the market produce will give an opportunity to effect the cost of produce with quality, for which
13
consumers are ultimately going for. But branding of Chandigarh market will not a cakewalk, there will be many supply control issues and pricing issues. So for this branding of Chandigarh market produce will be based on certain attributes like, a particular brand of fruits and vegetable of the Chandigarh terminal market might specify that the branding product can only come from selected area and justify this restriction based on the specific attributes of the region. Another way to control supply would be to limit membership of producers, which are supplying their produce to the collection center or directly to the terminal market, to a relatively small number of high quality producers or to a particular farmers group of the village and the selection of producers will be done on some quality criterion or location for restriction on supply control. Another way is through IPR or through trade sectors for some ingredients or process.
Problems with branding:-
1. Producers Producers or any chain chain members members will will not receive receive the the price price incentive. incentive. 2. Even Even the the whol wholee sell seller erss or the end end consu consume mers rs provid providee the the produ produce cerr with with price price incent incentive ivess to produc producee higher higher quality quality product products, s, compet competiti ition on from from other other farmer farmerss quickly eliminate the profitability and eventually leading to disguise to the small scale producers. 3. Small-scal Small-scalee production production leads leads to unprofi unprofitably tably of of the branded branded products products..
Branding will be successful step for Chandigarh terminal market because,
Price signal will be transmitted from the producers to the consumer. For p roducer- offering better price for better quality produce and ev entually encouraging producer to build professionalism in them. In this way to all the channel members (since the P. Premium be distributed)
14
Fig.5 Chandigarh terminal market
The proposed brand names for the terminal market produce are as follows, of which one can be selected by the market authority Farm Fresh, Nourisher, Ever Fresh, Dew Fresh, Farm Gold, Soul Fresh day, Fresh morning, Chandigarh fresh, Chandigarh ever fresh
15
ROLE of the PRIVATE ENTERPRISE The Private Enterprise would have the following rights and obligations: •
The enterprise would necessarily have to provide the infrastructure facilities and services as stated in Figure 1 at the TM and CC complex in the Hub-and –Spoke Format
•
The The ente enterp rpri rise se woul would d have have the the free freedom dom to setset-up up addi additi tiona onall faci facili liti ties es to provi provide de complimentary services such as facility to trade on the Commodity Exchanges, supply of agri-inputs, processing etc.
•
The enterprise would have the freedom to buy directly from the farmer through the CC and/or a procurement cell within the TM premises.
•
The enterprise would promote Farmers’ Associations and progressively involve them in the operation and management of the CCs
•
Obtain Obtain the necessa necessary ry licens licenses, es, cleara clearance ncess and approv approvals als for the establ establish ishmen mentt and operation of the market
•
The enterprise enterprise would be responsibl responsiblee for the acquisition acquisition of land for setting setting up of the TM and the CCs
•
The The enter enterpr pris isee would would be free free to coll collec ectt user user charg charges es (det (deter ermi mine ned d by comm commer erci cial al conside considerat ration ions) s) from from market market parti particip cipant antss and produc producers ers,, for the infras infrastru tructu cture re and services provided by it. The charges for providing the basic services of aggregation at collection centers and auction at the Terminal Market shall, however, not exceed 1% of the value of the produce.
•
The Private Enterprise would be liable to pay the prevailing taxes, duties, fees (including market fees) etc., as applicable
•
Farmers in the catchment area of the TM would be free to sell their produce either through the CC/ TM or any other marketing channel not related with the project. 5
16
Role Of The State Government
The State Government would play a pro-active role in the establishment establishment and operation operation of the Terminal Market and in ensuring ensuring the autonomy autonomy of the market. For the purpose, purpose, it would set up an empowered Committee and appoint a Nodal Officer to undertake, among others, the following: •
To provide Regulatory Clearances and licenses for the establishment and operation of the TM and the CCs
•
Facilitation of the land acquisition process for TM and CC as undertaken by the Private enterprise
•
Provision of Civic amenities (including drinking water, sewerage system etc) and suitable infrastructure near the Project site such as roads etc.
•
Requisite approvals for basic support infrastructure (such as electricity, power, water, communication etc.)
•
Assistance in organizing farmer and trader support in kick-starting the collection centers
•
The State Government will be at liberty to participate in the equity of the project by way of direct funding, land or infrastructure within the equity commitment of the Central Government (SFAC).
Central Government Support The Ministry of Agriculture (Department of Agriculture & Cooperation), Government of India will support the project through its Venture Capital Scheme for Agribusiness Development under SFAC. The terms for financing would be as follows: •
Private Enterprise will bring a minimum 51% of the project equity for the establishment of the project.
•
Up to 49% of the project, equity would be contributed by SFAC, including contribution by the State Government, if any, which would be returnable at par on the successful operation of the project and the repayment of the Term Loan of the financing bank.
17
•
At the time of redemption of equity, SFAC/ State Government will have the option to allocate at par its share of project equity to farmers’ organizations that are actively engaged in the business bu siness activities of the CCs of the TM.
•
Project appraisal would be undertaken by the Bank financing the term loan.
•
The privat privatee enterp enterpris risee would would be select selected ed throug through h an open, open, transp transpare arent nt compet competit itive ive bidding process. The Project will be awarded to the bidder with the request for minimum SFAC equity participation.
Example: Operation of SAFAL market
The Existing Market structure of fruits and vegetables does not adequately address the complex problems of farmers. It has low marketing efficiency, high post harvest losses and does not foster competitiveness. A modern innovative system that can reduce the vested interests of a large intermediary chain, create competition, assure quality and modernize operations with IT applications in handling of fruits and vegetables, is necessary to raise income of actual farmers. To achiev achievee this this object objective ive,, Nation National al Dairy Dairy Develo Developme pment nt Board Board was asked asked to develop develop and establish operations for a Modern Integrated Terminal Market for Fruits, Vegetables and Flowers in Bangalore by the Govt. of India. The market is popularly known as SAFAL Fruit and Vegetable Auction Market (SFVAM). SFVAM was a special endeavor to bring farmers and wholesalers to a common platform to facilitate information sharing and to promote the spirit of cooperative movement. The State Government amended Karnataka State Agricultural Produce Marketing (Regulation) Act, 1966, to pave the way for National Dairy Development Board to own, own, operate operate and manage manage fruits fruits and vegeta vegetable bless auctio auction n market market in the State State.. The venture venture facilitates the organization of more than 200 horticultural farmers’ associations with around 50,000 grower members for planned and assured production and supply of agricultural produce for the purpose of wholesale marketing. The SAFAL Market was designed on the lines of European Auction Markets. It offers a clea clean n and and hygi hygien enic ic mark market et envir environ onme ment nt.. Comp Compon onen ents ts of the the mark market etin ing g syst system em incl include ude establishment of Wholesale Auction Market, Backward Linkages with Farmers, and Forward Linkages with the Retailers and Consumers. The market is designed to handle 1600 MT tones of fresh fruit and vegetables per day, operating 312 days in a year. 18
Backward and Forward Linkages
The market is supported by 225 Horticultural Farmers Associations (FAs) 150 in the State of Karnataka and the balance in nearby states of Andhra Pradesh and Tamil Nadu. Membership of the association is restricted to only those farmers who own land and are not traders. The FAs will to be linked to 45 Collection Centers (CCs). The Forward Linkages envisioned under vegetables, graded material, Short-term storage, Fruit ripening facility etc. The market was designed to handle 858 MT in 2003 and 1830 MT in 2012 per day. The market has not achieved the prospective levels though the investment has already crossed more than 1,000 million rupees. The flower auction mainly caters to the flowers grown around the city. The market has not achieved the level of expectation in the year 2005 in terms of arrival and volume of business. The reasons for not achieving the operational level is advocated as – inadequate wholesalers to buy material because of deposit requirement equal to the amount of purchase everyday by the traders. This practice of NDDB is neither practically possible nor is prevailing in the existing trad tradee prac practi tice ce.. A back backwar ward d link linkag agee with with farm farmer erss is also also inad inadeq equat uatee and and incom incompl plet etee and and information communication is not in place. While cooperating with the NDDB in inculcating a new culture of modern markets, the Govt. of Karnataka amended the APMC Act and allowed NDDB to open and run the said market. The Govt. of India prepared a Model Act to bring amendment in APMC Act and allowing allowing private markets markets to come up. As a follow up, various various states have amended their acts to pave the way for the private sector to come forward on the same lines. The Govt. of India has also also introd introduced uced Market Market Infras Infrastru tructu cture re Develo Developme pment nt Scheme Scheme (MIDS (MIDS), ), which which is linked linked with with reforms. In this background, the Ministry of Agriculture took up the matter with different States and the NDDB for replicating replicating similar but improved improved model with removal of all weakness of previous previous system in different forms in different States. Taking initiatives, the Ministry offered to assist the willing State Statess in formul formulati ation on of Detail Detailed ed Projec Projectt Report Reportss (DPR) (DPR) for the settin setting g up of Integr Integrate ated d Horticultural Markets and subsequently in tying up of financing and implementation of the project by different agencies in different States subject to the condition of amendments in APMC act. Different States requested the Ministry to get prepared Detailed Project Reports for them. In 19
view of this, the National Institute of Agricultural Marketing was asked to prepare the said reports for different markets in different d ifferent States.
20
MARKET LOCATION Location decisions are the strategic decisions that require large financial investments and they are irreversible in nature. A number of factors like market related factors, tangible or cost factor factorss and intang intangibl iblee or qualita qualitativ tivee factor factorss affect affect and are affect affected ed by the locati location on..choice.
Models and techniques techniques such as break-even break-even analysis, factor rating technique, technique, and transportat transportation ion method of linear programming help in making location decisions. Since these models work on quantitative basis, therefore the influence of qualitative factors should be considered to decide the location choice. The State Government will approve the number and indicative location of the TMCs based on the demand, economic viability, commercial considerations etc.
FACTORS CONSIDERED FOR THE SELECTION OF THE LOCATION
Many factors were taken into consideration before selection of the location.
•
Location, with respect to the marketing area
•
Raw material Supply
•
Transport facilities
•
Availability of labour
•
Availability of utilities: water, fuel, power
•
Environmental impact and effluent disposal
•
Local community considerations.
•
Climate
•
Availability of suitable land
•
Political and strategic considerations
•
Accessibility from growing areas
•
Site Condition
21
STEPS IN LOCATION SELECTION
To be systematic, in choosing a market location, the following steps should be taken; 1.
Selection of region;
2.
Selection of the locali ality or or co communi unity;
3.
Selection of the exact site.
1. Selection of Region
The selection of a particular region out o ut of many natural regions of a country is the first step in market location. 1.1. 1.1.
Avai Availa labi bili lity ty of raw raw mat mater eria iall
It is very essential that it should be located in a place where the supply of raw material is assured at minimum transport cost. 1.2. 1.2.
Avai Availa labi bili lity ty of of Powe Powerr and and othe otherr faci facili liti ties es
Power is the wheel for any industry, therefore market should be a located at a place where electric power is cheaply available and in plenty. All the public utilities like electricity, communication, water, etc are currently available in the near vicinity and the same facilities could be expanded / increased for the proposed market. A provision can be made for Water Harvesting. 1.3. .3.
Transpo nsporrt facili ilitie ties
Transport facilities are essential for bringing raw material and men from different places to the market. A place which is well connected by rail , road is ideal for market location.
1.4.
Suitability of climate market
The climate has its own importance in the location of a market because of two reasons. First, certain crops are available in certain regions and thus the cost of storage can be reduced. Second, climate affects labour efficiency. Extreme climatic condition affects labour efficiency. 1.5. 1.5. Gove Govern rnm ment ent Polic Policy y
The Government would play a pro-active role in the establishment and operation of the Market and in ensuring the autonomy of the market. The various policies have been stated earlier. 22
2. Selectio Selection n of the locality locality or commu community nity
The selection of a locality or community in a region is the second step in market location
2.1. .1.
Avail ailabi ability ity of labo abour
Labour an important factor for the operation of a market. An adequacy of labour supply at reasonable wages is very essential for the smooth working of a market. 2.2.
Civic amenities for workers
Civic amenities such as parks theatres must be provided for the employee. A place which abounds in all these facilities will naturally be preferred to another place which lacks them. 3.
Selection of the exact site
The selection of exact site in a region is the third step in market location. This selection is influenced by the following considerations. 3.1.
Soil, Size and Topography
The terrain of the site is relatively flat. Therefore, the construction will be economical. The area of the land should be such as to accommodate not only the existing manufacturing facilities, but offer scope for future expansion programmes as well. 3.2.
Disposal of waste
The site selected for the location of plant should have provision for the disposal of waste. There must be enough vacant land for the dumping of solid waste.
CASE: SELECTION OF BEST LOCATION FROM THE SITES PROPOSED FOR PROPOSED TERMINAL MARKET AT CHANDIGARH
Following three sites were considered in the initial stages for the proposed terminal market: 1. Dariya 2. Site near Durga Nursery 3. Sec 39 Pros and cons were analyzed for each site. Below is the comparative analysis of the sites. 23
DARIYA:
- Railway line is adjacent to the area - Distance from airport is 5 Km. - Away from hustle and bustle of the city. Hence no traffic hassles - Near to hinterland (i.e. Himachal from where apple comes, Haryana and some part of Punjab). - Near to Transport area (2 Km) - Preferred site of most of the farmers. Sector 39
- Distance from airport is 8 Km. - Away from Transport area. - Some area is developed already having many facilities including sewerage, street light etc. - This site is preferred by farmers coming from adjoining Punjab areas like Patiala.
Site near Durga Nursery:
- Large stretch of land available - Near to national highway, so may create traffic congestion in future. - Near to airport. - Railway line passes by the site. - This site is also preferred by farmers.
A team visited all the three sites and critically analysed the sites. According to the team opinion, Dariya seemed to be the best option among the three sites visited.
It links the Haryana with the Ambala road. Produce from Punjab can come to the market from Patiala road and also Kalka road links Shimla to this place. Being near to transport area and railway line is another advantage. The produce coming from the southern part of the country can directly come to Chandigarh via train. Present pattern of arrival is that it comes up to Delhi by train and from train it further comes to Chandigarh by trucks. So cost of transportation increases. Also Also load loadin ing g unloa unloadi ding ng take takess plac placee in Delh Delhii and and then then agai again n in Chan Chandi diga garh rh leadi leading ng to deterioration in the quality of the produce. 24
Layout and Design of Market Complex The major activity of Terminal Market will be handling of large-scale produce of goods. This will involve providing various facilities facilities for receiving receiving goods, their mechanical mechanical and manual movement, display, auction, packaging, storage, and dispatch, etc. Keeping handling of goods as the major activity, the market complex design has been evolved.
Following objectives have been considered while wh ile designing
1. To facilitate smooth and safe traffic flow, the following were considered
• Segregation • Queuing and holding areas • Sizing of road
2. To ensure efficient and unhindered movement of men and material, the following were considered.
• Elimination of cross movement • Protected pedestrian area • Orientation
3. To provide a secure working environment free of unauthorized activities, the following were considered.
• Identify security zones • Locate check points
4. To provide a comfortable working environment conforming to the best health and safety standards, the following were considered.
• Good Ventilation • Good Lighting • Good Sanitation 25
• Good Waste material disposal method
5. To optimize construction costs and reduce construction time, the following were considered.
• Design and selection of structural system
6. To incorporate flexibility, upgrade ability and expandability into design, the following were considered.
• Material specifications • Modular space planning • Utility system design
Example: LAYOUT PROPOSED FOR PROPOSED CHANDIGARH TERMINAL MARKET
Keeping handling of goods as the major activity, the market complex design has been evolved.
•
Considering the flat terrain and the linearity of the site, zoning of activities within the site has been proposed in a sequential manner. The handling of goods in a modernized facility requires a sequential pattern of movement. The activities in this site have been zoned in a similar manner with an appropriate circulation system. This circulation system is both manual and mechanical i.e. freight lifts, conveyor belts, etc. The circulation areas are an important feature and govern the market design.
•
The layout is simple with a peripheral road and buildings planned in been provided to ensure a compact layout.
•
A large area near the entrance has to be provided for the entry of goods, parking and smooth circulation of vehicular movement. Mechanical systems like weigh bridges, etc have been provided which will monitor the entry and exit of trucks, and record their 26
contents and movement within the market complex. With this system each and every vehicle entering into the facility will be monitored, its content, weight of goods will be recorded. By means of mechanical monitoring, at any point of time it will be easy to assess the quantum of goods within the facility. Transparency and complete security will be achieved.
•
Facilities like cash and carry, etc has to be provided near the entry, so that the local buyers need not enter the market complex.
•
A Service Core has to be provided in each building to distribute the movement of goods. Each service core has staircases / ramps / freight/ lifts / toilets, etc. This will facilitate easy and controlled movement of goods vertically and horizontally within the large complex. Mechanical means have to be provided for circulation and movement of goods.
•
Provision has to be made in the layout for future expansion, which will be possible without disturbing the existing structures.
•
The layout enables phase wise execution ex ecution of the market facilities.
Market Facilities:
Various activities have to be provided for a modernized market facility in an organized and systematic manner to ensure that the flow of produce is smooth and facilities are utilized in most efficient manner. This market will alter the traditional marketing pattern and generate a new working model. The new model will develop an organized, disciplined and systematic marketing pattern. The facilities provided are:
Auction Halls
These halls have to be provided adjacent to the parking and the loading/ unloading areas, as most of the goods will first go to auction halls. The auction halls should have receiving areas, display areas, electronic auction areas and distribution areas. The halls should have fairly large 27
spaces and have the flexibility for their division into smaller areas, which could be used for fruits fruits,, vegeta vegetable bles, s, as per requir requireme ements nts so that that the activi activitie tiess can be divide divided d easil easily y without without disturbing other areas. Display Areas
These areas have to be provided outside the Auction areas as the Wholesalers, retailers and exporters will mainly require access to these areas for inspection of goo ds.
Viewing Galleries
These have to be provided at mezzanine floor level of auction hall for getting a complete overview of the system. It should be equipped with all kinds of electronic gadgets like cameras, etc. This will control and monitor the various activities like loading / unloading, packaging, distribution etc being carried out.
Large Halls for Grading and Packing
These have to be provided near the Auction and Display areas. From the auction and display areas, the goods will be brought to the Grading and Packing Zone where modern machines will be installed for the same. Here goods will be graded and packed for further distribution. These are connected to freight lifts where by mechanical means like conveyor belts; the goods will be transported to dispatch areas or cold storage. The consignments will be graded and packed for immediate dispatch to the local markets, distribution to distant wholesale markets and repacked for export.
Transportation Corridors
Transpo Transport rtati ation on corrid corridors ors have have to be provid provided ed which which will will connect connect all areas areas of variou variouss activities within the complex horizontally. The corridor should be wide enough for material to be delivered to different areas of the complex by trollies, conveyor belts, etc or by any other mechanical means. Freight lifts have to be provided which act as vertical corridors for the movement of goods.
28
Cold Storage Units
These units have to be provided at the rear end of the entire complex. Goods will be received here by mechanical means and will be stored if they are unsold and have to remain within the auction premises for various reasons for more than 12 hours. The cold storages can also be hired out to the wholesalers, buyers and sellers for storage of goods.
Loading and Unloading Areas
These are to be provided adjacent to the parking areas and near the wholesale market where trucks carrying carrying goods will be docked into the building building for loading loading / unloading unloading as per the requirement. About 10160 sq. m of space is to be provided and this will allow storage of produce. From here the goods will be distributed to the other areas like auction halls and display areas.
Parking Space for Containers, Trucks, Small Vehicles etc
All kinds of parking areas have been provided on lease out/rent basis for long term parking, short-term parking and docking areas for trucks, light motor vehicles, two - wheelers have been provided. Circulation in the parking area is to be planned in such a manner that congestion and pollution are avoided.
Traditional Shops for Local Markets
Shops have to be provided for the wholesalers and producers of the local market. The shops should have a size measuring 40 x 75 sq. m. It will be possible to have a display area in the front, an office space in the rear and stacking in mezzanine area in each individual office. Corridors have to be provided in front of the shops for buyers to visit, discuss and negotiate. Shops should be of the same size so that a trader can purchase two shops if he wants to have a larger shop or can divide them into two for smaller shops.
29
Office Areas /Quarters
These have to be provided for traders, wholesalers, etc who are interested in having individual office spaces. These could also be sold / let out to local traders, etc. Besides these other supplementary facilities like bank counters, ATM centres, etc cou ld be housed.
Other Service Areas
Administrative areas are to be provided which will have cash desk, conference rooms, training rooms, etc. Areas have to be provided for logistics companies, service providers, public conveniences such as cafeterias, toilets, etc. Public Conveniences such as rest rooms, wash rooms, toilets, cafeterias, also are to be provided for large number of truck drivers coming to these these areas. areas. Provisio Provision n of Five Five star star hotel hotel and setting setting up of Cash & Carry Carry format format store store for Perishables like Meat and Dairy products etc. in the second phase.
Additional Facilities: •
A Central Library and information centre to be provided which will give information regarding produce, cost, etc.
•
Info way lines to connect to nodal centres in catchments areas tom ensure connectivity with farmers, to establish forward linkages. Ten nodal centres are already present.
•
Rain Water Harvesting is proposed.
•
Solar panels are proposed for street lighting in the market complex.
•
Green zone and landscaping are proposed to control pollution.
•
Provision for fire fighting, police stations, petrol pumps, dispensaries, etc is to be made for emergency services.
•
Bus stops, street furniture, food kiosks, guesthouses, refreshment areas, etc have to be provided. Signage have been proposed to guide and enable smooth circulation within the complex.
•
Part of the site has to be reserved for future expansion and for providing processing u nits.
•
E.T.P’s and S.T.P’s have been proposed for sanitation, hygiene & environmental control
30
CONCLUSION The fast growing agriculture market is witnessing an exemplary shift in the life style of the people. The organized sector tries to utilize the opportunities to serve the public at large. The present system is affected by inefficient supply chain, wastages and inefficient storage of the commodities. In order to meet the demand, demand, an alternative alternative marketing marketing structure, structure, which provides multiple multiple choices for the sale of the product, is being planned on the basis of modern terminal market. The concept note on modern terminal market for fruits, vegetables and other perishables has been put up by Government of India, Ministry of Agriculture. The terminal market would link the buyer by offering multiple choices with the sellers through electronic auctioning. The necessary infrastructure will be provided to the participants. It proposes to offer one-stop solution by providing logistic support. The successful implementation of it will require the initiative of the State Government. It is menti mentioned oned that that the Centra Centrall Governm Government ent will will lend lend its suppor supportt to the initi initiati ative ve by provid providing ing financial support through venture fund of the Small Farmers, Agri-business Consortium. The private sector can play a level playing field to realize the vision The terminal market would be linked to number of collection centers. It would be on a Hub-and-Spoke Format. The spokes would be conveniently located for meeting the needs of the farmers. The commodities to be covered include fruits, vegetables, flowers, meat and poultry. It is suggested that along with the terminal market, price tickers can be put up on the Mandis, which would provide the spot price and futures prices for standard commodity of the multiple commodity exchanges. This will help the seller to choose the timing for selling of the products. The standardized products will help the seller to get a better price. At the same time, dematerialization of the goods will help in bank credit. The collusion among the bidders can be minimized. The auction for standard contracts and non-standard contracts can be on the electronic auction platform. After the auction is over, the bidders can get the funds and sellers can transfer the commodities to the clearing account. The benefits to the entire supply chain of the agricultural goods will be very large. According to the concept note, the private enterprise, which provides infrastructure, has the option to deal in non-perishable commodities at the terminal markets to improve more volumes 31
and economic viability. The enterprise can provide advisory services to the farmers. The farmers can sell the product directly directly to the terminal market or any other agency. The State Government has to play a proactive role and it is responsible for the approval and appraisal of the market complex. The Government should shou ld setup institutional mechanism for solving of disputes arising if any. The above model will help the farmer to take informed decision based on the information available. One need not go for distressed selling of commodities and gets a fair price of the commodities. He can get financial facility from banks, which will help to realize a better price by storing the commodities. The location selected and layouts are the major factors, which make any market successful. The location selected cannot have all the amenities; but a search ahs to be made for a place, which enjoys as many facilities as possible. The guiding principle in the search should be for a place where cost of the raw material and of fabrication, plus the cost of the marketing of the finished product, will be minimum. The efficiency of production flows, depends, largely on how well the various machines , production facilities and employee amenities are located in a market. Therefore, management to secure a proper layout for new or existing market uses a good expertise. Thus, a layout must be good enough to provide enough production production capacity, capacity, reduce material material handling handling cost, and utilize utilize labour efficiently
32
REFERENCES 1. Ashok .b. Sharma. Sharma. Terminal Terminal markets, markets, strategy strategy and and implication. 2. K. Aswathappa, Aswathappa, K. K. Shridhara Shridhara Bhatt. Bhatt. Production Production & Operation Management
3. We Webs bsit ites es;; www.msamb.com/terminal market.nic agmark.net.nic.in www.thehindubusinessline.com www.wickipedia.com www.google.com www.inrnews.com
33
