Role of CSO-CBO Partnership in the aggregation of

Agricultural Commodities: Issues and Prospects for

Commodity Futures Market

Yeswanth D and Sai Krishna N(Fellow Programme Participants,

IRMA, Anand, Gujarat)

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Setting the context….

• Agriculture & allied sectors contribute 22 % GDP (GOI, 2007)

• 63 per cent - top ten commodities traded (Pitalwalla, 2005).

• However, agriculture commodity trading faces lots of challenges• Decreasing average land holdings and• Increasing marketable surplus • To add, the existing traditional channel – Low

realisation of final price (1/3rd ) of produce

• Emergence of alternative models

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….Setting the context

• Alternative models • Reduce supply chain cost and • Increase share and participation of farmers

• In the changing scenario ….• Commodity exchanges (Price discovery)• Amendment of APMC Act

• A ‘Synergistic model’• Alternative models of aggregation +

Commodity Exchanges

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Existing alternative models

• Efforts to incorporate best practices• Reduction in total supply chain costs• Capital investment & Operational expenses• Information and Knowledge dissemination

• But yet to provide a complete solution • Supply uncertainties (timeliness and quantities)• Trust among partners • Poor impact / perceived value among farmers

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In the above scenario……

• New alternative model - emerging

• CSO-CBO Partnership Model• Civil Society Organisation (NGO)• Community Based Organisation (SHG)

• Merits of the CSO-CBO Partnership model• Cover –small & marginal farmers (86 %)

• Scattered and low average land holding• Produce contribute

• Lack of literature on CSO-CBO model

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Methodology

• Hypothesis• Supply chain of CSO-CBO partnership is

efficient than traditional model

• Universe of the study• CSO- CBO Partnership models with

successful record of operations in aggregating agricultural commodities

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…. Methodology

• Research Design• Multiple case study design

• Sampling Procedure (criteria to be used)• Type of Agriculture commodities handled• Scale of operations• Geographical spread of operations

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…. Methodology

• Units of Analysis • A case of CSO – CBO Partnership model

• Dimensions that would be considered• Cost Components• Organizational Characteristics• Partner Relationships• Performance• Material flow

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…. Methodology

• Respondents• Farmers • Commission agents• CSO representatives• Traders

• Data Collection• Semi-structured interview schedule

• Data Analysis• Multivariate Analysis

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Implications of the study

• Help realise the existing huge potential

• Potential for sustainability

• Understanding the modalities of partnership for Synergistic growth

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Variables to be studied

• Cost components• Reduction in total supply chain costs (Pagel,

1999)• Economies of scale• Capital investment & Operational expenses

of model

• Organizational (CSO & CBO) Characteristics• Feasibility of supplier partnering (scaling up

feasibility) (Pagel, 1999)• Technology quotient of the CSO & CBO• Flexibility to the changing market

environment (Jha, 2001)

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…. Variables

• Partner Relationships• Increased perceived value of the bundle of

goods and services (Pagel, 1999)• Trust among partners (Singh & Bhagat, 2004)

• Performance• Performance of decision support system

(Pagel, 1999)• Information and Knowledge dissemination

(Reach and Richness) (Singh & Bhagat, 2004)

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…. Variables

• Material flow• Supply uncertainties (Singh & Bhagat,

2004)• Timeliness and quantities

• Reduced time of material flow (Jha, 2001)• Reduction in delays in distribution (Jha,

2001)