Terminal Market

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AbstractThe 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. Terminal market has been envisaged to improve availability, in terms of quality as well as quantity, from fresh foods as well as of export market with benefits to all in the producer to consumer chain. India has embarked upon 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 number and indicative location of the TMCs based on the demand, economic viability, commercial considerations etc.

IntroductionWith 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 food retailer awaits to utilize numerous 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 worlds 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 clean and hygienic market environment. Components of the marketing system include 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.

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Terminal Market would endeavor to integrate farm production with buyers by offering multiple choices to farmers for sale of produce such as electronic auctioning and facility for direct sale to exporter, processor and retail chain network under a single roof. In addition, the market would provide storage infrastructure thus offering the choice to trade at a future date to the participants. It is envisaged to offer a one-stop-solution that provides Logistics 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, implementation and successful operation of this path-breaking 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 depends upon proper usage of allocated space, Circulation and movement patterns, Utility and service distribution. In a properly laid market processing bottlenecks and delays are few, and material handling costs are reduced.

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Objectives The main objectives of setting up Terminal Markets Complex (TMC) are: To link the farmers to the markets by 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 of farmers, operational efficiency and effective capital utilization of 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 one-stop solution in terms of providing logistics support including transport services and cool chain facility.

Review of literature

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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 terminal market complexes would work on the hub-and-spokes 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 conve