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 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.

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 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

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

multiple choices to farmers for sale of produce along with a comprehensive solution to meet key

1

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.

2

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.

3

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

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 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 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 building and joint applied research projects would address impediments to

successful agricultural growth, market development, trade, domestic and foreign investments,”

she said and added that work has already begun in the National Institute of Agricultural

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, economic growth in the US Agency for International 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 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)

would be linked to a number of collection centers (the spokes). The spokes would 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 services and infrastructure that are planned to be provided to farmers, traders,

consumers and other stakeholders, at the TM and the Collection Centers (CCs) are presented in

Figure.

Collection Centre

Terminal Market

Producers/ Farmers and theirAssociations

Infrastructure:Washing, grading, sorting, weighment, transport to TMServices:Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport

Infrastructure:Packhouse, Quality Testing Facility, PalletisationServices:Transport (incl. cool chain), Settlement of Payments, Banking, Market information

Electronic Auction

Banking Institution

Storage:Cold Storage, Temperature controlled warehouse,Ripening Chamber

Processor Exporter Wholesaler/ Trader/Retail chain operator

Direct Selling

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 its own Business Model and determine the size of the market and scale of its operation

based on financial viability and commercial 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 activities. Various departments are

formed and organization hierarchy is prepared. Departmental 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, backward linkages are supply chain related activities. The development 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

central driving force in this is the Collection Center (CC). A collection center 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 of Terminal market a major Department is set up to look 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 and

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 Export outside the Country.

Forward linkage consists of following departments:

I. Sales and Marketing already discussed above

II. Shops and Godowns

III. Terminal Market owned retail shop (Cash and Carry)

IV. Buyers

V. Exporters

VI. Processors

VII. Forwarders / Transport Trade

Fig4: Forward Linkage

12

ELECTRONIC AUCTION SYSTEM

Electronic Auction Systems are sophisticated solutions to address the growing need for an

efficient trading method. EAS employs various electronic hardware and software sub-systems.

These sub systems work in conjunction to produce a seamless mechanism for conducting

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 prices. Expensive customized products or services, especially in 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 expected to increase significantly. The effectiveness of these 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 or any chain members will not receive the price incentive.

2. Even the whole sellers or the end consumers provide the producer with price

incentives to produce higher quality products, competition from other farmers

quickly eliminate the profitability and eventually leading to disguise to the small

scale producers.

3. Small-scale production leads to unprofitably of the branded products.

Branding will be successful step for Chandigarh terminal market because,

Price signal will be transmitted from the producers to the consumer. For producer- offering

better price for better quality produce and eventually 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 enterprise would have the freedom to set-up additional facilities to provide

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 the necessary licenses, clearances and approvals for the establishment and

operation of the market

The enterprise would be responsible for the acquisition of land for setting up of the TM

and the CCs

The enterprise would be free to collect user charges (determined by commercial

considerations) from market participants and producers, for the infrastructure 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 and operation of

the Terminal Market and in ensuring the autonomy of the market. For the 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 activities of the CCs of the TM.

Project appraisal would be undertaken by the Bank financing the term loan.

The private enterprise would be selected through an open, transparent competitive

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 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 the purpose of 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.

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

trade practice. A backward linkage with farmers is also inadequate and incomplete 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 private markets to come up. As a follow up, 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 introduced Market Infrastructure Development Scheme (MIDS), which is linked with

reforms. In this background, the Ministry of Agriculture took up the matter with different States

and the NDDB

for replicating similar but improved model with removal of all weakness of previous system in

different forms in different States. Taking initiatives, the Ministry offered to assist the willing

States in formulation of Detailed Project Reports (DPR) for the setting up of Integrated

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 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

factors and intangible or qualitative factors affect and are affected by the location.choice.

Models and techniques such as break-even analysis, factor rating technique, and transportation

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 locality or community;

3. Selection of the exact site.

1. Selection of Region

The selection of a particular region out of many natural regions of a country is the first

step in market location.

1.1. Availability of raw material

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. Availability of Power and other facilities

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. Transport facilities

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. Government Policy

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. Selection of the locality or community

The selection of a locality or community in a region is the second step in market location

2.1. Availability of labour

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 loading unloading takes place in Delhi and then again in Chandigarh leading to

deterioration in the quality of the produce.

Layout and Design of Market Complex

24

The major activity of Terminal Market will be handling of large-scale produce of goods.

This will involve providing various facilities for receiving goods, their 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 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

• Good Waste material disposal method

25

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

contents and movement within the market complex. With this system each and every

26

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 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

spaces and have the flexibility for their division into smaller areas, which could be used for

27

fruits, vegetables, as per requirements so that the activities can be divided easily 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 goods.

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

Transportation corridors have to be provided which will connect all areas of various

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.

Cold Storage Units

28

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 goods will be docked into the building for loading / 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.

Office Areas /Quarters

29

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 could 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 areas. Provision of Five star hotel and setting up of Cash & Carry format 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 units.

E.T.P’s and S.T.P’s have been proposed for sanitation, hygiene & environmental control

CONCLUSION

30

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, an alternative marketing structure, which provides 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

mentioned that the Central Government will lend its support to the initiative by providing

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

and economic viability. The enterprise can provide advisory services to the farmers. The farmers

can sell the product directly to the terminal market or any other agency. The State Government

31

has to play a proactive role and it is responsible for the approval and appraisal of the market

complex. The Government should 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 capacity, reduce material handling cost, and utilize

labour efficiently

REFERENCES

32

1. Ashok .b. Sharma. Terminal markets, strategy and implication.

2. K. Aswathappa, K. Shridhara Bhatt. Production & Operation Management

3. Websites; www.msamb.com/terminal market.nic agmark.net.nic.in www.thehindubusinessline.com www.wickipedia.com www.google.com www.inrnews.com

33