Sustainable Procurement Model for Peas in Garhwal Region of Uttarakhand

Sumit Deolia, Mukesh Pandey, Deepali Tewari Pandey & Kamini Bisht

 GBPUAT

 The economy of Uttarakhand is predominantly agrarian. More than 80% of the working population is directly engaged in agriculture even though only 12.5% of the total land area of Uttarakhand is under agriculture. Only 11% of the total area is irrigated. The land holdings are mostly marginal and sub-marginal. Around 70% of the operational holdings of the hill region are less than 1 ha and nearly 86% are up to 2.0 ha (Census, 1991). In addition, these holdings are scattered in various locations and in the form of various fields. The area under cultivation and production of Peas in Garhwal region of Uttarakhand for the year 2005-06 is shown in Table 1.

Table 1: Area and Production of peas in Garhwal region (2005-06)
Name of District	Area(ha)	Production(MT)
Dehradun	1484 (17)	6078 (7)
Pauri Garhwal	295 (6)	1771 (9)
Tihri Garhwal	1686 (29)	15176 (32)
Chamoli	288 (13)	2304 (11)
Rudraprayaag	79 (12)	385 (6)
Uttarkashi	588 (24)	3778 (11)
Haridwar	340 (14)	4760 (13)
Total	4760 (18)	34252 (14)
Figures in parenthesis are Area and Production of peas in percentage of the total vegetable in Garhwal region

Source: District Horticulture Office, Dehradun

Garhwal because of its conducive agro-climatic conditions and proximity to bigger markets like Dehradun, Haridwar and Rishikesh, has an immense potential for various vegetables. Moreover, food processing sector is also growing fast due to rapid urbanization, international lifestyle and food habits, availability of over 80 TV channels and more women joining the workforce.

In Garhwal region, quality of pea is very good, but it doesn't have good marketing facility. There are places where there is no reach of commission agents and contractors with farmers' & farmers' have to bring their produce by their own arrangement. They want some collection centers so that their produce can be supply fast to market and they can fetch better price of their produce.

Existing market channels and intermediaries margins in Garhwal: Market channels for peas include farmers, contractors, commission agent and finally corporate houses. Harvested peas are generally carried by the farmer to commission agent at the Mandi. In Mandi commission agent sell farmers' produce in front f the farmers and take 6 - 7% commission which include 3% mandi tax. Commission agent then supply produce to smaller commission agent and charge 3% from them for providing platform to retailers called aarhat. Thus, commission agent gets double commission. Then small commission agent further charge 15-20% more from small traders according to the prevailing marketing condition and after adding transportation and miscellaneous charges. Eventually end consumer depends upon season, competitive shops available, prestige of location etc.

Role of NGOs in Peas marketing: NGOs in Garhwal region help farmers' association in the form of technical assistance and better marketing information. In Naugaon area of Garhwal, a NGO known as HARC (Himalayan action research center) has made "Rawai valley Fruit and Vegetable Producer Association". The members of this association help farmers to grow better quality of produce. Further adding value to their effort, this association provides the quality product to the corporate in a bigger lot and on the other way negotiates the prices with them. Associations also made collection centers at various places where whole produce is piled up and weighing is done and produce is send for processing.

Similarly other NGOs (the prominent NGOs working in Garhwal region are complied in Annexure -1) in Garhwal region can also be utilized for the procurement of vegetables by different private players like Sahara, Reliance, Futures Group, Wal-Mart, Godrej, SAFAL (Mother Dairy), Namdhari, Big Apple, Haldirams, TATA group, Birla, Subhiksha, Triveni, Bharti, DCM Shriram Consolidated Ltd etc who have setting up food retail shops still the major productive area is still untapped as intervention of private players is very less in the Garhwal region of Uttarakhand.

Proposed supply chain model: People in Garhwal have an immense belief on NGOs working in the respective areas. For example: HARC in Naugaon and nearby villages. So the involvement of these NGOs as an interface between corporate and farmers could be an unbeatable mix of societal and commercial thought. This supply chain model shown in Exhibit 4 will be beneficial in those areas which are little far like Maund, Kaddukhaal, Chopariyaal, Ranichauri, Purola, Netri, Badkot etc. Corporate firms can provide various facilities enlisted via the channel of NGOs to the farmers and collect the peas right at the farm gate itself.

 

Proposed model of the procurement of peas from Garhwal region

 1.  Farm inputs along with technical assistance and other facilities like loans, various promotional schemes etc can be provided to the farmers by corporates, through the concerned NGO. Further, company can hire qualified agri-graduates and post graduates and ask them to travel extensively and look after all NGOs working in 3-4 districts and providing extension services to the farmers regarding correct package of practices in agriculture, new technological innovations, plant protection techniques etc. This will not only ensure better quality of horticultural produce by farmers and but the company will also build grass-root level sustainable contacts which can be leveraged later on for marketing any other FMCG, durable or agri-inputs to them.

2. The farmers will send the peas cultivated and harvested to collection centres. Semi-literate and illiterate women associated with NGOs could be employed by the company on daily wages/target basis to sort and grade the produce. These women will be posted right at the collection centers itself and the company can even provide to and fro transportation facility to these women. This will also help the rural economy as more and more women get employment.

3.  This sorted and graded produce can then be sent to retail outlets or processing units by the company officials.

The relationship in this tie-up is symbiotic because those NGOs who provide various facilities to the farmers are duly supported by the company, thus fulfilling its social mandate. At the same time, the company also benefits as it gets a better and sustainable tie-up with the farmers via that NGO. This mode of working finally leads to a win-win situation i.e. better tie up for the company with the producers hence ensuring better quality of produce; also social mandate {of employment generation) of the company gets fulfilled.

If any firm be it Sahara, Reliance, Futures Group, Wal-Mart, Godrej, SAFAL (Mother Dairy), Namdhari, Big Apple, Haldirams, TATA group, Birla, Subhiksha, Triveni, Bharti or DCM procures peas directly from the proposed Marketing channel instead of the existing channel, then the costs turn out to be as follows:

Cost component 1: Farmer's cultivation cost= Rs 676.22 per nali (As per Table-2)

Cost component 2: Transportation cost = Zero as company will collect peas from farmer right from his farm yard.

Total cost to farmer per nali= Rs 676.22 per nali

Total cost to farmer per kg = Rs 2.25/ kg ( 1 nali = 300 kg pea productivity)

If farmers are now paid Rs 7/kg as remuneration right at their doorsteps by the company for peas harvested, then his profit = Rs 7 -Rs 2.25 = Rs 4.75/kg

Hence the net profit for farmer in the proposed channel vis-à-vis existing channel increases by 58.33%.

Let's analyse from the consumers' point of view:

1- Consumers buy the peas on an average @ Rs14/kg from the market or by the retailer or local vendor.

2- If the company's procurement price from the farmers will be Rs7/kg. After adding all transportation, grading & sorting costs, other miscellaneous administrative and selling expenses, the company can still offer peas to the consumers even at around Rs 12.5 per kg.  The company will tremendously benefit in terms of having assured supply of right quality of peas in the right quantity at the right time. With competition hotting up between various retail malls, an assured and sustainable supply chain of quality food products will be the key differentiating factor and a a strong USP for positioning of retail mall and resultant brand building.

3- Consumer's cost of buying peas reduces from Rs 1.50 to Rs 3.50 i.e. a net saving to consumer of 10 to 25% which is really remarkable.

This study is a clear indication of how corporate houses can build backward linkages with the farmers and create a great value proposition to consumers by providing better quality Peas at lower prices and how better profit per acre of cultivation to farmers and in turn creates a sustainable business model for themselves too.