Agri Value chain - Agriculture Business - Lecture Slides, Slides for Botany and Agronomy. Birla Institute of Technology and Science
farooq
farooq31 January 2013

Agri Value chain - Agriculture Business - Lecture Slides, Slides for Botany and Agronomy. Birla Institute of Technology and Science

PDF (652 KB)
56 pages
1000+Number of visits
Description
This lecture is from Agriculture Business . Key important points are: Agri Value Chain, Dairy and Horticulture, Indian Farm Reality, Supply Chain, Organized Processing and Retailing, Logistics and Intermediation Costs, P...
20points
Download points needed to download
this document
Download the document
Preview3 pages / 56
This is only a preview
3 shown on 56 pages
Download the document
This is only a preview
3 shown on 56 pages
Download the document
This is only a preview
3 shown on 56 pages
Download the document
This is only a preview
3 shown on 56 pages
Download the document
Value Chain management

Understanding Agri Value chain for Dairy and Horticulture

WHAT IS VALUE

Porter defined value as the amount buyers are willing to pay for what a firm provides.

He also conceived the “value chain” as the

combination of nine generic value added activities operating within a firm – activities that work together to provide value to customers.

Understanding Indian Agri Value chain systems

Indian farm reality Fragmenting farms and swelling bottom

0%

20%

40%

60%

80%

100%

1970-71 1980-81 1990-91 1995-96 2000-01

Area of Holdings-India

Less than 2 hectares 2-4 hectares 4 and above hectares

0%

20%

40%

60%

80%

100%

1970-71 1980-81 1990-91 1995-96 2000-01

Number of holdings-India

Avg Size 2.3 1.82 1.55 1.41 1.37

HOW VALUE CHAIN IS DIFFERENT FROM SUPPLY CHAIN

Consolidation of Organized Processing and Retailing

Source: Value Chain Survey, The World Bank

Farmer, 13.5 Intermediary, 5.4

Exporter, 24.2

International freight & insurance, 53.6

Importer, 23.5

0

20

40

60

80

100

120

1Different stages of the supply chain

R s

pe r K

ilo gr

am

Farmgate price=Rs.13.5

Retail price= Rs.120.3

CIF price= Rs.96.8

FOB=Rs.43.2

Wholesale price=Rs.18.9

Logistics and intermediation costs are much higher than production costs

High wastage reflects inefficiencies in the delivery chain

Fragmented and Costly Supply Chain

Producer / Farmer: Price Rs. 2.00; Wastage: 20%

Consolidator: Price: Rs.2.20; Wastage: 8%

Market Wholesaler: Price Rs. 2.50; Wastage: 5%

Semi-Wholesaler: Price Rs. 3.33; Wastage: 5%

Retailers: Price Rs. 8.20; Wastage: 10%

Source: S. Raghunath and D. Ashok; June 2004 (IIM- Bangalore)

Product Pyramid

Raw Produce

Raw Produce

Minimum Value Addition

Semi Finished

Finished Scale, tech, finance

Higher skill, technology, finance

Low skill, high volume, sold to intermediary

Smallholders and Business • No marketable surplus • No local level value addition to increase the price

realisation • Lack practices of mixed cropping/rotation of crops

to maintain the soil fertility as well as income • Soil testing missing • Organized trading • Storing • Agriculture not a business – the mindset • Lack loan planning - purposeful utilization of

loaned money • Insurance of crops

Retailer

Processor

Input supplier

The need of each segment in the Chain

Small producers

Retailer

Processor

Input supplier

Strategies to increase the income of poor and to make value chains inclusive

• Contract farming – partnership with private sector

players

• Collective marketing by CBOs

Small producers

Contract farming

Collective marketing

What is the best way to empower farmers ?

By providing him knowledge

Example of Reconfiguring the Value Chain

Collect Milk From

villages

Transport to The plant

Near the town

Convert to milk powder

Export and sell

Old Way:

Feeder Balancing Dairy

Save on shipping costs by 10 times Utilize cheaper non-union rural labor

New Way:

e Collect milk Make powder in the plant near

village

Sell and export Milk powder

directly

Example of Reconfiguring the Value Chain

Put cost property at city on rent

Issues related to Indian horticulture

• Developing Market linkage for exports

India is among the largest producers of horticultural products

Production (million MT)

64 56 24 5 3

149

76 35

6 5

502

127

44 8 7

0

100

200

300

400

500

600

China India Brazil South Africa

Chile

1980

1990

2004

Source: UN COMTRADE, 2005

Yields are still low by international standards

Source: UN COMTRADE, 2005

Fruits

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

China India Brazil South Africa

Chile

1990 2004

Vegetables

0

50,000

100,000

150,000

200,000

250,000

300,000

India South Africa

Brazil China Chile

1990 2004

(Yields per Hectare)

India is a relatively low cost producer / exporter …..

1,188

669

805

455 455 463

911

227 189

863

630

444

316 288 222

175 155 91

-

200

400

600

800

1,000

1,200

1,400

Fresh grapes Peas, fresh or chilled

Guavas, mangoes and mangosteens

Bananas, including plantains,

fresh

Lemons and limes, fresh

or dried

Apples, fresh Tomatoes, fresh or chilled

Onions and shallots,

fresh or chill

Other potatoes, fresh or chilled

World

India

Average Price in $/MT (2001-03): India vs. World (Price prevailing at the originating ports)

Source: UN COMTRADE, 2005

…but it has an insignificant share in global trade

Source: UN COMTRADE, 2005

0.5%

0.2%

0.2%

0.5%

10.8%

0.2%

0.1%

0.9%

11.1%

2%

2%

7%

8%

10%

12%

21%

22%

38%

Grapes

Apple

Tomato

Potato

Onion

Lime/lemon

Banana

Peas

Mango

India's share in global production and exports

Production Exports

Commodities Surveyed

Apple , 60

Banana, 100

Grapes, 98

Mango, 110 Mosambi, 102

Okra, 106

Onion, 100

Peas, 95

Potato, 101

Tomato, 100

Vegetables

Fruits

Source: Value Chain Survey, The World Bank

Main finding: Logistics and intermediation costs are much higher than production costs

Source: Value Chain Survey, The World Bank

Farmer, 13.5 Intermediary, 5.4

Exporter, 24.2

International freight & insurance, 53.6

Importer, 23.5

0

20

40

60

80

100

120

1Different stages of the supply chain

R s

pe r K

ilo gr

am

Farmgate price=Rs.13.5

Retail price= Rs.120.3

CIF price= Rs.96.8

FOB=Rs.43.2

Wholesale price=Rs.18.9

Factors Impeding India’s Exports A Combination of External and Domestic

Factors

High Cost of Delivery between the Farm- gate and Retail (in the Foreign Market)

High Transport Costs (Inefficiencies in specific modes of

transport)

Inefficiencies in Domestic Logistics and Intermediation

Tariffs Abroad, Quality and Standards

India exports mostly to proximate markets

Source: UN COMTRADE, 2005; CEPII

comments (0)
no comments were posted
be the one to write the first!
This is only a preview
3 shown on 56 pages
Download the document