Mr. Mradul Choubey, Manager, Ernst and Young, Bhopal, Madhya Pradesh, talks about the importance of aggregation, grading, marketing and harvesting practices in a value chain.
Mr. Mradul Choubey, Manager at Ernst and Young in Bhopal, Madhya Pradesh, emphasizes the significance of aggregation, grading, marketing, and harvesting practices within the context of a value chain. During his discussion, he highlighted the key features and distinctions among value chains in horticulture, agriculture, dairy, non-timber, and forest products. The comprehensive value chain analysis encompasses the entire life cycle of products, identifying bottlenecks and designing interventions at each step to achieve better pricing realization for farmers or collectors.
A critical factor affecting farmers' ability to negotiate favorable prices is the lack of scale, mainly due to small landholdings, often below 2 hectares. This limitation hinders their capacity to negotiate and secure better prices for their produce. To bridge the gap, traders act as aggregators, fulfilling the requirement for large volumes of agricultural produce necessary for processors or buyers to optimize costs. However, challenges such as small landholdings, low yields, and outdated techniques contribute to farmers' inability to achieve optimal yields.
Farmers often neglect the grading of produce, selling it directly in mandis, leading to a lack of transparency in pricing. While farmers are aware of good agricultural practices, traditional farming methods persist, contributing to resource inefficiency and increased production costs. Limited post-harvest infrastructure for aggregation, grading, and storage of perishable produce also affects price realization for horticulture products.
In addressing these challenges, various entities, including the Government of India, NGOs, and technical agencies, are attempting interventions. However, these schemes often overlook crucial aspects like aggregation, market linkages, storage, and post-harvest practices, impacting their effectiveness.
It's essential to recognize the unique characteristics of each value chain, tailoring interventions accordingly. Agriculture and horticulture value chains, for instance, are season-dependent, with production and availability influenced by the harvesting season. Storage considerations vary, with horticulture products requiring cold storage due to their limited shelf life.
Margin dynamics also differ across value chains, with high production scale impacting margins for agriculture and horticulture products. Dairy value chains, despite having lower overall margins for processors, benefit from daily procurement and cooperative models. Forest products, being relatively rare and produced on a limited scale, command higher margins for processors.
The discussion delves into price realization, highlighting the disparity between what primary producers receive and what end consumers pay. Cost drivers in value chains encompass cultivation, harvesting, packaging, storage, and transportation expenses. The involvement of multiple intermediaries further raises overall costs, including mandi cess and GST.
Aggregation and value addition play pivotal roles in optimizing value chains. Various stakeholders, including farmers, aggregators, traders, cooperatives, and processors, contribute to the efficient functioning of value chains. Farmers' associations and cooperatives aid in aggregation and grading, leading to better price negotiations and transparency.
The talk underscores the importance of interventions at every stage of the value chain, emphasizing the need for strategic planning and consideration of local factors. Examples from different regions, were provided such as the sustainable harvesting practices in Maharashtra's mango orchards, illustrate the impact of end-to-end interventions on price realization and overall sustainability. The importance of using the right fertilizers, implementing organic certification, and adopting proper harvesting practices is emphasized for achieving better prices in horticulture products like mahua.
Examples:
Mango (UP vs Maharashtra)
In Uttar Pradesh, the state boasts numerous high-quality varieties of mangoes, but the orchards are often leased out. The aggregator typically pays a lump sum to the farmer, undertaking the entire harvesting process without proper sorting. Unfortunately, this practice results in damaged produce and plants, rendering the harvesting process unsustainable. In contrast, Maharashtra employs a more meticulous approach by inspecting for mature produce before harvesting, leading to better price realization.
In Maharashtra, farmers adopt sustainable harvesting practices, including retaining twigs and leaves on fruits destined for export. This thoughtful approach contributes to a sustainable harvest and positively impacts price realization. It underscores the need for comprehensive interventions throughout the entire value chain.
Guava in Uttar Pradesh:
In the case of guava, susceptibility to diseases is a concern, yet farmers often neglect to apply Trichoderma for disease reduction. This oversight leads to a shortened orchard lifespan, and consequently, farmers do not realize the true value of their produce. It is crucial to emphasize the application of appropriate fertilizers and inputs before implementing interventions to address these issues effectively.
Forestry value chain Mahua:
When it comes to mahua, adopting measures such as organic certification becomes essential to enhance its market value. By following these practices, farmers can secure a better price for their mahua produce, demonstrating the importance of integrating sustainable and quality-focused interventions across the value chain. In Madhya Pradesh, 68 MT of sustainability harvested food grade Mahua collected from Mahua nets has been exported, assuring 3X price realisation over MSP for collectors.
How can proper grading of Agri products enhance their market value and consumer appeal?
Each produce needs to be graded before being sold. Typically, agriculture produce contains 70-80% good quality material, 10-20% average, and 10% poor quality. ypically, agricultural produce consists of approximately 70-80% high-quality material, 10-20% average, and 10% poor quality. The potential to secure higher prices for the produce is significantly enhanced when it undergoes proper sorting and grading. Traders critically evaluate the overall quality of the produce, and if it lacks proper grading, they may offer a reduced price or one closer to the average. In such instances, the farmer invariably incurs losses due to inadequate grading. Mustard, for example, is graded, and based on the oil content, the price is determined and the auction price is usually higher in Mandi’s with testing and grading facility than in the mandis where there was no testing or grading of the produce.
How can farmers benefit from implementing effective grading practices in their produce? Explain the significance of effective marketing strategies in promoting Agri produce to various consumer segments.
It will give them better price realisation and transparency. The farmers who are selling entire produce to a local trader at farm gate, they will get price which is 25 to 30% less than average market price as proper grading is not done. When graded, the price of the produce is always high as it is a saleable variety. The not-so-good produce is used for processing. When traded properly, we get higher price for better quality produce. This is the first intervention for any Agri produce we can do. Aggregation and grading of produce in any value chain are needed for any value chain to get good quality. In case of wheat, the price for atta or wheat is higher if it is from Madhya Pradesh. When the average atta is not branded, it will not get good price. So we have to brand and link to the market. There is always a paranoia even when we say we apply less fertiliser and inputs. With food grade and organic certification, we get higher price. We should have a better and appropriate testing mechanism in place and test the produce in right labs to get quality specifications. Then we can get higher price. We can sell the produce to a market where there is demand. We can brand the product and sell. Otherwise only aggregation and testing are needed.
What is the impact of digital marketing on connecting farmers directly with consumers for benefits? Can you provide examples of innovative marketing campaigns that have influenced farmers’ income? What is the role of mechanised harvesting practices in modernising agriculture and improving productivity?
Farmers have the option to undertake packing, grading, and cleaning activities at their farms, enabling them to sell directly to consumers at retail prices. While digital marketing proves beneficial for fostering entrepreneur relations, maintaining quality assurance is paramount. There should be no compromise on quality standards. Digital marketing, while enhancing entrepreneurial connections, introduces challenges such as transparency and assurance of quality.
Marketing campaigns play a pivotal role in increasing demand and subsequently improving price realization. Remarkably, some entities, like ITC, excel in aggregation and selling produce. They have established trading centres and integrated testing with procurement. Cooperatives, exemplified by Amul, provide farmers with an 80% margin, something many other cooperatives are struggling to achieve. Notably, Amul, is known for its innovative marketing approach with quirky cartoons during major geo-political national and international events.
Mechanized harvesting emerges as a solution to reduce wastage and labor costs. The government has initiated custom hiring centers where machines are purchased and then rented out to farmers. This approach not only improves the quality of harvesting but also accelerates the process. Given the high cost of machinery, it is more feasible for farmers to opt for renting unless they possess extensive landholdings, making ownership economically viable.
How can agriculture startups offer innovative solutions to improve harvesting efficiency and reduce labour demands?
Numerous promising startups are actively involved in providing training sessions for Farmer Producer Organizations (FPOs) to enhance their capacity and skills. Companies like DeHaat offer comprehensive end-to-end services for farmers, extending support in various aspects, including crop advisoty. These startups not only facilitate the purchase of agricultural products but also offer advisory services on optimal harvesting practices to farmers. To enhance effectiveness, it is crucial for these startups to express a willingness to procure graded products based on predetermined prices.
In many cases, farmers engage in the grading process only when they are aware of potential buyers or exporters for their produce. Consequently, startups can play a vital role in establishing that connect. They can help in disseminating information on harvesting best practices, grading techniques, and the importance of adhering to proper harvesting protocols. Ensuring that farmers receive fair and justified price realization for their produce is equally essential for the success of these interventions. Without this assurance, there is a risk of escalating overall costs without tangible benefits. Hence, startups must focus on providing comprehensive information and end-to-end integrated support to farmers to make their interventions truly effective.
Mr. Mradul Choubey
Manager,
Ernst and Young LLP
Bhopal, Madhya Pradesh
Email: mradul.choubey@gmail.com
Phone: 9643969118
Mr. Mradul Choubey, Manager at Ernst and Young in Bhopal, Madhya Pradesh, emphasizes the significance of aggregation, grading, marketing, and harvesting practices within the context of a value chain. During his discussion, he highlighted the key features and distinctions among value chains in horticulture, agriculture, dairy, non-timber, and forest products. The comprehensive value chain analysis encompasses the entire life cycle of products, identifying bottlenecks and designing interventions at each step to achieve better pricing realization for farmers or collectors.
A critical factor affecting farmers' ability to negotiate favorable prices is the lack of scale, mainly due to small landholdings, often below 2 hectares. This limitation hinders their capacity to negotiate and secure better prices for their produce. To bridge the gap, traders act as aggregators, fulfilling the requirement for large volumes of agricultural produce necessary for processors or buyers to optimize costs. However, challenges such as small landholdings, low yields, and outdated techniques contribute to farmers' inability to achieve optimal yields.
Farmers often neglect the grading of produce, selling it directly in mandis, leading to a lack of transparency in pricing. While farmers are aware of good agricultural practices, traditional farming methods persist, contributing to resource inefficiency and increased production costs. Limited post-harvest infrastructure for aggregation, grading, and storage of perishable produce also affects price realization for horticulture products.
In addressing these challenges, various entities, including the Government of India, NGOs, and technical agencies, are attempting interventions. However, these schemes often overlook crucial aspects like aggregation, market linkages, storage, and post-harvest practices, impacting their effectiveness.
It's essential to recognize the unique characteristics of each value chain, tailoring interventions accordingly. Agriculture and horticulture value chains, for instance, are season-dependent, with production and availability influenced by the harvesting season. Storage considerations vary, with horticulture products requiring cold storage due to their limited shelf life.
Margin dynamics also differ across value chains, with high production scale impacting margins for agriculture and horticulture products. Dairy value chains, despite having lower overall margins for processors, benefit from daily procurement and cooperative models. Forest products, being relatively rare and produced on a limited scale, command higher margins for processors.
The discussion delves into price realization, highlighting the disparity between what primary producers receive and what end consumers pay. Cost drivers in value chains encompass cultivation, harvesting, packaging, storage, and transportation expenses. The involvement of multiple intermediaries further raises overall costs, including mandi cess and GST.
Aggregation and value addition play pivotal roles in optimizing value chains. Various stakeholders, including farmers, aggregators, traders, cooperatives, and processors, contribute to the efficient functioning of value chains. Farmers' associations and cooperatives aid in aggregation and grading, leading to better price negotiations and transparency.
The talk underscores the importance of interventions at every stage of the value chain, emphasizing the need for strategic planning and consideration of local factors. Examples from different regions, were provided such as the sustainable harvesting practices in Maharashtra's mango orchards, illustrate the impact of end-to-end interventions on price realization and overall sustainability. The importance of using the right fertilizers, implementing organic certification, and adopting proper harvesting practices is emphasized for achieving better prices in horticulture products like mahua.
Examples:
Mango (UP vs Maharashtra)
In Uttar Pradesh, the state boasts numerous high-quality varieties of mangoes, but the orchards are often leased out. The aggregator typically pays a lump sum to the farmer, undertaking the entire harvesting process without proper sorting. Unfortunately, this practice results in damaged produce and plants, rendering the harvesting process unsustainable. In contrast, Maharashtra employs a more meticulous approach by inspecting for mature produce before harvesting, leading to better price realization.
In Maharashtra, farmers adopt sustainable harvesting practices, including retaining twigs and leaves on fruits destined for export. This thoughtful approach contributes to a sustainable harvest and positively impacts price realization. It underscores the need for comprehensive interventions throughout the entire value chain.
Guava in Uttar Pradesh:
In the case of guava, susceptibility to diseases is a concern, yet farmers often neglect to apply Trichoderma for disease reduction. This oversight leads to a shortened orchard lifespan, and consequently, farmers do not realize the true value of their produce. It is crucial to emphasize the application of appropriate fertilizers and inputs before implementing interventions to address these issues effectively.
Forestry value chain Mahua:
When it comes to mahua, adopting measures such as organic certification becomes essential to enhance its market value. By following these practices, farmers can secure a better price for their mahua produce, demonstrating the importance of integrating sustainable and quality-focused interventions across the value chain. In Madhya Pradesh, 68 MT of sustainability harvested food grade Mahua collected from Mahua nets has been exported, assuring 3X price realisation over MSP for collectors.
How can proper grading of Agri products enhance their market value and consumer appeal?
Each produce needs to be graded before being sold. Typically, agriculture produce contains 70-80% good quality material, 10-20% average, and 10% poor quality. ypically, agricultural produce consists of approximately 70-80% high-quality material, 10-20% average, and 10% poor quality. The potential to secure higher prices for the produce is significantly enhanced when it undergoes proper sorting and grading. Traders critically evaluate the overall quality of the produce, and if it lacks proper grading, they may offer a reduced price or one closer to the average. In such instances, the farmer invariably incurs losses due to inadequate grading. Mustard, for example, is graded, and based on the oil content, the price is determined and the auction price is usually higher in Mandi’s with testing and grading facility than in the mandis where there was no testing or grading of the produce.
How can farmers benefit from implementing effective grading practices in their produce? Explain the significance of effective marketing strategies in promoting Agri produce to various consumer segments.
It will give them better price realisation and transparency. The farmers who are selling entire produce to a local trader at farm gate, they will get price which is 25 to 30% less than average market price as proper grading is not done. When graded, the price of the produce is always high as it is a saleable variety. The not-so-good produce is used for processing. When traded properly, we get higher price for better quality produce. This is the first intervention for any Agri produce we can do. Aggregation and grading of produce in any value chain are needed for any value chain to get good quality. In case of wheat, the price for atta or wheat is higher if it is from Madhya Pradesh. When the average atta is not branded, it will not get good price. So we have to brand and link to the market. There is always a paranoia even when we say we apply less fertiliser and inputs. With food grade and organic certification, we get higher price. We should have a better and appropriate testing mechanism in place and test the produce in right labs to get quality specifications. Then we can get higher price. We can sell the produce to a market where there is demand. We can brand the product and sell. Otherwise only aggregation and testing are needed.
What is the impact of digital marketing on connecting farmers directly with consumers for benefits? Can you provide examples of innovative marketing campaigns that have influenced farmers’ income? What is the role of mechanised harvesting practices in modernising agriculture and improving productivity?
Farmers have the option to undertake packing, grading, and cleaning activities at their farms, enabling them to sell directly to consumers at retail prices. While digital marketing proves beneficial for fostering entrepreneur relations, maintaining quality assurance is paramount. There should be no compromise on quality standards. Digital marketing, while enhancing entrepreneurial connections, introduces challenges such as transparency and assurance of quality.
Marketing campaigns play a pivotal role in increasing demand and subsequently improving price realization. Remarkably, some entities, like ITC, excel in aggregation and selling produce. They have established trading centres and integrated testing with procurement. Cooperatives, exemplified by Amul, provide farmers with an 80% margin, something many other cooperatives are struggling to achieve. Notably, Amul, is known for its innovative marketing approach with quirky cartoons during major geo-political national and international events.
Mechanized harvesting emerges as a solution to reduce wastage and labor costs. The government has initiated custom hiring centers where machines are purchased and then rented out to farmers. This approach not only improves the quality of harvesting but also accelerates the process. Given the high cost of machinery, it is more feasible for farmers to opt for renting unless they possess extensive landholdings, making ownership economically viable.
How can agriculture startups offer innovative solutions to improve harvesting efficiency and reduce labour demands?
Numerous promising startups are actively involved in providing training sessions for Farmer Producer Organizations (FPOs) to enhance their capacity and skills. Companies like DeHaat offer comprehensive end-to-end services for farmers, extending support in various aspects, including crop advisoty. These startups not only facilitate the purchase of agricultural products but also offer advisory services on optimal harvesting practices to farmers. To enhance effectiveness, it is crucial for these startups to express a willingness to procure graded products based on predetermined prices.
In many cases, farmers engage in the grading process only when they are aware of potential buyers or exporters for their produce. Consequently, startups can play a vital role in establishing that connect. They can help in disseminating information on harvesting best practices, grading techniques, and the importance of adhering to proper harvesting protocols. Ensuring that farmers receive fair and justified price realization for their produce is equally essential for the success of these interventions. Without this assurance, there is a risk of escalating overall costs without tangible benefits. Hence, startups must focus on providing comprehensive information and end-to-end integrated support to farmers to make their interventions truly effective.
Mr. Mradul Choubey
Manager,
Ernst and Young LLP
Bhopal, Madhya Pradesh
Email: mradul.choubey@gmail.com
Phone: 9643969118