social benefit analysis of modern wholesale markets
DESCRIPTION
This is a comprehensive research report comprising the quantification of social benefits offered by the terminal markets in India.Activities for enhancing the value proposition of these markets from social perspective have been also been suggested.The report was used by the company to present to the State Government Ministry of Agriculture and Ministry of Commerce to convince them the need for reversal and matching investment pattern for the Terminal Markets project.The findings of the project became a part of the research paper presented at the annual conference of World Union Wholesale Market (WUWM), Paris.TRANSCRIPT
SOCIAL BENEFIT ANALYSIS OF PRIVATE WHOLESALE MARKETS IN
INDIA
Submitted to- Dr. J. S. Yadav(COO)Premium Farm Fresh Produce Limited,New Delhi
Submitted by-
Komal FulzeleSymbiosis Institute of International Business (SIIB), Pune.
Why Social Benefit Analysis?
To reflect the real value of the project to the society
It is important as the private investments are to be approved by various governmental & quasi-governmental agencies.
The impact of the project on the distribution of income in the society
The contribution of the project towards the fulfillment of certain merit wants( self-sufficiency, employment etc.)
Cont.…
To highlight the need of such private wholesale markets in India
To avail subsidies for such projects from the government
Involvement of private parties to take up such projects
Objectives of the Project-
To identify and categorize the socio-economic benefits offered by private wholesale markets to the society
To quantify the benefits on the basis of volume and value generated by such markets with particular reference to Private Wholesale Market Nasik.
To suggest the activities enhancing the value proposition of PWM from the social perspective.
To prepare a presentable document to State Gov. Ministry of Agriculture and Ministry of Commerce etc. to convince the need for reversal and matching investment pattern.
Research Methodology
Exploratory Research Design
In-depth Survey Of Respondents
Structured Questionnaire (Open Ended As Well As Close Ended Questions)
Data Source
Primary Data• Survey of the respondents
Secondary data
• Detailed Project Report on Modern Wholesale Market at Nasik, background studies conducted by PFFPL
• Company’s Annual Report• Books : Project Appraisal and Planning For Developing Countries by
I.M.D. Little and J.A. Mirrlees, Cost benefit Analysis by Ajit K. Dasgupta and D.W. Pearce and Marketing Research by Naresh K. Malhotra and Satyabhusan Dash
• Internet
Classification of Respondents Total- 150
• Farmers• Traders• Commission agents• Exporters• Labours• Cold storage
management/service provider• Ripening chamber
manager/service provider• Food testing lab
manager/service provider• Grading/sorting
management/service provider
• Banker• Warehousing manager/service
provider• Processing unit
management/service provider• PWM employee• APMC security officer• Waste management plant
manager/service provider• APMC Official• Retail trader• NMC Official• Packaging unit
Survey Sample Sources
Nasik fruit and vegetable market including nearby villages
Pimplegaon tomato market
Jaolgaon
Pune
Division of the Project
• Tangible and Intangible Benefits• Beneficiary wise benefits classification
Identification of the Benefits envisaged
• Facility Wise Quantification (Macro Analysis)• Respondent/Beneficiary Wise Quantification
(Micro Analysis)
Quantification of the benefits
Findings and Recommendations
Benefits Offered Through the MWM to the Beneficiaries
• Hub and spoke format• Electronic auction• Online spot commodity trading• Cold Storage & Refer Vans• Ripening Chamber• Pre-Cooling Unit• Processing Units• Material Handling Equipment• Labelling• Electronic Grading and Sorting
Line• Food Testing Lab• Banking services
• General Retail Shops• Movement and Parking Facility• Waste Treatment Plant• Rain Water Harvesting• Solar Panels• Wind Mill• Sanitary and Phyto-sanitary
Measures• IT enabled Operations• SMS services• Security• Employment generation• Packing unit management
MACRO ANALYSIS
Assumptions for Analysis
Present average price of the commodity
Market Price (a) Rs./Kg
Export Price (b) Rs./Kg
Difference (b-a) Rs./Kg
Price Per Vehicle (m)* Rs./Truckload
Export Price Per Vehicle (n) Rs./Truckload
Difference (m-n) Rs./Truckload
Tomato 12 40 28 45000 150000 105000
Grapes 43 70 27 161250 262500 101250
Pomegranate 40 65 25 150000 243750 93750
Onion 13 35 22 48750 131250 82500
Banana 40 - - 150000 - -
Average 27 52.5 25.5 101250 196875 95625
*Price per Vehicle= 150crates/vehicle * 25kg/crate * Price per kg
Breakup of the Various Losses in Total Loss
Losses/ Spoilage
Present losses due to spoilage 10%
Present losses due to no ripening chamber
Present losses due to lack of cold storage facility
Present losses due to lack of pre cooling facility
Present losses due to improper transportation
Total losses
Percentage 10% 22% 30% 23% 15% 28%
average 2835 8505 6520.5 4252.5 28350
*The percentages in the above table are as per the average of percentages given by the respondents
Average number of customers visiting PWM in a year.
FARMERS TRADERS COMMISSION AGENTS
EXPORTERS/SUPPLIERS LABORS
5000 250 20 10 350
HUB AND SPOKE FORMAT
Benefit Per unit beneficiary Total per year
Average reduction in distance to be travelled by farmers for selling their produce by introducing 'hub and spoke format'
Rs.155 Rs.7.5 lakh.
Percentage increase in interaction between buyers and sellers Rs.1083 Rs.21.36 crores
Percentage increase in farmers value realization due to elimination of intermediaries Rs.7634 Rs.3.82 crores
Percentage increase in the bargaining power of farmer Rs.28958 Rs.14.48 crores
Datasheet-1Datasheet-2
ELECTRONIC AUCTION
Benefit Per unit beneficiary Total per year
Percentage increase in the transparency in auctions due to introduction of electronic auction facility
Rs.21425 Rs.11.25 crores
Percentage increase in the farmer's value realization due to electronic auction facility Rs.7924 Rs.23.72 crores
Percentage reduction in incidences of retractment by electronic auctions
Rs.48910 Rs.25.78 crores
Percentage discrepancy in weighment of produce at present Rs.21425 Rs.10.71 crores
Datasheet-1Datasheet-2
ONLINE SPOT COMMODITY TRADING
Benefit Per unit beneficiary Total per yearIncrease in farmer's value realization through online spot commodity trading
Rs.6842 Rs.3.4 crores
Percentage increase in the price of a produce given by a buyer for better quality
Rs.27844 Rs.14 crores
Datasheet-1Datasheet-2
COLD STORAGE FACILITY
Benefit Per unit beneficiary Total per year
Percentage reduction in spoilage by introducing a cold store in market Rs.2143 Rs.1 crores
Percentage increase in the value of produce by maintaining its quality Rs.45743 Rs.22.87 crores
Better price fetched by farmer if he chooses to sell his produce at a later stage of the season Rs.63473 Rs.31.74 crores
Percentages of transportation losses in total losses to produce saved by refer vans
Rs.14159 Rs.7 crores
Datasheet-1Datasheet-2
PRE- COOLING FACILITY
Benefit Per unit beneficiary Total per year
Percentage reduction in spoilage by introducing a pre-cooling unit in market Rs.3286 Rs.1.64 crores
Percentage increase in the value of produce by maintaining its quality through PCU Rs.2530 Rs.1.3 crores
Percentage of after harvest losses that can be saved by PCU Rs.28710 Rs.14.4 crores
Percentage of value of produce realized by maintaining the nutritional value of the produce Rs.61050 Rs.30 crores
Datasheet-1Datasheet-2
RIPENING CHAMBER
Benefit Per unit beneficiary Total per year
Percentage reduction in spoilage by introducing a ripening chamber in market
Rs.19403 Rs.9.7 crores
Percentage better price realized by commodity if kept in a ripening chamber
Rs.12048 Rs.6 crores
Datasheet-1Datasheet-2
MATERIAL HANDLING
Benefit Per unit beneficiary Total per yearPercentage reduction in spoilage by using material handling equipment’s in market
Rs.28063 Rs.14.73 crores
Datasheet-1Datasheet-2
ELECTRONIC GRADING & SORTING
Benefit Per unit beneficiary Total per year
Grading & Sorting Rs.27485 Rs.13.80 crores
Datasheet-1Datasheet-2
FOOD TESTING
Benefit Per unit beneficiary Total per yearpercentage of better price a commodity realizes if quality is assured along with safe and hygienic condition
Rs.31937 Rs.16.77 crores
percentage exports boosted by establishing a food testing laboratory in the market
Rs.23565 Rs.12.37 crores
Datasheet-1Datasheet-2
WAREHOUSE
Benefit Per unit beneficiary Total per year
Percentage increase in value of the commodity due to storage in warehouses
Rs.17719 Rs.9.30 crores
Datasheet-1Datasheet-2
MOVEMENT AND PARKING FACILITY
Benefit Per unit beneficiary Total per year
Percentage improvement in the general efficiency of the markets by providing proper parking and circulation space
Rs.643 Rs.32 lakh
Datasheet-1Datasheet-2
EMPLOYMENT GENERATION
Benefit Per unit beneficiary Total per year
Benefit to the unskilled Labour Rs.26704 Rs.9.35 crores
Datasheet-1Datasheet-2
PACKING UNIT MANAGEMENT
Benefit Per unit beneficiary Total per year
Due to proper packaging of commodities Rs.13669 Rs.6.85 crores
Datasheet-1Datasheet-2
Quantification Of Benefits Envisaged For One Year
Facilities/Services Value In Crores (Rs.)
Hub & Spoke Format 39.73Electronic Grading and Sorting Line 71.50Online Spot Commodity Trading 17.34Cold Storage 55.68Ripening Chamber 17.37Pre-Cooling Unit 47.79Material Handling Equipment (Crates, pallets, etc.) 14.73Electronic Grading and Sorting Line 13.77Food Testing Lab 29.14Movement and Parking Facility 0.32Refer Vans 7.08
Employment generation 0.93Packaging unit management 6.85Warehouse management 9.30
Total Benefit from all the facilities - Rs. 331.53 crores
Total benefit of all facilities provided through PWM over 15 years
Years Total In Crores
First Year 331.5
Increase @10% for 2nd year 364.68
Increase @10% for 3rd year 401.15
Increase @10% for 4th year 441.27
Increase @10% for 5th year 485.4
Increase @5% for 6th years 533.94
Increase @5% for 7th years 560.64
Increase @5% for 8th years 588.67
Increase @5% for 9th years 618.1
Increase @5% for 10th years 649.0
Increase @5% for 11th years 681.5
Increase @5% for 12th years 715.5
Increase @5% for 13th years 751.3
Increase @5% for 14th years 788.9
Increase @5% for 15th years 828.3
Total 8739.9
The total benefit to the society over a span of 15years is Rs.8740 Crores.
The total benefit derived by the beneficiaries in a year through various facilities provided by PWM
Beneficiaries Farmers TradersCommission Agents
Exporters /Suppliers
Labors
Total No 5000 250 20 10 350
Value In Crores 323.43 5.3 0.14 0.082 0.93
12%
22%
5%17%5%
14%
4%
4% 9%0%
2%
0%2% 3%
Percentage Breakup of Total Benefit Realized From All The Facili-ties
Hub & Spoke Format
Electronic Grading and Sorting Line
Online Spot Commodity Trading
Cold Storage
Ripening Chamber
Pre-Cooling Unit
Material Handling Equipment (Crates, pallets, etc.)
Electronic Grading and Sorting Line
Food Testing Lab
Movement and Parking Facility
Refer Vans
Employment generation
Packaging unit management
Warehouse management
MICRO ANALYSIS OF THE PROJECT: RESPONDENT WISE ANALYSIS
Micro analysis of this project gives the social benefits of PWM in terms of percentage gain or loss by the projected introduction of the above mentioned modern technologies in the market yard.For this 30 categories of respondents and in total 150 respondents in number are taken.The categories are:
CATEGORIES OF RESPONDENTS1 Farmers
-Farmer using Hub & Spoke format2 Traders3 Commission Agent4 Labour5 Exporter6 PWM Employee7 Cold Storage Management8 Farmer using cold storage9 Warehouse Management10 Farmer using warehouse11 Food Testing Lab12 Farmer using food testing lab13 Ripening Chamber14 Farmer using ripening chamber15 Grading & Sorting Management
16 Farmer using grading & sorting facility17 Material Handling Equipment Unit18 Packaging Unit Management19 APMC Security guard20 APMC Official21 NMC Official22 Retail trader23 IT Official24 Bank25 Farmer using banking services26 Windmill Management27 Solar Panel Management28 Recycling / Waste Management29 Processing Unit Management30 Farmer using Processing unit
FARMER
Increase in transparency by electronic auction
Total benefit per farmer in Rs.
79,240
Farmer's value realisation due to removal of intermediaries.
Reduction in incidences of retractment by e -auction
Discrepancy in weighment of produce saved
Farmer's value realisation due to spot trading
Efficiency increased by providing parking facility
FARMER
HUB & SPOKE FORMAT
Reduction in distance due to 'Hub and Spoke Format'
Total benefit per farmer using hub & spoke in Rs. 77,377
Increased interaction between buyer and seller
Farmer's value realisation due to do removal of intermediaries through said format
Increased bargaining power of farmers
BENEFITS OF HUB & SPOKE FORMAT
TRADER
TRADER
Increase in Transparency through Electronic Auction
Total benefit per trader in Rs.
1,57,384
Reduction in Retractment by E- auction
Increase in Price by trader For Better Quality
Reduction in spoilage by using Material Handling Equipment’s
Increase in Price Realised Through Electronic Sorting / Grading
Increase in Efficiency Through Better Parking & Circulation Space
COMMISSION AGENT
COMMISSION AGENT
Transparency increased by introducing electronic auction
Total benefit per
commission agent in Rs.
82,864
Reduction in incidences of retreatment
EXPORTER
Increase in Price Due to Electronic Grading & Sorting
Total benefit per exporter in Rs.
97,369
Increase in Price Due to Quality assurance through Safe & Hygienic Conditions
Boost in Exports Due to Food Testing Lab
EXPORTER
RETAIL TRADER
Retail traders will be benefitted if the stakeholder like farmers satisfies their input requirement of the crop from the retail traders inside the PWM premises rather than the retail traders outside the PWM.
For this the inputs available at the retail traders should be of high quality. Farmers will be at ease because they will get all their requirements
fulfilled at one place and thus save on fuel expenses.
This will be an equally profitable business for the retail traders since they will get huge number of buyers
One of the major social benefits of the PWM to the society is the amount of employment generated. Rural unskilled labour is the major beneficiary of this system. They will be provided with training at PWM for doing commodity specific work like material handling, manual grading in some fruits like grapes
LABOUR
Employment generated through PWM in a year.
Total benefit per labour in Rs. 26,704
Wage received per day
LABOUR
PWM EMPLOYEE
PWM EMPLOYEE
The reduction in distance to be travelled by farmers for selling their produce by introducing 'Hub and Spoke Format'
Total benefit per farmer according to PWM employee in
Rs. 84,452
Hub & Spoke format facilitating interaction between buyer and seller
Farmer's value realization through the said format eliminating intermediaries
Reduction in spoilage by using material handling equipment’s in market
Increase in the bargaining power of farmers
Employment generated through PWM
COLD STORAGE MANAGEMENT
COLD STORAGE MGT
Reduction in Spoilage Due to Cold Store
Total benefit per farmer according to cold storage mgt. in
Rs. 4,21,308
Increase in Value of Produce by Maintaining QualityChange in price fetched by selling later in season through CS
Transportation losses in total LossesPre Cooling UnitReduction in Spoilage Due to Pre cooling unitIncrease in Value of Produce by Maintaining Quality through PCUHarvest losses saved through PCU
Value of produce realized by maintaining Nutritional value
COLD STORAGE FARMER
COLD STORAGE USING FARMER
Reduction in Spoilage Due to Cold Store
Total benefit per farmer using cold
storage in Rs. 41,59,452
Increase in Value of Produce by Maintaining QualityChange in price fetched by selling later in season through CSTransportation losses in total LossesPre Cooling UnitReduction in Spoilage Due to Pre cooling unitIncrease in Value of Produce by Maintaining Quality through PCUharvest losses saved through PCU
Value of produce realized by maintaining Nutritional value
WAREHOUSE MANAGEMENT AND FARMER USING WAREHOUSE
WAREHOUSE MGT.
Increase in value due to storage total benefit per
farmer according to warehouse mgt.in
Rs. 17863Decrease in distance due to Hub & Spoke Model
WAREHOUSE FARMER
Increase in value due to storage total benefit per
farmer according to farmer using
warehouse mgt.in Rs. 17859
Decrease in distance due to Hub & Spoke Model
FOOD TESTING LAB & FARMER USING FOOD TESTING LAB
FOOD TESTING LAB
Better price a commodity realize if quality assured, safe and hygienic total benefit per
farmer according to food testing labs in
Rs. 57445Exports boosted by establishing a food testing laboratory in the market
FOOD TESTING LAB FARMER
Better price can a commodity realize if quality assured, safe and hygienic
total benefit per farmer according to farmer using food testing lab in Rs.
141975Exports can be boosted by establishing a food testing laboratory in the market
BANK & FARMER USING BANKING FACILITY
Banks will offer a very safe payment settlement solution to both traders and farmers for settlement of money after the trade. Banks are still in the process of identifying and formulating a method for settlement of money in the wholesale markets.
The benefit derived by the farmers and traders that are going to use banking facility for payment settlement will be in intangible terms like up to what extent are they willing to take bank credit for trading, would they like it to be settled through cheque or cash or online money transfer
RIPENING CHAMBER
RIPENING CHAMBER
Reduction in spoilage by introducing ripening chamber in market total benefit per
farmer according to ripening
chamber in Rs. 132760
Better price of commodity realised by introducing ripening chamber in market
RIPENING CHAMBER FARMER
Reduction in spoilage by introducing ripening chamber in market
total benefit per farmer using
ripening chamber in Rs.
109403better price realised by the commodity if kept in a ripening chamber
Grading sorting facility makes the commodities more standardized for trading. PWM operates via electronic auctions where the grade of the product determines its price. So grading and sorting is a necessity for export products as well as domestic products
GRADING SORTING
MGT.
Better price can a commodity realizes if it is electronically sorted and graded
total benefit per farmer according to grading sorting mgt.
in Rs. 15188
GRADING &
SORTING FARMER
Better price can a commodity realize if it is electronically sorted and graded
total benefit per farmer according to
farmer using grading & sorting unit in
Rs.48094
GRADING SORTING MGT. & FARMER USING THE FACILITY
Material handling equipment reduces the post-harvest losses from the field to the market yard. The plastic crate reduces the mechanical shock to the agricultural commodities as compared to gunny bags. Packaging adds value to the product and results in considerable increase in the prices of the product. Setting up a packaging unit inside the PWM market yard has been envisaged keeping the below mentioned benefit in focus.
FARMER USING MATERIAL HANDLING EQUIPMENT
Reduction in spoilage by using material handling equipment’s in market
total benefit per farmer by using
material handling equipment in Rs.
27844
PACKAGING UNIT MANAGEMENT
Increase in value due to Packaging total benefit per farmer by using packaging unit
mgt. in Rs. 13844Decrease in distance due to Hub & Spoke Model
MATERIAL HANDLING & PACKAGING UNIT MGT.
WASTE MANAGEMENT UNIT:Waste management unit takes up the charge of collecting all the waste from the market yard every day and convert the biodegradable waste into compost or organic manure. This organic manure can be sold in the market earning revenue.
APMC SECURITY GUARD:APMC security guard provided the information regarding the probable increase in the efficiency of market yard operations by proper parking and circulation facility in percentage. The total benefit availed by the increased security is Rs. 357 per farmer. Incidences of theft are greatly reduced in the private wholesale market due to security and also due to the maintained databases of every stakeholder
APMC OFFICIAL:APMC official provided information regarding the various facilities available in the market like percentage of market that has been computerised, increase in the efficiency of market operation by introducing IT enabled operations, percentage increase in data accuracy and percentage decrease in labour requirement due to IT enabled operation
NMC OFFICIAL:NMC official provided information regarding the various facilities available in the market like percentage of market that has been computerised, increase in the efficiency of market operation by introducing IT enabled operations, percentage increase in data accuracy and percentage decrease in labour requirement due to IT enabled operation
WIND MILL MANAGEMENTWind mill will provide electricity to the PWM. The initial cost of establishing the wind mill inside the PWM premises is high but the maintenance cost is comparatively much less making it a viable source of electricity in the market yard. It will reduce the market dependency on the government source of electricity making the system self-dependent. SOLAR PANEL MANAGEMENT: Solar panel also will be providing electricity to the market yard. Similar to the wind mill its initial cost will be high but in later years its maintenance cost will be much less
PROCESSING UNIT MANAGEMENT:Processing unit adds value to the produce and also reduces its perishability to a large extent. Processing unit present inside the PWM premise increases the number of farmers using the facility and thereby their profit. Processing unit does not require a very high quality product and fetches huge profits.
FARMER USING PROCESSING UNIT:Farmers can add value to their produce by processing it. Processed food does not always require high quality produce and fetch huge profits on processing of low grade material. This way farmer can be benefitted by able to sell their low grade produce.
BENEFIT TO RESPONDENT FOR ONE YEAR
S.No
Name Of Stakeholders
Per Unit Benefit
Farmers (Cr.)
Traders (Cr.)
Commission Agents (Cr.)
Exporters (Cr.)
Laborers (Cr.)
Total Benefit In (Cr.)
5000 250 20 10 350
1 Farmers 0.54 Cr
2702.2 2702.2
2 Traders 0.02 Cr 4.98 4.98
3 Commission Agents
82,864 0.17 0.17
4 Exporters 0.02 Cr 1.55 1.55
5 Laborers 26,703 0.93 0.93
Total 2708.4
BENEFIT TO RESPONDENTS FOR FIFTEEN YEARS
S.No Respondents
Total Projected
Benefit After 15
Years In crores
Total Benefit
Including All
The
Respondents In
Crores
1 Farmers 6751.3
6766.9
2 Traders 12.4
3 Commission Agents 0.4
4 Exporters 0.4
5 Laborers 2.3
RECOMMENDATIONS
The activities enhancing the value proposition of PWM from the social perspective have been classified as follows:
Electronic Grading and Sorting Line Cold Storage Pre-cooling Unit Hub & Spoke Format Food Testing Lab
Learning
REFERENCES
Detailed Project Report on Modern Wholesale Market at Nasik- This DPR of Premium Farm Fresh Produce Ltd. has all the financial analysis, background studies and various outcomes of the company.
I.M.D. Little and J.A. Mirrlees 1974, ‘Project Appraisal and Planning for Developing Countries’ – the knowledge and application method of appraisal is understood from this book
Ajit K. Dasgupta and D.W. Pearce, 1978 ‘Cost-benefit Analysis, Theory and Practice’ – Case study ‘The siting of London’s Third Airport’ containing the application of social cost analysis was referred from this book.
Marketing Research by Naresh K. Malhotra and Satyabhusan Dash- this book was used for reference purpose for gaining better understanding of research methodology.
http://agmarknet.nic.in/reforms.htm http://mofpi.nic.in
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