BITS Pilani, Pilani Campus

Major players in Agriculture Supply Chain

1• Farmers

2• Traders

3• Commission agents

4• Wholesalers

5• Retailers

6• Consumers

BITS Pilani, Pilani Campus

Configurations Agriculture Supply ChainAg

ricul

ture

Sup

ply

Chai

n

Cooperative supply chain model

Collaborative supply chain model

Contract farming

BITS Pilani, Pilani Campus

1. Cooperative supply chain model

BITS Pilani, Pilani Campus

Example:

In some parts of India milk is collected and sold by cooperatives. The cooperative movement for milk was initiated by the National Dairy Development Board (NDDB) (Chakravarty, 2000).

Outcomes of milk cooperatives:• The efficiency, transparency and fairness of the system have

improved ( www.digitaldividend.org/pdf/akashganga). • The government’s attitude towards the cooperative system is

positive, especially after the success of the milk sector.

1. Cooperative supply chain model

BITS Pilani, Pilani Campus

2. Collaborative supply chain model

Example: Consumer durables and FMCG supply Chain

BITS Pilani, Pilani Campus

3. Contract farming

commitment from The purchaser

commitment from The farmers

BITS Pilani, Pilani Campus

3. Contract farming

Advantages:• This is helpful for farmers, since they get access to the

inputs and the market at a fair price. • Also, the processor gets an assured supply of raw material.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Total Supply Chain Cost

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Estimated cost escalationin the Indian grain chain

Figure clearly reflects the end consumer on average pays more than three times the farm gate price for grain.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Intermediaries in the grain supply chain and their margins and value additions

BITS Pilani, Pilani Campus

• Age-old historical loyalty of farmers to their agents, because these agents provide debt to the farmer;

• Local understanding and relationships with transporters• Lack of guidelines and rules in the development• Organised cartels between commission agents, wholesalers and

transporters;• Lack of scale in terms of what each farmer produces, sheer

numbers of small farmers drive down bargaining power• Lack of effort in development from front-end players (retailers)

Reasons for the existence of intermediaries