IMPACT OF ORGANIZED RETAIL CHAINS ON REVENUE OF FARMER (A CASE STUDY OF MOTHER DAIRY CENTRE S IN HARYANA)

JITENDER SINGH

ASSISTANT DIRECTOR

RESEARCH STUDIES OFFICE OF THE ECONOMIC ADVISER

DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION MINISTRY OF COMMERCE & INDUSTRY

UDYOG BHAWAN, NEW DELHI INDIA 2011

Views expressed in this paper are those of the author(s) and may not be attributed to the Government of India.

2 | P a g e

Acknowledgement

This acad em ic end eavor w ou ld not h ave been pos s ible w ithou t th e help of a nu m ber of people w h o w ith th ere k ind cooperation , active supervision and steadfast support have made this research work reality.

I am ex trem ely gra tefu l to Prof. R. K. S harm a, w h os e k een continuous encouragement and suggestions helped to complete this work.

I am th an k fu l to S hri M.C. S ingh i, S en ior Econom ic Ad vis er, for h is valu able com m en ts an d encouragem en t to com ple te th is w ork . I a ls o ex tend m y s incere gra titu d e to S hri S a ju K. S urend ran , Depu ty Director and Shri Ashwani Kumar, Deputy Director for their precious comments.

I w ou ld lik e to m en tion apprecia tion es pecially to v illagers / farm ers w h o helped m e to th eir m axim u m th roughou t th e field w ork . I am als o th an k fu l to m y colleagues in th e Office for in s piring m e an d actively participa ting in th e d ebate an d d is cu s s ion s on rela ted is s ues .

Palace: Date: Jitender Singh

3 | P a g e

CONTENTS

SN Subject Pg. No.

1 Introduction 5

2 Rise of Organized Retail Chains 6

3 Studies of Marketing Efficiency 10

4 Objectives of the Study 11

5 Data & Methodology 11

6 Comparison of the Alternative Models of the Direct

Procurement of Vegetables

12

7 Market Integration and Uncertainty in the Prices of

Alternative Marketing Channels

15

8 Impact on Revenue

17

9 Conclusion

23

10 Bibliography

24

11 Annexure

32

Table Title Pg. No.

1 Vegetable Production & Inflation in India 5 2 Augmented Dickey Fuller Unit Root Results 15 3 Co integration Results 16 4 Variability of Prices 17

5 Th e h ypoth et ica l va lu es to s h ow im pa ct of p r ice a n d quantity changes on revenue of the farmer

18

6 Avera ge Net Reven u e of Tra d it ion a l Ma rket a n d MD Channel

20

7 Results of the above equation 21 8 Ela s t icity of Pr ices w.r .t . Arr iva ls (Arr ) a n d p rocured

quantity (PR). 22

4 | P a g e

Abstract

The objective of the s tud y is to exam ine th e term s an d cond ition s of th e

procurem en t con tracts of Mother Dairy and Reliance Fres h and a ls o com paring revenue

impacts of Mother Dairy and Traditional Marketing Channel on farmer. It is found th a t th e

by la w s of the Reliance Fres h is m u ch better th an the Moth er Dairy procurem en t con tract

in term s of price in form a tion , qu ality m on itorin g, m od e of pay m en ts e tc. The relatively

simple con tract of Reliance Fres h provides an ed ge to th e Com pan y to a ttract better

quality of the prod uct. How ever it d oes not m ean th a t th e Mother Dairy d oes not pu t u p an

incen tive to grow m ore and be tter quality to th e farm er. Des pite th e com plexity of the

con tract of Mother Dairy (MD), it provid es a rela tively be tter d eal to th e farm er as com pare

to th e trad ition al m ark et ch a in . Th is m ay be th e reas on th a t it h as been s ucces s fu l for

s uch a long tim e in m an y areas . On th e practica l s id e of the im pacts of MD it is found th a t

excep t Green Ch illi On ion , and Mus k Melon th e prices of loca l m ark e t are co-integrated

w ith Mother Dairy prices . How ever, th e ne t revenue of the MD is es tim a ted m ore vola tile

th en TM for a ll th e vege tables excep t Bh ind i and Tom a to. Th is is qu ite oppos ite to the

notion th a t the organ iz ed re ta il ch ains w ill s tab iliz e th e prices for the farm er and

cons equen t th e re tu rns w ou ld be s tabiliz ed . How ever, the h igher in s tability of revenue

d oes not m ean th a t it a ffect farm ers incom e a lw ay s nega tively , ra th er the effect m ay be

pos itive if th e prices are fluctu a ting upw ard . The ne t revenue of the farm er for s elected

vegetables is found on an average 17 per cent higher for carrot, 134 per cent for Lauki, 17

per cen t for Green Ch illi, 45 per cen t for On ion , 50 per cen t for Bh ind i, and 57 percen t

h igher for Mus k Melon , in th e MD as com pare to TM except Cau liflow er. Bes id es , d irect

revenue im pact, th ere are ind irect im pact on th e revenue of the farm ers of the d irect

procurem en t of MD. And it is not on ly con fined to thos e s upply ing to MD ra th er ex tended

to a ll th os e farm ers s upply ing to the TM. The ind irect im pact a ls o s eem s to be

cons id erable given th e fact of low d erived d em an d elas ticity of the local m ark e ts . In s hort

the direct procurement of the MD has enhanced the farmer s revenue.

5 | P a g e

I INTRODUCTION

Why low grow th of area und er vege table an d h igh ra te of in fla tion an d perh aps profitab ility in vege table coexis t? Is it becau s e th e price ad van tages d o not accrue to th e farm ers or producing vegetables is a risky business?

1.2 The widening gap between dem a n d a n d p rodu ct ion of the vegetables h a s been eviden t in r is in g p r ices of vegeta b les in recen t pa s t . The average increase in the prices of vegetables at wholesale markets was 9 .5 per cen t du r in g 2006-2010. The contributory factors for this increase have been a n in crea s e in dem a n d a n d s t icky s u pp lies . On th e dem a n d side, th e per ca p ita in com e of th e cou n try is r is in g a n d th e con s u m ption pattern is getting diversified towards vegetables.

Table: 1. Vegetable Production & Inflation in India Year Production

(T) Production

Growth (%)

Yield (Tone/hec.)

Area ('000' Hec.)

Area Growth

(%)

Yield Growth

Inflation in

Vegetable (%)

2006-07

114993 3 15 7581 5 -2 0.5

2007-08

128449 12 16 7848 4 8 19.9

2008-09

129077 0 16 7981 2 -1 3.5

2009-10

133738 4 17 7985 0 4 14.0 Source: National Horticulture Board, and the Office of the Economic Adviser.

1.3 On th e s u pp ly s ide th e p rodu ct ion of vegeta b les is n ot keep in g th e pa ce with dem a n d . Th e low growth of th e vegeta b les p rodu ct ion du r in g 2008-09 a n d 2009-10 h a s been n ot on ly beca u s e low yield bu t a ls o beca u s e of low growth in th e a rea u n der vegeta b les . Th is in d ica tes th a t th e in cen t ives for th e crop diversification perh a ps were not sufficient en ou gh to in du ce a lloca t ion of a rea to vegeta b les . Wh y th e fa rm er is n ot d iversifying a rea towa rds vegeta b le wh en p r ices of vegeta b les h a ve been very h igh ? Th e m a in rea s on for s low crop d ivers ifica t ion towa rd vegetables is the h igh r is k -h igh retu rn pa t tern of th e vegeta b les. Th e high risk is due to fluctuating prices in the local markets and a low share in a u n it of con s u m er p r ice. Th e fa rm er m a y n ot n eces s a r ily be a r is k a vers e bu t h a s a low r is k a ppet ite. La ck of cred ib le in s t itu t ion a l m ech a n is m wh ich cou ld res u lt in a n in crea s e in h is s h a re in ea ch ru pee a consumer spends on vegetables is further reinforcing this risk aversion.

6 | P a g e

1.4 Th e s m a ll s ize of th e loca l m a rket a n d its d is in tegra t ion , h a ve m a de th e prices s u pp ly s en s it ive. Bu t wh ile fa rm ers a re n ot a b le to ben efit from th e in crea s e in p r ices , a fa ll h its th em im m edia tely. Dem a n d for vegeta b les , in s o fa r a s th e fa rm ers a re con cern ed is a der ived dem a n d , th e dem a n d of th e in term ed ia r ies . Th e exis ten ce of per fect com pet it ion a m on g th e fa rm ers a s s ellers of vegeta b les a n d a few oligopolistic bu yers or m idd lem en , th erefore, res u lts in distortion of the in cen t ive s t ru ctu re. Flu ctu a t in g p r ices of th e vegeta b le, wh ich a re kep t low by th e in term ed ia r ies ; do n ot p rovide en ou gh in cen t ives to th e farmers to produce more vegetables. Prevalence of high prices and higher in fla t ion a re also du e to th e h igh t ra n s a ct ion cos t of vegeta b les

tra n s fer a n d h igh m a rgin s of th e m id d lem a n . Bes ides , th e per is h a b le n a tu re of th e vegeta b le togeth er with in a dequ a te s tora ge fa cility, im proper dem a n d m a n a gem en t a n d in efficien cy in s u pp ly chains create h u ge wa s tes in transit. In this situation, while increased supplies results in a price crash for fa rm ers , lower s u pp lies does n ot p rovide th em a n y econ om ic ren t . Th is fu r th er rein forces th e r is k a vers ion of th e fa rm ers . On e op t ion for th e efficien cy in th e s u pp ly ch a in s is to encourage orga n ized reta il chains.

2. RISE OF ORGANIZED RETAIL CHAINS

2.1 The evolu t ion a n d pa t tern s of th e d iffu s ion p roces s of m odern food reta il in du s try h a s varied worldwide, bu t it s en try a n d con s is ten t in crea s e in m a rket pen etra t ion h a ve had s ign ifica n t im p lica t ion s across all countries including US, European Union and the developing countries of La t in Am erica a n d Ea s t As ia in clu d in g Ch in a 1. For In d ia , th e s ize of food reta il in 2008-09 wa s es t im a ted a t a bou t Rs .10 ,700 b illion, wh ich is 61 per cen t of th e tota l reta il in du s try. Wh en 95 per cen t reta il is in unorganized sector, th e orga n ized reta il (only 5 per cen t) is likely to grow a t a n a n n u a l ra te of a rou n d 11 per cen t a n d is p rojected to tou ch bu s in es s levels of Rs 53,000 b illion by 2020 . The Agri-food reta ilin g accounts for 18 per cent of the organized retail today and is likely to have a lower share (12 per cent) by 2020 2. According to ICREAR report annual growth ra te of orga n ized reta il in food a n d grocery is es t im a ted at 16 percen t du r in g 2004 20073. Oth er es t im a tes pu t th e growth ra te of

1 The IFPRI Discussion Paper (2008). 2NABARD study on Organised Agri-Food Retailing in India(2011) 3 Impact of Organized Retail Chains on Income & Employment, ICREAR(2009).

7 | P a g e

orga n ized food a n d grocery a t h igh er level of 42 percen t in 2006 over 20054.

2.2 The s h a re of expen d itu re towa rds food a n d bevera ge in tota l con s u m ption expen d itu re of th e h ou s eh olds is expected to declin e. Su ch a declin e, a s per th e En gle La w, is a n orm a l h a ppen in g a s pa r t of th e p roces s of developm en t . Th e orga n ized reta il m a y a ls o, th erefore, exper ien ce a declin e in ra t io of th eir bu s in es s tu rn over der ived from th e s a le of food rela ted p rodu cts . Th ere wou ld , h owever , be two pos it ive fa ctors . Th e r is in g in com es a n d s ta n da rds of livin g a re expected to pu s h u p th e dem a n d for h igh va lu e foods . Th e ch a n ges in con s u m er beh a vior a n d p referen ces in fa vou r of p roces s ed foods a s a res u lt of a n in crea s in g pa r t icipa t ion of wom en in la bou r force cou ld h elp in s u s ta in in g th e orga n ized reta il s s h a re in food a n d rela ted p rodu cts . Moreover, in crea s in g u rba n iza t ion is a ls o a s s ocia ted with a ch a n ge in th e s h opp in g beh a vior of th e m idd le cla s s du e to h igh er in com es a n d increasing oppor tu n ity cos t of t im e for th e con s u m ers (bu yers ), pa r t icu la r ly th e women. Im provem en t in p roces s in g tech n ology, p rogres s on a ccou n t of roa d con n ect ivity, in ves tm en t in s tora ge fa cilit ies , fa s t a n d s a fe t ra n s por t a n d in form a t ion tech n ology revolu t ion is likely to s olve m a n y of th e p rob lem s of m a rket in g s ys tem a n d p rovide oppor tu n it ies to p r iva te traders.

2.3 In crea s ed in ves tm en t in orga n ized reta il by dom es t ic a n d foreign p la yers b r in gs a bou t u ps trea m ch a n ges in s u pp ly ch a in a n d a n in crea s ed cen tra lized p rocu rem en t of a gr i p rodu cts from fa rm ers a s th e exper ien ce of th e Ea s t As ia n cou n tr ies s u gges t . Th e ra p id r is e of s u perm a rkets in d ifferen t cou n tr ies h a s t ra n s form ed th eir a gr i-food system, though the speed of transformation has been different. In case of In d ia th e t ra n s form a t ion a s of n ow h a s been s low both a t u ps trea m a n d at downstream. In the downstream changes; the retail sector is now open for th e corpora te to develop s u perm a rket in fra s t ru ctu re, th e foreign investment is likely to flow in near future.

2.4 The d irect p rocu rem en t in fresh fru its a n d vegeta b les may offer better p r ice, p rovide kn owledge of market demand, tech n ologica l in pu ts a n d a cces s to cred it on a ccou n t of a s s u red m a rket to th e fa rm ers . While it is es t im a ted th a t d irect procurement of fres h fru its a n d vegeta b les

4 The India Retail Report, Ministry of Commerce and Industry, 2007.

8 | P a g e

could redu ce wa s ta ge by a bou t 7 per cen t a n d ca n im prove th e ch a in efficien cy by a s m u ch a s 17 per cen t , th ere is n o con s en s u s wh eth er th e upstream operation of supply chain would be inclusive and cover farmers of a ll s izes of la n d h old in gs . Th e t ra d it ion a l ch a n n el where h u ge wa s ta ge of com m odit ies , la ck of in fra s t ru ctu re, m is s in g in s t itu t ion , la ck of s ta n da rd iza t ion a n d m oreover la ck of in cen t ives to in ves t in s tora ge facilities, standardization, packaging etc are very much evident. Experiences of other institutional innovation in agri-marketing 2.5 The exper ien ces of th e con tra ct fa rm in g, pa r t icu la r ly regarding th e in clu s ion of s m a ll fa rm er under con tra ct fa rm in g, th e d is t r ibu t ion of p rofits between fa rm ers a n d the con tra ctor , s h a r in g r is k by a gr ibu s in es s firm s , a n d m in im iza t ion of th e a dvers e im pa cts on en viron m en t a n d society h a ve led to m ixed res u lts . Th ere a re va r iou s p r ice a n d n on -price effects on a gr icu ltu re. Some positive im pa cts of con tra ct fa rm in g in clu de th e crop d ivers ifica t ion , in crea s e in p rodu ct ivity, im provem en t in th e p rofita b ility of fa rm ers , improved decis ion m a k in g, increase in wages a n d em ploym en t of a gr icu ltu ra l la bor a n d tech n ology t ra n s m is s ion . Th e is s u e of in clu s ion is m ore im por ta n t beca u s e of em ergin g t ren ds of large n u m ber of s m a ll fa rm er in In d ia a n d decreasing s ize of la n d h old in gs . A s m a ll fa rm er opera t in g p redom in a n t ly with fa m ily la bor h a s m a n y advantages which reduce th e cos t of la bor s u pervis ion , cos t of monitoring, s creen in g of h ired la bou r , cos t of con tra ct en forcem en t a n d cos t of n egot ia t ion 5. Collect ively, it is ea s ier to dea l with s m a ll fa rm ers by the contracting firms which reduce th e pos s ib ility to get involved in to a con flict . On th e oth er h and, th ere a re disadvantages du e to high dependency on farm in com e wh ich redu ces h is ba rga in in g power , low capacity to invest restricts (prohibits) implementation of new technology and to experiment with new farming practice and crops etc..

2.6 Th e s m a ll fa rm er is in teres ted in ta k in g u p con tra ct fa rm in g beca u s e it fa cilita tes a va ila b ility of m odern in pu t , wh ich a re eith er u n a va ila b le or cou ld be ob ta in ed th rou gh other sources a t a very h igh cost6. Con tra ct fa rm in g a ls o redu ces his p r ice r is k and eventually stabilizes in com e. Th e firm s , h owever , p refer la rge growers to a void dea lin g with la rge n u m ber of s m a ll fa rm ers . It is n ot on ly ea s y to ba rga in

5 Key, Nigel and Runsten, D. 1999 6 Porter Gina and Howard Phillip K., 1997

9 | P a g e

with s m a ll n u m ber of la rge fa rm er , it is a ls o a dva n ta geou s to th e firm to redu ce th e in pu t s u pp ly cos t , cos t of s u pp lyin g exten s ion s ervices . La rge fa rm s h a ve a h igh er r is k ta k in g a b ility, ca n pu t in la rger in ves tm en ts in la n d . Th ey h a ve rela t ively bet ter qu a lity la n d m ore u n iform a n d consolidated. Ma n y s tu d ies 7 reveal th a t th e s ys tem of con tra ct fa rm in g is s kewed towa rds m ed iu m a n d la rge fa rm ers , th ou gh there were n o s ign ifica n t d ifferen ces in p rodu ct ivity between s m a ll, m ed iu m a n d la rge farms . Th ere wa s n o d is cr im in a t ion in p rocu rem en t by a gr ibu s in es s firms as well as price obtained by small and large farmers.

2.7 Th e exclu s ion of th e s m a ll fa rm er eviden t in th e con tra ct fa rm in g, m a y h a ve s evere con s equ en ces for ru ra l econ om y. If firm ch oos e to con tra ct p r im a r ily with la rge com m ercia l fa rm s , then small fa rm er of th e ru ra l popu la t ion may fa il to ben efit d irect ly from con tra ct a r ra n gem en ts . In th e con text of libera lized m a rkets , con tra ct fa rm in g th a t exclu des s m a ll fa rm er ca n lea d to m ore con cen tra ted la n d own ers h ip a n d d is p la cem en t of ru ra l poor 8. Th e wa y con tra cts a n d th e in com e ea rn ed from con tra ct in g

is d is t r ibu ted with in a ru ra l com m u n ity ca n h a ve important implication for economic and social differentiations within that community9 . Th es e is s u es a re pa r t icu la r ly im por ta n t in th e con text of In d ia wh ere 85 percen t of la n d h old in g are s m a ll a n d m a rgin a l h oldings a n d m ore th a n 40 percen t of ru ra l popu la t ion is la n d les s . Add it ion a lly, th ere is a s ocia l s t ra t ifica t ion with h igh -in com e in equ a lit ies in ru ra l areas.

2.8 Even if small farmers are incorporated in contract farming, there is n o gu a ra n tee th a t th e contracting firm wou ld n ot exp loit or a t lea s t p rovide s om e ben efits to th e s m a ll fa rm er . In th e absence of representative farmer s orga n iza t ion s , th e con tra ct-fa rm in g s ch em e may have a limited regional/ local impact.10 Large number of small farmer are more p ron e to rem a in u n orga n ized du e to m is s in g n etwork in g, la ck of information a n d lim ited a wa ren es s of orga n iza t ion ben efits . In th e lon ger run, h owever , if th e con tra ct in g firm becom es perva s ive, th e fa rm er m a y n ot h a ve any option but to s ell th eir p rodu ce through th es e ch a n n els , but if these channel become nonoperational, farmers may need to reverse their con tra ct a n d s witch over to oth er firm . Th ere a re oth er pos s ib ilit ies

7 Kumar Promod (2006) 8 Key, Nigel and Runsten, D. 1999 9 Korovkin, 1992 10 Porter Gina and Howard Phillip K., 1997

10 | P a g e

a ls o; th e firm ca n m a xim ize its s h or t ru n p rofits with ou t con cern in g a bou t s u s ta in a b ility of the fa rm a n d the fa rm er a n d by exh a u s t in g th e potential of the region it may switch over to other relatively regions .

2.9 Th is ea s y s witch over by firm to oth er region to con tra ct or to p rocu re th e p rodu ce a n d any lim its on th e exit of th e fa rm er from con tra ct m a y d is tor t th e ba rga in in g power equ a t ion in th e lon g ru n in fa vors of th e firm . Som e a ltern a t ives , h owever , h a ve em erged . The s ch em es to p rom ote d irect m a rket in g ch a n n els a re Apn i Ma n d i, Ryth u Ba za rs , Ha ds pa r , Uzh a va r Sa n d ies etc. in va r iou s Sta tes . Th e p rom otion of in ves tm en t in s u perm a rkets a n d reta il ch a in s a ls o is th e s tep in th is direction.

Studies of Marketing Efficiency

2.10 Th ere a re m a n y s tu d ies on es t im a t ion of opera t ion a l m a rket in g efficien cy of t ra d it ion a l m a rket in g ch a in s , m os t ly u s in g th e fa rm er s s h a re in th e con s u m er p r ice. Th e s tu d y of Th a k u r , (1994) h a s obs erved that in ca s e of Tom a to, Ca u liflower , Capsicum, a n d Pea s in Him a ch a l Pa rdes h du r in g 1991-92, m a rket efficien cy wa s between 46 -52 %. In a n oth er s tu dy of Karnataka state, du r in g 1985-86, by Kires u r et a l, (1989) a ls o revea led th e low m a rket in g efficien cy (36 to 51 %) in per is h a b le com m odit ies like Tom a to, Br in ja l, wh ile in ca s e of pota to a n d on ion , wh ich a re rela t ively du ra b le vegeta b les with a lon ger s h elf life, th e m a rket in g efficien cy was between 60 to 67 %. In a s tu dy of wholesale market in Bangalore by Chengappa and Nagaraj (2005), it was found that reta il ch a in s h a d en h a n ced th e fa rm ers

profita b ility by 10 -15% as com pa red to th e t ra d it ion a l ch a n n el a n d redu ced the m a rket in g cos t by about 4.25% to 8%..

2.10 Des p ite, th e cla im s th a t orga n ized reta il ch a in s wou ld im pa ct fa rm ers in a bet ter wa y in term s of en h a n cem en t of in com e, fa rm efficiency a n d , u pda t in g fa rm ers with m a rket rela ted in form a t ion etc, thes e pos it ive im pa cts on fa rm ers a re depen den t on th e term s a n d con d it ion of th e p rocu rem en t con tra ct . These term s a n d con d it ion s defin e th e lega lity a n d en forcea b ility of th e con tra ct . Th e des ign of th e procurement contract also provides for some obligations on company and the fa rm er , wh ich once in s t itu t ion a lized cou ld s erve a s a m odel con tra ct , beneficial to both the contracting firm and the farmers.

11 | P a g e

2.11 The d irect p rocu rem en t con tra cts , with b in d in g or flexib le s u pp ly op t ion s , n eed to des ign a n in cen t ive m ech a n is m wh ich ben efits fa rm ers . The focu s of th is pa per is , th erefore, also on th e a n a lys is of th e a ltern a t ive m odels of d irect p rocu rem en t of fres h vegeta b les . Th ere a re m a n y con tra cts with d ifferen t term s a n d con d it ion s operating simultaneously ba s ed on th e va ryin g ba rga in in g powers of th e con tra ct in g pa r t ies . However , n ot a ll th ese con tra cts a re s u s ta in a b le in th e fu tu re. It m a y, th erefore, be n eces s a ry to s tu dy of th e n a tu re of contracts clos ely to assess th eir efficien cy a n d s u s ta in a b ility a n d their impact on parties. This study examines the relative efficiency of vegetable p rocu rem en t con tra cts of Moth er Da iry a n d Relia n ce Fres h a n d the tra d it ion a l ch a n n els of m a rket in g of th es e p rodu cts a n d va lida tes th e impact through field observation.

3. OBJECTIVES OF THE STUDY

I. Exa m in a t ion of th e des ign of th e a ltern a te Models of d irect procurement.

II. Tes t in g co-m ovem en t a n d u n cer ta in ty of th e p r ices of a ltern a te channels.

III. Es t im a t ion of In com e effect of th e a ltern a t ive m a rket in g ch a n n els on the farmers.

4. DATA & METHODOLOGY

4.1 Th e s tu d y is ba s ed on p r im a ry da ta on p r ices a n d qu a n t ity, collected from growers payment sheets s u pp lied by Mother Dairy centers from 2005-2007 . Procurement cen tres s elected for th e s tu dy in clu ded Pu th i, Moi, Ra bh ra , Ba lya n a a n d Kh a n dra i in Son epa t d is t r ict in Haryana. Th e wh oles a le p r ices for res pect ive vegeta b les were collected from th e records of th e Ma rket in g Com m it tee of th e n ea res t m a rket . Th e m a rket in g cos t da ta was collected from fa rm ers du r in g th e p r im a ry survey. A s et of ra n dom ly s elected fa rm ers a re in terviewed . Th e vegetables covered u n der s tu dy were s elected on th e ba s is of da ta a va ila b ility from th e Moth er Da iry cen tres , wh ich a re a ls o la rges t grown vegetables in the sample villages. The vegetables e.g. bottle gourd, carrot, on ion , green ch illi, tom a to, la dy fin ger , ca u liflower , and m u s k m elon are included in this study.

12 | P a g e

5. COMPARISON OF THE ALTERNATIVE MODELS OF THE DIRECT PROCUREMENT OF VEGETABLES

Model: Mother Dairy

5.1 Moth er da iry (MD) u n der th e Na t ion a l Da iry Developm en t Boa rd (NDDB) s ta r ted in 1985 a s a n orga n ized reta il ch a in of fru its a n d vegetables in In d ia . The procurement in 1985 was just 250 kg of vegetables wh ich in crea s ed over th ou s a n d folds to rea ch 250 ,000 kg in recen t yea rs . In th is s h or t s pa n of t im e it h a s becom e la rges t reta il ch a in in As ia a n d th e s econ d la rges t in the World . Th e popu la r Bra n d u n der which MD is doin g bu s in es s is Sa fa l . It p rocu res 40 -45 s ea s on a l item s of fru its a n d vegeta b le from over 17 s ta tes in In d ia . Arou n d 22 ,000 s m a ll and big farmers a re s u pp lyin g th eir p rodu ce to MD wh ich a re d irect ly lin ked to it a t u ps trea m of th e ch a in . At down s trea m , th ere a re a rou n d 350 outlets spread across the National Capital Region (NCR) Delhi selling th e p rocu red fru its & vegeta b les . Th e d is t r ibu t ion centres a t Pa lla ba kh ta va rpu r a n d Ma n golpu r i in Delh i lin k th e fa rm ers a n d the consumers . At distribution centre huge storage and logistic facilities have been put in palace.

5.2 At u ps trea m MD opera tes th rou gh p rocu rem en t cen ters spread a cros s th e cou n try to p rocu re fres h a n d qu a lity vegeta b le from growers . Th e loca lly p rodu ced top qu a lity vegeta b les a n d fru its a re p rocu red a t remunerative p r ices from th e fa rm ers . Fa rm ers

As s ocia t ion s also exists wh ere fa rm ers elects on e Pres iden t from among themselves. The Secreta ry, wh o is a ls o res pon s ib le for th e en t ire a r ra n gem en t of p rocu rem en t a n d record m a in ten a n ce, is a ppoin ted by MD. Secreta ry is en t it led to get s a la ry for h is s ervices a t p rocu rem en t cen tre. Ma jor cos ts incurred during p rocu rem en t s u ch a s pa ym en t of s a la r ies to secretary, helper, safai ka ra m ch a r i a n d ren t pa ym en t for th e la n d a n d s h ed of th e centre a re pa id from th e As s ocia t ion s fu n ds . Th ese fu n ds a re gen era ted from th e con tr ibu t ion of th e 1 .75 per cen t of th e tota l va lu e of procured qu a n t ity from th e cen tre. All th es e cos ts in clu d in g the transportation a n d h a n d lin g ch a rges in clu d in g th e m a rket fee a re dedu cted from th e growers

price. The p r ice pa id to th e fa rm er is net of a ll th e ch a rges a n d costs incurred until the produce reaches the distribution centre.

5.3 Farmers b r in g th eir vegeta b les to th e p rocu rem en t cen tre on da ily ba s is a n d a fter pa cka gin g a n d weigh t in g, th es e a re t ra n s por ted to th e

13 | P a g e

distribution centre of MD every evening. During procurement special care is ta ken by th e s ta ff a t p rocu rem en t cen tre to en s u re th a t th e p rocu rem en t m eets th e qu a lity n orm s of MD. Res t of p rodu ct is retu rn ed to th e fa rm ers to be d is pos ed of by th em a t th e n ea res t Ma n d i. Mandi, th erefore, fa ces a n a dvers e s elect ion a s th e p rodu cts b rou gh t a re in a wa y rejects of MD. Bes ides a los s in term s of th e p r ices , fa rm ers a re requ ired to in cu r expen d itu re on t ra n s por ta t ion a n d m a rket in g. It a ls o in volves s pen d in g a m in im u m of th ree to fou r h ou rs a n d h a ve a n oppor tu n ity cos t .11. MD does n ot lift th e en t ire qu a n t ity p rodu ced. The s ecreta ry a t th e procurement centre, a s th e key a gen t of th e MD coordinates th e p rocu rem en t . MD in form s th e s ecreta ry of it s requ irem en ts on a da ily ba s is a n d th es e a re com m u n ica ted to th e fa rm ers . Tota l qu a n t ity p rocu red by MD on d a ily ba s is , particularly during th e pea k t im e of s ea s on in term s of th e p rodu ce, is les s th a n th e total produce of the day. Consequently only a part of the farmers produce is p rocu red and n ot th e wh ole p rodu ce, in depen den t of it s qu a lity. Bein g in th e n a tu re of per is h a b les, th e vegeta b le ca n n ot be h old , th e exces s produce, therefore, a fter s u pp ly to MD, is s old in th e loca l Ma n d i, (Annexure 2).

5.4 MD does n ot p rovide th e fa rm ers a n y cred it or in pu t s u ppor t . Vegeta b le growers , wh o do n ot h a ve m a rket s u rp lu s of food gra in s, depen d on com m is s ion a gen ts for m eet in g th eir cred it a n d in pu t n eeds . Since these farmers bring relatively poor quality of vegetables (as the first gra de h a s a lrea dy been offered to MD), it s a ffects th eir cred it ra t in g. The farmers vis ited du r in g th e survey were requ es ted to give th eir op in ion on th e is s u e of d ifficu lt ies fa ced by th em in get t in g cred it . It wa s obs erved th a t th e s m a ll fa rm ers wh o m os t ly grow vegeta b les h a ve a rela t ively grea ter depen den cy on com m is s ion a gen ts for cred it a n d in pu ts a n d they are the worst affected.

5.5 The famers a ls o m en t ion ed th a t th e qu oted p r ice of th e s u pp ly is n ot kn own a t th e t im e of s u pp ly. It is on ly on th e n ext da y wh en th e ten ta t ive p r ices are informed. Th e a ctu a l p r ice is delivered to th e fa rm ers after ten days when their payment sheet is received by the secretary from MD. Th e a ctu a l weigh ts a n d qu a n t ity th a t h a s fin a lly been a ccep ted is indicated on ly in th e grower pa ym en t s h eet , though ten ta t ive qu a n t ity a n d percen ta ge of reject ion is in form ed to th e fa rm er on th e n ext da y of

11 IFPRI 2010

14 | P a g e

th e s u pp ly. Th e pa ym en t made a fter ten da ys of th e s u pp ly th rou gh a bearer cheque.

5.6 Th e p r ices a re a lit t le m ore u n cer ta in in MD th a n in Ma n d i, in th e s en s e th a t in Ma n d i th e p r ices a re kn own to th e fa rm er on th e s pot . Wh ile in MD, fir s t th e p rodu cts a re s u pp lied a n d on n ext da y p r ices a re told to farmers. Comparing with contract farming, in MD there is no price or qu a n t ity con tra ct form a lized with fa rm er . Th e MD is n ot bou n d to p rocu re th e qu a n t ity offered by th e fa rm ers . On th e other hand MD gives freedom to th e fa rm ers to n ot to s u pp ly to th em , or s ell a n ywh ere els e. Com pa red to formal con tra ct fa rm in g, th e flexib ility wh ich MD offers to fa rm ers is often is r is ky, pa r t icu la r ly to a s m a ll fa rm er , beca u s e th e prices and quantities procured are determined on daily basis.

5.7 Ma n y of th e fa rm ers m en t ion ed du r in g th e s u rvey th a t if th ey are in form ed of th e p r ices a t th e t im e of s u pp ly of th eir p rodu ce, th eir decis ion to s ell to MD or in a Ma n d i cou ld be ba s ed on bet ter information. Th e qu a lity con trol of MD was also repor ted to be of a s ign ifica n t ly h igh er level a n d s t r in gen t wh ich lea ves a s iza b le por t ion of p rodu ce to be m a rketed th rou gh th e Ma n d i. Som e of th e fa rm ers a ls o informed th a t th e p r ice told a t th e t im e of p rocu rem en t were h igh er th a n th e a ctu a l p rices fin a lly pa id. Th ere wa s a ls o a gen era l obs erva t ion th a t MD s p rocu rem en t wa s rela ted to th e p reva ilin g p r ices , declin in g du r in g th e per iod wh en p r ices were dep res s ed a n d th a t a ccen tu a ted th e r is k of the farmers.

Model of Reliance Fresh:

5.8 Reliance Fresh (RF) operates through a procurement centre at each selected villa ge. Th ere is n o form a l wr it ten con tra ct between the farmers and RF they a re free to s ell to MD or a n y oth er ch a n n el. However RF centre is m ore s oph is t ica ted and uses bet ter tech n ology in clu d in g a com pu ter to con s olida te p rocu rem en t in form a t ion . Th e m a n power a t RF is bet ter t ra in ed a n d qu a lified u n like MD wh ere s ecreta ry m a y n ot h a ve a n y tech n ica l qu a lifica t ion . Th e p rocu rem en t term s and conditions of RF are simple and th ey give th e p r ice in form a t ion a n d a ccep t or reject the qu a lity a n d qu a n t ity a t th e s pot . Both , MD a n d RF p rocu re on ly bes t qu a lity p rodu cts from th e fa rm ers a n d th e rest is left with th e fa rm ers to be sold by them. Th ere is n o fa rm ers association like in MD. The mode of payment in RF is both cash and cheque.

15 | P a g e

5.9 In th is con text of th e a bove a n a lys is of th e p rocu rem en t con tra cts of th e MD a n d RF it s eem s th a t th e Relia n ce Fres h con tra ct is relatively bet ter th a n th e Moth er Da iry p rocu rem en t con tra ct in term s of p r ice in form a t ion , qu a lity m on itor in g, m ode of pa ym en ts etc. Des p ite th e com plexity of th e con tra ct of Moth er Da iry, it provides a rela t ively bet ter deal to the farmer as compare to the traditional marketing channels.

6. MARKET INTEGRATION AND UNCERTAINITY IN THE PRICES OF ALTERNATIVE MARKETING CHENNELS

Market Integration

6.1 Th e MD pr icin g policy is n ot ba s ed on th e loca l m a rket p r ices . The p r ices given to th e fa rm ers a re determ in ed on th e ba s is p r ice qu ota t ion of good qu a lity vegetable from Aja dpu r m a rket (term in a l m a rket or TM), Delhi. Th e t ra n s por ta t ion cos t , h a n d lin g ch a rges a n d oth er fees s u ch a s s a la ry to th e s ecreta ry, ren t of th e la n d etc a re a ls o n et ted from qu oted price. Therefore the price paid by MD to a farmer excludes these charges. However , it m a y n ot m a ke s ign ifica n t d ifferen ce to th e tes t of co-in tegra t ion beca u s e th es e ch a rges a re a lm os t a fixed a m ou n t dedu cted from p r ice qu ota t ion . Th e d is in tegra t ion , if a n y, between th e MD a n d TM pr ices s im ply in d ica te th a t th e well con n ected m a rkets of Son epa t a n d Delh i a re n ot s h a r in g p r ice s ign a ls . To tes t m a rket in tegra t ion th e res pect ive p r ice s er ies a re tes ted for s ta t ion a ry. It is fou n d th a t a ll s er ies a re n on -stationary a t level bu t in tegra ted a t fir s t d ifferen ce (ADF re s ults may be seen in table 2).

Table: 2. Augmented Dickey Fuller Unit Root Results

Traditional Market Price Mother Dairy Price

Vegetables At Level Critical Value At First Difference Critical Value At Level Critical Value At First Difference Critical Valu

Carrot -2.57 -3.51 -5.1 -3.5 -2.23 -4.07 -7.45 -4.07

Lauki -2.63 -4.23 -5.14 -4.25 -2.62 -4.23 -4.43 -4.24

Green Chilli -2.35 -4.73 -3.99 -3.76 -0.7 -4.73 -1.52 -4.8

Onion -2.47 -4.39 -4.97 -3.62 -1.79 -4.39 -4.05 -3.61

Bhindi -2.9 -4.05 -7.29 -3.45 -3.31 -4.05 -5.65 -3.45

Tomato -2.57 -4.37 -3.98 -3.61 -2.74 -4.35 -5.52 -4.37

Musk Melon -2.61 -4.32 -3.63 -4.33 -2.01 -4.32 -3.15 -2.97

Cauliflower -3.3 -4.35 -3.66 -3.6 -1.7 -4.33 -3.74 -3.59

6.2 Th e s econ d s tep towa rds tes t in g co-in tegra t ion is to ru n b iva r ia te co-in tegra t ion tes t of En gle-Granger. It is fou n d th a t excep t Green Ch illi

16 | P a g e

Onion, and Musk Melon, the prices of local market are co-integrated with MD pr ices . Th e n on exis ten ce of p r ice in tegra t ion for th e green ch illi m a y be beca u s e it is n ot p rodu ced in la rge volu m e in th e villa ges of th e s tu dy areas. Non-in tegra t ion of Onion p r ices m a y be beca u s e of th e n ea rby Pa n ipa t m a rket , wh ich is th e m a jor m a rket for on ion in th is region a n d ju s t 32 km from th e s tu dy a rea . Th is n ea rn es s m a y be exerting more in flu en ce on loca l m a rkets th a n th e TM. Lon ger s h elf life of on ion cou ld be oth er rea s on . Mu s k Melon s TM pr ices a re a ls o wea k ly co-integrated with MD, though th e region p rodu ces it in good qu a n t ity. TM pr ices of Carrot, Lauki, Bhindi, Tomato and Cauliflower are co integrated with MD (results are Table.3.).

Table:3. Co integration Results

Vegetables Eigen Value Likelihood Ratio Leg Co-integration

Carrot 0.06 5.66* 2 Yes

Lauki 0.15 5.99* 2 Yes

Green Chilli 0.23 3.68 2 No

Onion 0.04 0.99 2 No

Bhindi 0.106 11.29* 2 Yes

Tomato 0.15 4.32* 2 Yes

Musk Melon 0.11 3.43 2 Weak

Cauliflower 0.15 4.33* 2 Yes

* Significant at 5% level, Critical value is 3.76.

Variation of Prices

6.3 Th e Sta n da rd Devia t ion (SD) a n d Coefficien t of Va r ia t ion (CV) is u s ed a s a m ea s u re of th e p r ices va r ia t ion . Th e n et reven u e of th e MD is obs erved to be m ore vola t ile for a ll th e vegeta b les excep t Bh in d i a n d Tom a to wh ere a s the CV is es t im a ted to be les s in MD th a n TM. Th is is qu ite oppos ite to th e n ot ion th a t th e orga n ized reta il ch a in s will redu ce th e vola t ility of p r ices for th e fa rm ers a n d con s equ en tly s ta b ilize th e returns. (Table 4)

Table: 4. Variability of Prices

Vegetables TM MD

17 | P a g e

SD CV (%) SD CV (%)

Carrot 114 62 143 63

Lauki 24 111 44 120 Green Chilli 18 76 35 104 Onion 197 50 375 62

Bhindi 38 129# 53 125 Tomato 76 0.86# 80 0.71 Musk Melon 43 0.67 90 0.81 Cauliflower 47 94 51 146

*SD is Standard Deviation, CV is coefficient of Variation

Impact on Revenue Theoretical relation between elasticity of demand and total revenue:

6.4 As s u m in g th a t th ere a re h omogeneous goods a n d m a n y s m a ll s eller a n d bu yers , ob ject ive of a s eller is to m a xim ize his profits; with a n a u ct ion in g s ys tem to determ in e th e p r ice in the market through com pet it ive b idd in g, th e m arket equ ilib r iu m is determ in ed by equality of demand and supply and prices are market clearing. The demand curve is a s s u m ed to be a n ega t ively s loped a n d th e s u pp ly fixed in a da y. In th e dynamic equilibrium if there are change in the demand and supply in the m a rket th is wou ld im pa ct on th e fa rm er t rou gh res pect ive ch a n ges in tota l reven u e. Th e qu es t ion is h ow it is goin g to im pa ct a n d to wh a t extent? Suppose

p = is net price (netted by marketing cost) received by farmer q = quantity sold in the market by a farmer

R = revenue So, a profit maximizing farmer will calculate its R as

R = p .q Taking first derivative of R w.r.t. p

or

..(1 ) where

(2)

Taking first derivative of R w.r.t. q

18 | P a g e

..(4 )

In th e s itu a tion of profit m axim iz ing th e ch an ge in total revenue of th e farm er w ou ld be e ither becau s e of ch ange in th e price or ch an ge in th e qu an tity or both . Therefore th e total ch an ge in th e revenue of the farmer is:-

(5)

1+ ) dp + p (1+ ) d q .. (6)

Table: 5. The hypothetical values to show impact of price and quantity changes on revenue of the farmer

Elasticity of demand 100% increase in price 100% increas e in qu an tity

0.5 66 33

1 50 50

2 33 66

6.5 Th e equ ation (6 ) exp la in s th e rela t ion s h ip between th e ch a n ges in th e reven u e of th e fa rm er with res pect to th e ch a n ges in th e p r ice a n d quantity. The ch a n ges in tota l reven u e con s equ en t u p on th e ch a n ges in p r ice a n d qu a n t ity are in oppos ite d irect ion for a given ela s t icity of demand. The h igher th e elas ticity of d em an d th e lower w ou ld be th e increas e in th e revenue w ith an increas e in th e price. There is , th erefore, a negative rela tion betw een price ch an ges an d revenue ch anges a t h igh elas ticity of d em an d vice vers a. At h igh ela s t icity of dem a n d , a declin e in price is more effective to increase revenue and at low elasticity of demand th e p r ice in crea s e wou ld be a good s t ra tegy for h a vin g a increa s e in tota l reven u e. For th e qu a n t ity changes, th ere a re pos it ive rela t ion s between increase in revenue and the elasticity of demand. The increas e in qu an tity in th e m ark e t a t h igh elas ticity of the d em an d w ou ld als o increas e th e revenue of th e farm er w h ile a t low er elas ticity of d em an d , an y increas e in qu an tity w ou ld als o d ecreas e th e revenue of the farm er. Th is explain s th e parad ox of the agricu ltu re w h ere good crop s eas on m ay not be rem unera tive for th e farm er becau s e of low elas ticity of d em an d of th e products. In a s itu a t ion of bu m per crop th e in crea s e in th e reven u e would be less not only due to the depression in the prices but also due to the low elasticity of demand in the market.

6.6 The revenue impact on the farmer generally gets aggravated in case of th e vegeta b le m a rkets beca u s e of the n a tu re of com m odity a n d their

19 | P a g e

yield pa t tern . Vegeta b les bein g th e per is h a b les in th e n a tu re requ ire s tora ge fa cilit ies to redu ce th e exten t of a fa ll in p r ice. Als o th e s ea s on plays an im por ta n t role in th e yield pa t tern of th e vegeta b le. Bes ides , th e s m a ll s ize of th e m a rket a n d d is in tegra t ion in th e loca l m a rkets lea d to overrea ct ion of th e s u pp ly ch a n ges on th e reven u e a n d th rou gh p r ice dep res s ion s . Given th is inverse rela t ion between qu a n t ity in crea s e a n d the low in crea s e in reven u e a t low ela s t icity of dem a n d th ere a re m ora l h a za rd for th e p rodu cers . Th ere is n o in cen t ive for th e fa rm ers to in crea s e th e p rodu ct ion wh en th e m a rket dem a n d cu rve is inelastic, beca u s e th e in crea s e in th e qu a n t ity will a dd les s to th eir reven u e. This is a ll th e m ore t ru e in ca s e of vegeta b les wh ere th e dem a n d is very inelastic. The low ela s t icity of dem a n d in th e loca l m a rket is th e gen era l ph en om en on in In d ia . Th is m a y be du e to th e s m a ll s ize of th e m a rkets , low integration with other markets or isolated markets.

Empirical estimation of revenue effect:

6.7 The estimation of remunerability of the prices of MD to the farmers is es t im a ted in th e followin g wa y. Let Pij p r ice of i vegeta b le for j m a rket in g ch a n n el a n d Qij is u n it of qu a n t ity s u pp lied of i vegeta b le to j m a rket in g ch a n n el. MCij is th e per u n it m a rket in g cos t of th e i vegeta b le for j m a rket in g ch a n n el a n d Rij is th e ra te of reject ion for i vegeta b le under j marketing channel.

NPij = Pij *(Qij* Rij) MCij

i = vegetable, j = marketing channel

Th e reject ion ra te is ca lcu la ted from th e fa rm er grower s h eets a n d th e m a rket in g cos t is ca lcu la ted from th e p r im a ry da ta of field s u rvey. Applying rejection rate, Rij, to the quantity supplied we can get the actual quantity for which the price, Pij , is received by the farmer.

6.8 Table: 6 s h ows th a t if th e fa rm er s ells th e s a m e a m ou n t of vegeta b le to eith er of m a rket in g ch a n n els h ow m u ch a vera ge n et reven u e will a ccru e to h im . For exa m ple, for ca r rot in Novem ber 2005 , if th e Q1 qu a n t ity is s old to MD th e a vera ge n et reven u e received by fa rm er is h igh er a t Rs . 221 a s com pa re in Tra d it ion a l Ma rket on ly Rs . 192 for th e s a m e qu a n t ity of ca r rot . Th erefore MD is a dd in g 16 per cen t m ore to th e reven u e of th e fa rm er for th e ca r rot in Novem ber 2005 . Excep t 2007 , in 2005 a n d 2006 th e MD h a s been a m ore rem u n era t ive ch a n n el for ca r rot as compared to traditional market.

20 | P a g e

Table: 6. Average Net Revenue of Traditional Market and MD Channel

Vegetables Year Month Average Net Revenue MD

(Rs.)

Average Net Revenue TM Price

(Rs.)

MD Premium

(%)

Nov 221.2 192.4 16.4 2005

Dec 312.0 263.4 15.3

Nov 251.3 161.7 54.1 2006

Dec 135.5 113.2 10.6

Carrot

2007 Jan 77.9 85.8 -10.7 2005 Jun 15.8 6.5 189.4

Jul 87.4 43.8 179.0

Aug 19.4 6 .2 223.0

Sep 28.3 26.7 47.1

Lauki

Oct 13.5 11.1 33.8 2005 May 8.0 7.7 14.5

Jun 22.4 17.6 17.3

Jul 65.5 42.9 43.9

Green Chilli

Aug 29.3 31.7 -7.6 2005 Jun 581.7 372.7 50.7

Aug 611.3 390.0 70.0

Onion

2006 Jun 510.7 435.6 16.1 2005 May 65.2 47.1 46.4

Jun 45.0 29.1 75.1

Jul 22.9 16.1 42.5

Aug 23.9 19.1 21.7

Sept 55.4 33.7 66.8

Oct 26.9 22.8 14.1 2006 May 26.1 19.8 33.1

Bhindi

Jun 20.1 10.4 103.4

Tomato 2005 May 7.8 24.7 7.8 2005 May 83.8 41.3 104.4

Jun 114.4 72.1 59.6

Musk Melon

Jul 51.6 40.2 7.1 2005 Nov 16.3 34.6 -51.7

Dec 53.4 47.7 -5.3

Cauliflower

2006 Jan 42.8 88.6 -47.2

Difference between Prices

6.9 A regres s ion equ a t ion is u s ed to ch eck wh eth er th e d ifferen ce between th e MD a n d t ra d it ion a l m a rket p r ices is s ign ifica n t or n ot . Firs t th e d ifferen ce between th e prices Din = Pi1-Pi2 of a ltern a t ive m a rket in g

21 | P a g e

channels is calcu la ted a n d th en to tes t th e s ign ifica n ce of th e d ifferen ce between prices the following equation is specified:

Din = ain + bint + uin

n = number of observations. Hypothesis tested are

H: ain = 0 Ha: ain 0

Th e in tercep t term (aij) in th e fu n ct ion will give th e d ifferen ce in n et m a rket in g p r ices . If th e p r ices a re s ign ifica n t ly d ifferen t th en th e in tercep t wou ld be s ign ifica n t . Th e res u lts given in ta b le-7 s h ow th a t th e MD pr ices a re s ign ifica n t ly h igh er th a n th e t ra d it ion a l m a rket p r ices for the vegetables except Cauliflower.

Table: 7. Results of the above equation Vegetables a in b int

Carrot 93.7* 0.09 Lauki 270* -2.7* Chilli 111* -0.15

Onion 131* -0.47 Bhindi 222* -0.01 Tomato 86* 1.77*

Musk Melon 198* 0.26 Cauliflower -83* 4.02*

Indirect Impact of the MD on Prices:

6.10 Th e d irect p rocu rem en t of th e reta il ch a in s a ls o im pa cts th e reven u e of th e fa rm ers in d irect ly. Bein g a cred ib le op t ion for th e fa rm er to s ell it s p rodu cts oth er th a n loca l m a rket , it redu ces th e depen den cy from th e t ra d it ion a l m a rket in g ch a in s . Th e loca l m a rkets a re rela t ively small in size and may not necessarily be integrated, and even if these are integrated, it m a y n ot n eces s a r ily res u lt in transfer of th e s u pp lies quick ly, a n d a ls o m a y n ot a dd ben efits to th e fa rm ers . Th erefore a n y extra a r r iva ls m a y ca u s e s u bs ta n t ia l dep res s ion in th e p r ices of th e loca l m a rket . Su ppos e th e MD wou ld n ot h a ve been th ere for d irect p rocu rem en t th e qu a n t ity wh ich is n ow p rocu red by it, th e en t ire produce wou ld h a ve been s old in to th e n ea res t m a rket . The im p a ct of

22 | P a g e

th is extra a r r iva l on th e p r ice cou ld h a ve h a d m odera t in g im pa ct on prices. To ca lcu la te th e in d irect im pa ct of th e d irect p rocu rem en t on th e loca l m a rket p r ices th e ela s t icity of th e p r ice w.r .t . a r r iva ls is ca lcu la ted (s ee ta b le). Us in g th is ela s t icity of p r ice th e n et p r ice im pa ct is ca lcu la ted for different vegetables.

Table:8 Elasticity of Prices w.r.t. Arrivals (Arr) and procured quantity (PR).

Vegetables

Carrot -0.10 -0.16

Lauki -0.016 0.11

Green Cilli -0.03 0.11

Onion -0.048 0.25

Bhindi -0.097 0.03

Tomato -0.163 -0.22

Musk Melon -0.15 -0.15

Cauliflower -0.118 -0.46

6.11 Us in g th e es t im a ted ela s t icity of p r ices of res pect ive i, it is ea s y to ca lcu la te th e n ew p r ice wh ich wou ld h a ve been New Pi1 if a ll th e p rodu ce of i vegeta b le (i.e. loca l m a rket a r r iva l p lu s d irect p rocu rem en t) wou ld h a ve been s old in n ea res t m a rket . The New P1 is ca lcu la ted with th e followin g form u la a n d ba s is of th e a s s u m ption s th a t th e New Pi1 cannot be negative and more than Pi1, as long as dInArr is pos itive :

New Pi1 = Pi1 (1- e* dInArr)

Wh ere Pi1 is th e p r ice in Rs . Per Qt ls . of a vegeta b le in th e loca l m a rket ,

e , wh ich is ela s t icity of loca l m a rket p r ice w.r .t . Arr iva ls and

dInArr is th e per cen t ch a n ge in th e Arr iva ls . Th ere is s ign ifica n t in d irect impact of the direct procurement on the local market prices. Interestingly th is ben efit is p r im a r ily a ccru ed to th os e wh o a re s ellin g in th e loca l m a rkets . Th is s ta tes th a t th e reven u e effect is n ot on ly con fin ed to th e fa rm ers d irect ly lin ked to th e MD ch a in but a ls o to oth er fa rm ers wh o s ells in th e loca l n ea res t m a rket . Th e graphs a s per Annexure 1 clea r ly indicates that the New P1 would have been much lower than P1.

7. CONCLUSION

7.1 Th e s u p p ly ch a in efficien cy a n d in efficien cy im pa cts wh ole a gr icu ltu re s ys tem . Th e t ra d it ion a l m a rket in g ch a in s a re ch a ra cter ized by high margins of the middlemen, low prices to the farmer, low elasticity

23 | P a g e

of der ived dem a n d , h u ge wa s ta ge of a gr icu ltu re p rodu ce, etc. Th e n ew m a rket in g a r ra n gem en ts s u ch a s farmers m a rket e.g. Apa n i Ma n d i etc, con tra ct fa rm in g, a n d em ergen ce of d irect p rocu rem en t by orga n ized reta il ch a in s a re h opes for em ergen ce of efficien t a gr icu ltu re m a rket in g. However, th ere cou ld be p rob lem s of exclu s ion of s m a ll fa rm ers , s h or t term view bein g ta ken by th e con tra ct in g com pa n y etc., in s t itu t ion a l reform s n eed to redu ce th e m u lt ip le la yers of in term ed ia t ion . Th e d irect p rocu rem en t is s t ill geogra ph ica lly res t r icted to th e h ot spots of th e vegeta b le p rodu cin g region s , a n d n ot for a ll, and th eir im pa ct on fa rm ers depen ds on th e term s a n d con d it ion of th e p rocu rem en t con tra ct . Procu rem en t s ys tem a dop ted by th e two a gen cies , MD a n d RF, suggest th a t th e a pproa ch a dop ted by RF is m ore in form a t ive in term s of p r ice information, quality monitoring, mode of payments etc.

7.2 Th is s im p licity of th e con tra ct of RF cou ld be con s idered to provide a n edge to it , bu t m u lt ip le a gen cies a n d a va r iety of con tra ct in g a r ra n gem en ts cou ld co-exist. Beca u s e des p ite th e com p lexity of th e contract, MD still p rovides a rela t ively bet ter dea l to th e fa rm er a s compared to th e t ra d it ion a l m a rketing ch a in s . Th is m a y be th e rea s on that it h a s been s u cces s fu l for s u ch a lon g t im e in m a n y a rea s . On th e practical s ide of th e im pa cts of MD it is observed th a t excep t Green Chilli, On ion a n d Mu s k Melon , th e p r ices of loca l m a rket a re co-integrated with MD pr ices . Th e n et reven u e of th e fa rm ers for s elected vegeta b les is fou n d on a n a vera ge 17 per cen t h igh er for ca r rot , 134 per cent for Lauki, 17 per cent for Green Chilli, 45 per cent for Onion, 50 per cent for Bhindi, and 57 percent for Musk Melon.

7.3 Th ere a re pos it ive s p illovers a n d oth er in d irect im pa cts on th e reven u e of th e fa rm ers of th e d irect p rocu rem en t by MD. Th e in d irect ben efits a re n ot con fin ed only to th os e s u pp lyin g vegetables to MD, th es e ra th er get exten ded to a ll th os e fa rm ers s u pp lyin g to loca l Ma n d i or TM. In s h or t th e d irect p rocu rem en t of th e MD h a s en h a n ced the fa rm ers

revenue. ***

24 | P a g e

8. BIBLIOGRAPHY

1. Rao,C.H.Ha n u m a n th a ,(1971), Un cer ta in ty, En trep ren eu rs h ip , An d Sh a recropp in g In In d ia Journ al Of Political Econom y ,Vol-79 , No-3 ,Pp-578-595.

2. Ch eu n g,S.N.S., Th e Th eory Of Sh a re Ten a n cy , Ch ica go Un ivers ity Press 1969.

3. Stiglitz,J .E ., (1974), In cen t ive An d Ris k Sh a r in g In Sh a recropp in g Review Of Economic Studies, Vol- 41, Pp-219-56.

4. Ba rdh a n , P.K.,(Ma rch 1980 ), In ter lock in g Fa ctor Ma rket An d Agra r ia n Developm en t : A Review Of Is s u es , Oxford s Econom ic Papers, Vol-32, Pp-82-98.

5. Bin s wa n ger , H. P. An d M.R. Rozen zweig (1984), Con tra ctu a l Arra n gem en t S , Em ploym en t An d Wa ge In Ru ra l La bor Ma rkets : A Cr it ica l Review H.P. Bin s wa n ger An ds M.R. Ros en zweig (Eds )Con tra ctu a l Arra n gem en ts , Em ploym en t An d Wa ges In Ru ra l La bor Ma rkets In As ia , Econ om ic Growth Cen ter , Ya le Un ivers ity Series New Haven And Landon Yele University Press.

6. Dileep , B. K. R.K. Grover An d K.N. Ra i (2002) Con tra ct Fa rm in g In Tom a to : An Econ om ic An a lys is , Ind ian Journ al Of Agricu ltu re Economics , 57(2), Pp- 197-200.

7. Es wa ra n , M. An d Kotwa l, A. (1985), A Th eory Of Con tra ctu a l Structure In Agriculture, American Economic Review 75(3),Pp-352-67.

8. Ros en zeig An d Bin s wa n ger , H.P. (1993), Wea lth , Wea th er Ris k An d Th Ecom pos it ion Of Profita b ility In Agr icu ltu ra l In ves tm en ts , The Economic Journal, 103(416), Pp 56-78.

9. Th a ku r , D.S., H. La l, D.R. Th a ku r , K..D. Sh a rm a An d A.S. Sa in i (1997), Ma rket Su pp ly Res pon s e An d Ma rket in g Prob lem s Of Fa rm er In Th e Hills , In d ia n J ou rn a l Of Agr icu ltu ra l Econ om ics , 52 (1 ), Pp - 139-50.

10. Th a ku r , D.S., S .K. Ch a u h a n An d K..D. Sh a rm a (1988), Efficien cy An d Wea kn es s Of Regu la ted Ma rkets , In d ia n J ou rn a l Of Agr icu ltu ra l Marketing,2(1).

11. Ach a rya , S .S. (2001), Dom es t ic Agr icu ltu ra l Ma rket in g Policies , In cen t ives An d In tegra t ion , In S .S. Ach a rya An d D.P. Ch a u dh ry (Eds .) In d ia n Agr icu ltu ra l Policy At Cros s Roa ds , New Delh i Ra va t Publications.

25 | P a g e

12. Ach a rya ,S.S.(1994), Ma rket in g En viron m en t For Fa rm Produ cts

Em ergin g Is s u e An d Ch a llen ges , In d ia n J ou rn a l Of Agr icu ltu ra l Marketing, 8(2)162-75, July- September.

13. Keris u r ,V.R.,K.C. Hirem a th Na d Sa ra d Kires u r (1989), Econ om ics Of Produ ct ion An d Ma rket in g Of Vegeta b les In Ka rn a tka A Com pa r is on Of Orga n ized An d Un orga n ized Sector Of Ma rket in g, In d ia n J ou rn a l Of Agriculture Marketing , 3(3)98,Conference Special 98 Special.

14. Th a ku r , D.S., Sn a ja y, D.R. Th a ku r An d K.D. Sh a rm a (1994), Econ om ics Of Off Sea s on Vegeta b le Produ ct ion An d Ma rket in g In

Hills, Indian Journal Of Agricultural Marketing, 8(1), 77-8 January.

15. Ka u l,(1997), Hor t icu ltu re In In d ia - Produ ct ion Ma rk et in g An d Processing, Indian Journal Of Agricultural Economics, Vol-52(3), Pp.-561-573.

16. Sin gh ,J .P.(2006), Ch a n gin g Agra r ia n Rela t ion s h ip In Ru ra l In d ia , Indian Journal Of Agriculturl Economics, Vol-16, No-1, Jan March.

17. Haque, T. (2000), Contractual Arrangements In Land Labor Market In Ru ra l Area , In d ia n J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-55(3). July Sept.

18. Sriva s ta va , Ra vi,(2000), Ch a n ges In Con tra ctu a l Rela t ion In La n d An d La bou r In In d ia , In d ia n J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-55(3), July Sept.

19. Sin gh , Su kh pa l,(2000), Con tra ct Fa rm in g For Agr icu ltu ra l Divers ifica t ion In Th e In d ia n Pu n ja b : A Ca s e Stu dy Of Perform a n ce An d Prob lem s , In d ia n J ou rn a l F Agr icu ltu ra l Econ om ics , Vol- 55 (3 ), July- Sept.

20. Sh a rm a , H.R., (2000), Ten a n cy Rela t ion n Ru ra l In d ia : A Tem poral An d Cros s Sect ion a l An a lys is , In d ia n J ou rn a l Of Agricu ltu ra l Economics, Vol-55(3), July Sept.

21. Swa in , Ma m ta (2000), Agr icu ltu ra l Developm en t An d In ter locked Ma rkets , In d ia n J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-55 (3 ), J u ly Sept.

22. Sa n gwa n S.S.(2000), Em ergin g Cred it Dem a n d Of Ten a n t In Ha rya n a , In d ia n J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-55 (3 ), J u ly Sept.

26 | P a g e

23. Bir th a l, P.S.,J h a A.K.,J os h i P.K. An d Sin gh D.K. (2006),

Agr icu ltu ra l Divers ifica t ion in Nor th Ea s tern Region Of In d ia : Im plica t ion s For Growth An d Equ ity , In d ia n J ou rn a l Of Agr icu ltu ra l Economics, Vol-61(3), July-Sept.

24. Ach a rya , S .S.(2004), Agr icu ltu ra l Ma rket in g

Sta te Of In d ia n Fa rm er

A Millen n iu m Stu dy Aca dem ic Fou n da t iopn , New Delh i.

25. Ga ikwa d ,V.R., Sa m bra n i,S ., Pa rka s h , V., Ku lka rn i,S .D. An d Mu ra r i,P.,(2004), Pos t

Ha rves t Ma n a gem en t- Sta te Of In d ia n Fa rm er A Millen n iu m Stu dy Aca dem ic Fou n da t iopn , New Delh i.

26. Des h pa n de, R.S., Bh en de,M.J ., Th ip pa ia h ,P. An d Viveka n a n da , M.,(2004), Crops An d Cu lt iva t ion - Sta te Of In d ia n Fa rm er A Millen n iu m Stu dy Aca dem ic Fou n da t ion , New Delh i.

27. Ra m a s wa m y, B. Ra vi,S .An d Ch opra , S .D. (2004), Ris k Ma n a gem en t- Sta te Of In d ia n Fa rm er A Millen n iu m Stu dy Aca dem ic Fou n da t ion , New Delhi.

28. Sh eph erd , A.W. (2007), Approa ch es To Lin k in g Produ cer To Ma rkets : A Review Of Exper ien ces To Da te , Agr icu ltu ra l Management, Marketing And Finance, Occasional Paper, Fao.

29. Ba ls evih , F. Berdegu e,J .A., Flores ,L. Ma in ville,D. An d Rea don ,T. (2003), Su perm a rket An d Produ ce Qu a lity An d Sa fety Sta n da rds In La t in Am erica , Am erica n J ou rn a l Of Agr ica u ltu ra l Econ om ics , Vol-85(5), Pp. 1147-57.

30. Bos elie,D., Hen s on , S . An d Wea th ers poon ,D., (2003), Su perm a rket Procu rem en t Pra ct ices In Develop in g Cou n tr ies : Redefin in g Th e Roles Of Pu b lic An d Pr iva te Sectors , Am erica n J ou rn a l Of Agr icu ltural Economics, Vol-85(5), Pp. 1155-61.

31. Ca rn ey, J .A., S t ru ggeles Over Crop Righ ts An d La bou r With in Con tra ct Fa rm in g Hou s eh olds In A Ga m bia n Ir r iga ted Rice Project , Journal Of Peasent Studies.

32. Glower , D., (1990), Con tra ct Fa rm in g An d Ou tgrover Sch em es In Ea s t An d Sou th ern Afr ica , J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-41, No-3, Pp. 303-315.

33. Por ter ,G., Howa rd ,K.P.,(1997), Com pa r in g Con tra cts : An Eva lu a t ion Of Con tra ct Fa rm in g Sch em es In Afr ica , World Developm en t , Vol-25,No-2, Pp.227-238.

27 | P a g e

34. Glover,D.J .,(1984), Con tra ct Fa rm in g An d Sm a llh older Ou tgrower

Sch em es In Les s Developed Cou n tr ies , World Developm en t , Vol-12,No-1, Pp1143-1157.

35. Wa rn in g, M. An d Key,N.,(2002), Th e Socia l Perform a n ce An d Dis t r ibu t ion a l Con s equ en ces Of Con tra ct Fa rm in g: An Equilibrium An a lys is Of Th e Arch ide De Bou ch e Progra m In Sen ega l , Word Development, Vol-30, No-2,Pp. 255-263.

36. Dey, J en n ie (1982), Developm en t Pla n n in g In Th e Ga m bia : Th e Ga p Between Pla n n er An d Fa rm er Percep t ion s , Expecta t ion s An d Object ives , World Development, Vol-10, No-5, Pp-377-396.

37. Por ter ,G. An d Howa rd , K.P.,(1995), Fa rm er , La borers An d Th e Com pa n y: Exp lor in g Rela t ion s h ips On A Tra n s kei Con tra ct Fa rm in g Sch em e , J ou rn a l Of Developm en t Stu d ies , Vol-32,No-1, Pp.55-73.

38. Golds m ith ,A.,(1985), Th e Pr iva te Sector An d Th e Ru ra l Developm en t : Ca n Agr ibu s in es s Help Th e Sm a ll Fa rm er , World Development, Vol-13, No- 10/11, Pp. 1125-1138.

39. Sin gh , S ., (2004), Cr is es An d Divers ifica t ion In Pu n ja b Agr icu ltu re: Role Of Sta te An d Agr ibu s in es s , Econ om ic An d Polit ica l Week ly, December,25. Pp.5583-5590.

40. Lea th ers , H.D.,(1999), Wh a t Is Fa rm in g ? In form a t ion , Con tra ct , An d Th e Orga n iza t ion Of Agr icu ltu ra l Produ ct ion : Dis cu s s ion , American Journal Of Agricultural Economics, Vol-81, Pp. 621-623.

41. Dileep , B.K.,Grover ,R.K.., An d Ra i, K.N., Con tra ct Fa rm in g In Tom a to: An Econ om ic An a lys is , In d ia n J ou rn a l Of Agr icu ltu ra l Economics, Vol-57,No-2, Pp-198-209.

42. Ku m a r , Pa rm od , (2006), Con tra ct Fa rm in g Th rou gh Agr ibu s in es s Firm s An d Sta te Corpora t ion : A Ca s e Stu dy In Pu n ja b , Econ om ic And Political Weekly, December, 30, Pp. 5367-5375.

43. Azza m , A.M., ( ), Tes t in g Th e Com pet it iven es s Of Food Pr ice Sprea ds ,

44. Weldegebr iel,H.T., (2004), Im perfect Pr ice Tra n s m is s ion : Is Ma rket Rea lly To Bla m e ? , J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol- 55 , No-1, Pp. 101-114.

28 | P a g e

45. Mccorr is ton , S ., An d Sh eldon , I.M.,(1996), Th e Effect Of Ver t ica l

Ma rkets On Tra de Policy Reform , Oxford Econ om ic Pa per , Vol-48, Pp. 664-672.

46. Roger , R.T., An d Sexton ,R.J ., (1994), As s es s in g Th e Im por ta n ce Of Oligops on y Power In Agr icu ltu ra l Ma rkets , Am erica n J ou rn a l Of Agricultural Economics, Vol-76, 1143-1150.

47. Hyde, C.E., An d Per loff, J .M., (1994), Ca n Mon ops on y Power Be Es t im a ted ? , Am erica n J ou rn a l Of Agr icu ltu ra l Econ om ics , Vol-76, Pp-1151-1155.

48. Love, H.A., An d Sh u m wy, C.R.,(1994), Non pa ra m etr ic Tes t For Mon ops on is t ic Ma rket Power Exer t ion , Am erica n J ou rn a l Of Agricultural Economics, Vol-76, 1156-1162.

49. Goodwin , B.K.,( 1994), Oligops on y Power : A Forgot ten Dia m en s ion Of Food Ma rket in g ? Dis cu s s ion , Am erica n J ou rn a l Of Agr icu ltu ra l Economics, Vol-76, Pp. 1163-1165.

50. Hollowa y, G. J ., (1991), Th e Fa rm - Reta il Pr ice Sprea d In An Im perfect ly Com pet it ive Food In du s try , Am erica n J ou rn a l Of Agricultural Economics, November, Pp. 979-989.

51. Sch roeter , J . An d Azza m , A., (1991), Ma rket in g Ma rgin s , Ma rket Power , An d Pr ice Un cer ta in ty , Am erica n J ou rn a l Of Agr icu ltu ra l Economics, November, Pp.-990-999.

52. Ga rdn er , B. L.,(1975), Th e Fa rm Reta il Pr ice Sprea d In A Com pet it ive Food In du s try , Am erica n J ou rn a l Of Agr icu ltu ra l Economics, August, Pp 399-409.

53. Dries , L. An d Swin n en ,J .F.M., (2004), Foreign Direct In ves tm en t , Ver t ica l In tegra t ion , An d Loca l Su pp liers : Eviden ce From Th e Polis h Da iry Sector , World Developm en t , Vol-32, No-9, Pp.-1525-1544.

54. Viswanathan, K.U., An d Sa ts a i K.J .S .,(1997), Fru its An d Vegeta b les : Produ ct ion Tren s An d Lin ka ges , In d ia n J ou rn a l Of Agricultural Economics, Vol-52, No-3, 574-583.

55. Dh a es e, M., Va n Hu ylen broeck , G. (2005), Th e Ris e Of Su perm a rkets An d Ch a n gin g Expen d itu re Pa t tern s Of Poor Ru ra l Hou s eh olds : Ca s e Study In The Transkei Area, South Africa, Food Policy, 30, 97-113

56. Dola n , C., Hu m ph rey, J . (2000), Govern a n ce An d Tra de In Fres h Vegeta b les : Th e Im pa ct Of Uk Su perm a rkets On Th e Afr ica n

29 | P a g e

Horticu ltu re In du s try, J ou rn a l Of Developm en t Stu d ies , 37 (2 ), Pp . 147-176

57. Fa fch a m ps , M., Ga bre-Ma dh in , E ., Min ten , B., In crea s in g Retu rn s An d Ma rket Efficien cy In Agr icu ltu ra l Tra de, J ou rn a l Of Developm en t Economics, Forthcoming

58. Gibbon , P. (2003), Va lu e-Ch a in Govern a n ce, Pu b lic Regu la t ion An d En try Ba rr iers In Th e Globa l Fres h Fru it An d Vegeta b le Ch a in In Th e EU, Development Policy Review, Vol. 21, No. 5-6, Pp. 615-625

59. Gow, H., Streeter , D. An d J . Swin n en , 2000 , "How Pr iva te Con tra ct Enforcement

60. Mech a n is m s Ca n Su cceed Wh ere Pu b lic In s t itu t ion s Fa il: Th e Ca s e Of Juhosucor A.S." Agricultural Economics, 23(3): 253-265.

61. Gow, H. An d J . Swin n en , 2001 , Pr iva te En forcem en t Ca p ita l An d Con tra ct En forcem en t In t ra n s it ion Cou n tr ies Am erica n J ou rn a l Of Agricultural Economics, 83(3): 686-690

62. Humphrey, J ., Mccu lloch , N., Ota , M. (20 04), Th e Im pa ct Of Eu ropea n Ma rket Ch a n ges On Em ploym en t In Th e Ken ya n Hor t icu ltu re Sector , J ou rn a l Of In tern a t ion a l Developm en t , Vol. 16(1), Pp. 63-80

63. J a ffee, S .M., Hen s on , S . (2004), Sta n da rds An d Agro-Food Expor ts From Develop in g Cou n tr ies : Reba la n cin g Th e Deba te, World Ba n k Policy Research Working Paper 3348

64. Key, N., Ru n s ten , D. (1999), Con tra ct Fa rm in g, Sm a llh olders , An d Ru ra l Developm en t In La t in Am erica : Th e Orga n iza t ion Of Agroprocessing Firms And The Scale Of Outgrower Production, World Development, 27(2), Pp. 381-401

65. Kh erra la h , M. (2000), Acces s Of Sm a llh older Fa rm ers To Th e Fru it s And Vegetables Market In Kenya, Ifpri, Mimeo

66. Kirs ten , J ., Sa r tor iu s , K. (2002), Lin k in g Agr ibu s in es s An d Sm a ll-Sca le Fa rm ers In Develop in g Cou n tr ies : Is Th ere A New Role For Con tra ct Fa rm in g?, Developm en t Sou th ern Afr ica , Vol. 19 , No. 4 , Pp . 503-529

67. Min ot , N., Ngigi, M. (2004), Are Hor t icu ltu ra l Expor ts A Rep lica b le Su cces s Story? Eviden ce From Ken ya An d Côte D ivoire, Ep td / Mtid Discussion Paper, International Food Policy Research Institute

30 | P a g e

68. Rea rdon , T., Ba rret t , C.B. (2000), Agroin du s tr ia lis a t ion , Globa liza t ion

An d In tern a t ion a l Developm en t : An Overview Of Is s u es , Pa t tern s An d Determinants, Agricultural Economics, 23:195-205

69. Rea rdon , T., Berdegu é, J . (2002), Th e Ra p id Ris e Of Su perm a rkets In La t in Am erica : Ch a llen ges An d Oppor tu n it ies For Developm en t , Development Policy Review, Vol. 20, No. 4, Pp.371-88.

70. Rea rdon , T., Tim m er , C.P., Ba rret t , C., Berdegu é, J . (2003), Th e Ris e Of Su perm a rkets In Afr ica , As ia , An d La t in Am erica , Am erica n Journal Agricultural Economics, Vol. 85, No. 5, Pp. 1140-1146

71. Wa lt is berger , D., Ca n trelle, P., Ra lija on a , O. (1998), La Morta lité À An ta n a n a r ivo De 1984 À 1995 , Docu m en t Et Ma n u el Du Ceped No. 7, Paris

72. Weath ers poon , D., Ca ch o, J ., Ch r is ty, R. (2001), Lin k in g Globa liza t ion , Econ om ic Growth a n d Pover ty: Im pa cts Of Agr ibu s in es s Stra tegies On Su b-Sa h a ra n Afr ica , Am erica n J ou rn a l of Agricultural Economics, 83(3), Pp. 722-729

73. Win ters , P., S im m on s , P., Pa tr ick , I. (2005), Eva lu a t ion of A Hybr id Seed Con tra ct Between Sm a llh olders An d A Mu lt in a t ion a l Com pa n y In Ea s t J a va , In don es ia , Th e J ou rn a l Of Developm en t Stu d ies , Vol. 41, No. 1, Pp. 62-89

74. Dr. Ra jiv Meh ta , (2005), An An a lys is of Crop Divers ifica t ion , Mem ber Secreta ry, CACP, Min is t ry Of Agr icu ltu re, Govern m en t Of India,

75. National Conference On Agriculture For Kharif Campaign-2005, 22nd 23rd (March), New Delhi..

76. Sriva s ta va , Ra vi,(1989), In ter lin ked Modes of Exp loita t ion In In d ia n Agr icu ltu re Du r in g Tra n s it ion : A Ca s e Stu dy , J ou rn a l Of Pea s a n t Studies, Pp. 493-522.

77. Ta s lim ,M.A., (1988), Ten a n cy An d In ter lock in g Ma rkets : Is s u es An d Som e Eviden ce , World Developm en t , Vol-16, No-6, Pp-655-666.

78. Ba rdh a n , Pra n a b , (1989), In ter lock in g Fa ctor Ma rkets a n d Agra r ian Developm en t : A Review Of Is s u es , Oxford Econ om ic Pa pers , Vol-32, Pp.82-98.

79. Wh ite, Ben An d Da ws on ,P.J .,(2005), Mea s u r in g Pr ice Ris k on Uk Ara b le Fa rm s , J ou rn a l of Agr icu ltu ra l Econ om ics , Vol-56 , N0-2, 239-254.

31 | P a g e

80. Min ten , B., Ra n dr ia n a r is on ,L. An d Swin n en ,J .F.M. (2006), Globa l

Reta il Ch a in s An d Poor Fa rm ers Eviden ce From Ma da ga s ca r , Discussion Paper 164/2006- Www.Econ.Kuleuven.Be/Licos.

81. Dola n , C.S.,(2002), Gen der An d Witch cra ft In Agra r ia n Tra n s it ion : Th e Ca s e Of Ken a n Hor t icu ltu re , Developm en t An d Ch a n ge, 33 (4 ), Pp. 659-682.

82. Fa o (2005), Fa os ta t Da ta . Acces s ed Novem ber 2004 , Htttp//Www.Fao.Org.

83. Mccu lloch , N.An d Otta , M., (2002), Expor t Hor t icu ltu re An d Pover ty In Ken ya , Id s Work in g Pa per174.Brighton, Sussex: Ids

84. Wein berger , K. An d Lu m pkin , T., (200 5), High Va lu e Agr icu ltu ra l Produ cts In As ia An d Th e Pecific For Sm a ll Holder Fa rm ers : Tren ds , Oppor tu n it ies An d Res ea rch Pr ior it ies , Rom e, Gfarhtpp://Www.Egfar.Org/Documents/02 Meet in g Workshop-On-High Value Productsoct, 2005/Regionlap.Pdf.

85. Government of In d ia (2007), Agr icu ltu ra l Ma rket in g In fra s t ru ctu re An d Policy Requ ired For In tern a l An d Extern a l Tra de Repor t Of Th e Working Group For The 11th Five Year Plan, Planning Commission.

86. Reardon, T & Gu la t i, As h ok , (2008), Ris e Of Su per Ma rket a n d Th eir Im plica t ion s , Dis cu s s ion Pa per IFPRI,

87. NABARD Study, (2011), Organized Agri-Food Reta ilin g in In d ia .

88. ICREAR Repor t , (2009), Im pa ct of Orga n ized Reta il Ch a in s on In com e & Em ploym en t .

32 | P a g e

Annexure-1

1 | P a g e