LESLIE Bourquin India Mango Project-Food Forum India 5-7-2008

8/6/2019 LESLIE Bourquin India Mango Project-Food Forum India 5-7-2008

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PFID:F&V India MangoPFID:F&V India MangoMarket Development ProjectMarket Development Project

Leslie D. Bourquin and Deepa ThiagarajanPartnerships for Food Industry Development Fruits and Vegetables

Institute of International Agriculture

Michigan State University

East Lansing, Michigan USA


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India Mango MarketIndia Mango Market

Development ProjectDevelopment Project

Funding provided by USAID India Mission, NewDelhi

Project duration 2004-2007

Focus on fresh and processed Alphonso and Kesarmangoes in Maharashtra state.

Increase net returns to farmers, by:

Building capability among mango growers and processors to

meet market demands Food safety, quality, environmental, social responsibility

standards

Strengthening linkages of mango growers and processorswith higher value markets (domestic and export)


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Program ElementsProgram Elements

Initial Assessment, SWOCA, Value ChainInitial Assessment, SWOCA, Value ChainAnalysis (preAnalysis (pre--awardaward 2005)2005)

Capacity Building / Training / Certification ofCapacity Building / Training / Certification ofMango Growers on PreMango Growers on Pre--Harvest Food SafetyHarvest Food Safety(Good Agricultural Practices) and Processors(Good Agricultural Practices) and Processorson Food Hygiene (HACCP)on Food Hygiene (HACCP)

Building Market Linkages for both fresh andBuilding Market Linkages for both fresh andprocessed mango products in the domesticprocessed mango products in the domestic

and export markets.and export markets.


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PostPost --Harvest HandlingHarvest Handling


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Market Reforms and Retail DevelopmentMarket Reforms and Retail Development

are Providing Opportunitiesare Providing Opportunities

Many states have amended their APMMany states have amended their APMActs to allow direct contracts outsideActs to allow direct contracts outside

of the government markets, contractof the government markets, contract

farming, etc.farming, etc.

IndiaIndias retail revolutions retail revolution

Expanded export opportunitiesExpanded export opportunities


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IndiaIndia Food Safety IssuesFood Safety Issues

Government regulation is minimalGovernment regulation is minimal

New food law passed by centralNew food law passed by centralgovernment in 2006, but development ofgovernment in 2006, but development of

new formal regulations and enforcementnew formal regulations and enforcementis only in the planning stagesis only in the planning stages

Some notable recent problems withSome notable recent problems with

Indian agricultural exportsIndian agricultural exports Pesticide residues exceedingPesticide residues exceeding MRLsMRLs inin

Thompson seedless grapesThompson seedless grapes

Sudan Red in chili powderSudan Red in chili powder


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Traditional Mango ValueTraditional Mango Value

Chain in IndiaChain in India

MangoGrower

Localmiddleman

Commission

Agent /Trader

WholesalerConsumer Retailer

Traditional Market = High Transaction Costs

(only ~35% of value returned to farmer)

I di F U ll HI di F U ll H


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Indian Farmer Usually HasIndian Farmer Usually Has

Limited Market InformationLimited Market Information

Asymmetry of information at marketAsymmetry of information at market

Seasonality of production and lack of coldSeasonality of production and lack of cold--chain andchain andpacking infrastructure results in extreme price volatilitypacking infrastructure results in extreme price volatility


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Fewer Steps in the Process =Fewer Steps in the Process =

More Margin to the FarmerMore Margin to the Farmer

Improved supply chain under projectImproved supply chain under project Direct linkages with retail markets andDirect linkages with retail markets andexportersexporters

MangoGrower

RetailMarkets,Exporters

Consumer

Key AdvantagesKey Advantages

Lower Transaction CostsLower Transaction Costs

Improved Quality ControlImproved Quality Control Improved Food Safety and TraceabilityImproved Food Safety and Traceability


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IndiaIndia Emerging Markets DemandEmerging Markets Demand

Produce Meeting High Standards forProduce Meeting High Standards for

Safety and QualitySafety and Quality

Traditional MarketsTraditional Markets

APMCs,APMCs, MandisMandis

Wet MarketsWet Markets

Exports toExports tolessless

discriminatingdiscriminatingmarketsmarkets

Business as UsualBusiness as Usualisis

acceptable for now, butacceptable for now, but

this is a lowthis is a low--value marketvalue marketsegment that will declinesegment that will decline

over the next decadeover the next decade

Emerging MarketsEmerging Markets

Organized RetailOrganized Retail

Hotels, FoodserviceHotels, Foodservice

Exports to Countries withExports to Countries with

HighHigh--Value MarketsValue Markets

Tremendous pressure toTremendous pressure to

improve quality andimprove quality and

safety standards in ordersafety standards in order

to participate in this moreto participate in this more

lucrative and growinglucrative and growing

market segmentmarket segment

M k i O i i / S i D dM k ti O t iti / St t i D d


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Marketing Opportunities/ Strategies Depend onMarketing Opportunities/ Strategies Depend on

the Willingness and Capability of Mangothe Willingness and Capability of Mango

Farmers to Meet Quality and Safety StandardsFarmers to Meet Quality and Safety Standards(e.g.(e.g. GlobalGAPGlobalGAP))

Farmers who are ableFarmers who are ableto implement/meet theto implement/meet the

standardstandard

Target organized retailTarget organized retailand export marketand export market

Farmers who areFarmers who areunable to or chooseunable to or choose

not to implement thenot to implement the

standardstandard

Target improvedTarget improvedaccess to traditionalaccess to traditional

market linkages withmarket linkages with

marginal financialmarginal financial

returns.returns.


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GAPsGAPs Training ProgramsTraining Programs

Conducted in partnership withConducted in partnership with FoodCertFoodCert IndiaIndia

Fi ld Vi itFi ld Vi it


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Field VisitsField Visits


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GlobalGAPGlobalGAP Certified Mango Farms inCertified Mango Farms in

Maharashtra Associated w ith ProjectMaharashtra Associated w ith Project

20062006

3131AlphonsoAlphonso growersgrowers

1313 KesarKesar growersgrowers

20072007

17 additional17 additionalAlphonsoAlphonso growersgrowers

1 additional1 additional KesarKesar growergrower Several other growers in Tamil Nadu andSeveral other growers in Tamil Nadu and

Gujarat participated in our trainingGujarat participated in our training

programs and were subsequently certifiedprograms and were subsequently certified


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Food Safety /Food Safety / GlobalGAPGlobalGAP ImplementationImplementation

2006 Certification costs ~2006 Certification costs ~ RsRs30,000 (~US $750) per farm.30,000 (~US $750) per farm.

Infrastructure improvementsInfrastructure improvementscost up tocost up to RsRs 11 LakhLakh (~ US(~ US$2500) in the first year.$2500) in the first year.


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Building Linkages BetweenBuilding Linkages Between

Farmers and RetailersFarmers and Retailers

Provide training on market orientationProvide training on market orientationfor farmers and state agenciesfor farmers and state agencies

Organization of buyerOrganization of buyer--seller meetsseller meets

Development of formal Memoranda ofDevelopment of formal Memoranda of

Understanding between retailers andUnderstanding between retailers and

MSAMB (on behalf of the farmers)MSAMB (on behalf of the farmers) FollowFollow--through on contractsthrough on contracts

MSUMSUss role as a catalystrole as a catalyst


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Farmers and RetailersFarmers and Retailers

Food Bazaar


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Farmers and RetailersFarmers and RetailersFood Bazaar


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US Market Opensto Indian Mangoes

April 2007


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Increased ReturnsIncreased Returns

to Farmersto Farmers Estimated value of reduced intermediariesEstimated value of reduced intermediaries

and GAP certification in value chain (2006):and GAP certification in value chain (2006):

Domestic Fresh Market:Domestic Fresh Market:

Growers receivedGrowers received 20 to 30%20 to 30% higher returnshigher returnsthan traditional channelthan traditional channel

Fresh Export Market:Fresh Export Market:Growers receivedGrowers received 50%50% higher returns forhigher returns forGAPGAP--certified mangoes when compared tocertified mangoes when compared to

traditional domestic markettraditional domestic market

Return on Investment by FarmersReturn on Investment by Farmers


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Return on Investment by FarmersReturn on Investment by Farmers

Although farmers typically had 20Although farmers typically had 20--50% greater gross returns50% greater gross returnson GAPon GAP--certified mangoes in 2006, this was usuallycertified mangoes in 2006, this was usuallyinsufficient to offset theirinsufficient to offset their firstfirst--year costsyear costs ofofEurepGAPEurepGAPimplementation.implementation.

Better return on investment anticipated in subsequent yearsBetter return on investment anticipated in subsequent years

This is test cricket, not oneThis is test cricket, not one--day cricketday cricket


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GlobalGAPGlobalGAP Certified Mango Farms inCertified Mango Farms in

Maharashtra Associated w ith ProjectMaharashtra Associated w ith Project

2008 (anticipated)2008 (anticipated)

126126AlphonsoAlphonso growersgrowers Option 1Option 1

1313AlphonsoAlphonso growersgrowers Option 2Option 2

Among those farms which were certified inAmong those farms which were certified in2006 and 2007, at least 26 (out of 62)2006 and 2007, at least 26 (out of 62)sought recertification in 2008.sought recertification in 2008.

KesarKesar mango farms have dropped from themango farms have dropped from theprogram for a variety of reasons:program for a variety of reasons: Strong local market near AurangabadStrong local market near Aurangabad

Competition in Mumbai from GujaratiCompetition in Mumbai from Gujarati kesarkesarmangoesmangoes

l b l


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GlobalGAPGlobalGAP

Certification OptionsCertification Options

Option 1Option 1 GlobalGAPGlobalGAP standard, individual certificationstandard, individual certification Option 2Option 2 GlobalGAPGlobalGAP standard, group certificationstandard, group certification

Option 3Option 3 Benchmarked standard, individual certificationBenchmarked standard, individual certification

Option 4Option 4 Benchmarked standard, group certificationBenchmarked standard, group certification

For small farms, group certification makes better economicFor small farms, group certification makes better economicsense IF the farmers can work together effectively.sense IF the farmers can work together effectively.

SelfSelf--aggregating farmer groups (aggregating farmer groups (SHGsSHGs, Coops, Clusters), Coops, Clusters)tend to do better than artificially formed groups.tend to do better than artificially formed groups.


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Overall ConclusionsOverall Conclusions

Tremendous opportunities exist for IndianTremendous opportunities exist for Indian

horticulture producers and processors tohorticulture producers and processors to

capture much greater returns in thecapture much greater returns in the

organized domestic and export markets.organized domestic and export markets.

GlobalGAPGlobalGAP adoption and certification hasadoption and certification has

proven essential for Indian farmersproven essential for Indian farmersexporting to highexporting to high--value markets, and GAPvalue markets, and GAP

adoption is preferred by several of theadoption is preferred by several of the

domestic retail chains.domestic retail chains.


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Overall ConclusionsOverall Conclusions

Adoption ofAdoption ofGlobalGAPGlobalGAP within India is likelywithin India is likely

to expand considerably in the coming years.to expand considerably in the coming years.

However, this is contingent upon the earlyHowever, this is contingent upon the early

adopters being rewarded for improvementsadopters being rewarded for improvements

in fresh produce safety, quality, andin fresh produce safety, quality, and

consistency of supply.consistency of supply.

The Indian food retail sector is key to thisThe Indian food retail sector is key to this

continued development.continued development.

Michigan State UniversityMichigan State University


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Michigan State UniversityMichigan State University

Partnerships for Food IndustryPartnerships for Food Industry

DevelopmentDevelopment Fruits & VegetablesFruits & Vegetables

Current Initiatives: Capacity building on post-harvest

practices, food safety and other

technologies for fruits and vegetables.

Expansion of development activities into

other commodities and states.

Product Flow


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ProductionClusters

Aggregationand Grading

SpecializedPacking andProcessing

Markets

Market Information Flow

FRESHPacking FacilitiesVHT, Irradiation

Facilities

PROCESSED

Large ProcessorsSMEs

Mega Food Parks

FreshDomestic

Fresh

Export

ProcessedDomestic

ProcessedExport

Government MarketsMandis

Terminal Markets

Private Markets andAggregation Units;SNX Spot Markets

Farmer-LedOrganizations;Cooperatives

Alphonso

Other Varieties

Totapuri

Kesar

Sector-Specific Interventions

Cluster & Coop Formation;Provide Market Orientation;

Training on Inputs, GAPs,Grades and Standards,

Production;Access to Inputs and Finance

Link Clusters to Local Markets;Training on Post-Harvest

Technology, Grades andStandards, Food Safety;Facilitate Price Discovery

Build Capacity of SMEs;Training on GAPs, Food

Safety, Grades and Standards,Packaging, etc.;

Backward Linkages to GrowersForward Linkages to Markets

Assess Market Demands andOrganize Upstream Sectors to

Meet This Demand;Link Producers and Processors

to Markets Based on Gradesand Standards, Capacity


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Documents

LESLIE Bourquin India Mango Project-Food Forum India 5-7-2008