ETAE - INTL CONF - IIT KHARAGPUR 2016 - 1241 - Role of Contract Farming in Food Storage in India and Prospects of Joint Venture Between Farmers and Food Organisations in Setting Food Bank

Role of Contract Farming in Food Storage in
India & Prospects of Joint Venture

Between Farmers and Food Organizations in
Setting Food Banks
Caleb Pradhan
Vaugh School of Agricultural Engineering
and Technology
SHIATS-DU(Formerly Allahabad
Agricultural Institute)
International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

December, 2016, Agricultural and Food Engineering Department, IIT Kharagpur
Allahabad, India
Eclecticismisaconceptualapproachthatdoesnothold
rigidlytoasingleparadigmorsetofassumptions,but
insteaddrawsuponmultipletheories,styles,orideastogain
complementaryinsightsintoasubject,orappliesdifferent
theoriesinparticularcases.(Source: Wikipedia)
There is no word such as plagiarism in the

dictionary of the eclectic minds as the former is
ostensibly bragged-Caleb Pradhan

BRIEF INTRODUCTION ON THE SUBJECT

Contract Farming
IS DEFINED AS A SYSTEM
-FOR
THE PRODUCTION AND SUPPLY OF
AGRICULTURAL/HORTICULTURAL/DAIRY PRODUCE
-BETWEEN
PRODUCERS/SUPPLIERS AND BUYERS. THE ESSENCE OF
SUCH AN ARRANGEMENT IS THE COMMITMENT OF THE
PRODUCER/SELLER
-TO
PROVIDE AN AGRICULTURAL COMMODITY OF A CERTAIN
TYPE,
-AT
A TIME AND A PRICE, AND IN THE QUANTITY REQUIRED BY
A KNOWN AND COMMITTED BUYER.



NEED FOR CONTRACT FARMING FOR FOOD STORAGE?

In India, about 70% of farm produce is stored by farmers for their
own consumption.
Storage losses constitute a major share of food grain loss in
postproduction operations which results in a loss in GDP (Gross
Domestic Product).
For fruits and vegetables Post-Harvest losses accounts for about 25%
to 30 of production(www.orihort.in,2016)
The biggest contributors to waste are the lack of refrigerated transport
and adequate high quality cold storage facilities for both food
manufacturers and food sellers (retailers).

Other reason for the need of Contract Farming in Storage

-Because of the problem of wastage
According to the Central Institute of Post-Harvest Engineering and

Technology (CIPHET), Ludhiana, approximately 18 per cent of the
countrys fruits and vegetables, worth INR 133 billion go to waste
annually because of the lack of coldstorage facilities
Fig.1Averageannualcumulativewastagepercentageinvariouscommodities.
(SOURCE:CentralInstituteofPost-HarvestEngineering
andTechnology,Ludhiana2013)
Wheat and paddy losses in Indian Scenario requires improvement
Fig.2Diagrammaticrepresentationofpercentagelossesofwheatandpaddy
atvariousstagesinthepostharvestchain.(Source:FAOCORPORATE
DOCUMENTREPOSITORY)
Why Contract Farming IS THE Solution?

Because it provides reliable, regular & timely source of
incomes to the farmers.
Because Contract farming can work if there is
acollectivization of small farmers with Governments
interventions and help.
Because of Public Private Partnership both the
governments implementation becomes more accountable
And Private sector companies cant do business dumping or
market monopoly.
Equitable price and uniform distribution of food.
Farmers can take market risk in case of crop failure.

Present scenario of Contract Farming in

India
Table 1. State wise area under Contract Farming in India
STATE/UTS
AREA UNDER CONTRACT FARMING (in

hectares)
ASSAM
BIHAR
GOA
GUJARAT
HARYANA
KARNATAKA
MIZORAM
ODISHA
PUNJAB
TAMILNADU
Total For INDIA
160
20
1924
2000
1416
15000
2447
5900
121457
235610
475834
(SOURCE:WWW.INDIASTAT.COM)
Types of Contract Farming
Market specification contracts arepre-harvest agreements

thatbindthefirmandgrowertoaparticularsetofconditionsgoverning
thesaleofthecrop.Theseconditionsoftenspecify price, quality and
timing.
Resource providing contracts obligetheprocessortosupply

crop inputs, extension, or credit, in exchange for a marketing
agreement.
Production management contracts bind the farmer to

follow a particular production method or input regime,usuallyin
exchangeforamarketingagreementorresourceprovision.Invarious
combinations,thesecontractformspermitfirmstoinfluencethe
productiontechnologyandrespondtomissingmarketswithouthavingto
operatetheirownplantations
(SOURCE:WWW.INDIASTAT.COM)

Summarizing CFs Role
1) Research and development

activities
2) Technological transfer to the
producers and
3) Commercialization of the farm
input or produce

Successes of Contract Farming in India

Successes of Contract Farming in India

WAREHOUSING OF AGRICUTURAL PRODUCE

IN INDIA
Table 3: Storage Capacity of the Organized Warehouses in India
Name of the Organization/

Sector
Food Corporation of India
(FCI)
Central
Warehousing
Corporation (CWC)
Storage
Capacity
Million MT)
32.05
(In
10.07
State
Warehousing 21.29
Corporations (SWCs)
State Civil Supplies
Cooperative Sector
Private Sector
11.30
15.07
18.97
(Source:ONICRAIndianColdChainIndustryreport,2014)
Paucity of Cold Warehousing OF

AGRICUTURAL PRODUCE IN INDIA
Asof2012,Indiahadapproximately6,300 cold storage facilities,
withacapacityof30.11 million metric tonnes.Ofthetotalnumber
offacilities,about60 per cent arelocatedinjust four states:Uttar
Pradesh,Gujarat,WestBengalandPunjab.
Uttar Pradesh hasthehighestpresentcapacityof10.187million
metrictonneswitha gap of 20 per cent pegged at 2.041 million
metric tonnes & the remaining 24 statesandthebulkofthe
countryremainunderserved.
In2010, Tamil Nadu hadonly 0.0239 million metric tonnesof
actualcoldstoragecapacitybuthadaneedfor7.906 million metric
tonnesofcapacity,leavinga97 per cent shortfall

NEED FOR CONTRACT FARMING TO BE

ALIGNED WITH COLD STORAGE STRUCTRES
Cold chains are essential for extending the shelf life,
period of marketing, avoiding over capacity, reducing
transport bottlenecks during peak period of production and
maintenance of quality of produce.
The development of cold chain industry has an important role to
play in reducing the wastages of the perishable commodities and
thus providing remunerative prices to the growers.
Considering the fact that India is producing about 270 million
tonnes of horticulture produce every year, the development of
cold-chain networks assumes high prioritywhich is only 30 million
tonnes (one-ninth)(Malviya & Shalu,2014)of now.
NEED FOR AN INTEGRATED FOOD SUPPLY CHAIN

MANAGEMENT Using Contract FARMING FOR COLD STORAGES
Theneedforanefficientsupplychainmanagementfor
thecountryisraisedbytheobservationthatwiththe
growthonthedomesticmanufacturingandretail
segments,thedemandforefficientwarehouse
managementservicehasimproved.Despite of the
growing demand, warehousing continues to
see little investment.
CurrentspendingonorganizedwarehousinginIndia
constitutes9 percent of total logistics spending,as
against25 percent in the US.
REVIEW OF INDIAs Cold Storage Chain

India's integrated cold chain industry - a combination of surface
storage and refrigerated transport - has been growing at a CAGR of
~20 percent for the last three years(ASSOCHAM & Tech Sci
Research, 2015).
The cold chain market in India is anticipated to reach Rs 624 Billion by
2017 (Chechi et al .2016).
India stores only two percent of its horticulture products in temperaturecontrolled conditions, while China stores 15 percent and Europe and
North America stores 85 percent of their products in such conditions.
Adequate cold storage facilities are available for just about 10 percent of
Indias horticulture production. Of the total annual production, 30-40
percent is wasted before consumption. During the peak production
period, the gap between the demand and supply of cold storage
capacity is approx. 25 million tonnes
THE PROPOSED MODEL
UNDERSTANDING VENTURE CAPITAL

Venture Capital can be defined as equity support to fund new concepts
that involve a high risk and at the same time, have high growth and profit
potential
Simply saying capital provided to start a new venture
General Doritos who set up the American Research and
Development Fund (AR and D) at Massachusetts Institute of
Technology in 1946
Examples: Xerox, 3m and
General Electric entered into the field of
venture capital.
The TATA Groups Investment Corporation of India successfully
developed a number of companies like Associated Bearings, CEAT
Types during the Independence period.
UNDERSTANDING JOINT VENTURE

A joint venture is a new enterprise owned by
two or more participants.
Reasons for forming a joint venture:
Build on company's strengths

Spreading costs and risks
Improving access to financial resources
Economies of scale and advantage of size
Access to new technologies and customers
Access to innovative managerial practices

FEW EXAMPLES OF JOINT VENTURES IN

AGRICULTURE:
Avesthagen forms global Joint Venture with Limagrain

in Atash Seeds Private Limited.
NAFED joint venture with cooperative
federations/marketing societies for Paddy, Gram,
Mustard seed, Soybean (Yellow), Potato, cotton and
Apples valuing
KRIBHCO Reliance Kisan Limited Joint Venture
PPP(Public Private Partnerships):

IN AGRICULTURE
PPP is a risk-sharing relationship between the public and private sectors which is
developed to bring about a desired public policy outcome.
Private sector entrepreneurs having the
necessary skill, finance and risk taking ability are selected by the public
sector as partners.
Trust & cooperation are essential for the success of such venture.
The concept of PPP may be utilized in diverse areas such as setting up of
big input industry,
to multilane highways
to field level activities like Joint Forest Management etc.

Kinds of partnerships:Permanent - Temporary

Long term - Need based
Bilateral - Indo-Swiss, Indo-Dutch etc.
Multilateral - world Bank, EU and other countries
Foreign donor - External donor + Govt + NGO
MNCs + Industry - De-Nocil, Kesoram, Nagarjuna.
NGO - Adarsh gaon (Anna Hazare), BAIF, Myrada, RDT
etc.
Professional bodies- Univ. & Res. Institutes ICAR, SAU, IVRI
other universities.

Prospects and modes of partnerships:The public & private sectors in agriculture and allied
sectors can come together and work in partnership mode
in providing supply & services to farmers in following
areas.
1. Input production & distribution
2. Human resource sharing
3. Marketing.
4. Extension delivery system
5. Enterprise establishment & management
6. Institutional
Role of Food Pantries and Food Banks (For zero Waste of

Food)
Theseproducethencanbeforwardedtofood firms, food courts,

food pantries whoeitherprocess, pack or add value to it for sale
andfewoperationalstrategyforfoodbankandpantryserviceincludes
following:
1)DevelopingaServicePlan
2)Setpolicies&procedures
3)Establishrecordkeepingpractices
4)
SightingFoodSourcesinyourcommunity
5)Selectingfoodforyourprogram
6)DesigningaDistribution
Method:ClientChoice.

An ALARMING DISCOMFORT
As many as 8 million people quit farming between the two

censuses of 1991 and 2001
The farmer suicide risen in every five years:

1997 2001, 78,737 (or 15,747 a year on average).
2002 2006, 87,567 (or 17,513 a year on average).
2001 onwards,one farmer took his or her life every 30 minuteson
average.
The 2007 figures (detailed below) place that year, too, in the
higher trend.(NCRB)
Number of farmers who have committed suicide 1997 and

2007 is staggering 182,936(NCRB).

CONCLUSION
Topreventlarge-scaleinfestation,drought,famineand severe food
crisis whichdisbalancesthecountryandincreasedinflationdueto
farmerssuicide,highdebtincaseoffarmingfamiliesandnon-availability
or high prices ofparticular
agriculturalproduct,proposedideaofIntegratingFoodBanksandFood
Pantrysystemprovidingeitherrawfoodmaterials,readytocookorreadyto
eatfoodproducts.
Itisnecessaryforbetterstoragestructuresthroughinvolvement of
masses,peopleofevery states accordingtotheproductspeciallylocalized
totheirsuitableeconomicstructure,geographicallimits,foodtrendsand
habitsthroughsupportfromgovernmentagenciesandPublic private
partnerships(PPPs)andnewstartupsof joint ventures between
state Centre, state-Centre-Private or Centre-Private Agencies
and companiesintheagriculturalsector.

CONCLUSION(contd.)
Althoughcoldstoragecapacityofover30 million tonnes(ONICRA,2014)has
beencreatedinthecountry,theconceptofcold-chainisstillinitsinfancyinIndia.
ConsideringthefactthatIndiaisproducingabout270 million tones of
horticulture produceeveryyear,thedevelopment of cold-chain networks
assumeshighprioritysinceseveralIndianandmultinationalcompanieshave
alreadybegunsuchinitiativesinIndiaandhavedemonstratedrepeatedsuccess..
Owingtothetremendouspressureonimprovingsupplychainandreducinglosses
duringproducehandlingandmovement,theneedforcreationofacoldchain
networkiscrucialforperishablefoodcommodities
usingContract farming model proposed in the research(Fig3)whichincludes
roleofeveryindividualtowork for his/her stomach by being directly either
partially or fully associated withinordertobringaboutanincreaseincountrys
agriculturalexport.
Itssurplusinownsstatewithproperstorageandlastbutnottheleastguaranteed
employmentwithlucrative and continuous salaries forallinvolvedforabetter
andalwaysrecurringandincreasinghappier Indian economy.

A Message
Large scale survey shows that given a chance almost 40% farmers
are willing to quit farming permanently

{Dearth of
Agriculture is
Famine}
you for your attention!

or questions & PPT
www.calebpradhanwb.webs.com

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Role of Contract Farming in Food Storage in

India & Prospects of Joint Venture

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

There is no word such as plagiarism in the

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

BRIEF INTRODUCTION ON THE SUBJECT

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

NEED FOR CONTRACT FARMING FOR FOOD STORAGE?

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Other reason for the need of Contract Farming in Storage

According to the Central Institute of Post-Harvest Engineering and

Wheat and paddy losses in Indian Scenario requires improvement

Why Contract Farming IS THE Solution?

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Present scenario of Contract Farming in

Table 1. State wise area under Contract Farming in India

AREA UNDER CONTRACT FARMING (in

Types of Contract Farming

Market specification contracts arepre-harvest agreements

Resource providing contracts obligetheprocessortosupply

Production management contracts bind the farmer to

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Summarizing CFs Role

1) Research and development

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Successes of Contract Farming in India

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Successes of Contract Farming in India

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

WAREHOUSING OF AGRICUTURAL PRODUCE

Name of the Organization/

Paucity of Cold Warehousing OF

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

NEED FOR CONTRACT FARMING TO BE

NEED FOR AN INTEGRATED FOOD SUPPLY CHAIN

REVIEW OF INDIAs Cold Storage Chain

THE PROPOSED MODEL

UNDERSTANDING VENTURE CAPITAL

Examples: Xerox, 3m and

General Electric entered into the field of

UNDERSTANDING JOINT VENTURE

Build on company's strengths

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

FEW EXAMPLES OF JOINT VENTURES IN

Avesthagen forms global Joint Venture with Limagrain

PPP(Public Private Partnerships):

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Kinds of partnerships:Permanent - Temporary

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

Role of Food Pantries and Food Banks (For zero Waste of

Theseproducethencanbeforwardedtofood firms, food courts,

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

As many as 8 million people quit farming between the two

The farmer suicide risen in every five years:

Number of farmers who have committed suicide 1997 and

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

International Conference on Emerging Technologies in Agricultural and Food Engineering 27 30th

you for your attention!

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