Transformation of current unorganized agri General Trade (GT) Fresh (F&V) business sector of India: challenges and approach

Abstract

Onion is commonly used vegetable in India and many countries worldwide. It is also one of the interesting commodities when it comes to price discovery, volatility in price as compared to other commodities, demand, and supply dynamics in India. Variation in price of onion have a huge impact on consumer, farmer and overall food security. A decrease in price of onion below the cost of production affects the farmer and the ecosystem around it whereas increase in price affects the consumer as it shoots the price consumption budget. The reason for high inflation in price in case of onion is not always due to mismatch between demand and supply or some exogenous shocks but could be due to various natural and artificial factors such as market inefficiencies, broken supply chain, climatic conditions, monopolies in the market etc. With this context we undertook this study to understand the above aspects and other market dynamics of onion supply chain that led to inefficiencies, explore various business models and recommend some best practices or policies that could potentially solve this problem. For this study, Primary data is collected by interviewing with traders and wholesalers across mandis of Odisha, UP, Bihar, West Bengal, Delhi, Karnataka, and Maharashtra. Secondary data is also collected from various public sources such as Agmarknet Portal (Directorate of Marketing & Inspection (DMI),Ministry of Agriculture and Farmers Welfare, Government of India, 2022), AgriXchange (AgriXchange, 2021), National Horticulture Research and Development Foundation (National Horticulture Research and Development Foundation, 2021) etc. Both Primary and Secondary data was analyzed using Statistical methods. Significant Observations from our study: • Wholesale price and quantity arrival for market are interlinked. We have observed that for APMC markets wholesale price decreases if arrival quantity increases and vice versa. However, for non-APMC markets wholesale price do not decrease even if the arrival quantity increases. The possible reason could be that APMC market are regulated whereas in non-APMC market, the market forces and other factors strongly drive the price. • Export of onion from India are regulated and government introduced Minimum export price (MEP) to regulate the domestic prices and the safeguard the domestic consumers. MEP was introduced in onion export during 2010 however Government has waved off and re-imposed MEP several times in last few years. 4 • Minimum Export Price (MEP) and Export impact the domestic onion price. Based on our analysis, we have observed that if MEP increases, exports quantity decreases leading to increase in domestic quantity and reduction of domestic onion price. • Seasonality plays a role in domestic price of onion as well. We have observed that domestic price is at the higher end towards the end of the year even though the production and availability of onion is high due to festive, marriage occasions where demands go up significantly.