ndia is one of the world's largest producer of many fruits, vegetables and spices (Rais & Sheoron, 2015). Coriander is one among the major spices in India cultivated in an area of 5.85 hectares. The annual production of coriander was 4.91 Lakh tonnes during 2015-16. Tamilnadu contributes to 2 per cent of the country's coriander production. In Tamilnadu, coriander is mainly grown in Ramanathapuram, Virudunagar, Krishnagiri and Thoothukudi districts (DEMIC, 2016). Apart from the seeds being used as a spice, the leaves of coriander also play an important role in Indian cuisine.
India is said to lag in terms of an efficient supply chain for the distribution of fruits and vegetables (Rais & Sheoron, 2015). The vegetable supply chain is inefficient due to the interference of intermediaries and as a result of these problems, both the farmers and consumers are being affected (Kalidas, 2013). Farmers across the country are complaining about not getting a fair share as a return on their investment of both money and labor. Bhimanna Dindalkoppa from Dharwad states "When we hear about the very high prices of onions, we wonder why we are not getting those prices. The retail price of onions had reached Rs 80 a kg in north Karnataka, but I couldn't reap its benefits. The middlemen did". He is not the only one. Ravidra Desai from Karnataka says "We have realized it's only retailers who make money when vegetable prices rise." This issue is shared by farmers across the country. A vegetable retailer in Tamilnadu states "If a farmer wants money for the crop in advance, he would be obliged to sell to a middleman at the price the latter wants. If the price goes up, the middleman might give a small percentage of the extra profit he makes through sales to the farmer, considering the relationship between them and the farmer's bargaining power,". It has also been observed that vegetable prices in retail markets across the country are three to four times higher than what the farmers get. Due to the perishable nature of the vegetables, farmers are not in a position to negotiate strongly and end up receiving a lesser return (Business Standard, 2013). Not only are the farmers affected by this phenomenon, but also the consumers who buy vegetables from retail outlets. They end up paying a huge cost for the produce, which they could have avoided if they had directly bought from the farmers. This is a problem faced by both the producer (farmer) and the consumer and it is high time that it is addressed. In order to address this issue, this study chose to analyze the supply chain of coriander leaves supply chain in Coimbatore. By analyzing the supply chain, the study aims to identify the constraints that prevent farmers from getting a fair share of price for cultivating coriander leaves. Coriander (also known as Cilantro) was chosen as it has an important place in the Indian cuisine and has a lower shelf life. Coimbatore was chosen as it has a huge customer base and it sources the coriander leaves from the nearby farmers. The study aims to analyze the supply chain of coriander leaves, in order to meet the following objectives.
? To identify and compare the distribution channels of coriander leaves in Coimbatore. ? To identify the constraints that prevent farmers from getting a fair share of price for cultivating coriander leaves. ? To recommend solutions to increase the returns for the farmers and reduce the price for the consumers.
The authors have used both primary and secondary data to identify the share of farmers in different modes of supply chain. Field visits were conducted to identify different modes through which cilantro is supplied to the consumers in Coimbatore. Secondary research was conducted to identify the price fluctuations over a period of 3 months and the margins kept by each member of the supply chain. The primary data was collected from all the entities of the coriander supply chain namely farmers, wholesalers, commission agents, retail sellers and consumers. The details of the sample are shown in Table 1. The instruments used were interview and questionnaire. The questionnaire included questions about the preferred retail points. Secondary data like price of Coriander leaves at Uzhavar Santhai (Farmer's market), cost of cultivation of coriander leaves were obtained from the administrative office of Uzhavar Santhai and the TNAU website respectively. Comparisons were made between the share of the farmer and other supply chain members.
The Coriander leaves supply for the Coimbatore market takes place through the MGR market located on Mettupalayam road. The daily average supply during the season of the crop ranges from 6-7 tons per day and averages around 2-3 tons during the offseason months of May-October. The prices are fixed based on the daily supply of Coriander leaves. The MGR market is the only wholesale market in Coimbatore. The main farmers growing Coriander leaves in Coimbatore are situated in Senjeri malai, Thadagam and in some villages around Annur. Around 350 farmers cultivate Coriander leaves in Coimbatore.
Coimbatore Farmers: The farmer is a person who is the first in the supply chain of vegetables and also the person who does the majority of work among the different players in the supply chain. The factors which contribute the cost of produce for a farmer with respect to Coriander are: field preparation, nursery and planting/sowing, weeding, plant protection, fertilizers, wages. The total cost incurred by the farmer for a hectare of land for growing Coriander leaves is Rs.32000 (TNAU website). The leaf yield per hectare is around 7 tons. The cost incurred per kg is approx. Rs. 4.5. If the farmer directly sells to the wholesaler, the total cost incurred per kg is approx. Rs.5.8. If the farmer sells at Uzhavar Santhai the cost incurred per kg is Rs.4.95.
Coriander farmers are concentrated in the districts of Coimbatore, Thoothukudi, Virudhunagar and Ramanathapuram. Coriander is grown both for its seeds as well as for its leaves. The Coriander leaves are widely used in the Indian cuisine. It is one of the few leafy vegetables that has high price fluctuation in various times of the year as Coriander is susceptible to weather changes which leads to early bolting, rotten roots etc. Most farmers prefer the hybrid variety of Coriander as it gives better yields.
Commission Agents: These are the mediators between the farmers and the wholesalers. Sometimes the wholesalers themselves act as Commission agents. The role of a Commission agent varies from procuring the produce from farms to a mere transporter to the wholesaler. The various costs incurred by the commission agent are wages, packaging costs, transport costs including entry charges inside markets and wastage costs. The cost incurred per kg is approx. Rs.1.6.
The wholesalers either directly buy from farmers or buy through the commission agents. The various costs involved for the wholesaler are the storage cost, labor for unloading and loading, storage space rent, electricity bill. The cost incurred per kg is approx. Rs.2. The wholesalers are the ones who deal with the highest quantity of produce. In Coimbatore the MGR market is the wholesale market for all vegetables.
Retailers: These are the players who deal with the least produce and sell to the consumer. They procure Cilantro leaves through various supply chain modes. The main retailers are located inside the MGR market and the nearby vegetable markets. The main retailers buy from the wholesalers at the MGR market and sell the produce to the final retailers or to the consumers directly at retail prices. The final retailers sell the produce to the consumers.
The wholesale price is determined by the supply of coriander leaves at the MGR market. The Uzhavar Santhai prices are fixed by the market committee which decides the rate by taking into account the wholesale and retail rates prevailing. The commission agent takes a Rs.3/kg fixed price whereas the wholesaler takes a Rs.5/kg fixed price as commissions.
The 3-month price data between November 1st 2017 and January 31st 2018 collected from Uzhavar Santhai for the Coriander leaves is shown below: On an average the price difference between the Retail and Wholesale is 195%. While comparing the farmer's markets with the retail points the farmer's market prices are 61.1% lower than the cheapest retail point which is the weekly markets, 62.9% cheaper than cart vendors, 66.6% cheaper than super markets, 85.1% cheaper than the vegetable shops, 88.8% cheaper than kirana stores and 103% cheaper than online retailing. It is evident from the graph that Uzhavar Santhai is by far the cheapest place to buy coriander leaves for the consumers. The consumers must be made aware of the huge price variations existing which would lead to more people buying at Uzhavar Santhai and which would lead to other retail points, reducing the prices.
Supply chain analysis was used to examine the different channels of Coriander leaves. The models are described below (All costs incurred are in Rs./kg)
This model involves a commission agent and a wholesaler as middlemen. In this model the farmer gets a 17.3 % share out of the total price (i.e.) (Rs.8.3/Rs.48). The Commission agent gets a 6.3% share (Rs.3/Rs.48); the wholesaler gets a 10.4% share (Rs.5/Rs.48) The retailers get an average of 66.0% share (Rs.31.7/Rs.48). The average 3-month price at which the farmer sells to the commission agent is Rs.8/kg. The commission agent picks up the produce from the farmland, packs it and then supplies to the wholesaler at Rs.11/kg. The wholesaler stores temporarily at the space available in MGR market, sells at Rs.16/kg and is picked directly by large departmental stores and vegetable chains and sold for an average retail price of Rs.45/kg in the case of super markets and departmental stores and Rs.50/kg in the case of vegetable shops. In this model farmers faced losses for 9 days out of the total 91 days studied. This model involves a total of 4 players the farmers sells his produce directly to the wholesaler at a 3-month average price of Rs.11/kg. The wholesaler stores and sells the produce at Rs.16/kg to the main retailer who are mainly vegetable markets sellers and sell at an average price of Rs.25/kg to the final retailers. The final retail point sells at an average price of Rs.48/kg. The farmer gets a 23.5% share, the wholesaler gets a 10.4% share, the main retailer gets a 18.1% share and the final retailer gets a 47.9% share. This model involves a total of 5 players. The farmer sells at a 3-month average price of Rs.8.3/kg. The commission agent procures the produce and sells at an average price of Rs.11.3/kg to the wholesaler who in in turn sells at a price of Rs.16.3/kg. The main retailer buys from the wholesaler and sells at Rs.25/kg to the final retailer who sells at average price of Rs.48/kg. The share of the farmer is 17.3 %, the commission agent gets a 6.3 % share, the wholesaler gets a 10.4 % share, the main retailer gets an 18.1 % share while the final retailer gets a 47.9 % share. This is a model in which the retailers buy from the farmer markets and sell them to the consumers. It is a convenient model for the retailers as the farmer's market are located at different places in the city. Based on the convenience they buy from the nearby market.
The farmers sell at average price of Rs.19.2/kg and the final retailer sells at an average price of Rs.48/kg. The farmer gets a 40.0 % share and the retailer gets the remaining 60.0 % share. This is one of the most profitable models for the farmer. This is a new model in which the farmer sells directly online through several ecommerce websites. The websites usually get a commission. This model involves slightly higher marketing and packaging costs. This model sells at average price of Rs.55/kg and the farmers gets a 74.9 % share. ii
The table below compares the price spread and marketing efficiency of the various supply chain models identified for Coriander leaves. The Price Spread is calculated by subtracting the price paid by the consumer and the net price received by the farmer. The marketing efficiency is calculated by Acharya method. Marketing Efficiency= (Net price received by producer)/ (marketing cost + marketing margin). (Kalidas K, 2016). The net price received by the farmer is found by subtracting the price received by the farmer (Rs./Kg) and the cost incurred by the farmer(Rs /Kg) as shown in section 5.2. The marketing cost is the sum of all costs incurred by the players in the supply chain model applicable and the marketing margin is the profit margin for each player in that supply chain mode. The difference between price paid by the consumer and the net price received by the farmer gives the sum of marketing costs and marketing margin of all the players in the supply chain model. From the above table it is evident that the marketing efficiency is highest in the supply chain model 5 and least in the models 1 and 3. The price spread is lowest in models 5 and highest in models 1 and 3.
The table 5 compares the share of various players in the models. From the above table, it is evident that the Models 1, 2 and 3 offer the least share to the farmer. The models 1, 2, 3, 4, 6 are unfair to the consumer as the final prices are too high. Thus the most suitable supply chain model for both the farmer and the consumer is model 5 in which the farmer directly sells the produce through Uzhavar Santhai.
The following are the observed constraints which prevent the farmer from getting a fair share: The main advantages of adopting hydroponics and vertical farming is the farming activities are more simplified, it eliminates the need to remove weeds, ploughing land, less labor intensive harvesting, consumes less water, faster crop cycle. The produce is of better quality as the essential nutrients are given directly to plants without the need of soil. Growing in a controlled environment eliminates the need to use pesticides. The produce can be grown atop of buildings in the city or in nearby regions and can satisfy the region's food requirements. This drastically reduces lot of non-value added activities like transportation, storing, handling etc. and also provides a better share to the farmer.
The different distribution channels of the Coriander leaves in Coimbatore were identified and compared. The results show that the number of nonvalue added activities and essential non value added activities are high in several models leading to low price for farmers and a high price payable by the consumer. Further, price spread is too high in several supply chain models of Coriander leaves and the marketing efficiency is very low in several models. On comparison of the shares received by the players in the different models, direct selling gives the highest shares to the farmer. There exists a huge price difference between the wholesale and retail points indicating that consumers are paying very high prices when buying through retail outlets except Uzhavar Santhai. Direct Retailing through Uzhavar Santhai and E-tailing give a fair share to the farmers whereas Uzhavar Santhai offers the consumers at the cheapest price; it is a win-win situation for the most important players in the supply chain. If the same price difference is seen in other vegetables also then, Uzhavar Santhai would be an ideal supply chain model for both the farmers and consumers. Several constraints which lead to low share for the farmers and several factors which lead to the consumer paying a high price for the Coriander leaves were identified and several recommendations have been made to solve the same. A Hydroponics model was recommended as a future model to increase the share of a farmer and reduce the intermediaries.
This study contributes in the area of supply chain of vegetables. The study identifies the best model for both the farmer and the consumer. This study points out the inefficiencies in several supply chain models leading to high price for the consumer and a poor share to the farmer and adds to the claims by several newspapers regarding the high difference in wholesale and retail prices. This study identifies the constraints leading to inefficiencies in the supply chain and identifies the factor for a high consumer price. Further, it gives several recommendations to solve the inefficiencies in the supply chain of Coriander leaves and the need for government intervention.
This research was done only for the Coriander leaves. If similar researches are conducted for other crops, the supply chain models existing for such crops can be found out and it can be checked whether such inefficiencies exist in Coimbatore for other crops also and solutions for rectifying the same can be identified.
Entity of the Supply Chain | Number of Respondents |
Farmers | 15 |
Commission Agents | 15 |
Wholesalers | 15 from MGR Market |
Sellers in Uzhavar Sandhai (Farmer's market) | 15 |
Retailers | 18 Kirana Stores; 18 Vegetable Shops; 5 Super Markets; 5 Weekly Markets, 1 Online Store; 4 Cart Vendors |
Consumers | 100 |
e) Comparison of various supply chain models of | Production, cleaning and processing were | ||
Coriander leaves | identified as value adding activities in previous | ||
i. Based on value added, non-value added activities and essential non value added activities Value added activities are those activities customers are willing to pay for, non-value adding activities are wastes and do not add any value whereas the essential not value adding activities aids in achieving value and hence difficult to eliminate. | researches on agro-supply chains (Rubayet Karim and Jony Biswas, 2016). Production (Farming) is the only value adding activity identified in the supply chain of Coriander leaves as cleaning and post processing are not applicable to Coriander leaves. The list of non-value added and essential non value added activities between various supply chain linkages are listed below. | ||
Linkages | Non value added activities | Essential non value added activities | |
Farmer-Commission agent | Wastage, waiting, storing the produce | Procurement, Transportation, packing, loading | |
Commission agent-Wholesaler | Unloading, grading, waiting, excess transportation | Transportation | |
Wholesaler-Retailer | Storing, unloading, loading wastage, waiting, excess transportation | Transportation | |
Retailer to Consumer | Storing, wastage | Transportation, bundling, loading, unloading, waiting | |
Wholesaler to Main retailer | Loading, unloading, waiting, wastage, excess transportation | Transportation | |
Main Retailer-Retailer | Wastage | Transportation, waiting, loading, unloading | |
Farmer-Wholesaler | Storing, waiting | Transportation, loading, unloading | |
Farmer-Retailer | Wastage | Packing, loading, unloading, waiting, transportation | |
Farmer-Direct selling | Wastage | Packing, waiting, loading, unloading, transportation, bundling | |
Farmer-E-Tailing | Wastage | Cleaning, packing, bundling, delivery |
Farmer-Uzhavar Santhai | |||||
Cost incurred:Rs: 4.95 | |||||
Farmer | |||||
? Cost incurred: Rs.7.5 | Online E-tailing | 2018 | |||
Year | |||||
Volume XVIII Issue I Version I | |||||
( ) G | |||||
Model | Number of Non-value added activities | Number of Necessary Non-value added activities | Total of Non-value added and necessary non value added activities | Non-value added activities (%) | Global Journal of Management and Business Research |
1(F-C-W-R-CO) | 3+4+6+2=15 | 4+1+1+5=11 | 26 | 57.6 | |
2(F-W-MR-R-CO) | 2+5+1+2=10 | 3+1+4+5=13 | 23 | 43.5 | |
3(F-C-W-MR-R-CO) | 3+4+5+1+2=15 | 4+1+1+4+5=15 | 30 | 50.0 | |
4(F-R-CO) | 1+2=3 | 5+5=10 | 13 | 23.0 | |
5(F-CO) | 1 | 6 | 7 | 14.3 | |
6(F-E) | 1 | 4 | 5 | 44.4 |
Model | Price Received by farmer (Rs./Kg) | Price at which commission agent sells (Rs./Kg) | Price at which Wholesaler sells (Rs./Kg) | Price at which Main Retailer (Rs./Kg) sells | Price at which the retailer (Rs./Kg) sells | Price Spread (Rs./Kg) | Marketing Efficiency |
1 | 8.3 | 11.3 | 16.3 | - | 45-50 | 39.7 | =3.8/44.2=0.09 |
2 | 11.3 | - | 16.3 | 25 | 43.5-51 | 36.7 | =5.5/42.5=0.13 |
3 | 8.3 | 11.3 | 16.3 | 25 | 43.5-51 | 39.7 | =3.8/44.2=0.09 |
4 | 19.2 | - | - | - | 44-51 | 28.8 | =14.25/33.75=0.42 |
5 | 26.6 | - | - | - | - | 0 | =21.65/4.95=4.37 |
6 | 41.2 | - | - | - | 55 | 13.8 | =33.7/13.8=2.44 |
Model | Share of Farmer (%) | Share of Intermediaries (%) | Share of Retailer (%) | Final price (Rs) |
Model 1 | 17.3 % | 16.7 | 66.0 | 45-50 |
Model 2 | 23.5 | 28.5 | 47.9 | 43.5-51 |
Model 3 | 17.3% | 34.8 | 47.9 | 43.5-51 |
Model 4 | 40.0% | - | 60.0 | 44-51 |
Model 5 | 100 | - | - | 26.6 |
Model 6 | 74.9 | 25.1 | - | 55 |
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