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

Transcription

1 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 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 num 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 extrem ely grateful 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 ful to S hri M.C. S ingh i, S en ior Econom ic Ad vis er, for his valu able com m en ts an d encouragem en t to com plete th is w ork. I als o extend m y s incere gratitu d e to S hri S aju 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 appreciation es pecially to villagers / 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 ful to m y colleagues in th e Office for in s piring m e an d actively participating in th e d ebate an d d is cu s s ion s on related is s ues. Palace: Date: Jitender Singh 2 P a g e

3 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 Comparison of the Alternative Models of the Direct Procurement of Vegetables Market Integration and Uncertainty in the Prices of Alternative Marketing Channels 8 Impact on Revenue 17 9 Conclusion Bibliography Annexure 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 etica l va lu es to s h ow im pa ct of price a n d 18 quantity changes on revenue of the farmer 6 Avera ge Net Reven u e of Tra dition a l Ma rket a n d MD 20 Channel 7 Results of the above equation 21 8 Ela s ticity of Prices w.r.t. Arriva ls (Arr) a n d procured 22 quantity (PR). 3 P a g e

4 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 als 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 inform a tion, qu ality m on itorin g, m od e of pay m en ts etc. The relatively simple con tract of Reliance Fres h provides an ed ge to th e Com pan y to attract 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 better 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 better d eal to th e farm er as com pare to th e trad ition al m ark et ch ain. This m ay be th e reas on th a t it h as been s ucces s ful for s uch a long tim e in m an y areas. On th e practical s id e of the im pacts of MD it is found th a t except Green Chilli On ion, and Mus k Melon th e prices of local m ark et are co-integrated w ith Mother Dairy prices. How ever, th e net revenue of the MD is es tim a ted m ore vola tile th en TM for all th e vegetables except Bh ind i and Tom a to. This is quite oppos ite to the notion th a t the organ iz ed retail ch ains w ill s tabiliz e th e prices for the farm er and cons equen t th e returns w ou ld be s tabiliz ed. How ever, the higher ins tability of revenue d oes not m ean th at it affect farm ers incom e alw ay s negatively, rath er the effect m ay be pos itive if th e prices are fluctu a ting upw ard. The net 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 Chilli, 45 per cen t for Onion, 50 per cen t for Bhind i, and 57 percen t higher 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 only confined to thos e s upply ing to MD rath er extended to all th os e farm ers s upply ing to the TM. The ind irect im pact als 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 ets. In s hort the direct procurement of the MD has enhanced the farmer s revenue. 4 P a g e

5 I INTRODUCTION Why low grow th of area und er vegetable an d high rate of inflation an d perh aps profitability in vegetable 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 produ ction of the vegetables h a s been eviden t in ris in g p rices of vegeta bles in recen t pa s t. The average increase in the prices of vegetables at wholesale markets was 9.5 per cen t du rin g The contributory factors for this increase have been a n in crea s e in dem a n d a n d s ticky s u pplies. On th e dem a n d side, th e per ca pita in com e of th e cou n try is ris in g a n d th e con s u m ption pattern is getting diversified towards vegetables. Year Table: 1. Vegetable Production & Inflation in India Production (T) Production Growth (%) Yield (Tone/hec.) Area ('000' Hec.) Area Growth (%) Yield Growth Inflation in Vegetable (%) Source: National Horticulture Board, and the Office of the Economic Adviser. 1.3 On th e s u pply s ide th e produ ction of vegeta bles is n ot keepin g th e pa ce with dem a n d. Th e low growth of th e vegeta bles produ ction du rin g a n d 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 bles. Th is in dica tes th a t th e in cen tives for th e crop diversification perh a ps were not sufficient en ou gh to in du ce a lloca tion of a rea to vegeta bles. Wh y th e fa rm er is n ot diversifying a rea towa rds vegeta ble wh en prices of vegeta bles h a ve been very h igh? Th e m a in rea s on for s low crop divers ifica tion towa rd vegetables is the h igh ris k-h igh retu rn pa ttern of th e vegeta bles. 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 price. Th e fa rm er m a y n ot n eces s a rily be a ris k a vers e bu t h a s a low ris k a ppetite. La ck of credible in s titu tion 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. 5 P a g e

6 1.4 Th e s m a ll s ize of th e loca l m a rket a n d its dis in tegra tion, h a ve m a de th e prices s u pply s en s itive. Bu t wh ile fa rm ers a re n ot a ble to ben efit from th e in crea s e in prices, a fa ll h its th em im m edia tely. Dem a n d for vegeta bles, in s o fa r a s th e fa rm ers a re con cern ed is a derived dem a n d, th e dem a n d of th e in term edia ries. Th e exis ten ce of perfect com petition a m on g th e fa rm ers a s s ellers of vegeta bles a n d a few oligopolistic bu yers or m iddlem en, th erefore, res u lts in distortion of the in cen tive s tru ctu re. Flu ctu a tin g prices of th e vegeta ble, wh ich a re kept low by th e in term edia ries ; do n ot provide en ou gh in cen tives to th e farmers to produce more vegetables. Prevalence of high prices and higher in fla tion a re also du e to th e h igh tra n s a ction cos t of vegeta bles tra n s fer a n d h igh m a rgin s of th e m id dlem a n. Bes ides, th e peris h a ble n a tu re of th e vegeta ble 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 pply 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 pplies does n ot provide th em a n y econ om ic ren t. Th is fu rth er rein forces th e ris k a vers ion of th e fa rm ers. On e option for th e efficien cy in th e s u pply ch a in s is to encourage orga n ized reta il chains. 2. RISE OF ORGANIZED RETAIL CHAINS 2.1 The evolu tion a n d pa ttern s of th e diffu s ion proces s of m odern food reta il in du s try h a s varied worldwide, bu t its en try a n d con s is ten t in crea s e in m a rket pen etra tion h a ve had sign ifica n t im plica tion s across all countries including US, European Union and the developing countries of La tin Am erica a n d Ea s t As ia in clu din g Ch in a 1. For In dia, th e s ize of food reta il in wa s es tim a ted a t a bou t Rs.10,700 billion, 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 projected to tou ch bu s in es s levels of Rs 53,000 billion by 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 According to ICREAR report annual growth ra te of orga n ized reta il in food a n d grocery is es tim a ted at 16 percen t du rin g Oth er es tim a tes pu t th e growth ra te of 1 The IFPRI Discussion Paper (2008). 2 NABARD study on Organised Agri-Food Retailing in India(2011) 3 Impact of Organized Retail Chains on Income & Employment, ICREAR(2009). 6 P a g e

7 orga n ized food a n d grocery a t h igh er level of 42 percen t in 2006 over The s h a re of expen ditu re towa rds food a n d bevera ge in tota l con s u m ption expen ditu 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 rt of th e proces s of developm en t. Th e orga n ized reta il m a y a ls o, th erefore, experien ce a declin e in ra tio of th eir bu s in es s tu rn over derived from th e s a le of food rela ted produ cts. Th ere wou ld, h owever, be two pos itive fa ctors. Th e ris 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 preferen ces in fa vou r of proces s ed foods a s a res u lt of a n in crea s in g pa rticipa tion 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 produ cts. Moreover, in crea s in g u rba n iza tion is a ls o a s s ocia ted with a ch a n ge in th e s h oppin g beh a vior of th e m iddle cla s s du e to h igh er in com es a n d increasing opportu n ity cos t of tim e for th e con s u m ers (bu yers ), pa rticu la rly th e women. Im provem en t in proces s in g tech n ology, progres s on a ccou n t of roa d con n ectivity, in ves tm en t in s tora ge fa cilities, fa s t a n d s a fe tra n s port a n d in form a tion tech n ology revolu tion is likely to s olve m a n y of th e problem s of m a rketin g s ys tem a n d provide opportu n ities to priva te traders. 2.3 In crea s ed in ves tm en t in orga n ized reta il by dom es tic a n d foreign pla yers brin gs a bou t u pstrea m ch a n ges in s u pply ch a in a n d a n in crea s ed cen tra lized procu rem en t of a gri produ cts from fa rm ers a s th e experien ce of th e Ea s t As ia n cou n tries s u gges t. Th e ra pid ris e of s u perm a rkets in differen t cou n tries h a s tra n s form ed th eir a gri-food system, though the speed of transformation has been different. In case of In dia th e tra n s form a tion a s of n ow h a s been s low both a t u pstrea 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 tru ctu re, th e foreign investment is likely to flow in near future. 2.4 The direct procu rem en t in fresh fru its a n d vegeta bles may offer better price, provide kn owledge of market demand, tech n ologica l in pu ts a n d a cces s to credit on a ccou n t of a s s u red m a rket to th e fa rm ers. While it is es tim a ted th a t direct procurement of fres h fru its a n d vegeta bles 4 The India Retail Report, Ministry of Commerce and Industry, P a g e

8 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 oldin gs. Th e tra dition a l ch a n n el where h u ge wa s ta ge of com m odities, la ck of in fra s tru ctu re, m is s in g in s titu tion, la ck of s ta n da rdiza tion a n d m oreover la ck of in cen tives 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 experien ces of th e con tra ct fa rm in g, pa rticu la rly 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 dis tribu tion of profits between fa rm ers a n d the con tra ctor, s h a rin g ris k by a gribu s in es s firm s, a n d m in im iza tion 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 riou s price a n d n on -price effects on a gricu ltu re. Some positive im pa cts of con tra ct fa rm in g in clu de th e crop divers ifica tion, in crea s e in produ ctivity, im provem en t in th e profita bility of fa rm ers, improved decis ion m a kin g, increase in wages a n d em ploym en t of a gricu ltu ra l la bor a n d tech n ology tra n s m is s ion. Th e is s u e of in clu s ion is m ore im porta n t beca u s e of em ergin g tren ds of large n u m ber of s m a ll fa rm er in In dia a n d decreasing s ize of la n d h oldin gs. A s m a ll fa rm er opera tin g predom in a n tly 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, screen 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 egotia tion 5. Collectively, 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 ibility 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 Th e s m a ll fa rm er is in teres ted in ta kin g u p con tra ct fa rm in g beca u s e it fa cilita tes a va ila bility of m odern in pu t, wh ich a re eith er u n a va ila ble or cou ld be obta in ed th rou gh other sources a t a very h igh cost 6. Con tra ct fa rm in g a ls o redu ces his price ris k and eventually stabilizes in com e. Th e firm s, h owever, prefer 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 Porter Gina and Howard Phillip K., P a g e

9 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 pply cos t, cos t of s u pplyin g exten s ion s ervices. La rge fa rm s h a ve a h igh er ris k ta kin g a bility, ca n pu t in la rger in ves tm en ts in la n d. Th ey h a ve rela tively better qu a lity la n d m ore u n iform a n d consolidated. Ma n y s tu dies 7 reveal th a t th e s ys tem of con tra ct fa rm in g is s kewed towa rds m ediu m a n d la rge fa rm ers, th ou gh there were n o s ign ifica n t differen ces in produ ctivity between s m a ll, m ediu m a n d la rge farms. Th ere wa s n o dis crim in a tion in procu rem en t by a gribu 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 prim a rily with la rge com m ercia l fa rm s, then small fa rm er of th e ru ra l popu la tion may fa il to ben efit directly from con tra ct a rra 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 dis pla 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 ctin g is dis tribu 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 community 9. Th es e is s u es a re pa rticu la rly im porta n t in th e con text of In dia wh ere 85 percen t of la n d h oldin 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 tion is la n d les s. Addition a lly, th ere is a s ocia l s tra tifica tion with h igh -in com e in equ a lities 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 exploit or a t lea s t provide 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 tion 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 pron e to rem a in u n orga n ized du e to m is s in g n etworkin g, la ck of information a n d lim ited a wa ren es s of orga n iza tion ben efits. In th e lon ger run, h owever, if th e con tra ctin 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 produ 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 ibilities 7 Kumar Promod (2006) 8 Key, Nigel and Runsten, D Korovkin, Porter Gina and Howard Phillip K., P a g e

10 a ls o; th e firm ca n m a xim ize its s h ort ru n profits with ou t con cern in g a bou t s u s ta in a bility of the fa rm a n d the fa rm er a n d by exh a u s tin 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 procu re th e produ ce a n d any lim its on th e exit of th e fa rm er from con tra ct m a y dis tort th e ba rga in in g power equ a tion in th e lon g ru n in fa vors of th e firm. Som e a ltern a tives, h owever, h a ve em erged. The s ch em es to prom ote direct m a rketin g ch a n n els a re Apn i Ma n di, Ryth u Ba za rs, Ha dspa r, Uzh a va r Sa n dies etc. in va riou s Sta tes. Th e prom 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 dies on es tim a tion of opera tion a l m a rketin g efficien cy of tra dition a l m a rketin g ch a in s, m os tly u s in g th e fa rm er s s h a re in th e con s u m er price. Th e s tu d y of Th a k u r, (1994) h a s observed 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 rin g , m a rket efficien cy wa s between %. In a n oth er s tu dy of Karnataka state, du rin g , by Kires u r et a l, (1989) a ls o revea led th e low m a rketin g efficien cy (36 to 51 %) in peris h a ble com m odities like Tom a to, Brin ja l, wh ile in ca s e of pota to a n d on ion, wh ich a re rela tively du ra ble vegeta bles with a lon ger s h elf life, th e m a rketin 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 bility by 10-15% as com pa red to th e tra dition a l ch a n n el a n d redu ced the m a rketin g cos t by about 4.25% to 8% Des pite, 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 better 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 tin g fa rm ers with m a rket rela ted in form a tion etc, thes e pos itive im pa cts on fa rm ers a re depen den t on th e term s a n d con dition of th e procu rem en t con tra ct. These term s a n d con d ition s defin e th e lega lity a n d en forcea bility 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 titu tion a lized cou ld s erve a s a m odel con tra ct, beneficial to both the contracting firm and the farmers. 10 P a g e

11 2.11 The direct procu rem en t con tra cts, with bin din g or flexible s u pply option s, n eed to des ign a n in cen tive 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 tive m odels of direct procu rem en t of fres h vegeta bles. Th ere a re m a n y con tra cts with differen t term s a n d con dition s operating simultaneously ba s ed on th e va ryin g ba rga in in g powers of th e con tra ctin g pa rties. However, n ot a ll th ese con tra cts a re s u s ta in a ble 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 bility a n d their impact on parties. This study examines the relative efficiency of vegetable procu rem en t con tra cts of Moth er Da iry a n d Relia n ce Fres h a n d the tra dition a l ch a n n els of m a rketin g of th es e produ cts a n d va lida tes th e impact through field observation. 3. OBJECTIVES OF THE STUDY I. Exa m in a tion of th e des ign of th e a ltern a te Models of direct procurement. II. Tes tin g co-m ovem en t a n d u n certa in ty of th e p rices of a ltern a te channels. III. Es tim a tion of In com e effect of th e a ltern a tive m a rketin 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 prim a ry da ta on prices a n d qu a n tity, collected from growers payment sheets s u pplied by Mother Dairy centers from 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 dis trict in Haryana. Th e wh oles a le prices for res pective vegeta bles were collected from th e records of th e Ma rketin g Com m ittee of th e n ea res t m a rket. Th e m a rketin g cos t da ta was collected from fa rm ers du rin g th e prim 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 bility 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. 11 P a g e

12 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 tion a l Da iry Developm en t Boa rd (NDDB) s ta rted in 1985 a s a n orga n ized reta il ch a in of fru its a n d vegetables in In dia. 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 ort s pa n of tim 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 procu res s ea s on a l item s of fru its a n d vegeta ble from over 17 s ta tes in In dia. Arou n d 22,000 s m a ll and big farmers a re s u pplyin g th eir produ ce to MD wh ich a re directly lin ked to it a t u pstrea 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 procu red fru its & vegeta bles. Th e dis tribu tion centres a t Pa lla ba kh ta va rpu r a n d Ma n golpu ri 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 pstrea m MD opera tes th rou gh procu rem en t cen ters spread a cros s th e cou n try to procu re fres h a n d qu a lity vegeta ble from growers. Th e loca lly produ ced top qu a lity vegeta bles a n d fru its a re procu red a t remunerative prices from th e fa rm ers. Fa rm ers As s ocia tion 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 ible for th e en tire a rra n gem en t of procu rem en t a n d record m a in ten a n ce, is a ppoin ted by MD. Secreta ry is en titled to get s a la ry for h is s ervices a t procu rem en t cen tre. Ma jor cos ts incurred during procu rem en t s u ch a s pa ym en t of s a la ries to secretary, helper, safai ka ra m ch a ri 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 tion s fu n ds. Th ese fu n ds a re gen era ted from th e con tribu tion of th e 1.75 per cen t of th e tota l va lu e of procured qu a n tity from th e cen tre. All th es e cos ts in clu din g the transportation a n d h a n d lin g ch a rges in clu din g th e m a rket fee a re dedu cted from th e growers price. The price 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 brin g th eir vegeta bles to th e procu rem en t cen tre on da ily ba s is a n d a fter pa cka gin g a n d weigh tin g, th es e a re tra n s ported to th e 12 P a g e

13 distribution centre of MD every evening. During procurement special care is ta ken by th e s ta ff a t procu rem en t cen tre to en s u re th a t th e procu rem en t m eets th e qu a lity n orm s of MD. Res t of produ ct is retu rn ed to th e fa rm ers to be dis pos ed of by th em a t th e n ea res t Ma n di. Mandi, th erefore, fa ces a n a dvers e s election a s th e produ cts brou gh t a re in a wa y rejects of MD. Bes ides a los s in term s of th e prices, fa rm ers a re requ ired to in cu r expen ditu re on tra n s porta tion a n d m a rketin g. It a ls o in volves s pen din g a m in im u m of th ree to fou r h ou rs a n d h a ve a n opportu n ity cos t. 11. MD does n ot lift th e en tire qu a n tity produ 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 procu rem en t. MD in form s th e s ecreta ry of its 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 tity procu red by MD on d a ily ba s is, particularly during th e pea k tim e of s ea s on in term s of th e produ ce, is les s th a n th e total produce of the day. Consequently only a part of the farmers produce is procu red and n ot th e wh ole produ ce, in depen den t of its qu a lity. Bein g in th e n a tu re of peris h a bles, th e vegeta ble ca n n ot be h old, th e exces s produce, therefore, a fter s u pply to MD, is s old in th e loca l Ma n di, (Annexure 2). 5.4 MD does n ot provide th e fa rm ers a n y credit or in pu t s u pport. Vegeta ble growers, wh o do n ot h a ve m a rket s u rplu s of food gra ins, depen d on com m is s ion a gen ts for m eetin g th eir credit 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), its a ffects th eir credit ra tin g. The farmers vis ited du rin g th e survey were requ es ted to give th eir opin ion on th e is s u e of difficu lties fa ced by th em in gettin g credit. It wa s observed th a t th e s m a ll fa rm ers wh o m os tly grow vegeta bles h a ve a rela tively grea ter depen den cy on com m is s ion a gen ts for credit a n d in pu ts a n d they are the worst affected. 5.5 The famers a ls o m en tion ed th a t th e qu oted price of th e s u pply is n ot kn own a t th e tim e of s u pply. It is on ly on th e n ext da y wh en th e ten ta tive prices are informed. Th e a ctu a l price 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 tity th a t h a s fin a lly been a ccepted is indicated on ly in th e grower pa ym en t s h eet, though ten ta tive qu a n tity a n d percen ta ge of rejection is in form ed to th e fa rm er on th e n ext da y of 11 IFPRI P a g e

14 th e s u pply. Th e pa ym en t made a fter ten da ys of th e s u pply th rou gh a bearer cheque. 5.6 Th e prices a re a little m ore u n certa in in MD th a n in Ma n di, in th e s en s e th a t in Ma n di th e prices a re kn own to th e fa rm er on th e s pot. Wh ile in MD, firs t th e produ cts a re s u pplied a n d on n ext da y prices a re told to farmers. Comparing with contract farming, in MD there is no price or qu a n tity con tra ct form a lized with fa rm er. Th e MD is n ot bou n d to procu re th e qu a n tity 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 pply 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 flexibility wh ich MD offers to fa rm ers is often is ris ky, pa rticu la rly 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 tion ed du rin g th e s u rvey th a t if th ey are in form ed of th e prices a t th e tim e of s u pply of th eir p rodu ce, th eir decis ion to s ell to MD or in a Ma n di cou ld be ba s ed on better information. Th e qu a lity con trol of MD was also reported to be of a s ign ifica n tly h igh er level a n d s trin gen t wh ich lea ves a s iza ble portion of produ ce to be m a rketed th rou gh th e Ma n di. Som e of th e fa rm ers a ls o informed th a t th e price told a t th e tim e of procu rem en t were h igh er th a n th e a ctu a l prices fin a lly pa id. Th ere wa s a ls o a gen era l observa tion th a t MD s procu rem en t wa s rela ted to th e p reva ilin g prices, declin in g du rin g th e period wh en prices were depres s ed a n d th a t a ccen tu a ted th e ris 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 written 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 tica ted and uses better tech n ology in clu din g a com pu ter to con s olida te procu rem en t in form a tion. Th e m a n power a t RF is better tra 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 tion. Th e procu rem en t term s and conditions of RF are simple and th ey give th e price in form a tion a n d a ccept or reject the qu a lity a n d qu a n tity a t th e s pot. Both, MD a n d RF procu re on ly bes t qu a lity produ 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. 14 P a g e

15 5.9 In th is con text of th e a bove a n a lys is of th e procu 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 better th a n th e Moth er Da iry procu rem en t con tra ct in term s of price in form a tion, qu a lity m on itorin g, m ode of pa ym en ts etc. Des pite th e com plexity of th e con tra ct of Moth er Da iry, it provides a rela tively better 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 pricin g policy is n ot ba s ed on th e loca l m a rket prices. The prices given to th e fa rm ers a re determ in ed on th e ba s is price qu ota tion 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 tra n s porta tion cos t, h a n dlin 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 etted 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 differen ce to th e tes t of coin tegra tion 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 price qu ota tion. Th e dis in tegra tion, if a n y, between th e MD a n d TM prices s im ply in dica 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 rin g price s ign a ls. To tes t m a rket in tegra tion th e res pective price s eries a re tes ted for s ta tion a ry. It is fou n d th a t a ll s eries a re n on -stationary a t level bu t in tegra ted a t firs t differen 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 Critica Carrot Lauki Green Chilli Onion Bhindi Tomato Musk Melon Cauliflower Th e s econ d s tep towa rds tes tin g co-in tegra tion is to ru n biva ria te co-in tegra tion tes t of En gle-granger. It is fou n d th a t except Green Ch illi 15 P a g e

16 Onion, and Musk Melon, the prices of local market are co-integrated with MD prices. Th e n on exis ten ce of price in tegra tion for th e green ch illi m a y be beca u s e it is n ot produ ced in la rge volu m e in th e villa ges of th e s tu dy areas. Non-in tegra tion of Onion prices 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 prices a re a ls o wea kly co-integrated with MD, though th e region produ ces it in good qu a n tity. TM prices 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 * 2 Yes Lauki * 2 Yes Green Chilli No Onion No Bhindi * 2 Yes Tomato * 2 Yes Musk Melon Weak Cauliflower * 2 Yes * Significant at 5% level, Critical value is Variation of Prices 6.3 Th e Sta n da rd Devia tion (SD) a n d Coefficien t of Va ria tion (CV) is u s ed a s a m ea s u re of th e prices va ria tion. Th e n et reven u e of th e MD is observed to be m ore vola tile for a ll th e vegeta bles except Bh in di a n d Tom a to wh ere a s the CV is es tim a ted to be les s in MD th a n TM. Th is is qu ite oppos ite to th e n otion th a t th e orga n ized reta il ch a in s will redu ce th e vola tility of prices for th e fa rm ers a n d con s equ en tly s ta bilize th e returns. (Table 4) Table: 4. Variability of Prices Vegetables TM MD 16 P a g e

17 SD CV (%) SD CV (%) Carrot Lauki Green Chilli Onion Bhindi # Tomato # Musk Melon Cauliflower *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, objective of a s eller is to m a xim ize his profits; with a n a u ction in g s ys tem to determ in e th e price in the market through com petitive biddin g, th e m arket equ ilibriu 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 tively s loped a n d th e s u pply 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 trou gh res pective ch a n ges in tota l reven u e. Th e qu es tion 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 where..(1) (2) Taking first derivative of R w.r.t. q 17 P a g e

18 ..(4) In th e s itu ation of profit m axim iz ing th e ch an ge in total revenue of th e farm er w ould be either 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 Th e equ ation (6) expla in s th e rela tion 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 price 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 price a n d qu a n tity are in oppos ite direction for a given ela s ticity of demand. The higher 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 relation betw een price ch an ges an d revenue ch anges at h igh elas ticity of d em an d vice vers a. At h igh ela s ticity of dem a n d, a declin e in price is more effective to increase revenue and at low elasticity of demand th e price in crea s e wou ld be a good s tra tegy for h a vin g a increa s e in tota l reven u e. For th e qu a n tity changes, th ere a re pos itive rela tion s between increase in revenue and the elasticity of demand. The increas e in qu an tity in th e m ark et at 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 at 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 agricultu re w h ere good crop s eas on m ay not be rem unerative 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 tion 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 ble m a rkets beca u s e of the n a tu re of com m odity a n d their 18 P a g e

19 yield pa ttern. Vegeta bles bein g th e peris h a bles in th e n a tu re requ ire s tora ge fa cilities to redu ce th e exten t of a fa ll in price. Als o th e s ea s on plays an im porta n t role in th e yield pa ttern of th e vegeta ble. Bes ides, th e s m a ll s ize of th e m a rket a n d dis in tegra tion in th e loca l m a rkets lea d to overrea ction of th e s u pply ch a n ges on th e reven u e a n d th rou gh price depres s ion s. Given th is inverse rela tion between qu a n tity in crea s e a n d the low in crea s e in reven u e a t low ela s ticity of dem a n d th ere a re m ora l h a za rd for th e produ cers. Th ere is n o in cen tive for th e fa rm ers to in crea s e th e produ ction 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 tity will a dd les s to th eir reven u e. This is a ll th e m ore tru e in ca s e of vegeta bles wh ere th e dem a n d is very inelastic. The low ela s ticity 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 dia. 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 tim a ted in th e followin g wa y. Let P ij price of i vegeta ble for j m a rketin g ch a n n el a n d Q ij is u n it of qu a n tity s u pplied of i vegeta ble to j m a rketin g ch a n n el. MC ij is th e per u n it m a rketin g cos t of th e i vegeta ble for j m a rketin g ch a n n el a n d R ij is th e ra te of rejection for i vegeta ble under j marketing channel. NP ij = P ij *(Q ij* R ij ) MC ij i = vegetable, j = marketing channel Th e rejection ra te is ca lcu la ted from th e fa rm er grower s h eets a n d th e m a rketin g cos t is ca lcu la ted from th e prim a ry da ta of field s u rvey. Applying rejection rate, R ij, to the quantity supplied we can get the actual quantity for which the price, P ij, 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 ble to eith er of m a rketin 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 rrot in Novem ber 2005, if th e Q1 qu a n tity 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 dition a l Ma rket on ly Rs. 192 for th e s a m e qu a n tity of ca rrot. Th erefore MD is a ddin g 16 per cen t m ore to th e reven u e of th e fa rm er for th e ca rrot in Novem ber Except 2007, in 2005 a n d 2006 th e MD h a s been a m ore rem u n era tive ch a n n el for ca rrot as compared to traditional market. 19 P a g e

20 Table: 6. Average Net Revenue of Traditional Market and MD Channel Vegetables Year Month Average Net Revenue MD (Rs.) Carrot 2005 Lauki Green Chilli Onion Bhindi 2006 Average Net Revenue TM Price (Rs.) MD Premium (%) Nov Dec Nov Dec Jan Jun Jul Aug Sep Oct May Jun Jul Aug Jun Aug Jun May Jun Jul Aug Sept Oct May Jun Tomato 2005 May Musk 2005 May Melon Jun Jul Cauliflower 2005 Nov Dec Jan Difference between Prices 6.9 A regres s ion equ a tion is u s ed to ch eck wh eth er th e differen ce between th e MD a n d tra dition a l m a rket prices is s ign ifica n t or n ot. Firs t th e differen ce between th e prices D in = P i1 -P i2 of a ltern a tive m a rketin g 20 P a g e

21 channels is calculated a n d th en to tes t th e s ign ifica n ce of th e differen ce between prices the following equation is specified: D in = a in + b in t + u in n = number of observations. Hypothesis tested are H: a in = 0 Ha: a in 0 Th e in tercept term (a ij ) in th e fu n ction will give th e differen ce in n et m a rketin g prices. If th e prices a re s ign ifica n tly differen t th en th e in tercept wou ld be s ign ifica n t. Th e res u lts given in ta ble-7 s h ow th a t th e MD prices a re s ign ifica n tly h igh er th a n th e tra dition a l m a rket prices for the vegetables except Cauliflower. Table: 7. Results of the above equation Vegetables a in b in t Carrot 93.7* 0.09 Lauki 270* -2.7* Chilli 111* Onion 131* Bhindi 222* Tomato 86* 1.77* Musk Melon 198* 0.26 Cauliflower -83* 4.02* Indirect Impact of the MD on Prices: 6.10 Th e direct procu 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 directly. Bein g a credible option for th e fa rm er to s ell its produ cts oth er th a n loca l m a rket, it redu ces th e depen den cy from th e tra dition a l m a rketin g ch a in s. Th e loca l m a rkets a re rela tively 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 rily res u lt in transfer of th e s u pplies quickly, 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 rriva ls m a y ca u s e s u bsta n tia l depres s ion in th e prices 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 direct procu rem en t th e qu a n tity wh ich is n ow procu red by it, th e en tire 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 21 P a g e

22 th is extra a rriva l on th e price cou ld h a ve h a d m odera tin g im pa ct on prices. To ca lcu la te th e in direct im pa ct of th e direct procu rem en t on th e loca l m a rket prices th e ela s ticity of th e price w.r.t. a rriva ls is ca lcu la ted (s ee ta ble). Us in g th is ela s ticity of price th e n et price 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 Lauki Green Cilli Onion Bhindi Tomato Musk Melon Cauliflower Us in g th e es tim a ted ela s ticity of prices of res pective i, it is ea s y to ca lcu la te th e n ew price wh ich wou ld h a ve been New P i1 if a ll th e produ ce of i vegeta ble (i.e. loca l m a rket a rriva l plu s direct procu rem en t) wou ld h a ve been s old in n ea res t m a rket. The New P 1 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 P i1 cannot be negative and more than P i1, as long as dinarr is pos itive: New P i1 = P i1 (1- e* dinarr) Wh ere P i1 is th e price in Rs. Per Qtls. of a vegeta ble in th e loca l m a rket, e, wh ich is ela s ticity of loca l m a rket price w.r.t. Arriva ls and dinarr is th e per cen t ch a n ge in th e Arriva ls. Th ere is s ign ifica n t in direct impact of the direct procurement on the local market prices. Interestingly th is ben efit is prim a rily 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 directly 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 rly indicates that the New P 1 would have been much lower than P CONCLUSION 7.1 Th e s u p ply ch a in efficien cy a n d in efficien cy im pa cts wh ole a gricu ltu re s ys tem. Th e tra dition a l m a rketin g ch a in s a re ch a ra cterized by high margins of the middlemen, low prices to the farmer, low elasticity 22 P a g e

23 of derived dem a n d, h u ge wa s ta ge of a gricu ltu re produ ce, etc. Th e n ew m a rketin g a rra n gem en ts s u ch a s farmers m a rket e.g. Apa n i Ma n di etc, con tra ct fa rm in g, a n d em ergen ce of d irect procu 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 gricu ltu re m a rketin g. However, th ere cou ld be prob lem s of exclu s ion of s m a ll fa rm ers, s h ort term view bein g ta ken by th e con tra ctin g com pa n y etc., in s titu tion a l reform s n eed to redu ce th e m u ltiple la yers of in term edia tion. Th e direct procu rem en t is s till geogra ph ica lly res tricted to th e h ot spots of th e vegeta ble produ 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 dition of th e procu rem en t con tra ct. Procu rem en t s ys tem a dopted by th e two a gen cies, MD a n d RF, suggest th a t th e a pproa ch a dopted by RF is m ore in form a tive in term s of price 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 ltiple a gen cies a n d a va riety of con tra ctin g a rra n gem en ts cou ld co-exist. Beca u s e des pite th e com p lexity of th e contract, MD still provides a rela tively better dea l to th e fa rm er a s compared to th e tra dition 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 tim 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 except Green Chilli, On ion a n d Mu s k Melon, th e prices of loca l m a rket a re cointegrated with MD prices. Th e n et reven u e of th e fa rm ers for s elected vegeta bles is fou n d on a n a vera ge 17 per cen t h igh er for ca rrot, 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 itive s pillovers a n d oth er in direct im pa cts on th e reven u e of th e fa rm ers of th e direct procu rem en t by MD. Th e in direct ben efits a re n ot con fin ed only to th os e s u pplyin g vegetables to MD, th es e ra th er get exten ded to a ll th os e fa rm ers s u pplyin g to loca l Ma n di or TM. In s h ort th e direct procu rem en t of th e MD h a s en h a n ced the fa rm ers revenue. *** 23 P a g e

24 8. BIBLIOGRAPHY 1. Rao,C.H.Ha n u m a n th a,(1971), Un certa in ty, En trepren eu rs h ip, An d Sh a recroppin g In In dia Journ al Of Political Econom y,vol-79, No-3,Pp 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 Stiglitz,J.E., (1974), In cen tive An d Ris k Sh a rin g In Sh a recroppin g Review Of Economic Studies, Vol- 41, Pp Ba rdh a n, P.K.,(Ma rch 1980), In terlockin g Fa ctor Ma rket An d Agra ria n Developm en t: A Review Of Is s u es, Oxford s Econom ic Papers, Vol-32, Pp 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 Critica 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 Agricultu re Economics, 57(2), Pp 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 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 ition Of Profita bility In Agricu ltu ra l In ves tm en ts, The Economic Journal, 103(416), Pp 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 pply Res pon s e An d Ma rketin g Problem s Of Fa rm er In Th e Hills, In dia n J ou rn a l Of Agricu ltu ra l Econ om ics, 52(1), Pp 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 dia n J ou rn a l Of Agricu ltu ra l Marketing,2(1). 11. Ach a rya, S.S. (2001), Dom es tic Agricu ltu ra l Ma rketin g Policies, In cen tives An d In tegra tion, In S.S. Ach a rya An d D.P. Ch a u dh ry (Eds.) In dia n Agricu ltu ra l Policy At Cros s Roa ds, New Delh i Ra va t Publications. 24 P a g e