Friday, February 24, 2012

Trader v.s Consumer

I strongly feel that there are more consumers in this world than manufacturers, producers and traders of goods. I have argues against the coconut farmers' lobby in Kerala that seeks higher price for coconuts, and thereby for oil and dare produce spurious "scientific" evidence in support of coconut oil's suitability for consumption by heart patients. Their latest invention is its use as a cure for Alzheimer's! I detest these propaganda. I am a consumer of coconut and its oil and I want it available to me at affordable prices. I also want rubber products like hawai slippers, and tyres cheaper whenever I need to buy them. And I am in the majority, and as someone who lives in a democracy, I believe in the number game. The political party I support loses the elections when some other party wins an additional vote. And how I have hated the well-heeled and the so-called intelligentsia sitting at home watching movies and eating chips when the scum of the earth queue-up and vote to the wretched people in other parties!

I have always tried to buy the stuff I need from large stores because they always gave me what is called the "consumer satisfaction". In Thiruvananthapuram I always bought most of the stuff my household needed from the Spencer's. In Kodungallur I bought from Reliance(Paravoor/Irinjalakuda),or the now-closed-down Varkeys, or the MCP in Irinjalakuda. It was a pleasure seeing the neatly arranged stuff, the polite attendants, and the better prices. When I moved in to Pune, I have larger malls to buy an infinite variety of goods at attractive "offer" prices everyday. I go to the Phoenix Market City, I go to the D-Mart, the Spencer's (which is a small shop compared to the others!) the Pune Central Mall, and newest and the nearest to us, the Reliance Mart. The last-names is my current favourite for its low prices and the quality of goods, particularly fruits and vegetables. We buy Kinley drinking water in 25 ltre cans at Rs.90 from a small retailer close to our house, and my wife feels that since they give us the essential water, we need to humout them buying some other stuff, and orders some. We got tomatoes the other day for Rs.20/kg from this small outfit. At the reliance it cost Rs.14 that day. I made it a habit to check prices for comparison, and tried to convince my wife that we are being ripped off by the petty shopkeeper. While I have no love lost for the Ambani family, I love bargain prices and quality goods. The fuits you by from Reliance mart are clean, better, and cheaper. In the local 'mandi' papaya sells for Rs.40/kg, and I pay Rs.16 at the Ambani place! I cannot love the petty shopkeeper who fleeces me, even if he cannot afford the "economies of scale" and the smarter supply chain available to the large retail chains. I am a retired man, not even a pensioner in the "pensioners\ paradise" that is Pune. I always wanted Wal-Mart and other huge retailers to come to India. Their entry, I believe would implove the supply chain infrastructure or producers and retailers, remove the intermediaries from the scence, farmers and other producers will have huge potential for improving their vocation, and consumers like me will have "Always low prices, always". I AM NOT ASHAMES OF IT.
Now, for those who understand how it works for the farmers, I give below a study. of which I took notes:
  A recent (2012 Feb 3rd week report) study by Pune’s prestigious Gokhala Institute of Politics and Economics (GIPE) found that farmeeers selling directly to the retailers earned 9% to 75% higher prices than they get from selling through the traditional marketing channels(TMCs) such as the State Agricultural Produce Markeing Committee set up by all states to regulate markeing of agricultural produce. Maharashtra had amended the APMC Act in 1963 to allow direct markeing, and also private markets, farmer co-operatives and corporate entry in the fielfd. The study conducted by a team headed bu Sangeeta Shroff of GIPE’s Agro-Economic Research Centre, in Nashik district, a major grower of Pomegranate and onion, researched the gamut of supply chain impacting the emerging market channels (EMCs) as well as TMCs collecting primary data from farmers. The study found that Onion farmers incurred a cost of Rs.74.94 while selling through TMC on received price of Rs.711/Quintal or net income of Rs.636.06 whereas selling through EMCs the net income per quintal was Rs.694 though the gross price was less than that obtained in auctions. THE TMC price is higher because the onions are sold the post-harvest glut where as in the EMC route farmers sell the entire produce immediately after the harvest. In the case of Pomegranates, the producers pay a marketing cost of Rs.330 per quintal plus agency commission of 8% on a receipt of net price Rs.3489/quintal. In sales through EMCs the sale price was Rs.6100/quintal which is 75% higher! Besied, for every quintal of onions sold through TMCs farmer lost 25Kg while loss is only 5Kg while transacting business through EMCs, becaue the latter’s better storage facilities. Better packing and transporting reduces decay of pomegranates too sonsiderably. The study found that overall waste of farm produce in sales through TMCs is 15-50 per cent! Farmer collection centres of Retail business picks up produce saving transport costs to the farmer. 

I always believed that large retailers like the Walmart or even our own Reliance will serve the manufacturers and farmers better by lifting their produce at their premises and pay a decent price for the quality they expect. This will eventually generate better manufacturing/producing practices that eventually enrich the society in general besides providing the various economies. When Mayawati government ordered closure of Reliance Marts, I heard farmers complaining to TV cameras that they could sell their produce at the farms, and get decent prices and  also look forward to repeat orders. Poor formers who could not invest themselves to cultivate their lands had the opportunity to become contract farmers and earn a good living. But the politics of a certain variety that protects the intermediaries and petty traders and ignores the plight of the farmers make the stupid decisions. though the farmers are in larger numbers, they are misled by bogus propaganda and are denied fruits of their labour.

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