INTEGRATED VALUE CHAIN: ENVISAGED IMPACTS

Illustrative value chains have been included here to compare pre and post intervention scenarios and key impacts are discussed. Some impacts may be more universal over the different product value chains where some are more pronounced in particular chains. The key emerging impacts resulting from the proposed interventions are expected to include but not be

limited to the following:

Shortening of the existing value chain through the reduced number of intermediaries thereby reducing the margins earlier appropriated at those levels

Systems, effeciencies and infrastructure (at spoke and hub, and transport related) to effectively reduce wastages up to more than 50% (in several cases) and ensure greater value realisation. This would also contribute to an overall reduction in moisture loss,

DANISH JAVED & ASSICIATES Page 66 thus minimising quality(and value) loss.

Farmers could eventually get up to 20% higher farm gate-prices resulting from the above cumulative impacts: shortening the value chain, fewer players, pre-harvest contractors replaced by spokes, improved infrastructure, reduced wastages and

improved awareness and enhanced capacities/skills

Further along the value chain, reduced losses add to the margins at wholesale and retail levels and ensure better quality

Higher price realisation all along the value chain due to improved handling packaging and storing.

31.1.1 Illustrative Example: Pomegranate Value Chain

Value chains for pomegranate both as it exists today and the proposed value chain, after the interventions have been shown below to highlight the impacts envisaged.

Pre‐intervention :

DANISH JAVED & ASSICIATES Page 67 After the suggested interventions, pomegranate value chain will have reduced level of intermediaries. If we compare the existing and proposed value chains, there is a possibility of reducing wastages up to more than 50%. Since pomegranate has a hard outer rind, most of the losses are on account of moisture loss during transit. Better packaging and faster evacuation will ensure reduction in moisture loss to a large extent. The new value chain of pomegranate after the proposed interventions will be as shown in the figure.

The new value chain can offer the farmers a 20% higher farm gate price for their produce on account of savings on mandi tax and commission agent‟s fee and still can keep the ex-spoke price at Rs. 50, which is the trader‟s price in the existing value chain. Reduced losses would indirectly add to the margins at wholesale and retail levels. If we keep the wholesaler and

retailer price at same levels as the existing one, 5-10 % discounts can be offered to the consumer from the current price apart from delivering a better quality produce.

31.2 KEY OVERALL IMPACTS

In addition to the specific impacts discussed through the illustrative examples, the following are also envisaged, as spin-offs of the project and its direct benefits:

Farm level improvements

It is envisaged that there is likely to be an increase in productivity as a result of adoption of better technology, facilitated by better monetary margins and, increased awareness of farmers through capacity building, as also through an improved understanding of the market demand. This will be aided by improvement in farm level infrastructure and improved farmer skill levels. The capacity building initiative will, under the project train 19,500 farmers on aspects relating to this project simultaneously putting into place systems to carry on the training process beyond the project period and forming linkages with relevant resource persons and groups.

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Market driven farming

Over the years, farming is likely to become even more market-driven as stakeholders along the value chain get better integrated and farmers are more in tune with market demands. This will also lead to more diversification which is responsive to market demand. In turn, this will contribute to better price realisations for the farmer as well as players along the value chain.

Market level improvements:

Improvements at market level are also envisaged along with improved systems and effeciencies. Even as farmers will have better negotiating powers to through the proposed system of spokes and collection centres, this will also induce more

competition and have a spin-off effect on other markets in the wider region. This system would have helped in the creation of another channel for marketing agri-produce leading to a healthy competition and improvements in the sector.

Price discovery

Connected to the aspect of market level improvements and greater responsiveness of farmers, it is the price discovery mechanism that will be the catalyst in bringing about greater transparency in information flow and transactions with improved systems, keeping the farmers better informed. This is an essential impact that will have a much larger spin off in terms of decision making, responsiveness and eventually overall effeciencies.

Institution building:

This project is envisaged to contribute directly to institution building, starting with farmers groups and ultimately leading to producer companies which in turn lead to better market access and need-based improvements in the sector, greater stakeholder participation in the sector and development processes overall. Institution building has other ramifications as well which will lead to contractual or more formal agreements

DANISH JAVED & ASSICIATES Page 69 between players, in turn helping to form a stronger supply chain. Special women-farmer groups are also proposed for group formation and capacity building. With adequate support and response from stakeholders, this has the opportunity to be

mainstreamed and come to represent them as an interest group. In the longer term, greater professionalization of the sector through its institutions will also lead to risk reduction on both sides- farmers and market end.

Contribution to exports

Improved quality produce from the region over time will contribute to export- based on improvements in quantity and quality, again bringing greater value realisation.

Sector improvement

The cumulative effect of the impacts discussed here is likely to catalyse investment in the agri-infrastructure sector over the longer term and make it more financially

sustainable.

Overall Economic Development

Overall economic development better human development indicators are envisaged for the project area in the long run. As a result of the project, and as discussed in the section on economic analysis of the project, incremental economic benefits including savings from wastage reduction and employment generation have been estimated.