In this article we will discuss about the marketing process for mangoes in various states of India.
Marketing of Mangoes in Andhra Pradesh:
The major commercial varieties of mango marketed in Andhra Pradesh are Banganapalli, Neelam, Tota Purii, Subarna Rekha.
Marketing Channels for Mango:
Based on the discussion with the farmers, traders and representatives of processing units, it was observed that mango reaches to the consumers through four channels.
From the grower, mango reaches the export destination through any of these four channels:
The orchard owner leases out his orchard as per contract to the PHCs. Both the parties agree to abide by the terms and conditions stipulated at the time of agreement (which is almost invariably oral in nature). The PHCs visit the mango orchards just after the mango harvesting season (during August/ September) to survey the orchards.
On completion of the survey, the negotiation takes place between the grower and contractor. These contractors also take up the works of required input application to the leased in orchards including plant protection to obtain optimum fruit yield. PHCs after harvesting mango sell it in the open market or to processing units like a grower who under takes self-marketing.
Many traders from neighbouring states visit mango markets in Chittor and Krishna districts during mango season. Traders from Bangalore, Chennai, Mumbai, New Delhi, Kolkata, Nagpur, Jaipur, Ahmedabad and Hyderabad participate in mango trading in Chittor and Krishna districts. UCTs visit mango orchards during the months of January, February and survey the orchards at flowering stage and estimate the output for the forth coming harvesting season.
Based upon the estimation, UCTs fixed the prices for the purchase of mango production from the orchard owners. Unlike the PHCs, the UCTs do not undertake maintenance of the farm. Under an informal agreement, UCTs pays an advance (10-20 %) to the orchard owners. The price is settled before the harvest and payment is made soon after the completion of marketing.
c. Mango Processing Units:
The mango processing activity in Chittor district commenced during 1965 with enterprising fruit merchants, M/S Haneef and Sattar, setting up a small unit named HANSTAR, at Damalcheru to extract mango pulp which worked for few years only. A more organized was to words the growth of the cluster was initiated by the prominent mango grower Late Subramanya Reddy who established M/S India Canning Industries, the first merchandised fruit processing unit.
However, no new units were commissioned during the period 1971-80. Thereafter mango pulp units were formed at a frequent interval.
The processors purchase mango for production of pulp from traders as well as mango growers. Totapuri mangoes are mainly used for preparing pulp because of its pulp- yielding rate. The processors reach the mango orchards, testify the quality, determine the price and offer advances to the growers. As the pulp content depends upon the quality, processors insist on sorting and grading of mangoes and prices are determined accordingly. Processing units purchase mangoes from market yards as they are assured of large quantities to run the unit continuously till the mango season is over.
d. Village Trader (VT)/Commission Agent (CA):
About 60 per cent of mango growers transact through village trader/commission agent (VT/CA). VTs often provide advance to the farmer with the condition that grower has to sell his produce to them. They resell mangoes to UCTs/retailers. But VT collects 10 per cent of volume of trade amount towards commission charges. If due to any unforeseen situation (Pests, cyclones etc.) the growers fail to settle the advance, the same gets adjusted from the next year sale proceeds. However, inadequate information of prices and lack of weighting facilities are a few limitations of these channels.
Over all, mango reaches to the consumers through five different channels (Table 7.1). However, it is very difficult to come out with a clear cut demarcation of channels as some PHCs also act as CAs, some CAs act as traders. They themselves also act as local whole sellers. Many of the CAs / traders are also mango orchard owners and contribute substantially to the mango production.
Discussions with the different players in the market revealed the following types of marketing channels:
Mango Market Yards in Chittor and Krishna Districts:
Mango production in Chittor district arrives to five different market yards. They are Chittor, Damancheruvu, Bangarupalem, Tirupatti, and Puttur. In Krishna district mango production mostly arrives to Nunna MY in Vijayawada. In Chittor market yard varieties of mango arrive. The commission agents facilitate the trade between the mango farmers and purchasers. Putur market yard handles smaller quantities of mango.
As it lies on the Tirupathti-Chennai Highway, mango production reaches either Tirupati or Chennai from the mango orchards directly. In Tirupati market yard, three varieties (Bangana Palli, Tota Puri, and Neelam) of mangoes are being traded.
The arrivals of mangoes are mainly from outside the notified area such as Putur, Nagari, Kodur (Kapada district). Damalacheruvu market yard, one of the oldest private market yards in Chittor district, consists of about 100 mandies. It is an open market and no action takes place. Mangoes arrive from Vellore, Kuppam and all the mondals of the district.
The traders from far off place like Delhi, Kolkata, Raipur, Ahmadabad, Nagpur, Mumbai, Bangalore, visit this market yard for buying mangoes. The command area of Bangarupalyam market yard covers four mandals. It covers 77 villages consisting of about 1000 mango growers. The arrivals of mangoes are from the command area.
The Nunna market yard under Golapudi AMC near Vijaywada consists of 81 shops. Every year about 7,000 to 8,000 trucks each containing 10-11 metric ton mangoes are being exported in different parts of the country mainly in Azadpur mandi of Delhi. Traders in this market yards also provide finance to the farmers. Major varieties of mango, i.e. Benishan, Totapuri etc. are coming to Nunna MY. About 15 to 20 per cent of Totapuri mango comes to this market and the rest is sold in the orchard itself.
Maharashtra, Gujarat, and West Bengal use this for picking in the early season. About 70 per cent of mangoes are exported to other states and rest 30 per cent is sold to local traders. Traders from Maharashtra, Gujarat, West Bengal visit Nunna MY and take advantage of early season pickling, when the prices remain usually high.
Market Arrivals and Prices of Mango:
The continuous drought conditions in Chittor district during the last four years had hampered the arrival of major agricultural produce in the market yard. Further, production of mango fluctuates due to alternate bearing nature of the crop, which affects the market arrival as well. Absence of effective marketing linkages also hampers the mango arrival to various market yards. Growers prefer to sell directly to processing units, local/ outside whole sellers.
Mango prices vary a great deal from year to year, depending upon each year’s total production and various other factors like the prevailing prices, demand, transport, marketing facilities etc. Whole sale prices of mango also vary considerably based on the supply / demand of particular varieties, periods of availability, weather condition; variety quality etc. Daily arrivals have also a direct bearing on the prices.
Thus, the fluctuations in prices are of an irregular pattern. Ordinarily, the prices are high at the commencement of the season. They start declining gradually as the supplies increase. Later on, when the arrivals decrease, they tend to recover and reach a high level again before the close of the season.
Role of UP Country Traders in Price Fixation:
The field study revealed that UCTs obtain supply prospects of mango from the village and supply to the terminal markets. UCTs acting as traders, also determine prices at the village level and at the terminal markets. In fact, daily price depends upon visit to number of UCTs in the village and market yard every day. If number of UCTs is large, mango price is reported to be high arid vice versa.
Thus, influence of UCTs is high on prices than the local traders. Mango growers’ mostly small and marginal farmers are unaware of the final price of their produce, which they sell to the traders. Farmers feel cheated as traders garner higher margin.
However, as UCTs facilitate selling of mangoes on the farm itself, small farmers those who do not have their own transport are greatly benefited. If UCTs purchase from the market, UCTs engage in financial links with mandi owners (Traders). Traders borrow from UCTs before the mango season to meet working capital requirement and the account is settled in installments or at the season.
After the purchase from the farmers or market depending upon the distance, transport arrangements are made by the UCT. Around 400 trucks take mango to UP country markets every day during the season (April-May) from Nuzivid mandal of Krishna district. About 40-45 rakes are exported in a year from this station (One rack= 40 wagons x 26 MT = 1040 MT). Similarly, about 100 trucks leave from Damancheruvu market yard in Chittor to different places in North India.
Role of Commission Agents:
The commission agents (CAs) are the most important link in the marketing of mango controlling about two- thirds of the total markets. These CAs also act as grower cum trader and facilitate the trade between the mango grower and UCTs.
The study revealed that the purchasers normally pay Rs. 60 for loading/ unloading/grading of mangoes to CAs. They are required to pay 1 per cent of the turn over as market fee to the AMC and 4 per cent of the turnover as commission to the CAs. The CA collects the market fee from purchasers on behalf of the AMC. For this purpose the AMC provides receipts to the CAs.
CAs, who are also traders, avail Secured Over Draft (SOD) from banks and utilize the same in lending to mango farmers for consumption/ production purpose (@24 per cent interest per annum). The amount of advance is decided on several factors such as areas under mango, expected production, past track record of the mango supply to the CAs etc. After harvest of mangoes, farmers sell mangoes to the CAs and 10 per cent of the sale proceeds as commission charges.
Price spread is the difference between the retail price paid by the consumer and the price received by the farmer/ producer for same quantity of the produce. Price spread in marketing of mango is analyzed by following the product movement in from the mango grower to the consumer. Various costs (particularly marketing costs) and margins together with the farm gate price constitute the consumer price of mango.
It is a fact that there is a direct relationship between the consumer price and the length of the marketing channel. In other words, the consumer price is the lowest when marketing is the shortest, i.e. when the mango grower directly sells to the consumers. However, the magnitude of sale takes place through the direct channel was negligible. In the absence of direct linkage between mango grower and the consumer, it is the middle men alone who have been taking the advantage of the situation.
An indicator of the efficiency of any supply chain is the extent of price spread between producer and consumer. A high price spread would indicate a lower efficiency. Conversely, a low level of price spread would denote a high efficiency of the supply chain mechanism. Producer’s share in the consumer price is high when the marketing efficiency is high.
The marketing margin as percentage of consumer minus producer price difference is a measure of efficiency of the marketing channel. High per cent indicates low efficiency and vice versa.
The Producer’s share in consumer price and market margins as percentage of consumer minus producer price differentials in various channels of marketing of mangoes is furnished in table below:
Marketing of Mangoes in Maharashtra:
Marketing Channels for Alphonso Mango:
The majority of farmers of Sindhudurg send their mangoes through transporter to the commission agents at Vashi and Pune, who market on behalf of the farmers. The sale price, total amount payable, and various deductions like transportation charges, commission (8 % in Pune and 10% in Vashi), loading and unloading (up to 5 per cent) are immediately conveyed to the farmers through a receipt known as Patti. Some commission agents used to deduct the postage charges for forwarding the Patti to the farmers.
A few farmers, who are not tied up with commission agents, send their mangoes to other markets where prices are higher. A few enterprising farmers were directly selling a part of their produces through their contact at Mumbai, Nasik and Pune. These channels fetched maximum price to the farmers. Local sales from the orchards were limited from the left out mangoes, which are sold directly to the processors towards the end of June.
The average sale pattern through the channels for the sample farms during 2005-06 is indicated in the Table7.3 below:
Marketing Cost and Average Price Realized by Farmers:
An attempt has been made to examine the share of mango farmers in the price paid by the consumer.
Details are depicted in table below:
The weighted average cost of maintenance and marketing of the produce of a tree come to Rs. 357 and Rs. 507 respectively. The mango grower realizes a minimal surplus of Rs. 12 per kg. This is primarily because of the unusually high expenditure incurred in marketing of the produce.
The expenditure incurred for production and marketing of one kg of Alphonso mango and percentage share to each item of expenditure are shown in Table 7.5:
The above data reveals that the marketing expenditure is considerably more than the annual maintenance cost of tree. There is hardly any scope for reduction in cost under ‘Production Cost’ and ‘Cost of Peti’, ‘Packing Charges’ etc. In view of the fact that Alphonso mango needs to be marketed at distance places, existing packaging process is most suitable and cost effective. However, if the mangoes are marked locally, the cost on packaging can be substantially reduced.
Further, the transportation cost can be minimized by opening marketing centers in the locality/district headquarters. Similarly, the cost towards Commission, and Hamali etc., which accounts for 13.57 per cent of price realized in sale of 1 kg of Alphonso mango, can also be reduced if the produce is marketed locally, as commission, as high as 10 per cent is being charged by Commission Agents in urban marketing centers of APMC, Vashi. Therefore, provision of marketing outlets locally is pertinent in order to increase the share of the primary grower in the ultimate price paid by the consumers.
Role of Transport Operators (TOs) and Commission Agents (CAs) in Marketing:
The commissions Agents (CA) cum Wholesalers (WS) normally lift the produce from the mango growers through local transport operator. The wholesalers (WSs) also operate in the field through sub agents. On receiving the ‘Pettis’ of mango from the mango grower, the CA determines the per Petti price through open Auction or through the nontransparent rumali system. On the basis of the price so determined, the CAs issue patties to the grower.
A Patti indicates the amount payable to the farmer with details such as cost of the mangoes and deduction towards transportation. Agent’s commission, Hamali (Mazdoor) charges, octorai, Tapal Charge (Postage) etc. The commission was 10 per cent in vashi and 08 per cent in Pune and other markets during the period of study.
a. Transport Operators:
A transport Agent at Vengurle, Sindhudurg is in the business of collecting mangoes and sending them to traders on a commission for the last forty years. During 2004-05, he had transported 1, 35,000 Pettis (2025MT) to Mumbai and 30, 3000 Pettis (450MT) to Belgaon. Similarly, during 2005-06, he had sent 1, 25,000 Pettis (1875 MT) to Mumbai and 25,000 Pettis (375MT) to Belgaon in Karnataka. The transporter normally, sends the Pettis to Vashi market in truck loads.
However, if the Pettis collected are less than a truck load, the stock is sent by bus or train. The transportation charges during 2005-06 came to around Rs. 5 per petti, which included truck charges of Rs. 25-32 , labor charges for loading and unloading, and handling charges in the godown, toll charges and miscellaneous charges including administrative charges of the transporter. There are number of such transporter throughout the district.
b. Commission Agents (CAs):
The CA has their offices in mandis/ market places. In majority of the cases these agents arrange to transport mango Pettis from the orchard to the market place .The CAs start paying advances to the mango growers in November and December to enable growers to carry out various farming operations. Such advance payments range between 10 and 30/40 per cent of anticipated value of production, which in turn is arrived at on the basis of average production of last 5-10 years.
Some commission agents do not make advance payments as there is possibility that farmers might sell the produce in cash to an agent other than from advance is received. In most of the cases the CAs have developed cordial relation with the farmers over the years and take advantage of these trust to lift the produce on a continuous basis. The Agents often encash the relationship and make a little advance payments to win over the farmers.
The advance paid to the farmers prior to the production is not adjusted against the sale price of mango at the time to final settlement of account (Pettis) with the farmers in the month of June. The CA was not ready to reveal their margin. The strong linkages between marketing and credit (advance payments) are clearly visible in the study area. However, their relationship is weakening with increase of Kisan Credit Card (KCC) and awareness of the farmers about other markets as reported by some of the CAs and farmers.
Due to the presence of Commission Agents (CA) and Wholesaler (WSs,) and retailers, the cost of production get multiplied and the burden is ultimately borne by the consumer, in the form of higher prices. Similarly, this increased expenditure on the items of marketing, other than production, also resulted in the reduction of producer’s share in consumer’s price.
In table 7.5 the per cent share of expenditure in the price of 1 kg of mango paid by the consumer is 26.17 per cent under production cost, 9.83 per cent towards cost of packing, 10.43 per cent towards transportation and 13.57 per cent towards commission and hamali charges, thus leaving 40 per cent of the consumer price towards share of the farmers. It is entirely the producer’s surplus as the cost of production is already taken into account.
The percentage spread being 20, marketing efficiency is low. The marketing efficiency can be increased by reducing the interference on the commission agents, thereby lowering the intermediate cost.
Arrival and Prices of Kesar Mangoes in Aurangabad:
The commission agents and traders charge commission for marketing the produce. There is no standard procedure for charging commission. However, in APMC markets, there are approved rate for charging commission by agents. Farmers were spending about Rs. 3, on an average, for marketing one petti of Kesar mango in Aurangabad Market.
Arrival and Prices of Kesar Mangoes in Aurangabad petti is presented in table below:
It is observed from table above that there is substantial increase in the modal prices during 2006. Modal price is the price in a distribution that occurs most frequently.
Marketing Cost and Average Price Realized by Farmers in Kesar Mango in Aurangabad:
Weighted average costs for annual maintenance and marketing of the produce of a tree has been arrived at Rs. 337 and Rs 495 respectively (table 7.7). The mango grower realizes a net income of Rs. 13 per kg, which includes cost of own labor and supervision.
The details of expenses incurred and income derived by the farmers are critically analyzed in the table below:
The expenditure towards annual maintenance in case of Kesar mango tree is less than that of Alphonso mango tree. The average annual maintenance for Kesar mango tree is Rs. 337 as against Rs. 628 for an Alphonso tree. Further, marketing cost in respect of Kesar mango at Rs. 19 per petti of 2.5 kg i.e. Rs. 8 per kg is much less in comparison to that of Alphonso mango at Rs. 162 per petti of 16 kg i.e. Rs. 10 per kg. However, due to variation in yield, the Kesar mango growers get the net surplus of Rs. 13 per kg whereas the same in respect of Alphonso mango was Rs. 12 per kg.
Marketing Expenses and their Share in the Price of One Kg of Alphonso Mango:
The expenditure incurred for production and marketing of one kg of Kesar mango and percentage share of each item of expenditure are shown in Table 7.8:
The above table indicates that marketing expenses is almost one and half times more than the annual maintenance cost of tree. There is hardly any scope for reduction under ‘Production Cost’ and ‘Cost of Petti’, ‘Packing Charges’ etc. However, the transport can be minimized by opening market centers in the locality or district headquarters. Therefore, provision of marketing outlets locally may increase the share of the primary grower in the ultimate sale price.
Relationship between Prices and Arrivals of Mango:
The mango produced in the state is mainly marketed in urban centers i.e. Vashi, Pune, Nasik, Nagpur and Aurangabad. Besides, it is being marketed in Surat, Bangalore and Hyderabad. Mango in the state is mostly harvested and marketed during March to July. The trend in price of mango is simply reflective of its market arrivals, which in turn entirely depends on plucking of manufactured fruits from the trees as mango has a very short shelf life.
The correlation and regression analysis has been drawn to establish relationship between the prices of mango in some of the markets in Maharashtra and arrivals. This relationship was exiled for major markets of Aurangabad and Kolhapur for which reliable and comparable data are available on daily basis. Daily basis data were considered more relevant than aggregated weekly and monthly data. The daily data on peak season (March to May) are taken into account for the three years 2004, 2005 and 2006.
In Aurangabad, Kesar variety of mango is grown and in Kolhapur division mainly Alphonso is grown. This comparison also is based on the ground level prices and arrivals of Alphonso and Kesar mango. As these are the major representative markets, the trends and conclusions are more or less applicable to the rest of the markets of Maharashtra.
The results are given in the table below:
In case of Aurangabad market, the regression coefficient of price is negative and significant in 2005 and 2006 while it was positive but not significant in 2004. In Kolhapur market, the regression coefficient of price is negative in 2004, 2005 and 2006 though it was significant in 2004 only. Hence, these estimated equations largely substantiate the inverse relationship between arrivals and price. They move in the opposite direction. In the event of more arrival there is a fall in market price. During the study it was gathered that farmers try to disperse supply and realize higher prices in different markets.
Marketing of Mangoes in West Bengal:
The wholesale price of mangoes in Malda, West Bengal varies considerably because of prevalence of various factors. There is no uniform pattern for price quotations. Thus the sale of mangoes, both in wholesale and retail trade, varies from place to place causing great confusion for comparing prices in different markets. However, attempt has been made to record the maximum and minimum price of different varieties of mango in Malda during 2004 to 06.
It revealed that Amrapali fetched highest price at Rs. 1500 per quintal followed by Himsagar at Rs. 1,300 per quintal, Langra at Rs. 1,200 per quintal and Laxman / Gopalbhog Rs. 1,000 per quintal during 2004. Price realized for Amrapali mango, however, reduced to Rs. 1,300 per quintal in 2005 and 2006. The same trend was noticed in other varieties also.