In this article we will discuss about the Supply Chain Management (SCM) and credit support given for mangoes in India.
Supply Chain Management (SCM) for Mangoes:
Supply Chain System (SCS) for mangoes covers a balanced and efficient relationship encompassing input supply, production, harvesting, storage, processing, marketing export etc. of mangoes. It also manages such relationship in a collaborative and efficient manner to garner optimum benefit. Out of it for all the players are in the chain.
Considering the existing production of mango and mango pulp as well as future potential for facilitating supply chain management, the AEZs for mango and mango pulp were notified in 2002.However, there is no significant development in linkages, both back ward and forward and no breakthrough in developing quantity standard and post-harvest management for furthering exports. Number of mango pulp making units, production of mango pulp as also export of fresh mango and pulp have picked up in Chittor AEZ.
However, the infrastructure in terms of post-harvest facilities likes pack-houses, cold storages, etc. have not come up to exploit the potential. In mango AEZ in Krishna district, as against the target of 25 pack-houses only two have come up. Only one post-harvest facility is available at AMC, Vijaywada (Gollapudi). Export of fresh mango from Krishna district has always been below 500MT per annum. Currently, export of mango by air is in passenger air craft, due to which the freight charges are very high.
There are mango growers’ cooperative organizations and they have not been able to plan an organized production and marketing system. They have also not been able to reduce the marketing channels. These channels are so long increasing the margins to the middle men and thus aggravating marketing efficiency. In order to facilitate the SCM, the Govt. of Andhra Pradesh had sanctioned a scheme for promotion of export of mangoes through mango growers Cooperative Organizations’.
As a part of the scheme, a cold storage plant was set up in 1993 as ‘Post-Harvest Temperature Management Scheme’ at AMC, Vijaywada. Exports were taken up under the management of Marketing Department during the initial years through reefer container by sea and air.
However, the progress in export front was not that encouraging shown in Table. 11.1:
The AMC Vijaywada was charging nominal service charges from exporters. The unit has the facilities of one cold storage plant with 20 MT capacities, two pre-cooling units each with a capacity of 20MT.
Vijaya Association of Fruits and Vegetable Growers, consisting of 230 members in Vijaywada, have been engaged in export of mangoes since 1994. They have been using the pack house and cold storage unit at Golapudi AMC. They use the protocol developed and given by Central Food Technological Research Institute (CFTRI) for export through central marketing fund of mango.
Further, as the protocol for sea shipment has not yet stabilized, APEDA engaged a scientist from Belgium to develop a protocol for cases where more than 15 days sea journey is required. Vitas Company Export Private Limited, Chennai visits AMC Golapudi every year and also visits the mango orchards and purchases the fruits at the ripening stage. The graded mangoes are priced at Rs. 15,000 per MT and are of good size and quality (“labeled as garden Fresh Mangoes”).
In both the districts, exclusive mango market yards are functioning for marketing of produce. There is also excellent network of traders both local and up country, commission agents etc. to assist the smooth flow of the product (fruit) from growers to final consumers. However, even though growers/traders Associations are informally functioning in both the districts, these have not taken up any initiatives to reduce the large margins eaten by the middle level functionaries.
They have not made any attempt even to reduce the length of the marketing channels. Such growers associations have not made any visible attempt in creating awareness with regard to quality in improvement in fruits. However, conduct of “Mango Festival” has been a regular affair in Chittor that creates a lot of awareness among the growers/ traders/ processors on quality issues.
Growers’/ Processors’ Federation:
In order to smoothen out the SCM for mango processing sector, ‘Chittor District Canners’ Federation was formed during 1991. Later it was rechristened as Chittor District Fruit Processors Federation. The Federation used to assist units in hazard analysis and critical control point (HACCP) Certification with assistance from APEDA, modernization of cluster to Andhra Pradesh Industrial and Technical Consultancy Organization (APITCO), seek soft loan and subsidy with APEDA, Ministry of Food Processing Industry (MFPI), and National Horticulture Board (NKB).
In consultation with Pollution Control Board (PCB) and other technical institutes, the Federation helps the units in formulating exact technology to treat liquid and solid affluent wastes.
The Federation of Farmers’ Association (FFA), an authorized body to address the issues of mango growers in consultation with the government of Andhra, managed to form six exclusive mutually aided cooperative societies (MACS) of mango growers of Chittor District. The Agri- Terra of Netherlands, through the FAO, the FFA and Horticulture Department of Andhra Pradesh has initiated the project and helping the farmers to develop these cooperatives.
The cooperatives are expected to result in an additional value of up to 20 percent to the growers as they cut second-rung traders/commission agents from the supply chain y providing a direct inter face between the buyer and seller. Besides making it easier for companies to enter into agreements, these MACS are expected to strengthen the hands of mango growers.
The tie-up would result in saving of transportation charges and market cess. The idea is to strengthen the supply chain and facilitate a direct linkage between the corporate buyers and farmers. On its part the FFA would give training to the farmers’ issues such as pesticides and improving quality.
As far as input availability is concerned, for growers —plant materials are available sufficiently in Srikalahasthi, Tirupati, Mallavalli in the study district. All sorts of pesticides and chemicals are locally available in major towns. Processors procure mangoes directly from mandi, growers, factory, and traders. Generally processors go for a storage capacity of 7 days fruit requirement to match with the ripen cycle.
Power supply by Andhra Pradesh Transmission Corporation (APTC) is quite adequate to run the units. Diesel generating unit have been installed to meet power requirements during shut down. Water, being a major requirement for processing unit, is available sufficiently at site. A good network of transport arrangements is provided to transport both raw materials and finished products. Both sea and air transport is available at Chennai, which is only 185 km from Chittor and 300km from Vijayawada.
Various enzymes like bio-tropilase enzyme for consistency of mangoes are being purchased from M/s Biocon, Bangalore. Citric acid (for maintaining the pH level of the pulp), ascorbic acid (added as per customers’ requirement) are being arranged from Bangalore and Chennai. Various machineries required for installing the canning unit are Plastic Crates, Fruit washer, Belt conveyor, Screw conveyor, Pulper, Roto pumps, Boiler Kettles/ Pasteurizer, Flanger, (to seal one side of the tin), Embosser ( for labeling).These are available in Chittor and Bangalore.
Another important input in the pulp industry is the packaging and packing material, such as cans, aseptic bag, and cartons. The units undertaking the processing on job work basis are supplied with require can material, labels, and packing materials by Export Houses which have provided production orders. Aseptic packing sizes are mostly of 200 litre [228 kg double strength (DS) or 215 kg single strength (SS)] 45 kg, 54kg, and 91 kg depending buyers’ specification.
Mostly DS aseptic packages go to Europe and USA. The SS aseptic packages are supplied to Coca-Cola, Indian Fruit Juice Manufacturers like Pepsi, Parle, and Godrej. Cans are mainly supplied to Middle East Countries like Saudi Arab, (Dubai, Yamen, Kuwait), Korea, Japan, Singapore, Australia etc.
Credit Support – Andhra Pradesh:
Data collected from a sample of 10 bank branches (3 branches of Indian Bank, 5 branches of Regional Rural Bank and 2 District Central Cooperative Bank) revealed that crop credit to mango during the last three years constituted a share of 38.7 per cent of total crop loan accounts and 47.1 per cent of total crop loan amount in Table 11.2.
Pre-harvest contractor, VT/CAs are adequately provided with’ Secured Over draft’ facility from banks. They utilize the same in lending to farmers as also in going for lease / contract of mango orchards. Bank loan is also utilized by them for procuring mangoes from the field as also from the market in order to supply to up country traders, as there remains time lag of 30-75 days while getting payments from UPCTs.
Similarly, term loan for establishment of mango orchards constituted 19.1 per cent of the total Agricultural Term Loan (ATL) Account and 17.2 per cent of the ATL amount during the period 2003-06 (Table 11.3). However, interactions with banks revealed that bankers are not inclined to provide term loan owing to its long term tenure, up to 10 years.
The company after procuring the fruits from the growers/professionals suppliers route the entire sale proceeds through their bank accounts. The system is so long as there is smooth flow of the margin to the growers after adjusting their repayment. However, the growers complained that the company delays the payment resulting in late repayment of loan by growers. All processing has working capital arrangements with banks, which range from Rs. 20 to 60 lakh depending on their requirements. Banks work out the working requirement based on Nayek Committee recommendations.
Credit Support –Maharashtra:
The short term loans for maintenance of Alphonso mango orchards have been availed from bank in the district and same shows increasing trend. In all the sample cases, farmers availed bank credit for maintenance of the orchards especially after introduction of KCC scheme. A part of requirement has also been met by purchasing inputs on credit from suppliers and availing advance from traders cum middlemen (Dalals).
Progressing farmers are invariably availing bank loans, but small farmers normally lease out their orchards to farmers cum traders and receive money in advance to meet the maintenance expenses till fruiting stage. Out of the 25 sample beneficiaries, bank loan particulars in respect of 12 farmers have been collected, which are given in Table 11.4. Most of the sample farmers used a part of the KCC limit for Investment in Mango Orchard.
It is observed from the above table that average annual maintenance cost of mango orchard up to plucking stage comes to Rs. 62,700 lakh as per the current package of practices. However, loan actually availed by the farmers was at Rs. 35,920 per hectare. It also revealed that in the reference year, the bankers assessed the loan requirement at Rs. 600 per tree for meeting maintenance expenses and accordingly sanctioned KCC limit of Rs. 60,000 per hectare.
It was gathered that the remaining portion of the maintenance cost was met out of own funds and/or by availing credit from the traders-cum- middlemen and input dealers on terms, which restricted free marketing. This indicates there is ample scope for bank finance.
Repayment Performance of Bank Loan:
The repayment performances of all the sample farmers were good as all the loans were standard. Moreover, bank loan was not available for trees taken on lease.
The bank loans were disbursed in the district during last three years for mango cultivation is given below in the Table 11.5:
The apathy of farmers towards bank loan is primarily due to the fact that alternate options for arranging maintenance expenses are in practice in the district. At times, the input agents provide inputs on credit and collect their dues in harvesting season. But traders cum middle men, who normally lift the produce through their local agents, are continued to be the primary source of finance of the farmers.
These traders cum middle men provide advance ranging up to 20-30 per cent of the anticipated production at the door steps of the farmers, during October to January, without going through elaborate documentation. Farmers reported no interest was charged till settlement of yearly account in June. However, interest is charged @ 2 per cent per month on the outstanding balance, if any, of the advance after petties are settled around June.
Unlike Sindhudurg district, raising mango orchards in a commercial manner is a recent phenomenon and mostly orchards are being raised with own resources or availing personal loans. Specific credit limits for cultivating mango orchards alone have not been availed from any bank by the sample cases. However, bankers in the district are inclined to sanction credit limits for growing Kesar mango orchards and meeting maintenance expenses. As already indicated, since Kesar mango orchards are coming up in the district on a large scale, there is potential for dispensation of bank credit in future.