Marketing of Guava in Allahabad District, Uttar Pradesh

Transcription

1 Marketing of Guava in Allahabad District, Uttar Pradesh K Malar Mathi * and Pandey A P ** Agricultural development is crucial to India's overall progress as it accounts for nearly 20-30% of the Gross Domestic Product (GDP). Due to inadequate facilities for storage, transportation and processing of agricultural produce, the post-harvest losses amount to 25-30%, causing a monetary loss to the tune of several thousand crores. Therefore, awareness of resource management practices and management of proper marketing of produce is essential, so as to encourage new farmers to initiate production of fruits like guava to improve the employment and income of the rural masses. This paper aims at identifying the supply chain with respect to guava, a tropical fruit in the Allahabad District of Uttar Pradesh. The results of the study clearly show that as the marketing costs increase, the marketing efficiency decreases. The study also evaluates the problems encountered by various processing units at various levels under seven categories. Finally, the paper draws meaningful inferences using SWOT analysis and TOWS Matrix. Introduction In a developing country like India where the majority of the population hails from the rural sector, agriculture is the backbone of the economy. Agricultural development is crucial to India s overall progress as it accounts for nearly 20-30% of the Gross Domestic Product (GDP). From a starving nation in 1947, when it became politically independent, India today is one of the leading producers of food grains and horticultural products. Green revolution and Operation flood, along with other advances in the agricultural scenario, have made India self reliant in food production. Today India is the leading producer of fruits and vegetables, milk, marine products, etc. Due to inadequate facilities for storage, transportation and processing, the post harvest losses amount to 25-30%, causing a monetary loss to the tune of several thousand crores. Loss, at this juncture is a major setback, keeping in view the effort * Assistant Professor, Department of Agri-Business Management, College of Business Studies, Allahabad Agricultural Institute Deemed University, Allahabad, India. mathijj@yahoo.com ** Professor and Head, Department of Agricultural Economics and Rural Sociology, Allahabad Agricultural Institute Deemed University, Allahabad, India. pandeyap@gmail.com Marketing 2008 The of Icfai Guava Univeristy in Allahabad Press. All District, Rights Uttar Reserved. Pradesh 7

2 undertaken in producing these food commodities. Food preservation and processing help in the proper utilization of the horticultural produce during glut and make it available during off-season. This is a boon to the poor farmer, as he does not have to be at the mercy of the middlemen; nor does he have to opt for distress selling. It plays an important role in enhancing the shelf life of the predominantly perishable commodities, and in producing a diversified range of value-added products. This sector also aids the economy as it generates employment as well as foreign exchange. Fruit farming is one of the most important sectors in the Indian economy. Fruits serve as a natural source of vitamins and minerals. They also supplement the carbohydrates and proteins to varying degrees, depending upon their composition. One of the easiest and cheapest ways to fortify the average daily diet with all essential ingredients is to ensure a certain minimum level of fruit intake. The rapid growth of population within the scarce capital resources has consequently increased the demand for nutritive and indispensable food among a wide range of the Indian consumers. The value addition in the food sector is still very low at 7%. In the last decade, India moved from an era of scarcity to one of plenty. The production of fruits and vegetables, which was just 50% of total quantity of food grain production, has now increased to 66%. In India, farmers suffer losses due to wastage about 20% of cereals and 90% of fruits and vegetables in the market are usually wasted. The total wastage in all food sectors amounts to as high as Rs. 50,000 cr. Even if half of the wastage could be prevented, there will be enough calories to raise the nutritional status of the poor above the subsistence level. In this scenario, food processing becomes critical, and there is a great need for both backward and forward integration in the whole supply chain. Interestingly, there is no backward linkage between the farmer and the processor. It has to take a proper shape to tide over the impediments, which exist on account of fragmented and small land holdings, fluctuations in the production due to natural factors, non-uniformity and inconsistent supply of raw material, and longer chain of intermediaries. It is saddening to note that only 25% of the consumer s rupee reaches the farmer, as compared to 50% in developed countries. Besides, low margin, seasonality and high perishability have been the distinct features of this industry. Guava (Psidium guajava L) is one of the important fruits of India; it is considered to be the poor man s apple. Guava is the fourth most important fruit in India after mango, banana and citrus fruits, and has a high nutritive value. The guava trees are quite hardy, have a prolific bearing habit, give satisfactory returns without much care and have the ability to withstand adverse climate conditions. Besides that, the trees bear fruit twice a year and give handsome returns involving very little inputs. Because of its ease of culture, high nutritional value of the fruit, and popularity of the processed products, guava is considered an important fruit crop. Due to its adaptability to a wide range of soil and climatic conditions, large areas laying barren and uncultivable for field crops can be utilized for the cultivation of guava. Moreover, it begins its bearing from the fourth year and reaches the optimum bearing stage around its eighth year. Though many farmers grow guava with a great hope of future satisfaction and prosperity, most of them are unaware of possible improvements with respect to marketing to avoid post-harvest losses. Due to these reasons, the returns to the producer are not satisfactory. Therefore, awareness of resource management practices and management of proper marketing of produce is essential, so as to encourage new farmers to adopt desired practices to raise nutritive food, prevent losses, and thus finally improve the income of the rural masses. 8 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

3 The guava tree (Psidium guajava L) is a native of Tropical America, but now it is found in all parts of the tropics. Guava is grown in USA in the states of Florida and Mexico, and in Pakistan, Israel and South Africa, and other tropical and sub-tropical parts of the world. French settlers brought it to India in the 18 th century. The family myrtaceae to which the cultivated Guava belongs is a large one containing 80 genera and 3000 species. In India, 112 species of this family are present, out of which, Psidium guajava L is being commercially and economically utilized. Guava is cultivated in hectares (ha), with a production of 163 million tons all over the country. Bihar is the largest producer of guava, producing 0.32 million tons, followed by Maharashtra, Uttar Pradesh, Karnataka and Andhra Pradesh. Uttar Pradesh ranks second after Bihar in area under cultivation (12399 ha), and ranks third in guava production ( tons). The major guava producing areas in Uttar Pradesh are Allahabad, Varanasi, Lucknow, Kanpur, Aligarh and Agra. Cultivation of Guava is so naturalized in Uttar Pradesh that it is hard to believe it is not native to India. Guava is a very rich and cheap source of Vitamin C. Many writers have referred to it as king of Vitamin C. Thus, it is very popular among the rich and poor alike due to its moderate price, nourishing value and good taste. It is grown practically in almost all parts of the state. It excels most other fruits in productivity, hardiness, adaptability and Vitamin C content. The guava fruit can be used both for processing and fresh eating. As soon as one gets accustomed to its penetrating aroma, one finds it the most delicious and fascinating of fruits. Guava contains 85.9% moisture, 0.3% protein and 13.4% carbohydrate. The calorific value of guava is 56% per 100 gram. It also has a considerable amount of Vitamin B 1, Riboflavin and Vitamin C. The Vitamin C content of the fruit remains unaffected even during preservation. It is also a very good source of pectin. Therefore, guava is used for commercial extraction of pectin. Guava is preeminently used for making jelly, jam, guava cheese, guava nectar and other culinary products. It is also a good source of carbohydrates and has delicious taste. Review of Literature Agarwal and Saini (1995) studied the marketing of vegetables in Jaipur market during The main channels observed were, Channel I: Producer commission agent retailer consumer; and Channel II: Producer commission agent retailer consumer. The total marketing cost in the sale of cauliflower and cabbage through Channel I was Rs and Rs , respectively, per quintal. Charges for transport, commission, value of quantity lost and market fee were the main cost items, as these together accounted for 36% of the total marketing cost in these crops. In Channel III, the total marketing cost in sale of cauliflower and cabbage was Rs and Rs , respectively, per quintal. In this channel, transport, commission, value of quantity loss and market fee accounted for over 87% of the total marketing costs. Producer, mashakhors and retailers shared these cost. The producers share in consumers rupee was around 55% in Channel I and 52% in Channel II. The farmers got a higher share in the sale of Cole crops when Channel I was adopted, as the total margin of the intermediaries is higher in Channel II for both the vegetable crops. Bhogal (1994) studied the marketing channels, marketing margins, costs and price spread for each channel and problems faced by the apple producers in apple marketing in Uttar Pradesh. The most prevalent channels observed in apple trade were Channel I: Producer commission agent/wholesaler of Haldwani market wholesaler in distant market retailer in distant market consumer in distant market; and Channel II: Producer local agent of wholesaler wholesaler in distant market retailer in distant market consumer in distant market. Marketing of Guava in Allahabad District, Uttar Pradesh 9

4 Chauhan et al. (1999) analyzed the marketing of vegetables grown in Azamgarh district, one of the important vegetables growing districts of UP. Analysis of margins and price spread reflected that the producers share in consumers rupee in channel, where commission agents and retailers were the main functionaries, was the lowest and varied from 60% to 63%, while 37% to 60% accounted for marketing cost including various items. In Channel II, the producers share in consumers rupee varied from 85% to 88% where CA was the sole forwarding functionary. The highest producers share in consumers rupee was noted in Channel I where producer directly sold to consumer. The producers share in consumers rupee was between 91% and 94% for all producers, and also efforts were made to describe the structure and operations of the guava marketing channels and quantify marketing margins of producers and other market agencies. The producers share of the retail price was calculated to be 27%; 38% contractors share, 7% commission agents, 8% wholesalers, 20% retailers were also calculated. Results indicated that more than 95% of producers sold harvesting rights of their orchards to contractors. Chinnappa (1997) investigated guava marketing costs and the difficulties faced by producers in marketing the crop. Information was obtained from 60 producers in Devanhalli and Bangalore taluks (30 from each taluk) in Bangalore district, Karnataka, India. The total marketing cost incurred by producers was Rs. 168 per ton of which commission charges accounted for 45%. It was concluded that the present marketing system was not efficient as evidenced by the high marketing cost and the many problems faced by growers. Market regulation and minimum price support were thus needed to safeguard the interests of growers. Mahalambis (1971) concluded that there was a loss of fruits and vegetables during storage, movement of produce and package. Srinivas et al. (1997) reported in a survey total Physical Harvest (PH) losses of 17.9% (3.5% orchard/field, 4.9% transportation, 3.5% storage and 5.3% retail) and 14.4% (1.9% orchard/field, 3.7% transportation, 3.5% storage and 5.3% retail) respectively for Bangalore and Alphanso. Keeping all these aspects in view, a study was undertaken with the following objectives: Objectives To study the various channels involved in the marketing of processed (produced) guava fruits; To study the constraints encountered by the entrepreneur; and To conduct SWOT (Strength, Weaknesses, Opportunity and Threat) analysis. Research Methodology The study was carried out in Allahabad district of Uttar Pradesh, since the district is famous for producing the best quality guava in India (Allahabad safeda). Out of the 21 processing units present in Allahabad, only 10 units are engaged in the processing of guava. Since the production of guava has to go through many stages before getting the final product, i.e., the fruit, the word processing is used in this context instead of producing. Further the processing or producing units were categorized into four sectors; Large scale, Small scale, Cottage scale and Home scale units. Therefore, all the guava processing units were studied to minimize the statistical error. Table 1 shows the various categories and the investment criteria of the processing units. A total sample of 150 farmers was randomly selected for this 1 0 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

5 Table 1: Categories of Processing Units S. No. Units Investment (Rs.) Number 1. Large scale Above 3 crores 1 2. Small scale Upto 3 crores 4 3. Cottage scale 25 lakh 3 4. Home scale Below 25 lakh 2 Total = 10 study. The farmers were categorized into different size groups depending upon their land size holdings. The sample size of various size holdings is given in Table 2. Analytical Tools Identification of Channels: To calculate the price spread of guava for different marketing channels, the following estimates were obtained: Weighted average of price received by the guava producers from different market intermediaries Average marketing cost incurred by the farmers to sell their produce to various intermediaries The net price received by producers at the time of first sale: P F = P A C F where, P F = Net price received by producers (Rs./q) P A = Weighted average of price received by the producers (Rs./q) C F = Marginal cost incurred by the producers (Rs./q) q = quintal Producers share in the consumers rupee is as follows: P S = (P F /P C ) 100 where, Table 2: Distributions of Selected Guava Growers Size Group No. of Selected Guava Growers Total No. of Guava Growers First (0-1 hac) Second (1-2 hac) Third (above 2 hac) Total P S = Producers share in the consumers rupee P C = Price paid by the consumer Marketing of Guava in Allahabad District, Uttar Pradesh 11

6 P F = Net price received by producers The average price prevailing for guava, at different stages of marketing To calculate the margins of different intermediaries (a) A mi = P Ri (P Pi + C mi ) where, A mi = Net margin of the i th middlemen (Rs./q) P Ri = Sale price (Rs./q) P Pi = Purchase price (Rs./q) C mi = Cost incurred on marketing (Rs./q) (b) Percentage margin of i th type of market functionary (P mi ): P mi where, P Ri P P PI Ri C mi 100 P Ri = Total value of receipts/produce (Rs./q) P Pi = Purchase value of goods/units (Rs./q) C mi = Cost incurred on marketing per unit of produce (Rs./q) The average price paid by the processor and ultimate consumer The percentage share of total marketing cost and margins in the price paid by the processor as well as ultimate consumers: (a) C S = (C/P C ) 100 where, C = Total marketing and processing cost (Rs./q) C S = Percent share of total marketing and processing cost in processors /consumers rupees M TS = (M T /P C ) 100 where, M T = Total margins M TS = Percent share of total margins in consumers rupee Acharya s (Acharya and Agarwal, 1992) modified measure of marketing efficiency was used to calculate the efficiencies of the channels MME = FP/(MC+MM) where, MME = Modified Measure of Marketing Efficiency FP = Prices received by the Farmers 1 2 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

7 MC MM = Total Marketing Cost = Marketing Margin Finally, Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis and Threats, Opportunities, Weaknesses, Strengths (TOWS) Matrix were made to draw the meaningful inferences from this study. Results and Discussion Marketable Surplus Marketable surplus is that quantity of the produce, which can be made available to the non-farm population of the country. It is the residual left with the producer farmer after meeting his requirements for family consumption, payment to labor in kind, payment to artisans, social and religious payments in kind, etc. The marketable surplus of guava was calculated and is presented in Table 3. It can be observed from the table that the marketable surplus of guava was , and tons for small, medium and large size groups respectively. It is also clear from the Table that marketable surplus of the large size holdings was more than that of the other groups. Table 3: Marketable Surplus of Guava S.No. Size Group Total Area (ha) Total Production (tons) Marketable Surplus (tons) 1. Small Medium Large Marketing Channels From the preliminary survey conducted in the study area, it was observed that the marketing of guava to the processing units and then in turn to the customer was done mainly through the five channels shown in Figure 1. Figure 1: Marketing Channels 1. Producer PHC WS/CA (LMF) Processor Consumer (LMP) 2. Producer PHC Processor Retailer (LMP) Consumer (LMP) 3. Producer PHC Processor CA (LMP) Consumer (LMP) 4. Producer PHC WS (LMF) Processor WS (DMP) Consumer (DMP) 5. Producer PHC WS (LMF) Processor WS (DMP) Retailer (DMP) Consumer Note: PHC Pre-Harvest Contractor CA Commission Agent LMF Local Market for Fresh Fruits LMP Local Market for Processed Products DMP Distant Market for Processed Products WS Wholesaler Marketing of Guava in Allahabad District, Uttar Pradesh 13

8 Price-Spread, Marketing Cost and Marketing Margin in the Marketing of Processed Guava The processing unit purchased the fresh guava either from the wholesale secondary market or directly from the producers. As soon as the order is furnished, the producers bring the guava from the orchard to the processing unit at their own expense and sell them to the processing unit. By this transaction, they bypass all the middlemen and get higher margin for their produce. The marketing of processed products is basically done through four sources. They are directly sold to the consumers or they are sold through salesmen who work on a commission basis. The processed products also reach the consumers plate from the retail shops of both local markets and the distant market on the condition that these retail outlets are not operated in the area, which are covered by the salesmen. The marketing of processed products was basically through salesmen in the local market and through wholesalers in the distant market. Some of the home scale processors directly sold the products to the consumer without any involvement of middlemen. Small scale units and large scale units use the commission agents or the retailers. The commission agents/salesmen were employed to capture bigger market as they sold the products by door-to-door selling method. On the other hand, the retailers were able to sell the product only to a limited number of consumers. Thus, the processors preferred to sell the produce through commission agents. The wholesalers of distant market sold the produce either directly to the consumer or through the retailer. Table 4 represents the marketing costs, margins and price spread of various channels involved in the marketing of processed guava. Channel I was exclusively for home scale unit and cottage scale processing unit, whereas Channel II was followed both by small scale processing units and large scale processing units. But smallscale processors exclusively followed Channel III. Channels IV and V were followed by large scale units. The analysis for these channels was done on the basis of average costs and prices realized by related categories. Channels I, II and III were followed in the marketing of processed products in local market, whereas Channels IV and V were followed for selling the products in distant market. In Channel I, the processors incurred the processing costs of Rs which includes the costs price of guava. The processor has to pay commission to the wholesaler/commission agent at the rate of Rs. 5 per basket. In this channel the processors directly sold the product to the consumers and received a margin of 66.93% in the consumers price. In case of Channel II, the processed product was sold through retailers. They facilitated the products to the retailers with a concession of 20% on retail price. The processors on an average received a margin of Rs with the processing costs of Rs The retailers had to incur risk and maintenance cost of Rs. 50, and in turn received a margin of Rs Channel III involved the salesman or commission agents. They worked on a commission basis. They received 22% of the maximum retail price as their commission. The processors received profit margin of Rs in the whole transaction. Channels IV and V deal with the customers of distant market. In Channel IV, the wholesaler of distant market sold the product directly to the customers, whereas in Channel V, the processed product reached the final consumers through retailers. These two channels were followed both by small scale processing units and large scale processing units. 1 4 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

9 Table 4: Channel-Wise Price-Spread, Marketing Costs and Marketing Margin for Processed Guava (Local Market) (Rs./q) S. Channel Particulars No. I II III IV V 1. Producers Sale Price PHC s Purchase Price Cost Incurred by PHC (a) Transportation Charges (b) Cost of Packaging (c) Weighing Charges (d) Commission (@ Rs. 5/Rs. 100) (e) Miscellaneous Total Costs Absolute Margin of PHC Wholesaler/Commission Agents Purchase Price Cost Incurred by WS/CA (a) Mandi 2.5% (@ Selling Price) (b) Miscellaneous Charges (c) Total Cost Absolute Margin of WS/CA Processors Purchase Price (Included in cost of processing) (a) Commission Paid (@ Rs. 5/basket) (b) Processing Costs Absolute Margin of Processors Purchase Price of WS (DMP) Cost Incurred by WS (DMP) (a) Transportation Charges (b) Packaging Loading and Unloading Charges (c) Risk and Maintenance (d) Miscellaneous Total Costs Absolute Margin of WS (DMP) Purchase Price of Retailers 7998 Cost Incurred by Retailers (a) Risk and Maintenance 50 Absolute Margin of Retailer Salesmen Commission@22% Transportation Costs 60 Purchase Price of Retailers (DMP) Cost Incurred by Retailers (DMP) (a) Risk and Maintenance Absolute Margin of Retailer Consumers Purchase Price Note: DMP Distant Market for Processed Products. Marketing of Guava in Allahabad District, Uttar Pradesh 15

10 The processing cost incurred by the processors, including the costs of raw guava, was Rs The wholesaler of distant market paid for the transportation, i.e., Rs. 350 and packaging costs, i.e., Rs Besides this, the wholesaler of the distant market also incurred risk and maintenance cost of Rs. 50 and Rs. 150, respectively, in the form of other costs including rent of their shops and the salaries to their employees, etc. Thus in total, the wholesalers incurred a total of Rs. 775 as marketing cost. The processors sold the product with a concession of 15% on MRP to the wholesalers. Thereby the processors received a margin of Rs The wholesaler sold the product directly to the consumers with a margin of 10%. In Channel V, the retailers had to incur the risk and maintenance cost of Rs. 50 and buy the product on the consumers table at a margin of Rs Thus, it is clear from the above discussion that the farmers as well as processors earned a better margin by converting the raw guava in processed form. Thus, the better earning through processing may encourage the producers/orchardists to adopt the processing of the fruits on home scale and thereby increase the technical efficiency of guava trade. Channel I is more efficient than the rest of the channels as the product directly reaches the customers (Table 5). The marketing cost comprises of 33.06% in consumers price and the processors share is 66.93% in consumers price. The marketing efficiency of Channel I is The main reason behind this is that no intermediaries are involved in the marketing of the processed product. But home scale units mainly follow this channel and it is not feasible to cover a large area by this process. The marketing efficiency of the above-discussed channel is shown in Table 6. The next most efficient channel is Channel III, wherein the commission agents or the salesmen are involved in the selling of the processed products. The marketing efficiency of this channel is 0.42 as against Channel II whose efficiency is the lowest (0.36). Channel II involves the wholesalers and the retailers as the middlemen, who increase the marketing cost and in turn reduce the efficiency of this channel. Table 5: Processors Share, Marketing Costs and Marketing Margin in The Marketing of Processed Guava (Rs./Quantity) Channels Particulars I II III IV V Processors Share (66.93) (26.55) (29.82) (30.18) (28.23) Marketing Cost (33.06) (53.39) (70.77) (58.91) (55.10) Marketing Margin (19.52) (9.57) (18.79) Consumers Price Note: Figures in parentheses show percentage share in consumers price. (100) (100) (100) (100) (100) Among the channels, which are followed in the distant market, Channel IV is more efficient than Channel V. The marketing efficiency of Channel IV is 0.44 and the marketing efficiency of Channel V is In both these channels, the wholesalers transport the product from Allahabad to different regions. But in Channel IV, the products are directly sold to the customers, whereas Channel V involves the retailers as middlemen between the wholesalers and the final customers. 1 6 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

11 Table 6: Statement Showing Marketing Efficiency for Different Channels Involved in The Marketing of Processed Guava (Ratio) Channels Particulars I II III IV V Processed Guava The above discussion clearly shows that as the marketing costs increase the marketing efficiency lowers down. Similarly, the more the processors share, the more efficient that channel would be. Constraints Encountered by Guava Processors The data in Table 7 depicts the constraints faced by various processing units at different levels during the processing of guava. For the sake of convenience, the various constraints were divided into seven categories. They were further subdivided into different divisions. The problems encountered by various units are discussed below: Lack of infrastructure facilities, such as availability of land at cheaper rate, power supply and transportation facilities, was found as one of the major problems faced by the entrepreneurs engaged in small scale, cottage scale and home scale units. This problem is not much prevalent in the large scale units surveyed in this study. 75% smallscale units and 100% of cottage scale and home scale units reported this particular problem. Electricity is a major problem in Allahabad. To maintain the required hygienic conditions is a very difficult task due to regular course of processing in the units. However, to prolong the life of the processed products and to provide healthy food materials to the customers, hygienic atmosphere should be a priority. With this view, it becomes a constraint for the entrepreneurs to process the products under hygienic conditions. Home scale and the cottage scale units were found unable to maintain hygienic conditions because of inability to develop infrastructure facilities like abundant water supply, power inputs and adequate disposal system. But in the case of small scale units, only 50% units were found to face this problem. Another major constraint faced by the entrepreneur is the difficulty in finding competent staff. About 50% of small scale units, 66% of the cottage scale and whole of home scale units reported this particular problem. It was very difficult for them to find well-trained staff. Moreover, they expected a good salary, which the entrepreneurs found difficult to pay. Further, the cottage scale and home scale units employed their own family members and local people who were not capable of doing the task. None of the entrepreneur reported any problem in finding lower grade staffs. The largescale units did not face much problem in this particular area. The cottage scale and home scale units faced the problem of communication owing to the small size of holdings. Another major problem faced by these units is in the area of forward and backward linkages. All the units have reported that there is no proper flow of information from the various research institutes. The various researchers are confined only to the area of their own interest but the real technical barrier faced by the processors is hardly a matter of concern to the researches. Moreover, the researchers take a lot of time in reaching them. Marketing of Guava in Allahabad District, Uttar Pradesh 17

12 S. No. Table 7: Constraints Encountered by Different Categories of Entrepreneurs in Running the Units During Guava Processing 1. Administrative Constraints (a) Lack of Infrastructure Facilities 2 (50) 3 (100) 2 (100) 7 (70) (b) Lack of Hygienic Conditions 3 (75) 3 (100) 2 (100) 8 (80) (c) More of Formalities and Paper Work 3 (75) 3 (30) (d) Favorable Government Rules and Regulation 1 (100) 4 (100) 5 (50) 2. Staffing Constraints (a) Staff Inadequate 0 (0) (b) Staff in Competency 2 (50) 2 (66) 2 (100) 6 (60) (c) Lack of Training 3 (75) 3(100) 2 (100) 8 (80) (d) Limitation of Lower Staff 3. Communicational constraints (a) Lack of Communicational Facilities 3 (100) 2 (100) 5 (50) (b) Lack of Mass Media Communication 3 (100) 2 (100) 5 (50) (c) Rare Possibility of Personal Contacts 3 (100) 2 (100) 5 (50) 4. Linkages and Coordination (a) Lack of Coordinated Approach 1 (100) 4 (100) 3 (100) 2 (100) 9 (90) (b) Lack of Flow of Information from the Research Institutes 1 (100) 4 (100) 3 (100) 2 (100) 10 (100) (c) No Proper linkages with the Farmer 1 (100) 2 (50) 3 (30) 5. Budgeting Constraints (a) Lack of Proper Funds 3(75) 3 (100) 2 (100) 8(80) (b) Poor allocation of Budgets for different Purposes 3(75) 3 (100) 2 (100) 8(80) 6. Raw Material (RM) Constraints (a) Lack of Supply of RM for Uninterrupted Production (b) Procurement of RM is Time Consuming and Require diligent Selection (c) Variations in RM Prices at Different Places 7. Marketing Constraints Particulars LS n = 1 SS n = 4 CS n = 3 HS n = 2 Total (a) High Degree of Competition 4(100) 3 (100) 2 (100) 9(90) (b) Delayed Disposal of Produce 3(75) 3 (100) 2 (100) 8 (80) (c) Lack of Demand for processed Guava products 1 (100) 4(100) 3 (100) 2 (100) 10 (100) (d) Lack of Proper Packaging 1 (100) 4(100) 3 (100) 2 (100) 10 (100) Note: LS Large Scale; SS Small Scale; CS Cottage Scale; HS Home Scale; the figures in brackets the parantheses indicate the percentages. 1 8 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

13 The large scale units and 50% of the small scale units have also reported the difficulty faced in having direct contacts with the farmers growing guava. The farmers are interested in selling their produce in the Mundera market where they get more buyers and also a good price. But 50% of the small scale units have reported that farmers are now interested in selling their produce directly to the processing units, avoiding all the middlemen, but the reach and access remain a question. However, the cottage scale and home scale units do not face this constraint as they are operated mainly in the rural areas. Lack of capital inputs is a major problem faced by the entrepreneurs. 75% of small scale unit and the whole of cottage scale and home scale units have reported this difficulty. It was also found that they were facing problems in the allocation of funds for different activities. A high degree of competition was reported by most of the entrepreneurs, as they had to search for a market for their processed products. The products of home scale units were sold at a comparatively lower rate and marketed by the processors themselves. This is true in the case of cottage scale units also. The small scale units also faced high degree of competition especially when they sold their products outside Allahabad. The small category processors had to compete with the processors of distant markets also. Therefore, the processors searched for those distant markets where the number of processing units was less or the availability of raw material was a constraint. In the case of the large scale units, the brand name of the company (Morton) itself indicated that no one could beat it as it is said that the well-established brand is the best market. The processed products were being sold either through commission agents or the processors themselves in local market or through the wholesalers and the retailers in the distant market for which they had to pay a higher percentage of their return to the middlemen in the form of commission. In Allahabad, the processors sold the products through commission agents who charged 22% commission on MRP from the small scale units. The marketing structure for processed food is not much strong in Allahabad district, as the processors themselves had to approach the commission agents or retailers to sell their products. But in the case of largescale unit, the market was not a major problem as they sold the products in the markets of Allahabad as well as transported to other outside markets through carry forward agents. This is the reason for the delayed disposal of the products produced by the small scale, cottage scale and home scale units. The processed products are not preferred in the regular diet among the Indian customers. It is a well-known fact that the processed products do not figure in the menu of Indians. That is why only 2% of total fruits and vegetables are being processed in our country despite its availability and the many advantages. The main processed guava product that is jelly, which is being marketed in Allahabad as well as transported to other places, is not a favorite item among the customers. All the processing units have reported that the demand for the processed guava products is less. Lack of demand is yet another constraint which is being faced by the processors. Usually two main guava products are being manufactured in Allahabad; jelly and toffees. Jelly is sold in glass jars of half kilograms and the toffees are wrapped in simple cellophane paper. The packaging of toffees did not create any considerable problem in expanding the Marketing of Guava in Allahabad District, Uttar Pradesh 19

14 market as the mishandling with jars could cause a big loss to the dealers. Though advanced packaging techniques are available with the large scale unit, they are so expensive that the other units can hardly afford them. SWOT Analysis The SWOT analysis of guava marketing in Allahabad district of Uttar Pradesh is briefly summarized as follows: Strengths Guava can be grown in varied agro climatic zones; Availability of resources and knowledge base viz., Allahabad Agricultural Institute, (Deemed University), Chandra Shekar Azad University, Kanpur, and Narendra Dev Agricultural University, Faizabad; Presence of Agro Parks in Varanasi, Lucknow and Faizabad; The Guava tree flowers twice a year; The input required is comparatively less; Presence of Agri-export zones dedicated to horticulture; Vitamin C content remains the same even after processing; and Easy availability of labor at low costs. Weaknesses Short shelf life varieties; Lack of farmers awareness about good agricultural practices, new products and technologies; Quality not competitive in the domestic and international market; Inadequate post harvest management; Lack of storage facilities; Weak research and development especially in the area of post harvest management; Unavailability of cost-competitive quality planting material and other inputs; Lack of credit support system; and New technologies not percolating down to the farmers. Opportunities Favorable government vision; Rising domestic as well as export market under globalization; Branding offers new opportunities for differentiation; Opening of large retail shops; New developments in post harvest technologies; Private sector keen to join horti-business value chain; Contract farming getting new shape; 2 0 The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

15 External Factors Internal Factors Opportunities Favorable government vision. Rising domestic as well as export market under Globalization. Branding is offering new opportunities for differentiation. Big retail stores/chains opening up. New developments in post harvest technologies. Private sector keen to join horti-business value chain. Contract farming getting new shape. Better graded fruits. Cost-effective packaging. Threats Competition from other states. Non-tariff barriers may be imposed by developed nations. Table 8: TOWS Matrix Strengths Guava can be grown in varied agro climatic zones. Availability of resources and knowledge base like existence of Allahabad Agricultural Institute Deemed University, Chandra Shekhar Azad University, Kanpur, Narendra Dev Agricultural University, Faizabad. Presence of Agro Parks in Varanasi, Lucknow and Faizabad. The Guava tree flowers twice a year. The input required is comparatively less. Presence of Agri-export zones dedicated to horticulture. Vitamin C content remains the same even after processing. Easy availability of labor at low costs. SO Strategies Off Season supply to export the domestic demand. An umbrella brand should be adopted. Resource and knowledge base be utilized for research in production, marketing and post harvest management. Area and production under guava can be enhanced to meet rising fresh produce as well as processed produce. ST Strategies Quality and consumer oriented products. Differentiated products should be promoted to overcome competitive threats from other states and nations. Weaknesses Short shelf life varieties. Lack of farmers awareness about good agricultural practices, new products and technologies. Quality not competitive in the domestic and international market. Inadequate post harvest management, Lack of storage facilities. Weak Research and development especially in the area of post harvest management. Unavailability of cost competitive quality planting material and other inputs. Lack of credit support system. New technologies not percolating down to the farmers. WO Strategies Use of research and knowledge base of universities and other research institutes, private sector for farm extension and linkages with farmers. Building market information and intelligence system through institutes and private sector. Strengthening the basic infrastructure and utilizing specialized infrastructure taking support from both the government and the private sector. Creation of hub for input supply, farm extension work, help in marketing, food processing with the help of public sector, co-operatives and self help groups. Promotion of contract farming. WT Strategies An efficient supply chain management to combat competition in domestic and international market. Marketing of Guava in Allahabad District, Uttar Pradesh 21

16 Better graded fruits; and Cost-effective packaging. Threats Competition from other states; and Non-tariff barriers may be imposed by developed nations. TOWS Matrix The TOWS matrix is an important decision-making tool that helps producers/traders develop four types of strategies by matching internal strengths and weaknesses with the external opportunities and threats. SO (Strengths-Opportunities), WO (Weaknesses-Opportunities), OT (Opportunities-Threats) and WT (Weaknesses-Threats) are the four sets of strategies that have been analyzed (Table 8) for guava trade in Uttar Pradesh, and the key strategic dimensions have been identified. Conclusion There is an emergent need to integrate production, processing and marketing of agricultural products, in view of the globalization and liberalization policies. This aspect needs to be discussed in detail with a product-specific approach that includes cutting down the cost of production, producing the right variety for the purpose of processing, and marketing fresh produce. Establishing linkages between farmers and consumers is an important aspect of any agri-business. To increase value addition, small-sized processing units should be installed and promoted. This will save post-harvest losses on the one hand, and increase the profitability of farmers, on the other. This would also generate employment to a large extent. Quality production of international standard is the watchword for survival now. Thus, the small and big producers have to take steps to improve the quality of guava at every stage in the process of production. Side by side, steps would also be required to upgrade hygienic and sanitary conditions of the workers, plant and machinery, so as to ensure the quality of the finished products. There should be a greater emphasis on investment in research and development and product innovation, so as to remain competitive in the global market. Last, but not the least, unless and until the basic infrastructure, particularly the power supply is improved, the development of food processing cannot take off. Offering financial and other grants, without providing the basic facilities, will not produce the desired results. References 1. Acharya S S and Agarwal N L (1992), Agricultural Marketing in India, p Agarwal N L and Saini T C (1995), Vegetable Marketing A Case Study of Jaipur Market (Rajasthan), Indian Journal of Agricultural Marketing, Vol. 9, No. 1, pp Bhogal T S (1994), Apple Marketing in Uttar Pradesh Channels, Margins and Problems, Indian Journal of Agricultural Marketing, Vol. 8, No. 2, pp Chauhan R N, Singh J M and Thakur D R (1999), Marketing of Vegetables in Uttar Pradesh, Indian Journal of Agricultural Marketing, Vol. 13, No. 2, p The Icfai Journal of Agricultural Economics, Vol. V, No. 1, 2008

17 5. Chinnappa B (1997), Marketing of Guava in Karnataka: An Analysis of Problems and Costs, Agricultural Marketing, Vol. 40, No. 1, pp Mahalambis J N (1971), Need for more Processing and Preservation of Food, Agricultural Marketing, pp Srinivas R N, Reddy R V, Ravi P C, Lalith Reddy B and Achoth L (1997), Post Harvest Loss Assessment of Totapuri and Alphanso, Journal of Food Sciences and Technology, Vol. 34, No. 1, pp Reference # 49J Marketing of Guava in Allahabad District, Uttar Pradesh 23

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