Farmers group:linking with market aggregator

Farmers group gram sampada

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Corporate Social Responsibility (CSR) to support vegetables growers.

Corporate Social Responsibility

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Why forming a collection center approach fails in village for vegetables

Last weekend, I spent considerable amount of time to understand what challenges farmers faces when they enter into collection center approach and working with big players.

There were couple of points that came up during the discussions I had with various growers.

1. Grading mechanism practice: It has been told by villagers that initially when a agreement is done with group of growers saying they need Tomato 100 crates daily. Next day they sent the Tata 407 to pick the crates from the growers. The truck reaches the collection center where quality check will be performed based on the agreed grading. Now during the inspection 10 crates were not meeting the quality standard (more than 10% items were rotten and intentionally put inside the tomato crate). Now the penality of these crates will be born by the group of farmers. The process of penalizing the group when there is a mistake or wrong deed of individial has caused mistrust among the progressive farmers. Hence they broke off and the grower group is dismantle.
2. They buy Rs 5/kg and sell Rs20/kg: Its a general belief that buyer is earning a lot more (atleast 3 to 4 times) compared to what they pay to growers. Growers are well aware of transportation cost which can cost from ruppes .5 to 1.5 per kg. Grower always compare the rate that he gets from collection center format verses mandi format. e.g. If local/regional mandi is offering Rs. 6/kg then he will go to mandi rather than selling this to collection center.

These two points itself is an eye opener for new start up to consider before they get into another collection center format otherwise they will also be able to create but not able to sustain.

What you think should be done differently to succeed in village.

Perish or Peril with Perishable Vegetables

Problem: Vegetables are seen low value , highly perishable. What kind of sales and marketing solution it is looking for from Retailers, e-retailers, Rediwalas.

Humm.. Lets examine each other's concern.

Local Retailers:
I'm a local shopkeepers who goes to buy vegetables and fruits from local mandi every day. My profit margins are shrinking as more and more shops are operating in the near vicinity. I'm not concerned with the perishablity because I have to buy every day, I buy only what i sell so for me it doesnot really matter. What is more concerning is my time and labour spent on buying vegetables. Usually it costs me almost 12-15k for buying vegetables on contrary to my other staples items where I dont need to go out to buy rather all distributors drop all items to my shop (Pepso,Aaata etc). Can you do something to make the vegetables supply chain very similar to other grocery items? Help me if you can!

Rediwala
Hi, My name is Uttam, I' have a small push cart which i can carry to mandi and buy vegetables and come back to residents area. My customers generally know my name and my timing. I shout my arrival and people started coming out to buy vegetables. I'm also not worried about perishability of vegetables becuase I go to buy veggies every day and i buy what i can sell.
My problem is my business is very much dependent on me. If I'm sick or travelled outside ,my business suffers. Second problem is its too much labour . I have pull the manual cart almost 20 km every day. very tough job.Thirdly I'm not allowed to go inside the gated security community becuase generally it is not allowed.
I may no longer sell vegetables but move to rickshawpullng for passenger. Its not profitable.

e-Retailers:
Hi My name is Neha and I'm e-Retailers. I generally takes order through website or phone call and delivers to my customer's doorstep. This way of direct marketing involves lot of operational cost and high service standard and not viable if the volumes are confined within 500kg. I'm also not worried about perishability rather I'm more focused on increasing the volumes.
I'm an enthusiast enterpreneur and would like to take this challenge.


At last when all the interviews are over, i sit on sofa and start thinking I thought perishability is the key hurdle in vegetables however most of the direct sellers have found a way to negotiate around this issue. Their key issue volume increase, high labour cost, transportation cost.

Conclusions

From an IT perspective,anything which is repeatable, that should be automated. Here every one goes to mandi every day to buy their share from local mandi. First opportunity to earn by shipping directly to B2B customers. That's big statement though. Its not easy but worth trying.

For an agripreneur, organized farming, planned crop planning, variety production, all season vegetables production is the key to succeed.

For a businessman, how I build a supply chain to work like dairy. standarised products and early morning delivery.

Gram Sampada-An initiative by mandi fresh

Gram Sampada

A Farmer Franchise Model

www.mandifresh.co.in

Self Sustainable Agro Business (Horticulture)

This document is prepared by:

Mandi Fresh Agro Pvt. Ltd.

"Anytime fresh at your doorstep”

Gram Sampada is unique project which connects farmers to the customers through direct marketing using mandi fresh “online mandi” competency.

DETAIL PROJECT REPORT

MISSION

To reduce the middle man chain of agriculture produce market by enabling farmers to direct marketing their agri produce.

OPPORTUNITY

·         The market size of daily needs of fruits, vegetables & milk is immense as every individual needs veggies every day. Mandi fresh is poised to exploit this opportunity by building a strong cost effective supply chain network.

·         Vegetable and fruit market is largely unorganized; hence there is no fixed MRP of the product. A large gap exists between the farmer and the consumer, so at every stage the price escalates and if we cut these middlemen chain there is huge profit margin, even if we share some to both ends.

·         By venturing into production through advance cultivation technique we will ensure fruits & vegetable is of high quality as per international standard (level of insecticide and pesticide).

·         www.mandifresh.co.in has been well perceived as “online” mandi where supply demand information can be posted by approved suppliers and credible buyer respectively.

THE CONCEPT

·         Selling of pre-ordered fruits and vegetables: We aggregate demand by taking advance order through our web portal / call centre and deliver fresh, quality vegetable at unbeatable price to the our customers doorstep. Our primary customers are small retailers, small hotels, and small restaurants.

·         Collecting orders from end consumers through website and directing orders to our authorized retailer partners.

·         Creating progressive farmer community (farmers club) to support the project from long term perspective. Assured buy back arrangements, contract farming etc.

·         Steady supply of vegetables and fruits will be ensured with the help of Farmer’s club.

·         Creating customer community that will support community supported agriculture.

·         Integrated one stop solution for customer who looks for fresh organic dairy produce, organic fruits & vegetables, organic grocery, non organic fruits and vegetables.

·         Demand based production through community supported agriculture

ABOUT THE GRAM SAMPADA

Gram Sampada is co-operative of farmers group. Gram Sampada along with mandi fresh and government (state and central) aims to effectively and efficiently utilize village resources such as vegetables, fruits, milk, groceries, handicrafts, processed food, man-power and machines to support direct marketing of agri produce.

WHAT’S IN IT FOR FARMER?

·         One stop resource center for “Gram Sampada” including linking farmers with the govt. schemes, term loan from bank and subsidy related to production, post harvest management, processing and marketing to assure appropriate returns to “Gram Sampada”

·         Brining planning into production and sales cycle to de-risk the uncertainty of agri-business.

·         100% assured sales of Gram Sampada produce through direct marketing channels

·         Gram Sampada will have control over the selling price of their produce and there by maximizing

it’s profit.

·         Receiving on-demand farming training and consultancy service to encourage farmers to diversify into different types of vegetables and high value crops, to increase farm incomes

·         Receiving technology support such as low tunnel, shade net, green house, micro irrigation to increase the farm output.

·         Direct employment opportunity for skilled and unskilled person’s especially unemployed youths from the local village

·          Opportunity to learn computers, call center management, business knowledge with the help of NGO.

·         Cross selling of handicrafts, pickles, processed foods and other village products to consumers

·         Gram Sampada farmers will get support on certification such as GAP to ensure branding of Gram Sampada

·          Joint crop insurance for the farmers produce.

·         Safeguard against crop failure of any individual farmer of the group. Contingency fund can be utilized to support member farmer.

About Mandi Fresh

Mandi Fresh is unique venture to create an "online" virtual mandi where farmers and customers connect with each other. With the project “Gram Sampada”, mandi fresh will create vegetables brand, direct market for farm produce and thus create self-sustainable franchise business. Mandi Fresh plays pivot role in ensuring quality supply, accurate and transparent pricing, provide logistics solution, ensure high standard of service including timely delivery, accurate weighing, billing, packing, grading as per the agreement with the buyer.

Mandi fresh Agro Pvt. Ltd is founded by an Agriculture graduate, Shilu Sinha on 1st Jan-2010 with a vision to create online mandi.

Key Responsibilities of Mandi Fresh in Gram Sampada

·         As a business partner of Gram Sampada, mandi fresh will provide business know       how, business processes and their automation, trademark and existing infrastructure in sales & distribution.

·         Marketing “Gram Sampada” brand through company owned online business www.mandifresh.co.in

·         Establishing the Gram Sampada business model, creating forward linkage, backward linkage and establishing the supply chain processes

·         Hand holding support till the time Gram Sampada unit is self –sustainable

·         Initial management ownership of the entire “Gram Sampada” program till we find the right successor from “Gram Sampada” unit.

Key expectations Government / NGO / Bank

·         Arranging timely VC funding, subsidy and soft loans to “Gram Sampada”

·          Arrange term loan from bank on affordable interest rate to the “Gram Sampada” for carrying out production, post-harvest management, processing and marketing.

·         Provide GAP certificate to farmer’s produce.

·         Reimbursement of pre-operating expenses such as (Travel, training, logistics etc.)

·         Help in creating detailed project report (DPR) for viability, grants and term loan.

·         Providing Human Resource Development (HRD) in horticulture. Train the trainer, on demand training at farm site, demonstration and exhibition in local territory for adoption of high yielding variety of vegetables

OBJECTIVE

·         To share 50% of the revenue to the farmers associated with gram sampada during the harvesting season

·         To increase the harvesting period of vegetable from 6 month to 10 month ( above 50% )

·         To create 30 full time direct employment opportunity for skilled and unskilled person’s especially unemployed youths from the local village. Out of 30 employee 11 would be women employee by the end of the year 2011

·         To serve 50 direct customer (small shopkeepers/ vendors) by end of year 2011.

·         To establish 5 Gram Sampada unit by the end of the year 2011 in Haryana and Rajasthan.

·         To serve directly and indirectly 400 consumer every day.

·         To impart 22 weeks of on demand training to farmers associated with Gram Sampada. Training will include crop planning , technology training , business Training,

SCOPE OF EXPANSION PLAN

• Mandi Fresh wants to build “Gram Sampada” brand and expand its operation to pan Delhi NCR. Initial pilot project is planned to start in Gurgaon with vegetables and fruits effective 1st April, 2011.
  Gram Sampada will reach to its customer (small retailers and end consumers) through “Direct to Shop” and “Direct to Home Delivery” distribution model.

SALES AND MARKETING PLAN

Competition

·         One of the main competitors of our business is local and regional mandi. Since we are creating “online” mandi, there would be resistance for small shop retailer to move from physical mandi to “online” mandi.

·         Direct linkage between agriculture production and consumers rarely exist in Delhi NCR. Today’s market is full of traders and relies on retail outlet sales cum home delivery model.

·         Competition comes from big player such as Reliance, Food Bazaar etc.

·         Mandifresh competitive advantage lies with: - (1) strong mission of creating online mandi (2) providing fresh quality fruits, Vegetables and dairy products from self cultivated farm by adoption of Good Agriculture Practices (GAP), integrated pest manage (IPM), protected farming etc so as to produce fruits and vegetable as per international standard. (3) Integrated approach to market our products

·         Early movers advantage: Mandi Fresh believes that it’s innovative and strong management team can continue to build strategic relationships with the investors, customers and the farmers to capture a large market share in industry before other companies can do so.

Target customer segment

·         Direct customer:- small retailers, Hotels, Restaurant and caterers

·         Indirect customer:- medium and high class educated consumer.

Marketing Mix

·         Product- Seasonal fruits and vegetable from periurban region.

·         Price- Weekly fixed price for the fruits and vegetables agreed between farmers group and buyers.

·         Packaging- Fruits & vegetables certified under GAP will have separate labeling and packing requirement.GAP certified Veggies will be sold to consumer in preordered basket form. These baskets will be packed at farm site and distributed through networked shopkeepers.

·         Promotion-

Direct Customer marketing approach:

v       Provide better price.

v       Free shipping on referring a friend.

v       Optional, Discounted rate for passing web orders to networked vendors.

v       Optional, Discounted SMS billing support for networked vendors.

v       Tea & Snacks get together every month with networked vendors.

Indirect Customer marketing approach:

v      Farm visit is the face of mandi fresh through which we involve people in community supported agriculture.

v       Promote customer to prepay advance for a season which generally lasts for 3-4 months through concept of community supported farming.

v      Road show with vegetables costumes

v      Display on vendor partner’s veggies cart which is spread all over Gurgaon city

v      Create awareness through notice board in housing society.

v      Tie up with Residential Welfare Association (RWA) of Gurgaon

v      Price promotion strategy

v      Online marketing techniques to promote the website

v      Word of mouth (Refer a friend) marketing

Fig: Promotional strategy

PRODUCTION PLAN

Production Strategy

Integrated cultivation concept will be used to grow fruits and vegetables with networked farmers such as farmer’s club.

• Building a vegetables brand by selling certified farmers produce
• Round the year cultivation of vegetables and fruits (offseason and in season)
• Promoting Integrated farming with the introduction of fishery, poultry, dairy, mushroom cultivation, honey bee production.
• Use of Integrated pest management (IPM), integrated nutrient management (INM), and good agriculture practices (GAP) practices.
• Forming farmers association and providing training on integrated farming from government agencies.
• Building a team of agripreneurs and getting financial loan and subsidy support of government.

Production Schedule

Vegetable crop production schedule will be derived using following information

• Distribution requirement planning (DRP):- This constitutes estimated daily demand of seasonal vegetables and storable vegetables and fruits of direct and indirect customers.

Fig :-Sample DRP

	APRIL	MAY	JUNE	JULY	Grand Total
BANANA RIPE	1552	2180	1434	1574	6740
PYAZ	999	1065	883	827	3773
AALU	997	1165	872	553	3587
TOMATO	774	726	488	645	2634
KHEERA	661	426	302	248	1637
WATER MELON MD	453	792	360	1	1606
KHARBUJA	280	527	132		939
PAPITA	260	234	163	261	918
LAWKI	255	224	191	209	878
WATER MELON GREEN	252	214	84	85	635
AALU NAYA GRADE B	225	320	197	117	859
BHINDI	207	250	221	220	898
TOMATO DESI	189	289	134	91	703
ORANGE	171	0			171
MINT	170	190	29	4	393
PALAK	168	124	146	153	591
KAKRI	134	84	10		228
MANGO SAFEDA	130	309	89	4	531
ANGOOR	128	8			136
KADDU LAL	123				123
TORI	116	136	105	138	495
BEANS	115	89	82	110	396
PATTA  GOBI	114	87	52	64	317
APPLE FUZI	101	101	98	105	405
TINDA DESI	96	138	118	92	444
MAUSAMBI	85	72	34	13	204
NIMBU	82	96	80	61	319
SHIMLA MIRCH	78	97	73	81	330
BRINJAL BHARTA	75	71	65	84	295
HARA DHANIYA	72	72	62	72	278
PARVAL	65	59	46	59	229
MUSHROOM	64	49	42	70	225
ENGLISH GAJAR	60	89	78	84	311
ADARAK	56	53	38	47	193

·         Apart from DRP, Production plan is dependent on crop, planting and yield.

Crop Info
--------------

Crop NameVariety

Planting info
------------

Maturity Days
By Direct Seed or Transplant
Rows/Bed
Row Spacing
Plant Spacing
Flat size
Weeks to Transplant

Yield Info
-----------
Yield units
Total yield/ft
Estimate value/unit

·         Timeline :- A timeline is a schedule that shows when certain production and marketing activities will take place. Timelines provide a visual aide to producers for allocating production time and resources. Enterprise budgets provide basic timing information needed to construct farm enterprise timelines.

Fig :- Production Timeline

OPERATION PLAN

Sourcing Strategy

• Multipoint Sourcing point that includes fruits and vegetables from member farmer of Gram Sampada, Regional/local Mandi, and other Gram Sampada units located in nearby area and cultivating items other than the member Gram Sampada.
• Multipoint sourcing is planned to meet the demand of different fruits and vegetable, cost, quality and delivery time constraint.
• Pack House would be made at farmers convenient point within the Gram Sampada.
• Farmer produce from Gram Sampada will go to Pack House where washing, sorting, grading, labelling and packaging of veggies will take place
• Storable products bought from the mandi will be stored in the pack house.

• Packing of Direct customer ( shopkeepers, vendors, restaurants, hotels etc) and special packing of Indirect customer ( consumers order from website and call centre) will be done at Packhouse by assembling both seasonal and storable products.

Fig:- Pack House

·         Basket of both direct and indirect customer would be loaded into pick up van and reach to individual shop.

·         Payment collection would be made by area manager

                                          Fig:- Vegetable Flow Chart

FINANCIAL PLAN

Financial Overview:

v      Current sale of mandifresh (from home delivery segment) is Rs 2.0 Lakhs/ month. Fixed Asset is over Rs. 6.0 Lakhs. No of customers served till date is over 1000.

v      Future finance projection is depicted below.

v      For 3 years detailed projected financial statements email us on mandi.fresh@gmail.com

v      Three years financial projections are shown below

Profit and Loss Statement	FY1112	FY1213	FY1314
	2011	2012	2013
	1	2	3
	Jan -Dec	Jan -Dec	Jan -Dec
Revenue	72,89,635	286,32,776	898,61,916
Cost	36,31,238	142,65,965	447,72,709
Misc. expenses	3,79,000	10,82,000	13,92,000
Leadership salary expenses	4,80,000	7,20,000	7,20,000
Marketing expenses	1,61,400	3,14,400	3,14,400
Distributor expenses	15,62,077	55,90,571	164,41,589
Sourcing expenses	30,000	60,000	60,000
Total expense	62,43,715	220,32,936	637,00,698
PBT	10,45,920	65,99,840	261,61,219
Profit Margin	14%	23%	29%

Percentage of Revenue distribution
Farmer's cost	50%
Misc. expenses	5%
Leadership salary expenses	7%
Marketing expenses	2%
Distributor expenses	21%
Sourcing expenses	0.4%
Franchisee Fee	4%
Profit Remaining	10%

Source of Funding

In order to establish Gram Sampada units Mandi Fresh is seeking funds from

• Banks as term loan

• Government/ NGO (State , National)

Mandi Fresh is seeking approx. 8 Lakhs rupees initially for the training of Farmers and unemployed youths of village to establish and run Gram Sampada center.

Mandi Fresh will also require funds for

§         Capital expenditure (vehicle purchase/lease),

§         Cold storage setup

§         Pack House

§         Vegetables and crates purchase

§         Other expenses (Sales and Marketing expenses)

Management Team

·         Shilu Sinha (Founder): An Agriculture graduate and MBA Marketing from Pune University. Shilu has 4 years of agriculture marketing and cultivation experience. She has been selected for two months training from The Ministry of Agriculture, Government of India, in association with NABARD.

·         Shakti Singh: Belongs to National award winning Organic farmer’s family. Shakti is having a vast end to end farming experience right from land preparation to crop planning, harvesting and post harvesting. He is also expert in precision farming, mix crop farming, and dairy. He currently manages 110 acres of farmland in Uttar Pradesh.

·       Prashant Shekhar: MBA Marketing from Pune University. Prashant has 4 years of retail operation, procurement and sales experience.

Advisors

·         Deepak Rao: Deepak has Engineering and MBA degree in supply chain management. Deepak is based out of USA and having 9 years of vast experience in supply chain and IT

·         Sutirtha Sinha: Sutirtha has done engineering from IIT Kharagpur and MBA from IIM Kolkata. He has over 11 years of experience in business development and sales.

·         Dr Balaraj: Head, Green house cultivation, Pusa Institute, New Delhi.

·         Manisha Bhalla: Copy editor cum correspondent, Outlook, New Delhi
·         Jayant Sinha: B.E Production and MBA in Supply chain from NITIE, Mumbai. Jayant has 9 years of supply chain and IT consulting experience globally. Worked with Accenture USA Consulting.

·         Local NGOs.

For further information please contact:

Shilu Sinha

B.Sc (Agri Eng) & MBA (Marketing)

(Director)

Mandi.fresh@gmail.com

www.mandifresh.co.in

+91-9910035164

+91-9560158973