PFID:F&V India Mango

Market Development Project

Leslie D. Bourquin and Deepa Thiagarajan
Partnerships for Food Industry Development: Fruits and Vegetables
Institute of International Agriculture
Michigan State University
East Lansing, Michigan USA
The Project
„ PFID-F&V = Partnerships for Food Industry
Development – Fruits and Vegetables
– Core program is funded by the United States Agency for
International Development, Washington, DC and housed in
the Institute for International Agriculture at Michigan State
University

„ India Project funding provided by USAID – India

Mission, New Delhi
– 3-year Associate Award to Michigan State University
(2004-07)

„ Focus on fresh and processed Alphonso and Kesar

mangoes in Maharashtra state.
Project Goals

„ Increase net returns to farmers, by:

– Building capability among mango growers

and processors to meet international
grades and standards for food safety and
quality

– Strengthening linkages of mango growers

and processors with higher value markets
(domestic and export)
Program Elements
„ Initial Assessment, SWOCA, Value Chain
Analysis (pre-award – 2005)

„ Capacity Building / Training / Certification of

Mango Growers on Pre-Harvest Food Safety
(Good Agricultural Practices) and Processors
on Food Hygiene (HACCP)

„ Building Market Linkages for both fresh and

processed mango products in the domestic
and export markets.
Project Planning - SWOCA Analyses
and Value Chain Analysis

„ Strengths, Weaknesses, Opportunities,

Challenges, Actions
„ Developed in collaboration with Indian stakeholders (producers,
processors, retailers, exporters, government, academia) during a
2004 forum on “Horticulture Market Development” in New Delhi

„ Follow-up SWOCA conducted with Maharashtran mango farmers

during a workshop in Talegaon-Dabhade in February 2005

„ Alphonso Mango Value Chain Analysis conducted in the Konkan

region in February 2005 – included visits to farms, packing facilities
and processing units.
 Primary Production Conditions
„ Konkan Region (Alphonso) – volcanic basalt, relatively low
planting densities, several years to establish production,
LOTS of new trees planted in last five years
„ Aurangabad Region (Kesar) – more typical fruit orchards,
close tree spacing, pruning, intercropping, rapid onset of
production, management and harvest much easier
 Post-Harvest Handling
„ Many pre-existing facilities and techniques are rather inadequate
„ Adoption of modern grading / packing technology is limited, but growing
thanks to investments by MSAMB, APEDA and private firms
„ Cold chain technology is severely lacking
„ Major exporters have good capacity to grade, pack and transport
mangoes according to international standards.
Post-Harvest Handling
Traditional Mango Value
Chain in India
Traditional Market = High Transaction Costs
(only ~35% of value returned to farmer)
Commission
Mango Local Agent /
Grower middleman Trader

Consumer Retailer Wholesaler

 Indian Farmer Usually Has
Limited Market Information
„ Asymmetry of information at market
„ Seasonality of production and lack of cold-chain and
packing infrastructure results in extreme price volatility
Market Reforms Are
Providing Opportunities
„ Historically, the Agricultural Produce
Marketing Act has mandated that
farmers sell their produce at
designated markets
– Direct contracts with buyers were
unlawful under the old act
„ States are currently amending their
APM Acts to allow direct contracts with
buyers, contract farming, etc.
India’s Retail Revolution

„ Tremendous investment by Indian

conglomerates
– Reliance, Food Bazaar, Spencers, Bharti, Birla,
ITC, Spinach, etc.
„ Growing presence by multinationals
– Metro, ShopRite, Wal-Mart

„ Existing Cap on FDI by Multi-brand Retailers

is limiting growth rate, but Indian
companies are moving forward aggressively
India – Food Safety Issues
„ Government regulation is minimal
– New food law passed by central
government in 2006, but development of
new formal regulations and enforcement
is only in the planning stages
„ Some notable recent problems with
Indian agricultural exports
– Pesticide residues exceeding MRLs in
Thompson seedless grapes
– Sudan Red in chili powder
India – Emerging Markets Demand
Produce Meeting High Standards for
Safety and Quality
Traditional Markets Emerging Markets
„ APMCs, Mandis „ Organized Retail
„ “Wet Markets” „ Hotels, Foodservice
„ Exports to “less „ Exports to Countries with
discriminating” markets High-Value Markets
„ “Business as Usual” is „ Tremendous pressure to
acceptable for now, but improve quality and
this is a low-value market safety standards in order
segment that will decline to participate in this more
over the next decade lucrative and growing
market segment
Marketing Opportunities/Strategies Depend on
the Willingness and Capability of Mango
Farmers to Meet Quality and Safety Standards
(e.g. EurepGAP)

„ Farmers who are able „ Farmers who are

to implement/meet the unable to or choose
standard not to implement the
standard

„ Target organized retail „ Target improved

and export market access to traditional
market linkages with
marginal financial
returns.
Fewer Steps in the Process =
More Margin to the Farmer
„ Improved supply chain under project
– Direct linkages with retail markets and
exporters
Mango Retail
Grower Markets, Consumer
Exporters
„ Key Advantages
„ Lower Transaction Costs

„ Improved Quality Control

„ Improved Food Safety and Traceability

GAPs Training Programs
„ Conducted in partnership with FoodCert India
Field Visits
Capacity Building / Policy
Efforts
„ In addition to farmers and processors, training
was provided to State Department of
Agriculture personnel from five states.
„ Additional cadre of trained farmers and
academicians in Tamil Nadu
„ The project was very active in facilitating
development of national GAPs standard
(IndiaGAP), which is currently in review by the
relevant GOI ministries.
Summary of Market
Activities
„ Domestic linkages with organized retail
– Food Bazaar, ShopRite, Reliance
„ Direct marketing events
– Mango Festivals, MSAMB Market
„ Link producer groups and processors
with exporters
– Facilitated exports to higher-value, more
discriminating markets
EurepGAP Certified Mango Farms in
Maharashtra Associated with Project

„ 2006
– 31 Alphonso growers
– 13 Kesar growers
„ 2007
– 17 additional Alphonso growers
– 1 additional Kesar grower
„ Several other growers in Tamil Nadu and
Gujarat participated in our training
programs and were subsequently certified
MOU Agreements Between
Farmers and Retail Buyers
Food Bazaar,
Division of Pantaloon

ShopRite
Pune Mango Festival
US Market Opens
to Indian Mangoes
April 2007
Increased Returns to
Farmers
„ Estimated value of reduced intermediaries
and GAP certification in value chain (2006):

„ Domestic Fresh Market:

Growers received 20 to 30% higher returns
than traditional channel

„ Fresh Export Market:

Growers received 50% higher returns for
GAP-certified mangoes when compared to
traditional domestic market
Food Safety / EurepGAP Implementation

2006 Certification costs ~ Rs

30,000 (~US $750) per farm.
Infrastructure improvements
cost up to Rs 1 Lakh (~ US
$2500) in the first year.
 Return on Investment by Farmers
„ Although farmers typically had 20-50% greater gross returns
on GAP-certified mangoes in 2006, this was usually
insufficient to offset their first-year costs of EurepGAP
implementation.
„ Better return on investment anticipated in subsequent years

„ “This is test cricket, not one-day cricket”

EurepGAP Certification in India

„ There are currently 7 firms offering

certification in India
„ Estimated costs of certification
inspection have dropped to
approximately Rs 12,000 (~ US $300)
– This excludes costs associated with
infrastructure improvement, auditor
travel, residue testing, etc.
„ Opportunities for partial subsidy to
meet these costs abound
Overall Conclusions – PFID India
Mango Market Development Project
„ Targeted opportunities exist for Indian horticulture
producers and processors to capture much greater
returns in the organized domestic and export
markets.

„ EurepGAP adoption and certification has proven

essential for Indian farmers exporting to high-value
markets, and GAP adoption is preferred by several
of the domestic retail chains.

„ Adoption of EurepGAP within India is likely to

expand considerably in the coming years.
Mango Marketing in India – some
thoughts on the current situation
„ Quality grades and standards are poorly
understood and not utilized effectively in the
markets.

„ Current Harvest and Post-Harvest Practices

are not conducive to maintaining fruit
quality or shelf life.

„ If the goal is to extend shelf life and

maintain quality of mango for distant
markets, then approaches must change.
Seasonal Mango Price Fluctuation
in Indian Domestic Market
„ 2006 Alphonso Mango Prices in Maharashtra
– Stratified by Grade (size) and time of
arrival at market

No Grade Size (g) Market Price (Rs /dozen)

Time of the Season Start Mid End
1 A 250-300 173 118 70
2 B 225-250 NA NA NA
3 C 200-225 NA NA NA
4 D 175-200 69 45 35
Mango Marketing in India – some
thoughts on the current situation
„ There is a huge premium for being first to
market during the production season, as
prices collapse later in the season as the
“glut” of production arrives.

„ In reality, the goal when shipping mangoes

to distant markets (even “distant” markets
within India) should be to slow down fruit
maturation to maintain better fruit condition
and longer shelf life.
The Bottom Line

„ The production, harvest and post-harvest

practices need to be tailored to meet the
expectations / demands of the target
market.

„ Focus on opportunities to capture more

value through improved production and
post-harvest practices, and target
investments to help realize those
opportunities.