Terminal Markets

A bumper crop can turn out to be a big loss for farmers in the absence of efficient marketing system. Efficiency of agricultural marketing in the country is low as a result of inadequate and improper infrastructure facilities, large number of intermediaries in supply chains and archaic marketing policies. Most of the time farmer is not receiving even 50% of the price paid by consumer for perishables. About 25-30% of perishables produced are wasted due to inefficient handling, transportation and storage conditions. Various measures initiated by governments during the last six decades to protect the interests of farmers and consumers failed to achieve the desirable results.

Ministry of Agriculture has introduced Terminal Markets as a new component under National Horticulture Mission launched in 2005-06 for holistic development of horticulture. Government has ambitious plans of starting terminal markets in Nasik, Mumbai, Chandigarh, Sambalpur, Hyderabad, Visakhapatnam, Tirupati, Hassan, Hubli and other places to address the marketing problems of fruits and vegetables. First terminal market in the country named as Safal Market was started by Mother Dairy Fruit and Vegetable Ltd, a subsidiary of NDDB, in Bengaluru in May 2004 on the request of Government of India.

The objective of proposed terminal markets is to reduce the number of intermediaries in supply chains, improve the marketing efficiency and infrastructure facilities, bring transparency in marketing and to protect the interests of farmers and consumers.

Concept of Terminal Market Complex:
Terminal markets were envisaged to provide all the required facilities and services for marketing under one roof and connecting farmers directly with wholesalers, retailers, processors and exporters. The operation of Terminal Market is based on hub-and-spoke format in which the Terminal Market acting as a hub is connected to many collection centers which act as spokes. The Terminal Markets would be located near cities (consumption centers) and collection centers would be conveniently located at villages’ level (production centers). The catchment area of a collection center depends on convenience needs of farmers like transportation to collection center, operational efficiency and capacity utilization at the center. Terminal Markets would establish backward linkages with farmers through collection centers by forming groups or associations and forward linkages with wholesalers, retailers, cash and carry stores, processors and exporters. It is envisaged to provide world class infrastructure and facilities at terminal markets which include cold storages, temperature controlled warehouses, ripening chambers, facilities for electronic auction, quality testing, packaging, banking and transportation. Revenue for terminal markets would be generated in the form of service charges, rent and license fee. Terminal Markets in the country are envisaged to be built, operate and owned by a private enterprise selected through a competitive bidding process.

Governments’ initiative to encourage private sector participation to set up terminal market complexes is commendable. However, this ambitious initiative should not result into another failure in agricultural marketing. Proper care should be taken in execution and establishment of operations of terminal market complexes. Creation of infrastructure facilities will be the easiest part of the projects and difficulties may be encountered in backward and forward linkages. Comprehensive studies may be undertaken before starting other markets to find the efficiency, viability and potential problems in implementation and operation of existing Safal Market. Studies will help in making suitable amendments in the proposed plans and avoid repeating some of the mistakes, if any, of the existing market. Other terminal markets may be started only if the present market is working according to desired objectives. Terminal markets should not make way for mere replacement of small traders/intermediaries with larger enterprises without achieving the actual purpose for which they were designed. The range or maximum amount of service charges that can be collected by terminal markets has to be specified by governments before starting of bidding process for markets.