Daily Mains Answer Writing - PrayaasPrayaas – February 2019Prayaas – February 2019 – Week 2

Daily Answer Writing for IAS Mains Examination – PRAYAAS Series – Day 55

Q. Examine the role of supermarkets in supply chain management of fruits, vegetables and food items. How do they eliminate number of intermediaries? [Answer in 150 Words]     

 

MODEL HINTS

                                                                         

INTRODUCTION
Importance of Super Markets
  • The economic development combined with the use of technology has caused modernization of the supply chain management.
  • The impact of this modernization can be witnessed in the supply chain management of the agricultural commodities as well wherein the super markets have played an important role.
Connecting Line

The role of super markets can be examined as follows.

Supply Chain of Agricultural Commodities

BODY
Reduction in number of Intermediaries
  • Unlike the traditional mandis, the super markets procure directly from the farmers (near Urban centers) or through the aggregators (if farmers are located in distant areas).
  • Through instruments such as contract farming, the need for intermediaries like ‘village merchant’; ‘APMC Mandi’; ‘Wholesaler’; etc. is greatly reduced.
  • This process (also explained pictorially in the adjacent diagram), helps to eliminate the large number of intermediaries.

Transport cost reduces
  • Many farmers in India are small and marginal farmers who have little produce to sell. As a result transporting this small produce to the local markets or mandis for a marginal profit becomes a problem.
  • Procurement from the farmers at the farmgate either directly or through aggregators (farmers’ cooperatives, etc.) significantly reduces this problem.
  • This reveals that the supermarkets play an important role in streamlining the supply chain management which is beneficial for the farmers.
Better storage
  • Timely procurement and provision of better storage facilities by the super market helps in reducing the losses.
  • This to a great extent is absent in the APMC, which suggests the crucial role of super market in the supply chain management of the agricultural commodities.
Incentive for Quality & Better Farming Methods
  • Ensuring the quality is an essential component of the supply chain management.
  • Since the quality is directly associated with he reputation of the brands, it has been found that super markets ensure the quality as well as gradation of the commodities procured.
  • When farmers enter into a contract with the super markets, they are incentivized to use better farming methods that lead to a better quality produce.
Super Market beneficial for the consumers
  • A further examination also reveals that the impact of super markets in the supply chain management of the agricultural commodities has some benefits for the end consumer as well.
  • By operating on the principles of “low-margin and high volume” the prices of the commodities get significantly reduced for the end consumer.
CONCLUSION
  • Based on this examination, it is quiet evident that super markets have a crucial role to play in reducing the excessive number of intermediaries and the consequent impacts (negative) arising out of it.
  • However, to reap the benefits of the super markets to the full potential, it is important that the maximum number of agriculturalists are financially included (in the absence of which, dependence on APMC can not be tackled).
  • It is hoped that with time, financial inclusion will become better and the system of super market will evolve so that the benefits arising out of it can reach maximum number of people.

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