STUDY
OF MARKETING CHANNEL OF FRESH VEGETABLES IN NEPAL; PAST AND PRESENT SCENARIO
AND FUTURE MODEL OF MARKETING
Samita
Paudel
1.
INTRODUCTION:
Agriculture is the
major occupation of Nepalese peoples where 65.6 percentage of people are
involved contributing to 28.89% in National Gross Domestic Product (Agriculture
diary, 2075). Horticulture sub-sector has the most significant role sharing
21.42 percent (MOAD, 2016). In the year 2016/2017, the total cultivated area of
the country was about 3.09 million hectare, among which vegetable crops occupy
9.19 % of total cultivated agricultural land and the annual vegetable
production was found to be 38,59,492 metric ton with average productivity of
13.5 Mt/ha (MOAD,2017).
The demand for fruits and
vegetables is increasing due to increase in income and rising health
consciousness. Correspondingly, Government of Nepal has been encouraging crop
diversification which is increasing domestic vegetables production base
catering the urban and sub urban area demand. Almost all quantities of
vegetables required for consumption in Nepal are produced domestically.
However, the major quantity of vegetables are imported. In terms of export,
vegetable is the fifth important agriculture (CBS, 2013). In 2015/16, According
to department of custom 2017/18 Nepal imported edible vegetables and certain
roots and tubers worth NPR 23,729,259.84 and exported them worth NPR 11,39,866.1
with a trade balance of -22589393.74. This shows that there is good potential
for import replacement in vegetables. Improving production and marketing
efficiencies is one important way to uplift agricultural status of Nepal.
However, the country is not able to harness available market for vegetables,
and different factors at production and marketing levels hindering vegetable
business are not fully identified and abated.
Studies on
vegetable production and marketing to substantiate economic relation between
farmers and traders are limited in Nepal. Review of the literatures suggests
that in absence of satisfactory marketing system farmers are deprived from
satisfactory income and stop to cultivate vegetables for commercial purpose
(Pokharel & Thapa 2007).
Realizing the
importance of production potential and increasing demand of vegetables, several
programs have been conducted to promote commercial vegetable farming.
Agriculture Perspective Plan (APP, 1995-2014) had targeted the growth rate of
horticulture GDP to 5.5 percent per annum by 2014/2015 and growth rate of
vegetable GDP in particular to 5.42 percent per annum. In order to come up with
targeted growth rate of the agriculture, APP mainly emphasized on the
production of high value crops through the pocket packages strategy on crops
and horticulture crop in different areas of different ecological zones.
Similarly, under the outcome Profitable Commercialization, ADS has highlighted
enhancing development of the vegetables value chain through production,
marketing and policy/institutional support as an important activity. The
strategy has prioritized a limited number of value chains over the first five
years and vegetable sector is one among the top five sectors. A total of 27
wholesale markets, 553 collection centers and 149 retail markets are
established and services of market facilities are provided to the farmers.
Nearly 1038 Hat bazars are developed and direct marketing facilities are
provided to the rural farmers (MOAD, 2017). However, insufficient study on effectiveness
of better marketing channels in fresh vegetable consumers are paying large
amount in the purchase of products however farmers in the country are not
getting reasonable price for their products and the maximum profit is taken by
middle man. The present study is conducted with a view to analyze vegetable
marketing channel at present and in past and to develop a future vegetable
marketing model.
2. OBJECTIVES:
BROAD OBJECTIVES:
· To study and
analyze the fresh vegetable marketing channel in past and present and design a
feasible future models of fresh vegetable marketing
SPECIFIC OBJECTIVES:
·
To find out possible ways of improving the
operation of fresh vegetable marketing channels
· To suggest different
kind of fresh vegetable marketing channel and model (wholesale market,
collection center, hat bazaar, retail market and cold store)
· To suggest appropriate
support measures for the improvement of vegetable marketing systems
3. LITERATURE REVIEW:
Marketing:
Marketing in
general, refers to the process of price-decision for a good by seller and buyer
together, and market to the place where such decision takes place. Marketing as
a process involves many operations in price formation of a commodity such as
transfer, value addition and intermediation.
Marketing system:
Marketing system
refers to the channel along which commodity passes through a sequence of stages
or events, and it varies with commodity and other factors such as distance,
infrastructure and producer’s awareness.
For the marketing of the
vegetables in Nepal there are several marketing systems followed according to
the accessibility.
Channel-I
=
Farmers → Consumers
Channel-II
=
Farmers → Retailers → Consumers
Channel-III
=
Farmers → Collection Centre → Wholesalers→ Retailers → Consumers
Channel-IV
=
Farmers Collection center Wholesalers → Retailers → Consumers
Channel-V=
Farmers → Collection Centre → Middle man→ Retailers → Consumers
Channel-VI=
Farmers → Wholesalers → Retailers → Consumers
Figure
B: Marketing channels of fresh vegetables in Nepal
FRESH VEGETABLES PRODUCTION TREND IN
NEPAL:
The area and production
trend of vegetables in Nepal shows the increase in area and production of
vegetables from 2010/11 to 2013/14 however in 2015/16 the area under vegetable
production decreased though the production was in increasing trend. While in
2016/17 again the area and production both increased simultaneously.
TRADE OF FRESH VEGETABLES IN NEPAL:
The
import data of fresh vegetables shows the rapid increasing trend. In year
2068/69 the import of fresh vegetables and root crops was only 5.9 million
which increased to 23 million in fiscal year 2073/74. Similarly the data on
import of fresh vegetables shows the decreasing trend from 2.5 million in
2068/69 to 1.6 million in fiscal year 2072/73. However the import increased in
fiscal year 2069/70 compared to base year. The import and export data shows
there is large amount of import of fresh vegetables compared to export so there
is negative trade balance. If the proper production and marketing strategies
are followed there is a great scope of reducing import.
For the preparation of
this paper, secondary information and data are collected from different source
like Krishi diary 2075, research journals and articles. Different websites like
Department of Agriculture, Vegetable development directorate and Department of
custom were visited and required information were obtained. This paper is mainly
focused on developing understanding about present and past marketing system and
model of fresh vegetables in Nepal and providing an appropriate recommendation
for future marketing model.
5. FINDINGS:
In past years, marketing of fresh vegetables were done by farmers on their own. There was no
involvement of collection center and cooperatives in marketing of vegetables.
Farmers used to sell their surplus vegetables to the nearby market in Doko .In
past years, there was lack of transport and communication facilities so the most
of the products were sold to nearby areas. The activities of value addition
like grading , storage, and packaging were also not done properly so there was
huge post harvest loss of the vegetables.The farmers were compelled to sell
their vegetables in near by market at lower price. The marketing system of
vegetable prevailing in past was:
Channel-I: Farmers → Consumers (nearby
markets)
Channel-II: Farmers → Retailers → Consumers
Channel-III=
Farmers → Wholesalers → Retailers → Consumers
PRESENT MARKETING CHANNEL, STRATEGY AND
APPROACHES:
Along with the
development in infrastructure like agriculture roads, communication and
development of market structures like haat bazars, collection centers,
wholesale and retail markets. The marketing of fresh vegetables have been
easier and profitable business in these years. However several marketing
problems exist in the marketing chain of fresh vegetable. We can find several
types of marketing channel in fresh vegetables along with the variation in
place, time and seasonality of crops. The main practices of marketing of fresh
vegetables in present situation in Nepal are discussed below:
Farm-gate Selling
This is not a prominent
marketing practice. However, some farmers sell their vegetables to the buyers
at the farm-gate. In this mode of marketing, buying and selling of vegetables
is done in an individual basis. Buyers go to the farm, usually at a fixed time
given by producers, though it can occur at any time without notice. There are
two types of farm gate selling: organized and unorganized farmers’ collection
centres. The farm-gate price is higher in the organized farmers’ collection
centres than in the unorganized farmers’ collection centres.
Direct Selling
Many small farmers prefer
to sell their products after harvesting by them, believing that they will get a
better price for their produce this way. In this case, after harvesting,
farmers do general grading and bring their produce in bamboo baskets (Doko) to the nearby markets on foot.
In some cases, they have permanent buyers in the bazaar (local market), and sometimes they visit house-to-house
carrying their vegetables. This is time consuming and exhausting. Some farmers
have improved this method by using bicycles and motorcycles.
Selling to Middlemen
Direct selling practice
is decreasing as the volume of production increases. It is not possible or
profitable for producers to sell their products directly to consumers, so
selling to a middleman is often adopted strategy by small-scale farmers. In
addition, door-to-door selling makes price setting difficult because farmers
have little information regarding prices being charged by other sellers.
Engaging a middleman who is willing to collect products from different
producers and sell them to retailer to consumers provides employment and income
to both producers and the middleman. Irrespective of volume, a middleman
collects products from producers in rural areas, and after collecting a large
enough volume, he/she sells to the retailers’ shops in urban areas. In areas
where there is no strong cooperative network and road access to farms is
limited, middlemen are the key actor to bring products into market place.
Group/ Collective
Marketing
Farmers in marketing
groups or cooperatives bring their produce to collection centers that are
managed by farmers marketing management groups and they sell to the traders at
collection centers.
Wholesaler/Wholesaling:
These include organized entrepreneurs who are engaged in getting produce from
the farm to consumers using various linkages. The wholesalers based at Kalimati
market play a dominant role in vegetable marketing as they are based in the
central wholesale market of the country. They operate directly or have agents,
buy produce from the traders, and the farmers.
Retailers/Hawkers:
Retailers for agricultural produce comprise fixed retail shops (often
multi-purpose stores selling all types of grocery items), roofed sheds, and
enclosed/lockable publicly owned market sheds and open street markets. Fruits
and vegetables are sold by street hawkers, selling from bicycles, four-wheel
carts, doko, tokari, kharpans, etc.
The typical market channels at present for
fresh vegetable from produce to consumers are as:
Channel-I
=
Farmers → Consumers
Channel-II
=
Farmers → Retailers → Consumers
Channel-III
=
Farmers → Collection Centre → Wholesalers→ Retailers → Consumers
Channel-IV
=
Farmers Collection center Wholesalers → Retailers → Consumers
Channel-V=
Farmers → Collection Centre → Middle man→ Retailers → Consumers
Channel-VI=
Farmers → Wholesalers → Retailers → Consumers
Future marketing system and marketing
model:
The general concept of
vegetable marketing implies that marketing of vegetable products begins at the
farm when the farmer plans his production to meet specific demands and market
prospects. The harvester’s product cannot usually go directly to the consumer.
The production site is likely to be away from the place of consumption. Thus
the transportation is required to bring the product. Vegetable production is
generally seasonal while consumption is regular and continuous throughout the
year. Thus, storage is required to adjust supply to demand. Similarly, a
product is rarely in a form acceptable to consumers. It must be sorted, cleaned
and processed in various ways, and must be presented to the consumer in
convenient quantities for sale. Moreover, the farmer expects payments when his
produce leaves his possessions. Some financial arrangement must be made to
cover all the various stages until the retailer sells the product to the
consumer. So the future marketing model should satisfy all the stakeholders in
the marketing channel. The collective marketing through collection centers can
help small farmers to reduce the cost incurred in transport and various value
addition functions of fresh vegetables so that farmers can fetch good price for
their products. Similarly, the marketing of fresh vegetables is done best
through cooperative marketing. Cooperative can be a key organization in the
promotion and development of fresh vegetable market in Nepal. Cooperatives can
be enhance people's participation, promote market oriented production systems,
increase the bargaining power of the farmers, supplement the existing service
delivery system, provide credit and mobilize savings, facilitate in the
implementation of the government programs.
Cooperative are involved in value addition through processing, helping
the farming community indirectly by stabilizing the market place, and
developing the new markets or creating new consumption by supplying newly
developed processed items. In addition, it protects local farmers and consumers
by checking and interfering in the business carried out by large private
companies, who try to maximize their benefits in domestic markets by unfair
market control. It strengthens the bargaining power of member farmers as they
are not compelled to sell over-produced volume at dumping –level prices when
cooperatives have the capacity to absorb this excess volume. The future model
for marketing of fresh vegetables can be as:
Channel-I
=
Farmers → Collection Centre → Wholesalers→ Retailers → Consumers
Channel-II=
Farmers → Cooperatives→ Wholesalers → Retailers → Consumers
Channel-III
=
Farmers Collection center Wholesalers → Retailers → Consumers
Channel-IV=
Farmers → Collection Centre → Middle man→ Retailers → Consumers
6. SUMMARY AND CONCLUSION:
Vegetable
production and marketing potentials of vegetable farming could be harnessed
only through improved performance of production and marketing systems. Besides
small quantity of farm produces disposed beyond road-head via farmer-collectors
on commission basis, the farmers, in major, transact the produces directly to
private traders at road-head through price-negotiation. Local cooperatives and
the cooperative-run collection-centers facilitated in the transaction process.
Because of perishability of the produces and lack of proper storage, the
farmers have weaker position in price negotiation. The Cooperative can play
important role in equal distribution among the farmers as income disparity
.Farmers are dedicated to vegetable production with utilizing large proportion
of their land under vegetable cultivation. Higher producer share in the case of
cooperative involved marketing. Farmers, in marketing cost in the case of
private marketing indicates the efficiency of cooperative involved marketing
channel. A member of the cooperative or the member of the other social groups
know more about the benefits of joining cooperative and more involved in
selling through cooperative channels. Although directly or indirectly
cooperatives greatly facilitate in the market of the vegetable by facilitating
in getting fair prices, inputs and training but they seem fail to consume a
large amount of the produce. Because of this reason, small scale farmers are
more likely to market their vegetable through cooperative channels.
7. SUGGESTIONS:
For the further
enhancement of fresh vegetable marketing in Nepal, some interventions are required.
These are:
1. Government
should provide market network and market information to quality inputs supply,
vegetable demand, prices of vegetables, minimise malpractices and losses;
2. Most
of the vegetable growers in Nepal are using bamboo basket or jute racks for
transporting vegetables to the market. Therefore, government should provide
training to vegetable growers regarding packaging materials etc.
3. Before
marketing wholesalers should do follow proper grading, cleaning and storage
practices. Therefore, government should provide training to whole sellers
regarding this to reduce vegetables quality and enhance net income from the
vegetables.
4. There
is need to enhance farmers’ share in consumer price and enhance market
efficiency by reducing the actors in marketing chain.
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Export and Import
situation in fiscal year 2068/69 to 2073/74
|
SN
|
Fiscal year
|
Import
|
Export
|
Trade balance
|
|
1
|
2068/69
|
5,935,625
|
2,561,117
|
-3,374,508
|
|
2
|
2069/70
|
9,220,380
|
2,802,669
|
-6,417,711
|
|
3
|
2070/71
|
12,182,855
|
2,060,829
|
-10,122,026
|
|
4
|
2071/72
|
15,206,309
|
1,553,915
|
-13,652,394
|
|
5
|
2072/73
|
17,958,156
|
1,606,611
|
-16,351,545
|
|
6
|
2073/74
|
23,729,259.84
|
11,39,866.1
|
-22589393.74
|
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