CHAPTER 1 INTRODUCTION

It is true that inventions changed the face and pace of the world. Yet man has an endless craze for food and food drinks. Among the beverages, soft drinks occupy a place of pride. The soft drinks are preferred by all categories irrespective of sex, age status, and dignity of course they have a unique place in the diet pattern of man. Realizing this truth entrepreneurs all over the world has shown tremendous interest in the industry. As a result this soft drink industry is characterized by a paradise for the dynamic and successful entrepreneurs. In todays competitive world, a farmer has to fend for everything right from finance, procuring inputs, farming for production and marketing for profitability. Each activity is an expert area and we cannot expect a farmer of limited resources and exposure, to be competitive. Producer Company is proposed to take over all responsibilities from the farmers groups, leave them to farm, making them sustainable, where they remain stakeholders to the end. The concept of producer companies was introduced in 2002 by incorporating a new Part IXA into the Companies Act based on the recommendations of an expert committee led by noted economist, Y. K. Alagh, that was given the mandate to frame a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies, while ensuring the unique elements of cooperative business with a regulatory framework similar to that of companies. Producer Company will do everything to ensure that a member farmer is left to farming and on farm activities, rest everything should be the responsibility of the PC. Some such duties are indicated below: The producer company helps farmers for training members on good agricultural practices based farming system approach and low cost and environmental friendly inputs. They also procure produce at a price committed at the time of sowing/planning. Nadukkara Agro processing Company has been promoted by the Kerala Horticulture Development Programme (KHDP), a project funded by European Union and Government of Kerala, designed to utilize the rich agricultural potential and promote cultivation of high-value horticultural crops in Kerala with key benefits going to farmers. One of the components of this Programme was been to establish a modern fruit-processing factory for the commercial processing of pineapple, mango and other fruits for value addition and ensure supplementary
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income to farmers through successful transfer of technology. The factory is situated at Nadukkara, Avoly Panchayat, near Muvattupuzha in the heart of Kerala's pineapple growing area. The factory gives committed importance to international standards and is ISO 9002 / HACCP certified. During 1992, the European Union signed an agreement with the Republic of India to provide financial assistance aimed at improving farmers income by increasing production of high valued crops. Accordingly Kerala Horticulture Development Programme (KHDP) was initiated under the programme Directorate. One component of the progrmme was to set up a modern fruit processing factory to impart value addition of fruits on a pilot scale. Global tenders were invited in 1994 and contract was awarded to an Italian Company M/s.Alberto Bertuzzi Spa in 1996. The factory was completed with an investment of 26 crore in 1998. Nadukkara Agro Processing Company Ltd was established to operate the said modern fruit processing factory in commercial lines. The local farmers was permitted to hold 70% of the share in the NAPC. NAPC is playing a vital role in the Agro Processing Sector this region by benefiting the farmers as well as consumers. What is unique about NAPC is its farmers participation. There are four farmer directors in the Board of Directors to ensure farmers participation in management. NAPCL proposes to expand its activities by setting up additional common infrastructure facilities to be managed by it. This will help the company to maximize the utilization of existing facilities in addition to open up a new business opportunity to fresh fruits export. These common facilities will be shared with other exporters, farmers and other processors. 1.1 STATEMENT OF THE PROBLEM In a farmer producer company only certain categories of persons can participate in the ownership of such company.The members have necessarily to be primary producers. The main advantages of Producer Company are their agri-experts provide advice on crop planning and latest farming techniques. Under this guidance the farmers produce and supply the factory with the desired top quality produce. It may be important to evaluate whether the model still meets the expectations of both the company and farmer producers or if there is need for modification. Therefore the study envisages analyzing the effectiveness of the production system linkages of NAPCL with the following specific objectives.
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1.2 OBJECTIVES To study the farmer linkages of the NAPCL in the agricultural raw material

procurement To delineate the factors influencing the performance of linkage model followed by the company To evolve strategies to overcome the limitations, if any in the existing system.

1.3 METHODOLOGY I. Data collection The study is based on both primary and secondary data .The major agricultural raw material required by the company includes pineapple and mango. Supply of fresh pineapples comes mainly from the registered farmers (the 70% shareholders of the company) within the surrounding panchayats of the company. So primary data will be collected through survey method from the 30 farmers who contribute the major portion of raw materials of the company and information will also be collected from field officials of NAPCL through personal interview using structured schedule and interaction with the people in the organization. Secondary data will be collected from office record of NAPCL, journals, magazines, internet, records, published accounts etc. II. Sample selection A sample of 30 respondents was randomly selected .All the respondents were farmers from whom the company procured raw material. The sample comp resides of respondents from19 surrounding panchayats. III. Survey A questionnaire was prepared to conduct a survey among the registered farmers. The survey was mainly conducted in the surrounding pachayats of the company.

IV.

Data analysis Collected data were analyzed using appropriate tools like percentage, arithmetic

mean, standard deviation etc. And also Process mapping used to identify the Linkage model followed by the company for raw material procurement. 1.4 OBSERVATIONS TO BE MADE Seasonal data on quantity of fruits procured from different sources. Procurement price, market price, quality assurance procedure. Sources of procurement of Agri raw materials. Frequency of procurement of raw materials. Type of linkages with different stakeholders for the procurement of raw material. 1.5 SCOPE OF THE STUDY This study will mainly focus on production system linkages to procure the raw material. It helps to improve the efficiency in procurement of raw material and reducing the cost of procurement. It helps to evolve strategies to overcome the limitation of the existing system model with more efficient linkages with farmers. 1.6 LIMITATION Due to the time limit the study has to be confined to a single firm & as such cannot be generalized. 1.7 PRESENTATION OF THE PROJECT REPORT The report is presented fewer than five chapters. The first chapter deals with introduction, statement of the problem, objectives, methodology, observations to be made,
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scope and limitation of the study. The second chapter viz. reviews of literature deals with review of selected important and related studies in the field of present investigation. In the third chapter the profile of industry and company are included. The fourth chapter deals with the results of the study and the discussions thereon. The last chapter summarizes the study with implications. The references and annexure are given at the end.

CHAPTER 2 REVIEW OF LITERATURE

The review of literature is an attempt to cover various literature related to the procurement system of raw materials and farmers participation in the farmer producer company. Avery few studies on these aspects to understand the various aspects of the world markets are also attempted here and is aimed at providing a theoretical base for this study. Dwivedi (1985) viewed that the expectation of farmers from the agriculture, results are the expectation of farmers while carrying on agricultural activities is, beyond meeting his consumption needs, to be able to get a reasonable return on the time and money invested by him. Also his desire is to increase his share in the consumer rupee. According to Schwalbe (1989) the term procurement means acquiring goods & services from outsource. The term procurement is widely used in Govt ;many private companys used the term purchasing & IT professional used the term outsourcing. Organization individuals who provide procurement services are referred to supplier vendors, contractors, subcontractors, or sellers with supplier being the most widely used term. According to Irani committee (1995) the producer company clause should be taken out of the purview of the companies Act. It is of the View that the producer company does not fit the definition of a company. If need be, there could be separate legislation for producer companies. This recommendations of the committee has come at a time when the concept was just picking up pace in terms of its practice at the producer level and many development agencies seemed to have found away to organize producers in a market oriented economy. Any tinkering with the law at this juncture will certainly create trouble for the existing and new producer companies.
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Abdul and Kaul (1998) reported that the main constraints in marketing of pineapple in district of Meghalaya state were fluctuating market price, heavy cost of transportation and substantial wastage during transportation. A survey by NISER (1999) on the strategies used by agribusiness firms suggests that the use of buying agents and direct purchase from the open market are quite popular amongst agribusiness firms. The soft drinks, livestock feeds, biscuits, and beer agribusiness sub-sectors mostly source their agricultural raw materials by direct purchase from farmers. This indicates that these sectors actually encourage farm agribusiness linkages. Use of contract farmers is virtually non-existent for all agribusiness firms except in the beer and flour-milling industries but at very low levels. The impact of farm agribusiness linkages on rural income and employment is likely to be lowest for the pharmaceuticals, confectionery, vegetable oil, and flour-milling industries. According to Quentin (2003) Procure management planning is a document that describes how the procurement process will be managed from developing documentation for making outside purchases or acquisition to contract closure. According to Reardon (2005) the transformation of the food industry sector spread of supermarkets, changes in the procurement system, modernizing of processing presents big opportunity for farmers that are capitalized and organized. However, the food industry firms do not like to buy directly from individual small farmers (too much transaction cost); hence, options are the brokers/wholesalers, contract farming and small farmers organizations (SFOs) or cooperatives According to Raghavendra (2007) Problems encountered in the production and marketing of pineapple crop are cent per cent of the respondents were facing the problem of lack of regulated markets, where as high majority of the farmers facing problem were low market price for the produce (97.50%), followed by micronutrient deficiency in soil (92.50%), lack of storage facility (88.12%), lack of technical guidance (85.63%), lack of processing units (80.00%), non availability and high labour charges (70.63%). Further less than sixty per cent of respondents expressed, exploitation from pre-harvest contractors and middle men (57.50%) and non availability of required quantity of fertilizers in time (33.12%).
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Murray (2009) reported that Current Status and Future Outlookshows, the objects of producer companies shall include one or more of the eleven items specified in the Act, the more important of these being Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of members or import of goods or services for their benefit. According to National Rain fed Area Authority (2009), Growth in demography, urbanization and industrialization calls upon highly dynamic food and income security system in the pre-dominantly agrarian economy of India. Enhancing productivity and marketable surplus by delivering latest technologies, quality inputs, credit and value addition by aggregating primary production of more than 80% small and tiny holders is a very unique and indigenous business process. Innovative, alternative and regionally differentiated institutions are called upon to establish public-private small primary producers partnership. Primary Producers Ltd. Companies (PPC) are quite unique since they eliminate deficiencies in the existing systems of supply of inputs, credit, collection and processing. There is a lot of interest among the corporate, trans-nationals and joint ventures to establish contact, contract and corporate farming in the food supply chain especially fresh fruits. According to Sreelakshmi (2010) middlemen and local farmers play an important role to ensure continuous supply of raw materials for the production. Availability of raw materials was not found to be a great problem. Price and quality were reported as creating difficulties in procurement. Procurements are based on requirement, which reduces wastage of raw material. And also helps to minimize usage of preservatives for storage. SFAC (2010) process guidelines covers their objective to facilitate access to fair & remunerative markets including linking producer groups to marketing opportunities by market aggregator. The output attained through this objective was sustainable and competitive linkages for marketing exist for their produce and Families in production clusters have multiple options to sell farm produce.

According to Ashish (2011) a producer company is thus a hybrid between a private limited company and a cooperative society. It combines the goodness of a cooperative
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enterprise and the vibrancy and efficiency of a company. It accommodates the unique elements of cooperative business with a regulatory framework similar to that of a private limited company. Therefore the intention behind insertion of the concept of Producer Company in Companies Act,1956 is to ensure a more beneficial and easy adaptable regulatory framework of such companies and it is to be well noted that whether it is a Producer Co-operative registered under Co-operative Societies Act, or a Producer Company under the Companies Act, they both serve for the common purpose as to serve its members and work for their betterment.

CHAPTER 3 INDUSTRIAL PROFILE &COMPANY PROFILE

3.1 INTRODUCTION India is the second largest producer of fruits and vegetables. Its processing level is estimated to be around 2% as compared to about 80% in Malaysia, 30% in Thailand and 6070 % in UK and USA. A strong and dynamic food processing industry is important for diversification and commercialization of agriculture. It ensures better value addition to the agricultural products, generates employment, enhance income of farmer and creates surplus for export of agro goods. Food processing covers a spectrum of product from sub sectors comprising agriculture, horticulture, plantation, animal husbandry and fisheries. India has abundant availability of wide variety of crops, fruits vegetables, flowers, livestock and sea food. Diverse climate condition and long coastline have contributed to Indias position as leading food producer. While India has an abundant supply of food, the food processing industry is still nascent with only 2% of fruits and vegetables and 15% 0f milk produced are processed. Kerala, a land of splendid combination of natural gifts, enjoy a very rare blend of its own. Nature has gifted the place with mountain and valley which offer a bountiful variety of produce from its soil including fruit that are a rich source of palatable and healthy nutrition. Kerala share many unique qualities that make it Indias one of the most promising industrial destination. The state has highly skilled personnel for all type of jobs, abundant natural resources, excellent transport and communication network and the strategic location on the corridor connecting Europe and pacific rim makes it well connected by air and sea route. In the soft drink sector there are 54 units in the organized sector with an installed capacity 3562 million bottles per annum. Besides the organized sector with which according to some estimated account for 25% of total production to soft drinks. This was again estimated at 5670 million bottles. Multinationals like Pepsi and Coke have entered this industry in India recently. As per the latest data on consumption pattern, Indian consumers as a whole, spend about 55% pf the total consumption expenditure on food items, consisting of cereals and substitutes, milk products, sugar, edible oils, meat, eggs and fish.
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3.2 FUTURE OF THE INDUSTRY Because of liberal Government and other developmental measures taken the future of the industry looks very bright. The production base is being enlarged modern methods of cultivation are being adopted thus improving the productivity and cutting per unit cost. To some extent cold chain is being provided which will help in retaining quality, freshness and reduce post harvest losses. With the new hybrid varieties being added production season is also being extended.

Nadukkara Agro processing Company holds 30% of market share in the case of soft drink sector. There are 32 soft drink manufactures in India. The main competitor of the Jive is Mango Fruity from the Parle product.The demand for the juices and fruit based beverages is increasing in the state. The fruit juice industry has a promising future.

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3.3 COMPANY PROFILE

The original agreement for the company was made in 1992 between the European economy and the Government of India, and it took almost 8 long years to commission this company and its commercial operations. The Government of Kerala and the visionary planners have encouraged and supported this venture ardently to make this reality .Directors have always been sensitive to the fact that NAPCL is the company of the farmers, for the farmers and by the farmers. Consequently the objectives of the company are divided from this vision. It has been the endeavor of the company to strengthen the linkages with the pineapple farmers and channels the flow of benefits to them. This company is also a major provider of employment in this backward region and a provider of sustenance and livelihood to large number of families. The company disbursed an amount of Rs 60 lakhs as wages and salaries to the staff and workers during the year under report. The fruit processing factory was taken over in July 1998 from the Turkey contractor Alberto Bertuzzi of Italy. This was followed with training of technical aspect, trial production and performance assessment. Jive is the brand name for the products of the organization. Jive is the outcome of the project promoted by the Kerala Horticulture Development Program (KHDP). It is an avenue of the European Union and Government of Kerala. KHDP promotes the growth of high quality horticulture and provide substantial direct benefit to farmers. It has set up as a factory for processing of mango, pineapple and other tropical fruit. Mainly the company produces pineapple juice concentrate bulk both for exporting and for domestic market. They also manufacture RTS in tetra pack fruit candies, mango concentrates etc. NAPCL also have license from FPO and SGF, this is from ministry of processed foods and products association of fruit juice. They also have certificate from IRMA (International Rae Material Association).the company ensures good quality of produce all the processing is done aseptic condition. Make the entire product under specification of European Standards. Companys main products are Jive pineapple juices 250 ml tetra pack. This contains pineapple juice without any preservatives or artificial coloring agents; Jive splash 250 ml, Pineapple nectar, Jive splash, jive fundo and fruit candies.

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Supply of fresh pineapples comes mainly from the registered farmers (the 70% share holders of the Company) within the surrounding Panchayats of the Company. The Company provides consultation on crop planning and farming methods to the farmers. The Company's agriculture experts frequently visit the farmers to give proper guidance. This ensures that farmers are able to supply the factory with exactly the ideal crop of high quality on a consistent basis. NAPC also offers price guarantee, which also ensure stability of supply. NAPCL also provides employment to a good number of people in an around Avoly Panchayath, resulting in the overall development of the human community. Women forms a good portion of the employees in the company, thereby NAPCL advocates women empowerment too. The umbrella brand JIVE of NAPCL therefore, stands as a symbol of quality product, value addition,upliftment of farming community and women empowerment. NAPCL is incorporated under the Companies Act 1956(NO.I of 1956) on 1st December 1999. The main objects to be pursued by the company are: To carry on the business of production, processing and marketing of horticultural and agricultural products.

Ancillary objects:
To optimize the income of the farmers by ensuring higher yields for their

produce by channeling to the company horticulture and agriculture produce of farmers for processing value added products by using modern technology and thereby to provide direct access to the farmers for horticultural and agricultural processing and to optimize the profits of the company for the benefits of such farmers. To carry on research and development in agricultural and horticultural produce and products to develop and sustain higher yielding strains of such produce. The authorized share capital of the company is Rs.10000000/-(Rupee one crore) divided into 1000000(ten lakhs) equity shares of Rs.10/-(Rupees ten) each which may the increased or reduced in accordance with the provisions of the Companies Act, 1956.

MISSION STATEMENT Be an integrated model for the production of fruit produces of international quality and
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achieve best value addition for the benefit of farmers. NAPCLS PRODUCT RANGE INCLUDES: Pineapple and Totapuri mango juice /Juice concentrate in aseptically packed Bag-indrum. Fruit candies from Pineapple, Papaya, Ginger
Ready-to-serve (RTS) Juice/Nectar (branded JIVE) based on pineapple and

pineapple/mango tropical mix for retail in 250 ml/200 ml Tetra Brix cartons promoted as natural juice/nectar.

STATE-OF-THE-ART PROCESSING
As the factory is situated in an area that produces an abundance of premium quality horticulture products, the fruits procured for processing are very fresh and used immediately after harvesting. Produced by selected farmers from the best quality suckers and managed with care from planting to harvest, the produce is plucked at the perfect moment for processing .The processing plant therefore handles the finest fruits and produce concentrate, RTS and candies of international standards. The Company gives prime importance to quality checks at every stage of production. Under controlled processing conditions, the product reaches the market with uniform taste, aroma and flavour. Mechanized processing at every stage ensures that quality is maintained throughout. The company at present has three product lines - Concentrate Line, RTS Line and Candy Line.

HACCP POLICY AT NAPCL

NAPCL dedicates all its resources to develop, implement and maintain a HACCP based system, which could ensure production and supply of hygienic, safe and quality fruit pulp and juice concentrates, fruit candies and RTS drinks to achieve customer satisfaction. 1) Customer satisfaction related to food safety will be above 8 on a 10 scale point for the year 2009-10

2) Minimum number of training programs related to food safety conducted for workers will be one in a year 2009-2010.

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3) Minimum number of training programs related to food safety conducted for operators will be one in a year 2009-2010. 4) Sanitation and hygiene in the plant will be always above 8 on a 10point scale during the period 2009-10. MANAGEMENT RESPONSIBILITY The Food safety is documented and communicated throughout the organization. The suitability of the policy is reviewed during the management review meetings. Amendments if any will be recorded and communicated. Through effective verification it is ensured that the HACCP system is implemented effectively. HACCP TEAM The team at NAPCL is responsible for developing, implementing and monitoring the HACCP system. They are responsible for the verification of the layout flow diagram to ensure continuing stability. they are responsible for participating in HACCP team meetings. They are responsible for hazard analysis and CCP decision making. They should participate in the management review meetings. HACCP includes Administrative officer, Manager (Quality Assurance and Procurement), Storekeeper, senior utility and Maintenance Engineer, senior production Engineer, shift supervisor, Quality Assurance assistant handling microbial analysis and Quality assurance Officer. PRESENT INFRASTRUCTURE: The present infrastructure facilities established in the factory mainly for processing activities like juice extraction, concentration and aseptic filling of fruit like pineapple and mango. There are facilities for production of tetra pack drinks and fruit candies. The plant is ISO 9001-2000 certified and HACCP certified.

CHAPTER 4 RESULTS AND DISCUSSION

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Collected data were subjected to both descriptive and relational analysis to suit the objectives of the study and the results are presented and discussed under the following heads. 4.1 Socio-economic profile of the registered farmers 4.2 Process map of the linkage model followed by NAPCL for raw material procurement 4.3 Limitations and recommendations for improvement of the linkage model 4.1 Socio Economic profile of the registered farmers Results of socio economic characteristics of pineapple farmers who were shareholders of NAPCL are presented in Table 4.1.The results indicated that 66.7% of farmers belonged to middle age category. The average age of the registered farmers was 51.1 years. In case of educational status of the respondents, 43.3% of them were of high school education and none of the respondents were illiterate. Average educational level of them was of 10 th standard. Annual income of around 73% of the farmers was 1.14 lakhs and belonged to the middle income category. Average yield of pineapple of 43.3% registered farmers was 11.3 tonnes/acre and had two harvests per year. Average procurement of pineapple by NAPCL for the last five years was 5.91 tonnes/year and was contributed by around 36.67% of the registered farmers. Average of farm area owned by 23.33% of the registered farmers was 2.3 acre. Among them around 3.3% of them were Marginal scale farmers and the average area owned was 2 acre, around 16.67% of them were small scale farmers owned an average area of 3.8 acres .Among them medium scale farmers were around 3.3% and they owned an average area of 8 acres. Leased farm area of 76.67% of the farmers was 4.3 acres. Annual income from pineapple of around 73.33% of farmers was .96 lakhs.

Table 4.1 Socio Economic profile of the registered farmers (n=30)

SL.No Variables Average score (unit) Percentage %
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1 2 3 4 5 6 7 8 9 10 11

Age Education Annual Income Average pineapple yield Average quantity procured by NAPCL Farm size-owned marginal scale farmers small scale farmers Medium scale farmers Area under leased farming Income from pineapple

51.3 years 10
th

66.67 43.33 73.33 43.33 36.67 23.33 3.33 16.67 3.33 76.67 73.33

standard

1.14 lakhs 11.3 Tonnes/acre 5.9 Tonnes/year 2.3acres 2 acres 3.8 acres 8 acres 4.3acres .96 lakhs

4.2 Process map of the linkage model followed by NAPCL for raw material procurement
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Price fixing

Processing unit

Requirement estimate

TV/Print/Radio

Marketing Department
Price fall information

Press release

Quality &
Procuremen t

Procurement registered

Purchase order

Registere d Farmers

Departmen t
Transportation

Pack house

Price receipt

Quality Accepted lot Assurance Rejected lot Seasonal workers

Fig 4.1 Process map of the linkage model followed by NAPCL

Fig 4.1 process map showing the existing farmer linkage model of raw material procured by NAPCL

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NAPCL had different departments which are responsible for procurement, pricing and ensuring the quality of raw material viz. Quality and procurement department, marketing department, processing unit. Marketing department analyses the market and observe the price prevailing in the market. Quality and Procurement department had a mechanism for receiving information about the price fall from the marketing department. The linkage model shows direct connection between Quality and Procurement department and the registered farmers. If there was a heavy price fall in the market, the pricing committee which includes the chairman, managing director, administrative officer, production manager, marketing manager etc...Will fix the minimum fixed price of the raw material. While fixing the price they consider the cost of production, transportation, marketing and profit. Then the processing unit will estimate their present inventory and requirement of the raw material. Quality & Procurement department informs the registered farmers about the procurement through a press release in the local TV channels, radio and the Newspapers. After receiving the information concerned registered farmers will registered and receive purchasing order which includes the quantity, date of procurement, rate and other details from the Q & P department. The company informs regular seasonal workers for procurement, at the same time they reduce the number of shifts in 3 to 2 in the existing production system and used those employees for procurement and make arrangement for receiving the raw material at the pack house. Then Q & P department will receive the raw material from the registered farmers who made the purchasing order. The main disadvantage of this model is that the raw material must be transported by the farmers themselves to the company. So they had to incur the cost of transportation. Then the agri-experts ensure the quality of raw material. They collected only partially ripped fruit and graded each raw material on the basis of the weight of the raw material. Normally pineapples are classified in to 3 grades A, B, and C. The pine apple having the weight 1.5 Kg and above was graded as A and between 900gms-1.5kg was graded as B and below 900gms was graded as C. These grading helps to ensured the quality and the juice content was different for each fruit having different weights. The company provide Rs.8 & Rs.5 for A grade and B grade pineapple respectively. They are not procuring c grade pineapple which goes into the rejected lot. An Integrated Pack House was constructed at the Nadukkara Agro Processing Company to store fresh pineapple. Utilizing the pack house and allied technologies, fresh
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pineapple can be kept as farm fresh for about a month. Around 200 tonnes of fresh pineapples can be packed into the house at any given time. Q & P department provide price receipt to the registered farmers. The company always try to fix a price which ensures support to farmers at the time of a price fall in the market. When the market price is high the pulp and concentrate stored were used for production.The model indicated that direct connection exists only between the quality and procurement department and registered farmers. The objective of the company to produce value added products from tropical fruit ensuring supplementary income to farmers has been fulfilled to an extent by procuring pineapple fruits from registered farmers by fixing a minimum price, especially beneficial to the farmers when there is a glut in the market. We try to analyse the effectiveness of model by analysing the procurement trends of the past five years. The details are depicted in table 4.2.

Table 4.2
Year

PINEAPPLE PROCUREMENT OVER THE PERIOD OF 2007-2011

2007 3 AprMay,Sept,Dec 741104 4117401.27 5.55 101939 143232.52 1.4 843043 4260633.79 5.05 2008 3 Jan,July,O ct 70037 329606.6 4.7 9207 29587.12 3.21 79244 359193.7 2 4.52 2009 1 May-June 384572 2282703. 25 5.93 31109 97211.9 3.12 415681 2379915. 15 5.56 2010 2 Feb,Nov 205699 1645592 8 10497 50385.6 4.8 216196 1695977 .6 7.84 2011 1 Aprmay 339881 2719048 8 11763 56462.4 4.8 351644 2775510 .4 7.89

Number of Procurement Month of Procurement A grade Quantity(Kg) Cost of procurement(A) Rs Average cost of A grade Quantity/kg B grade Quantity (Kg) Cost of procurement (B) Rs Average cost of B grade Quantity/kg Total Quantity of procurement(Kg) Total cost of procurement Average cost /kg (Rs)

The above table represents the details of pineapple procurement over last five years. Table 4.2 indicated that NAPCL entered into direct procurement from farmers ten times over the past five years. In 2007 and 2008 three times the company procured pineapple and in
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2010 two times the procurement was made. The least number of procurement was made in 2009 and 2011 that was once in a year. In case of procurement of A grade and B grade pineapple the highest quantity was procured in 2007 and it was 741104Kg and 101939Kg respectively. The least quantity of both A grade and B grade was procured in 2008 that was 70037Kg and 9207Kg respectively.

Fig 4.2 showed the total quantity of procurement over last five years.The graph indicated that the company made its largest procurement of pineapple in 2007 over the last 5 years and the quantity procured in 2007 was 843043 Kg. The least quantity was procured in 2008 and that was 79244 Kg. In 2008 the quantity procured become very low because they stored the excess quantity procured in 2007 as concentrate and they used these concentrate for the production in 2008.In 2009 the quantity procured slightly increased to 415681 Kg .But in 2010 the quantity reduced to 216196 Kg. In 2011 it slightly increased to 351644 Kg. This indicated high variability in trends over the period.

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However a trend analysis of the average procurement price shows only a slow increase as depicts in Fig 4.3. In 2007 the company procured pineapple at an average cost of Rs.5.05.but next year it become Rs.4.52 and that was the least average cost /kg over the last five years. In 2009 it increases to Rs.5.56.and in 2010 it again increases to Rs.7.84. The highest average cost/Kg was procured in 2011and that was 7.89.

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As per Fig 4.4 the highest procurement cost was incurred in 2007 that was Rs.4260633.79. It was because the price fall persisted for a long time and the company procured more quantity of raw material. The lowest procurement cost was incurred in 2008 and that was Rs.359193.72. The reason for reduction in cost was that they use the pineapple concentrate made in 2007 for production. In 2009 cost slightly increased to Rs.2379915.15.In 2010 it slightly reduced to Rs. 1695977.6 .During the last year the procurement cost was Rs.2775510.4 .The cost of procurement over five years shows a continuous increasing and decreasing trend.

4.3 LIMITATIONS AND RECOMMENDATIONS FOR IMPROVEMENT OF THE LINKAGE MODEL 4.3.1 Limitations of the linkage model
Process documentation research (PDR) was used to identify the limitations of the linkage model followed by the company for the procurement of the raw material and the salient findings are presented below.

NAPCL announced procurement through local channels and newspapers but

there was no formal institutionalized mechanism for informing all registered farmers directly.

The procurement was highly influenced by the price fall in the market. The

company and the farmers had no control over the price fluctuations in the market.

The support price the company fixed was insufficient to cover the cost of

cultivation and could serve only a support price. The company followed high quality specifications in terms of ripeness and size.

However there was no extension service offered by the company to ensure the quality standards. The transportation cost had to be met by the farmers itself and there was no

local level procurement strategy for the company.

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Farmers suggestion on improvement of the model.

Table 4.3.1 Areas of improvement suggested by farmers n=30
Sl.N O 1 2 3 4 5 Area of improvement Marketing Extension and other related Services Procurement Production Administration Response (%) 30.00 43.33 13.33 10.00 3.33

Survey was conducted among 30 registered farmers of the company to identify their suggestion on improving the model. The major areas of suggested improvements could be categorized in to areas of marketing, Extension services, procurement, production and administration and results are presented in Table 4.3. Majority of the respondents (43.33%) wanted the company to enhance the extension services provided by it. They suggested that company should provide some financial benefits to the registered farmers who contributed large quantity of raw material to the company it could be in the form of grant with the help of APEDA or state government. This would be helpful to motivate farmer into pineapple cultivation. Early NAPCL provided subsidies to vermi compost and organic farming. But later they stopped this practice. The company must revive this practice for the benefit of farmers. Through a tie up with FACT, NAPCL could popularize organic fertilizers among its registered farmers. In the present situation the farmers faced difficulty to collect fertilizers from outside dealers. The company could also make arrangements with NHB for supplying the high yield variety planting materials to the farmers. The results indicated that 30% of the respondents suggested improving the marketing of their products through attractive promotion activities. Launch of the companys products could not take off due to limited marketing infrastructure in implementing the market
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activities. The marketing activities of NAPCL were not much effective. This inefficiency affected their sales. To improve the marketing of their product attractive promotional activities like advertisement, stickers and hoardings were to be introduced. The present marketing trends of the industry must be considered in improving the marketing strategy. NAPCLs major part of products was exported to other countries. Main export of the products of the company was to the Fare Trade Organization. The company should also try to capture the domestic market through diversification of products. Among the respondents 13.33% suggested the company to increase the quantity procured from each farmers. The procurement of raw material was done by the quality and the procurement department. The major disadvantage of their procurement system was that they procured raw materials only when there was a glut in. the market. So the farmers got the benefit only at these seasons. For providing assistance to farmers company should try to procure fruits at all seasons with a minimum support price which is approximately near to the market price. Then only the farmer could be benefited on a continuous basis. The major problem faced by the farmers at the time of harvesting the pineapple was lack of availability of labors. In order to tackle this problem company could provide seasonal workers for harvesting. Another 10% of the respondents proposed the company to increase the production by fully utilizing the plant capacity. The company directly procured pineapple from registered farmers. But the quantity procured was very less. The capacity of the production plant was not fully utilized because the demand for their products was low. For the benefits of the farmers the company must try to increase the procurement by utilizing its maximum plant capacity. At present they gave more concentration on diversifying to mango products. As the shareholders of the company were pineapple growers the company must try to increase the processing of pineapple instead of mango. Only 3% suggested the company to improve the efficiency of top management. The board of directors included three representatives from the registered farmers. These representatives shared the problems faced by the farmers. However 50 % respondents were satisfied with the services offered by the company. And remaining other 50 % of the farmers is not satisfied with the company. They expected more from the company and they suggested improving services offered by the company. 40 % of the respondents were not attending any classes and seminars conducted by the company. And other 60% of the farmers had benefitted from the company through the training classes and the seminars. But they were not fully satisfied with these classes and
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programmers. They faced difficulty to implement these techniques into their farming due to non-availability of inputs in the locality.

4.3.2 Recommendation for improvement

Though the model provided flexibility for farmers to take market advantage of high market price the following suggestions could improve the linkage model followed by the NAPCL. Based on the deduction made from the study some recommendations are being made to improve the farmer linkage in the existing model.

Procurement should be extended throughout the harvest season by providing

Strengthen the farmer linkages through institutional mechanism for the procurement of

competitive price in comparison to the market price. raw material must be introduced. Company should increase the production by fully utilizing the plant capacity and then Extension services extended to farmers need to be strengthened by providing incentives Improving the marketing of their products through attractive promotion activities could Practice of providing subsidies for vermi compost and organic farming must be revived

by increasing the procurement quantity. quality inputs and technical support. increase the procurement. for attracting more farmers in to the pineapple cultivation.

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CHAPTER 5 SUMMARY OF FINDINGS, SUGGESTION AND CONCLUSION

The present chapter contains the summary of the project which is reported under the following sub-heads. 5.1 Summary of major findings, 5.2 Suggestions based on the findings and 5.3 Conclusion.

5.1 Summary of major findings

Study focused on the farmer linkage model followed by Nadukkara Agro Processing Company Ltd, a leading farmer shareholder company involved in the production of pineapple soft drinks in the state. The results indicated there were linkages gaps that need to be address to strengthen the effectiveness of the model. The major findings of the study are the following.

The linkage model provided flexibility when there was a glut in the market. About 66.7% of registered farmers of the NAPCL belonged to the middle age

category and the average age of the respondents was 51.1.

Majority (43.3%) of the respondents had educational level up to High Schools

and none of the respondents were Illiterate or Post Graduates. Annual income of around 70% of the farmers was 1.14 lakhs and belonged to

the middle income category.

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Average yield of pineapple of 43.3% registered farmers was 11.3 tonnes/acre

and had two harvests per year. Average procurement of pineapple by NAPCL for the last five years was 5.91

tonnes/year and was contributed by around 36.67% of the registered farmers. Owned farm area of 23.33% of the registered farmers was 2.3 acre. Marginal

scale farmers around 3.3% of them was 2 acre, small scale farmers around 16.67% of them was 2.8 acres. And middle scale farmers around 3.3% of farmers were 8 acres. Leased farm area of 76.67% of the farmers was 4.3 acres. Annual income from pineapple of around 73.33% of farmers was .96

lakhs/annum. Around 50 % respondents were satisfied with services offered by the

company. However an equal 50 % of the farmers were not satisfied with the company. They expected more from the company and they suggested improving services offered by the company especially in terms offering a market reflective price for the product.

Around 40 % 0f the respondents were not attending any classes and seminars

conducted by the company. However 60% of the respondents had benefitted from the company through the training classes and the seminars. But they were not fully satisfied with these classes and programs. They faced difficulty to implement the techniques offered into their farming. Availability of raw materials was not found to be a great problem. Price and

quality were reported as creating difficulties in procurement.

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Only 23 % of farmers were cultivated pineapple in owned land. Majority of

the farmers (more than 3/4th) had leased land for the cultivation. So they had to pay the rent for the leased area.

Among the respondents 43.4 % farmers suggested improvements on the

marketing strategy adopted by the company whereas 30% of farmers wanted to improve services offered by the company. NAPCL made most number of procurement in 2007 & 2008, they procured

raw material 3 times in each year. In 2009 & 2011 they procured once in each year. NAPCL had linkage model that ensured procurement of raw material from the

farmers. They graded each raw material and provide fixed price to the farmers.

NAPCL procured 843043 tonnes of pineapple in 2007 and the least quantity

procured was 79244 tonnes which was procured in 2008. In the year 2007 they procured large quantity and they inventoried that quantity of raw material in the form of concentrate, thats why the company procured less quantity in the next year.

The average cost/Kg incurred for procuring pineapple shows an increasing

trend. In the last year company provide Rs 7.89/ Kg. So the farmers got more benefits from the company. In 2010 the number of shareholders is 600. In 2011 it becomes 1200.

5.2 SUGGESTIONS AND RECOMMENDATIONS

Based on the results following suggestions and recommendations were made to improve the linkage model followed by the NAPCL.
Strengthen the farmer linkages through institutional mechanism for the procurement of

raw material must be introduced.

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 NAPCL should adopt a market related price fixing policy. NAPCL should improve the extension and other related services offered to farmers. As a shareholder farmer did not get any advantage from the company. So NAPCL should

try to consider the interest of shareholders.

In order to improve the quality of fruits procured the company should promote the

organic farming among the registered growers. Procurement should be extended throughout the harvest season by providing

competitive price in comparison to the market price. Company can increase the production by fully utilizing the plant capacity and thereby increasing the procurement. NAPCL can improve the marketing of their products through attractive promotion activities like advertising, hoardings, and stickers etc.
Company should try to provide fertilizers and high yield variety planting materials to

farmers for promoting the pineapple cultivation. The company should provide the training classes which are useful and effective for farmers. The company must ensure the participation of all shareholders in training classes and seminars conducted by the company. NAPCL should revive the practice of providing subsidies to vermi compost and organic farming. The company must capture the domestic market through diversification of products. The company must increase the processing of pineapple instead of mango as all the registered farmers are pineapple growers.
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The company must provide seasonal workers to the registered farmers for the

harvesting period. This process will help both workers and farmers

5.3

CONCLUSION

Nadukkara Agro processing Company has been designed to utilize the rich agricultural potential and promote cultivation of high-value horticultural crops in Kerala with key benefits going to farmers.The objective of the company to produce value added products from tropical fruit ensuring supplementary income to farmers has been fulfilled to an extent by procuring pineapple fruits from registered farmers by fixing a minimum price. This has benefitted the farmers when there was a glut in the market. The findings of the study reveal that NAPCL have efficient linkage model to procure raw material from farmers. However there existed some gaps which could be strengthened through the introduction of an institutionalized mechanism for the procurement of raw material. Improvement in the quality of the products, infrastructure, marketing, extension services and management of the company could overcome the existing limitation for the model and benefit the farmers more effectively.

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APPENDIX
KERALA AGRICULTURAL UNIVERSITY COLLEGE OF CO-OPERATION, BANKING & MANAGEMENT MBA IN AGRIBUSSINESS MANAGEMENT PRODUCTION SYSTEM LINKAGES IN A FARMER PRODUCER COMPANY SCHEDULE

1. Name of the farmer: 2. Address: 3. Age: 4. Education: 5. Main occupation Farming : Others: Other(specify): Total:
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6. Annual income: Farming:

7. Total area; 8. a) Crops grown:

owned :

Leased:

Total:

b) Area under pineapple: c) Average yield per harvest: d) Number of harvest in a year: 9. a) Are you a shareholder of NAPCL: Yes No

b) Year in which you become a member of NAPCL: c) Quantity of pineapple given to NAPCL: d) Rate at which the procurement is made: 10. a) Whether you sell pineapple in open market? Yes b) If yes the quantity sold: c) Price received from the market: 11. What is the mode of linkage between you and NAPCL? 12.What is your suggestion to improve the farmer-NAPCL linkage? No

13. Are you satisfied with the services you received from NAPCL? Yes 14. What are the other services you receive at NAPCL?

No

REFERENCES

Abdul, H. M. and Kaul. J. L., (1998)-Pineapple production in Meghalaya state An economic analysis 23p Ashish M. (2011) -An overview of Producer Companies pp1-7
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Murray E.V(2009) Producer Company Model - Current Status and Future Outlook Opportunities for Bank Finance 13p Nigerian Institute of Social and Economic Research (1999)-Survey on strategies used by agri business firmspp16-21 NRAA (National Rain fed Area Authority) (2009) - Perspectives and Problems of Primary Producers Companies - Case study of Indian Organic Farmers Producer Company Limited 15p Quentin V Shrlin (2003)- Project procurement Management pp326-340 RAGHAVENDRA B. NAYAK) (2007) - A study on management practices of Pineapple growers in Karnataka 67p Schwalbe wilson (1989)- Procurement Management pp216-225 SFAC (Small Farmers Agribusiness Consortium)(2010)-Guiding principles of sustaining Farmer Producer Organisation development pp9-13 Sreelakshmi B.S (2010)-Challenges in rawmaterial procurement system-A stakeholder participatory assessment 65p Thomas Reardon (2005) Linking Small-scale Producers to Markets: Old and New Challenges pp1-5 Yogesh Kumar Dwivedi and Arun R. Joshi (2007)-Producer Company - a new generation farmers institution-Leisa India 17p

E-Sources
http://www.atimes.com/atimes/southasia/EH09dfol.html http://www.flocentroamerica http://www.hiddenmysteries.org/health/effects/coke.html http://www.ifdc.org

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http://www.indiaonestop.com/foodproducts.html http://www.napcl.com http://www.rna-cs.com

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