Unregulated Agriculture Market:
An un regulated agriculture market is very common business scenario in India.As per independent survey conducted by Global AgriSystem, Indian agriculture business supply chain operates as per shown diagram below
On an average there are 5-6 intermediaries between primary producer and the consumer.Price and quantity of the agriculture product varies at each intermediary based on profit margin & wastages. Total markup in price from farmer to consumer is up to 60 to 75%.Farmer gets only 20-25% of consumer price due to long supply chain.15-25% agriculture products gets waste during supply chain. In the example of Dal Supply Chain below, we can see how consumer has to pay INR 80/KG though farmer sells it at price INR 35/Kg .Also we can see 100 QT quantity sold by farmer reaches as 80 QT due to handling and wastages.
In Summary following are major challenges in any unregulated market:
Long Supply Chain: From primary producer to consumer supply chain is very long which results in high consumer price and wastage of agriculture products
High Prices: It is very difficult to track prices in unregulated market due to large volume of transactions every day and unwillingness of intermediary to disclose the buy/sell price so that they can make high profit margin. This results in price hike for unknown reason
Illegal Stocking & Black Marketing: Intermediaries are involved in illegal stocking to create shortage in supply which results in price hike and black marketing
Tax Stealing: As purchase and buy quantity can not be tracked intermediaries do not reveal exact details of their transaction and steal the purchase and sales tax from the government
Less profit to Farmers: Farmers are doesn’t have visibility to the long supply chain which result in less options to sell their product in better prices
The root cause for the several issues in unregulated market is inability to track prices and quantity at different steps of the supply chain.
There could be multiple reasons for the same:
- Conventional way of trading where records are kept in books rather than in system during initial trade steps of supply chain
- High volume of transaction at every step of supply chain .Recording each transaction is very difficult and time consuming for any monitoring organization
- Unwillingness of intermediaries to expose Buy/Sell price
- Lack of specialized software to track supply chain on product/trader basis
- Cost/Complexity to develop such supply chain tracker software
After gathering all above facts, one question comes in my mind Can technology (HANA & Mobility) help to address issues in unregulated market ?
Quantity/Price/Wastage Tracker( A Possible Solution)
In my opinion we need a different mechanism to handle issues related to human tendencies like unwillingness to disclose price, record keeping etc. But from technological point of view, definitely solution can be made using HANA & Mobility to handle high volume of transactions for millions of users. One quick solution could be to track quantity,price & wastage at each step of supply chain as follows:
A simple mobile app can be develop to feed buy/sell/waste quantity by producer, intermediaries & consumer. HANA can be used as DB to store all the data.
Once data is in system, various reports can be pulled & action can be taken to address issues in the supply chain. A high level architecture for such solution could be as follows :
High Data Volume: Mobile App is expected to record daily transactions for billions of traders . Processing such large volume of transaction would be a big challenge.
Large user base: Development & maintenance of mobile app for billions of users would definitely be very challenging
Internet connectivity & mobile app usage: Internet connectivity & mobile usages could be challenges in villages
Implementation: Introducing additional process step to update data in the supply chain would be difficult task as most of the farmers/traders/consumers would not be willing to do so.
Investment/Benefits: There could be many benefits of such tracker system but the primary focus of this system is to support government to control the commodity prices & wastages. Investment in such kind of tracking system would be challenge for the government bodies.