Rajasthan farmers take to Reliance, dump mandis July 12, 2007Posted by Ramnath Rangaswamy in Indian Economy, Supply Chain.
Before Reliance came into the scene, the farmers would sell their produce to the Rajasthan State Agriculture Produce Marketing Committees. Earlier the farmers had to wait at the mandis for unloading and were not paid cash immediately. Because the farmers had no other choice, they had to put up with the situation. In supply chain terms, the middle men had a ‘transaction’ approach towards their suppliers, the farmers.
The entry of Reliance has been good for the farmers. They are paid cash and the process of selling to Reliance takes less time than it did while selling to the middlemen.
From a SBD standpoint, Reliance has to do much more. Reliance has just started on the journey towards SBD.
To go ahead with the SBD work, Reliance should partner with the farmers to improve their yields, cultivate better varieties of vegetables and fruits [similar to what manufacturers do with their component vendors to improve the quality and process of components so that the supplier and manufacturer benefit from the lower costs and higher productivity], share demand forecast so that farmers can plan their harvest and selling accordingly [ similar to the 12-18 month forward demand forecast that manufacturers share with component vendors so that the vendor can plan capacities, labour and preventive maintenance accordingly].
If Reliance does not do this SBD, some other Modern Retailer will do it. With so many entrants and players competing in the Modern Retailing space they would just be looking for opportunities like this to get a competitive advantage.
This is good for the farmer. The first time he has a choice on whom to sell to. Also he can look forward to a long term mutually beneficial relationship with his buyers rather than have a day to day transactional relationship with his buyers.
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