THE MANDI SYSTEM
It’s not as if the traditional mandi supply chain is ineffective. After all, as Karthik Jayaraman, Cofounder, WayCool, says: “Day in and day out, fresh fruits and vegetables reach the market without fail.” However, he adds: “But are we getting them in the most efficient manner? Are we getting all the produce the farmer grows and can we ensure that he gets better returns, and consumers, healthy options? The answer is no.”
That’s because most vegetable farmers are marginal farmers and their crop goes through several intermediaries before reaching the market. Typically, the farmer – or a village- level aggregator – takes the crop to the nearest mandi, where traders buy to sell to wholesalers in a larger mandi. From there, it gets sold to semi-wholesalers or disaggregators in a city mandi, who, in turn, sell to retailers from the city’s big vegetable markets ( like Byculla or Dadar in Mumbai), who will sell further to neighbourhood vendors and thelawallahs.
There are commission and logistic charges at each stage, and the produce changes hands four to nine times.
“If we sent 100 kg earlier, the aadhati
( agent) would deduct 9- 10 kg as commission. Or they’d say it was damaged or spoilt. Till we got the patta ( invoice), we never knew how much was sold and at what price,” says Manish More. Plus, there were long- credit cycles.
According to Jayaraman, it is not one large middleman making supernormal profits in the
mandi system “but a number of small businesses eking out a small living”. “Each intermediary gets 7- 10 per cent margin so the margins stack up. And, there’s a lot of damage because the product is handled repeatedly,” he says.
He adds: “Every time the produce is loaded and unloaded... it’s like a patient in critical care, and its life gets diminished. Instead of transporting vegetables like patients in an ambulance, they get transported like electronics.”
However, he believes the intermediaries are not entirely the villain of the piece. Rather, they’re “pushed to adopt abnormal behaviour” – such as ripening mangoes with calcium carbide – because of the cost structure, capital requirements, long credit cycles and inefficiencies of the supply chain and as they don’t have access to bank finance.