HOPCOMS

Hopcoms

Horticulture Producers Cooperative Marketing & Processing Society (HOPCOMS) fresh fruit bottled beverage in mango and blue grapes flavour is a much preferred choice in Bangalore. The society manufactures the fresh fruit beverage at its processing unit in the city. The monthly production is around 4,000 bottles during off-season and 10,000 bottles during peak seasons. A 200 ml bottle is priced at Rs. 5.

Currently, the beverage is sold at its retail outlets in Bangalore apart from strategic points in the city - railways stations, bus stands, Janata Bazaar and other government retail outlets. The Society plans to install mixies at certain locations where its 313 retail outlets dealing fruits and vegetables already exist. Right now it sells a fresh fruit juices in the evening using seasonal fruits and these are priced reasonably per glass.

There is a concerted effort on the part of the Society to manufacture jams, fruits pulp and sauces with the sun scorched fruits and vegetables like tomato which cant be sold to customers. Plans are underway to strengthen the beverage segment by investing in a bigger processing unit for which land is being identified. Under the government of India National Horticulture Mission grant of Rs. 200 crore, the Society has asked for funds to set-up the processing unit and a cold chain facility.

The primary objective of HOPCOMS is to procure fruits and vegetables from the farmers in the districts in Karnataka and gives the growers instant cash payment. These are sold through its 313 retail outlets in the State and the farmer is paid 75 percent of the prevailing cost of the produce.

HOPCOMS supplies fruits and vegetables in bulk to:

    • Industrial canteens
    • Government hospitals
    • Student hostels
    • Clubs
    • Marriage halls
    • Fertilizers and manures to farmers

HOPCOMS Bangalore experience

There was no proper marketing system of food and vegetables in Bangalore. From the system which was coming from a very long period of time, neither the growers nor the consumers are getting any benefits. To make the whole system much more organized and in line the co-operative societies/ farmers associations start looking into it much more seriously.

The department of horticulture with a burning desire to end the age of old exploitation by
middleman took a vow not to rest until an alternative arrangement is made for the marketing system for fresh fruits and vegetables. The result is the birth of Hopcoms and it was established in the year 1959 for organized marketing of fruits and vegetables in the co-operative sector.

Aims and Objectives

The major aims and objectives for setting up of Hopcoms are as given below:

    • To ensure remunerative prices to producers of horticulture crops
    • To ensure reasonable prices to consumers
    • To free both producers and consumers from the clutches of middlemen
    • To expand marketing and cold stage facilities progressively
    • To promote horticulture development on scientific lines by providing necessary
       inputs and technical advice

Management

Hopcoms is managed by a board comprising of 15 Directors. Of theses, 11 are elected from among grower members and 4 are government nominees.

The Additional Director of the state department is the managing director. The society has 15000 growers as members and paid share capital is Rs. 258.54 lakhs.

The department has four arms in the State of Karnataka, and these are given in the chart below:

The Department of Horticulture has a number of schemes to help improve horticultural production and marketing in the State. (http://www.nitpu2.kar.nic.in). Horticultural produce is classified as four elements:

   • Fruits and Vegetables
   • Spices
   • Flowers
   • Cash crops

HOPCOMS works only with fruits and vegetables. The promotion of other items is done through other activities of the Department of Horticulture, which specializes in marketing of fruits and vegetables and has as members farmers growing these crops.

Handling

The society is presently handling 90-100 tonnes of fruits and vegetables daily. The farmers bring their produce directly to the society and to the procurement centers. As soon as the produce is brought by the farmers, it is graded, weighed and cash payment is made immediately.

Procurement Centers

To avoid losses during the transportation and to save time of the farmers, the society has opened 10 procurement centers in the growing areas. The produce of that area is either collected from the member’s field or the growers bring their produce directly to the procurement centers. The material so procured is transported to central godowns from where it is supplied to retail outlets and to the various institutions.

Retail Outlets

Hopcoms so far has opened 318 retail outlets in its area of operation. Bangalore being the major consuming area has got 278 retail outlets which provide fresh supplies to the consumers in the city. For the opening of retail outlets, the sites have been provided by the respective corporations/municipalities/ development authorities on lease basis at nominal charges. The retail outlets are being managed by the salesmen who are the employees of Hopcoms. As incentives, they are allowed to absorb Driage and damage to the extent of 3.7% of the value beside wages. Every day the salesman will remit the sales proceeds of the previous day and collect the materials required for the day’s sales.

The supplies to retail outlets are being made through the 19 own and 40 hired vehicles. Mobile sales of fruits and vegetables are being arranged through society’s vehicles at the place where Hopcoms does not have its retail outlets.

Other Activities

The society has set up a unit for preparing fresh fruit drinks out of fruits like Bangalore blue grapes, mango, oranges etc. It is selling the same to the general public at a reasonable price of Rs. 5/- per 200 ml bottles through its retail outlets and through dispensers located at important places. The society has opened centers at its procurement centers for supply of manures, fertilizers, plant protection chemicals, garden implements, seeds etc. in order to help the grower members.

STRENGTHENING OF HOPCOMS FOR ORGANISED MARKETING OF FRUITS & VEGETABLES BY KARNATAKA STATE CO-OPERATIVE HORTICULTURE MARKETING FEDERATION LTD (KHF)

KHF is:
   • State Level body.
   • Established in 1996.
   • Administration and Management of Existing District HOPCOMS except Bangalore      HOPCOMS
   • 22,129 farmer members
   • Rs.22.33 Lakhs as share capital

Aims and Objectives of KHF

   • To promote & encourage development of horticultural crops
   • To admit members and allot shares
   • To arrange for the sale of horticulture produces
   • To purchase & sell horticulture produces
   • To provide financial assistance to members as advances
   • To open its branches, central godowns with cold storage facilities, procurement &
      grading, retail outlets for marketing facilities
   • To open sale counters outside the State.
   • To promote and establish its own processing and manufacturing units.
   • To arrange supply of plant inputs to the members
   • To carryout publicity and propaganda.
   • To supply both processed and fresh horticultural produces on credit basis to Government       institutions, co-operative, public sector companies and non-private organizations at nominal       prices.

Facilities provided by KHF and HOPCOMS

A. Overall Benefits to Farmers

Several farmers were interviewed as part of the study. All farmers stated the same benefits from HOPCOMS. The most important benefit is that HOPCOMES purchases the produce directly from the farmers. This eliminates the middleman, and the commission payment to the agent. Consequently, a remunerative price is paid to the farmers, usually 10-15 % higher than the open market prices. Further, during periods when there is excess supply of certain produce in the market, the open market price drops. HOPCOMS, however, assures a minimum support price for the produce at the time of distress sales.

Another major benefit is that cash is paid to farmers on the day of the transaction; there is no delay in payments. The discussion with private commission agents revealed that these agents extend advances to the buyer merchants and to the seller merchants. This system of extending credit is prevalent in the private businesses. HOPCOMS does all its transactions in cash, thereby eliminating the need for such credit.

HOPCOMS have weigh-bridges at each procurement centre; hence farmers are assured of correct weights. HOPCOMS also has infrastructure facilities like cold storage and godowns to store the produce. The procurement centers have places where farmers can keep their products and sell directly to consumers. This facility is provided for sale of watermelons

As farmers come to procurement centers to sell their produce, HOPCOMS also provides for sale of seeds and fertilizers at subsidized rates to them. They also sell plastic crates to transport the produce at subsidized rates.

As farmers travel long distances with large quantities of produce, HOPCOMS has provided lodging and boarding facilities. Farmers have found this very useful and have taken advantage of these facilities.

B. For Consumers

Several customers were interviewed, who were regular visitors to HOPCOMS retail shops. They said that HOPCOMS assured good quality produce both to the individual as well as bulk consumers like the hostels, hospitals, public sector units (PSUs) etc. Moreover, vegetables and fruits are available at reasonable rates, which are normally less than the prevailing market rates. They also avail the following benefits:

   • Correct weighment
   • Quality fruits & Vegetables at reasonable prices
   • Retail outlets in extensions
   • Mobile sales
   • Supplies to Marriage and other functions
   • Capital supplies to institutions, organizations, hostels, hospitals & others
   • Seasonal fruit drinks at reasonable price
   • Conducting seasonal fruit fairs at discount price

Price Setting

The APMC markets play a major role in setting market trends and prices. These are established by the Department of Agricultural Marketing. The price at which HOPCOMS buys the produce from the farmers is based on the rates and prices released by this department. The department collects the maximum, minimum and model prices for the various commodities sold in the APMC markets the previous day and the same is released to the markets the next day, published in the newspapers. Based on the rates released by the department, HOPCOMS fixes the procurement and sale price for the goods. These prices form the basis of the price offered by HOPCOMS in the indents issued to its members.

The prices of horticultural produce vary from day to day and from hour to hour in private markets. HOPCOMS determines the price based on the previous day’s prices in APMC yards, and adds an additional half rupee per kg. This is the price quoted on the indent given to members. The indents carry the price and the quantity that HOPCOMS will buy on a particular day from the farmer member. Thus it offers price certainty to the farmers, even if the quantity it picks up from the farmer is not too high.

Investment and Infrastructure

The major investment that HOPCOMS has made is in the infrastructure created for the marketing and processing of horticultural produce. These include

   • Procurement centres
   • Retail outlets
   • Processing centres
   • Cold Storage centres
   • Staff
   • Vehicles

The society has at present not borrowed any money for improvement/ increase of its infrastructure. The reason given was that the society was building its reserves to utilize it
for increasing its infrastructure like increasing its retail outlets, vans etc.

HOPCOMS has two major uses of its funds:

   • The first one is the investment in retail outlets
   • Infrastructure in terms of procurement centers

Another major use of funds is the daily purchase of fruits and vegetables. The daily operating expenses of the company are around 10 lakhs ($20,833). The society handles around 20 lakhs ($41,666) on cash on every single day, including all other operating expenses like transport costs, etc.

Process

The first step of interaction is for a farmer to become a member of HOPCOMS. HOPCOMS issues indents giving the quantity of a particular vegetable or fruit to be purchased from members. On receiving the indent order for a particular amount, the member has to bring in the produce to the procurement centre, either in Bangalore City or to the procurement centers in other districts/ taluks as the case may be. The produce is verified as regards it quality, it is graded and a receipt for the same is given to the farmer.

The farmer presents the receipt to the payment officer, who pays the sum of money in a cash voucher to the farmer. The cash voucher can be en-cashed at the bank which has a branch within the procurement centre, thus enabling farmers to take cash immediately for their sales for the day. This is shown in the chart below:

The process ensures that farmers who bring good quality produce to the procurement centers can sell this at good prices and get cash the same day. When compared to open market transactions, where they sale to wholesale traders, they get the money late, as they usually have accounts with these traders and settle them only one a fortnight or once a month.

Driage and wastage

F& V being highly perishable products, control of wastage affects the performance the performance directly. Driage and wastage is around 4-5% of the total procurement of the produce. However, D&W has been reduced from 4.32 % of the total procurement to 1.85%.

Environmental Sustainability

HOPCOMS engages in wholesale purchase and sale of fruits and vegetables and eliminates the need for plastic packing of vegetables. However, it could contribute more if it collected all the spoilt vegetables and processed it for production of bio-gas. This was planned at some time, but it did not come through partly because of the lack of funds and partly because it needs an organizational effort and new roles and processes to be introduced for this additional activity. As the organization currently focuses all its efforts on just breaking even, this aspect is neglected.