Trade Winds

Supply Chain

Horse latitudes lie between about 30° to 35° north and 30° to 35° south of the equator. Nobody is actually sure how this area got its name – horses at sea!!! Wow!!! English Dictionary claims the origin of the term "uncertain." The area is also commonly known as subtropical high. Blowing from the subtropical highs or horse latitudes toward the low pressure of the ITCZ are the trade winds, so named from their ability to quickly propel trading ships across the ocean. 

It is safe to assume that the East India Company, now owned by an Indian, may not have reached the shores on the Indian subcontinent but for these winds. One thing is certain that for existence and sustenance as also for luxury and pleasure mankind has resorted to trade from time immemorial. Trading then was only in non perishable goods. Trade is necessitated by the biodiversity and availability of natural resources only in each region. With improved modes of communication over the years, procurement and distribution of perishable farm produce has transcended the single path of farm to local mandi. Hence apples from Kashmir became available in Kanyakumari. The path from procurement of the apples to its reach to the consumer was given the name of supply chain by he mandarins of management. Thus supply chain management became a crucial issue in procurement and distribution of farm produce.

The Nukkad (Aggarwal) shop

When I moved into this locality of Vignananagar (loosely translated as ‘place of knowledge’) seven odd years back, it was a coming-up place with roads to rival the moon’s surface. The whole area and the surroundings as well (Tata’s, Adarsh et all also had build their colonies within 500m of my place) were serviced by two kirana dealers. One was a departmental store ((DS) a smaller version of those that will be serviced with FDI in retail if it comes through) and the other one was our good old Aggarwal stores(AS). Both afforded home delivery. While the AS had the usual cramped layout and the musty smell with all the grains et al in open sacks the DS had self service facilities with the items neatly laid out on shelves along alleys. DS also stored non-kirana items like chocolates, ice creams, bottled drinks and such strategically placed from where the unwary customer will always pick up a couple of those items on his way to the billing counter. There was not much to differentiate the quality of stuff sold at either places and we were as happy with AS as with DS. Until…..until we saw a rat scramble out from the open grain storage facilities at the AS. We have not visited AS since.

In the past seven years many DS and high end retail outlets such as More, Reliance, Nilgiris (arguably the oldest and best retail outlet in South India) have all come up in the area. Say when we include all AS, DS and other high end retail outlets there must be close to thirty of them to service the area done by two outlets seven years back. 

The larger picture

Once in 1986, I was traveling from Manali via Kulu to Udhampur wher my unit was stationed. We had gone to Manali in connection with the ‘Himalayan car rally’ whose route was from Udhampur via Srinagar, Kargil, Leh, Tangla la, Lungalacha, Baralacha and  over Rohtang pass to Manali. Along the way from Kulu I stopped at an apple orchard where the fruits were being packed in cardboard boxes to be ferried to Mumbai and other cities – the start of the supply chain. I bought 50 Kgs of nice and juicy Himachal apples at Rs 3.50/- per kg, direct from the farmer. I suppose the trader would also have paid a similar amount per kg for his trucks loads of the fruit. Even in the late 1980s cost of good quality apples was in the region of Rs 20-25 per kg in the market. The consumer price was 714 % more than what the farmer got – the farmer’s share was just 14% of the final price. The farmer had little option. His produce was being picked up from the orchard where he had to spend little for only the plucking. Sorting and packing, in his boxes, was done by the trader in the presence of the farmer. The supply chain was prevalent even then though we did not probably know it as the supply chain. So I presume that when we buy apples today we pay about 700% more than what the farmer gets. So who gets this 700% - every body along the supply cahin – an exmple is as follows

Sector	Income - Rupees per kg (Selling price Rs 25 per Kg)	% share of income
Farm labour	1.40	4
Farmer	2.10	10
Retailer	10.50	42
Middle man	1.75	7
Handling	1.75	7
Transportation	3.00	12
Transport and customs	1.50	6
Incidental labour and packaging	3.00	12

In the traditional supply chain the 42% made by the retailer is shared by the last mile link in the supply chain such as the local transporter, the rediwallah et al. In the event of allowing FDI into retail in India it is feared that the rediwallah will lose his job. Let me assure you as on date the AS in my locality and the innumerable handcarts occupying the sidewalk continue co-exist with the many DS establishments in the area. We can’t draw parallels in this world to anything Indian – we are like that only. The rediwallahs now stock local bananas, sappotas, papayas and perus!!! You see these days very few people eat apples regularly. That explains the mushrooming of ‘super-specialty’ hospitals in all localities. The aim of infusing capital and expertise in retail business is to ensure that the farmer gets substantially more than the 10% percent he gets now and the consumer pays much less than the 700% he pays now more than what the farmer gets. I feel that once we get the new systems in the mechanics of the supply chain will get established and steadied as it always usually happens in India.

The brouhaha 

Any new system will experience birth pangs. Even with all the pain in attendance about 255 babies are born in this world every minute! As in the case with everything ‘official’ in our great country matters come to the fore only when they become politically expedient. By that time the essence of the mater is obscured by the methods adopted or not adopted. The common flounders with a lack of knowledge. When a bandh is called traders shut shop the mention of a bandh call for fear of looting and arson on violation of the call. Political leaders go on dharna. Media supports all these actions because they say an election is around the corner and winning the elections is more important than Governing the Nation. 

Why can’t our system be proactive rather than reactive?

With all this I get fed up and in the absence any live sporting action on TV tune into a music channel to hear the olden Goldies while reaching for a mangosteen bought in the evening at the DS.