Export Commodiites

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EVALUATION STUDY OF

POST HARVEST CENTRES

(PRE-COOLING ETC.)

FOR

EXPORT OF GRAPES(MAHARASHTRA STATE)

NATIONAL BANK FOR

AGRICULTURE AND RURAL DEVELOPMENT

RUNE-INDIA

MARCH - 2001


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EVALUATION STUDY SERIES PUNE RO NO.8

POST HARVEST CENTRES

(PRE-COOLING ETC.)

FOR

EXPORT OF GRAPES(MAHARASHTRA STATE)

S If .

NATIONAL BANK FOR

AGRICULTURE AND RURAL DEVELOPMENT

REGIONAL OFFICE PUNE

March 2001


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Published by National Bank for Agriculture and Rural Development, 54Wellesley Road, Post Box No. 5, Shivaji Nagar, Pune -411005.Printed at Ketan Printers, Pune -411005.Telephone No.:91(020) 553 5824 E-mail:[email protected]
mailto:[email protected]:[email protected]


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FOREWORD

The present evaluation study is the eighth in the series of evaluation study

reports published by NABARD Pune, Regional Office. As a part of NABARDs

efforts in getting a continuous feed back on the performance of various

investments relating to agriculture and allied sectors, an evaluation study

was conducted on post harvest centres (pre cooling etc.) for export of grapes

in Maharashtra State.

NABARD, Pune Regional Office has been actively involved in making

available credit for post harvest management of agri produce and had

sanctioned 117 Hi-Tech schemes for agro processing including EOUs.

Among them, 25 schemes involving 56 units were forsettingup of pre cooling

and cold storage units for extending shelf life of fruits with a refinance of

Rs.1076lakh. A total of 26 units were taken up for detailed study.

The present study revealed that thejjnits in Nasik district were exporting

products by themselves where as the units in Sangli district were rented out.

The capacity utiiiation of units was about 50% in Nasik district and less than

25%in Sangli district, in view of the low capacity utilisation, the study has

brought out that pre - cooling unit of 2 MT/2.5 MT capacity and cold storage

of 25/30 MT capacity alone need to be encouraged as against the higher

capacity units financed by the banks.

It was observed that good support was made available for setting up of units

by both GOI andGOM.However, the study points out that there is a need forbetter coordination among various organisations like NHB, APEDA, NCDC,

MoFPI,etc., for promoting pre cooling / cold storage units.


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All the schemes were completed in time and there was no time and costover run for any of these units. There were no major problems in availability

of material required for export of grapes or for operation and maintenance of

these units.

The repayment performance of units engaged in direct exports was very

good whereas in units rented out it was poor suggesting the need for a

longer repayment period.

I hope,the findingsofthestudywillbe useful to banksandother implementing

agencies.

NATIONAL BANK FOR AGRICULTURE R. KRISHNAMURTHY

AND RURAL DEVELOPMENT, Chief General Manager

PUNE R. O.


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ACKNOWLEDGEMENTS

Assistance received from the following insttfettons in the conduct

of the study is gratefully acknowledged

1. Nasik District Cooperative Central Bank Ltd, Nasik

2. Sangli District Cooperative Central BankLtd,Sangli.

3 Bank of Maharashtra, Nasik Regional Office, Nasik.

4. Bank of India, Nasik Regional Office, Nasik.

5. Bank of Baroda, Nasik Regional Office, Nasik.

6. Mahagrapes, Pune.

7 Maharashtra Grape Growers Society, Pune.

8. VEFCO, Nasik.

9. Hutatma GGCS, Sangli.10. Sri Ram GGCS, Nasik.

11. NCDC Unit, Sangli.

12. Vasanthadada Grape Growers Coop. Soc.Ltd.Anjani,.

13. ChamanGrapeGrowersCoop. Soc. Ltd. Nimni,

14. Yelavi Grape Growers Coop Soc Ltd, Kundal,.

15. Kundal Grape Growers Coop. Soc. Ltd, Kundal,

16. Bhilwadi Grape Growers Coop. Soct. Ltd., Bhilwadi,

17. Shiva Sakhi Grape Growers Coop. Soc. Ltd, Savalaj,

18. Shri Veerabhadra Grape Growers Coop. Soct. Ltd., Gardi,

19. Shri Nath Grape Growers Coop. Soc. Ltd, Gardi,

20. Mahalaxmi Grape Growers Coop. Soc. Ltd, Mahankal,

21 . Khanderaya Grape Growers Coop. Soc.Ltd,Waiphale,22. Sampathrao Deshmukh Phalbhajya Vikri va

Shitagriha Coop. Soc.Ltd,Kadepur,

23. Tasty Grapes.

24. Susheel Grapes.

25. Leading Agro.

26. Mouli International.

27. Holly Grapes.

28. Panchwati.

29. Mass Exports.

30. Akkar Exports.

31. Krushirath Agro-Industry.

32. SACO Fruits.33. Malode Agro Exports.

34. BorasteAgro.

35. Traimbakraj.

36. Kadava Farms.

37. Anand Grape Growers Coop. Soc. Ltd.

IV


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Particulars Paae No.

Foreword i

Credit List iii

Acknowledgments iv

Abbreviations vi

Basic Data Sheet vii

Summary and Conclusions ix

THE MAIN REPORT

Chapter No.

I Introduction

II Support Available for Pre cooling and

III Minimum Quality Standards for Exportof Table Grapes

IV Methodology of Study

V Description of the Study AreaVI Cold Storage Projects and their

Implementation

VII Economics of Investment

VIII Repayment Performance

IX Problems and Prospects of Pre Cooling

1

6

12

17

22

24

38

46

50

Annexure I A (FRR for units Exporting)

Annexure I B (FRR for units Rented Out)

Annexure 7.1 (Cost of Export upto Mumbai)

Annuxure II - List of NABARD Publications

53

54

55

56


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ABBREVIATIONS

APEDA Agricultural Produce Export Development Agency

BOB Bankof Baroda

BOI Bank of India

BOM Bank of Maharashtra

Coop Cooperative

CS Cold storage

DCCB District Central Cooperative Bank

Die District Industries CentreEOU Export Oriented Units

GOI Government of IndiaGOM Government of Maharashtra

Govt. Government

ha Hectare

HT High Tension

lATA International Air Ticketing Association

LT Low Tension

Ltd Limited

MoFPl Ministry of Food Processing Industries

MSEB Maharashtra State Electricity Board

MT Metric Ton

NABARD National Bank for Agriculture and Rural DevelopmentNCDC National Cooperative Development Corporation

NE North East

NGO Non Governmental Organisation

NHB National Horticultural Board

O&M Operation and Maintenance

PC Pre cooling

PLR Prime Lending Rate

R&D Research and Development

Rs. Rupees

SBI State Bank of India

SCARDB State Co-op Agriculture & Rural Development Bank

UK United Kingdom

VEFCO Vegetable and Fruit Cooperative

WMDC Western Maharashtra Development Corporation

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BASIC DATA SHEET1. Evaluation Study of - Post Harvest Centres (Pre-cooling etc.)

for Export of Grapes in MaharashtraState

2. Coverage of Study

i) Activity - Pre cooling and Cold Storage Units

ii) Districts - Nasiic and Sangli Districts

iii) Banks - a. Sangli DCCBb.NasikDCCB

c. Bank of Maharashtra, Nasikd.Bank of India, Nasik

e. Bank of Baroda, Nasik

iv) Sample Units - 26 Units-SDCCB -1 1 unitsNDCCB - 1 unitBOB - 2 unitsBOM - 7 unitsBOI - 5 units

3. Reference Year of Study- Calendar year 1999

4. Field Study - APRIL 2000

5. Refinance Sanctioned- Rs.1462.886 lakh

6. Refinance Disbursed - Rs.1076.849 lakh

7. Average Capacity of a. Pre Cooling 04 M lb. Cold Storage 30 M l

8. No. of Units exporting in own name - 14

9. No. of Units rented out - 12

10. Average No. of containers exported by

units exporting - 8units rented out - 7

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11. Percentage of Recovery

- NasikDist. - 100%- Sangli Dist. - 17%

12. Price realised by exporters perkg - Rs.60/-

13. Financial Rate of Return -

a. Units Exporting - Above 50%b. Units Rented out - ( -0.31 %)

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SUMMARY AND CONCLUSIONS

1. India is one of the world's largest producer of fruits and vegetables.

However, 30 to 50 per cent of the produce disappears in transit due to

Poor post harvest facilities. There is an urgentneedto stop these losses

by improving the post harvest management. There is also a need to

process them as the availability of fruits is limited to certain months of

theyear.Among the states, Maharashtra tops the listinthe production

of fruits.

2. There are manymethods/ technologiesavailablefor processing. Among

them, pre cooling / cold storage is most efficient, suitable and cost

effective for storage of fruits and vegetables.

3. NABARD has been extending refinance for agro processing and has

sanctioned 117 Hi-Tech schemes for agro processing including EOUs.

Of these, 25 schemes involving 56 units were for setting up of pre

cooling and cold storage units with a refinance assistance of Rs.1076

lakh.

4. Government of India, through APEDA, NHB, MoFPI has extended good

incentives for setting up of pre cooling and cold storage units for

encouraging export of agricultural produce.

5. The present study covers 26 units (11 from Sangli and 15 from Nasik

district) financed by Nasik DCCB (1), Bank of India, Nasik(5),Bank of

Maharashtra, Nasik (7), Bank of Baroda, Nasik (2) and Sangli DCCB

(11). In addition, 4 units not refinanced by NABARD, two each in Sangli

and Nasik districts were visited for general understanding of pre cooling

and cold storage units. However, the conclusions were drawn based

on NABARD refinanced units, only.

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6. Reference year of the study was calender year 1999. The export of

grapes starts from middle of February and ends by April and export

proceeds are realised after 60-90 days from the day of shipping.

7. Both Nasik and Sangli fall in Western Maharashtraregion.About 64%

and 77% of the total population consist of rural population respectively.

Nasik falls under high rain fall zone while Sangli falls under moderate

rainfall zone.

8. Even though food crops dominate in both the districts, grapes occupy

about1% of the net sown area in Nasik district and 0.7% of net sown

area in Sangli district.

9. Both the districts have good net work of rail and road and are connected

to major cities in India. Further, in both the districts Mahagrapes and

Grape Growers Association have their offices and are extending all the

support needed for the development and export of grapes.

10. Both the districts not only lead in the production of grapes, but also

have large number of pre cooling and cold storage units.

11. The total cost of the pre cooling and cold storage units ranged from

Rs.19.15 lakh to Rs.74.25 lakh with an average cost ofRs.45.10lakh.

The project cost of units in Sangli district is on higher side. This was

mainly due to the installation of higher capaicty of pre cooling and cold

storage units. Secondly, the machinery installed was also imported.

12. The average installed capacity is 6 MT/6 Hr. in pre cooling in Sangli

district while the same is less than 3 MT /6 Hrs in Nasik district.

13. Ofthetotal expenditure, 60 per cent had been accounted forprecooling

and cold storage machinery including installation, electrification andgenerator set. 30 per cent was for civil construction. The rest was for

acquision ofland,payment of electricity deposit, pre operative expenses,

etc.


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14. There was no time or cost overrun.All the units were completed within10-12 months. Normally, the supplier himselfgotthe machinery installed.

No major problem in operation was reported by any unit.

15. Units set up in private sector had, on an average contributed more

margin(26.81%) than that of units set up in cooperative sector (6.13%).

The contribution ranged from 3.4% in Vasanth Dada Patil GGCS

financed by Sangli DCCB to 48.4% in Susheel Grapes financed by

Bank of Baroda, Nasik.

16. Subsidy for the pre cooling and cold storage unit was made availableby various organisationlikeWMDC, DIC, NCDC, NHB,MOFPI,APEDA,

GOM,etc. Among 26 units, subsidy was sanctioned for 16 units but

received subsidy in respect of 12 units. Six units got subsidy from more

than one source. The highest subsidy was released to Sampath Rao

Deshmukh Phal Bhajya Vikri va Shitaguruha Cooperative Society

Limited which was also the largest pre cooling cold storage unKs

refinanced by NABARD.

17. All the units under cooperative sector were sanctioned and disbursed

subsidy except one unit (Veerabhadra CGCS, Sangli).

18. Some of the unrts financed by Sangli DCCB were sanctioned interim

loan and the same was adjusted on release of subsidy.

19. National Horticultural Board as a part of package, extended Rs.9.63

lakh soft loan at4%interest rate repayableinfive instalments with one

year grace period.

20. The interest rates varied from 15% to 18.5% to different units.

21 . The banks had allowed 5 to 7 years as repayment period with 1 to 2

years grace period.

22. No delay was noticed in disbursement. The loans were generally

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disbursedintwo instalments; oneforcivil works and otherfor installation

of plant and machinery.

23. All the units were completed and commissioned satisfactorily and there

was no case of infractuous investments.

24. The units financed by NCDC had a longer repayment period of 12-14

years with1 -2years graceperiod.NCDC and GOM had also contributed

20%and 25% of the project cost as equitycapital.The rate of interest

varied between 16% and 17%.

25. Banks in Nasik had extended working capital for one working cycle.The same was not made available to units operating in Sangli as all

the units were rented out.

26. There were no problems in harvesting of grapes or availability of grapes.

Further, all the material required for export including containers were

available, locally. Commission agents from foreign countries also made

their presence in these areas and entered into agreements for import

of grapes.

27. FRR has been worked out categorising the units separately for exporting

and rented out. FRR for the former is above 50 per cent whereas

negative for thelater.

28. All the units in Sangli district are rented out theirunits,while the units in

Nasik are exporting iri their name. However, none of the units are

operating at optimum capacity level. The level of operation is 50% in

Nasik district while the same is below 25 % in Sangli district.

29. As the units were rented out on quantity (per kg.) basis, traders never

tried to optimise the capacities as his costs were not related to the

optimisation of capacity utilisation.

30. All the exporting units on an average could realise the assumed gross

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price of UK 7.75 pounds for a 4.50 / 5.00 kg box. No sample unit was

observed to have made sales in domestic market utilising pre cooling

cold storage facilities. The exports to Europe were highly profitable

and at the same time risky venture.

31. Of the price realised, 35% was spent on various charges including

transportation charges upto JNPT, NewMumbai.The net price realised

works out to about Rs.60/- per kg.The price realised was about 50%

more than domestic market price of comparable quality and this is the

additional income that had generated from exports.

32. The rental income realised was Rs.4/- a kilo for pre cooling and cold

storage. All the expenses for packing, transport etc. were born by

traders.

33. Promotors of all the units are grape growers . In the case of rented

units, the promotors sold export quality grapes to traders, While

exporting units purchased grapes, in addition to theirown,directly from

other grape growers.

34. The units set up in private sector were exporting and could generate

enough surplus for repayment of loans.

35. All the units financed in Sangli were rented out. These units, could not

generate sufficient income to repay loan instalments.

36. The units that were exporting directly, had exported on average 9

containersandthe same for units rented out came to about 7 containers.

37. The units were working, on an average, for 75 days. There was an

expenditure of about Rs. 35,000/- on maintenance of plant and

machinery each year. The electricity charges came to about Rs.1.00lakh per annum. In addition, an amount of Rs.15000/- was spent on

dieselfor generator.

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38. The average expenditure annually other miscellaneous utilities were

about Rs.15000/annum on items like gas, sanitation, general hygiene,

etc. Further, an amount of Rs.5000/- was spent on Telephone and

Rs.6000/- on apparels for labour in the pack house.

39. The repayment performance of units financed by Sangli DCCB was

poor with 16.8% while it was more than 100% in case of Bank of India,

Nasik indicating advance payment by some of the borrowers. Overall

recovery in case of Nasik district is more than 100 per cent.

40. The repayment period of 5-7 years allowed by banks was reasonable

for the units directly exporting. While for rented units, there is need for

longer repayment period in view of low income generation.

41. The net price realised, was UK pound 4.75 to 5.50 per a box of 4.50

/ 5.00 kg.Thus the rate of grape works out to one Pound per kg.The

exchange rate of per Pound was Rs.60/- akilo.The average net price

realised constituted about65%of FOB price. Even in the case of units

rented out to members got better prices than domestic market, which

other wise they would not have got in absence of pre cooling and cold

storage facilities. There is a need to properly educate farmers to partwith some of the benefits and utilise the same towards repayment of

loans instalments.

42. There were many constraints in export of grapes mainly being non -

availability of standard quality grapes required for export purpose. The

percentage of standard quality grapes forms about 5% of the total

production. Further, popularvarietiesare, oflate,becoming increasingly

susceptible to leaf roll virus thereby severely affecting quality of grapes.

43. The yield of export quality grapes are 25-28 ton/ha in Nasikand

45-50ton/ha in Sangli.

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44. There is inadequate infrastructure at productionsites.Further, incidence

of large number of diseases and heavy application of pesticide leads

to pesticide residues above maximum permissible limit. This create

problems for export of grapes.

45. There are wide fluctuations in international prices and severe

competition from Chile.

46. Inspite of all the difficulties, we have certain added advantages in

production and export of grapes. Grapes can be harvested in India by

virtue of double pruning at such a time when no grapes are available in

the world market. There is also scope to stagger the fruit pruning in

90%of the grape cultivated area, as this area falls inthe tropical region

of India. Further, the time of harvesting grapes can be adjusted by

adjusting the fruit pruning. But in order to adjust pruning, extension

agencies have to educate farmers for which a lot of effort is needed.

47. Technology for production of export quality grapes is available in India.

Thereisalso availability of experienced man power for various activities

starting from production of grapes to packaging of grapes for export

and other support services needed for export of grapes.

48. Again grape producing regions are nearer to seaports and reasonably

good infrastructure is available there. Besides, there are other

encouraging aspects like incentives in the form of subsidy, good

government support for establishing pre cooling and cold storage for

export of fruits and vegetables, availability ECGC coverandpackaging

credit from banks. In addition, most of the grape growers are aware of

the export opportunities and procedures. Further, foreign trading agents

are present for taking up export of grapes on a regular basis.

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ACTIONS FOR FUTURE

^ Pre cooling unit of only 2 MT/ 2.5 MT capacity and

cold storage 25 / 30 MT capacity alone need to be

encouragedas thecapacity isadequateand reasonable

for the present level of exports.

^ Setting up higher level ofPreCooling + Cold Storage

leads to higher overheads and lower capacity

utilisation.

^ Installation of indigenous plant and machinery need

to be encouraged as it is as efficient as imported.

Besides, the cost of indigenous plant and machinery

is also lesser than that of imported one.

^ //units are setup for renting out, there is a need for

higher repayment period and minimum export should

be17containers to sustain the investment.

^ There is also need for better coordination among

different agencies in disbursement of subsidy and thesame should be released only in the name of the

financing bank wherever bank loans are involved.

^ Thereis no need for making a provision for conveyor

belt system in the pack house,initially. Based on the

performance,the same can besanctioned at a later date,

if need be.

^ The farmersoftherented units could alsorealise better

prices due to the presence ofthepre cooling and cold

storage units in thevicinity.Inspite of reaping benefits,

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therepaymentislackingonlybecause themembershavenot passedon the extra benefits realised by them

to thebankers.Wherever,such benefit is passed onto

the bankers, therecoveryisgood.Hence, there is a

needto properly educate farmersto partsomeofthe

benefits realised to banks towards repaymentof loans.

^ Theexport ofgrapes can beaugmented by streamlining

the exports through strengtheningmarket intelligence.

Further,anew financing scheme should be designedto help exporterstotide over inbadtimes.

^ Special care has to be taken before developmentofvine

yards forexport.

^ Thereisalso need for exploring newmarkets.

^ To achieve all theseintendedobjectives,there is a need

for proper planning, extensive market surveys,

strengthening extension education to farmersetc.This

will go a long way inpromotinggrape exports and

therebyaugmenting income from pre cooling and cold

storageunits.

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CHAPTER-I

INTRODUCTION

1.01. India is predominantly agriculture based economy blessed with diverse

agro-climatic conditions which are conducive to the cultivation of

different crops and almost round theyear.Given the arable land and

varied agro-climatic conditions, India is already one of the worlds

largest producer of variety of food grains, vegetables and fruits.

According toCM- Mc Kinsey Report; food production is expected to

treble to Rs.2,34,000crore by the year 2005. India has emerged as

the second largest producer of fruits and vegetablesinthe world with

an annual production of41million ton of fruits and 73 million ton of

vegetables contributing nearly10%and 13% respectively of the world

productbn.During the next10years the output of horticultural produce

is expected to be increased to 265.5 million ton.

1.02 The production given above will make agro-business larger than the

entire Indian manufacturing sector put together. But much of this

potential is likely to remain in the realm of statistics if production is not

supported by proper post harvest management. Today 35-50 per cent

of production disappears in transit till it reaches to the consumer.

Therefore, any increase in production ofthe foodis negated by spoilagein storage and transportation. The loss is more pronounced in the

case of fruits and vegetables as these contain high level of moisture

(between 75%-95%).

1.03. The immediate requirement, therefore, would be not only to stop these

losses, but also value addition through processing. Agro processing,

helps to reduce the losses, thereby increasing the availability of both

fruits and vegetables for domestic consumption and also for export.

1.04. Fruit and vegetable processing involves transformation of raw materials

through physical or chemical alternation, storage, packing and

distribution. The purpose of processing is to make the raw material

portable, palatable and preservable and are known as 3 Ps of processing.

1.05. The necessity for processing of fruits and vegetables arises due to

the following features.

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Contain high level of moisture (over75%),thus prone to microbiological spoilage and natural enzymatic degradation.

Availability is restricted to limited months of theyear.

Creates employment opportunities in rurai/semi-urban areas.

1.06. There are many technologies available forprocessing.Some of them

currently in vogue are:

L Classicalmethodsof preservation:Thisisanage oldpractice

followed in India. It is done by addition of salt or sugartocreate

high osmotic pressure in the cells of fruits and vegetables and

thereby prevent micro biological spoilage. Pickles and jams

are prepared by using this process.

iL Preservation by low temperature: The well established

principleof processingisthat low temperature nearthe freezing

point of water is effectiveinreducing the rate of respiration and

minimize spoilage. The storage has to maintain required

temperature and relative humidity for effective storage life.

Before placing the commodity in the cold storage, field heat is

to be removed for effective storagelife. It generally consists of

3 methods.:

a) Cold storage

The temperature of the commodity can be brought down by

taking out the heat by means of mechanical refrigeration without

any chilling injury. Generally, ammonia is used as refrigerant.

b} Refrigerated gas storage

The process involves storage under low oxygen, high carbon-

dioxide orboth.

c} Preservation by freezing

This process involves passing of commodities through a zone

of ultra low temperature (-15 C to-17C).Byfreezing,products

remain/retain theiroriginalflavour, shape, textureandnutrients.

But this involves high cost. This freezing can be done by

Air blast freezing

Plate freezing

Individual quick freezing

Cryogenic freezing


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Fjii. Chemical preservation

Chemicals like Sodium Potassium metasulphate/ inorganic and

organic (Benzoic Acid) can be used for retarding of inhibiting

micro organisms for enhanced shelf life.

iv. Canning

Canning is a process of sealing of foodstuff in containers and

processing them by heat.

y, Drying / Dehydration

By using sunlight or artificially produced heat. Raisins are made

of this process.

vL Radiation preservation

Use of X-rays for preservation of fruits, vegetables. It is also

known as cold sterilisation. But the process of preservation by

irradiation may lead to long-term problems and loss of nutrients

to certain extent.

1.07. It may beseenfrom the above that, of the above methods, preservation

by low temperature is more suitable for extending the shelf life of fruits

and vegetables, as this process retains most of the original qualities

and the process is easy to operate and thereby is popular than all

other methods.

1.08. In India, Maharashtra ranks on top in the production of fruits which

are to the tune of 53.37 lakhs metricton. However, as in the case of

rest of India, less than1 %of this is utilised for agro processing.

1.09. Agro-processing involves substantial cost and as such involvement

of financial agencies is necessary to supplement the resources of

entrepreneurs. This activity could reduce losses and help in export of

fruits and vegetables. NABARD, recognising the need for extending

financetothissector,actively involved in extending refinance facilities.

So far National Bank, Pune Regional Office had sanctioned 117 Hi-

tech schemes both for production and processing of agriculture and

allied projects including Export Oriented Units (EOUs). Of these 117

projects, 25 units were sanctioned for pre-cooling and cold storage

units and 12 were 100% EOUs(8for production and 4 for processing


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^

of agriculture and allied products). The sector-wise details of ail Hi-

tech & EOU schemes sanctioned by NABARD, Pune Regional Office

are givenintablel .1:

TABLE-1.1

Hi-tech Schemes sanctioned byNABARD. PUNE RO

SI.

No.

Activity No. of schemes

sanctioned

Of which,ECUS

1 Poultry 18 4

2 Agro-processing 4 -

3 Pre-cooling / cold storage 25 -

4 Floriculture 19 7

5 Vermiculture 3 -

6 Mushroom cultivation 9 1

7 Straw berry 6 -

8 Composite horticulture 9 -

9 Tissue culture 11 -

10 Seed processing 13 -

Total 117 12

1.10. It could be seen from the above, that highest number of schemes

sanctioned by NABARD were for setting up of pre cooling and cold

storage units. The Government of India had also given top priority

to set up pre cooling and cold storage units. Though NABARD had

been refinancing these unitsina liberal way, no study was conducted

on the functioning of these units sofar.Therefore, it was decided to

conduct an ex-post evaluation studyonpre-cooling and cold storage

units in Maharashtra State.

1.11. Since beginning, India was primarily a source of raw material supplier

to the Industrial nations in Europe. But the export of perishables has

gained momentum only after opening up of the economy in early

nineties. The export of Indian perishable agro-products include

grapes, mangoes, flowers, live-plants, etc. The share of Indian

agricultural and allied products in dollar terms is about 17% of the


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total Indian exports. But the share of grapes is very negligible asmost of the fruit season lasts for 30-40 days only. The details of

exports from India are given in table 1.2.

Table 1.2

Indian Exports commodity-wise

(in million US dollars)

1997-98 1998-99

Agri.&.allied 4326.56(17.19)

3952.25

(16.51)

Marine 1207.26

(4.80)

1038.24

(4.24)Ores and minerals 1061.06

(4.22)

890.94

(3.64)

Mfg.goods 1650.69(6.56)

1653.36

(6.76)

Eng.goods 4435.29(17.62)

3803.51(15.55)

Cotton yarn and fabrics 3264.28(12.97)

2773.78(11.34)

Ready made garments 3876.18(15.40)

4444.42(18.17)

Germs & jewellery 5345.52(21.24)

5904.05(24.13)

TOTAL 35006

(100.00)

33659(100.00)

Figures in brackets indicate relative share tototal.

1.12. The pre-cooling and cold storage units referred above are also

established as a part of the liberalisation of Indian economy and

most of the units were sanctioned between 1993-94 and 1996-97

and started export of grapes. The inspiration for export of grapes

was because of the efforts done by 'Mahagrapes', (a cooperativeorganisation of grape growers/exporters), which had set up pre-

cooling and cold storage facilities in collaboration with NCDC.

Mahagrapes also make available other infrastructure required for

grower exporters of grapes. The export of grapes is on the increase

ever since these units have come into existence.


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CHAPTER-II

SUPPORT AVAILABLE FOR PRE COOLING

AND COLD STORAGE UNITS

2.01. Generally the Government and its policies play a crucial role in

development of any sector. This could be by way of infrastructure

creation, tax legislation, provision of subsidy, soft loans, etc. Hence,

an attempt has been made in this chapter to analyse the various

facilities/support that was made available by Government of India and

Government of Maharashtra either directly or through their sponsored

agencies like NHB, APEDA, NCDC, MSEB, etc.

Government of India

2.02. Government of India, Ministry of Food Processing Industries (MoFPI)

has three component plan for setting up of post harvest infrastructure

facilities for food processing. Industrial Estates/Food Parks and for

preservation and processing of fish either by way of loan or grant

which would be upto 50% of the cost of capital equipment subject to a

maximum of Rs.25 lakh as grant or Rs.50-150 lakh as loan for first

and third components. For the second component, upto Rs.400 lakh

would be given as a grant. An implementing agency can avail loan or

grant only and not both under MoFPI scheme.

2.03 In addition to the above components, MoFPI, GOI also extends

assistance for dissemination of low cost preservation technology on

grant basis upto Rs. 5lakh.

2.04. Further, MoFPI, GOI extends the grant@ 100% of the project cost to

Non-profit organisations / Universities / NGOs, Public sector or

@33.33% of the project cost to the Private sector, to undertake R&D

projects relat ing to development of post harvest management

techniques.

2.05. It has also a scheme for development of manpower requirements of

food processing industries. This covers cost of training as also for

creation of infrastructure facilities. It ranges from Rs.2.00 lakh to

Rs.50.00lakh.


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2.06. Specific grant based schemes are for marketing of assistance (Rs.10

lakh-Rs.25 lakh), strengthening of backward linkages (Rs.10 lakh),participation in international exhibitions, promoting studies, conduct

of market surveys (Rs.3 lakh), etc.

Government of Maharashtra

2.07. GOM through Maharashtra Agro-Industries Development Corporation

is implementing a scheme for establishing cold storage chain for fruits

and vegetables. Under this scheme the following incentives/facilities

are offered.

2.08. Government of Maharashtra provides 25% of the capital cost of pre

cooling,cold storage, refrigeratedvan,etc., to farmers, industrialists,exporters, cooperative institutions, NGOs or to the Public Sector.

However this is limited to Rs.30.00lakh.

2.09. Government of Maharashtra reserves certain plots in industrial estates

for setting up of pre cooling and cold storage units and also extend

sales tax concessions to these units.

2.10. Maharashtra State Electricity Board charges uniform rate of Rs.1.50

per unit of consumption of electricity for bothLTand HT pre cooling

and cold storage units.

2.11. Green Houses and Poly Houses are exempted from payment of

property taxes. Further, food processing industriesneedto renew their

licenses once in 5 years as against 2 years currently.

2.12. Extends 25% of the Air freight as subsidy to promote export of fruits

and vegetables. Similarly, for promoting exports to new markets orto

test marketing of new products, subsidy upto Rs.2.00 lakh is provided.

APEDA

2.13. Agricultural Produce and Exports Development Agency (APEDA), an

export promotion body for agricultural products under Ministry ofCommerce is implementing a number of schemes. The brief details

of APEDA Schemes are given in Table2.1.


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Table-2.1.

APEDA Schemes for Export Promotion

SI.

No.Activity Subsidy as

%of costCeiling(Rs.)

1 Feasibility studies,surveys, consultancyand data upgradation

50% Rs.10 lakh in case ofpublic Sector / State /Semi Govt.Rs.2 lakh per individual

2 Infrastructure Development

a) Purchase of refer vans 25% 2.5 lakh per beneficiary

b) Setting up of the cooling unit 50% 10 lakh per beneficiary

c) Setting up of machine

handling facilities.

50% 10 lakh per beneficiary

d) Purchase of packagingmaterial for domestictransport of the produce.


e) Providing facilities forpre shipment treatment.


f) Setting up of sheds forstoring,grading andcleaning operations


g) Setting up of cold storage 50% 50 lakh per beneficiary

i) Setting up of vapour heat,

electronic beam processing,or irradiation treatment


k) Supply of product samplesfor test marketing. Air freight

/ cost of sample or both

.50 lakh per beneficiary

1) Cost of packaging material

m)Air freight subsidy on export

30%

25%oflATA freight

rates or1/3 of theFOB value

1 lakh per beneficiary

Rs.10/-per kg.forN.Asia, SE Asia andCIS countries. Rs.25/-

/kg for Europe, NorthAmerica and Far East.

However, total assistance for items under 2 from 'a' to 'g 'shall not exceed

Rs.25 lakh

2.14 APEDA also extends support to exporters, producers, trade

associations, public institutions forsettingup laboratories for improving


35/89

quality and certification. Further, APEDA reimburses the cost ot

pesticide residue testing of exports.

NHB

2.15. National Horticultural Board (NHB) has various schemes for

development of production and post-harvest management of

commercial horticulture. Recently NHB has launched Capital

Investment Subsidy Scheme for construction/expansion and

modernisation of cold storage and storage for horticultural produce

with following pattern:

-> Promoters should bring 25% of the project cost.

-> 50% is term loan by banks at PLR +1% through NABARDrefinance.

-^ Credit linked capital subsidy @25% of project cost subject to a

maximum of Rs.50lakh.

^ For NE states the same would be 33 1/3% and Rs.60 lakhs

respectively.

-> Whereverterm loans are notraisedfrom institutions, NHB would

provide loans/subsidy directly.

-^ The subsidy would flow from NHB and operated by NABARD

through commercial and cooperative banks and by NCDC wherecooperatives institutions seek loan from NCDC.

-> The subsidy would be released to bank/ financial institution as

per the guidelines issued to NABARD by NHB.

-> For modernisation and expansion of cold storage, subsidy would

be given@ Rs.1000/ton.

-> For other storage, subsidy would be at a rate of interest of 8.5%

and quantum of refinance would be90%of the amount financedto borrower (95% for SCARDBs (State Land Development

Banks) and forNE States and Sikkim).

-> The scheme would be operational upto March 2002.

-> Subsidy would be made available through NABARD and is

available to units only after commissioning.

^ In case if no bank loan is involved, promoters have to apply


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directly to NHB for subsidy.-> The subsidy under capital investment subsidy scheme would

be backended.Therepayment schedule wouldhave tobe drawn

by banks in such a way that the subsidy amount is adjusted

after the bank loan (net of subsidy) is liquidated.

2.16. Further, NHB extends assistance for Technology Development and

Transfer which includes introduction of new technologies, providing

expert services from India andabroad,conduct of seminars, arranging

study tours, etc.

2.17. NHB also extends assistance to farmers, exporters, dealers, etc., bygenerating market information reports. It also conducts techno-

economic feasibility studies to reviewthepresent status of horticultural

development in particular area ofthestate so as to identify constraints

and suggest remedial measures.

2.18. NHB further extends soft loan @ 4% for setting up post-harvest

management systems. The loan shall be repayable in 9 years not

exceeding 5 years for repayment of principal. However, there is no

moratorium on interest payments.

NCDC

2.19 National Cooperative Development Corporation (NCDC) has a special

schemes for cooperative societies for setting up post harvest

infrastructure for horticultural crops in an area of operation where

sufficient produce for full utilisation is available.

2.20. NCDC provides loan assistance for longer period for 9-10 years with

a moratorium upto 4 years. There shall be no moratorium on payment

of interest. NCDC gives 50% as term loan and remaining 50% as

equity to the beneficiary cooperative society.

2.21. The sanctioned assistance shall be released to the State Government/

Bank in the form of reimbursement finance. The State Government/

Bank should first disburse and then seek reimbursement from NCDC.

Assistance to cooperative societies would be released on guarantee

of the respective State Governments.

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2.22. NCDC has also a scheme for extending short/medium-term loan to

Apex Cooperative Societies engaged in marketing, processing and

export of agricultural produce for meeting their working capital

requirements.

2.23. Capital Investment Subsidy Scheme of NHB, is applicable to NCDC

financed projects also. Promoters have to apply directly to NCDC

and subsidy is released by NCDC directly to the promoters.

11


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CHAPTER-MI

MINIMUM QUALITY STANDARDS FOR

EXPORT OF TABLE GRAPES

3.01. India produces approximately ninelakhton of fresh grapes, but export

from these grapes is little over 12,000 ton, which is around 1.33 per

cent of the total production. Indian grapes are exported mainlytoGulf

Nations, Middle East, U. K., Germany, Netherlands, Singapore, Hong

Kong,etc.

3.02. Among the export, 90 per cent is for Gulf and Middle East Nations,

while eight per cent is to that of European countries and rest goes to

South East Asian and other countries. Export to European Nations is

limited as Europe is highly quality conscious. Even for other countries,

quality is important. In order to understand the quality requirements

of importers or quality of export grapes, an attempt has been made in

this chaptertoanalyse the minimum standards required for export of

table grapes.

Classification

3.03. The table grapes can classified into four classes which are definedbelow:

L Extra class

The table grapes in this class must be of superior quality. In

shape,development andcolouring,the bunches must be typical

of variety, allowing for the distinct in which they are grown and

have no defects. Berries mustbefirmly attached, evenly spaced

along the stalk and have their bloom virtually intact.

n. Class-!

The grapes in this class must be of good quality. In shape

development and colouring, the bunches must be typical of the

variety allowing for the distinct in which they are grown. Berries

must be firmly attached and as faraspossible, have their bloom

12


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intact. They may, however, be less evenly spaced along the

stalk than in the Extra Class. The following slight defects,

however, may be allowed provided that these do not affect the

general appearance of the produce and the keeping quality of

the package.

Slight defects of shape

Slight defects in colouring

Very slight sun scorch affecting the skin only

ML Cjass-il

This class includes table grapes which do not qualify for inclusion

in a higher class but satisfy the minimum requirements laid

down above. The bunches may show slight defects in shape,

development and colouring provided these do not impair

essential characters of the variety, allowing for the distinct in

which they are grown. The berries must be sufficiently firm and

sufficiently attached and where possible, still have their bloom.

They may be less evenly spaced along the stalk than in Class

- 1 . However, the following defects are allowed.

defects of shape

defects in colouring

slight sun scorch affecting the skin only

slight bruising

jy, Class-Ill

This class includes table grapes which do not qualify for inclusion

ina higher class but satisfy the minimum requirements of Class-

II. The bunches may include some abnormally developed

berries. These bunches, i.e. bunches in which the grapes are

abnormally far apart on the stalk, and thick bunches in which

grapes are too close together, shall fall in this class.

3.04. Of the above four classes, only Extra class and Class-I are accepted

by exporters subject to other qualities which are detailed below.

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3.05. Sizing is determined by the weight of bunches and the following arethe minimum weight requirement per bunch.

Table 3.1

Class House varieties Open field varietiesClass House varieties

Large Berry Small Berry

Extra 300 200 150

1 250 150 100

11 150 100 75

III 75 75 75

Provisions concerning tolerances

Quality tolerances

3.06. The quality tolerance can be 5% by weight of bunches not satisfying

the requirements for the class, but meeting those for the class

immediately below and for classes I & II; 10% by weight of bunches

not satisfying the requirements of that class but meeting those for the

class immediately below respectively. The same is15%for Class-Ill.

Size Tolerances3.07. 10% by weight if bunches not satisfying the size requirement for that

class,but meeting the size requirement for that class immediately

below respectively for Extra, I and II classes. The same is 15% by

weight of bunches weighing less than 75 grams.

3.08. In all the classes also subject to special provisions for each class and

the tolerances allowed, bunches and berries must be

* sound; produce effected by rotting should be excluded.

* clean, practically free of any visible foreign matter

free from damage by pests or diseases.

* free from all visible traces of mould.

* free from abnormal external moisture.

* free from foreign smell or taste.

* intact, well formed, normal developed.

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* must display satisfactory ripeness

* must withstand transport and handling.

Post-harvest Management for export

3.09. Pack House

* Pack house must be clean. Frequent and efficient disposal of

waste should be done.

* Staff should maintain cleanliness and hand washing must be

adopted. Hot air dryers or disposal paper towels should be

used for hand drying.

* Protective clothing must be wornin

the pack house. Head gear/caps must cover the hair.

* Rest areas for workers should be away from pack house.

* Pack house to be solid construction, not allowing access to

rodents or bisels. Windows to be fly-proofed with mesh screens.

Insectocuters to be installed in the pack house. These should

be fitted with catch freeze to prevent insects falling into packed

product.

Product cooling, storage and packing

3.10. Pre-cooling is aimed at reducing the field heat, prompt removal of

field heat of harvested grapes is the best way of retaining the freshness

of grapes for longer time. The temperature of harvest grapes has to

be brought down to less than 4 C within six hours of harvest. Once

pre-cooling is done, the dual releasing sulphur dioxide (Grape Guard)

is to be placed with their coated surfaces downwards on the filled

plastic pouches and are to be covered with the plastic sheet lining.

The boxes are closed and then shifted to cold storage rooms where

the temperature and humidity are maintained at 0Cwith "^0.5C

variation and 94% with*2%

variation respectively.

3.11. The arrangement of boxesinthe cold storage to ensure uniform cooling

of all berries in a box and all the boxes is very important. The carton

size should be:

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i) 400 mmX300 mm x 125 mm Net weight - 4.50 Kg.

ii) 600 mm x 300 mm x125 mm Net weight - 8.25 Kg.

for European super markets and net weight of 2 kg / box for Dubai

markets. Pouch bags to be used from food grade low density poly

ethylene. A minimum of 9 bags in a 4.50kg./ 5.00 kg. carton and 16

in an 8.25 kg. carton should be used. Bag weight should be between

400 and 700 grams with no more than 2 bunches perbag.Liner bags

should be of good quality clear polythene and large enough to cover

the grapes and grape guard with a good overlap.

3.12. Boxes should be palletised on a 48" x 40" pallet with paper boardcorner posts and steel strapping. Different growers produce should

be palletised separately, clearly marked for easy identification. The

minimum berry size should be 18 mm and Brix is 18%.

16


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44/89

CHAPTER IV

METHODOLOGY OF STUDY

4.01. National Banl< had sanctioned 25 schemes involving 56 pre cooling

and cold storage units spreading across the different regions of

Maharashtra State. Govt, of India has launched a new scheme to

promote/expand this activity. In view of the disbursement of sizable

amount and emphasis to be given in future, it was felt necessary to

conduct an evaluation study on the subject matter in Maharashtra

State so as to firm up our policy and to understand forward and

backward linkages.

Objectives

4.02 The broad objectives of the study are :

to assess the actual cost of investment, the amount of loan

sanctioned & adequacy of the loan amount provided by banks ;

to examine the adherence to technical specifications and to

identify the reasons for divergence, if any ;

to understand and asses the product ion, chain linkages,

institutional linkages and other forward and backward linkages ;

to unders tand the operational problems faced by the

entrepreneurs / owners of cold storage units;

to estimate the benefits accruing from the investments to

entrepreneurs and utilisers/ hirers; and

to study the repayment performance

Sampling Design

4.03 The distribution of sanctioned units spread to 6 districts across different

regions of the state which can be seen from table4.1. But on a carefulexamination,the schemes sanctionedinAmaravathi and Ahmednagar

districts have not claimed any refinance thereby leaving only four

districts. Of the four districts also, 15 schemes involving 40 units

17


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were sanctioned in Nasikdistrict,four schemes, involving 11units

were sanctioned in Sanglidistrict. The remaining three schemes

involving three units werein Latur(2) and inPune(1) districts.Hence

it wasdecidedtotakeupNasikandSangli districtsfordetailedstudy.

Thedetailsofschemes sanctionedaregivenatTable-4.1.

Table- 4.1

DetailsofSchemes SanctionedinMaharashtra State

(Rslakhs)

District Banl


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(Rslakhs^

District Bank&No. of

schemessanctioned

No.ofunits

ineach

scheme

Dateof

sanctionRs.

TotalFinancial

outlay

Refinancesanctioned

Rs.

RefinanceDisbursed

Rs.

%ofAchieve

-ment

Sangli DCCB(4) 8 22.11.93 632.304 429.976 282.367Sangli

1 19.01.94 79.038 53.747 34.560

Sangli

1 25.03.95 120.524 63.556 41.440

Sangli

1 22.06.95 81.179 55.202 39.850

Sangli

Total 11 913.045 602.481 398.217 66.10

Total Sangli DIst. (4) 11 913.045 602.481 398.217 66.10

Latur

ToUl

BoM (2) 1 08.03.95 59.480 31.227 24.416Latur

ToUl

1 18.03.96 33.500 12.500 12.500

Latur

ToUl 2 92.980 43.727 36.916 84.42

Total for Latur Dist(2) 2 92.980 43.727 36.916 84.42

Pune BoM (1) 1 21.03.96 77.280 29.000 28.305Pune

1 77.280 29.000 28.305 97.60

Total forF'une Dist .M) 1 77.280 29.000 28.305 97.60

A' Nagar DCCB (1) 1 05.07.96 36.000 21.600 0.000A' Nagar

Total 1 36.000 21.600 0.000 0.00

TotalforA'Nagar Dist. (i; 1 36.000 21.600 0.000 0.00

Amara-

vathi

BoM (1) 1 17.03.97 663.000 12.000 0.000 0.00Amara-

vathi Totel 1 663.000 12.0000.000

0.00Totalfor; 'vathi Dist (1) 1 663.000 12.000 0.000 0.00

Total fortheState (25) 56 2727.044 1462.886 1076.849 73.82

'Jointly with 4 schemes of Pune District

4.04 It can be seen from the table4.1that the cold storage units in Nasik

district were implemented by Nasik District Central Cooperative Bank

and Commercial banks while in Sangli district, all the units were

implemented by Sangli District Central Cooperative Bank. The major

banks were Bank of Maharashtra (19 units), Bank of India (13 units),

NDCCB (3 unrts). Bank of Baroda (2 units) in Nasik district and SDCCB(11 units) in Sangli district. Out of the 40 units financed in Nasik

district, 15 units were selected and all the11units were selected from

Sangli district for detailed study. In addition to these 26 units, three

units financed by NCDC / Mahagrape and one unit of VEFCO were

19


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also visited and discussions were held with concerned peopleinorder

to have better understanding of the functioning of pre-cooling and

cold storage units. However, entire analysis is restricted to NABARD

refinanced schemes only. The distribution of sample units among

different banks is presented in table 4.2.

Table 4.2

Bank wise distribution of sample units

SI.No. Name of the Bank Total No. of units Sample units

1 NDCCB *3 12 SDCCB 11 11

14 12

3 BOM 19 7

4 BOI 13 5

5 BOB 2 2

26

6 Other units 4

Total Units 30

* 2 units have not yet taken off

4.05 The required data forthestudy was collected through a well designed

questionnaire. The information was obtained from the banks and also

from the unit members. Information on facilities made available by

various organisations is collected from secondary sources and

updated wherever necessary. Detailed discussions were held with

bankers, importers representatives, exporters, officers of Mahagrapes

and Grape Exporters Cooperative Society at Sangli, Nasik and at

Pune also.

Reference year

4.06 The reference year of the study is the calendar year 1999 and all the

costs and benefits have been valued at the year 1999 prices. All the

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pre-cooling and cold storage units work for about 45 to 60 days in

between 15 February and 15 April every year and hence calendar

year is considered as reference year as export amount would be

coming only after 60- 90 days. By and large, the conclusions drawn

in this report are based on the data collected from the pre cooling and

cold storage units supported by NABARD. However, all other relevant

information was incorporated wherever necessary.

4.07 Primary data in respect of production, quantity exported, expenditure

incurred,price realised, etc., was collected from selected units by

direct interview method and all other related information was collectedfrom banks. Financial viability of the investments was worked out

using Financial Rate of Return.

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C H A P T E R - V

DESCRIPTION OF THE STUDY AREA

5.01. The study area covers Nasik and Sangli districts. Both the districts

are traditionally grape growing areas. Various demographic,

physiographic and economic features of the selected districts are

discussed in this chapter.

5.02 Nasik district is located between 18.33- 22.53 North latitude and

between 73.16 - 75.16 East longitude at North-West corner while

Sangli district is located between 16.46-17.10 North latitude and

between 73.42 - 75.40 East longitude at southern side ofthedistrict,both fallinginthe Western Maharashtra region. Geographically, Nasik

district is larger in size (15633 sq.km) as compared to Sangli district

(8610sq.km). For administrative convenience, Nasik district is divided

into 15 blocks and Sangli district is divided into 8 blocks.

5.03 The population of Nasik district as per 1991 census was 38.51 lakh

with 64% rural population, while Sangli district had a population of

22.09 lakh with 77% rural population. The density of population was

more in Sangli district (259 per sq.km) than that of Nasik district (246

persq.km).

In both the districts, the literacy rates were around 62%.

5.04 Godavari and Krishna are major rivers flowing in Nasik and Sangli

districts respectively. The annual average rain fall of Nasik district

was 2600 mm with 90% of it is received from June to September

(South - West monsoon). The maximum temperature in summer

months is 42.5 C and minimum temperature in winter is about 5 C.

The relative humidityisbetween 43%-62%.InSangli district the annual

average rainfall was 625 mm with 90% of it is received from June to

September (South-West monsoon). The maximum temperature in

summer months is 47 C and minimum temperature is about 7 C in

winter months. The relative humidity varies between 40%-65%.

5.05 The pattern of land use indicated that the net sown area of Nasik

district was 8.73 lakh ha forming51 %of the total geographical area

while in the Sangli district the same was 6.73 lakhhaforming 78% of

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the geographical area. The area under double copping is 16% and

11 %respectively for Nasik and Sangli districts.

5.06 The cropping pattern in both the districts is dominated by food crops

which is about 55% in Nasik district and 58% in Sangli district.

Plantation & Horticultural crops occupy about1 %of the area in Nasik

districtandabout 0.7% area in Sangli districtwithgrapes as a dominant

crop in both the districts.

5.07 Both Nasik and Sangli districts are covered by good network of road

and rail connecting with majortowns in India like Mumbai, New Delhi,

Rune, Bangalore, etc. Both the districts are having excellent banking

facilities as 448 and 404 bank branches are operating respectively in

NasikandSangli districts.The groundlevelcredit flow for priority sector

is about Rs.600 crores in Nasik district and Rs.200 crores in Sangli

district.

5.08. In both the districts, 'Mahagrapes', an organisation working for

development of grapes and export of grapes. Similarly Maharashtra

Grape Growers Association is also having offices in both the districts.

These organisations not only help grape growers by supplying all

relevant material required for grape cultivation, but also advises them

on technical matters. Further, they also supplyallthe material requiredfor export of grapes and manufacture of dry grapes.

5.09. Agricultural Research Centre for Grapes (ARC-Grapes) of Indian

Council of Agricultural Research is also located at Rune, Maharashtra,

which is almost at equidistant both from Nasik and Sangli districts

also extend technical assistance as and when required by farmers.

Mahagrapes and Maharashtra Grape Growers Association have been

utilising the expertise of ARC Grapes, Rune.

5.10. Tasgoan, in Sangli district and Niphad and Dhindori blocks in Nasik

district are prominent clusters in grape cultivation. Tasgoan, apart

from fresh grapes, is also famous for marketing of dry grapes. APMC,

Tasgoan is the biggest dry grape market in India.

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CHAPTER-VI

COLD STORAGE PROJECTS AND THEIR IMPLEMENTATION

6.01. It is already mentioned in Chapter-IV that this study was conducted in

Nasik and Sangli districts, which are not only leading in cultivation

and production of grapes, but also having large number of pre-cooling

andcoldstorage units.Thepackage sanctioned by NABARD for setting

upof pre-coolingandcold storage units is givenintable6.1. Inaddition

an attempt has been madeinthis chapter to analyse various aspects

of project implementation and management of project.

TABLE-6.1.

Details of schemes sanctioned in Nasik and Sangli districts

(Rs.lakh)

SI.No.

1

Nameof the

district2

Totalfinancial

outlay (Rs.)3

Refinancesanctioned

(Rs.)4

Refinancedisbursed

(Rs.)5

%of 5/4

6

1 Nasik (40) 1,544.74 754.08 613.41 81.35

2 Sangli (11) 913.05 602.48 398.22 66.10

TOTAL (51) 2,457.79 1,356.56 1,011.63 74.57

Figures in brackets indicate total number of schemes.

6.02. It can be seen from the above that the achievement in refinance

disbursement in Nasik district was 81.35 %, while the same was 66.10

% in Sangli district. The same for both the districts together was

74.57 %. The percentage of achievement would have been higher

than 81.35% in Nasik district but for the 2 out of 3 schemes sanctioned

toDCCB, Nasikdid not materialise. In the case of Sangli even though

allthe schemes had takenup,the refinance targetcouldnot be reached

because the sanction included working capital for 15 days which was

approximately Rs.25 lakh per unit and as the bank has not extended

this facility, the achievement was down by Rs.204.26 lakh which

otherwise could have been achieved. The reasons for the same were

analysed in detail else where in the report at an appropriate place.

Out of the 51 schemes sanctioned in Nasik and Sangli districts, 26

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units werevisitedby studyteamfor detailed examination as mentionedin Chapter-IV and the following are implementation aspects of the

selected schemes.

Project Cost

6.03. There is no standard project cost for the pre-cooling and cold storage

units.The project mainly depended upon the installed capacity of the

units and type of technology chosen i.e. whether indigenous or

imported.Thetotalproject cost in respewt yf the 26 units selected for

the study are presentedinTable 6.2.

TABLE-6.2.

Project cost of pre-cooling and cold storage units

(Rs.lakh)

SI.

No

Name of

the

project

District

&Banlc

Installed

capacity

inMT

Date

of

san

ction

NABARD

sancti

oned

project

cost

Bank

loandisbu

rsed

Prom

oterscontri

bution

Actual

project

cost as

sessed

#

PC OS Rs. Rs. Rs. Rs.

1 Vasanthadada

Grape Growers

Coop.Soc. Ltd.

Anjani

DCCB

Sangli

7.5 30 t1.12.93

3.2.93@

68.037*

11.002

36.76

9.35

2.30 54.05

2 Chaman Grape

Growers Coop.

Soc, Ltd. Nimni

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68.037*

11.002

36.76

9.35

9.35 58,06

3 Yelavi Grape

Growers Coop Soc

Ltd,Kundal

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68.037*

11.002

36.76

9.35

7.52 55.02

4 Kundal Grape

Growers Coop Soc

Ltd,Kundal

DCCB

Sangli

7.5 30 11.12,93

3.2.93@

68.037*

11.002

36.76

9.35

2.90 45.48

5 Bhilwandi Grape

Growers Coop Soc

Ltd, Bhilwandi

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68,037*

11.002

36.76

9.35

5.02 51.98

6 Shiva Sakhi

Grape GrowersCoop. Soc. Ltd.

Savalaj.

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68,037*

11.002

36,76

9.35

4,30 51.86

7 Shri Veerabhadra

Grape Growers

Coop. Soc. Ltd.

Gardi.

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68.037*

11,002

36.76

9.35

4.50 46.82

25


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8 Shri NathGrape

Growers CoopSoc

Ltd,Kundal

DCCB

Sangli

7.5 30 11.12.93

3.2.93 &

68.037*

11.002

36.76

9.35

4.34 50.10

9 Mahalaxmi Grape

Growers CoopSoc

Ltd, Mahankal

DCCB

Sangli

7.5 30 11.12.93

3.2.93@

68.037*

11.002

36.76

9.35

4.00 47.73

10 Khanderaya

Grape Growers

Coop.Soc. Ltd.

Waiphale

DCCB

Sangli

7.5 50" 25.7.95 81.180* 54.98 5.37

8.00

64.10

11 Sampathrao

Deshmukh

Phalbhajya Vikriva

SliitagrihaCoop.

Soc. Ltd.Kadepur.

DCCB

Sangli

7.5 50** 4.4.95 120.52* 52.10 11.28 74.25

12 Tasty grapes NASIKBOB

2+2$ 30 18.2.98 49.00 36.00 7.00 43.00

13 Susheel grapes NASIK

BOB

72.5+2.5$$

50

19.8.94 43.00 22.58 20.81 43.39

14 Leading agro NASIK

BO!

2.5 30 18.3.95 36.47 28.95 8.39 37.34

15 l\4ouliinternational NASIK

BOI

2 20 18.3.95 19.15 12.53 6.97 19.15

16 Holly grapes NASIK

BOI

4 40 15.3.96 48.00 36.00 12.78 48.78

17 Panchwati NASIK

BOI

2 30 18.3.95 40.10 30.82 10.28 41.10

18 Mass exports NASIK

BOI

2.5 30 18.3.95 38.98 29.82 8.81 38.63

19 Akkar exports NASIK

BOM

2+2$$ 30 22.3.95 38.34 28.74

10.00

11.52 40.26

20 Krushirath

Agro-industry

NASIK

BOM

1.5 20 22.3.95 29.50 20.00 10.00 30.00

21 SACO fruits NASIK

BOM

2 30 18.3.96 25.34 19.00 7.50 32.84

22 Malode Agro

Exports

NASIK

BOM

2+3$$ 30 22.3.95 18.05 13.00

7.50

7.90 20.90

23 Boraste Agro NASIK

BOM

5+8$$ 50 28.2.95 45.00 40.00

16.25

8.00 48.00

24 Traimbakraj NASIK

BOM

2 20 22.3.95 33.64 25.00 9.00 34.00

25 Kadava Farms

BOM

NASIK 4 40 22.3.95 28.60 20.00 13.00 33.00

26 Anand Grape

GrowersCoop.

Soc. Ltd.

NASIK

DCCB

6 50** 31.12.93 65.00 56.30 2.94 61.75

26


55/89

$ Machinery for 2nd unit not installed.

$$ Additional units not considered in actual cost.

PC Precooling. CS Cold storage.

# As per the quotations/Balance sheets of units.

2 units of 25 MT each.

@ @ Collected as deposit from members. @Amount sanctioned for PC.

Includes working capital for one cycle.

6.04. It can be seen from table6.2.that the total cost varied from Rs.19.15

lakh to Rs.74.25 lakh with an average cost of Rs.45.10 lakh. The

project cost of units of Sangli district when compared with units of

Nasik district were on the higher side. This was mainly due to the

installation of higher capacity of pre cooling and cold storage units.

As can be seen from the table 6.2, every unit in Sangli district had aninstalled capacity of 6 MT /6 Hrs. pre cooling and 30 - 50 MT cold

storage. In Nasik district, barring four units, all other units had a pre

cooling capacity of less than 3 MT/6 hrs and 30 MT of cold storage.

6.05. Of the total cost of setting up of pre cooling and cold storage units,

major share i.e. 60 per cent had been accounted for pre cooling and

cold storage machinery including insulation, electrification and

generator set. 30 per cent was accounted for construction of civil

structures. Remaining was accounted forland,electricity deposit, pre

operative expenses, etc.

6.06. Inall the cases, there is no time or costoverrun. In most of the cases,

civil works were undertaken byoneofthepromoters orbytheir relatives

while that of installation of plant and machinery for pre cooling and

cold storage was done by supplier on turnkey basis and the costs

were well within the estimated cost. All the projects were completed

within 10-12 months. Out ofwhich,installation of plant and machinery

for pre cooling and cold storage including insulation work took 3

months.

6.07. The supplier, once everything is completed, gave training to one of

the identified persons on operational aspects of pre-cooling and cold

storage machinery and also provided guarantee against defect of

machinery for 12 months. Afterwards sales service were also made

available tothem.No unit had reported any major problem during the

27


56/89

last 5-6 years of operations and overall working of plant and machinery

was reported to be good.

6.08. It is observed that in all the units financed under cooperatives, the

capital costs are on higher side. This is one of the reasons that the

units under cooperative sector are set up with lower margin money

than stipulated by NABARD. This has happened mainly because of

wrong estimates/certifications by architects and inflated quotations

from suppliers. The details of margin money is discussed in the

following paragraphs.

Margin Money

6.09. It can be seen from the table 6.2. that in the case of private sectorunits, the margin was more than 25% and averaged it to 26.81%.

Eventhough NABARD had stipulated a margin of 15%, all the units

established under cooperatives had contributed much less than the

stipulated percentage and the same ranged from 3.4 per cent of

NABARD approved project cost (Rs.2.3 lakh) in the case of Shri

Vasanthdada Grape Growers Cooperative Society to 9.4 per cent

(Rs.11.28 lakh)inthe case of Sri Sampath Rao Deshmukh Phalbhajya

Va Shitagriha Cooperative Society Ltd. The same for units in private

sectorrangedfrom 14.3 percent (Rs.7.00 lakh)incase of Tasty Grapes

of Bank of Baroda, Nasikto48.4 percent(Rs.20.81lakh) inthecase

of Susheel Grapes, Bank of Baroda, Nasik. The average margincontribution in terms to approved project cost for different banks is

given in the table - 6.3.

TABLE-6.3.

AVERAGE MARGIN MONEY CONTRIBUTED

(Rs.lakh)

Bank District Average approvedcost

Average marginmoney

%

DCCB(II) Sangli 74.003 5.53 7.47

Sub-Total 74.003 5.53 7.47

DCCB(1) Nasik 65.00 2.94 4.52

BOB (2) Nasik 46.00 13.91 30.24

BOM (7) Nasik 40.21 9.56 23.76

BOR (5) Nasik 36.54 9.45 26.00

Sub-Total 41.41 9.66 23.33

28


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Subsidy

6.10. As mentioned in Chapter-2, subsidies were made available by Central

and State Governments directly or through their organisations.Infact

many of the units got the benefit of subsidy from Government of India

/Govt, of Maharashtra andboth.Thedetails of subsidy made available

by various organisations are given in Table - 6.4.

TABLE-6.4.

DETAILS OF SUBSIDY AVAILABLE

(Rs.Lakh)

SI.

No.

Name ofmoney

Financingagency

Subsidysanctioned

(Rs.)

Subsidydisbursed

(Rs.)

Source of

Subsidy

1 VasanthdadaGrape GrowersCo-op.Society Ltd.

DCCBSangli

17.623.332.25

12.573.332.25

WMDCFPINCDC

2 ShivShakthiGrape GrowersCo-op.Society Ltd.

DCCBSangli

12.811.01

12.811.01

WMDCNHB

3 Yelavi GrapeGrowers Coop.Credit Society Ltd.

DCCBSangli

18.56 13.61 WMDC

4 Kundal Grape

Growers Coop.Society Ltd.

DCCB

Sangli

NA 11.59 WMDC

5 Khanderaya GrapeGrowers Coop.Society Ltd.

DCCBSangli

35.00 15.22 FPI

6 Mahalakshmi

Growers Coop.

Society Ltd.

DCCB

Sangli

15.00

0.98

11.72

0.98

WMDC

NHB

7 Srinath GrapeGrowers Coop.Soc. Ltd.

DCCBSangli

15.00 9.99 WMDC

8 SampathraoDeshmukh PhalBhajya Vikri VaShitagruha Coop.Soc. Ltd.

DCCBSangli

50.0018.9015.00

50.0018.90

FPIGOM

WMDC/DIC

29


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9 Bhilwadi Grape

Growers Coop.

Soc. Ltd.

DCCB

Sangli

18.41 0.16 WMDC

10 Chaman Grape

Growers Coop.

Soc. Ltd.

DCCBSangli

18.41 12.460.74

WMDC/DICAPEDA

11 Anand GrapeGrowers Coop.Soc. Ltd.

DCCBNasik

10.002.87

16.25

WMDCAPEDA

GOM/NCDC

12 Akkar Exports BOM Nasik 9.50 9.50 WMDC

13 Malode Agro BOB Nasik 11.50 WMDC

14 Susheel Grapes BOB Nasik * WMDC15 Leading Agro BOI Nasik * WMDC

16 Mass Exports BOI Nasik 8.09 WMDC

* Subsidy sanctioned by WMDC but not released so far.

6.11. It can be seen from table 6.4., that the highest subsidy was sanctioned

and disbursed to Sampathrao Deshmukh Phal Bhajya Vikri va

Shitagriha Cooperative Society Ltd. financed by Sangli DCCB.

Incidentally this is one of the largest pre cooling and cold storage

financed by banks through NABARD refinance. In this case, the

subsidy released by all the three agencies worked out more than theactual cost of plant and machinery. The main reason for this is the

lack of coordination among subsidy sanctioning / disbursing agencies.

Inthis particularcase,inspite of availability of subsidy more than the

bank loan sanctioned, the entire amount together with interest is

outstanding and the subsidy cheques were encashed through some

other bank by the unit.

6.12. Another noticeable thing from table 6.4. is that all the units sanctioned

in Sangli except Veerabhadra Grape Growers Cooperative Society

Ltd.were sanctioned subsidy. In some cases, the sanctioned subsidy

was not disbursed in full due to non availability of adequate funds with

the subsidy sanctioning agency (Western Maharashtra Development

Corporation / District Industries Center). There is a lot of delay in

releasing the sanctioned subsidy. It could also be seen that all the

30


59/89

units financed in the cooperative sector except Veerabhadra Grape

Growers Cooperative Society Ltd, got subsidy sanctioned/disbursed

by different agencies.

6.13. Interim Loan

As there was a delay in release of the subsidy, Sangli DCCB has

extended interim loaninanticipation of release of subsidy. The interim

loan has to be repaid within oneyear. Subsidy was sanctioned only

on commissioning of the units and the purpose of sanctioning interim

loan in anticipation of subsidy hence could not be justified by DCCB.

The details of interim loan sanctioned by Sangli DCCB for units is

given in table - 6.5. The banks in Nasik district did not extend the

same facility. In Sangli district, out of the11units sanctioned, 6 units

had availed interimloan.

Table 6.5

Details of Interim loan

(Rs.lakh)

SI.

No.

Name of the unit Interim loan

sanctioned (Rs.)

Subsidy

released (Rs.)

1 Shiv Sakthi Grape GrowersCooperative Society Ltd.

10.00 13.81

2 Kundal Grape GrowersCoop.Society Ltd.

9.25 11.59

3 Yelavi Grape GrowersCoop. Society Ltd.

2.70 13.61

4 Mahalakshmi GrapeGrowers Coop. Society Ltd.

9.00 12.7

5 Veerabhadra Grape GrowersCoop. Society Ltd.

10.20

6 Chaman Grape GrowersCoop. Society Ltd.

10.00 13.19

6.14. It could be seen from the table 6.5. that highest amount of interim loansanctioned wasRs.10.20 lakh and lowest amount was Rs.2.70 lakh

with an average of Rs.8.53lakh. It may further be observed thatinall

the cases the interim loan together with interest was adjusted except

31


60/89

in the case of Veerabhadra Grape Growers Cooperative Society

Limited as the unit was not sanctioned subsidy by any agency andthe amount of Rs.15.30 lakh is overdue in the books of Sangli DCCB

on account of interimloan.

NHB Soft loan

6.15, National Horticultural Board (NHB) as a part of the package of

assistance extended soft loan at4%interest rate payable over a period

of5years. NHB has released this amount in 1994-95 after completion

of units and has to be repaid with one year grace period. National

Horticulture Board has released this amount against Bank guarantee

of DCCB. DCCB has initially adjusted the loan as per the interestslabs, but the societies had not repaid to NHB /DCCB on due dates.

As the DCCB had given guarantee for repayment of soft loan to NHB,

it had repaid the installments on the due dates to NHB and treated the

amount as regular loan charged at market interest rates. This had

led to higher loan outstanding and excess over dues. The soft loan

was made available to units financed in cooperative sector that too in

Sangli district only. The units in Nasik had not applied/availed this

facility. The details of soft loan given by NHB and its repayment

schedule stipulated by NHB are givenintables 6.6.and6.7 respectively.

TABLE-6.6.

Soft loan made available by NHB

(Rs.lakh)

SI.No. Name of the unit Soft loan (Rs.)

1 Vasantha Dada Patil Grape Growers Coop. See. Ltd. 9.63

2 Shiva Shakti Grape Growers Coop. Society Ltd. 9.63

3 Kundal Grape Growers Coop. Society Ltd. 9.63

4 Yellavi Grape Growers Coop. Society Ltd. 9.63

5 Mahalakshmi Grape Growers Coop. Society Ltd. 9.63

6 Srinath Grape Growers Coop. Society Ltd. 9.637 Veerabhadra Grape Growers Coop. Society Ltd. 9.63

8 Chaman Grape Growers Coop. Society Ltd. 9.63

9 Bhilwandi Grape Growers Coop. Society Ltd. 9.63

32


61/89

6.16. It could be seen from the above that out of11units financed inSangli

district by DCCB, nine units got soft loan from NHB. All the nine units

got Rs.9.63 lakh each as softloan.The two units that did not apply for

soft loan are bigger in size and had applied for subsidies only. The

repayment schedule by NHB is given in table 6.7.

TABLE-6.7.

Repayment schedule of NHB soft loan

(Rs. lakh)

Year Principal

(Rs.)

Interest

(Rs.)

Total

(Rs.)

1 192,600 77,040 269,640

2 192,600 30,816 223,416

3 192,600 23,112 215,712

4 192,600 15,408 208,008

5 192,600 7,708 200,308

Total 963,000 154,084 1,117,084

6.17. It could be seen from table 6.7 that the first year installment included

interest for the grace period also. National Horticulture Board had

decided the quantum of soft loan as per the breakup given in table

6.8. The DCCB, Sangli had not charged any commission/margin on

softloan.

TABLE-6.8.

BREAKUP OF NHB SOFT LOAN

(Rs.lakh)

SI.No. Items Amount

1 Grading packaging house 2.20

2 Pre-cooling 5.00

3 Packaging house equipment 1.18

4 Diesel generator set 1.25

Total 9.63

33


62/89

Rate of Interest6.18. The implementing banks had charged varied interest rates. While

Bank of Baroda and Sangli DCCB had charged the ultimate borrowers

uniform interest rate at 15%, Bank of Maharashtra charged between

16%and 17%. In the case of Bank of India, the interest rate varied

between 16.5% and 18.5%. The Nasik DCCB had charged 17.5 %

on theloan.

Repayment period

6.19. The repayment period fixed by NABARD at the time of sanction was 5

years including one year grace. During the grace period (first year)only interest was to be collected by the banks. During the field study

it was observed that banks were fixing varied repaymentperiods.The

table 6.9. illustrates bank-wise repayment period fixed for the units

financed by them.

Table 6.9

Repayment period-wise schemes.

Bank Repayment period in yearsBank

5 6 7-

Sangli DCCB 9(1) 1(1) 1(2)

Nasik DCCB 1(1)

Bank of Baroda, Nasik 1(1) 1(1.5)

Bank of Maharashtra, Nasik 1(1) 6(2)

Bank of India, Nasik 5(1)

Total 10 8 8

Figures in brackets indicate grace period in years.

6.20. it can be seen from the above that eighteen units allowed one year

grace period while seven units allowed 2 years grace period and one

unit of Bank of Baroda had allowed a grace period of one and half

year.When it comes to repayment, 10 units had 5years,8 units each

had 6 years and 7 years as repayment period.

34


63/89

Loan sanction and disbursement6.21. No delay was noticed in any case in disbursement of loans. The

loans were generally disbursedintwo installments. One for taking up

construction activity and other for installation of plant and machinery

of pre-cooling and cold storage units. In all the cases, the loans

disbursed was infull.

Utilisationofloan

6.22. All the units were complete and commissioned satisfactorily in time.

There were no cases of misutilisation except that in case of some

units the loan sanctioned including subsidies, soft loans was more

than required amount. In the case of Anand Grapes, Nasik, the unit

was initially financed by DCCB, Nasik. However, the unit had

subsequently availed loan from National Cooperative Development

Corporation (NCDC) and repaid the earlier loan availed from Nasik

DCCB.

Technology adopted and its suitability

6.23. All the units visited had been used by exporters and there were no

problems in quality of the grapes, which established the suitability of

the units for export of grapes. All units except one i.e. Anand Grape

Growers Cooperative SocietyLtd.Nasikwereusing free on gas whileAnand Grape Growers Coop. Society unit operated on any hydrous

ammonia.

Information on other units visited

6.24. As mentioned at Chapter-IV, in addition to NABARD refinanced units,

four units; three units financed by NCDC / Mahagrapes and one unit

financed to VEFCO were alsovisited.All these units were also set up

under cooperative sector. These units enjoyed a longer repayment

period of 10-12 years in addition to 1-2 year grace period. However,

the rate of interest charged by NCDC varied between 16% and 17%.NCDC, apart from termloan,makes contribution@20% of the cost

of the project as share capital. State Govt, also had made an share

capital contribution @ 25% of the project cost. The members

contribution was only 15% and rest 40% was extended as termloan.

35


64/89

Even though, NCDC allowed longer gestation period, there was no

gestation on payment of interest. The units allow members to keep

their produce on rental basis. Members were allowed space subject

to availability of time for pre-cooling and space in cold storage. These

units have comparatively larger pre-cooling and cold storage

capacities. Inspite of the higher interest rate, the interest outflow

average was relatively low due to loan component being only 40%,

against 60-90% in other cases. These units also availed of subsidy

from WMDC, MoFPI, GOM & NCDC and were exporting grapes of

members and non members.

Sanction of working capital/packaging credit

6.25. NABARD had as a part of the project sanctioned Rs.24.787 lakh for

all the units in Sangli district as working capital for one working cycle

of 15 days each, the same was not extended to Nasik district while

appraising the schemes. Inspite of this, Sangli DCCB did not extend

the facility of working capital to any unit, while all the units in Nasik

district had availed working capital except in the case of Susheel

Grapes which was financed by BOB but was enjoying packing credit

fromSBI,Nasik. Nasik DCCB, Bank of Maharashtra and Bank of India

had been extending packaging credit for the units financed by them.

In Nasik district, the packing credit extended was observed to besufficient. It was informed by Sangli DCCB that as the units were

rented out to exporters, there was noneedfor packaging credit/working

capital to these units and therefore the same was not extended.

Availability of other infrastructure

6.26. The grapes need to be harvested before 8.00 a.m. and pre cooled

immediately after that. No unit/exporter has expressed any difficulty

in getting labours for harvesting at such odd hours. In addition all the

packaging materia

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