Do the Wholesale fruit and vegetable markets in India need more technology?

Motivated by this question, a few of us technology people at a software company set out to investigate the Wholesale fruit and vegetable market experience from both a supplier and buyer perspective. Being Delhi based, our nearest stop was Azadpur, Asia’s largest wholesale fresh produce market in North Delhi.

Our first impression on entering the market was that compared to a modern supermarket, walking through Azadpur felt like an experience from a 19th century.  Were we dreaming? We were told that every day thousands of trucks bring fresh produce to it from all over the country. Azadpur felt out of date with the rest of the city but we were told that it is the most important link in Delhi’s food chain, and its mammoth operations are round the clock. Transactions worth hundreds of crores take place here every day. The methods by which the mandi works may be mysterious to the first-time visitor but seems to work.

Farmers bring their produce to commission agents, who auction it by calling out prices quoted by potential buyers around them. The produce is rarely sorted and graded. These auctions happen only for few hours (e.g. 6am-11am). The suppliers are bound to sell the vegetables by the end of the auctions, as there is no appropriate cold storage available for highly perishable produce and waiting for another day will incur extra time and cost besides the produce will rot.

The commission agent checks with the supplier before handing over the produce to the highest bidder.  If the deal goes through, the farmer pays commission of the final rate to the commission agent. Commission agents (middlemen) try to get the ‘best price’. They don’t bid loudly. Instead, they communicate with buyers in code, by touching hands under a handkerchief. This way, the price changes with every buyer. It’s an old-fashioned way, and illegal too, but that’s how most deals are struck at the mandi.

Thousands of local vendors gather at the mandi to buy produce from the middlemen at the crack of dawn to be able to sell in their areas early in the morning, Azadpur never sleeps or slows down. It is kept alive and active by the thousands palledars, who work round the clock. They live in godowns or in a shanty villages within the market complex. Handling and sorting the produce is labour-intense work. We were shocked when we saw few ladies pounding wet garlic with their naked feet in a lane with open drains. More shock was in store when told that this peeled garlic was meant for big hotels of Delhi.

At the end of early dawn visit, instead of getting a quick answer to our original question we ended with tons of more questions. Do our famers deserve such markets in the age of internet? Were they and consolidators who buy their produce at source are getting a fair price? Do fruit and vegetables that provide heathy nutrition to all of us deserves to be traded in a place that is full of filth and stinks badly, thereby is completely unhygienic? Do the suppliers and buyers have to always burn mid night oil just to market the harvest of their hard labour or make their living? What is the social cost for their families? Can the traders who makes crores from this trade ever bring their families to such a dirty workplace? The list of questions that popped in our head was endless.

In nutshell, how valuable these markets are really in the serving the farmers, consumers and thousands of people associated with this trade?

Sure, we found an answer. In the age of Flipkart and Amazon, wholesales fruit and vegetable markets in India do need more technology. Thus was conceivedhttp://vegfru.com, a b2b portal we are building for fruit and vegetable trade, specific to needs of developing economies like India.

But one big question emerged without which being answered it would be impossible to attempt building an business to business portal for Indian fruit and vegetable industry.
The big question was; Despite all THE INEFFICIENCIES WHY AZADPUR WORKS?

After some ‘blue-sky thinking’ and few brain storming sessions, besides obvious TINA factor (There is no alternative), we could filter out five broad aspects viz: Discovery, domain knowledge, liquidity, finance (read credit) and network effect that was all that make Azadpur work.  Surprisingly these factors also contribute to major ills at Azadpur. I can elaborate on pluses and minuses of these factors till cows come home but the truth was; “Everything was not rotten in the state of Denmark”.

We reasoned that if we can marry our technology strengths with our domain knowledge of F & V Trade to  build a tool that not only matches Azadpur’s enablers but also provide thousands of proven  benefits from technology integration than perhaps we can do our little bit in making a positive contribution to the industry.

Thus http://vegfru.com was born.


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