Examine the role of supermarkets in supply chain management of fruits, vegetables and food items. How do…

Question

Examine the role of supermarkets in supply chain management of fruits, vegetables and food items. How do they eliminate number of intermediaries?

Ghissu Editorial · Accepted Answer

Supermarkets organise procurement, cold storage, grading and retail for fruits, vegetables and food items, cutting wastage and improving quality. They remove intermediaries by buying directly at farm-gate collection centres or from FPOs, a shift enabled by reforms like Maharashtra's 2016 delisting of fruits and vegetables from APMC control.

**Introduction**

Farmers receive only about a third of the consumer price of tomatoes, onions and potatoes (RBI, 2024), the rest going to traders and wastage. Supermarkets, integrating sourcing, storage and retail, are reshaping this chain.

**Role of Supermarkets in the Food Supply Chain**

1. **Organised procurement**: Reliance Retail and Mother Dairy's Safal buy through collection centres or grower associations and grade produce at source.
2. **Less wastage**: Distribution centres, ripening chambers and reefer transport cut perishable losses, valued at about ₹1.53 lakh crore a year (NABCONS, 2022).
3. **Quality and limits**: Grading, packaging and FSSAI labelling give consumers safe, consistent food, though strict rejection norms and delayed payments can squeeze small growers.

**How Supermarkets Eliminate Intermediaries**

SKETCH: comparison | Mandi Chain vs Supermarket Chain
a: Mandi chain
b: Supermarket chain
- Village trader :: Farm-gate collection
- Commission agent :: Direct purchase
- Wholesaler :: Own distribution centre
- Street retailer :: Own store or app

1. **Buying outside the mandi**: The Model APLM Act, 2017 and Maharashtra's 2016 delisting of fruits and vegetables let chains buy directly, removing commission agents.
2. **Vertical integration**: Owning warehouses, transport and stores lets one firm do the work of the wholesaler and sub-wholesaler, removing each handling margin.
3. **FPO linkages**: Sahyadri Farms in Nashik supplies grapes and vegetables straight to retail chains, replacing the village aggregator.
4. **Back-end rule**: The multi-brand retail FDI policy (2012, revised in 2013) requires half of the first USD 100 million to go into back-end infrastructure.

**Conclusion**

By buying at the farm gate and owning the chain to the shelf, supermarkets shrink a long mandi chain into a short, cold and traceable one. With strong FPOs and fair contracts, the farmer keeps a larger share of the consumer rupee and the consumer gets fresher food.

Examine the role of supermarkets in supply chain management of fruits, vegetables and food items. How do they eliminate number of intermediaries?

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