Home >Companies >Middlemen gain as retail vies with street vendors

It was 3am when Mahavir Singh, wrapped in a coarse white shawl and braving the winter morning chill, started his cauliflower-laden tractor for the 35km journey from Bichau Kalan to Azadpur mandi, the Capital’s biggest wholesale market for fresh produce.

A boy watches as cauliflowers are weighed at the Azadpur mandi

Driving at about 20km per hour, Singh started off so early because the convoy of trucks headed to the market and the difficult navigation inside means that the trip could take well over three hours. Almost 30-35 tractors and mini trucks full of cauliflowers from Bichau Kalan and other villages near Najafgarh, on the outskirts of New Delhi, make their way to Azadpur every morning.

This morning, Singh’s face lights up as soon he steps into the quarter where cauliflowers are sold: He can sense it will be a good day for him as there are only 15 tractors and trucks milling around, which means a short supply of cauliflowers and better prices for his own pile of the cloudy white florets nestling in green stems.

“We can expect a reasonable price today," says Singh, his face breaking into a smile at the prospect. As he has done for the last 10 years, Singh parks his vehicle next to other cauliflower-laden tractors and takes out a large scale that stands on three thick bamboo sticks. Some young men and children start chopping the excess leaves with sharp knives and milling cows start feasting on them.

In less than five minutes, it is clear that Singh is a veteran at the give and take that is unfolding. He and his fellow villagers are looking for their cauliflowers to sell today at between Rs4 and Rs5 a kg, depending on the quality of the produce. Just two weeks ago, amid a glut of cauliflowers, rates had come down to as low as just 50 paise per kg. “Those days, we were losing...and could not cover the labour and transportation" costs, says fellow farmer Rajinder Kumar.

As the market comes to life, legions of commission agents start swarming around the piles of vegetables, haggling for produce they purchase—constantly liaising between farmers and wholesalers, and even some retailers.

Commission agent Narang Swarup says he makes between Rs5,000 and Rs10,000 per day, depending on the vegetable and the going price. Commission agents offer one-stop shopping for multiple vegetables and do some preliminary grading and sorting for other buyers putting them at an advantage over those wholesalers who deal in, say, just cauliflower.

Typically, wholesalers from Azadpur purchase in bulk from Bichau Kalan farmers and, in turn, sell the produce to various small and large retailers. A small-time wholesaler, Sunil Kumar, buys about 150kg of cauliflower from Rajinder Kumar for about Rs5 per kg, taking advantage of his ability to buy in bulk.

A few minutes later, Sunil Kumar, in turn, is selling them to individual retailers for Rs8 per kg from a dirty sackcloth spread on the ground. The small retailers, who can only purchase just a few kilograms each day, line up to make their purchases.

A pushcart vendor, Santosh Kumar, purchases 5kg each of potato, onion, tomato and cauliflower, among other vegetables, from the mandi and soon is on his way out. Cauliflower that he bought for Rs8 a kg will likely sell for Rs12 a kg to households in Block D of Jehangirpuri, in north Delhi, where Santosh Kumar will ply his vegetables cart.

Not everyone will be lucky enough to pay just 50% more than what the pushcart vendor paid. In the more affluent south Delhi neighbourhoods, such as at INA Market, the cauliflower can sell for as high as Rs20 per kg.

Increasingly, though, pushcart vendors such as Santosh Kumar are finding competition for their purchases. These days, he has competition from buyers for India’s emerging breed of modern retailers, including Reliance Retail Ltd, Aditya Birla Retail Ltd, Subhiksha Trading Services Ltd and Spencer’s Retail Ltd. They have all become regular shoppers here as well.

At commission agency Billu & Co., workers sift through peas, okra, eggplant and cucumber, filling black plastic cartons for Aditya Birla’s More chain as well as Reliance Fresh stores. Billu & Co. alone supplies about 3,000-10,000kg of vegetables a day to the new retail chains.

Both Reliance and the Aditya Birla Group have set up offices in Azadpur and both buy fruit and vegetables from dozens of wholesalers here even as they buy a sizeable portion of their fresh supply directly from farmers in states where they are currently allowed to do so.

And, because they can buy in bulk, they often get the best prices in the market from the middlemen.

The morning after Santosh Kumar was walking around the streets of Jehangirpuri, hawking his fresh cauliflower for Rs12 a kg, similar cauliflower was selling in the air-conditioned and sanitized comfort for a Reliance Fresh outlet in Jhandewalan for Rs8.50 a kg. Meanwhile, over at a More grocery store in Patel Nagar, a rather fresh looking cauliflower was on sale for just Rs5 that same day, about what Mahavir Singh, the Bichau Kalan farmer, got in Azadpur the previous morning.

Despite various critics, nobody disputes that organized retail has been good for city consumers who are able to get their produce at very attractive prices. That is because many organized retailers are using low vegetable prices as a way to attract traffic to their stores in the hope of making up for it when the same consumers buy other, more profitable items.

For now, Santosh Kumar and other pushcart vendors of New Delhi can bank on years of home delivery and their familiarity with households on their morning route to try and overcome their clear price disadvantage. But, as organized retail spreads to more neighbourhoods, starts offering home delivery, and as Indian consumers—especially busy, urban shoppers—increasingly don’t mind grabbing day-old vegetables from their own fridge, Kumar may find there are dwindling takers for his Rs12 ­cauliflower.

All in a day’s work:

1. A farmer harvests cauliflowers in an east Delhi village.

2. Farmer Mahavir Singh carries cauliflowers on a tractor to the Azadpur mandi in the wee hours.

3. Harmit Singh, a commission agent with Billu and Co., oversees loading of vegetable crates to be sent to Aditya Birla and Reliance retail chains.

4. Billu Singh (centre) at a vegetable auction in Azadpur mandi.

5. A boy watches as cauliflowers are weighed at the Azadpur mandi.

6. A few yards from where he bought the vegetables in bulk, small-time wholesaler Sunil Kumar manages to make a profit by selling them at a higher price to smaller buyers.

7. Umaidh Singh, a farmer from Najafgarh, keeps a watch as his harvest is weighed.

8. Vakil Rai, a pushcart vendor, gets ready to go hawk vegetables in the Pitampura area of north Delhi.

9. A Reliance Fresh store at New Delhi’s Jhandewalan.

Photographs by Ramesh Pathania

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