Major factors inhibiting the growth of this cluster market are cost and quality competitiveness. Because of this the largely small & micro firms supply in the local or regional markets. The impending FSSA (Food Safety & Standards Act 2006) to be implemented by this year would require a much higher level of quality and packaging, labelling related preparedness in the cluster imminently.
There are critical gaps to be addressed for cost competitiveness in the cold chain - absence of multi-product storage facility/technology, latest cost saving technology ethos, lack of refrigerated transportation, and woefully missing infrastructure in packhouse & pre-cooling activities. There is also multiplicity of tiers in backward supply chain suppliers/consolidators and their poor storage, loading/unloading practice leading to wastages and cost escalation. Raw material costs in the cluster is about 35-40% of the total value added as against 20% in most internationally competitive clusters. Packaging costs about 35% of the total value addition.
The BDS (Business Development Services) strategy for the cluster address the critical success factors in the value chain - vital to the market viability of the cluster units. The implementation involves service demand assesment of the MSMEs and awareness creation on existing services, understanding constraints and distortions in the supply of services and bridging information gaps between local, regional, and national stakeholders. The latter will address service provision and on entrepreneurial, institutional, and legal constraints in building business development opportunities. Often in weaker markets, demand orientation has to be combined with some supply oriented pilot activities for demonstration effects. So, our BDS implementation strategy involves pilots in various critical market areas.
While the value chain approach would enable us to identify concrete demand for services, it also builds the foundation for Local Economic Development (LED) and EE (Enabling Environment) objectivity in the project process, through economic rationality. It also enables the use of embedded services towards business and institutional linkages between suppliers, buyers, BMOs, and providers.
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