• Mkting. margin can identify efficiency of vegetable marketing at dedicated econ. centres

Developing post-harvest loss indexes (PHLIs) for selected crops will support the forecasting of PHLs in future years for particular crops. Further, the marketing margin (MM – the difference between the amounts that consumers pay for the final product and the amount that the producer receives) can be used to identify the efficiency of vegetable marketing at dedicated economic centres (DECs) including the Dambulla DEC (DDEC).

These recommendations were made in a research article on ‘Introducing a ‘PHLI’ for some selected high producing vegetables in Sri Lanka to enhance food security’ which was authored by C.V.L. Jayasinghe and D.M.C.M.K. Dassanayake (both attached to the Wayamba University's Livestock, Fisheries and Nutrition Faculty's Food Science and Technology Department), R.D.T.D. Madhushani and J.C. Edirisinghe (both attached to the same University's Agriculture and Plantation Management Faculty's Agribusiness Management Department), H.M.S. Wasana (attached to the Peradeniya University's Postgraduate Institute of Agriculture and the Chinese Academy of Sciences' Research Centre for Eco-Environmental Sciences) and M.A. Wijewardane (attached to the Moratuwa University's Mechanical Engineering Department) and published in the Tropical Agricultural Research Journal's 35th Volume's Third Issue, this month.

Agriculture plays a vital role in the national economy of Sri Lanka while contributing 7.9% to the gross domestic production (GDP). Vegetables contributed 0.6% and 0.5% to the GDP in 2017 and 2016, respectively. Private consumption expenditure (PCE), which measures consumer spending on goods and services, was 29.1% for foods in 2017, and in that, consumers spent 8.8% on vegetables (per the Central Bank's Annual Reports in 2016 and 2017). Thus, as an agriculture based country and considering the food consumption pattern of the country, vegetable production plays a key role in its economy. The DDEC is the focal point in the fruit and vegetable value chain in Sri Lanka to supply basic facilities for farmers and to make the marketing process efficient. Presently, 65-75% of the fruit and vegetable supply in Sri Lanka is handled by the DDEC. However, L. Rajapaksha, D.M.C.C. Gunathilake, S.M. Pathirana and F. Nilanthi's ‘Reducing PHLs in fruits and vegetables for ensuring food security – The case of Sri Lanka’ estimated that in Sri Lanka, PHLs of vegetables vary from 20-40%. 

Furthermore, the information on the impact of PHLs from each vegetable on the Sri Lankan economy is limited. Thus, developing PHLIs for agricultural commodities is important to fill the data-related gap and perform a situation analysis of the actual economic loss (quantity 'multiplied by'/'into' price) that occurs due to the PHLs in the country. Furthermore, PHLIs will facilitate the estimation of the annual economic loss of fruits and vegetables, and prioritise agricultural commodities to reduce PHLs through correct interventions. This in turn would reduce economic losses to the country, while enhancing food security.

The MM includes all the costs of moving products from the point of production to the point of consumption (R. Kohls and N. Joseph's ‘Marketing of agricultural products’). Marketing efficiency (ME) can be defined as the maximisation of the output (consumer satisfaction with goods and services) – input (labour and capital) ratio and can be measured on the basis of the size of the MM and the cost in the ultimate consumer price (per an Indian study). The MM identifies the disparity between the cost of purchasing items wholesale and the income made by selling them. ME is the maximisation of the input–output ratio. Thus, ME can be used as a determining factor of the PHL of agricultural commodities through each point of the value chain from the farm gate to the retailer. As the DDEC is the focal point in fruit and vegetable value chains in Sri Lanka, investigating ME at the DDEC will provide important information on factors affecting PHLs through particular marketing channels. 

Jayasinghe et al.'s study focused on introducing PHLIs in Sri Lanka for four types of vegetables; bean, carrot, leeks and beetroot, based on the data gathered from the DDEC during October 2015, to March 2017. The selected agricultural commodities are the commonly consumed vegetables grown in the upcountry of Sri Lanka, and their transactions are normally done via the DDEC. Data were collected on daily PHLs and the prices at 10 randomly selected stalls out of 166 functioning stalls at the DDEC. The study was performed based on the daily logger data available at the DDEC, personal interviews and using representative samples of solid waste. The solid waste samples were separated into categories and the weight of each separated component was measured by using a weighing balance. 

Then, the percentage of each waste component was calculated for each month. This procedure was repeated monthly. The collection of data pertaining to the total loss of these vegetables at the DDEC took place during October 2015 and March 2017. The PHLIs were calculated considering October 2015, as the base month. The Laspeyres formula (Laspeyres Index, The Concise Encyclopaedia of Statistics) was used to calculate the PHLIs. Here, the Laspeyres index of October 2015, was used as the base value. The ME of the DDEC during October 2015, to March 2017, was measured based on the MMs. To calculate the MMs of selected crops at Dambulla, the wholesale prices at the DDEC and the farm gate prices of the selected vegetables announced by the Hector Kobbekaduwa Agrarian Research and Training Institute (Food Information Bulletins of November, 2016, and October 2015-March 2017) were used.

The Seasonal Autoregressive Integrated Moving Average (SARIMA) model under the time series analysis was employed to forecast the future PHLI values for each vegetable type. The SARIMA is a generalisation of an ARIMA model that represents an important example of the Box and Jenkins approach to time series modelling (G. Box and M. Jenkins's ‘Time series analysis forecasting and control – [Revised edition]’). The SARIMA model contains a seasonal component.

Results and discussion 

The PHLIs of bean, carrot, leeks and beetroot fluctuate seasonally from October 2015 to March 2017. The pattern of the fluctuation for each vegetable was different. The highest index value was reported in carrots in December 2016, and June 2016, compared to the other three types of vegetables. The PHLI of beans did not fluctuate much compared to the other commodities, and the highest index was recorded in June 2016, while for leeks it was recorded in January 2016, and May 2016. The highest PHLI for beetroot was reported during November to December 2015, but afterwards, no drastic changes were observed during the study period. According to the results, significant changes in the PHLIs were observed in carrots and leeks, and no major changes were observed for beans and beetroots. Compared to beans and beetroots, carrots and leeks have soft damageable tissue. Due to the soft tissue structure, the amount of PHLs of carrots and leeks was higher than the rest. The PHLI of all selected vegetables showed a significant increment between October 2015, and January 2016, excluding beans. During the base month of October 2015, crop establishment commenced in all Districts in the upcountry, mid-country and low-country with the early onset of rains in the Maha season. Upcountry vegetables were received mainly from Nuwara-Eliya, Badulla, Kandy, Matale and Ratnapura, and the daily supply of vegetables to the DDEC was approximately 1,200-1,500 metric tonnes (MTs). The prices of all vegetable varieties, except leeks, increased in October 2015, due to a decreasing trend in market supplies. However, the supply of vegetables began to show an increasing trend for both upcountry and low-country varieties because the Maha season supplies had reached the market since early January, 2016. The results imply that when the supply of vegetables increases to the DDEC, the amount of losses increases. Climate change and the season of vegetable cultivation have highly influenced the PHLIs of the agricultural commodities in Sri Lanka. There was a sharp decrease in the PHLIs between January and March in both 2016 and 2017. The prolonged dry weather conditions usually present in the country is one reason for the low supplies of vegetables to the market from January to March. 

However, the PHLIs increased between June 2016, and July 2016, due to the commencement of harvesting and the increase in the supplies of vegetables. During the periods of July 2016, to September 2016, and December 2016, to February 2017, the PHLIs of selected crops decreased marginally. This may be due to the decreasing trend of the supply of vegetables in the said months. During the latter phase of the harvest of the Yala season (in September, 2016), the supply of vegetables decreased. In the same manner, during December, 2016, the supplies of both upcountry and low-country varieties of vegetables further dropped due to the slow cultivation progress in the Maha season. 

In February, 2017, this decrease was due to the latter phase peak harvesting period of the Maha season. These supply variations were also confirmed by the management of the DDEC and the labourers of the Dambulla Municipal Council. A marginal increase in the PHLI was shown during the periods of September, 2016, to October 2016, November 2016, to December 2016, and February 2017, to March 2017. In October 2016, the cultivation extent in the intermediate season (in between the two main seasons) was negatively affected by the delayed onset of the north-east monsoon; thus, the supply of vegetables considerably decreased and affected the PHLIs. Hence, it can be concluded that the PHLIs decrease during the months where there was a low supply of vegetables to the market, while it increases with the increasing supplies to the market.

The PHLs are influenced by the amount of production and the climatic condition. When production was high, the PHLs were high. In particular, when there is surplus production in economic centres, it is observed that there would be a loss of demand (per an Indian study). Nearly 10 MTs of fruits and vegetables are discarded at the DDEC for many reasons. The main reason is that farmers dump their products at the DDEC due to the low demand for their products, although the products are in consumable condition. The atmospheric humidity condition in the Maha season with high rainfall also influences the PHLs of fruits and vegetables across the value chains. 

As mentioned in a Nigerian study, PHLs and the quality-related deterioration of horticultural crops are mostly caused by pests, microbial infections, natural ripening processes and environmental conditions such as heat, drought, improper post-harvest handling and vibration resulting from the transport vehicles as they traverse undulations and irregularities on the roads, and the use of unsuitable packaging containers.

With reference to the MMs, a timely increase in MMs is considered as a factor contributing to the decrease in the efficiency of vegetable marketing (per an Indian study). For beans, the highest MM was recorded in January, 2017, while for carrots and leeks, it was recorded in February 2017. For beetroot, the highest MM was recorded in November 2016. Compared to the base month of October 2015, the MMs fluctuated differently, and thus, the MEs at the DDEC for the selected vegetables changed over time.

The MM fluctuated throughout the study period; however, a similar pattern of fluctuation was observed for beans, carrots, leeks, and beetroots. The decreasing trend of MMs in the periods of October 2015-January 2016, April 2016-July 2016, October 2016-December 2016, and February 2017-March 2017, implies that the ME at the DDEC has increased in the said periods. Similarly, the MMs increased during January 2016-April 2016, July 2016-October 2016, and December 2016-February 2017, indicating that the ME of the DDEC decreased in these periods. The pattern of fluctuation of the MMs is negatively correlated with the fluctuation of the PHLIs of the selected crops.

The coefficient of determination (R2) values for the correlation between the PHLIs and the MMs of carrots and leeks showed a strong negative relationship, while that of bean and beetroot showed a weak negative relationship between the PHLIs and the MMs. The PHLIs of bean and beetroot did not drastically fluctuate over time, which could have contributed to a strong negative relationship between the PHLIs and the MMs. ME is inversely proportional to the volume of the PHLs. Losses during and after harvest resulted in major problems in marketing, reducing the availability and resulting in an intensification in the unit cost of marketing (per a Turkish study).