Abhishek Sharma 05

BASMATI CASE STUDY

Crop Shifts could hit Government Purchases: -

In this article, author is telling about why farmers are shifting from non-basmati
and lower varieties of rice to basmati rice variety.
As this will lead to decrease in supply of lower varieties of rice. Lower supply
hence will lead to increase in price of rice creating a problem to FCI as they have
to procure rice of lower varieties for PDS
Question- List the various factors affecting supply of rice in the open market
and hence ability of FCI to buy the required volumes?
Ans- Some of the factors that influence the supply of rice are
described as follows:
1. Price- Unlike demand, there is a direct relationship between the price of a
product and its supply. If the price of a product increases, then the supply
of the product also increases and vice versa. In this scenario, basmati rice
is getting more price than lower variety of rice.
There is also big spurt in international prices of basmati. So, speculation
about increase in price also lead to affect supply

2. Cost of Production-
Basmati rice requires less water compares to other varieties of rice this is
also important factor that lead to affect supply of rice in open market.
Because conditions of ground water are poor in Punjab. Also cost of input
is also lower. Supply of a product would decrease with increase in the cost
of production and vice versa.
3. Govt Policies-
Govt. is encouraging farmers to shift to basmati cultivation under crop
diversification programmes, to reduce the risk to farmers

4. Increase in acreage under basmati rice-

Farmers are increasing area under basmati cultivation, so that is having
direct impact on the supply of lower variety of rice leading to more
problems for FCI.

5. MSP-
Farmers are getting only Rs645-670 as Minimum support price for lower
varieties of rice that is very low that also lead to shift to Basmati
cultivation.
 Abhishek Sharma 05

SKIMMED MILK POWDER CASE STUDY

A) If you were the head of procurement at a dairy processor, but with limited
SMP processing this season, but strategically would like to be in SMP
processing next year, how would you devise your procurement plan for next
year?
As procurement manager my plan will be to procure milk from farmers because
the company want to be in SMP processing as the company might have forecasted
absence of ban SMP is fetching very high prices in international market so
producing SMP will be very beneficial to the company
Also, if the ban is there, they can sell SMP to ice-cream companies or other milk
processing companies.
Procurement plan - Firstly, What I will do I will gather information from the
stakeholders regarding the demand and supply of milk
If there is increase in milk production, my aim will be to procure at lower cost as
possible and if there is decrease in milk production then need to improve the
reliability of supply chain by making good connections
B) If you were the procurement manager for an ice-cream manufacturer,
what implications do you think will presence or absence of ban have on the
quantity of product available in the open market? How would you plan a
proactive procurement plan?
As ice-cream is made up of skim milk so presence or absence of ban have also
impact on ice-cream production
 If Ban on exports is there then more quantity of skim milk is available in
the market and the price of skim milk will also be reasonable. So, more
quantity of product available in the open market and easy for a procurement
manager to get skim milk in the market at a good price
 But if the ban is not there then most of the skim milk will go for exports
because of higher prices in international market, that lead to a shortfall of
skim milk in Indian market leading to increase in price of skim milk
creating a problem for a procurement manager to procure the right quantity
at the right price.
So as a procurement manager I have to be proactive regarding the situations and
forecasting what is going to happen.
As a procurement manager, my role is to provide the amount of material sent by
the company for this year to the production department at a fixed price
 So, if I have forecasted the situation of the ban then I will convince my
leader for a reduction in quantity because of ban scenario or increase the
price for procurement I have to make good relationships with dealers and
convincing them in such a way that if the ban will be imposed, I will always
procure your skim milk powder as a regular customer at a fixed price.
 Reduce Minimum Order Requirements
 Improve the Reliability of the Supply Chain
 Increase Material Ordering Flexibility
 Make More Use of Local Warehousing and Local Production