Agricultural Food Value Chain Illustrated from a Community Retail Super Market Model in Gujarat

The Agricultural Food Value Chain is of crucial importance to the Rural Commercial Market in a State like Gujarat. Gujarat has a vast potential particularly in the Agro- Industrial Sector. This is because not only does the state have a rich agricultural sector, but it has a diversified Crop and Live-stock sub sector. Gujarat Agriculture has been known for its Mixed Cropping and Productivity Potential of Oilseed crops like Groundnut and particularly recently Cotton. Further in order to maximise the earning and Productivity Potential of the larger Agricultural and allied Activities Sector the State has identified Agro and Food Processing Industries as one of the thrust industries in Industrial Policy 2015-2020. In this regard a metamorphosis of the Supply Chain Infrastructure is of crucial importance to create economy wide multipliers for the State's Economy. As we will further see in Section B of this paper with an example of a Community Super Market Rural Retail Franchising Initiative in the State; the State's Roots lie in Trade, Merchandise and Community Participation in such initiatives will take the State's Economy to even grander heights in the future. Such cross sector Value additions will lead to even further Productivities for the Agriculture and allied Activities Sector in the Economy of the State. Section A of this Paper summarises some of the key Initiatives described in the Comprehensive Agro Business Policy of 2016. This Policy contains the key initiatives in the State to facilitate investment in Agro and Food Processing Sector for Value Addition to Farm Produce so as to ensure higher incomes to farmers, provide greater employment opportunity in rural areas and better products to consumers. Further in Section B it is noted that Supermarkets are very popular centres for Grocery shopping and as such can provide great Value Addition in Rural Centres in a highly Commerce Sensitive Economy of the State of Gujarat. Hearty Mart Super-Market at Vishala Circle on the outskirts of Ahmedabad developed as a Centre of Super-Market Retail, which then expanded across Gujarat into Retail Stores run in a Franchise Arrangement. However our interest in this paper is that how can Quality and Price Standards which are carefully calibrated by the Parent Franchisee in such arrangements be ensured to be functionally operational in Workable Contract Arrangements. Our particular interest is that how can Adverse Selection and Moral Hazard be avoided in Contracts engaged with Independent Store owners.