Grim days for Chennai wholesale market

Rising costs eat into profits.

Rising freight rate, labour cost and lack of adequate infrastructure are eating into the profits of the traders at the Koyambedu market here. Spread over 36 acres, the wholesale market sees a business of over Rs 4 crore a day and is one of the largest in Asia for fruits, flowers and vegetables.

According to S Chandran, secretary, Koyambedu Vegetable Market, the vegetable market alone has around 3,000 shops. It employs 15,000 people directly and 30,000 indirectly (daily labour) on any given day. Salaries have gone up almost 200 per cent in the last one year. For instance, daily wages have increased to Rs 100-150 from Rs 60 earlier.

D Madivannan, a wholesale dealer in potatoes used to make a profit of around Rs 35,000 to 40,000 a month some two years ago but it has now come down by 50 per cent. He attributes this drop to the increase in lorry rent, which has increased by 30-40 per cent.

Lorry rent from Bangalore to Chennai has gone up to Rs 11,000 from Rs 8,000 for 10 tonnes. Similarly, from parts of Andhra Pradesh to Chennai, the freight has increased to Rs 17,000 from Rs 10,000, he added.

Moreover, the market is also witnessing a decline in retail buyers. “We see a significant drop in such buyers. But, there has not been much difference in wholesale buying,” he said, adding it was difficult to exactly quantify the decline in the number of retail household buyers coming to the market.

Fruit market’s president P Srinivasan said the situation was quite bad in the fruit market, which has about 850 shops and employs 3,000 people directly. Apart from the freight and labour cost, the market is facing power cuts, shortage of cold storage and theft.

Srinivasan said since there was no cold storage in the market, the stocks had to be sold on a daily basis. Traders, therefore, have to compromise on the price and accept whatever they get.

The freight rate has increased 15-20 per cent in the last six months. For instance freight between Delhi and Chennai rose to Rs 75,000 from Rs 60,000. On the other hand, apple prices have come down. A 20 kg apple box, which fetched Rs 1,200, is now selling at Rs 1,000.

Meanwhile, ever since supermarket chains like Reliance, Subhiksha, Food World, and Pazhamudir Cholai have started procuring from Koyambedu, the traditional small time vendors, who used to buy from here and contributed almost 70 per cent till four to five years ago, have stopped coming.