India has forever been an agrarian economy and is the second largest gross agricultural producer in the world. Though the sector engages 60% of the population, its contribution to the GDP is limited to around 17%. India loses 20% of its agricultural output due to improper logistics and supply chain limitations. There are many linking points from farm to fork and every point witnesses some leakage. To further degrade the situation, agri-supply chain was highly disrupted as the pandemic struck. However, it was also one of those sectors that recovered like a phoenix from the ashes and the credit goes to the rapid digitization from food production to the last mile delivery. The backing provided by the perspective reforms introduced by the government further gave the much needed push to the development of agri-supply chains. We get candid with Dr MJ Khan, Chairman, Indian Chamber of Food and Agriculture, to explore the present scenario and future prospects of the agri-supply chains.
Q] There has been undoubted development in the agri-suply chain during recent years. What according to you are the challenges it still needs to overcome?
One by fifth of what India produces is lost due to improper logistics. Post harvest we still transport our goods in badly ventilated trucks and improper or without proper packaging. Reefer trucks, cold storage etc. are still absent from our supply chain. It seems many are unaware of the benefits associated with using cold chain. They think these to be fancy and unwanted and continue to do age old practice of manual loading unloading and open transport. The journey from farm to fork entails a number of steps and we lose products at each step.
Q] How do we minimise wastage throughout the supply chain?
The huge amounts food wasted in the supply chain can be fortunately reduced to a considerable extent. We have to resort to scientific processes and technology. There are studies pointing out that this kind of intervention existing structures can reduce storage losses from 10% to a mere 0.5%, translating into a saving of $13 billion or roughly INR 80,000 crore every year. We have to adopt best warehousing practices. Despite being an ace producer of fruits and vegetables there is regional disparity in the availability of these throughout the country. This indicates our gap in storage and transport facilities. There are multiple intermediaries too in the supply chain which increases the time between farm and fork.
Q] The government recently announced that it will take back the 3 controversial farm laws. Will this or will this not have any effect on the agri-supply chain?
It is very unfortunate that the farm laws were repealed. It is important to note that industry players and participants in the agriculture value chain agree that the farm laws are progressive and visionary. I consider the laws to be progressive and would have played an important role in doubling farmers income. These laws would have freed farmers from the clutches of middlemen and provided them the freedom to sell their produce anywhere in the country. The laws were revolutionary as they intended to break monopoly of the APMC and allows farmers to sell directly to anyone/ anywhere – a step towards realising the goal of one nation-one market. By matching supply with demand, the farm laws would lead to improvements in supply chain infrastructure and result in better price discovery. This would have helped both the farmer as well as the consumer.
This is an abridged version of the original interview that was published in the February edition of the Logistics Insider magazine. To read the complete article, click here.