Need for Efficient and Robust Agri Value Chain in India

Why we need an Efficient & Robust Agri Value Chain in India? 2015

1 Manoj Rawat | Head Agribusiness RBL Bank, Mumbai | [email protected]

Manoj Rawat, Head- Agribusiness RBL Bank, Mumbai [email protected] http://mkrawat.blogspot.com https://in.linkedin.com/in/mkrawat

Why we need an Efficient & Robust Agri Value Chain in India?

Few thoughts & possible way forward >>

Why do we need a Agri Value Chain?

The first on foremost thought that comes to my mind is to “Make the country free of

hunger”.

In simple terms what Agri Value Chain means Capturing the value created along the

Agriculture chain from pre sowing to food harvest or in other words capturing value

created from “Farm to Fork”.

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The Agri Value Chain is needed to

1. Prevent Colossal Wastage of Agriculture Produce “billions of dollars” loss to economy

2. To ensure that share of Farmer in consumers wallet can increase, which is merely 25-30%

as compared to western market where it goes as high as 50-75%

3. Demand for MSP regime will automatically go away and farmer can expect a rightful price

for the produce

4. Ensure optimal management of natural resources and mother earth which is being abused

5. Make that India becomes “Global Hub for Food Industry”

Unfortunately India remains the Chronic Hunger Capital of World despite the fact

that our country

1. Grows more 260 Million tonne cereals enough to feed our population

2. Contrary to Country is Food Surplus in many ways

3. Largest producer of milk in world

4. Second-largest producer of fruits and vegetables

5. Largest in many other commodity

What a paradoxical situation?

We grow more. We waste even more.

We waste more food than that produced by Developed and Rich nations.



India is among the biggest food wasters in the world, reportedly wasting an estimated Rs.

900,000 million worth of fruits, vegetables and grains every year and year on year.

1. India wastes wheat equivalent Australia grows in a year

2. We waste more fruits & vegetables than that consumed by United Kingdom in a year & so

on…

The irony is despite such a wasteful situation , India accounts for the highest estimated

number of hunger stricken people, about one in every four such people in the world. On

Global Hunger Index (GHI), India ranks 63rd, out of the 78 hungriest countries, significantly

worse than neighbouring Sri Lanka (43rd), Nepal (49th), Pakistan (57th), and Bangladesh

(58th).

India lacks efficient markets fails to facilitate the “Producer find the best Buyer and Buyer

identify the best supplier”.

While there is no dearth of market places, there lack efficient market linkages

1. More than 7200 + Regulated Markets

2. More than 22220 + Regular Periodic markets in primitive shape

3. India has thousands of un-organized Haats, fairs, assembly markets



4. Marketing System follow a very subjective practice, has promoted monopolistic practices,

procedures and market inefficiencies

5. There is lack of grading infrastructure & no accreditation

6. No premium for quality- unscientific post-harvest handling- Heavy loss to GDP

7. Market is controlled by middlemen as who add little value

8. Linkage may farms to markets grossly inadequate

9. Non-existent Logistics and Information technology interventions.

10. System is only production oriented and detrimental to processing & value addition

Few challenges which the Agri-markets face

1. Unpredictability about supply

2. High variation in Quality

3. Short Shelf life and High Wastages in Supply Chain

4. Licensing Barriers across markets

5. Lack of scientific Market Infrastructure in Agricultural Markets

6. High Incidence of Market Charges

7. High cost of Transportation

8. Non-available Credit Facilities

9. Farmers realise un-remunerative value for produce

10. Market Focus on production only not preservation and processing

11. Exploitation by Middlemen/Traders

12. Lack of Logistics and scientific management of information

To develop efficient Agri Value Chains, there is crying need for Reforms, better

market information and use of Information Technology.

1. Undertake reforms that attracts large capital and skill based investment in Agri-Supply

Chain sector

2. Market Information with regular surveys to ensure rightful price to producer

3. Provision of warehouse and credit facilities in vicinity of production centers

4. Transparency and fair trading in Mandis /market yards

5. Implementation of new APMC across the country

6. Ensure provision for direct sale of produce by producers to retailers and processing

agencies

7. Focus on prevent colossal losses to agriculture product

8. Create a Unified and Vibrant Agri-marketing system that promotes efficiency and value

addition



It is important understand Agri Supply Chains must remain as “work-in-progress”

and continuously evolve

To conclude “Agri value chains” should keep tab with developments in Agriculture

segment, policies, global market and consumer needs with the following being centre

1. Need for focus on “Improving Preservation” rather than just “ Increasing Production”.

Colossal loss of food produces. This could increase GDP of country by 1% and increase

farmer’s price realization by 10-15%.

2. Need for “Process in India” rather than just “Grow in India”. Agro-Processing sector to be

considered an important component of supply chain.

3. Ensure realization of Rightful price to farmers rather than prolonging the “MSP” based

regime. Possible by reducing the intermediation cost from existing 50-70% to 30-40%, a

realistic target.

4. Solution for Agri Value Chain challenge in not merely more Investment but in truly

“unlocking & enabling” the investments that have already made over the years and bringing

focus on improving the efficiency of what has already been created. This sector already has

billion of rupees grossly underutilized investments.

The situation in India demands to “needle” the various factors into a single thread that

would provide end-to-end solutions for efficient market and better price discovery for

producer, processor and consumer and develop efficient “Agri Value Chains”, which may

ultimately create a “hunger free & properly nourished” India.



No matter whatever development happens in technologies, mankind will still need Food

and Water to “survive” unless we are able to develop smartphone that can be “munched

and chewed” when you feel hungry and can also be used for communication and

messaging.

Manoj Rawat | India

The views expressed in this article are purely personal.

Twitter : TheManojRawat | http://mkrawat.blogspot.com | https://in.linkedin.com/in/mkrawat

Email : [email protected]

http://mkrawat.blogspot.com/

https://in.linkedin.com/in/mkrawat

Need for Efficient and Robust Agri Value Chain in India

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