Harvesting Losses: An Autopsy of the Indian Agricultural Value Chain

Harvesting Losses: An Autopsy of the Indian Agricultural Value Chain

Food supply chain management refers to the process whereby the movement of agro-based product(s) from the initial supplier to the ultimate user occurs with all non-value adding expenses. Usually supply chain management is between partners such as a retailer and a preferred supplier, or a restaurateur and a preferred supplier of a particular ingredient. From a supplier’s perspective, supply chain management can mean more than this. It means that with due care, one can providing the needed produce to penultimate user with a lower cost. An effective supply chain management can be summed in the one phrase: detail, detail and detail. It means studying in detail the entire process from harvest to the penultimate user. In doing so, all steps and costs should be established. After that, it is a matter of establishing what economies can be exercised along the way to the benefit of all the stockholders and adapt that in slightly different way for perishable agriculture produce.

The production of agricultural commodities has substantially increased in the country over the decades due to continuous efforts made by the government in terms of technological intervention at different level of production system, coupled with its price support policy. The production, supply and distribution of many agricultural commodities are mainly influenced by government regulations. In the process of economic liberalization, it has been felt that there is need to re-orient policies and regulations related to agricultural commodities. In response to this, the government has initiated agricultural policy reforms related to the production and marketing of agricultural commodities. Although, the pace of this reform process is very slow. Besides, there are numerous rules and regulations, and the infrastructural gaps, which are hindering the smooth flow of agricultural commodities from farm to fork. A lack of integration from various stakeholders in the supply chain leads to inefficiency in the agricultural system, causing high post-harvest losses, quality deterioration, high cost of commodity transfer, information symmetry and lack of transparency. Each participant of chain acts independently with little and no collaboration in physical and information flow.

It is important the corporate participants in agricultural chain understand supply chain, right strategy and leadership. Indian agriculture also prerequisites more public investment and policy support in several areas to overcome prevailing structural weaknesses such as low scale of operations, high post-harvest losses, poor state of rural infrastructure, lack of product diversification, inadequate research and development spending, low productivity, absence of marketing infrastructure and inadequate financial support.

Various Integrative aspect of Agricultural Supply Chain

There is not enough attention has been given to possible ex-ante measures to reduce, mitigate or share risks, although in some circumstances assessments will be conducted during/after adverse ‘shocks and attention will certainly be needed on workable coping strategies. There is also lack of emphasis on both formal and informal risk management options available to the different parties, although in practice, most analytical attention will likely focus on the scope for improving or supplementing formal mechanisms, including institutional and financial arrangements, technological changes, adoption of improved management practices, and/or investments in infrastructure. To the extent that the overall assessment is focused on the position and welfare of poorer farmers, then greater attention on alternative informal mechanisms and improving their efficacy.

Study also observes that there is lack of attention has been paid to areas categorized as ‘high vulnerability’, either for individual chain participants or the chain as a whole. This high vulnerability may already be evident from recent/experience or be expected due to unfolding changes in market conditions, regulations, or other circumstances. Depending upon the purposes for which the assessment is done, primary attention might be given to addressing areas of high vulnerability for specific entities (smallholder farmers, the government agencies). Study on food supply chain has not been given its due and that should be undertaken on the needs/options for policy and regulatory reforms that affect farmer/agro-enterprise risk management as well as the possible revision/reform of governmental risk management instruments. Aspects of cold chain are to be given more consideration as it has contributed tremendously to trade in fruits, vegetables and flowers in developed countries and it could game changer in India. As cold chain, results in the reduction of losses and retention of the quality of horticultural produce. While the introduction of a cold chain facility nationwide due to some institutional, structural and financial constraints may not be immediately possible in India, attempts must be made to develop a cool chain. If efforts are not made to modernize the harvest handling system for horticultural crops, then postharvest losses will continue to have a negative economic and environmental impact. There is no doubt that postharvest food loss reduction significantly increases food availability.

Post Harvest Loses and Supply chain

Post-harvest losses and its impact and ways to reduce it and to achieve has led to the understanding that it is important to educate the farmers in selecting the correct inputs and in postharvest handling, including cleaning, food safety, drying, sorting, and packaging at the farm gate. There has been gradual improvement in the accuracy of demand forecast by dynamic adjustments to reflect changes in demand, lead times, transit time, capacity, and transportation and distribution routes, as well as events outside the organization due to advancement in information and communication technology and it has done a good job as per reducing the post-harvest losses and it means that variance of lead-time can be reduced by removing non value-added steps and activities, improve the reliability and robustness of manufacturing, administrative and logistics processes. Standards for the handling and storage of all perishable items has been improving but still far away from where it can be and better the handling ,storage and preservation of quality of fruits and vegetables, which would increase the price and consumption, which in turn, would provide a better return to the farmer.

Supply chain management systems have the ability to track critical events & activities and when these events do not unfold as expected send out alerts and messages to notify appropriate managers to take corrective actions. Flexibility is still lacking supply chain system and it can be improved by enhancing responsiveness, companies need flexible strategies that match their operations, such as product design, sourcing, manufacturing and postponement. Establishment of pack house facilities having basic requirements such as washing tanks, sorting and grading devices and cold storage facilities at the premises of the Dedicated Economic Centres (DEC) (collecting centres) in major fruit and vegetable producing areas in the country, will overcome the problems of quality deterioration, contamination of fresh produce with harmful bacteria and other extraneous matter and will improve the safety of produce to a great extent

Backward and Forward linkage in food supply chain

As if one talks about Promotion of Production, Backward and Forward linkage, Marketing and Consumption in food supply chain in agriculture and it takes us to rural India and in rural India most of Mandies or wholesale markets are not equip with the capacity to accommodate the volumes of fresh produce production. Physical infrastructure variables such as roads and electricity which link villages to nearby assembly and wholesale markets and in turn with large wholesale and terminal markets and ports. There is huge lack of warehousing & cold storage and encouragement for the establishment of cold storage facilities and refrigerated carriers to facilitate storage and transportation of perishable commodities. It’s important to encourage technological developments in the packaging of agricultural commodities and in promoting packaging facilities appropriate to specific commodities. Develop mega markets and food parks or terminal markets with a higher level of all facilities are not accessible to common farmers. To integrate whole supply chain there is requirement of collaboration and co-operation among supply chain partners will only happen if there is trust among the parties, upfront agreement on how to share the benefits, and a willingness to change existing mind sets. Once these elements are in place, supply chain partners can do joint decision making and problem solving, as well as share information about strategies, plans, and performance with each other.

Further, consensus building for change in agricultural policy has been difficult in India, structural adjustment has been very slow to its new economic environment and limiting the new public and private investment needed to allow the sector to participate in the growth of Indian economy. The implication of current policies and institutions can be understood in the context of agricultural sector large contributions to economic production, employment and the welfare of rural people, all of which has made it difficult for policy makers to take risk on agricultural policy reforms. Study also suggest that stimulating private agri-business investment, whether domestic or foreign will require not only public investment in market infrastructure, but also supporting price and trade policies and comprehensive development of public market regulations and the institutions.