An agriculture supply chain involves a set of activities starting from production until distribution, bringing the agricultural products to the market and eventually, to the consumer. It encompasses stages such as production, processing, storage, transportation, and distribution of agricultural goods. It plays a crucial role in generating income, enabling market access, providing employment, and ensuring food security. However, several challenges plague the efficacy of agriculture supply chains and their management. Beginning with a scarcity of resources, including land, water and soil health, in addition to a stressed labour supply is a major challenge for the agriculture industry at the input level. Moving forward, the presence of multiple intermediaries in the system has exacerbated the existing information asymmetries in agriculture, which also induces a lack of transparency and traceability.
Further, in the journey from farm to fork, there are several stages where products are lost within the supply chain. In India, approximately $14 billion worth of crops are wasted annually due to poor cold chain facilities and disorganised logistics. Insufficiently ventilated trucks and inadequate packaging methods are still prevalent during the transportation of harvested goods. The absence of essential components like reefer trucks and cold storage facilities further compounds the problem within the supply chain. Further, according to the Horticulture Board the penetration and adoption of a cold chain system remains rather limited (significant shortfall of 90% in cold storages across the country) with high cost of stable power supply, low-capacity utilisation, and limited financing options.
However, given the complex nature of agricultural supply chains, with the involvement of a number of stakeholders, in addition to external factors including climate conditions that are hard to predict, a collaboration between the government and the private sector seems imperative.
The government’s involvement is essential to provide necessary regulations, policies, and infrastructure support, while the private sector can bring its expertise in logistics, distribution, and technological innovation. This targeted partnership is likely to lead to a more robust and resilient agricultural supply chain – reducing losses, improving productivity, and delivering high quality agricultural produce to the end consumers.Initiatives of the government
In recognition of the complex challenges that face the agricultural supply chain in India today, the government has taken significant steps to strengthen and streamline the agricultural logistics systems across the country.
In a bid to foster crop diversification, the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW) has introduced the National Food Security Mission (NFSM), which offers assistance to farmers through demonstrations of modern crop production technologies, promotion of high-yielding and climate-resilient varieties, adoption of integrated nutrient and pest management techniques, and water conservation practices. Further, to maintain the supply chain and support to the farmers in selling their perishable produce, the government, in 2020-21, rolled out the scheme for creation of integrated supply chain for fruits and vegetables in major cities. While the government has pushed for diversification, it has also maintained a progressive stance in terms of encouraging farmers towards adopting organic farming. Government’s Paramparagat Krishi Vikas Yojana (PKVY) was launched with this purpose, in addition to supporting the creation of a unified national agriculture market to boost the income of farmers by providing crop insurance coverage to mitigate risks.
Additionally, the government has also allocated significant budgetary provisions for the development of robust agri logistics systems. Cognizant of the hurdles faced by stakeholders in the agriculture value chain, the government introduced the “Kisan Rath” mobile application. The app serves as a user-friendly platform that connects farmers, Farmers Produce Organizations (FPOs), and traders with transport services for the smooth transportation of agricultural goods. The app has also been integrated with the National Agriculture Market (e-NAM) portal in order to streamline the process and creating a seamless flow of information, enabling the stakeholders to efficiently manage the trade of agricultural goods.
Private sector participation
The private sector has played a vital role in shaping the agriculture supply chains in India. Its participation has brought about significant advancements, improved efficiencies, and fostered overall growth in the sector. Private players, with their contribution to the development of critical agriculture infrastructure, including storage facilities, cold chains, processing units, and transportation networks have helped the farmers in reducing post-harvest losses, improving quality control, and enhancing market access. Further, with the introduction of innovative practices and digital solutions, the sector has enabled farmers to make informed decisions, leading to enhanced crop productivity patterns. The adoption of advanced modern technologies has led to improved farm efficiency and output.
Financial service institutions such as private banks, microfinance institutions, and insurance companies have empowered farmers in their journey through the provision of credit facilities, insurance, and risk management solutions for agriculture. These services have improved access to capital, enabled farmers to mitigate risks, and safeguarded their livelihoods against unforeseen events. Further, by setting up food processing units and facilitated market linkages, the private sector has enhanced their access to markets, enabled diversification in their income sources, and helped them gain a competitive edge in both domestic and international markets.
Way forward
In India, one persistent challenge is the prevalence of small farm holdings, making their management increasingly difficult. As time progresses, land holdings continue to split further, exacerbating the problem. To address this issue, Kaizen Institute envisages the assessment of the potential of agri clusters. To optimize land usage, manage farm input inventories efficiently (such as fertilizers, pesticides, equipment), and improve labour productivity, large agri clusters can adopt successful practices from the manufacturing sector.
This approach of bringing farms and farmers together by consolidating land parcels would allow for the application of Kaizen and other time-tested methodologies to farming. Scaling up through this approach can attract greater private sector engagement, and even small improvements can yield substantial impacts on productivity and efficiency.
Given its complexity, a synergy between the government and the private sector can bring forth numerous benefits and drive positive transformations in the agriculture industry. By leveraging their respective strengths, resources, and expertise, the two sectors can work together to facilitate flow of investments, disseminate technology and enable transfer of knowledge, enhance commodity production, improve supply chain dynamics, thereby bringing in desired efficiencies in the agricultural sector.
This partnership can be visualised at various levels of the value chain, such as crop diversification, farmer livelihoods, and infrastructure. Moreover, collaboration between the public and private sectors is likely to create a conducive environment supporting agricultural growth. Through collaboration, both sectors can work together to identify and address systemic challenges, develop supportive policies, and establish regulations that promote fair trade practices, quality standards, and sustainability measures.
As a step towards sustainable agricultural development in India, a policy framework for the creation of a regulatory environment for agriculture research, technology, and innovation to establish effective partnerships in agriculture would be highly supportive.
The private-public collaboration is imperative for building a robust agriculture supply chain ecosystem in India. By enhancing productivity, fostering innovation and empowering farmers, it is likely to pave the way for a sustainable, inclusive, and resilient agriculture supply chain ecosystem, ensuring a prosperous future for farmers and the entire industry.
The author is Joint Managing Director – South Asia & Africa at Kaizen Institute.
