BOTTLENECKS IN INDIAN

AGRICULTURAL PRODUCE SUPPLY CHAIN

INDIAN AGRICULTURE
MARKET SCENARIO
 Primary source of livelihood for about 58 % of India’s
population (www.ibef.org)
 Agriculture and allied sector contribute 17% to the total
GDP of India (www.ibef.org)
 The Indian food and grocery market is the world’s sixth
largest
 Agriculture GDP is expected to grow above-trend at 4.1%
(www.ibef.org)
 India is one of the top 15 leading exporters of agricultural
products in the world (www.apeda.gov.in)
 India is one of the key food producers in the world, with the
second largest arable land area (156.43 million hectares)
(www.icar.org.in)
PROBLEMS
 Even though abundance of resources are available for
India to be a leading agricultural country in the world,
we still lag behind countries like China, USA, etc.
 India's share in the global market is still nearly 1%
only in horticulture (www.manage.gov.in)
 Post-harvest losses of food grains in India are 7-10 % of
the total production from farm to market level and 4-5 %
at market and distribution (World bank study)
 These losses greatly impact the earnings of the farmers
as well as impact the supply of agricultural produce to
the consumers
 These losses can be traced back to the various bottle
necks in the agricultural produce supply chain
TRADITIONAL SUPPLY
CHAIN

 Perishable food produced in the farmer‘s field reaches the

end consumer through a chain of intermediaries.
 These intermediaries carry out various functions such as
transfer of ownership of commodities, its movement,
maintenance and preservation of quantity & quality, payment
to the seller and commodity delivery to the buyer
 Such a vast number of nodes in supply chain allows for
greater chances for wastages
 BOTTLENECKS
 Cold Chain issues
 Since agricultural produce are perishable, they need to be either sold to the
consumer quickly(not possible) or should be stored in a safe place where its shelf
life could be increased. Therefore storage facilities should be up to the mark.
 But currently there is a lack of cold chain facilities, cold chain are of inadequate
capacity, cold chain network is not fully developed

 Fragmentation issues
 Large number of local trader and intermediaries increases the number of nodes in
supply chain and thus increase the risk of wastages

 Integration issues
 There is no integration and linkage of farmers to the markets and the customer due
to lack of bargaining power

 Infrastructure issues
 Lack of proper storage, poor loading/unloading facilities, poor processing facilities,
poor quality inspection leads to major wastage of agriculture produce
BOTTLENECKS - continued
 Packaging issues
 High cost and unavailability of proper packaging material leads to
reduction in the shelf life of the produce

 Technological issues
 Lack of investment in modern post harvesting technologies has led to
increased post harvesting losses as compared to other advanced countries
like China

 Farmer's Knowledge and Awareness

 Farmers are unaware about the current market demands and thus produce
crops based on their own judgment of the market demand which leads to
imbalance in demand and supply leading to losses

 Quality issues
 Poor hygiene, safety and quality standards as against international standards
leads to losses in the supply chain
BOTTLENECKS - continued
 Financial issues
 Lack of transparency in the pricing of goods by the mandis
leading to trust issues
 Transportation issues
 Poor road connectivity, poor road quality, inefficient and costly
transportation, lack of refrigerated vehicles add to the losses
STEPS TO REMOVE BOTTLENECKS
FROM THE SUPPLY CHAIN
 Investing in cold chain infrastructure at the critical areas of supply
chain. This chain must be started from the point where actual harvesting
of food is done i.e.; pre-cooling, and should end up to the consumer level
or at least to the retail level
 Government agencies could act as a village level aggregator or village
farmers could form cooperative marketing societies to tackle
fragmented supply chain issue
 Contract farming through participation of private sector companies
could allow better integration of farmers with the market
 Government agencies/private sector could set up food parks for
processing, grading, packaging with better equipment for
loading/unloading at various critical locations of the supply chain
 Communication of modern technologies and practices in agriculture by
conducting seminars and exhibitions to improve awareness. Also,
providing incentives will increase deployment of modern technology in
agriculture
STEPS TO REMOVE BOTTLENECKS
FROM THE SUPPLY CHAIN
 Updating the quality standards and performing regular
audits to conform adherences to standards. Government
agencies could provide support to ensure standards are
followed
 Using digital technologies for better demand forecasting and
transparency in the supply chain. It will also help in weeding
out of inefficient processes and nodes
 Government can invest in road and connectivity improvement
activity to make the transportation more efficient. Also
investment in refrigerated vans in partnership with private
sector can be done to improve rural urban connectivity
 More focus on exports so as to dispatch excess inventories to
the international market
 FDI investment in post harvesting activities will spur a
revolution in agriculture supply chain