Integrated Logistics for Agri Market Sector

Integrated logistics for Agri market sector

“Sabka Saath Sabka Vikas” is a key theme of Inclusive development in the country. Agriculture stands at the fulcrum of transformation. India has 2/3rd of its rural population and around 45% of its workforce in agriculture and allied activities. India is the second-largest food producer in the world in terms of calorific value and the fourth-largest in terms of product value. India is also the world’s largest producer of milk, pulses, and jute.

Despite the above, agriculture so far has not played the role it was expected to play th in the economic development of the nation.

Since independence, every year a 4% growth target was set and each time it was not met. The failure can be attributed to the challenges in today’s agriculture which are still mostly the ones existing since Independence. Agriculture is plagued with age-old issues related to land, inputs, finance, farmers, and markets. The agricultural sector has also not been able to leverage the full power of ICT despite having inbred IT excellence.

Even today conditions are not conducive to small and marginal farmers in the country. Most land holdings are fragmented and held by small and marginal farmers. Fragmented holdings limit the farmer’s ability to get affordable seeds, fertilizers, pesticides, machines, etc. limiting their ability to take benefit of economies of scale. Elsewhere, both individual farmers and corporate farmers who have large landholdings can economize their costs and achieve higher economies of scale in the purchase of inputs and sale of output.

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As a result, they beget a loper-unit unit production cost and a higher per-unit profit-boosting their incomes. Small and marginal farmers are also not able to compete with cheap imports due to rising input costs and thus are losing the domestic market share as well which is worsening their condition.

Non-institutional sources of lending like informal village lenders often force them to enter into advanced sale contracts increasing farmers’ woes. Small marketable surplus, non-availability of quick transport, perishability of goods, and lack of well-connected roads mean that the farmers need to spend substantially on the transport of produce to mandi thus making their goods uncompetitive. Disaggregated farmers, markets, information, absence of storage infrastructure lack of value addition, and processing capabilities mean that the farmers do not get edecentprices for their goods. The slow pace of reforms in land, APMC, and contract farming by states mean more pain to producers and consumers. Further, inadequate downstream infrastructure viz. warehouses, storage ages, transport, and inability to attract investments lead to wastage of about 40% of the product before it reaches the market.

The success of the Green revolution in Punjab, Haryana, and some northern states and the White revolution in dairy farmers could not be replicated across the country on a larger scale. The green revolution increased access to technology, seeds, fertilizer, irrigation, and credit leading to increased productivity and increased incomes. White Revolution (Operation Flood) in India employed an integrated approach to increase milk production sustainably. Producers benefitted through a share of the milk market, increased pace of development of dairy animals in rural areas, creation of a self-sustaining system of village cooperatives, enablement of direct marketing, expansion of cooperatives, strengthening of the infrastructure to procure and market increased volumes of milk, veterinary first aid, feed and breed services, member education and R&D in animal health and nutrition among others. The white revolution increased incomes by linking farmers with retail markets.

The green revolution focused on pre-harvest interventions and the White revolution focused on both pre-and post-harvest interventions. The latter gave greater attention to logistical aspects. Such attention to logistics in agricultural activities is expected to yield llong-lastingoutcomes and success.

So how much progress has been made in agri-logistics in the country.

Logistics in the context of agriculture is often misunderstood and simplified to transport and storage excluding the plethora of pre-harvest and post-harvest activities. Agri-logistics comprises services, the flow of information, infrastructure, the addition of value to the product, marketing, order processing, aggregation of s, too,k, and many more in an integrated manner which results in ina competitive advantage for the farmer or producer company.

The agricultural sector in the country is a character by the lability of information mostly on the upstream side like credit, cost of seeds, equipment, fertilizers pesticides, soil quality, and meteorological data. The information on the upstream side is fragmented across platforms yet it is available. Conversely, not much information on the downstream side related to the warehouse, cold storage, transport, market, prices, and demand is available. Gathering downstream information is more challenging and even impossible amid the numerous vested interests i.e. traders, middlemen, and big farmers.

Effective logistics aims at delivering the right products in the right quantity in the right condition at the right place at right time for the right cost. As mentioned earlier, most of the upstream side information is related to different institutions, banks, agencies, and vendors and is available. However, it is scattered across multi-platforms. As the first step in integrated logistics, input side information available across multiple platforms must be unified. Unification would increase ease of access, convenience, reduction of visits to public agencies, aid decisions d empower farmers who could focus on the core activity of production.

The second crucial stage of agri-logistics is post-harvest management absenceence of market information and affordable storage infrastructure makes the relationship between producer and buyer asymmetric. e-NAM has been a good starter to this end through a lot of work in other areas like warehousing, inventory management, networking, transparency, user convenience, and just-in-time delivery of goods across various markets has to be done. e-NAM features direct payments, transparent e-bidding, real-time information on trade and price, extended access to markets across states, information on the quality of commodities, and trade from anywhere.

Some problems the downstream agriculture system suffers from are MSP which skews production, lack of wider market access, malpractices in a market system, lack of rreliable and up-to-date market information, multiple market fees, wastages in mandates, inadequate cold storage and warehouses, storage and handling, poor packaging practices, absence of value addition and food processing, deferred payments, lack of road-rail transport integration, etc.

Integration of downstream (marketing and distribution) or post-harvest side logistics will consist of the digital market, assaying, warehouse, cold storages, transport, road rail integration, innovative postharvest handling, higher-value end use(s), branding, packaging, food safety, traceability, targeted markets, transparent bidding, payment, tracking of goods, logistics platforms for perishable products, export services.

Integration should ensure that the product is sold online soon after the farmer brings it to market. When it is not immediately sold then the product should be stored in a warehouse with a third party being responsible for transport, storage,e and assaying at a later time for e-trade too to increase convenience to the farmer. Logistic integration measures should also promote offtake from farm gate after self or third-party certified assays. A simultaneous review of sellers and buyers post exchange of goods can be made on digital platforms for building trust. Integrated logistics will ensure that flow of materials and goods from point of origin to point of destination shall be smooth.

The integration will yield benefits such as better connectivity between production and consumption centers, minimal loss of quality as well as quantity, linking of producers directly to markets, elimination of middlemen, possible sale at farm gate, avoidance of distress sale, value addition, securitized access to credit for next cropping season, help government in food security and reduction of MSP burden. Other benefits would be direct payments, transparency, real-time information on trade and price, extended access to markets across other regions, information on the quality of commodities, trade from anywhere, and, formal sector participation.

Integrating services such as third-party assaying, quality certification, dispute resolution mechanism, and digital infrastructure will bring more buyers, more competition, better prices for a farmer’s goods, and a greater voice for the farmer.

Integration would also bring new players instrumental for new technology and ideas. Public-private partnerships (PPP) or new players can help farms and farmers in areas of food processing such as biofortification, scientific ripening, Incubator centers, Quality testing, IoT based farming.

Integrated logistics also create opportunities for the farmers to cater feed and fodder products to the animal husbandry and blue economy segments thus widening their markets.

Agri-logistics reforms of the future should be built on the foundations of eNAM which by providing market information of grains, pulses, grading facilities, andthird-partyy testing is empowering the farmer to get the right price.

Some forthcoming measures which can strengthen the sector are,

Firstly, reform of APMC act and removable of perishables from its ambit. Producers should be allowed to sell to the larger market through platforms like e-NAM.

Secondly, all APMCs should be brought on e-NAM platforms and all APMC mandis to be reformed.

Third, policy reforms such as the introduction of contracts far much will secure both producers and buyers and also bring cheap capital into agriculture infrastructure.

Fourth, traditional capital, large price spread, price crashes at harvest times, and spikes in the lean period have led t a loss of faith in the market-creating the rine of demand for MSP. MSP has distorted cropping patterns in procurement states with excessive focus on the cultivation of a few such ops as wheat, rice, and sugarcane with crops such as pulses, coarse seeds, and oilseeds getting neglected. Reform in MSP is to be looked into.

India needs to realize that automation IoT, AI, big data, and machine learning are limiting the capacity of the non-agricultural sector to absorb the workforce from agriculture. Only through rapid deployment of technology and reforms can one transform the agri-logistics and agri-market. India needs to act quickly to take advantage of evolving aAgrimarkets, diversifying consumer diets, globalization, and commercialization of agriculture. The “Sabka Vishwas” slogan of PM is an apt word to describe agri-logistics for it can bring equity, inclusivit,y and growth to farmers and completely fulfill the vision of “Sabka Saath Sabka Vikas Sabka Vishwas”.