TODAY -

Re-imaging agriculture through the lens of food processing industry

Sanjana Kadyan / Tulsipriya Rajkumari *



The COVID-19 pandemic has accentuated the criticality of food security and food surplus management in the current policy space. To this end, policy steps in the agriculture sector in recent years have shifted their orientation from sustenance to marketing.

However, the sector is still exposed to challenges of post-harvest management (PHM), poor price discovery and inadequate market access for farmers. Lack of PHM, in particular, has led to significant post-harvest losses of 4-6-15.8% in fruits and vegetables, 10.5% in marine fisheries and 6.7% in poultry (ICAR-CIPHET, 2015).

While significant progress has been made in building individual cold storage facilities, their lack of geographical spread persists as also their tardy upgradation into integrated multi-commodity hubs.

The food processing industry (FPI) is poised to address these supply chain gaps bolstered by an ecosystem recently set up by the Governmentís three Farm Acts under the Aatmanirbhar Bharat package, Agri Infrastructure Fund and formalisation of Micro Food enterprises.

A growing FPI sector will also help create a fair and equitable agricultural market while ensuring good remuneration for farmers, as elucidated by models of Amul, Mother Dairy and Big Basket. However, FPI in India is currently at a nascent stage, accounting for only 10 percent of our total food production.

Despite the sector employing 11.4% of the organized manufacturing workforce, Indiaís FPI share in manufacturing GVA is fairly low at 9.7% as compared to 35.5% in Indonesia and 34.3% in New Zealand.

For this sector to contribute to the establishment of an efficient farm to fork supply chain, Government will be required to intervene in five key areas:

First, as part of the One District One Product initiative, the Government may conduct a district level crop-wise assessment of existing bottlenecks in the supply chain, mapping all strategically located stakeholders. These stakeholders will include farmers, farmer co-operatives/producer companies and private enterprises such as standalone investors, traders, food enterprises, online and offline supermarkets, exporters and retail chains.

Second, make it behaviorally and financially viable for the farmer to adopt PHM technologies by aggregating information and services ranging from inputs, credit and marketing for him at the district level, which is currently done by the local trader. These local agents with intimate knowledge of farmers and social norms are ideal candidates to be risk assessors, information aggregators and influential catalysts for trust building.

Therefore, it is critical to retain the role of such key local agents in FPI business models, as exemplified by ITCís E-Choupal and NABARDís Maa-Thota programme. Further, with the farmers now free to sell their produce beyond mandis, building alternative locations of service and information aggregation, both online and offline, becomes salient.

These may emerge at GRaminHaats for building PHM, E-NAM centres for price discovery, WDRA registered warehouses for storage and KrishiVikasKendras and Primary Agricultural Cooperative Societies for technology dissemination.

Third, encourage integration of all locally available micro food processing units with nearby production clusters for enabling them to vertically integrate with big private players. This can be facilitated through investor platforms like NiveshBandhu Portal and India Investment Grid, which can be upscaled with backward linkages to farmers/FPOs.

Fourth, address local capacity needs via bottom up FPI training channels. In particular, impart basic IT training to rural youth via Common Service Centres to serve as digital links for the farmers/FPOs and food enterprises. Further, upskilling of mandi labourers with key PHM skills of loading, unloading, cleaning and bagging will also improve the efficiency of FPI supply chains.

Fifth, engage consumer behavior analytics firms to study post-COVID emerging signals of shift in consumer preferences towards fresh produce and environmentally friendly products. The firms could also analyze the massive data collected through M-Kisan and Kisan Call Centres on e-TAAL to bridge the FPI demand-supply data dichotomy and identify potential areas for FPI investment.

Today, with Indiaís food sector opened to global participation and the Government bringing in the ecosystem to strengthen the food value chain, the food processing industry is poised to be a harbinger of a third green revolution in Indiaís agriculture. However, this favourable global ecosystem will be a lost opportunity if the national and rural constructs of Indiaís agri-business systems are not dovetailed with it.

These interventions will precisely do that by bringing the macro, meso and micro in sync with each other.


Sanjana Kadyan is a civil servant of the Indian Economic Service, Assistant Director in the Department of Economic Affairs (DEA), Ministry of Finance.

Tulsipriya Rajkumari is an Indian Economic Service officer, Deputy Director in the Economic Division (Macro Unit) and Chief Economic Adviserís office, D/o Economic Affairs, Ministry of Finance.

The views in the article are of authors



* Sanjana Kadyan / Tulsipriya Rajkumari wrote this article for PIB which was published at The Sangai Express
This article was webcasted on October 29 2020.



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