‘Post-harvest supply chain, poor warehousing woes of agri sector’

Agricultural produce to the tune of Rs 50,000-60,000 crore is lost due to poor post-harvest infrastructure and insufficient supply chain management, according to a report on Indian Agribusiness.

Most warehouses and logistics providers lack adequate scientific and technical facilities to store and transport perishable commodities such as seafood, fruits, vegetables, the report “Indian Agribusiness cultivating future opportunities” by Boston Consulting Group said.

About 30-40 per cent of horticulture produce is wasted annually due to inadequate storage and transportation facilities, it said, pointing out that the shortfall for warehouse capacity is likely to touch 70 million tonnes (mt) to 80 mt by 2015.

“The country currently requires 130-140 mt of dry storage for a production of approximately 220 mt of foodgrain, 27 mt of oilseeds, and 35 mt of other cash crops such as cotton, jute,” the report said.

The post–harvest supply chain is one of the critical levers that can resolve some of the key issues plaguing agriculture in the country. On the other hand, it provides a huge opportunity for the private sector to look at a profitable business.

Warehousing woes

The warehouse sector is currently highly fragmented with its presence being confined primarily to local players. The key challenge in the industry is to tackle the domination by unorganised players with low capacities and poor handling, stacking and monitoring facilities.

Intense competition from small truckers to non-registered business entities that offer a smaller space for storing goods is another challenge to overcome. The problem in the sector was that a majority of the warehouses are about 5,000 sq ft in space against an average size of approximately 50,000 sq ft in developed countries.

Smaller sizes limit the ability of warehouse owners to invest in high–quality construction, technology, and modern material handling equipment, the report said.

Other problems facing the sector were uneven distribution of warehousing facilities with most of the sector concentrated in Uttar Pradesh, Andhra Pradesh, Punjab and Harayana and lack of supporting infrastructure such as power and specialised transport.

Though the Centre has come up with various measures such as the Warehousing Development Act and allowing 100 per cent FDI investment, the traditional business model of the sector is not economically viable, the report said.

Stating that several global players have built successful business, it said that the sector in the country is still at a nascent stage.

Based on cost-benefit analysis, the report said the recommended approach for an entrepreneur in the sector was to build strong presence in a select geography, expand offerings, become a strong pan-India player and look for multi-revenue streams.

Logistics

Third-party logistics is emerging as key concept in the country and this involved a single logistics provider managing end-to-end logistics for a firm.

While it will take time for focussed agri-based logistics business model to evolve, the key to third-party logistics will be building scale, optimising logistics, ability to provide value-added services and access to quality sub-contractors.

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