India, home to almost 1.42 billion, is one of the largest exporters of agricultural produce, with over 51 per cent of its total land up for cultivation and agricultural purposes. As the seventh global exporter of agricultural produce, India has witnessed an upward trend over the past decade, noting 315.6 million tonnes of foodgrain output during FY2021-22 compared with 257.1 million tonnes (mt) during FY2012-13, resulting in an all-time high revenue amounting to $50.2 billion in agricultural export in FY2021-22.

Despite an extraordinary output, India remains the second largest contributor in wasting food, with 74 mt of food wasted every year – amounting to about eight per cent of the total food wasted globally. Moreover, nearly one per cent of the country’s GDP is depleted due to food wastage. Several factors contribute to this massive loss of agricultural produce, including climate change, sticky inflation rates, inadequate transportation, and a lack of adequate supply-chain operations and storage facilities.

With a current food storage capacity of about 145 mt, a massive 53 per cent gap is required to be filled via efficient agricultural supply-chain logistics amendments to not only reduce food wastage along the chain but also reduce import dependence and empower the domestic agricultural sector.

Existing challenges

One of the most prominent challenges in the agricultural industry is the perishable nature of the produce, which makes it imminent for stakeholders to hasten the process of transportation from the supplier to the end consumer.

Lack of robust agricultural logistics across domains often results in inflated prices of produce, critically affecting the farmers/producers who face the brunt of both labour-intensive production costs and the inflated prices of the final produce, thereby struggling to sell the produce at the earliest, at lowered costs, and cover their losses, resulting in meagre incomes. Higher inflation rates throughout the year impact the overall consumer price basket, which was at 8.70 per cent in November 2023 –compared to 6.61 per cent reported in October.

In addition to the economic challenges, several issues in the agricultural supply chain also hamper the overall productivity of the industry, thereby pushing the bloated costs to the consumers. Cold storage facilities in particular pose a massive threat to productivity, with around 20 per cent of output lost due to logistical issues along the supply chain. According to a report published in 2023, a 99 per cent gap persists in the required cold chain Integration (CCI), which further weakens post-harvest management. The gap in cold chain integration is mostly evident in the dairy sector, at about 80 per cent gap, and fish value chains with around 70 per cent gap.

With the ever-increasing demand for food produce and the exorbitant exports annually, it becomes indispensable to develop robust agricultural logistics in the country to ensure an uninterrupted supply of produce with increased revenues.

Way forward

Considering the perishability of agricultural produce, it becomes imminent to address the challenges of supply chain fiascos in the agro-logistics sector. Agrologistics, as defined by the World Bank, “collectively refers to the infrastructure, machinery, services, and information systems that enable the movement of agrifood products from farm to fork, within countries and internationally.”

A recent initiative of the Union Government to establish “the world’s largest food storage scheme” in the co-operative sector worth ₹1 lakh crore, which would entail the construction of 2,000-tonne warehouses in every block, aims to expand the national capacity for food storage to 215 mt within the next five years. Successful implementation of such initiatives is noteworthy in addressing the massive food wastage challenge in the country.

In addition to the existing initiatives such as Kisan Rath – a smartphone application to ease the process of hiring vehicles for agricultural transportation, increased adoption of technology in agro logistics becomes imminent to identify broken supply-chain issues, develop GPS systems, and reduce production and revenue losses for both manufactures and operators along the line.

Further, tailored training programmes for on-ground personnel, ranging from farmers to manufacturers and distributors, are necessary to equip them with the operations of agro logistics and the market trends, ensuring minimal disruptions along the chain.

Additionally, identifying existing weak links through Kaizen lean methodologies and other similar approaches can be implemented to streamline cross-border processes in the agriculture sector through robust transportation systems along established routes and promote the establishment of unified management centres to further minimise food wastage and revenue losses throughout the process.

The Indian agricultural sector is a pivotal economic pillar, employing over 46 per cent of the country’s workforce, contributing to 18.3 per cent of the country’s GVA (Gross Value Added). It becomes all the more imperative to reinforce agrologistics, encouraging leaner processes as we move towards higher demands of produce.

The author is Joint Managing Director, South Asia & Africa , Kaizen Institute

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