Importance of resilience

G Chandrashekhar | Updated on April 11, 2021

Farm supply chains for a post-Covid world

For any discussion on supply chain management (SCM) in 2021 and beyond, it is imperative we draw lessons from our experience in 2020. The Covid-19 pandemic and the national lockdown taught us that food security is next only to national defence in its criticality.

As the nation was in a state of forced inactivity in the initial stages of the lockdown, the domestic supply chain was disrupted. Crop harvest was suspended; agri-markets were shut; labour and transportation was unavailable; raw material did not move from the field to the food processing factories and there was no functional distribution mechanism. Global chains, too, were disrupted.

As a result, there was artificial supply tightness. With panic buying, retail prices of essential foods escalated. As soon as policymakers realised that agriculture and food ’cannot wait’ any longer, farm related activities resumed gradually and food supply tightness eased.

If the pandemic has taught a lesson, it is that a key component of the food SCM ought to be building ‘resilience’. Although agri and food systems are most critical for the economy, there is a lack of recognition of serious risks that threaten this sector. It is not only pandemic-like events, but also climate change, water stress, land constraints and even bio-security.

The SCM could be affected by any or all of the above. We need to recognise this looming risk and design real-time responses to protect our food systems. It may be facile to dismiss the pandemic as a Black Swan event with low probability of a second strike.

We are always at the risk of unforeseeable events. So, we need ‘Diagnostics and Therapeutics’, that is, appropriate tools to identify risks and responses to mitigate them. This is where resilience comes in. An ideal ecosystem is the one built for ‘EWAR’ (Early Warning and Advance Response).

From another level, it is clear that in our country, post-pandemic, it is not so much of a supply-side challenge for the economy, but more of a demand side challenge. We have faced demand destruction in many sectors due to closure of business resulting in loss of jobs and incomes.

The hotels, restaurants and catering segment as also tourism and hospitality have been the worst hit. Boosting demand by putting more money in the people’s pockets will help revive the supply chain.

There is another lesson from the pandemic. Should businesses chase cost efficiencies alone? As critical as cost efficiency is resilience or the ability to manage and overcome risks (such as the one posed by the pandemic) will minimise damage. For the farm and food sector, such resilience is even more critical as it is the nation’s lifeline.

To be sure, it is not cost efficiency versus resilience; but cost efficiency plus resilience. We need to practise not only ‘climate-smart’ agriculture, but also ‘crisis-smart’ agriculture and food business.

Agriculture and food systems are not separate or disjointed; but a continuum. So, it is important to build partnerships and collaborations among various stakeholders — input suppliers, growers, output processors, financiers, researchers, service providers, and policymakers. Each is an integral part of the agro/food supply chain. As the saying goes, ‘A chain is only as strong as the weakest link’. Strengthening every link in the supply continuum should become the bedrock of our Atmanirbhar programme.

Market reforms

We know supply chains in our country are notoriously long with too many intermediaries adding to the cost but not to the value. Shorter supply chains through disintermediation will be the future. The process has started with e-markets and e-commerce. When implemented well, the recently announced agri-market reforms will further strengthen agri supply chains, infuse efficiencies, bring transparency with tech adoption, reduce costs and help bring producers and consumers closer.

Going forward, countries will lay greater emphasis on food security through local production. There will be greater demand for health foods and adoption of healthy lifestyles. Importantly, there will be faster adoption of technology, especially in supply chain management. Digitalisation, Artificial Intelligence, automation, robotics, blockchain tech, drones, etc., will dominate this segment. All this will help advance traceability and food safety, too.

The author is a policy commentator and agribusiness specialist. Views are personal

Published on April 11, 2021

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