Re-imaging agriculture through the lens of food processing industry

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 focus 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 has led to significant post-harvest losses of 4-6 per cent in fruits and 15.8 per cent in vegetables, 10.5 per cent in marine fisheries and 6.7 per cent in poultry (ICAR-CIPHET, 2015). While there has been significant progress in building individual cold storage facilities, their lack of geographical spread and tardy upgradation into integrated multi-commodity hubs are problems that persist.

The food processing industry (FPI) is poised to address these supply chain gaps bolstered by an ecosystem recently set up by the government’s 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.

However, FPI in India is currently at a nascent stage, accounting for only 10 per cent of total food production. Despite the sector employing 11.4 per cent of the organised manufacturing workforce, India’s FPI share in manufacturing GVA is fairly low at 9.7 per cent.

Five key areas

To establish an efficient farm-to-fork supply chain, the government needs 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 including farmers, farmer co-operatives/producer companies and private enterprises.

Second, make it behaviourally and financially viable for the farmer to adopt PHM technologies by aggregating information and services ranging from inputs, credit and marketing 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 ITC’s E-Choupal and Nabard’s 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 GRamin Haats for building PHM, E-NAM centres for price discovery, WDRA registered warehouses for storage and Krishi Vikas Kendras 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 Nivesh Bandhu Portal and India Investment Grid, which can be scaled up 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 behaviour analytics firms to study post-Covid emerging signals of shift in consumer preferences towards fresh produce and environmentally friendly products. The firms could also analyse 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.

Third Green Revolution

Today, with India’s food sector opened to global participation and the government bringing in the eco-system to strengthen the food value chain, the food processing industry is poised to be a harbinger of India’s third green revolution.

However, this favourable global ecosystem will be a lost opportunity if the national and rural constructs of India’s 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.

The writers are officers with the Indian Economic Service