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Reengineering India’s Post Harvest Supply ChainsThe Next Frontier

Bhairavi Jani

Some Facts..

• India has a large and diverse agriculturalsector, accounting, on average, forabout 16% of GDP and 10% of exportearnings.

• India's arable land area of 159.7 millionhectares (394.6 million acres) is thesecond largest in the world, after theUnited States. Its gross irrigated croparea of 82.6 million hectares (215.6million acres) is the largest in the world.

• India has 6,50,000 organic producers,which is more that any other country.

• India also has 4 million hectares of landcertified as organic wildculture, which isthird largest in the world (after Finlandand Zambia).

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Some More Facts..

• India ranked in the world's five largestproducers of over 80% of agricultural produceitems.

• India is the world's largest producer of manyfresh fruits and vegetables, milk, major spices,select fibrous crops such as jute, staples suchas millets and castor oil seed.

• India is the second largest producerof wheat and rice, the world's major foodstaples.

• India is the world's second or third largestproducer of several dry fruits, agriculture-basedtextile rawmaterials, roots and tubercrops, pulses,farmed fish, eggs, coconut, sugarcane andnumerous vegetables.

• India is one of the world's five largestproducers of livestock and poultry meat.

• India the second largest producer ofhorticultural products in the world.

🤔 And Yet..• The Indian farmer receives just 10% to 23% of the

price the Indian consumer pays for exactly thesame produce, the difference going to losses,inefficiencies and middlemen. Farmers in Europeand the United States receive 64% to 81%.

• Indian total factor productivity growth remainsbelow 2% per annum; in contrast, China's totalfactor productivity growth is about 6% perannum, even though China also has smallholdingfarmers.

• Farmer suicides have risen by 42% in the past twoyears in India. The principle cause is debts andloans.

• 38-40% of all post harvest produce in India is lost,wasted, damaged or infected in transit.

• 7000 people die every day in India due tomalnourishment and hunger, out of which 5000are children below the age of six.

• Due to high food inflation almost 150 million poorand another 200 million lower middle classIndians continue to remain malnourished in India.

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What Lies Ahead..• The Hon. Prime Minister has given a mission for a

new India where by 2022 we must double theincome of our farmers.

• Reduce post harvest losses of produce in India toa below 10%.

• India will have by 2030 One Billion people ofworking age, the largest ever in the history of theworld. Many can be meaningfully employed infarm and agriculture sector if we think ahead andout of the box.

• We can pledge to give every Indian access to abalanced meal by 2022.

• Several studies suggest India could eradicate itshunger and malnutrition and be a major sourceof food for the world by achieving productivitycomparable with other countries.

Major Components of a Cold Chain

Immobile Infrastructure –modern pack-houses with pre-coolers, value adding

units, Bulk cold warehouses and Cold stores for last mile

delivery to markets.

Mobile Infrastructure –short and long haul refer trucks, last mile delivery

packing units.

Digital Infrastructure – data, information along the

supply chain.

Skilled Manpower – people who will deliver and drive the processes across the

chain.

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Some Facts..

• Indian cold chain sector is estimated to cross USD 1 billion mark inthe next 5 years.

• Currently, India has cold storage facilities unevenly spread across thecountry, with an installed capacity of approximately 32 millionmetric ton. These are mostly used for storing potatoes.

• 36% of the cold storages in India have capacity below 1,000 MT.

• At the current capacity only less than 11% of what is produced canbe stored.

• Organized players contribute only 8 to 10% of the cold chain industrymarket

A NCCD Report Points Out..

Type of Infrastructure

Infrastructure Requirement (A)

Infrastructure Created (B)

All India Gap (A-B)

Pack-house 70,080 nos. 249 nos. 69,831 nos.

Cold Storage (Bulk)

341,64,411 MT

318,23,700 MT 32,76,962 MT

Cold Storage (Hub)

9,36,251 MT

Reefer Vehicles 61,826 nos. 9,000 nos. 52,826 nos.

Ripening Chamber 9,131 nos. 812 nos. 8,319 nos.

Pack-House Infrastructure Deficit at 99.6%

Refer Vehicle Deficit at 85.4%

Ripening Chamber Deficit at 91.1%

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Reengineering the Cold Chain

• Large number of small scale farm holdings in India give us the opportunity to use smaller pack house unitsinterconnected with small feeder vehicles. The business dynamics of this don’t work out due to refrigerationcosts.

• India unlike the US and EU can grow its produce throughout the year, almost all 12 months. Therefore itsstorage requirements are different.

• The variety of farm produce that grows throughout the year gives us the opportunity to createcompartmentalised pack house and refer vehicle system not tried in many developed economies. Thereforethere is room for home grown innovation.

• The middleman who is much dreaded can be transformed into a logistics entrepreneur and can earn muchmore through cold chain logistics ventures.

• Digital and mobile apps can help the farmers dynamically select the best market for their produce.

• Vast number of skilled jobs can be created closer to the farm via pack-houses and local refer-pool transportservices.

• Food Processing and Retail can then further support integration at consumption end.

• Farmer income can be doubled and food losses can be halved within just 5 years.

The Other Road Block Is..

High fuel cost and power cuts• Fuel costs in India constitute

around 30% of operatingexpenses of cold storage ascompared to 10% in the West.

• Further, cold storages aredependent on steady supply ofpower. Most Indian regions facepower cuts.

• Hence, companies have to invest in power back-ups, which push up the capital investment.

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The Case for Innovation

The Indian Agriculture sector needs much more ..and without these investments – any investment in the sector will only yield below expectation results..

Process Innovation

Capacity Development

Knowledge Dissemination

Experimental Pilots

Financial/Market Access

• Imagine you have an eye dropper and you place a single drop of water in themiddle of a large sport stadium. Every minute, the amount of water addedfrom the magic dropper doubles.

• If we assume a drop of water is 0.05mL this would mean in minute one 0.05mLwas added to the pitch. About enough to bend the tip of a blade of grass. Atthe next minute 0.10mL are added to the pitch. In minute three 0.20mL. Andso on.

• Assuming for the sake of the example that the stadium is watertight, how long does it take for the stadium to fill up?

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• Right Answer: 49 to 50 minutes.

• But for the first 45 minutes, thevolume of water isn’t verynoticeable, or it doesn’t seemlike much of a threat—the fieldhas maybe about five feet ofwater by the 45th minute.

• It’s in the last four to fiveminutes that the stadiumsuddenly, rapidly, fills up, leavingyou with very little time toescape.

• The point of this example is notonly to show how exponentialgrowth works, but todemonstrate how it can take usunawares, and how we mightnot be able to react in a timelymanner when it happens. By thetime we’ve noticed the growth,the window of opportunity toreact to it is very nearly gone.

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And Reduce Post Harvest Food Losses

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How can YOU Play a Role?

• Academia

• Industry players and Associations

• Skills and Training Organizations

• Innovation Labs

• Incubators and Accelerators

• Government Agencies

• Research Institutes

• Technology Companies

• And More.. All are welcome..

The Opportunity

• The Netherlands has invested over the past decades significantly in understanding, implementing and successfully managing post harvest cycles for Fruits and Vegetables, amongst other commodities

• The Dutch model of Co-Ops where the grower/farmer has a say and a share in post harvest process is a key learning for the Indian agriculture sector

• The Dutch model of allowing growers, companies and supply chain providers to directly engage through knowledge sharing and working partnerships can help unlock the inherent potential of mass scale cold chain deployment in India

• The capacity building and knowledge dissemination models and tools developed in The Netherlands can be applied to the Indian conditions

• The understanding of quality and process so successfully mastered by the Dutch practitioners can help the Indian farmer reduce his/her losses and access the global market

• A new perspective and viewing the relationship and opportunity through the lenses of long term and deep collaboration can create a virtuous cycle and win-win for both the nations

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For Example, Tomato-Banana PMC Project

• SCA R and D from India partnered with Wageningen Food and Biobased Research to conduct a product market combination project for two crops in two of India’s states. –Tomato from Maharashtra and Banana from Gujarat

• Aries Agro Ltd joined the project consortium to support access to farmers and give inputs on agriculture practices

• Post-harvest network NL, supported the project with EUR 10,000 grant

• Together we were able to find 8 PMC cases – 4 for each crop and out of these two are being implemented for the farmers on the ground.

The Response to this GLOBAL CHALLENGE Is With All of US