India?s agricultural sector is facing a severe crisis. The problems are plenty and include inadequate use of technology, poor irrigation and water management, poor seed quality, declining fertility of land, sustained decline over time in public investment in agriculture, lack of adequate and timely credit, and poor farming techniques.
While these are challenges which need to be tackled urgently, what compounds the problem from the supply point of view is the significant wastage of produce due to the absence of post-harvest infrastructure (cold chains, warehousing and storage facilities, road connectivity and so on). According to recent government estimates, farm produce worth Rs 55,600 crore is wasted every year?30% of fruits and vegetables, 10% of foodgrains and 15% of pulses are lost. It should shock us all that wastage in India?s food sector is as high as 30-40% of production. If that?s not bad enough, farmers are rarely ever able to sell their produce at competitive prices. Something is severely wrong. What does it say of the distribution system if food vanishes/rots in vast quantities even as so many Indians scrape their food bowls in hunger?
The solution may lie in effective integrated supply chain management. The chain has to be streamlined to minimise the distance between the farmgate and the consumer. Modern retailing can significantly help.
Currently, the supply chain from the farm to the retail level suffers from gross inefficiencies, huge transit wastages and several layers of intermediation. The backward linkages in this sector through growth of modern retail can increase efficiency, cut costs and prices significantly, while ensuring more remunerative farm incomes through better logistics and commercially viable supply chains.
Reductions in transportation losses, predictability of demand, higher realisation for farmers, better access to markets, and direct investments in agriculture sector by retailers, contract farming, all will lead to higher productivity. Across the world, all big retailers have direct linkages with farmers. Retail can give a push to our entire agriculture and food sector, and in the process emerge as a key driver of economic development. It can infuse dynamism in not just the agriculture sector, but the rural economy.
In India, statistics reveal that nearly two-thirds of overall retail spending is accounted for by the food and grocery category. Agriculture is a business proposition, and should be seen as such. Right from pre-production stage to delivery of the product to the consumer, the entire spectrum of agri-business activities has to be treated as an integrated whole.
The growth potential of India?s food industry is well recognised. Apart from fresh fruits and vegetables, the demand for processed and packaged convenience foods has seen an upward trend in the last decade. There is a growing market for processed ?heat-and-eat? forms of food in India and abroad.
India is the third largest foodgrain producer in the world. Horticultural production is the second largest in the world. India accounts for over 10% of the total world production of fruits & vegetables. India is the largest producer, consumer and exporter of more than 50 spices. India ranks amongst the top few in the world in the production of several crops. India is also the largest milk producing country in the world.
Even though agriculture is a State subject, it is time the Centre incentivises the States by making devolution of funds conditional on commitment to farm sector reforms. Of course, we have to ensure that the livelihood of millions of Indians who subsist on agriculture is not threatened in any way and they become full partners in the growth process. But let us also not use the bogey of ?threat to livelihood? to perpetuate subsistence farming. India deserves to be the food hub of the world.
The writer is additional secretary, PHD Chamber of Commerce