What could improve the food and beverage supply chain scenario?

Indian food and beverage companies are creating a buzz among the countries like Pakistan, Nepal, Middle East and Bangladesh. The market is facing a vibrant competition from both public and private players like Amul, Britannia, Dabur, Heinz, HLL, ITC, Marico, Mars, Mondalez, NAFED, NDDB, Nestle, Pepsi and Pillsbury.  Large disposable income in India has been the perfect ingredient for India to be one of the largest food processing countries. Indian food processing industry is at an estimated $135 billion which includes only 2% of the produced food in the country.

The supply chain of the food and beverage industry is India is a jumble of several links being farmers, trade intermediaries, wholesale traders, retail vendors, small-large scale processing plants, packaging, street vendors, unorganized food chain and organized retailing. That increases to millions of farmers because of the land fragmentation and the market further divides into millions of servicemen and processors before it reaches the end-user. In the extensively diverse land like India where more than three-fourth of the population depends on agriculture, over 50% of the land is fertile and the second highest milk, fruits and vegetables producer of the world, the massive ineffectiveness of the supply chain primarily is seen as the biggest hindrance to achieve further growth.

Reducing food waste that is currently more than 40% is a major challenge to the government and the biggest lacuna that the players of the whole supply chain are to overcome. APMC Markets or ‘Mandi’ are a tangle of government regulation and intervention, middlemen and traders which never allows the primary producer to earn a larger pie in consumer’s rupee. Fair and transparent markets are necessary to secure the share of the farmer in consumer’s expenditure. 11th planning commission came up with findings that on an average the cost is hiked thrice since the food supply chain has eight intermediaries on an average. Policy level changes leading to structural reforms and changes from the demand side primarily driven by technology and end-consumers are the prerequisite for the desired results.

Technology and Infrastructure

While structural and policy reforms are dependent on political aspects of government, the technological changes are seen as a panacea for the existing problems in the industry. The adoption of proven technology or the innovation of the user-friendly technology is all that it takes for a start. This will also be the support for new business models. More warehouses and cold storages will encourage farmers to hold their produce in proper condition for longer periods since harvest.

Connectivity and logistics

Diverting the immense internet potential of the country towards business could prove miracles in on time connectivity throughout the supply chain through simplest and handy devices like mobile. Also, more companies are entering into contract farming which ultimately also shares the responsibility of procuring the farm produce as safely as they are grown with supervision. The nascent area of Internet of Things is showing rapid progress in commercial applications and holds a lot of promise for use in this sector.

With an added effort by the government to push these initiatives, mainstream technology, connectivity and logistics can see better adoption.

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