“Supply-chain: Linking

Farmers to Markets”17th January 2020

Interactive Session with:Capt. Pawanexh Kohli

Chief Executive Officer, NCCD cum Chief Advisor, DAC&FW

Professor, Post-harvest Logistics, Univ. of Birmingham

Autonomous PPP think-tank on Cold-chain & Agri-logistics, facilitated by the Ministry of Agriculture& Farmers Welfare, to guide policy interventions.

Supply chain integrates the multiple actors, who link into a market-led marketing system. Each actor has a value chain.

Value chain relates to optimal operations and processes to build efficiency and add value to a business unit -activities internal to each actor

Supply chain integrates Value chains

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Horticulture (2018-19)(million tonnes)

Livestock (2017-18) (million tonnes)

Potato 53.03 Fish 12.60

Onion 23.49 Inland Fish 8.91

Tomato 19.40 Marine Fish 3.69

Mango 20.80 Meat & Poultry 7.02

Citrus 13.20 Egg 95.2 billion pcs

Banana 31.75Milk 176.5

Brinjal 12.66Butter & Ghee 5.4

Honey, aromatics, flowers, cashew, etc.

3.80 Field Crops (2018-19) (million tonnes)

Spices 9.21 Fibre crops 7.52

Fruits 98.58 Wheat & Rice 216.83

Vegetables 185.88 Pulses 23.22

Total Horticulture 313.85 Sugar cane 400.30

Horticulture Trends

28.6

43.050.9

65.6

74.981.3

91.3 92.998.6

58.5

88.6

101.2

128.4134.1

146.6

162.2 162.9

169.1

178.2185.9

0

20

40

60

80

100

120

140

160

180

200

Million Metric Tons

Horticulture Production

Fruits Vegetables Plantation Crops Others

x 3.2

x 3.4

Others: includes Spices, Loose Flowers, Nuts, Mushroom, Aromatic/medicinal and Honey .

Source: Ministry of Agriculture

Within Horticulture, perishable commodities trends higher & drives growing demand for perishable handling.

3

Making food available

4

Producing more is not enough

1971-72 to 1981-82

1982-83 to 1993-94

1995-96 to 2004-05

2005-06 to 2011-12

All Commodity 10.2 7.9 5.9 6.6

Primary Food 8.5 9.2 5.9 9.9

F & V 9.0 10.6 7.5 9.2

Milk 7.1 9.0 5.7 10.1

Eggs, Meat, Fish 11.0 9.4 6.4 11.8

10.2

7.9

5.9

6.6

8.5

9.2

5.9

9.9

5.5

6.5

7.5

8.5

9.5

10.5

11.5

Infl

atio

n %

Trends - Annual Average WPI Inflation (from 1970 to 2012)

Continual demand for food distribution and cold chain is foreseen over coming decade.

Source: RBI, Office of Economic Adviser, MoCI, Govt of India

28.6

43.0

81.0

58.5

88.6

155.0

ProductionFruitsVegetablesPlantation CropsOthers

WPI Inflation trends (40 years):

• Despite producers showing robust

response by increasing supply, yet

inflationary pressure exists.

• Food, is now the prime driver with

perishables contributing highest.

• On surface, indicates demand continues to outstrip supply.

• Actually, indicates a lack of

efficient supply systems which

continues to feed inflation in food

items.

Correlation in decadal trend of inflation rate (WPI and food items) with production of high value foods.

Food inflation fell below WPI, now leads WPI5

The Focus on PHM

All Production is at risk unless market integration - connectivity and links are developed.

PHM and Cold-chain is a thrust area – optimal monetization the primary concern.

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Logistical Capacities required

Cold-chain needs to integrate capacities basis product and produce type being handled. One size will not fit all,but multiple synergies exist. Cold-chain is the harbinger of the Income Revolution - doubling farmers income.

Type of InfrastructureInfrastructure

Requirement (A)Infrastructure

Created (B)All India Gap

(A-B)% share of Shortfall

Pack-house 70,080 nos. 249 nos. 69,831 nos. 99.6%

Reefer Vehicles 61,826 nos. 9,000 nos. 52,826 nos. 85%

Cold Storage (Bulk) 341,64,411 MT318,23,700 MT 32,76,962 MT 10%

Cold Storage (Hub) 9,36,251 MT

Ripening Chamber 9,131 nos. 812 nos. 8,319 nos. 91%

-AICIC 2015 Study by NCCD

Currently majority of infrastructure is in form of bulk produce coldstores. A healthy 75% capacity utilisation is seen.

Produce from one State finds capacity in neighbouring States.

The gap is larger in case of pre-cooling at pack-houses, transportconnectivity and ripening chambers.

Mission is to develop integrated & synergistic infrastructure, so thatfarmers and consumers will gain from organized supply chain.

Integrated ?!?

• 15 MT per day

• Supplies cold & normal chain

Modern Pack House

• 10-15 MT loads

• 2-3 days TAT

Long Haul Transport

• 1000 MT capacity

• 10% or 100 MT for Horti

Distribution Hub (Cold store)

• 2-4 MT loads

• Daily Delivery

Retail distribution

• Temperature controlled outlets

• Vending carts, cabinets

Retail / Merchandising

• 1000 MT capacity

• 10% or 100 MT for HortiAt Rs. 10,000 per ton = 100 lakhs

• 10-15 MT loads

• 2-3 days TAT20 units at Rs. 30 lakh each =

600 lakhs

• 15 MT per day

• Supplies cold & normal chain7 units at Rs. 90 lakh each =

630 lakhs

Component Units Cost % of cost

Pack-houses 7 630 47%

Reefers units 20 600 45%

Cold Store (MT) 1000 100 8%

TOTAL COST 1330 lakhs

Gainful Productivity“All Food must be handled with one end-use in aim – for Consumption”

Redefine productivity to include market access and market reach.

Supply chain a prime objective – to expand reach, open markets

1st step to organise the supply chainGrAMs- New Market Architecture

Suppliers Market - Hub Small resellers Buyers

FORWARD AGGREGATION MODEL

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Relook at India’s Market Architecture

▪ Mandatory to transact at regulated yard.

▪ Each market (APMC) designated its zone,

gets captive footfall.

▪ Sets up a chain of wholesale transactions.

Wholesale markets (6,615 APMC yards)

Regulated auction

Rural Periodic Markets22,800 Unorganised retail

Market yards, sub-market

yards

Informal retail, small lot sales

Farmers / Agents/ Intermediary

New Market Architecture

Market Density:

• Concept of a market every 80 sq.kms (5 km radius) based on assembling people.

• Market density evaluated on travel time, distanced about 1 to 2 hours from farms.

• Source markets as platforms need not only execute a local exchange but also facilitate transactions that connect with demand at markets farther afield.

• Also allow existing warehouse or cold store to function as markets.

Export Markets

Terminalwholesale

Primary / Secondarywholesale

Gramin Agri-MarketsLogistics hubs to pool & prepare into viable

unit loads for wholesale and local retail

Ma

rke

t In

tel

Aggregate - Dispatch - Retail - Wholesale

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Export Gateway

Post Harvest supply

Pack-house is the Nerve Centre

Food Processing

PreservesJuicesMixesJamsJellies

IQF

5 ton / day

Non-FoodCompost

Farm FeedBio-gas

Dyes

<1 ton / day

25 ton / dayExisting

Multi-layered chain

Local Mandi / Consumers

Cold Store for Market access

15 ton / dayReady to retail produce - cold-chain

Reefer

Retail

Distant Consumer

Ripening Unit

Harvest Catchment

50 ton / day harvest

Cold-chain Modern Pack-house

Each end-point is economically gainful end-use12

Natural Price DispersionAgricultural Fresh Produce Marketing

ConsumptionBreak-bulk

& RetailProduce

WholesaleLong haul Transport

Bulking & Pre-conditioning

Agricultural Production

Farm Inputs

Agricultural Processed Product Marketing

Produce as feedstock

Warehousing Processing Transport

Product Distribution

Paw

anex

h K

oh

li

Natural price dispersion = Cost of production (1) + cost of logistics (2) + risk (3) + marketing margins (4)

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Supply chain has a Digitalised Future

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• BMS, PMS, Spares, Upkeep, telemeasures, People SafetyAssets

• Smart Picking (FEFO), Quality, shrinkage, forecasts, packagingInventory

• Climate control, water, insulation, machines, utilities, alertsEnergy

• HACCP, tainting, contamination, EOP, labelling, compliance

Food Safety

• Traceability, recalls, feedback, tracking Traceability

• Reuse, dispose, disease, lower ecological footprintWaste

• Documentation, Regulations, Compliance, CSR

Trade Processes

• Route planning, FMS, Distribution, remote management Transport

Service

Life C

ycle

Energy efficiency

Operational efficiency

Internet of Things

Robotics

Monitoring

Safety

Integrated Cold-chain Availability Platform (ICAP)

See full concept in NCCD’s AICIC Study

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Impact of a proper Supply-chain

In the region, 16 pack-houses and pre-coolers have been set-upover 40 months.

About 1600 reefer vehicles deployed in 2019 and more marketsbrought under reach, with access opened to more consumers.

Abohar area farmers have since connected with London, Dubai, andBangladesh.

Aggregators have reported 4 fold sales with earnings multiplied.

Farm productivity has been rejuvenated and increasing.17

• By consolidating demand, simplifying supply.

• By extending market footprint for farmers.

• By infusing ownership in the total value chain.

• By creating brands versus commodity selling.

• By diverting would be loss into processing.

• By laying onus on better handling practices.

• By adding to existing private participation.

• By perforce infusing capital into rural India.

• By linking producer owners to consumer buyers.

Organised Supply-chain: Advantages for Value-gain

By consolidating demand, simplifies supply.

By extending market cachement of farmers.

By infusing ownership in the total supply chain.

By diverting would be loss into processing.

By creating brands versus commodity selling.

By laying onus on better handling practices.

By promoting produce owner participation.

By adding infrastructure capital into rural India.

By linking producer owners to consumer buyers.

राष्ट्रीय कोल्ड-चेन विकास कें द्र

Defining - Rationalising - Harmonising

Making Cold-chains Smarter

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