Organized supply chain, growing crops in sync with demand can boost farmers’ incomes

India must concentrate on fork-to-farm, and not the other way round, that is, produce on the basis of demand, NCCCD's Pawanexh Kohli

New Delhi: Growing crops in sync with market demand can boost farmers’ income, while organized supply chain can reduce loss of perishable goods, said experts at the ‘Mint Danfoss Transformation Agenda’ on food processing on 9 May.

In her keynote address, Union food processing minister Harsimrat Kaur Badal was also upbeat about the government’s role to help the sector grow.

“We have created an environment for businesses to partner with the government...we are also putting in place the necessary infrastructure and cold chain network to reduce food waste and help farmers realise better value for their produce,” said Badal.

“The way we use energy, fresh water and deploy technologies is imperative to transform the agriculture sector and reduce food loss...skilling and creating capabilities in post-harvest food management is also critical,” said Danfoss Industries Pvt. Ltd president Ravichandran Purushothaman.

During the session, ‘Farm to Fork: Challenges and Opportunities for India’, the panellists were of the view that the need to create overseas demand and working towards building an efficient supply chain for value-added farm produce will be key, going ahead.

The panellists included Acharya Balkrishna, managing director, Patanjali Ayurved; Pawan Agarwal, chief executive officer (CEO), Food Safety and Standards Authority of India; Siraj Chaudhry, chairman, Cargill India; Asim Parekh, vice-president, Coca-Cola India and South West Asia; Sachid Madan, chief executive officer, fruits and vegetables, ITC Ltd; Siraj Hussain, former agriculture secretary; and Pawanexh Kohli, chief adviser, National Centre for Cold Chain Development.

Moderated by Mint’s Elizabeth Roche, the discussion also touched on regulatory issues and the government’s role in creating demand for processed food and reducing losses at the farm gate level. Edited excerpts:

Can the government and private sector partner to build the food processing industry and reduce wastage of farm produce?

Acharya Balkrishna: The problem in Indian agriculture is that farmers sell their produce at Rs2 to Rs3 per kg, while city consumers pay a high price.

This is not just because of the middlemen, but also due to gaps in post-harvest infrastructure, including transport.

Besides, farmers have no idea about market demand, leading to either overproduction or shortages.

The government and the private sector can come together for better crop planning and reducing wastage.

In fact, the problem today is not about productivity, but excess production.

Asim Parekh: India is the second largest producer of fruits and vegetables, globally.

In fruits, we can practically grow all varieties as we have 127 climatic zones.

The reality on the ground is that poor marginal farmers sell their produce at low prices, but small and medium processors purchase it at a higher price.

Then the brand owners, like us, think should we buy the processed juice, or import it from some other country, which works out to be cheaper despite import duties and logistics costs.

We need to fix this vicious circle.

As a company, we are trying to fix this by rasing productivity levels on farms and processing on a scale where by-products of value can be generated.

We have also decided to use India-only fruits for our beverages.

Pawanexh Kohli: It is a misnomer that private sector has not invested. We have the world’s largest footprint in refrigerated warehousing space, even higher than countries such as China, which grows more fruits and vegetables than us.

So investments have been made here...what is missing is organized supply chains.

After the challenge thrown by the Prime Minister on doubling farmers’ income, we must concentrate on fork-to-farm, and not the other way round, that is, produce on the basis of demand.

Policies are changing, too.

For instance, the directorate of marketing and inspection (under the agriculture ministry) now also doubles up as the directorate of marketing and intelligence.

As we map our production and consumption better, more investments will come. We are the world’s largest exporter of beef (buffalo meat).

By establishing the right kind of pack house, we are also exporting grapes, which are highly perishable.

Sachid Madan: At ITC, we have worked with farmers to help them with technology and market access, but partnerships should go beyond that by connecting to the front-end.

The challenge for companies is to produce world class products with produce from India.

For instance, one option was to get orange concentrates from South America for juices, but we looked at Indian fruits, including Jamun, Falsa and Bel, which are fabulous and can have global demand.

Food processing is challenged by the fact that a lot of our products were driven by a West-centric approach. We are also trying to ensure that all our juices are not made from concentrates, but as fresh as possible to suit the Indian palate.

To make this happen we have committed Rs10,000 crore across 20 state-of-the-art plants. We have also set up an R&D centre at Bengaluru, employing 350 scientists. This centre is helping us develop India-centric products, focusing on health and wellness aspects.

Siraj Hussain: The industry can manufacture anything for which there is demand.

There are only two examples where demand was created by the industry —the way eggs were promoted by the National Egg Coordination Committee, and Maggi, where a company was successful in creating demand, despite challenges.

Now, the challenge before us is to create an enabling environment to help the private sector invest.

In the past 15 years, India has become the largest exporter of buffalo meat without any support from the government. The government should intervene in two respects — for certain commodities it can create demand by promoting its use, say, processed onions and tomatoes.

Two, we need stability in government policies, say, on whether to ban futures trading of pulses as prices rise or fall sharply.

Pawan Agarwal: Over the past few years, partnerships have driven our role as India’s food regulator.

We have institutionalised the process of standard setting. On the compliance front, we still have a challenge. So we have recently completed the process for third-party audits.

We are merely 350 people compared to 10,000 people in the US. We are a small organisation and, therefore, we need to build partnerships to ensure 1.3 billion citizens get safe and nutritious food, and oversee operations of 4 million food businesses.

How can the food processing sector contribute in achieving the Centre’s goal to double farmers’ income by 2022?

Siraj Chaudhry: Farmer income is a problem across the world. It is not unique to India. The problem is aggravated here as a large proportion of the population depends on agriculture.

A farmer will be willing to take greater risks if an industry is there to back him. This is where the processing industry’s role comes in.

Such a scenario will be better than, say, giving the farmer higher prices for anything he may produce.

Sachid Madan: If you give the right varieties of seed to the farmers it will help raise their income.

For instance, potatoes used to make chips are sold at Rs18, while those for household consumption are for Rs10 per kg.

Here, too, a farmer’s production has to be aligned with demand.

The problem is higher yields will not always convert to higher income — for that to happen we have to create additional demand through exports.

There you need consistency in government policies: sudden export bans or minimum export price restrictions cannot be implemented.