India posses 52 percentage of the total land as the cultivable land , while the world average is mere 11 percentage. India experiences all 15 major climates of the world, holds 46 out of 60 total soil types found globally, epicenter of bio-diversity, accounts for 17% animal, 12% plants and 10% fish genetic resources of the globe. The agricultural sector accounts for 28% of GDP and provides employment to more than 50 percent of country's work force.
India is among top three fruit and vegetable producer in the world while it has cold storage facilities available only for 10% of the produce, among top three milk producers while it has mere 70,000 tones of cold storage capacity , among top seven eggs and fish producers of the world.
The irony remains in spite of being so abundant with natural agricultural products India till date remains out of top 10 global food exporters.
THE FOOD SUPPLY CHAIN:
India is the land of diversity and it can very well capitalize this diversity in order to become a global food supplier leader, what India need is an visionary and aggressive marketing strategies along with this an effective state of the art supply chain management infrastructure and practices. India is all set to become a "Vegetarian Food hub", "Organic food hub", "sea food hub" etc.
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The food supply chain is complex in nature due to perishable goods , existence of several small stakeholders. Apart from this the connecting infrastructure between these partners is very poor, each of the stakeholders work in silos. There practically remains no scope for demand forecasting, whatever farmer produces is subsequently pushed via intermediaries to the consumers. Supply chain management practices like data integration, financial flow management, supply-demand matching, collaborative forecasting, information sharing, transport scheduling etc are hardly used in industry. Once these SCM practices find their way into food supply chain benefits would be immense and it will create the win-win situation for all the stakeholders involved. The only question remains unanswered is when all this will happen?
The food supply chain can be segregated into a several sectors viz agriculture, horticulture, manufacturers of ready to eat or cook food , packaging companies, the retailers, wholesalers and caterers. At each stage value is added by the new ownership such as processors, distributors, packers, etc. and the cost and profits are part of the business. The end consumer of this chain broadly can be reached in three ways:
from farmers in the form of fresh produce,
to the caterers directly from the manufacturer, and finally from the
By far the supply chain in India remains fragmented and primitive in nature compared to western counterparts.
FOOD SUPPLY CHAIN STAKEHOLDERS:
The crucial stakeholders within the supply chain are being depicted below diagrammatically. In western countries the retailers have become the masters of supply chain and primarily dominate the supply chain. They play a major role in managing the supply demand situation, coordinating the supply chain and managing the logistical activities. There lies a tremendous opportunity for any player to enter a growing market as till date there remains no subsequently large player within this foray. Along with benefits no one can rule out the risk associated few among them includes country risk, monsoon risk, crop or raw material supply failures due to pests, diseases, partner risk, etc. High taxes, import duties, contract forming etc make profitability a big issue in India. There are several regulatory modifications that need to be made all along the supply chain in order to make it lucrative sector for FDI or draw investments locally in order to upgrade the current state.
Avenues for Improvement within food supply chain:
Cold chain infrastructure - Investments in cold chain infrastructure and real estate are capital intensive and yield slow returns. The Infrastructure comprises of Coolers, Refrigerated Trucks, Carriers, Warehouses, malls etc Although, 100% foreign direct investment (FDI) is allowed in this sector it still requires an in depth study for the potential risks and the ROI.
Food processing industry - Government of India allows 100% FDI for this sector, provides incentives for setting up processing plants either in AEZ or outside of them but still there lies a bundle of opportunities to create India for example as Halal hub (via export to South-East Asia, Middle East), Vegetarian hub (20% of Indian population + overseas), Organic food hub (Europe and USA), Sea food hub etc.
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3 PL (third party logistics) - the food supply chain is very much sensitive to the temperature and humidity conditions, while manual handling can reduce the quality and shell life of the goods. The logistic partners can play a vital role in improving the shelf life by using state of the art technologies; best practices like cross docking, conditioned trucks, automatic handling equipment, trained manpower etc.
Retail - industry is going a through a great transition phase in India. The Indian retail sector is estimated to be of $ 200 billion +; but the organized sector represents only 2% share of this market while globally organized sector commands close to 70 % share (avg.). India is flooded with small grocery shops, push carts, wet markets etc. they are generally located in small space and have no cold storage facilities they also have restricted capital resulting in lack of product variants provided to the end customer. A strong retail front-end can provide the required boost to agriculture and food processing, industries. Currently 100% FDI is not allowed. But India presents a huge opportunity and is all set for a big retail revolution.
Research in food supply chain - The general perception remains that agribusinesses are not the areas where there lies the scope for extensive research and development but on the contrary there still remains tremendous possibilities for innovation which can subsequently have disruptive benefits for all the stakeholders. The research can be carried out in two forms
Strategic level - this pertains to the macro level of the industry and have direct implications on the overall business strategy for example "What happens if 100% FDI is allowed in retail" and also ''ROI models for establishing cold chain infrastructure", etc.
Operational level - this pertains to the micro level of the industry and has direct implications on the operational efficiency of the industry for example problem of choosing the right kind of inputs, timing for various tasks for seeding, weeding and harvesting depending on the environmental parameter, logistics, packaging, procurement etc
There lie several other opportunities that can inspire young and mature. The above stated opportunities are not exhaustive in nature but try to capture the areas for improvement on broad level.
India is poised to become the global food supplier, it has what it takes to be a global supplier be it cultivable land, all the seasons for production of all varieties of fruits and vegetables, well developed agribusiness system though it works in its own way but is very well aligned with the consumer behavior (food habits) and convenience of both the urban and rural consumers. Factors such as rapid growth in the economy, innovations in consumer electronics, dynamically changing population demographics and psychographics has led to increase in the demand for healthy processed food. Though supply chain sector is very poor in terms of efficiency and can spell disaster while addressing this new demand. But In order to be the global food supplier food supply chain needs a great amount of attention, strategic plans and investment from academicians, the industry and the Government.