‭FOOD SUPPLY CHANNEL IN INDIA‬

I‭ NTRODUCTION‬
‭India is one of the largest food and grocery markets in the world‬
‭and a large consumer of food products. Despite having a rich raw‬
‭material base for food products, high food price inflation is‬
‭becoming a major challenge facing the country. There is a shortage‬
‭of supply due to issues in the food supply chain. The food supply‬
‭chain is fragmented and only seven per cent of the perishable‬
‭products are being processed. To counter this, the Indian‬
‭government is offering several incentives to private and foreign‬
‭investors in the food processing sector reflecting the government’s‬
‭intention to attract investment. The large and unsaturated Indian‬
‭market has attracted a number of foreign companies yet the‬
‭country has not been able to be a part of their global production‬
‭networks. There is a need for reforms in the food supply chain to‬
‭enable India to reach out to its unrealised potential.‬

‭ HAT IS FOOD SUPPLY CHANNEL IN INDIA ?‬

W
‭A food supply chain or food system refers to the processes that‬
‭describe how food from a farm ends up on our tables. The‬
‭processes include production, processing, distribution,‬
‭consumption and disposal. The food we eat reaches us via food‬
‭supply chains through which food moves systematically in‬
‭domino-like motion from producers to consumers while the‬
‭money consumers pay for food goes to people who work at various‬
‭stages along the food supply chain in the reverse direction.‬
‭Because a food supply chain is domino-like, when one part of the‬
‭food supply chain is affected, the whole food supply‬‭chain is‬
‭affected, which is often manifested through changes in price‬
‭The Indian Food Processing Industry‬
I‭ ndia with its billion-plus population provides a large and growing‬
‭market for food products. Food products are the single largest‬
‭component of private consumption expenditure, accounting for as‬
‭much as 49 per cent of the total spending. Furthermore, the‬
‭upward mobility of income classes and increasing need for‬
‭convenience and hygiene is driving demand for perishables,‬
‭non-food staples and processed foods. Though companies like‬
‭HLL, ITC, MTR have introduced some innovative heatand-eat‬
‭dishes with reasonably good packaging, hygiene and quality issues‬
‭remain since there is a fair amount of manual handling. While‬
‭domestic companies like Dabur, MTR, ITC, Godrej and Amul are‬
‭aggressively entering the food chain, multinationals are also‬
‭gradually making their presence felt—Cargill and Conagra in‬
‭agri-inputs, Tropicana in food processing and Metro in‬
‭wholesaling. However, the pace is slow in the food sector when‬
‭compared to IT and pharma. India is still to get its share of‬
‭billion-dollar players in the food industry like China and‬
‭Philippines where the companies are achieving sales exceeding US‬
‭$ 1 billion.‬

‭CURRENT STATE OF INDIAN AGRICULTURE INDUSTRY‬

‭ griculture was and is one of the largest employment sectors of‬

A
‭india.Its major of the primary source of employment. More than‬
‭half of the Indian population depends on agriculture as their‬
‭source of livelihood. Agriculture is the backbone of the Indian‬
‭economy. In India 52% of total land is cultivated as against 11% in‬
‭the world. All major climates of the world exist in india.‬

I‭ ndia is the center of biodiversity in plants,animal,insects,‬

‭Micro organism which accounts for:‬
‭ ‬ 1‭ 2% plants‬
●
‭●‬ ‭17% animals‬
‭●‬ ‭10% fish genetic resource of the globe‬

I‭ n the livestock sector, india has 16% of cattle,57% of buffalo,‬

‭17% of goats and 5% of the sheep population of the world which is‬
‭the highest.‬

‭ griculture contributes 24.2% to GAP 15.2% of total exports and‬

A
‭provides employment to 58.4% of the country's workforce.‬

I‭ ndia is the fruit and vegetable market of the world. India being‬
‭home to a wide variety of fruits and vegetables holds a unique‬
‭position in production figures among other countries. Estimates‬
‭currently suggest that India ranks second in terms of farm output,‬
‭first being china. Although there have been a large number of‬
‭people involved in agriculture in India ,there is still a food crisis.‬
‭In India agriculture got its dimension during the green revolution.‬
‭This introduces several new methods, which also increases food‬
‭productivity. But still in India many people die due to malnutrition.‬
‭Although the green revolution in India led to a sizable increase in‬
‭terms of productivity in certain crops, the overall growth in terms‬
‭of farmers' economic status is unremarkable.‬

‭ EVIEW OF EXISTING TRADITIONAL INDIAN FOOD‬

R
‭SUPPLY CHAIN‬
I‭ n the case of the agricultural sector, India's supply chain is one of‬
‭the most fragmented and inefficient in the world resulting in‬
‭wastage of large quantities of food grains, vegetables and fruits.‬
‭About 25-30 percent of fruits and vegetables are destroyed before‬
‭they come to the market. Apart from this, the output is procured‬
t‭ hrough unhygienic practices. This means farmers and consumers‬
‭bear the costs of the wastage.‬

‭ he agricultural markets are not functioning in a proficient‬

T
‭manner. Apart from inefficiencies in distribution, including‬
‭wastage of the agricultural produce, the farmers suffer due to‬
‭exploitation by traders.‬

‭ ow, lets see the end results of the traditional food supply chain‬
N
‭faced by various stakeholders‬

‭Review of existing traditional indian food supply chain‬

‭• At Farmer's side:-‬

‭• → Low return on investment.‬

‭→ Prices delinked from the market.‬

‭→ Unavailability of adequate infrastructure.‬

‭→ High credits leading to debt trap.‬

‭→ High commission charges.‬

‭→ High transportation cost.‬

‭→ Distress selling‬

‭• At Commission Agents side:-‬

‭→ Non-Value adding player.‬

‭→ Unscientific handling.‬

‭→ Quality deterioration.‬

‭→ Risk free inconse.‬

‭→ Charging of high commission farm farmers.‬

‭• At Traders Side:-‬

‭→ No infrastructure far gracing.‬

‭→ Large wastage due to ineffective transportation.‬

‭→ Improper management resulting in complete‬

‭wastage.‬

‭• At Wholesaler's Side:-‬

‭→ Large wastage.‬

‭→ No control on quality.‬

‭' At Retailers Side:-‬

‭→ No control in quality.‬

‭→ No infrastructure for proper storage.‬

‭• At the customer's Side:.‬

‭→ High prices.‬

‭→ Law quality products.‬

‭→ Limited alternatives.‬

‭Food supply chain cluster‬

‭ oad chain clusters are formed with the participation of all‬

F
‭stakeholders such as farmers, merchants, transporters, financial‬
i‭nstitutions, wholesalers, retailers, insurance companies, ete.‬
‭Information sharing is the most essential for generating the‬
‭efficiencies The internet and mobile communications are used to‬
‭enable the transfer of information between the stakeholders. Also,‬
‭recent advancements in RFID technology will have a tremendous‬
‭impact in the management of the food chain particularly for the‬
‭source identification and tracking and also in supply chain‬
‭visibility.‬

I‭ n advance countries, the retailers have become the channel‬

‭masters of the food supplychain taking over from the food‬
‭manufacturers.‬

I‭ n India, with less superstores, no economies of scale, too many‬

‭intermediaries, there is a vacuum, meaning there is no real channel‬
‭master managing the supply demand situation and coordinating‬
‭the supply chain and managing the logistical activities.‬

‭ his provides a tremendous opportunity for smart players to enter‬

T
‭a growing market with a high potential of the retail sector. But one‬
‭needs to remember that the infrastructure capital outlays are high‬
‭and the returns are long term. Also there are various risks‬
‭associated with awning a cold chain. Some of these include‬
‭country risk, monsoon risk, crap or saur material supply failures‬
‭due to pests, diseases, etc.‬

I‭ n India, there are merely few large scale food manufacturers like‬
‭AMUL, ITC, Nestle, Dabur, Britannia, etc. High taxes on processed‬
‭food, high import duties, make the profitability a big issue in India.‬
‭There are several regulatory changes that need to be made all‬
‭along the supply chain so that they are consistent and mutually‬
‭reinforcing.‬
‭Opportunities for improving food chain supply‬

‭Cold Chain:-‬

‭ old Chain is a logistic system that provides a series of facilities far‬

C
‭maintaining ideal storage conditions for perishables from the point‬
‭of origin to the point of consumption in the Food supply chain.‬

‭ he chain needs to start from farm level and cover up to the‬

T
‭consumer level or at least to the retail level. A well organized cold‬
‭chain reduces spoilage, retains the quality of the harvested‬
‭products and guarantees a cost efficient delivery to the consumer.‬
‭The main feature of the chain is that if any of the links is missing or‬
‭is weak, the whole system fails. Failure to maintain appropriate‬
‭temperature may shorten the life of the product which‬
‭downgrades its quality consumption for the consumers.‬

‭Food Packaging:-‬

‭ ackaging has become a competitive tool to reach the consumer.‬

P
‭The task assumes increasing responsibility with more and more‬
‭competitive and substitute products being introduced. This has‬
‭opened the sector for introduction of modern technology for‬
‭processing and packaging and entry of new organizations.‬

‭• Food Processing:‬

‭ he Government of India allows 100% FDI in this sector. Sourcing‬

T
‭of raw materials is easier with AEZ Since there are already‬
‭participants with knowledge about the industry Standards.‬

‭• Third Party Logistics:-‬

‭ ood supply chain is temperature sensitive and manual handling‬

F
‭reduces the product quality and life. Logistics providers with AC‬
‭trucks,automatic handling equipment and trained manpower will‬
‭provide end to end support.‬
‭• Feed Safety and Hygiene:-‬

‭ ood safety is a growing concern across the country. There is an‬

F
‭increasing need to provide greater assurance about the safety and‬
‭quality of food to consumers.‬

‭• Training:‬

‭ raining, coaching and counseling have to be given to all the‬

T
‭parties in the supply chain. For example, it is important to conduct‬
‭courses and training sessions to raise the Knowledge and‬
‭awareness to ensure that there is no break-down in the supply‬
‭chain.‬

‭●‬ ‭Business Model:‬

‭Retail, e - Retail, Export‬

‭ he food supply chain starts from the farm and ends with the‬
T
‭consumer. The local consumer could be served through the home‬
‭delivery or through a retailer or a neighborhood kirana store.It is‬
‭important to foresee the demand for each of the channels and‬
‭serve the customer within the expected time.‬

‭• Role of Government:-‬

I‭ n formulating policies the government plays an important tale.‬

‭There are several regulatory measures handled by a multitude of‬
‭departments divided between state and central government.‬

‭ urther, research should be initiated to develop indigenous‬

F
‭packaging materials, machines, labs for storage and more‬
i‭mportantly practicals for storage and processing raw material in a‬
‭better manner.‬

‭Food safety in India‬

‭Food Safety and Standards Authority of India‬

(‭ FSSAI) is an autonomous body established under the Ministry of‬

‭Health and Family Welfare, Government of India. It is a statutory‬
‭body under Food Safety and Standards Act, 2006.‬

‭ he Food Safety and Standards Act, 2006 is the primary law for‬
T
‭regulation of food products.‬

‭ his act also sets up the formulation and enforcement of food‬

T
‭safety standards in India.‬

‭ he main aim of FSSAI is to lay down science based standards for‬

T
‭articles of Food to regulate, manufacture, Storage, processing,‬
‭ istribution, same sale and to import of feed to facilitate food‬
d
‭safety.‬

‭Food security‬

‭ ood Security is a measure of the availability of food and‬

F
‭individuals ability to access it. According to the United Nations‬
‭Committee on World Food Security, food security is defined as the‬
‭means that all people, at all times, have physical, social, and‬
‭economic access to sufficient, safe, and nutritious food that meets‬
‭their food preferences and dietary needs. far active and healthy‬
‭life.‬
‭CONCLUSION‬

‭ he food supply chain involves farmers seed, producers fertilizers‬

T
‭factories, financial institution millers, Government Policies, fair‬
‭price shaps, warehouses; retail shops, railways, truck transport‬
‭companies, consumers, etc.‬

I‭ ndia's supply chain is one of the most fragmented inefficient ones‬

‭in the world resulting in wastage of large quantities of foodgrains,‬
‭vegetables. But India can improve the supply chain by focusing on‬
‭various areas which includes Logistics, cold chain, food Packaging,‬
‭Processing, Safety de Hygiene, etc.‬

‭ ood Security is also an important concern in countries like India.‬

F
‭It refers to the availability of food to every individual with‬
‭sufficient quantity of nutrition. It can be possible if there is a‬
‭proper supply chain and we as individuals can also contribute by‬
‭not wasting the food.‬
‭Impact of COVID-19 on the food supply chain‬
‭ pandemic is not a new event encountered in the history of‬
A
‭humanity because mankind has faced various pandemics in‬
‭history. The common point of pandemics is their serious negative‬
‭effects on the global economy. Considering the food supply chain,‬
‭one of the most important sectors of the economy, it has been‬
‭seen that COVID-19 has an impact on the whole process from the‬
‭field to the consumer. In the light of recent challenges in food‬
‭supply chain, there is now considerable concern about food‬
‭production, processing, distribution, and demand. COVID-19‬
‭resulted in the‬

‭ ovement restrictions of workers, changes in demand of‬

m
‭consumers, closure of food production facilities, restricted food‬
‭trade policies, and financial pressures in food supply chain.‬
‭Therefore, governments should facilitate the movement of workers‬
‭and agri-food products. In addition, small farmers or vulnerable‬
‭people should be supported financially. Facilities should change‬
‭the working conditions and maintain the health and safety of‬
‭employees by altering safety measures. Food protectionist policies‬
‭should be avoided to prevent an increase in food prices.‬
‭FARM BILLS 2020‬

I‭ n September 2020, President Ram Nath Kevind gave his assent to‬
‭the 3 Agricultural Bills that were passed by the Indian Parliament.‬

‭These farm Acts areas follows:-‬

‭ armers (Empower and Protection) Agreement on Price Assurance‬

F
‭and Farm Services Act, 2020‬

‭Citation: Act No. 20 of 2020‬

‭Territorial Extent: Inclia‬

‭ ok Sabha: The Bill was passed in Lok Sabha on 17 September 2020‬

L
‭and was introduced on 14 September 2020.‬

‭Rajya Sabha: It was passed an 20 September‬

‭I.‬ ‭Act: It creates a national framework for‬

‭ ontract Farming through an agreement between a farmer and‬

c
‭buyer before the production is rearing of any farm products.‬

‭II.‬ ‭Provisions:‬

‭ ) Farming Agreement: The Act provides for a farming agreement‬

a
‭between a farmer and a buyer prior to the production or rearing of‬
‭any farm product.‬

‭ ) Minimum Period of farming Agreement: The minimum period of‬

b
‭the farming agreement shall be for a crop season or a production‬
‭cycle of livestock.‬

‭ ) Maximum Period of Farming Agreement: The maximum period‬

c
‭of the farming agreement shall be five years. It states that if the‬
‭production cycle of any farm produce is longer and may go beyond‬
‭five years, the maximum period of farming may be mutually‬
‭ ecided by the farmer and buyer and explicitly mentioned in the‬
d
‭farming agreement.‬

‭ ) Pricing of Farm Produce: The pricing of farming produce and‬

d
‭the process of price‬

‭ etermination should be mentioned in the agreement. for prices‬

d
‭subject to variation, a guaranteed price of the produce and a clear‬
‭reference for any additional‬

‭ mount above the guaranteed price must be specified in the‬

a
‭agreement.‬

‭ ) Settlement of Dispute: The Act provides for a three - level‬

e
‭dispute settlement mechanism for Conciliation Board, Sub-‬
‭Divisional Magistrate and Appellate Authority.‬

‭ armers Produce Trade and Commerce (Promotion and‬

F
‭facilitation) Act, 2020‬

‭Citation: Act Na.21 of 2020‬

‭Territorial Extent: India‬

‭ ok Sabha: The Bill was introduced in Lok sabha on 14 september‬

L
‭2020 and was passed on 17 September 2020.‬

‭Rajya Sabha: It was passed in Rajya Sabha on 20 September 2020.‬

‭ ct: It permits intra and inter - state trade of farmers produce‬

A
‭beyond the physical premises of APMC markets and other markets‬
‭notified under the state APMO Acts. APMC stands for Agriculture‬
‭Produce Market Committee:‬
‭Provisions:‬

‭ ) Trade of farmer's Produce: The Act allows the farmers to trade‬

a
‭outside trade areas such as farm gates, factory premises, Cold‬
‭Storages, and so on. Previously, it could only be done in the APMC‬
‭yards or in Mandis.‬

‭ ) Alternative Trading Channels: It facilitates lucrative prices for‬

b
‭the farmers via alternative trading channels to promote‬
‭barrier-free intra-state and inter-state stade of produce-‬

‭ ) Electronic Trading: Additionally, it allows the electronic trading‬

c
‭of scheduled farmers produce in the specified trade area. It will‬
‭also facilitate direct and online buying and selling of produce via‬
‭the internet.‬

‭ ) Market Fee Abolished: The State governments are prohibited‬

d
‭from levying any market fee on the farmers for produce in an‬
‭outside trade area.‬

‭Essential Commodities (Amendment) Act, 2020‬

‭Citation: Act No.10 of 1995‬

‭Territorial Extent: India‬

‭ ok Sabha: The Bill was introduced in Lok Sabha on 14 September‬

L
‭2020, passed on 15 september 2020.‬

‭Rajya Sabha: It was passed on Rajya Sabha on 22 September 2020‬

‭I.‬ ‭Act: It is an act of Indian Parliament‬

‭ hich was enacted in 1995 to ensure the delivery of certain‬

w
‭commodities or products, the supply of which if obstructed owing‬
‭to hoarding or black marketing would affect the normal life of‬
‭people.This includes food stuff, drugs, fuel, etc.‬

‭II.‬ P
‭ owers of Central Government: The GOI regulates the‬
‭production, supply, distribution of commodities it declares‬
‭essential in order to make them available to consumers at fair‬
‭prices. The government can also fix the MRP of any product‬
‭that it declares an essential commodity'. It can add‬
‭commodities in this list when the need arises and can take‬
‭them off the list ance the situation improves.‬

‭III.‬ P
‭ owers of State Government: The state government can‬
‭choose not to impose any restrictions. as notified by the‬
‭center. IP restrictions are imposed, traders have to‬
‭immediately sell any stocks held beyond the mandated‬
‭quantity into the market. This is done to improve supplies‬
‭and bring down prices.‬
‭WHY INDIAN FARMERS ARE OPPOSING FARM BILLS?‬

I‭ ndian farmers are fearing that they might lose more than they‬
‭could gain after the new fam Laws 2020 thereby taking the protest‬
‭to the streets. Farmers in the country are worried that the farm‬
‭bills which aim to deregulate the agricultural market will further‬
‭reduce their price security.‬

‭ nder the new laws, a host of entities including corporates,‬

U
‭traders and even the customer can procure from farmers without‬
‭a license unlike in the APM structure.‬

‭ his opens up the gates to the corporations and can directly‬

T
‭procure from farmers without the interference of middlemen.‬

‭ everal farmer groups are scared that this will allow large‬
S
‭corporations excessive control over farm prices in the long run‬
‭when the free market system is fully established. The government,‬
‭however,claims that deregulating the current agrimarket and‬
‭procurement structure will allow the farmers to get better prices‬
‭for their crops. Many prominent economists back the governments‬
‭free market idea for reviving the country's weak agriculture sector‬
‭through private investments.‬
‭CONCLUSION‬

‭ he purchase by organized retailers limits the length of the supply‬

T
‭chain, giving better prices to farmers and asking for lower prices‬
‭from consumers. It is witnessed that middlemen charge higher‬
‭prices than organized retail players.‬

‭ lso, contract Farming by corporates implies that the corporation‬

A
‭will provide technology to farmers to Improve their yield. This‬
‭benefits both the farmer through increased yield and the‬
‭corporate , who can get higher production from suppliers.‬

‭ a, the new farm bitts will be. boon for the economy and any‬
S
‭loopholes will be addressed by the experts and the policymakers.‬