Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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“The current situation in food supply chains needs to be corrected immediately” – Siraj A. Chaudhry, Managing Director & CEO, National Collateral Management Services

Siraj A. Chaudhry, Managing Director & CEO, National Collateral Management Services

The current pandemic has distorted the food supply chains with restricted movement of goods from origins to destinations. The massive difference between the origin prices and destination prices explains the gravity of distortions in the food supply chains. On one side, farmers are resorting to distress selling of their produce, especially perishables, and on the other hand, consumers are paying hefty amounts for the produce. The current situation in these food supply chains needs to be corrected immediately. If this continues for a while, it will have a significant impact on the cropping patterns adopted by farmers. Local distributions of perishables and food grains within the towns and cities have been improved but interstate movement of goods is yet to recover. Unless the interstate movement is improved, the fragility of the food supply chains cannot be addressed.

On a priority basis, there is an immediate need to allow hassle-free movement of food grains and other perishables, both interstate and intrastate movement. The Govt. can also consider using railways rake networks so that the threat of the spread of Corona is limited. They can also consider airlifting of high-value perishables from the origins to destinations so that the negative impact of lockdowns on the farmer’s income can be minimized. Further, Govt. should look at opening exports of perishables and surplus food grains so that farmers and food supply chains are less impacted because of the lockdown.

Smoothening the agri-value chain

Post-harvest Agri value chain starts with Primary Mandi or Agriculture Produce Market Committee (APMC) which acts as a platform for efficient price realization by farmers and aggregation centres of the produce for stockiest, traders, processors and other value chain participants. Amidst lockdown, it will be difficult for farmers to bring their produce to the mandis and hence alternate arrangements should be made so that farmers can dispose their produce. The Govt. can consider allowing warehouses to act as Mandis during this crisis time. This solution will help normalize the supply of essential commodities during the lockdown period by bringing farmers produce directly to the warehouse through commission agents, also known as Arhatiyas.

These Warehouse operators can tie-up with national-level companies in post-harvest management of Agri supply chains and use their online E-market platforms for connecting with buyers locally and nationally. An SMS based pre-registration system can be implemented to regulate the arrival and manage logistics, in line with the protocols for social distancing and help avoid crowding at the warehouse. Each step of exchange and transfer, i.e., weighing, sampling, grading, and quality assessment, will be carried out by the WSP, thereby minimizing crowd and contact. After completion of the auction, the farmer will be paid the value within 24 hours directly into his bank account, mapped at the time of his registration on the online Surakshit Mandi. This will ensure the smooth running of the Agri value chain and help farmers generate cash against their produce without doing any distress selling.

Apart from warehouses, Govt can also consider giving direct procurement licenses to exporters of high value perishables and surplus food grains. These exporters can procure the produce directly from the farm gate and can make arrangements for export provided Govt operates the ports and air lifting of Cargoes. Processors who has storage capacities can also be considered as commodity procurement centres/ aggregation centres.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

2 Comment

    • Amanpreet Singh -

    • April 14, 2020 at 20:46 pm

    Very well stated the Govt. Needs to allow all Warehouse Service Providers to operated through Private mandis/procurement centers. Major APMC mandis to be aligned with smaller ones and they with licensed Warehouses.

  1. Well expressed Shiraj. Covid has brought out unimaginable disruption in market place. Need of the hour Is to allow APMCs to operate with minimum interference save health related-imposition of social distancing sanitization etc. APMCs have established grading and payment systems in place .

    Road and bulk rail transport should be opened cross country which will facilitate transportation of harvests to warehouses and to some extent labour movement at the same time if proper rules of manpower movement on trucks is implemented .Labour will not walk downtown on foot this time. Time not ripe to enforce eNAM at this time. Digital driven local distribution is not yet mature except in Metros . In testing time like these local kirana stores have scored over E-commerce. Facebook tie up with Geo could be game changer , but we have to wait till it evolves.

    We are linked with large number of farmers on one to one basis. Local deliveries have evolved with farmers driving with products to local Residencial area risking police action and from obvious danger from Corona . But as you said margins or hunger outweigh the risk ; particularly when you are faced with crop perishing in fields .

    Lockdowns need to be more pragmatic. I sure there is knowledgeable management at helm must be judging pros an cons

    From all accounts Covid cure is not in sight. Agricuture cannot wait

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