The wave of e-commerce has left agriculture disembarked. Today organic turmeric to croissants is all available online, but the originator of the supply chain of these – the farmer – is still nowhere to gain financial recognition. This opinion piece by Dr. Aman Dua, Assistant Professor (FBMED), National Institute of Food Technology Entrepreneurship & Management (NIFTEM), Sonepat, highlights the much-needed intervention by the Government to bring the agricultural produce on the e-commerce radar and provide farmers their due credit. This initiative will make the country’s agri-business supply chain robust & reliable and will position the much deserving farmers at the center of the digital revolution.
With the number of globally recognized e-commerce firms and affordable connectivity, it is deemed that India has developed a robust supply chain. Increased expenditure on infrastructure has made it more reliable. In 2020, the expected number of internet economy users will be around 82 million, and the internet economy will be US$50 billion. Despite this, when pandemic COVID-19 emerged, the effect was most acidic on the farmers. The development of cities has often camouflaged the result of farmers also. In this disaster, due to COVID -19, the supply chain seems broken.
Farmers are ready with the product but unable to sell it. Ironically, several electronic supply chain firms have emerged in the previous decade, but all evolved around corporates. All of these are targeted to sell products in the urban area. Their vendor list is limited to suppliers from large organizations or small and medium enterprises (SMEs). While the Indian e-commerce law intends to curtail any preferential treatment to vendor the starting vendor of agri-supply chain, the farmer is left and feels left out in this digital revolution. This makes the farmer hesitant to any change which modern information technology-based policies will bring. With the industries moving towards the fourth revolution and supply chains adopting blockchain based enterprise solutions, agriculture will be impacted, and so will be the farmers. These fast-changing paradigms necessitate that the policymakers include the farmers in this digital advancement. Otherwise, they will keep representing their agony in different forms.
THE COMPLEX YET SIMPLIFIED CHAIN
In a simple view, a supply chain needs an aggregator, a producer, and a buyer, but a still different middle layer exists in the supply chain of an e-commerce firm. These layers are necessary due to consolidation and economies of scale and scope. But it is clear that if a farmer is supposed to be a stakeholder in a supply chain, the Government has to intervene with the corporation to forgo economies of scope.
Ironically in various regions, the consumer is waiting for the vegetable. In the span of 20kms, a farmer cannot find a consumer because the mandi is closed or working for limited hours, or they cannot find transportation to the mandi. To bring goods to the mandi, a medium capacity vehicle (1 – 10 tons) is required to reduce per-unit transportation cost. In contrast, a small capacity vehicle (which may be a two-wheeler or a tri-rickshaw) may work if the farmer has direct information on the requirement of the product to the consumer. In the National Capital Region (NCR), various farmers with marginal lands between sky-scraping towers can be found and are bound to sell their produce in mandi at a meagre price. In contrast, the consumers living in these towers visit stores to buy various local agri-produce. One can easily find jaggery priced at Rs240 per kg in the stores in the basement of skyscrapers, while at the retail market in the village, these are sold around Rs50 per kg. To my surprise, I found the two feet sugarcane priced at Rs15, which approximately translates to Rs30 per kg or Rs. 3000 per quintal, at lower estimates, while the latest price received by the farmer is Rs 362 per quintal in Haryana, inclusive of transportation at the doorstep of the sugar factory. It is noted that sugarcane has a reasonably good shelf life. No doubt a corporate enterprise commits to profit, but a farmer doesn't get the fair share. Farmer's profit margin increases by an average of 200% while selling directly to the consumer in the case of vegetables. The same may happen for dairy products and other essential needs. Hence it is a MUST to make farmers inclusive in the digital market space.
Geography bound model for e-commerce based on the hyper-local model sounds apt for this situation. The hyper-local style of e-commerce is based on local geographical information and fulfils the demand from local supply only. Its crucial feature is fast speed and delivery in two hours. This makes it suitable for perishable goods and very low shelf life. With the improved quality of roads in India, it can be within the range of 100kms. The hyper-local model finds applications in agriculture while converting farmers to direct sellers. The hyper-local model requires minimal efforts from the retailer and can be fruitful for sustainable development. In the context of technical requirements, a hyper-local model-based delivery by a seller can be managed by a single device. This e-commerce based digital market can mitigate the capital requirement for transportation by the farmer. The Indian customers are changing their tracks for fulfilling their demands. The hyper-local market has silently been integrated into the lives of people in cities and towns. Services and groceries are traded through these platforms.
As Consumer Protection (E-commerce)- Rules-2020 prohibits any preferential treatment to any vendor, it will stop any bias among farmers with different capacities. This Act also keeps track of the algorithm, which attempts to give any preferential treatment to any vendor, the farmer. When e-commerce rules put obligations on sellers, farmers, as the sellers, will not be untouched by these.
These obligations will become challenges for the small and marginal sellers. These include handling grievances, providing complete and correct details about all products, providing a customer care number and fast solution for consumer complaints. A possible solution can be providing a collective solution at the block level or district level. The digital marketplace can also be integrated with the ODOP (One District One Product) policy of the Indian Government. This scheme aims to promote exports for every district, and if a village/block or town has something, which is GI (Geographical Indication) tagged, this government-sponsored e-trading platform can also boost ODOP. It can be achieved via platforms like YouTube and various government initiatives that have already utilized it in MOOC (Massive Open Online Course). Training of basic skills for the adoption of e-business practices would aid the transition.
REMOVING THE MIDDLEMEN
Farmers would have been in a better situation with a farmer involved-supply chain model. If a farmer can record his expected produce on a system, variety and updated status procurement would have been simplified for consumers and other retailers. Further, it would have been integrated with consumers. A dual approach, where customer coming to farmer and farmer to the customer, can be created by removing the middlemen in the true sense. This can be easily implemented with decent adoption of a user interface in the local dialect. E-commerce based on a hyper-local model may help in achieving this. The government-owned e-services platform like IRCTC, COWIN, and various service delivery platforms have already delivered their effectiveness in providing services to the masses unbiased. In this type of change, the onus will lie on the farmers also because when e-trade happens, a high amount of trust is required between the seller and the buyer.
Several relaxations will be required to bring the farmer to the e-trade platform as company liability rules cannot be applied to an individual farmer. When the Government is involved, the liability may lie on the Government. This article advocates for the e-tailing of edible items; hence FSSAI regulations will also come into the picture. The farmer needs to understand that what is being produced in the field will be consumed by people, and any contamination may endanger their lives. The importance of quality standards needs to be understood, and an auditing mechanism is required to ensure the quality of agri-produce listed on the platform. The proper training and disciplined & ethical behaviour by farmers will make the operations of the e-trading smooth and bring efficiency and effectiveness. The farmers must understand that on the one hand, this e-trading platform is providing the extended reach to products sold by him, while on the other hand, if unethical and unfair practices are resorted to, then the reputation of the entire community or district can be at stake.
THE SILVER LINING
The inclusion of farmers in existing e-commerce has not happened yet in a holistic way because firms standing on this e-commerce wave have been founded with a capitalist approach with an expectation of high Returns on Investment while formulating their strategy. The grassroots initiatives of the Government for digital infrastructure offer a ray of hope that farmers will become the stakeholders of digitized value chains in the incoming days. This will make the country's agri-business supply chain robust and reliable and include the farmers in the digital revolution. This farmer-inclusive supply chain will bring financial inclusion. In terms of sustainability, this approach will be helpful because of the reduction in transportation for the local produce. This greenfield project will be filled with challenges but will eventually lead to significant structural changes in the agri-market concept.