Efficiently Fresh

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Efficiently Fresh

“Cold chain has to be looked upon afresh, as a mode that extends the selling range of the produce, and thus expands the farmers’ market footprint. Efficient agri-logistics enhances market linkage and justifies efforts to produce more and brings overall growth to agriculture,” asserts Pawanexh Kohli, Chief Executive and Advisor, National Centre for Cold-chain Development (NCCD).

Your views on the transformation of the agriculture sector in India…

As the country develops and its citizens become more affluent and health aware, we are witnessing a shift in food preferences. Demand is no longer about carbohydrates & calories, but incorporates proteins, minerals and micro-nutrients. The shift in consumer orientation is effectively the prime driver in shaping an associated transformation of the agricultural sector. Many of these opportunities can only be tapped with required systemic and policy changes. These, however, need to be calibrated to suit the type of produce in demand and to empower the farmers to supply such demand. From the supply chain managers’ perspective, the systemic changes must cater to the requirements that are specific to the varied kind of produce that need to be handled.

Pre- and post-independence, when focus was on cotton and grains, agri-markets were termed as assembly points, or zones where farmers would aggregate with their farm outputs, so that the flow of trade was monitored, regulated and taxed. However, today’s farming eco-system generates surpluses, and while other markets have been liberalised, restrictive regulations have remained in case of farmers’ markets. Under this system, the farmers are expected to monetise their produce at a near farm mandi, which has area demarcated market jurisdiction. This market architecture essentially delinked the farmers from the best possible valuation, which typically is seen at terminal destination. This is like forcing all factories to sell at factory gate, instead of being allowed direct consumer access.

The transformation of agricultural economy calls for evolving a new market architecture, one that endows the farmers with the tools to physically communicate their produce, in their name, to transact at terminal markets. The forward connectivity will also require logistics infrastructure in the form of first mile aggregation hubs, co-located to villages. These would primarily bring immediate and gainful organisation in the post-production supply chain.

But can farmers manage this themselves?

The physical connectivity can be provided as a service, against revenue sharing or other service level agreements with farmers. It is a misnomer to imagine that farmers would manage the entire logistics chain which can run across geographies. However, farmers will intrinsically be the key beneficiaries from such services. If you can courier a parcel to any location in the country today, why cannot a group of small farmers use services to dispatch their produce to a market location of choice?

Yes, to do so, the farmers will have to collaborate and generate sufficient load at source, so that their production can be transported by most viable mode. To do this, an aggregation hub is required at village level, or one that covers a few villages. These hubs will also create employment for the rural communities, in jobs that are inherently linked to the core activity of farming. Such aggregation hubs or pack-houses will set off a virtuous cycle of economic growth. Without such back-end organisation, the agricultural eco-system will continue to face chaotic development.

Is it not easy for a farmer to vertically integrate with a food processing factory?

Sure, vertical integration with any agro processor is an easy option. And this is typical and already happening. However, their growth is not linked to their immediate effort, but on the growth of the factory they are vertically linked with. The only option is to expand their consumer from one nearby factory, into multiple factories and this again will require back-end aggregation of produce, in enough volumes to supply to far-away demand.

In case of high-value foods, such as fruits, vegetables, dairy, meat items, the Indian market is predominantly fresh. Here, the producers also could horizontally integrate, with multiple markets of choice. Especially as here, the markets have a more rapid, near daily, selling cycle. For example, a farmer group in Bihar, should be able to precondition and connect their litchi to terminal markets of Delhi, Mumbai or Chennai, of their own volition. Hence, their growth is not limited to the growth of the industry that they supply into, but by the scope of how they expand their market.

Food wastage has been one of the biggest challenges that the industry needs to circumvent. How can we resolve the issue?

Mere presence of cold-chain infrastructure does not stop food loss. Food loss occurs primarily because food or food product is not connected to consumption before it perishes. In case of fresh produce, this can happen when the time to reach market is beyond the marketable life of the food item. Most fresh fruits, vegetables, fish, meat do not have a long saleable life in normal conditions. They either should be harvested on demand (as usually in case of meat) and/or have to be sold quickly. Unless, the selling cycle falls within their natural saleable life, cold-chain intervention is required, especially when markets are concentrated across longer time-distance spans.

The cold-chain not only extends the marketable life span of whole produce, it also brings organisation and standardisation to post harvest food handling. This ensures that fresh produce is packaged and preconditioned to withstand road stress or damage, promotes modern material handling practices, provides relief from damage due to uncontrolled exposure and safety from external diseases. All of this allows for a larger quantum of farmers’ produce to reach consumers, thereby mitigating food loss. Key to reducing food loss is holistic development of agri-logistics to connect more food with more consumers, be it fresh or processed. All other aspects are secondary.

How does cold chain system maintain the safety and quality of produce at the desired level?

Palletization of a load facilitates safe multi-modal handling, whilst transporting and when in cold stores. Pallet handling is best done by mechanized means, which ensures quick & easy operations, reducing the loss that occurs due to mishandling. Cold stores are preferred when they are equipped to handle pallet-based cargoes, i.e. forklift types, roll-on/roll-off ramps, pallet based put away racks, etc.

At the last mile, retail shops also need strengthening to handle cold-chain routed fresh produce. In all, the complete chain enhances the produces’ usable life, retards loss of freshness, sustains nutritional value to the maximum and contributes enormously by extending the value chain system beyond traditional regions and limitations. The most phenomenal gain is drastic reduction in physical loss, through organised practices, when compared to the traditional multi-layered logistics chain.

How can marketing enhance the reach of perishable food?

An effective marketing and logistics network require developing an efficient link between an Origin (farm-source) with Destination (consumer-market) - ‘OD pair’. Lack of modern packhouses at points of origin, deflected the existing refrigerated transport and cold storage distribution hubs into the limited role of aiding the marketing of certain processed foods and the fresh imports arriving in the cold-chain.

A common example of efficient source level aggregation is the milk pooling or collection point. This is the first step to value-realization though a chain of market linking logistical activities. Post-production activities that safeguard the value of the harvest and deliver the maximum quantity of produce to end-consumers without degradation of quality, would have a positive trickle down effect on farmers’ income.

An effective agri-logistics infrastructure network design is required for perishable produce, at first instance needing source points, as pack-houses to serve as aggregation or pre-conditioning centres, normally developed at village or farm-gate level, to organize an effective farm-to-fork supply system. However, the planning approach should follow an inverse flow from fork-to-farm.

Please highlight the Inverse Approach “From Fork-to-Farm”.