by teamrecAgri Logistics with it’s various constituents is probably one of the oldest occupations in the world. In a nutshell, Agri-logistics in India can be divided into three major components: Procurement, Storage and Distribution. Agri logistics in its modern concept covers mainly agricultural output commodities and can be charactarised with various constituent operations post harvesting including sorting, grading, transportation from field to primary storage depots from there to main or secondary storage structures and then transportation to storage structures near consumption points. The product is then transported to primary processing centres before moving to retail distribution centres from where it reaches end consumers.
While the farmers and retail consumers constitute the beginning and end of agri-logistics value chain, other stakeholders in the process include the farm labourers, the road transport vendors, rake handling contractors, labour force and contractors at warehouses, packing material suppliers which mainly constitute gunny bags and HDPE bag suppliers and intermediaries, the trader community and mandi boards comprising mainly of primary and secondary arhatiyas and their network, railway network, banking and other NBFC commodity funding organisations, collateral management agencies, commodity care and pest management agencies, assaying and warehousing agencies, security agencies and distribution channel comprising mainly of wholesale and retail trading organisations.
India being still a primarily agrarian economy and agricultural produce comprising of about two thirds of raw material for manufacturing sector, primary sector is still having over half of the workforce engaged in agriculture though a diminished contribution to GDP at about 14%. There are 127 agro-climatic zones in India, as specified by NARP project of Indian Council of Agricultural Research and the agricultural production and consumption zones being heavily skewed in distribution, logistics has a very important role to play in context of Indian agriculture to address these anomalies. Unfortunately a large portion of agri logistics sector in India, is still unorganised. Till recent the sector has failed to attract the attention of investors and consequently has lagged behind in terms of technological interventions and attracting adequately quality and trained manpower into stream.
Warehousing remains a major part of entire agri-logistics process and often many warehousing companies do not shy away from calling themselves agri-logistics organisations. In contrast with the West and other developed part of the world, Indian warehousing sector is characterised with storage in smaller denomination of bagged commodities often in size range between 25 kg to 100 kg, manual driven, controlled and operated systems and processes and rampant use of chemicals as insecticides and pesticides, which are even permitted by regulatory authorities as per prescribed norms and dosage. There are some other common method of storages such as open storage structures called cover and plinth (CAP), which due to various risk factors such as weather, security, infestation etc are limited to few commodities such as wheat, paddy etc.
Of late there is another trend of silos with temperature and humidity control systems for health of commodity catching up amongst private investors in the country, the growth has been limited due to large scale investments required, bigger volumesof commodity required for operation and technical nature of the system.
The procurement system of agricultural commodities in India is filled with it’s own woes. While the licence permit raj is still alive in the system with every procuring organisation requiring licence to procure in each Mandi. The limited number of primary and secondary licenced arhatiyas operating in each Mandi, make it mandatory for both the buyer and seller to route the transactions through same set of intermediaries, even if unwanted. The arhatiyas however also act as facilitators of trade by arranging other set of services such as transport vendors, providing labour force for loading and unloading operations, packing material etc., arranging finance through organised as well as informal sources. The protective measures for farmers as well as consumers in form of issues such as MSP in some commodities further make it difficult for trading firms to take advantage of price spread in times of glut in the market.
According to a study of FAO sometimes back, about 45% of India’s perishables go to waste. This highlights another glaring shortfall in India’s logistics sector which relates to cold storage chains. While India is still fighting it’s infrastructure woes, the lack of power sources in many producing areas makes the presence of cold storage structures desirable but difficult to operate and thus perennial shortage of cold storages. The existing dry storage structures too have a skewed distribution with some consumption zones such as northeast still depending on transportation network for steady supply of food and other essential commodities. The Government, realising this need has opened up some incentives for construction of godowns in such areas but still the required benefits are yet to be seen.
With a new Government at the helm and a general feeling of optimism in the air it is expected that the infrastructural bottlenecks particularly in areas of power, road transportation and storage structures will be addressed by promoting investments in required areas. Also there is scope for improvement in capacity building by investment in manpower development and introduction of appropriate technologies to harness the potential of each of 127 agro-climatic zones. The state level extension systems need to be improved by participation of PPP model to increase reach of technology and finance to beneficiary groups. The self reliance in agri-production needs to be increased by extending already existing schemes such as SRI to other crops. There is also a need for encouraging the organisations for direct procurement from the farmers so as to enable both the parties derive benefits of market mechanisms. Hope that good days in the sector will return with sound strategies and execution and not just with a general atmosphere of euphoria.
ABOUT THE AUTHOR
Mr. Kamlendra Srivastava is currently working as Assistant Vice President – BD looking after Madhya Pradesh and Chattisgarh in National Bulk Handling Corporation Limited, a part of the FT Group, a diversified financial services group with a presence in pan-India and in multiple international locations. He is a qualified engineering and management professional possessing wide exposure & experience of 20 years in Logistics / SCM / Procurement / Sales & Distribution; who is a Strategic thought leader, Change manager, Negotiator and a Collaborator leading from the front in a cross functional multi-cultural matrix teams.
Mr. Srivastava is an alumni of IIM Ahmedabad with a degree in MBA (PGDM – A) and has also done B. Tech. (Agriculture Engineering) from University of Allahabad.
Kamlendra has Top-notch Industry exposure in Logistics, FMCG, Commodity Trading, Micro Finance & Power across private and public sectors. He started his career with Powergrid Corporation of India Limited , before joining as an employee of MMTC Limited. He moved on to join Food Corporation of India, from where he separted at General Manager level after having spent more than 9 years with them in the year 2008.
Kamlendra joined ICICI Bank Ltd. as Chief Manager incharge of Orissa, Chhattisgarh in their Micro Finance Division. He joined SLCM Ltd. for a short duration at Delhi as Vice President – Operations before moving on to NBHC Ltd.
Kamlendra has a proven track record of meeting challenging organizational objectives in diverse terrain and geography and he has exhibited excellence in effectively handling cost efficient SCM solution thereby achieving substantial savings through innovative model / solution implementation. He has established strong professional relationship with clients, government agencies and potential partners through collaborative, information-sharing approach. His expertise in using IT (SAP) to coordinate storage and warehouse operations has been very effective for the organisations he has worked for.
