Follow Us:
Monday, May 16, 2022

Building fresh agri-produce value chains: A start-up experience

India is a world leader in fruit and vegetable production, but that does not guarantee win-win for farmers, consumers or the trade

Written by Pravesh Sharma |
April 20, 2017 3:29:35 am

Despite being the second largest fruits and vegetables (F&V) producer after China, India hasn’t developed any significant nationwide value chains in this fresh produce segment. This is unlike in cereals, where the government, through the Food Corporation of India, has created huge systems of procurement and distribution. Similar systems, largely private enterprise-based, have emerged in edible oils and pulses. Even for milk, Amul has shown how this most perishable of all farm produce can be viably aggregated from millions of small producers and linked to consumers across the country.

The question, then, arises: why not in F&V? This is a segment that has, after all, seen a steep production jump in recent times on the back of rising incomes and growing demand for fresh produce. In 2014-15, India’s total F&V output of 277.74 million tonnes exceeded the 252.02 million tonnes for all foodgrains — and which has been so since 2012-13. Yet, the country remains highly inefficient in post-harvest management and marketing of F&V, with estimates of wastages between the field and the fork varying anywhere from 15 to 30 per cent. The farmer’s share of the consumer rupee for F&V spends in India, at 20-30 per cent, is well below the 50 per cent norm, not just for North America and Western Europe, but even closer home in South-East Asia.

For a country with a large population consuming fresh F&V on a daily basis, it’s almost mystifying why large supply chains haven’t developed in this segment. Some answers could be had from the experience of our start-up (Sabziwala) in exploring alternative models of linking farmers to consumers in the Delhi-NCR market. While this is still work in progress, our early failures (too many to be listed here) and a few breakthrough successes (too precious to be revealed) might provide some key lessons in building agri value chains that might be useful to both policymakers and aspiring entrepreneurs in the field. Three of the most important learnings are discussed here.

The first striking thing about India’s fresh produce agri value chain is the absence of authentic data. While we happily declare gross output figures with an 18-24 month time lag, crop-specific data for F&V beyond state-level is simply not available. In cereals, pulses or oilseeds, a fairly sophisticated and reasonably reliable system of data collection has been built over the past four decades. Both the Centre and state governments have deployed substantial financial and human resources for arriving at production estimates, which the markets (and even international trade) have come to rely upon.

Best of Express Premium

ExplainSpeaking: Why Govt of India is wrong to claim inflation hit the ri...Premium
Bhupinder Singh Hooda at Idea Exchange: The only way out is to fight for ...Premium
Vistara could merge with Air India, decision likely by end of 2023Premium
Expert Explains: How to protect yourself from heat-related illnessPremium

Our inability to replicate this system for fresh produce is surprising, given their increasing importance in the Indian diet and also public sensitivity to price fluctuations (few things make for better proverbial expression or soap opera material than pyaaz and aloo). The massive data gaps in the F&V value chain means you can have virtually no business plan built on safe assumptions of production and supply.

Any business plan can at best be a contingency plan, which must accommodate wild swings in supply and prices. The inability to address this uncertainty has proved to be the proverbial iceberg on which the Titanic of many an enterprise in the fresh produce segment has foundered.

Which brings us to the second major learning — the absence of trust among all players in the value chain. It starts from the farmer, completely in the dark about what his produce will fetch at the mandi, then the intermediaries who aggregate and push the product to the next level while seeking to extract the maximum cuts for themselves, and finally the consumer befogged by prices that vary across vendors in the same geography and over the course of a few hours. At the end of it, every stakeholder feels short-changed. Almost one year into our business, we have developed our own “bluff meter”. It allows us to judge with a fair degree of success whether and how much somebody is misleading either on production volumes, costs or prices. It’s impossible, though, to lay down precise protocols for detecting such exaggerations.

Finally, the lack of statutory standards and the means to enforce them are a deterrent to the growth of modern enterprise in the fresh produce segment. There’s nothing that defines — legally or even through independent benchmarking — “fair and average quality” (FAQ) produce when it comes to F&V. Legally enforceable FAQ standards in grains, oilseeds or even milk products have helped to develop industry-accepted practices for production, harvesting, processing, storage, packaging, transportation and sale of these agricultural products. The same is urgently needed in the F&V fresh produce value chain.

Private investment to build a modern supply chain in F&V will not really take off until the above three hurdles are satisfactorily addressed. Generating reliable production data and setting FAQ standards are squarely public policy domains. Building equitable value chains can be attempted by farmer producer organisations, traders, processors and consumers. All the three ultimately require bringing formalisation in the fresh produce segment, similar to what has taken place in milk, both through cooperatives and organised private sector dairies. Only that will ensure its long-term development and a fair deal to all stakeholders.

The writer, an ex-IAS officer, is promoter of Sabziwala, an agriculture start-up, and also affiliated as visiting senior fellow at ICRIER, New Delhi

For all the latest India News, download Indian Express App.

  • Newsguard
  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
  • Newsguard
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by