Insight
Supply chain management for agricultural products
by Pulastya Roy
Agriculture is a significant
sector of most of the economy of world. Agriculture derives its
importance from the fact that it provides any a country self
reliance in terms of food for their people, providing huge
direct and indirect employment and more over huge revenue by
export of surplus food grain. Agriculture is backbone of the
economy and infrastructure for many countries like India, Brazil
and others. Due to technical advancement, improved irrigation
system and several other reasons production in agriculture has
increased several folds. To meet this increased production and
business in agriculture sector an equally reliable supply chain
support is imperative.
Supply chain is basically-“a set of processes
functioning synergistically to satisfy a customer’s demand”. Any
supply chain trades off between two main attributes of supply
chain, “Efficiency and Responsiveness”. Any supply chain is
adopted or designed keeping only this two attributes in mind
because it defines about which kind of customer the supply chain
wants to cater and what is the scale of “return on investment”
is being planned for. Agricultural industry uses both kind of
supply chain as per the need.
Designing supply chain for agricultural
products:
Most of the produce in agriculture can not be
sold directly; as per their mode of consumption they can be
categorized as follows-
There are some products which are not highly perishable like
cereals but needed to be processed like- rice is polished,
and wheat has to be husked.
Some products are highly perishable so they must be sent to
market very fast or otherwise needed to be processed and
packaged well.
For designing a supply chain
for any Agriculture product, it’s important to know which kind
of agriculture products is that, and accordingly a responsive or
efficient supply chain is designed.
Supply chain for non perishable items:
Most all the cereals like Wheat, Rice, Maize etc.
and some vegetables like Potato and Onion are highly inelastic
in demand, more over they are not highly perishables so the
supply chain for such products should focus more on efficiency
and cost effectiveness than responsiveness. These products have
vital supply and demand links with the market. Cereals needs
some kind of processing and polishing after they are harvested
from field and from here onwards supply chain comes into play.
The food grain is then packed in jute bags and then stored in
cold storages till they get order from market.
These type of agricultural products are highly in
elastic in demand and the demand more or less remains constant
so their demand can easily be forecasted and hence while
designing supply chain for such products efficiency should be
more preferred.
Supply chain for perishable items:
Fruits, green vegetables and flower come under
perishable items and they need all together a more responsive,
fast and accountable supply chain as a means of propagation from
farms to the market.
These products are elastic and erratic in demand
hence their demand forecasting is also difficult. They need more
costly type cold storage and refrigeration, special
transportation mechanism and on time delivery, all these
requirements make this supply chain very costly, but at the same
time the price of these products are consummately adjusted to
ensure higher margin and profit. While designing supply chain
for such items main focus should be given on the responsiveness.
Supply chain management for fruits:
To handle supply chain for these items is a very
demanding task. Such products need facilities like refrigerated
vans, more efficient cold storage faster transportation. This is
the sector where India needs more improvement. India is the
second largest producer for both fruits and vegetables, next
only to China. Major vegetables include potato, eggplants,
tomatoes, cassava, cabbage, dry onions, cauliflower, pumpkin,
okra and green peas, while fruits include mangoes, oranges,
apples, grapes, pineapples and papaya. So we severely need
better support system to handle this massive produce. For
example refrigerated vans, the need
for refrigerated vans is driven by economics. Every year, India
wastes over 30 per cent of the fruits and vegetables owing to
shortage of proper cold chain infrastructure. As of today, most
of the fruits and vegetables and meat get spoilt by the time
they are transported from the farmlands to the retail chains in
the cities. The export potential of fresh fruits,
vegetables and dairy sector in India has not been fully tapped
considering the size and diversity of these sectors.
A poor supply chain is a chief
reason behind this. However, India has a negligible share
in imports of fruits and vegetables by countries like Australia,
Hong Kong, Indonesia, Iran, Japan, Jordan, Republic of Korea,
Lebanon, Mongolia, New Zealand, Pakistan, Philippines,
Singapore, Syria and Thailand. Considering the level of imports
in Asian countries, the study noted that India has a high
potential in many Asian markets. Potential fruits identified by
the study for increasing the exports include apples, oranges,
bananas, watermelon, mandarin, pineapple, mangoes and guavas.
Potential vegetables identified by the study include garlic,
cauliflower, tomatoes, potatoes, cucumbers, peas, mushrooms,
onions and eggplants.
Major problems for fresh fruit and vegetable
exports from India include low productivity (cost
competitiveness) as compared to global standards, prevalence of
a low level of pre-harvest and post-harvest technologies,
international quality standards and existence of distortion in
market channels and poor supply chain system. Developing region
specific export facilitation centers and emphasizing the role of
Agri-Export Zones (AEZs) further in tandem with the market
requirements, especially to provide a specific thrust to the
quality and supply chain requirements of the target markets.
Conclusion
Agriculture is the main stay of the Indian and
several other economies of world, it constitutes the backbone of
rural livelihood security system and accounts for a handsome
percent of GDP of the whole world and if given due support to
this industry in terms of better supply chain management system
it can certainly provide India or in that manner any
agricultural based economy a substantial growth.
Disclaimer : The views
expressed in the articles are author’s own views B’Cognizance or
IIITA is not liable for any objections arising out of the same.
The matter here is solely for academic use only.
MBA (IT), IIIT Allahabad