Magazine
If one looks up the definition of “fresh”, what comes up is “just produced”. Imagine a just produced spinach’s journey - traveling from the small hectares of nondescript farms to the hustle-bustle of a city’s market, huffing and puffing all the way over many days, exchanged between multiple wry hands, haggled over incrementally and finally, the exhausted spinach gets consumed; purchased at a price over 10 times the original value. More often than not, the same spinach would not even make it to a kitchen and gets discarded somewhere along this long journey.
Agri Supply Chain: The Forgotten Step Child
The Green Revolution changed India. India witnessed increased production because of enhanced cultivation methods and irrigation systems. While there has been a drastic improvement in the yield per acre, an unresolved and ailing issue that remains is the post harvest distribution channel. A 2011 UN study shows that close to 45% of fresh produce gets wasted in developing nations like India. Not only does this hurt the farmer but also the consumers as the quality deteriorates and prices increase exponentially. Inadequate storage facilities and the lack of market linkages hurt the farmers at the first mile and the wastage gets compounded during distribution. Startups and corporations have been hard-pressed to solve this problem despite the tremendous opportunity primarily due to the multitude of policy challenges and regulations to operate any sort of business in the hinterlands. Add to that, a poor credit system and an ineffective formal banking model that hampers most entrepreneurs. Structurally, there are a lot of reforms and investments needed to uplift this sector. Unfortunately the farm-to-fork model continues to be a pipe-dream.
Organized Retail: The Panacea
Organized retail in developed nations accounts for over 60 percent of food retailing. The overall wastage is lower unorganized sector. A well-defined and systematic supply chain infrastructure can orchestrate the fine line between meeting the demands of the farmers and benefiting consumers and retailers. The farmers in such a setup
· Have access to trained agronomists to optimize the quality of produce
· Follow a predictable pattern of harvesting cycles based on market demand· Maximize yield
· Receive a consistent price year round
· The consumers in such a setup
· Get seasonal and fresh produce at a consistent price year round
· Seek to aggregate the right amount of inventory, balancing it to reduce wastage
· Optimize with technology powered storage and cold chain solutions
· Optimize on first mile logistics across grids of farming centers based on shelf life of the produce
The organized food retail sector in India is still at a nascent stage compared to the developed economies, with a small number of players trying to create a new paradigm. For these players to thrive there is a continued need to manage everything in-house from supply chain, logistics, selling, sourcing, stocking, merchandizing, trend analyzing etc. While having to keep prices low enough to be able to compete with the traditional sector, it is no wonder profitability is a mirage.
The organized food retail sector in India is still at a nascent stage compared to the developed economies, with a small number of players trying to create a new paradigm
Certain Conditions Have Created The Primordial Soup For Or-Ganized Retail In India:
1. India opened up food retail for foreign direct investment in 2016. A shot in the arm for the players/entrepreneurs in the organized retail sector.
2. The average consumer is now willing and able to pay a premium for quality and speed of delivery. With two-thirds of the country below the age of 35, with disposable incomes and an ever-increasing spending habit, adoption of apps like BigBasket, Amazon, Flipkart and more is at an all-time high.
3. In the recent past there has been a tremendous rise and growth of logistic/delivery companies whose claim to fame is their technology platform. The delivery fleet in colorful Tshirts that adorn company logos swerve on their bikes in every by-lane and alley delivering just about anything. IOT enabled trucks and its drivers tapping on their apps is not uncommon anymore.
4. 4G networks have proliferated across the country making it the second largest internet user base in the world. Access is easier than it has ever been and is getting democratized. It is not surprising that more and more companies are now targeting the rural consumer base.
5. Cold chain solutions, which were previously unheard of and cost prohibitive, are now more accessible. The market for extremely perishable commodities stands to benefit the most from this.
6. Corporations are adopting technology solutions like never before with an aim to reduce costs.
7. Data led decision making is the future. Demand forecasting, once an art, is now a science.
Farm In A Fork?
Imagine this. Farmer gets a notification on his phone at 7pm. It is a demand for 10kg spinach to be delivered the next morning. Farmer harvests it at 5am, hands it over at the nearest processing center where farmer is paid at par/above market value. The processing center collects the spinach, logs it into the Warehouse Managing System using an app and dispatches it using a cold chain solution to the nearest warehouse 50 kms away at 11am. By 1pm, the spinach is ready to be transported to a temperature controlled vending machine, a further 10 kms away where it finally finds a resting shelf space. A savvy mother passes by the machine at 4pm, buys the spinach via a mobile app and picks it up from the vending machine. Palak paneer served at the dinner table at 8.30pm. fresh from the table.
