VALUE CREATION, SUSTAINABILITY &

INTEGRATION OF AGRICULTURAL
SUPPLY CHAIN OF INDIA
Sazzad Parwez
Doctoral Fellow, University of Gujarat, Gujarat
Abstract: This paper is an attempt to explore the problems faced by Indian agriculture for value
creation, sustainability and food security in terms of inadequate infrastructure and highly inefficient
supply chain mechanism. Due to lack of efficient infrastructure, food processing industry and lack of
value creation lead to wastage of about 30-35 percent of all foods produce. This paper examines the
critical issues at each sub-system of agriculture supply chain, starting from the input to the consumer,
with a view to integrating them for value creation and sustainability. Investments in cold chain
infrastructure, applied research in post harvest technologies, installation of food processing plants in
various sectors and development of food retailing sector are mandatory for achieving gains in this
sector. Paper broadly covers some of important aspects of agriculture supply chain in India-
identification of issues at different levels in the supply chain; transformation in the agriculture due to
various supply chain interventions; the role of ICTs in supply chain management: and this paper also
covers the suggestion to improve efficiency at different levels in supply chain. There is wide research
gap in this sector, having such potential and prospectus for overall growth there is not much research in
this field. The paper concludes that efficient supply chain plays very important role for development
and contemporary issue for agriculture therefore; government action must address the issue of
infrastructure development to achieve the objective of food security for all.

Keywords: Agriculture; Supply chain; Value Creation; Sustainability; Development; Investment

Introduction
Agriculture has been the backbone of Indian economy since independence and before
that, right now with nearly 12 percent of the world‟s arable land, India is the world‟s
third-largest producer of food grains, the second-largest producer of fruits and
vegetables and the largest producer of milk; it also has the largest number of
livestock. Add to that a range of agro climatic regions and agri-produce, extremely
industrious farmers, a country that is fundamentally strong in science and technology
and an economy which one of the largest in the world with one of the highest growth
rate and you should have the makings of a very good harvest.

Yet the comprehensive outlook for Indian agriculture is far more complex than those
statistics might suggest. The sector supports an estimated 70 percent of the Indian
population, but is also the most sluggish, having just extricated itself from a period of
negative growth of -0.1 percent in 2008-2009, to rise to an unspectacular 0.4 percent
in 2009-2010 with upward revision in the production, „agriculture, forestry and
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fishing‟ sector in 2010-11 has shown a growth rate of 6.6 per cent, as against the
growth rate of 5.4 per cent in the Advance estimates. Adjusted for inflation, even this
6.6 percent growth looks unexciting when compared to the growth rates in services
and manufacturing. Today, agriculture accounts for 13.8 percent of the country‟s
gross domestic product, compared to 51 percent in the 1950s (Government of India,
2011). Worse, India is amongst the world‟s largest wasters of food and faces a
potential challenge to provide food security to its growing population in light of
increasing global food prices and the declining rate of response of crops to added
fertilizers.

The reforms of 1991 have introduced Indian agriculture to the globalization which has
very significant impact on agriculture and supply chain. And further analysis of
secondary data says that first part of reforms brings out that there was a visible
deceleration of growth in agriculture during the post reforms period .It also comes out
that the growth of agriculture exports which picked up after 1991 slowed down after
1996-97 have stagnated since then and infect it went down and fluctuating in nature as
it picked up due to some policy reforms and good monsoon in 2010-11 and it raised to
growth rate of 5.4 percent. The deceleration of agriculture growth was also
accompanied by visible deceleration of growth in growth rate of employment. The
growth rate on employment collapse to nearly zero during that period. The data on
both barter and income terms of trade brings out that both of them did shows some
improvement in mid-eighties up to 1996-97 but had stagnated since then. All these
data and information point out that agriculture sector is lagging sector in the Indian
economy and farmers and other agricultural workers engaged in this sector have not
been able to derive much benefit from new economic policies initiated in 1991.

For strengthening agricultural production and productivity for farmers and economy,
the governments had taken various initiatives, most of which were on the production
side to ensure food security in the country. As a result, agricultural production in India
experienced a remarkable growth after the mid-1960s with adoption green revolution
technologies. This growth certainty led the country to being food deficit country to
food surplus country, but at the cost of excessive utilization of natural resources and
further, raised issues of sustainability in agriculture. The other crucial problem that
constraints the growth of the agricultural sector is that public investment in agriculture
as a percentage of GDP has been declining gradually. A policy analysis of agricultural
system shows that there is multiplicity and duplicity of rules and regulations dealing
with various components of supply chain in agriculture. Lack of coordination among
these, again, leads to the poor alliance and collaboration supply chain, which in turn
leads to the inefficient product and information flow.

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Thus, this paper broadly covers some of important aspects of agriculture supply chain
in India- identification of issues at different levels in the supply chain; transformation
in the agriculture due to various supply chain interventions. Paper also tries to
recommend activities to improve efficiency at different levels in supply chain. There
is wide research gap in this sector, having such potential and prospectus for overall
growth there is not much research in this field. The paper explore the aspect of value
supply chain as it very significant role for development and contemporary issue for
agriculture therefore; government action must address the issue of infrastructure
development to achieve the objective of food security for all.

Objectives of the Study

There is basically two most important objective of the study:
1. To assess the importance of supply chain in Indian Agriculture.
2. To explore the issues of value creation and sustainability in Indian
Agriculture.

Research Methodology- Literature Review

Literature review has been base of understanding of subject. The literature review
covers many areas related to the nature of the research questions put forward, and thus
includes: agriculture, food management, supply chain approaches, information
technology and supply chain interfaces. Tracing the references by looking to the
reference list is also performed and relevant papers found in journals have been
tackled as well. The literature sources are mainly books, scientific journals,
conference proceedings, dissertations, projects documentations, and management-
oriented publications. These sources are of particular importance and engender all
research process development, especially the early phase for initial exploration of the
food supply chain management.

The focal point of paper has been supply chain mechanism in Indian agriculture. It
has been assessed through primary and secondary data and information which
obtained through application of scientific research method by formulating research
design and conducted research by utilization of diverse kind of methods to assess the
objective which includes research methods such case study, in-depth interview
content analysis, triangulation method, observation method for primary data and
information in Jharkhand (India) in month of June-July 2013 with farmers and
officials of Reliance Fresh. Secondary data are taken from reliable sources such
annual reports of ministry of agriculture, ministry of food processing, Food
Corporation of India, research papers of authors with repute, article and book review
from reputed national and international journals, Economic survey etc.

Limitations for the Study

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The major limitations for the study are as follows
The paper has been prepared based on the data collected from the published
and unpublished secondary sources.
The study findings are based on the limited coverage of selected literature and
data available.
Poor availability of secondary sources of data, especially on agricultural
infrastructure.

An Assessment of Agricultural supply chain

The paper mainly focuses on supply chain management in Indian agriculture one can
say that it is an integral part of the organisation drive and direction. SCM represents
the way to customer retention and growth, competitive advantage and profitability.
But there is not enough attention has been given to possible ex-ante measures to
reduce, mitigate or share risks, although in some circumstances assessments will be
conducted during/after adverse „shocks‟ and attention will certainly be needed on
workable coping strategies. There is also lack of emphasis on both formal and
informal risk management options available to the different parties, although in
practice, most analytical attention will likely focus on the scope for improving or
supplementing formal mechanisms, including institutional and financial
arrangements, technological changes, adoption of improved management practices,
and/or investments in infrastructure. To the extent that the overall assessment is
focused on the position and welfare of poorer farmers, then greater attention would
need to be given to alternative informal mechanisms and improving their efficacy.
Study also suggests that there is lack of attention has been paid to areas categorized as
„high vulnerability‟, either for individual chain participants or the chain as a whole.
This high vulnerability may already be evident from recent/past experience or be
expected due to unfolding changes in market conditions, regulations, or other
circumstances.

Assessment of food supply chain management has not been given its due and that
should be undertaken on the needs/options for policy and regulatory reforms that
affect farmer/agro-enterprise risk management as well as the possible revision/reform
of governmental risk management instruments. Aspects like cold chain needs to be
given more consideration as it has contributed tremendously to trade in fruits,
vegetables and flowers in developed countries and it could be game changer in India.
Besides, as cold chain, results in the reduction of losses and retention of the quality of
horticultural produce. While the introduction of a cold chain facility nationwide due
to some institutional, structural and financial constraints may not be immediately
possible in India, attempts must be made to develop a cool chain. Food loss reduction
is less costly than an equivalent increase in food production. If efforts are not made to

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modernize the harvest handling system for horticultural crops, then postharvest losses
will continue to have a negative economic and environmental impact. There is no
doubt that postharvest food loss reduction significantly increases food availability.

Collaboration between supply chain partners has been reducing and will reduce risk
and greatly improve the efficiency of overall pipeline. Supply chain efficiency
therefore relies heavily on the successful long-term relationships/partnerships where
information sharing, joint problem solving and trust are key success factors. Supplier
development and the evaluation of the supplier‟s performance is the first issue of
managing the supplier relationship. If the supplier‟s performance is perceived as
inadequate, it should be assisted to enhance its performance by means of training and
continuous improvement teams and this area also require mote research work and
assessment for overall development.

After exploring important issues such as post-harvest losses and its impact and ways
to reduce it and to achieve that, one can understand that there is need of educating
farmers in selecting the correct inputs and in postharvest handling, including cleaning,
food safety, drying, sorting, and packaging at the farm gate. There has been gradual
improvement in the accuracy of demand forecast by dynamic adjustments to reflect
changes in demand, lead times, transit time, capacity, and transportation and
distribution routes, as well as events outside the organization due to advancement in
information and communication technology and it has done a good job as per
reducing the post-harvest losses and it means that variance of lead-time can be
reduced by removing non value-added steps and activities, improve the reliability and
robustness of manufacturing, administrative and logistics processes. Standards for the
handling and storage of all perishable items has been improving but still far away
from where it can be and better the handling ,storage and preservation of quality of
fruits and vegetables, which would increase the price and consumption, which in turn,
would provide a better return to the farmer. Supply chain management systems have
the ability to track critical events & activities and when these events do not unfold as
expected, they send out alerts and messages to notify appropriate managers to take
corrective actions. Flexibility is still lacking supply chain system and it can be
improved by enhancing responsiveness. Companies need flexible strategies that match
their operations, such as product design, sourcing, manufacturing and postponement.
Establishment of pack house facilities having basic requirements such as washing
tanks, sorting and grading devices and cold storage facilities at the premises of the
Dedicated Economic Centres (DEC) (collecting centres) in major fruit and vegetable
producing areas in the country, will overcome the problems of quality deterioration,
contamination of fresh produce with harmful bacteria and other extraneous matter and
will improve the safety of produce to a great extent.

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Physical infrastructure variables are in need, as roads and electricity, which link
villages to nearby assembly and wholesale markets and in turn with large wholesale
and terminal markets and ports. There is huge lack of warehousing and cold storage
facility and encouragement for the establishment of cold storage facilities. There is
need of transportation facility such as refrigerated carriers to facilitate storage and
transportation of perishable agricultural commodities. There is lack of encouragement
for technological developments in the packaging of agricultural commodities and in
promoting packaging facilities appropriate to specific commodities. Developed of
mega markets and food parks or terminal markets with a higher level of all facilities
are to be established and most of existing mega markets and food parks not accessible
to common a farmer which needs to be addressed. To integrate whole supply chain
there is requirement of collaboration and co-operation among supply chain partners
will only happen if there is trust among the parties, upfront agreement on how to share
the benefits, and a willingness to change existing mindsets. Once these elements are
in place, supply chain partners can do joint decision making and problem solving, as
well as share information about strategies, plans, and performance with each other.

The implication of current policies and institutions can be understood in the context of
agricultural sector large contributions to economic production, employment and the
welfare of rural people, all of which has made it difficult for policy makers to take
risk on agricultural policy reforms. Research work also suggest that stimulating
private agri business investment , whether domestic or foreign will require not only
public investment in market infrastructure, but also supporting price and trade policies
and comprehensive development of public market regulations and the institutions.

Information and Communication Technology and Agricultural Application

In order to disseminate information and provide different services in a cost effective
manner, numerous ICT initiatives are being made in many countries. The developing
world is looking towards ICT systems for solving their numerous information related
problems. Literature argues that use of ICT facilities free flow of information and
makes available the services even to the most marginalised section of the society.
Many public and private sector ICTs – enabled initiatives have been undertaken in
India in the last decade especially to cater the needs of agricultural or overall rural
sector development butt one need to understand to reach over 110 million farmers,
spread over 500 districts & over 6000 blocks is an uphill task. Some of these
initiatives include e- Choupals by ITC, DCM Shriram Consolidated Limited (DSCL),
Hariyali Kissan Bazar, Drishti, AgMarknet, Gyaandoot, iKisan, Reliance Fresh, Parry
Kiosks by EID parry etc.

Integrated Supply Chain Model: ITC e-Choupal (India)

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ITC e-Choupal is a virtual market place where farmers can transact directly with a
processor and can realize better price for their produce. Geographical distances do not
restrict participation in the e-Choupal. The main disadvantage of conventional market
is that information asymmetry is inherent in the market where as e-Choupal provides
for transparent transactions. This enables the participation of smaller as well as larger
players. The main attractiveness of e-Choupal is that it can be used for connecting
large producers/small producers and small users/large users, thereby eliminating the
need for hierarchy of brokers. Internet is used as a low transaction cost backbone for
communication.

Initially e-Choupal came up, as an experimental business model. But now e-Choupal
presence is there in different states like Madhya Pradesh, Uttaranchal, Haryana,
Andhra Pradesh, Karnataka, Uttar Pradesh, Rajasthan, Maharashtra and Kerela and in
different commodities like soyabean, wheat, coffee, aquaculture etc. ITC firstly
launches e-Choupal at the pilot stage in a state, this amount to 50 to 100 e-Choupals.
ITC e-Choupal' services today straighten to more than 3.5 million farmers cultivating
a range of crops - soyabean, coffee, rice, wheat, pulses, shrimp - in more than 38,000
villages through nearly 6500 kiosks across the states in India.

The e-Choupal model has been specifically designed to tackle the challenges posed by
the unique features of Indian agriculture, characterized by fragmented farms, weak
infrastructure and the involvement of numerous intermediaries, who block critical
market information from passing to the farmers and use that information for getting a
big margin for themselves. But e-Choupal sets things in order as it smoothens the
flow of information to the farmers by disinter mediating intermediaries from the chain
of information flow and at the same time leverages the physical transmission
capabilities of the them as they deliver critical value at every link for a very low cost
in a weak infrastructure environment. The structure of e-Choupal network is shown in
Figure 1.

The project e-Choupal is an ICT platform for carrying out trade at a number of
locations. In this, ITC sets up a back-up physical service support at the village level,
called Choupal, through Sanchalak: a lead farmer, who acts as the interface between
computer and the farmer. ITC accumulates information regarding weather, modern
farming practices, and market prices from sources like Meteorological Department,
Agri-universities, mandis (regional market) etc., and upload all information on to e-
Choupal web site.

Figure 1: ITC e-Choupal supply chain model

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Input STOCKIST Input
companies Retailer
 Farmer PROCESSOR

Govt Universities, Intermediaries

e- Choupal
Money Met. Dept., MSP,
lender Insurance, (Sanchalak)
Weather

Source: Conceptualise by Author Dept. of

Agril., GoI

All information is customized according to local farmer‟s needs and provided into the
local language through computer set up established by ITC in Sanchalak‟s house. As
one observe in above (figure 1) that Sanchalak access this information and facilitates
its dissemination to farmers which is generated through the information gathered from
Dept. of Agriculture (GoI), Universities, Indian Meteorological Department (IMD),
input firms, stockist, retailers and many more. Information regarding weather and
scientific farming helps farmers to select the right crop and improve the productivity
of their farms. Availability of market information helps farmers to become market
oriented. They know what price ITC is quoting and the price prevalent in the local
market (Mandi), thereby helping better price realization for farmers.

ITC‟s example also shows the key role of information technology, in this case
provided and maintained by a corporation, but used by local farmers in helping to
bring about transparency, to increase access to information, and to catalyse rural
transformation, while enabling efficiencies and low cost distribution that make the
system profitable and sustainable. ITC has been successful in making the farmer feel
the sense of ownership and encourage them to generate additional revenue by
eliminating middleman. Participating farmers have been able to enhance their income
and eliminate the delay in getting the payment once the product is sold. It has helped
in reducing debt burden of the farmers. The success of e-Choupal has given new
lessons to the government agencies and corporates in the country. By embarking on
this initiative, ITC has shown that ICT platforms can benefit even if the farmers and
rural India.

Supply Chain Framework of Reliance Fresh (India)

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Reliance Fresh was the first foray into retailing by behemoth known as Reliance
Industries Limited. Reliance Fresh is somehow different from business model of ITC
e-Choupal mainly in terms of use of information technology an being working as a
tool for increase in productivity by assisting farmers, which is major part of ITC e-
Choupal model but for the Reliance Fresh it is more about procuring the material,
processing it then distribution to various retail outlet for timely availability of the food
produce in most efficient and effective form by utilisation of information technology
in best possible way. Reliance Fresh launched by opening retail stores in
Hyderabad on November 2006 then it 12 opened "Fresh" outlets in Chennai
increasing the total store count to 40. Reliance was testing its retail concept by
controlled entry, beginning in the southern states.

Figure 2: Reliance Fresh Supply Chain Framework

City
Processing Retail
Centre Outlets
Farmers Collection
Centres

Source: Conceptualise by Author

There were three basic reasons for Reliance Industries Limited (RIL) choosing foods
and vegetables for entering into retailing sector as Reliance Fresh. First, it wanted to
go after the very core of the great Indian retail opportunity in terms of agricultural
based business. Second, its aim was to build a high-profitability business and food
was perhaps the best place to start. Third, the grossly inefficient food supply chain
provided a well-resourced and well managed organization like RIL with an
opportunity of amending the flaws which would also make business sense and to
materialise that it has increased the number of stores to till June 2013, around 1,500
from 1,150 in 2010.

As it (figure 2) suggests that source have been the farmers and City processing centre
and Collection centres works as intermediary part of chain to avail the produce at
retail outlet. Farmers also see advantage of quantity procurement by Reliance Fresh of
vegetables they need from them and they can go there and get there consignment
graded at their collection centre. The centre would get the price-band and quantity of
vegetables it needed to collect that particular day. Reliance Fresh provides a good
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example of a successful case, depicting improvement in the economic conditions of
the farmers through their network, rising income levels and more opportunities.

Both ITC e-Choupal and Reliance Fresh model operates on a very small scale, and is
able to meet the administrative and infrastructural constraints to turn out to be a
successful model. If this supply chain model is expanded, then the viability of it
largely depends on the integration of variables and development of agricultural
infrastructural facilities. By embarking on this initiative, ITC has shown that ICT
platforms can benefit even if the marginal farmers.

Since the rural economy in India or, for that matter, in any developing country, has
very strong linkage with agricultural economy, the major thrust of these initiatives has
been the agriculture and allied sectors. But integration between these models lacking
due to lack of proper coordination among various sub-system in supply chain. The
Government of India (GOI) has formulated an ambitious National e- governance plan
(NeGP) which identifies 25 mission mode projects including agriculture to be
implemented through different ministries at the centre well state level. All these
supply chain initiative share the common objective of empowering Indian agriculture
to take the right decisions related enhancement of productivity, realisation of revenue
and improvement in their overall performance.

7 Integrated Value Supply Chain for Indian Agriculture

Food supply chain management refers to the process whereby the movement of agro
based product(s) from the initial supplier to the ultimate user occurs with all non-
value adding expenses. Usually supply chain management is between partners such as
a retailer and a preferred supplier, or a restaurateur and a preferred supplier of a
particular ingredient. From a supplier‟s perspective, supply chain management can
mean more than this. It means that with due care, one can actually providing the
needed produce to penultimate user with a lower cost. Successful supply chain
management can be summed in the one phrase; detail, detail and detail. In reality it
means studying in detail the entire process from harvest to the penultimate user. In
doing so, all steps and costs should be established. After that, it is a matter of
establishing what economies can be exercised along the way to the benefit of all the
stockholders. And one needs to apply that and adapt that in slightly different way for
perishable agriculture produce.

Despite the changes in the global and domestic scenario, poverty and food insecurity
continue to haunt millions of Indian citizens. With about 30 percent of the population
being poor and about 20 percent of the population being under-nourished, the need for
ensuring food security for all remains of paramount importance. Along with that is the
continuing need to stabilize food price and supplies as a means to achieve household
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level food security. The changed circumstances of today provide opportunities to
design new instruments for a more efficient and welfare improving foodgrain
management system, in which consumers benefit from stable prices even as the
interests of the farmers do not suffer.

The production of agricultural commodities has substantially increased in the country

over the decades due to continuous efforts made by the government in terms of
technological intervention at different level of production system, coupled with its
price support policy. The production, supply and distribution of many agricultural
commodities are mainly influenced by government regulations. In the process of
economic liberalization, it has been felt that there is need to re-orient policies and
regulations related to agricultural commodities. In response to this, the government
has initiated agricultural policy reforms related to the production and marketing of
agricultural commodities. Although, the pace of this reform process is very slow.
Besides, there are numerous rules and regulations, and the infrastructural gaps, which
are hindering the smooth flow of agricultural commodities from farm to fork. A lack
of integration from various stakeholders in the supply chain leads to inefficiency in
the agricultural system, causing high post-harvest losses, quality deterioration, high
cost of commodity transfer, information symmetry and lack of transparency. Each
participant of chain acts independently with little and no collaboration in physical and
information flow (Mittal and Mukherjee, 2008).

The consumption basket of Indian consumer is changing as a shift is noticed towards

the high value commodities. Therefore India needs intensive and diversified farming
to address new challenges for sustainable production and processing practices that
promote the balanced approach to the problems of food quality, safety, and
environmental management.

Due to high level of government regulations, the investment in the organized private
agribusiness is low. The new corporate entries are not just participating in the chain to
source there required material, (mainly indirectly from the farming community) but
they focusing more on the primary source of agricultural produce particularly farming
community through contract farming and tools by procuring agri produce from
farmers. In the context, development of direct linkages with farmers will attain greater
importance. It is important the corporate participants in agribusiness chain have an
understanding of supply chain, right strategy and leadership. Indian agriculture also
needs more public investment and policy support in several areas to overcome
prevailing structural weaknesses such as low scale of operations, high post-harvest
losses, poor state of rural infrastructure, lack of product diversification, inadequate
research and development (R & D) spending, low productivity, absence of marketing
infrastructure and inadequate financial support.
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Modern agriculture is highly knowledge intensive and increasingly information
driven, under which each participant in supply chain yearns for timely and accurate
information for various decision. Therefore, knowledge and information are important
factor for accelerating agricultural development by increasing agricultural production
and improving marketing and distribution efficiencies. In addition to connecting small
farmers and artisans to markets, ICTs also facilitate most agricultural decisions such
as what to cultivate, how to cultivate and harvest, when and where to sell, and at what
price to maximize the returns. Effective decision making related to all these aspects
ultimately determines the efficiency of supply chain (Rao, 2007). Therefore, a proper
and information flow among stakeholders of any business activity is the key for
strengthening supply chain efficiency. The rapid and innovative developments in
ICTs can provide immense opportunities to public as well as private sector agencies
to integrate these technologies in their supply chain systems. ICTs are especially
useful for dissemination of information, provision of services, and enabling various
transactions and awareness creation among the rural masses far removed from the
government. ICTs provide modern, effective and speedy modes of communication
that convey new resources of knowledge and information to society.

Strengthening vertical relationships between various stages of production and

processing in the agribusiness sector has always been an important area for empirical
analysis by researchers and policy makers across the world. However, the pace of
change in supply chain integration and responsiveness of production system towards a
market driven approach is slower in India compared to elsewhere in the world (Haan
et al., 2003). Farmers are still more comfortable growing traditional crops,
particularly rice and wheat, as they have already discovered the market for their
marketable surplus- be it a government procurement arrangement or private local
traders. But the shift in market demand needs a balancing approach to meet the supply
of deficit commodities such as pulses, oilseeds and high value food items. This
balancing in demand and supply can be ensured by strengthening buyer- supplier
relationship efficiently, and by disseminating of accurate and timely information to all
the participants of the business chain (Mittal and Mukherjee, 2008).

8 Issues and Opportunities in Agricultural Supply chain

Agriculture is inherently a fragmented and unorganized sector involving a diverse
range of distinct stakeholders such as inputs supplier, farmers, traders, commission
agents, processors and distributors. As compared to developed countries, the Indian
agriculture supply chain is far more complex and difficult to manage because of its
unorganized nature and a large number of intermediaries (Sachan et al., 2005). The
enormous wastage of agri- produce annually is due to gaps in basic infrastructure,
which leads to instability in prices and low realization of prices by the farming
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community. Another important reason for inefficient supply chain is the inadequacy
of logistics infrastructure, i.e. roads, railways, airport, seaports, information
technology, telecommunications and energy production, which is poor as compared to
other developed and developing countries (Sahay and Mohan, 2003).

The agriculture supply chain suffers from inefficiency at every stage. Lack of proper
infrastructure for procuring agricultural produce from the farm gate to the consumer
has led to huge losses in transit. The farmer hardly benefit from any price rise while
the many layers of intermediaries enjoy high margins. Even when farmers are forced
to sell their produce at throwaway prices in times of bumper crops, prices at retail
level remain higher by many multiples. This has also lead to large mark- ups in
pricing due to extra layers of intermediaries. Cumulative wastage in agriculture
supply chain is estimated to be around US$ 11 billion, or 9.8 percent of the
agricultural component of the GDP (Ahya, 2006). About 25-30 percent of agricultural
production gets wasted due to improper handling and storage, pest infestation, poor
logistics, inadequate storage and lack of transportation infrastructure (Sachan et al.,
2005). Apart from this, only a small quantity of agricultural production is processed
for value addition. Efficiency in food production is very low and this is mainly due to
inefficient sourcing of raw material, which is the major part of processing costs (Ali
and Kapoor, 2005). To assess the critical issues at each level of agricultural supply
chain, the agricultural system can broadly be categorized in to five sub-systems-
agricultural input, agricultural production, food processing, distribution and
marketing, and consumer demand.

A sustained increase in agricultural production and productivity is largely dependent

on the continuous development and use of modern agricultural inputs such as seeds of
a better quality, fertilizers, pesticides, farm implements and machinery. Due to a
fragmented input market, farmer faces numerous problems in acquiring quality inputs
on time and a reasonable price. Policy reforms introduced during the late 1980s have
attempted to encourage greater private sector participation in the agricultural input
industry, which has stimulated a noticeable increase in investment in plant breeding
research and seed production (Singh and Morris, 1997).

The price support system was introduced by government in 1965 by setting up

Agricultural Prices Commission (APC) now renamed as Commission of Agricultural
Costs and Prices (CACP). This provided the opportunities to farmers to sell their
produce on MSP if the market price dropped below the MSP for that commodity. The
government is supposed to procure all agricultural commodities for which MSP has
declared in such situation. The basic objective of food grain procurement by
government agencies is to ensure remunerative prices to producer and reasonable

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prices to consumers, and to maintain price stability in market (Jha and Srinivasan,
1999).
Agriculture can realize its full potential by applying the principal of supply chain
management by strengthening the collaboration between various stakeholders, non-
exploitative vertical and horizontal integration, market reforms, precision farming,
contract farming, demand-led diversification, and the extensive and intensive use of
information technology for real time communication across the chain (Balakrishanan,
2006).

The nature of the integration model is an implementation issue that needs to be

addressed with a view to consumer‟s needs and other variables such as industry and
market characteristics. One theme that appears to hold constant throughout the
literature in this area is the importance of taking a holistic view, and the systemic
nature of interactions between the participants. The recognition of the
interdependence of all partners in a supply network appears to be an important
catalyst for effective integration. In this sense, organizations moving to implement
integrated supply chain management systems could be seen to be formalizing
strategies to better manage this inter-dependence, and to leverage it to mutual
advantage. At the same time, it is also apparent that this requirement to take such an
holistic and systemic view of the supply chain acts as an impediment to more
extensive implementation. The strategic nature of adopting a supply chain-wide
perspective, on the one hand provides significant potential benefit, and on the other
requires trading partners to think and act strategically. The challenge for developing
more effective and integrated networks is to encourage such a mind-set, and use it to
promote adoption and implementation of enabling technologies and methods. In other
words, this review of the literature serves to highlight the inter-dependence between
integration (technologies, logistics, and partnerships), a strategic view of supply chain
systems, and implementation approach. All three need to inform and underpin each
other in order for management of supply chains to be able to deliver on the promise of
benefits for all trading partners.

Economic reforms and liberalization in the agriculture sector has emphasized the need
for transforming Indian agriculture by designing agricultural supply chain model
covering innovations at farming levels, which can help farmers regain profitability in
a sustainable manner under changing conditions with proper assurance of market
arrangements (Rao and Punwar, 2004). The reforms in agricultural marketing system
to ensure participation for establishing direct linkage with farmers, capacity building
and infrastructure development in regulated markets, extension of road network and
transportation, storage and warehousing, market intelligence system, introduction of
commodity by establishing commodity are some important areas of interventions, but
the changes are taking place at a very slow pace.
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For establishing an efficient and effective supply chain system in the Indian
agriculture, there is an urgent need to improve the functioning of regulated markets
and amend the APMC Act by the all state government as per the model act on
agricultural marketing suggested by the central government to ensure private
participation in supply chain system in an organized and legal manner. This will
enable private agro processing units and business operators to link themselves with
farming community directly, eliminating multiple intermediaries. For increasing
efficiency in food processing segment, the process of raw material sourcing needs to
be redesigned in an efficient organizational framework with proper backward
linkages. The emergence of agribusiness activities and food retailing are providing
both opportunities and challenges to policy makers. There is need to asses all the
existing policies affecting the agricultural supply chain and modify them as per the
requirements of market forces, with proper regulatory mechanisms to protect the
interest of all the stockholders in the chain.

9 Further Research Opportunities

As our assessment indicates, there is a lack of empirical research on the significance
and benefits of food supply chain management. Although a majority will agree to the
importance and potential benefits of it, somehow food supply chain management does
not seem to occur often enough in practice. Organizations appear to have significant
difficulties in evolving from theory to the successful implementation and practice of
supply chain management. This is a crucial yet challenging dilemma to solve. In
many cases, food supply chain not has seamless chains, optimized flows, or networks
of integrated organizations. In reality, the frameworks and their corresponding
terminologies, once more elaborately illustrated, ultimately are dealing with
companies trying to make dyadic relationships better. Therefore, Indian agriculture
need methodical approaches to the implementation of supply chain system and we
need sound empirically based research to continue to develop the field and to explore
the concepts related to supply chain. It will require significant efforts, applying both
qualitative and quantitative research projects to further develop these concepts in
order to advance both practical applications and academic theories.
As above points emphasise on need of greater problem oriented and issue based
research which employs integrated approaches to solving postharvest issues, apart
from missing links in our understanding and implementation of food supply chain,
postharvest technology, proper linkages must be established in agriculture and
processing sector. Innovations in postharvest technology and particularly in the
development of infrastructure could help achieve this goal. The processing of fruits
and vegetables for export and for domestic markets requires utmost attention in
developing country like India. Waste generated by processing factories must be put to

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profitable usage, either through conventional technologies or through the adoption of
biological processes (Verma and Joshi, 2000).

One additional aspect that requires discussion is the challenge in designing,

developing and managing cross-organizational processes when organizations are still
struggling with internal process management. Few, if any, examples exist of truly
process-oriented organizations. Yet process management is, in many ways, mentioned
as a prerequisite for supply chain management.

The need for further research to capture both the characteristics of successful
implementation, and the factors determining the level of implementation is captured
by Akkermans (1999) when he states:

. . . the Supply chain management literature has shown very little empirical evidence
of successful strategic moves towards supply chain management [and later] . . . we do
not yet have causal relationships between the various factors driving effective supply
chain management and their interrelations with performance improvements in areas
like inventory management, supply chain costs, and customer satisfaction.

There has been some research into a range of barriers to extensive adoption,
particularly with regards to cost, ease of implementation and conflicting standards
being identified as restricting wider use. An emergent theme in the literature is the
discussion of implementation in terms of extent (i.e. formal organizational links with
suppliers and customers, application ICT tools to incoming goods, formal agreements
with suppliers, etc.), focus (overall strategic plan), and expected benefit (source of
competitive advantage). There is an opportunity to pursue a range of questions. What
is the true extent of implementation of techniques and methodologies used for the
management of the supply chain? Do organizations that implement supply chain
management techniques progress from a basic implementation to a more extensive
one over time? Are there significant geographic and demographic factors that impact
on the decision to implement such as company size or industry sector? Can companies
be distinguished from one another on the basis of this extent of implementation
model? How Food Corporation of India (FCI) has been coordinating among its
different sister units and different scheme run by government of India. All the
different aspect of PDS and contract farming is subject with desire of further more
research work. Given the apparent contradiction in the literature between promised
benefits and still limited evidence of extensive implementation, the examination of
factors creating and reinforcing this apparent gap would appear beneficial.

10 Conclusion

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While exploring the subject of food supply chain in Indian agriculture one can say
upliftment and integration of agricultural system is utmost important. There is also
lack of emphasis on both formal and informal risk management options available,
although in practice, most analytical attention will likely focus on the scope for
improving or supplementing formal mechanisms, including institutional and financial
arrangements, technological changes, adoption of improved management practices,
and/or investments in infrastructure. To the extent that the government is mainly
focused on the position and welfare of poorer farmers, then greater attention would
need to be given to alternative informal mechanisms and improving their efficacy.
Study also suggests that there is lack of attention has been paid to areas categorized as
„high vulnerability‟, either for individual chain participants or the chain as a whole.
Research towards agricultural infrastructure and supply chain has not given its due
and that should be undertaken on the needs/options for policy and regulatory reforms
that affect farmer/agro-enterprise risk management as well as the possible
revision/reform of governmental risk management instruments. Aspects like cold
chain needs to be given more consideration as it could results in the reduction of
losses and retention of the quality of horticultural produce. While the introduction of a
cold chain facility nationwide due to some institutional, structural and financial
constraints may not be immediately possible in India, attempts must be made to
develop a cool chain. Usefulness of ICT is well established in improving productivity
of Agricultural sector and this need to address by authorities. Food loss reduction is
less costly than an equivalent increase in food production. If efforts are not made to
modernize the harvest handling system for horticultural crops, then postharvest losses
will continue to have a negative economic and environmental impact. There is no
doubt that postharvest food loss reduction significantly increases food availability. An
efficient collaboration between stakeholders will reduce risk, losses and greatly
improve the efficiency to ensure food security and development.

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