[Answered]What are the impediments in marketing and supply chain management in developing the food processing industry in India? Can e-commerce help in overcoming this bottleneck?

Demand of the question

Introduction. Contextual introduction.

Body. Issues in marketing and supply chain management in developing the food processing industry in India. Significance of e- commerce in removing these issues.

Conclusion. Way forward.

The food processing sector is critical to India’s development, for it establishes a vital linkage and synergy between the two pillars of the economy, the Industry and Agriculture. But food processing industries face many challenges especially in marketing and supply chain management. These impact overall income of farmers. E-commerce can help in overcoming these. The food processing industry is one of the largest industries in India and ranks fifth in terms of production, consumption and exports. As per the latest data available, food processing sector is expected to reach US$ 258 billion in FY15.

Issues in agricultural marketing:

  1. There is fragmented market and poor mandi linkage to farmers which impede transportation.
  2. Market domination by organised traders by dominating mandis is an issues that prevent other farmers to gain benefits.
  3. There is a lack of direct access to market for the farmers that lead to their exploitation in the hands of intermediaries.
  4. Farmers could buy and sell only in the government-designated Agricultural Produce Marketing Committee (APMC) market-yards, thus accessibility is an issue.
  5. There are information irregularity between the buyers and sellers that lead to corrupt practices, giving inaccurate input data.
  6. There are issues of storage facilities that often lead to spoilage of the produce.

Issues in supply chain management:

  1. Food processing sector is mostly dominated by MSMEs and they face issues of non-availability of institutional credit, outdated technology, infrastructure constraints, especially lack of integrated cold storage, skilled manpower shortage, etc.
  2. Poor transportation (lack of multi-modal linkages) and storage leads to delay in procuring perishable items and thus leads to losses.
  3. APMC laws in some states don’t allow food processing industries to procure directly from farmers and thus increases cost due to coming of middlemen.
  4. There is lack of connectivity from villages to markets.
  5. The food supply chain is complex with perishable goods and numerous small stakeholders. In India, the infrastructure connecting these partners is very weak.
  6. Demand forecasting is totally absent and the farmers try to push whatever they produce into the market.
  7. At present the unorganized retailers are linked with farmers through wholesalers or commission agents. The commission agents and wholesalers redundant supply chain practices make unorganized further inefficient.

Significance of e- commerce in removing these issues:

  1. Synchronisation: With wide participation and perfect sync between markets and stakeholders e-commerce can play a proactive role.
  2. Better quality: E-commerce authorities can work to encourage farmers to produce better quality crop and meeting exchange standards.
  3. Better price: Price distribution alerts through mobile phones could serve as a reliable reference price for farmers.
  4. Monitoring: Monitoring the warehouses for the incoming and outgoing stocks will make the initiative stronger.
  5. Internet penetration: Rising internet uses and penetration of smartphones provide a great opportunity. Rising aspiration, greater consumer awareness and easy payment options would help in a big way. Most important, the growth is fuelled by both Urban and Rural involvement.
  6. Middlemen elimination: E-Commerce presents an advantage to both consumers and sellers. It eliminates most middlemen and inventory reduction which makes it easy for a seller to pass on the benefits to consumers at low prices.
  7. Customer Centric: For consumers, easy delivery becomes an advantage with low prices while, on the other hand for sellers, cross-boundary selling gives multiple benefits, thereby making it a saviour of search reduction and negotiation costs as well.
  8. Better sales: For the farmers, it promises more options for sale. It would increase their access to markets through warehouse based sales and thus obviate the need to transport his produce to the mandi.
  9. Marketing: It has been successfully used by a few enterprising people in agricultural marketing. For instance, Big Basket, amazon, books orders from online consumers and delivers sorted and cleaned groceries, vegetables and fruits to them.
  10. Accessibility: It helps by providing an accessible nationwide market for the farmer with equal prices for the quality of his produce.

Farmer Producer Organisations involvement is required to give it a multi vibrant market presence. Agri-marketing can benefit immensely from e-commerce in both B2B and B2C markets. While e-NAM is the government driven government has promoted private players such as Big Basket to fill the gap of the B2C market through policy initiatives like direct purchases and e-trading. E-retailers engagement with FPO’s may bridge technological gaps and bring more effective and general use of technology. Giving consumers a quality out-put and farmers and retailers a far better price.

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