Post-harvest losses (PHL) constitute an acute problem for a growing global population and for developing countries in particular. Many emerging markets have swelling populations to match their burgeoning economies. But, while their economies and their appetites are growing, all too often the infrastructure of the food supply-chain is not.
In India the situation is particularly bleak, with the Chairman of the Agricultural and Processed Food Products Export Development Authority (Apeda) pointing out that, because India has so few temperature controlled storage facilities, only 2% of the fruit and vegetables produced there are stored in temperature controlled environments.
Unfortunately the problem extends well beyond highly perishable fresh foods. In fact the inadequacy of much of India’s warehousing provision means that the country struggles to properly store wheat and grain produce too. Adepa claims that, all told, the losses incurred from food waste in the country amount to Rs440bn (US$7.3bn) each year.
The vast majority of these losses could be avoided if a modern and sophisticated supply chain was established in the country. However such change cannot occur overnight and, in the case of India, there are many road blocks. It has very complex tax regulations, an extremely diverse array of transportation, uncertainties throughout the value chain and ageing logistics infrastructure across the country.
Moreover, India’s logistics market is highly fragmented with the main means of transportation, road freight, composed of a vast collection of very small enterprises. Provision of the kind of logistics services required to effect a significant improvement in Indian PHL is growing, but what 3PL’s do operate in the country remain very small in comparison to the market they serve. This makes the effective handling of the vast quantities of food required by the Indian population very difficult.
With the scale of appropriate operations in the private sector as yet insufficient to resolve the problem of high PHL, or indeed to provide adequate provision of buffer stock in case of famine, the task has fallen to one of India’s monolithic public departments, the Food Corporation of India (FCI).
The FCI manages reserve food grain and distribution, however, with its primary focus centred on procurement to ensure sufficient buffer stock levels are maintained it has been unable to develop the storage and distribution side. According to the FCI itself, between 2009 and 2013 this led to the loss of 79m tonnes, or 9% of the total wheat and grain produced in India over the period. These losses were primarily the result of a shortfall of warehousing which meant that the stock had to be left exposed to the elements, spoiling far quicker than it would if stored properly. This problem is only likely to be compounded when India’s National Food Security Bill becomes law. The Bill will require the Indian state to provide subsidised food stocks for 67% of the population, massively increasing the demand for proper storage and distribution.
It seems then that the first step towards ensuring Indian food security and reducing PHL would be significant investment in warehousing. However if India is to really reduce PHL then it will require modern storage facilities right along the supply chain. The growing demand for improved food security, and the necessity of logistics to provide it, presents an opportunity for logistics companies to move into this huge market and fill an enormous gulf between supply and demand.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)