Start-up Rural India, after Covid19

Most of rural India witnessed an unseasonal reverse migration of its able bodied manpower, who had to return perforce fearing prolonged economic duress. In the backdrop of the Covid19 pandemic, this movement from urban centres to home villages, was undertaken in defiance of a nationwide curfew. 

As this virus spreads its reach, it is quite evident that the risk of disease is heightened in localities with a high population density. When working in cities, these workers (termed migrants), tolerated crowded and squalid living conditions, usually in illegally built building blocks and slum areas that do not even pretend to have basic norms. Typically employing themselves in blue collar jobs and semi-skilled tasks, often as informal labourers, this workforce by now would understand that they are safer in the more open expanses of rural India.

Covid19 Safety for Agri-markets in India

Life can only be sustained with food, and food supply is dependent on agricultural trade, which is routed through wholesale markets (mandis).

Typically, the operations in mandis involves crowds and close quarters working practices. This, in the age of COVID-19 raises some concerns. Yet, the mandis must function to maintain supply of agri-produce.

To keep the agri-markets safe, a few basic suggestions are listed. If readers have other ideas, please feel free to add in comments.

The Farm is Humankind's first Solar Powered Factory

Agriculture is most commonly correlated with the act of cultivation (and herding, catching, harvesting) and a few other field activities, carried out by agricultural serfs. It is also mostly linked with food security concerns. However, farming is the heart of the agricultural value system, a value system that not only ensures that humankind and their livestock gets fed (food & fodder), but has also evolved to provide feedstock to industries.

Agriculture has a unique place in the primary economic sector, as its output can be directly consumed (as in milk, meats, fruits & vegetables) and also service the demand of industries (as in cotton, leather, medicinals, chemicals, processed foods, and more). The other main primary sector is mining, where the harvest of natural resources (eg. ore, crude, coal, etc.) has to necessarily undergo transformative processes before it can come into gainful end-use. Like how cotton cannot be worn unless converted into cloth, and oilseeds have to be processed for oil before it is consumable.

Farm Productivity is not an End in Itself!

Heard at a recent lecture, the expert recommendation that India should direct greater resources for raising the field level productivity of crops, to alleviate two core concerns: the food security needs of the nation and to improve incomes for farmers. 

As someone who might have believed in these platitudes till a few years ago, I think it is imperative to set some records straight, and offer a more nuanced picture.

While one cannot ignore the 'general sense', it should be understood that productivity in itself is not a 'silver bullet', and except at individual enterprise level, such focus is in many ways contraindicated.

Stop Food Loss to Counter Climate Change

Artificial refrigerant gases cause global warming... and so do decomposing gases from wasted food

India has the world’s largest footprint in cold stores. Recent estimates indicate that over the last few decades we have created 130 million cubic metres of refrigerated warehousing space. Most importantly, 97% of these happen to be users of natural refrigerant gases – in effect this is the world’s largest collection of users of ammonia based refrigeration. This is not a petty matter, as most of the developed world has cold stores that deploy artificial refrigerants. Unlike ammonia, these artificial fluids - Hydrochlorofluorocarbons (HCFCs) and Hydrofluorocarbons (HFCs) - either caused Ozone depletion or are negatively impacting Global Warming.

In Europe alone, reports indicate that almost 50% of their food chain refrigeration is using such gases with a thousand times higher global warming potential (GWP) than CO2. Ammonia on the other hand, extensively used in India, has zero GWP.

High Technology in Agriculture

Use of technology in agriculture is normally interpreted as technologies that go into on-farm machinery. However, there are many more high-tech applications, involving various sciences, which have come into regular use in agriculture.

Drones are used in farming for various reasons

For example, India has a program called CHAMAN which uses satellite based remote sensing information or geo-informatics to manage crop forecasting. High tech systems, that use overhead Drones, chemistry labs and spectrograph analytics are part of agriculture and are used to manage crops and diagnose soil health. Spread your gaze wide, and you will find almost every possible form of science being applied in the field of agriculture.

Doubling of Farmers' Income

In day-to-day conversation, a number of terms sometimes lead to confusion, especially when the words involved are in disconnect from colloquial and professional context. Revenue and profit are often used interchangeably by the average person, but these terms have separate meanings, albeit profit being an outcome of revenue. Contextual clarity on terminology is important to avoid confusion of intent or action. 

Value Realisation is directly linked to market connectivity, waste occurs when connections fail.

Revenue is a synonym for income, whereas profit mean net income. Profit, in simple terms, means the income or revenue that remains after all expenses.

Increase in Farm Yields is not always Revenue Generating

Logistics Connectivity is Key to Reduce Food Loss

Food has one end-use, to be consumed...food loss or waste occurs when food left unconsumed - or, when food perishes before it could reach the market within its normal saleable life cycle.

Food loss can be reduced... only by ensuring that all the harvested produce reaches its logical end use. This means that food delivery mechanisms must also aim to counter the perishable nature of food, to extend its saleable life cycle.

Cold-chain is about Speed!

Frequently cold-supply-chain strategists are asked to help develop models for a laudable vision, one that envisions a revenue multiplier for farmers-producers. This Vision is typically presented alongside tactical options, those that focus on enabling small farmers to offset their sales by storing their weekly or seasonal produce, thus avoiding peak season price drops. This is also expected to avoid distress sales due to low shelf life of the perishable produce.

Ergo the cold-store, which is viewed as a buffer space that can extend the trade opportunity, conceivably offering safe, risk free storage and defer the sale to a more favourable future date. This tactic lends itself to the core premise that the buying markets will pay a higher value at a later date, when supply patterns are low.

El Niño story

In December 2014, the Japan Metreological Agency had declared the onset of El Niño, on the basis of a rise in the ocean temperature alone, though other atmospheric conditions had yet to manifest. In March 2015, the Climate Prediction Center of USA confirmed the arrival of the El Niño conditions. Though these conditions are weaker than expected, and have manifested much later than was foretold, scientists have predicted that 2015 will be the hottest year in recorded history.

The El Niño effect results in not just a momentary peak in air temperatures, but higher than expected temperatures that can last for weeks! At the last major El Niño in 1998, the Indian Ocean temperatures rose by 3°C with associated weather impact. We shall have to wait and see how the 2015 predictions fructify, for a final measure of the extent of increase in temperatures. The eventual impact to India, of a 'minor El Niño' event, is not always correctly predictable due to various factors. Nevertheless, cold-chain users are advised not to take lightly any preliminary forecast of hotter than normal temperatures. 

Preparing for hot temperature operations:

Visions and Value chains

Cold-chain development is commonly debated over round table discussions, mostly by business researchers and prospective financiers. The non-inclusion of practical domain experts can tend to make these discussions academic about value chains and the result is a wizardry of numbers. This happens frequently, largely because there are merely a handful of strategic experts who have partaken across the wide range of functions that make the cold chain - it truly is a niche sector! However, the cold-chain is increasingly taking importance as the heart and centre of food security in our future, and such discussions need to move from the rhetoric into the realm of reality.

[There is real need to include operative considerations – after all, even the original round table of King Arthur had a functional head with fighting knights on board, and only one wizard]

Pre-conditioning fresh farm produce

What the budget proposal means for cold-chain. 

(Union Budget of India 2015-16)

It is amply clear that to properly utilise the cold-chain, and to initiate a supply of fresh farm produce to consumers, the supply chain operator, at the source end (farm gate), needs to prepare the harvested produce for travel from farm gate to market. This involves pre-conditioning procedures (e.g. washing, waxing, de-sapping), retail packaging and labelling, pre-cooling, before undergoing climate controlled storage and transportation and ripening. None of these measures alter the essential characteristics of agricultural produce as no food processing is involved – the farm produce is delivered fresh and whole, from farm to market. These preconditioning procedures make it possible for agricultural produce to be marketed more efficiently and help to reduce losses in supply chain and to prolong the freshness of produce. 

Under the provisions in India’s Finance Act, in regards to service tax (see Section 66D (d) (iii) of Chapter 5 of Finance Act 1994 and Chapter VA of Finance Act 2003), processes carried out at an agricultural farm which do not alter the essential characteristics of agricultural produce but only make it marketable for the primary market do not fall under the Negative List. However, elsewhere (Section 65B(5) of the Act), “agricultural produce” is defined to mean any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer.

Indian agriculture and G20

This February, the Group of 20 (G20) Development Working Group (DWG) holds its first meeting in Turkey. The meeting is the start of many, to prepare for the G20 leadership summit in December 2015. Agriculture and an understanding of next steps in this sphere, is an important matter for discussions. Under the framework of the Food Security Network (FSN), some of the items to be discussed – responsible investment in food systems, enhancing quality employment and incomes in agriculture, expanding food supply and sustainability are key topics.

In all these subjects, the Indian development records important examples, in terms of best practises followed, and the experiences and learnings that resulted. The G20 will do well to take cognisance of the India story, especially in the for agriculture area including cold-chain sector.  Let us touch on what Indian agriculture brings to the G20 table-

Food security breach… and bridging it

Cold-chain infrastructure pieces comprise a physical bridge that enables the farm-to-fork flow of food. How does one correctly evaluate the infrastructure capacity needs of a cold-chain?

Only with access to relevant information and only with clear understanding of what comprises the total cold-chain. Unfortunately, such assessments in the past have related to one sole component, the cold store. The most commonly quoted capacity gap was assessed in 2010, where that report stated that the country (India) needed creating another 37 million metric tons in storage capacity.

That 2010 analysis assumed that all infrastructure created, continued to be operational, irrespective of technology or ageing. The assessment did not resort to first hand data on the existing usable and available capacity in the country. As a mere desk review of statistics, with the existing capacity not ascertained, the gap mentioned served purpose at a very basic level only.

Sort yourself out, Grade yourself in

Sorting and Grading are commonly spoken of as one activity - in the persihable trade. But where lies the difference and where lies the finesse... lets try and understand the discriminating differences!
 
Sorting: the activity at source when produce is assorted into target lots basis qualitative criteria – as non-edible, as reject or dump, by quality, by shelf life, by market value, etc. This sorting activity is the first step that brings the concept of value to fore. Essentially, this is the first stage categorisation of received produce and separates them into differentiated value-based flow towards an ascertained and useful end-use.

APO Cold-chain Workshop

APO's first Workshop on Cold-chain (2014)

Talking Points at Asian Productivity Organisation Workshop in New Delhi - co-hosted by National Productivity Council and NCCD.

- As you are aware, all raw food is sourced at harvest – be it livestock, fish, dairy, agriculture or horticulture. In India, a largely vegetarian country, horticulture is a major source of high value food.

- Horticultural produce (which is primarily perishable in nature), intrinsically requires the integration of activities during its post-harvest life cycle. Any breach in the required set of activities, results in loss of the produce – physically or in its value realisation.

- These losses cannot merely be attributed to a short life cycle due to the lack of temperature controlled logistics. A major cause of food loss also stems from flawed handling - poor hygiene practices, packaging not suitable to the distances the produce has to travel, bottlenecks and delays due to multilayered transactions.

Perpetuating fallacies - more on market research

Yet another spate of research reports were sent to me, some having quoted the National Centre for Cold-chain Development (NCCD); almost all referring to out-dated data and sadly, confidently extrapolating that into futuristic scenarios.


I cannot help but point out some of the errors and omissions, else yet another set of documents, poorly understood and researched would be bandied about as gospel (distorting whatever they aim to propound)!

Perpetuating misinformation or inexperienced interpretations is the biggest threat to India's cold-chain development. Worse… when they are given guise of authoritative alignment. More so, because these studies are frequently lapped up by the gullible who buy this largely to make plans and strategise their businesses.

These theorised documents would be agreeable and pass muster if they were but reports or outputs from study groups... if only they did not attempt to lend their secondary collation undue legitimacy aimed at decision makers.

Market for Fruits in India

India is viewed as a steady state consumption market, including for fruit produce…and it has lived up to this perception! Over the last 10 years, imports into India of apples, kiwis, pears, grape have seen phenomenal growth; not merely doubled or quadrupled, but more than 10 fold growth has been witnessed.

On the domestic front, Indian farms repeatedly break production records but one does not see a likewise increase in trade volumes from these domestic source points. What prevents our own produce from spanning the sub-continent and emulate the growth our imports have witnessed?

Is it that our consumers have a penchant for imported fruit, a specific flavor, a specific brand?

Fish for food!

Fish farms or aquaculture farming is catching on in a big way in India. This is because of rising health awareness and demand for fish meat, and increased logistics bottlenecks along traditional fish sources and lower catches from those regions.

So, new catch is being developed in hinterland fish ponds, the idea being that a long term source of alternate food and earnings can be developed in our farm lands.

The whole idea of modern fish farming is to enhance productivity, thereby the supply, and therefore commercial returns to our farming community.

Cold Chain scenario in India?

What is the Cold Chain and what is its importance for the Agriculture sector? What is the overall scenario of Cold Chain in India? What are the challenges before us, where we stand in comparison to other developed countries? What kind of technological & infrastructural and knowledge up gradation logistic companies need to do to meet the demand of goods in the future? What are the challenges do you see in front of logistic companies to reach the rural areas and how can it be tackled? Wal-Mart has parted itself from Bharti very recently, how will it affect the India’s retail and supply chain industry and its infrastructure? What is NCCD doing and its future goal?

Above are a series of questions thrown my end, with some quick responses in revert.

Cold-chain is a series of interlinked chain of activities that link perishable goods from source point to destination. Inherently cold-chain must involve a market linkage and a product life cycle matrix.