Food Production & market opportunity

From a talk at Thaifex 2013 - World of Cold-chain Conference

No one can deny that India’s food industry is undergoing massive transition and its intention of being a major player in the global supply of food.  In order to achieve this goal, policy makers are looking across the board at the daunting task at hand whilst recognising the need to also bring the agriculture sector in to the 21st century.

Yet it does not matter how good a product is, or how sophisticated or productive an agricultural area is, if a farmer or manufacturer cannot get their product to market or on the retail shelf… all their efforts turn out in vain.

Currently the progress in the food industry is quite uneven. The ever growing middle class with their specific demands, local and international food companies all wishing to meet those aspirational needs, the regulatory agencies making massive strides towards a complete overhaul of the food industry is all inextricably coupled to the struggling logistics infrastructure already pushed to the limits.

Budget & Infrastructure: Questions

1.  As this is a well known fact that this sector leads to wastage in agricultural produce due to lack of cold storage infrastructure, what infrastructural framework is required to boost the growth of this sector? 

Infrastructure that is developed should complement the concept of cold-chain. The query itself reflects the nascency in understanding and the prevalent misconceptions by limiting the concerns to the storage aspect alone. A cold storage warehouse is merely the middle link in the chain. If the initiators of cold chain are missing, the storage will automatically function only for select products and those that happen to originate in the cold chain (ie. imports). Our cold-chain, as it has developed, serves well for imported produce and for processed foods. For similar benefits to accrue to our domestic agricultural produce, cold chain originators and other complementary links should be the first priority.

2.  FM has taken an initiative to make Rs 5000 crore available to NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store agricultural produce, both in the public and the private sectors this year. What is your take on this? Is this figure is sufficient for the warehousing sector?

India-USA Bilateral Cooperation

Bilateral Cooperation between USA and India: Cold-chain & Agriculture.

The US Secretary of State, Mr. John Kerry is expected in Delhi in June 2013, to co-chair with our minister of external affairs Mr. Salman Khurshid, the fourth round of India-US strategic dialogue. The focus is bilateral cooperation and partnerships between the two nations and targets five principal pillars: 

•   strategic cooperation;
•   energy and climate change;
•   education and development; 
•   economics, trade and agriculture;
•   science and technology, health and innovation.

“Cooperation in Cold-chain and PHM (Post Harvest Management)” would automatically meld a few of these topics.

Frequent Questions about NCCD (National Centre for Cold-chain Development)

About NCCD

1.    Could you please provide some highlights about the initiatives undertaken by the NCCD for the development of cold chain infrastructure in India?

See Wikipedia Article on NCCD

NCCD under its agenda of inclusivity has held various interactions with stakeholders from inception, for inputs to develop its roadmap to targeted conclaves to receive recommendations to ease the roadblocks to further development. These stakeholder interactions are followed up for directed interventions by the government. Of notable achievement is that NCCD has already redressed some concerns by project implementers by providing ready response to interpretations of subsidy guidelines. NCCD has brought about an improved understanding in allied sectors on the opportunity and remedial options in this sector.

In another initiative, NCCD has opened participation to a wider base of stakeholders by including educational and research institutions, farmer producer organisations, self-help groups, student groups and other allied industry sectors. Please go through attached criteria document – we are surprised that some industry stakeholders who habitually profess interest in supporting cold-chain development have not walked-the-talk by partaking in NCCD. The industry at large must realise that the government is a facilitator to support the ground action that they hope to fulfil. NCCD was formed to supporting them... and as a measure of their interest. We feel the initiatives need to arise from business enterprises in tandem with government interventions.

NCCD is also advising on the XII Plan period assistance programs and aims to bring technology interventions and more support to participants from the logistics sector.

2.    What are the achievements of NCCD so far, you would like to highlight?

Custodians missing in the Cold-chain

Looking ahead into 2013, the expectations from market and service providers are quite obvious to conclude. The Previous year has established that manufacturers and marketers will continue to push to outsource both critical and non-critical areas in logistics to ease working capital pressure on their company.

Yet, are the LSPs prepared and professional enough to match this opportunity? It will require innovative organisational leadership in finance and operations. The typical response though, is to reduce head count and fixed warehouse & transportation assets while maintaining service (exactly what their client company did by outsourcing their own requirement). LSPs need to respond otherwise and not play in tandem. Besides, maintaining service with lowered asset base means opening up to risk, or alternately requires another kind of asset – technology! The smart ones will manage; there will be intelligent contingency plans, back-haul network redesigning, productivity realignments and a move from transactional to strategic management and control.

India’s logistics sector usually has a limited outlook when projecting into the future. This is largely because of the gap in associated infrastructure and matching processes, thereby never allowing them to be truly ahead of the development curve.

Sorry State of Market studies

“What goes wrong with Market Studies”

Frequently I am asked to vet and assess market studies, business plans and DPRs (Detailed Project Reports) on the topic of supply chain, albeit specific to the Indian backdrop. This, after the document owner has, in all earnest, already paid a hefty amount to the researcher for the study and evaluation. 

These impulses to seek second opinions are retrospective in nature... One understands this reaching out, since no matter how big the hospital, one's personal physician is still a trusted referral!

Where I get utterly flummoxed, is the lack of quality & authenticity in the documents I am provided. Whereas, one ought to be barely dotting an odd alphabet (or none, preferably), the entire diagnosis and the conclusions suggested are often suspect. Especially when it comes to those on the topic of cold chain... I fail to grasp what is passed off as a study sometimes. Recently, there was once again a spate of annual releases on the cold chain sector, focus India. I was provided a couple to assess and confirm upon. I repeat, I failed to understand...