The agricultural supply chain in India is a vital component of the nation's economy, rural development, and food security. With its diverse agro-climatic zones, India cultivates a wide range of crops, including cereals, fruits, vegetables, and spices, ensuring a diverse and nutritious diet for its population. This diversity provides farmers with multiple income opportunities. The extensive network of farmers, particularly small and marginal farmers, forms the backbone of the sector, contributing to widespread rural employment and poverty alleviation. The Indian government has implemented various policies and initiatives to support the agricultural supply chain and empower farmers. Programs like the Pradhan Mantri Kisan Samman Nidhi Yojana provide direct income support to farmers, while the National Food Security Mission aims to enhance crop productivity. Technological advancements have significantly improved productivity and efficiency throughout the supply chain.
The adoption of modern farming techniques, precision agriculture, and mechanization has led to increased crop yields and reduced post-harvest losses. Efforts have been made to integrate agricultural markets across the country, enabling farmers to access markets beyond their local areas. Establishing Agricultural Produce Market Committees (APMCs) and introducing the National Agriculture Market (e-NAM) platform has played a crucial role in market integration. Launched in 2016, e-NAM is a digital platform that creates a unified national market for agricultural commodities. It revolutionizes the supply chain by directly connecting farmers and buyers. It also ensures pricing transparency by providing farmers with real-time information on market prices, demand, and supply.
This empowers them to make informed decisions and negotiate fair prices for their produce. The platform also reduces the number of intermediaries involved in transactions, enabling farmers to retain a larger share of the final selling price. This eliminates exploitative practices and increases farmers' profitability. Furthermore, e-NAM simplifies logistics by providing a seamless process for the transportation and delivery of agricultural produce. It also ensures secure and timely payments to farmers, mitigating the risk of delayed or unfair payments.
Agriculture Supply Chain in India
Supply chains are primarily concerned with the movement of goods and data among their member companies—the acquisition of raw materials, their transformation into completed goods, and their distribution to final consumers. Supply chains that are information-driven and linked today help businesses cut costs, add value to their products, use resources more efficiently, speed up time to market, and keep consumers.
How well supply chain activities coordinate to provide value for customers while boosting the profitability of each link in the supply chain is the true test of a successful supply chain. Supply chain management is, in other words, the coordinated process of creating value for the final consumer. However, due to the inherent issues in the agriculture industry, the supply chains of various agricultural commodities in India are rife with difficulties. Different difficulties, like the predominance of small/marginal farmers, fragmented supply chains, the absence of scale economies, low levels of processing/value addition, inadequate marketing facilities, etc., affect the country's Agri supply chain system. Early processing-based supply chain management successes included enhanced warehouse and transportation partnerships within businesses because of lower inventory and quicker fulfilment of client orders for goods and services.
The logistics stage of supply chain management is where different corporate functional divisions come together to integrate manufacturing, procurement, transportation, distribution, and marketing to successfully compete in the market. This stage was aided using telecommunications, electronic data interfaces, and other technological advances that made the transfer of information more transparent across the functional areas between companies.
Supply Chain Management (SCM) in agribusiness implies managing the relationships between the business which is responsible for the efficient production and supply of products from the farm level to the consumers to meet the requirement of consumers reliably in terms of quantity, quality, and price. It often includes the management of both horizontal and vertical alliances, relationships, and processes between firms.
Agri-supply chains are economic structures in which players share risks and gains. As a result, supply chains enforce internal controls and provide chain-wide incentives to ensure that production and delivery commitments are met on time. By virtue of shared information, reciprocal scheduling, promises to transaction volume, and assurances of the quality of the products, they are connected and linked.
In a continuous improvement process, connections require individual participants to coordinate their operations and add value to agricultural goods. The actions done or not taken at subsequent links in the chain significantly influence the costs incurred in the first link. Up and down the chain, extensive planning and coordination are needed to influence crucial control operations like forecasting, procurement scheduling, production, processing programming, sales promotion, and new market and product launches etc.
Some of the components of an Agri-supply chain include procurement or sourcing, logistic management, organizational management, and the application of an efficient consumer response (ECR) system.
The management of India's Agri supply chains is currently changing to adapt to the new marketing realities brought about by the wave of globalisation and other internal changes, such as an increase in consumer disposable income and a shift in the consumer's food basket towards high-value items like fruits, vegetables, and animal protein. The government agencies are now pursuing various legal reforms to enable and invite private investment in agricultural marketing infrastructure, removing entry barriers to encourage coordinated supply chains and traceability, in response to the country's new agricultural economic challenges.
The principal agricultural marketing law of the country, the revised APMR Act, which is being implemented by several states of India, now incorporates enabling measures to encourage contract farming, direct marketing, and the establishment of private markets. These actions will go a long way towards giving small businesses economies of scale and creating direct connections between farmers and processors, exporters, retailers, etc. As a result, the policy will offer both forward and backward connections to develop integrated supply chains for various agricultural products in the nation.