Supply Chain Management in Agro
The agro-supply chain plays a crucial role in facilitating the smooth movement of agricultural products from producers to consumers. However, traditional processes in the agricultural sector’s supply chain often face challenges such as delays, inefficiencies, and a lack of transparency. Fortunately, advancements in technology have opened up possibilities for innovative solutions that can revolutionize agro-supply chain operations, enhancing their efficiency, transparency, and sustainability. This article will explore various technological solutions that have the potential to improve the effectiveness of agro-supply chain operations.
Supply Chain Management:
Supply chains generally focus on the flow of goods and information between companies involved in sourcing raw materials, transforming them into finished products, and distributing them to end consumers. The supply chain for fresh agricultural products begins with farmers or planters who sell their produce to primary processors. The processors then prepare the produce before packaging and shipping it to wholesalers. Supply chains are driven by information and help businesses reduce costs, add value to their products, optimize resource utilization, minimize time to market, and satisfy consumers. The success of a supply chain is measured by how well operations across the chain align to create value for consumers while enhancing the profitability of each link. In other words, supply chain operations involve an interconnected process of delivering value to end consumers.
The Role of Fresh Produce in the Agricultural Supply Chain:
The availability of fresh produce is a critical factor for in-store businesses, such as supermarkets and convenience stores. Consumers prioritize high-quality fruits and vegetables when choosing their primary retailers. However, recent trends have raised concerns about the future viability of agricultural products. Fluctuating rainfall patterns, increasing food consumption, significant productivity gaps in farming compared to neighboring countries, and the need to manage food prices and import dependencies to meet demand have highlighted the necessity for India to reassess its strategy.
Significant Challenges in the Agri Supply Chain:
Dealers in the agricultural supply chain face numerous obstacles. Inefficiencies in the supply chain are compounded by a lack of traceability, excessive storage costs, and various other issues. Some of the main challenges include:
Poor Packaging Techniques:
Many goods are transported to marketplaces or storage facilities without adequate packaging, protection, or segregation, leading to significant damage. Goods are often thrown on the ground for counting and negotiation purposes. Some sorting and grading may occur on-site before the goods are loaded back onto trucks for further transportation. This process contributes to additional waste.
Security and Safety Concerns:
The logistics of fresh produce must adhere to various food safety requirements, including those related to transportation, storage, cleanliness, and warehousing, among others. For example, vehicles used for transportation must meet ISO standards and be capable of handling different cargo conditions. Failure to comply with these regulations can have adverse financial and legal consequences at every stage of the supply chain.
A fresh food supply chain requires careful preservation as it needs to be stored at appropriate temperatures, well-packaged, and promptly handled.
Challenges Faced by Farmers:
Farmers in India encounter several problems, with fair pricing for their products being a major concern. Soil and water health face significant pressures, limited knowledge about high-value crops, lack of exposure to high productivity practices, poor market connections, inefficient supply chains leading to food waste, and heavy reliance on rainfall. To bring about a revolution in agricultural income, it is essential to capture the entire value chain, from cultivation to the point where farmers can reap the benefits.
Lack of Liquidity for Growers:
The agricultural supply chain is susceptible to unethical trading practices, primarily due to the disparity between small and large-scale farmers. Payment delays and volatile crop prices often result in financial difficulties for growers. Consequently, they struggle to purchase inputs for the next season, leading to imbalances and resorting to loans with exorbitant interest rates.
Inadequate Post-Harvest Infrastructure:
The agrarian and horticultural supply chain exhibits significant gaps in post-harvest infrastructure at the farm level. Sorting, grading, washing, packaging, and other crop-specific post-harvest activities are largely absent at the farm site. The absence of farm-level collection centers leads to additional losses and diminished value along the supply chains, particularly affecting the farmers’ profitability.
Maintaining the Shelf Life of Produce:
The supply chain must ensure that fresh produce is stored under optimal moisture and temperature conditions. Different fruits have specific temperature and moisture requirements to maintain their quality. However, due to inadequate storage options, produce often has a shorter shelf life, resulting in quality deterioration. This leads to significant losses for farmers, with lower quality and safety standards being a major cause of product losses, especially in industrialized countries. Substantial losses occur during post-harvest handling, with fresh agricultural products experiencing high wastage rates (up to 30% at times).
Utilizing Digital Technology to Address Challenges:
Given the increasing demand for food and limited resources, especially after the COVID-19 pandemic, there is a pressing need for a clear long-term vision for digital agriculture. Digital technologies provide tools to establish a modernized supply chain that can tackle current challenges and create new value. For instance, India has one of the most effective soil health management systems globally, utilizing various digital technologies throughout the production and post-production stages
Benefits of Modern Technology:
Advanced Access to Inputs: Providing farmers easier access to agricultural inputs near their locations facilitates the adoption of innovative inputs to increase productivity and yield.
Financial Support: Government programs help farmers facing financial difficulties, ensuring quick access to loans.
Digital Agriculture: Companies specializing in digital agriculture provide cutting-edge technology solutions to enhance agricultural productivity and efficiency.
Improved Supply Chain Efficiency: Utilizing relationship-based technology platforms facilitates the seamless connection between agricultural products and potential consumers, thereby enhancing the efficiency and effectiveness of the supply chain.
Farming as a Service: Using subscription-based or pay-per-use models, this approach offers farmers access to state-of-the-art technology at affordable prices, making valuable resources more accessible and converting fixed costs into variable costs.
Role of Fasal in Addressing Challenges:
- Fasal, an IoT-based agricultural platform, provides complete traceability for farmers.
- It helps farmers manage their products and connect with potential buyers, improving supply chain outcomes.
- Fasal ensures product quality consistency, allowing dealers to purchase fresh produce directly from farmers.
- The system enables dealers to track their transactions and plan product handling throughout the supply chain.
- Along with sorting, grading, packaging, and logistics capabilities, Fasal aids farmers in selling their produce at higher prices.
- Fasal employs precision agriculture techniques, offering crop, time, and location-specific solutions that boost productivity.