Storage, Transport & Marketing of Agricultural Produce & Issues & Related Constraints.

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Mains: GS III- Storage, transport & marketing of agricultural produce & issues & related constraints.

Introduction
  • The agricultural sector carries immense importance for the Indian economy. It plays a significant role in the overall socio-economic fabric of India.
  • Agriculture also enjoys vitality for ensuring food security to all and has the potential to influence the growth of secondary and tertiary sectors of the economy through its forward and backward linkages.
  • But for that to happen, post-harvest activities like storage, transport & marketing are as important as giving the right inputs and harvesting.
  • Since ancient times huge importance is given to these post-harvest activities.
  • For example, in the Indus valley, civilization grains were stored in large granaries.
  • Harappan seals contain information on agricultural production, transport, marketing, and distribution.
Important stages in Post-harvesting–Storage, transport & marketing

In agriculture, postharvest handling is the stage of crop production immediately following harvest.

Activities included in Post-harvesting:

  • Technical activities: Handling, storage, and processing.
  • Economic activities: Transportation, information and communication, and marketing.

Post-harvest technologies i.e. all treatments or processes that occur from the time of harvesting until produce reaches the customer are gaining importance to increase agricultural productivity.

The main objectives of applying postharvest technology are:

  • To add value to agricultural produce
  • To maintain quality (appearance, texture, flavour, and nutritive value)
  • To protect food safety
  • To reduce losses between harvest and consumption.


Need for efficient Storage, transport & marketing of agricultural produce

India is one of the largest producers of food in the world. But India is still facing the problem of hunger and malnutrition. The agricultural sector's contribution to GDP is very less and Indian farmers are still suffering from inadequate prices and a low standard of living.

The reasons for such a dire situation are:

  • Huge Post-harvest losses.
  • Lack of better price realisation for farmers.
  • Bottlenecks in logistics.
  • Weak supply chains.
  • Lack of storage facilities.
  • Ineffective marketing.
  • Lack of Quality control mechanisms.

Figure: Loss of agricultural produce at various stages

Losses of agricultural produce are a major problem in the post-harvest chain. They can be caused by a wide variety of factors, ranging from growing conditions to handling at the retail level. Not only are losses clearly a waste of food, but they also represent a similar waste of human effort, farm inputs, livelihoods, investments, and scarce resources such as water.

Hence, there is a need for efficient storage, transport & marketing of agricultural produce to reduce losses and improve the lives of farmers.

Significance of Storage, transport & marketing of agricultural produce
  • The perishable food industry is crucially dependent on storage, logistics, transportation, and distribution.
  • Food security: increasing storage capacity and ensuring last-mile connectivity will help prevent post-harvest losses and ensure food security.
  • Effect on the price of agricultural produce: As most farmers cannot afford to take their produce to government-regulated mandis due to high transportation costs and storage issues, they are often compelled to sell to middlemen at a low price.
  • Procurement of farm produce by the government may not prove fruitful in the absence of good storage and transportation facilities.
  • Creates employment opportunities: An investment in creating robust post-harvest storage and transportation by investing Rs 89,375 crore will also create over 3 million jobs.
  • Empowers rural economy: The majority of jobs will be at the village level, thus empowering the local, rural economy.
Who is responsible for storage, transport & marketing of agricultural produce

Role of Central Government:

  • The Central Government, through FCI, has assumed the responsibility for procurement, storage, transportation, and bulk allocation of food grains to the State Governments.
  • Facilitate speedy clearance of projects concerning the development of infrastructure for bulk handling, transportation, and storage of foodgrains;
  • Enter into bilateral agreements with other countries/international agencies for providing technical/financial assistance;
  • Take necessary legislative/administrative measures for removing impediments with regard to stock control order/movement control order framed by various state governments;
  • Utilize the services of an existing independent regulatory mechanism for fixing /regulating tariff for various operations, such as cleaning, drying, storage, transportation, etc;
  • Make available facilities of the Railways for bulk transportation
  • Promote negotiable Warehousing Receipt (NWR) System by which farmers could hold their grains back from the market and meet their working capital/short term requirement by borrowing from Banks against these receipts; and
  • Promote research for the development of alternate storage technologies like Vacuum Process Storage (VPS) technology which would ensure the longer shelf life of foodgrains and help experts of foodgrains in vacuum packs.

Role of the State Government:

  • Acquisition of land required for various projects as for the public purpose; and
  • Making available other facilities such as water, power, road, etc.
  • Under Decentralized Procurement Scheme (DCP), introduced in 1997-98, food grains are procured and distributed by the State Governments themselves.
  • The designated States procure, store and issue food grains under the Targeted Public Distribution System (TPDS) and other welfare schemes of the Government.
  • The decentralized system of procurement was introduced to enhance the efficiency of procurement for PDS and to encourage procurement in non-traditional States as well as to save on transit losses and costs.

Food Corporation of India (FCI):

  • It is a Public Sector Undertaking, under the Department of Food & Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution.
  • It is a statutory body set up in 1965 under the Food Corporations Act 1964.
  • It was established against the backdrop of a major shortage of grains, especially wheat.
  • It has primary duty to undertake purchase, store, move/transport, distribute and sell food grains and other foodstuffs.
  • Its objective is to ensure the food security of the nation by maintaining a satisfactory level of operational buffer stocks of food grains.

Warehousing Development Regulatory Authority (WDRA):
The mission of Warehousing Development and Regulatory Authority (WDRA) is to regulate and ensure implementation of the provisions of the Warehousing (Development and Regulation) Act, 2007 for

  • Development and regulation of warehouses,
  • Regulations of Negotiability of Warehouse Receipts and
  • Promote orderly growth of the warehousing business.

National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED):

  • It is an apex organization of marketing cooperatives for agricultural produce in India.
  • It is registered under the Multi-State Co-operative Societies Act. 
Storage of agricultural produce- importance, issues & related constraints.
  • Storage is an important marketing function, which involves holding and preserving goods from the time they are produced until they are needed for consumption.
  • It is the phase of the post-harvest system during which the products are kept in such a way as to guarantee food security other than during periods of agricultural production.

The main objectives of storage can be summed up as follows:

  • at the food level, to permit deferred use of the agricultural products harvested;
  • at the agricultural level, to ensure availability of seeds for the crop cycles to come;
  • at the agro-industrial level, to guarantee regular and continuous supplies of raw materials for processing industries;
  • at the marketing level, to balance the supply and demand for agricultural products, thereby stabilizing market prices.

Importance of storage:

  • Ensures a continuous flow of goods in the market.
  • Protects the quality of perishable and semi-perishable products from deterioration;
  • Helps to cope with the seasonal demand of goods like woollen garments;
  • Helps in the stabilization of prices by adjusting demand and supply
  • Storage is necessary for some period for the performance of other marketing functions.
  • Storage provides employment and income through price advantages.

Where agricultural produce is stored?

  • Around 70% of the total foodgrains production is retained and consumed at the farm level.
  • The balance amount is supplied to the central pool and delivered at the nominated warehouse or at the local mandi earmarked for procurement.
  • As of 2019, India has a total Agri warehousing capacity of around 91 million metric tonnes with the majority of the capacity being owned by state agencies.
  • State agencies own around 40% of the capacity and the balance distributed among private entrepreneurs, cooperative societies, farmers, etc.

Issues and constraints in storage:

  • The poor condition of storage facilities.
  • Lack of enough storage space.
  • Low investments by the private sector in storage.
  • Not using scientific storage methods.
  • Inefficient capacity utilization.
  • regional imbalances in storage capacity.
  • Insufficient funding for bodies like FCI, CWC, etc.

Steps were taken to improve storage facilities:

  • Decentralized Procurement Scheme to procure and store at the state level to avoid transit losses.
  • Negotiable warehouse receipt system: 
    • Under this system, farmers can deposit their produce to the registered warehouses, and get a certain amount as advance from banks against their produce valued at MSP.
    • They can sell later when they feel prices are good for them.
    • This will bring back the private sector, reduce massively the costs of storage to the government, and be more compatible with a market economy.
  • The essential commodities act(ECA) has been amended to relax stocking limits and thus encourage private and foreign investments in storage.
  • Agriculture Infrastructure Fund for investment in viable projects for post-harvest management Infrastructure.
  • Under Pradhan Mantri Kisan Sampada Yojana (PMKSY) storage and cold chain facilities are created.
  • 'Village Storage Scheme' announced in Budget 2020:
    • It will be run by women's SHG's.
    • The aim of the scheme is to provide holding capacity for farmers and through this, women in villages and the rural part of the country will be able to retain their status as “Dhaanya Lakshmi” (one of the eight forms of Hindu deity Lakshmi, the goddess of wealth)

Further measures to improve storage:

  • Modernization and up-gradation of Bulk Grain Handling Infrastructure.
  • The private sector should be encouraged to build storage capacities in which they will store and maintain foodgrains procured by the Government agencies.
  • Adequate manpower and supervision are required for scientific and safe storage.
  • Timely and systematic evacuation planning can lead to the utilization of vacant storage space.
  • The intervention of state governments in identifying and handing over land for the construction of covered storage spaces without undue delay in obtaining various clearances will speed up the addition of storage capacity.
  • FCI reforms should be an urgent measure to address the issue of funding and scientific storage.
  • Integration of the entire storage business in India would go a long way in ensuring timely decisions are taken for optimum utilization of the existing facilities.

Unless some very drastic measures are taken to improve the storage capacity of food grains, the wastage of food grains cannot be curbed which otherwise could be utilized for feeding millions of poor people. From augmenting the existing storage capacity by construction of new ones through various means both public and private including partnerships, the need of the hour is to revamp the existing storage management of food grains in the country and make people and agencies accountable and responsible for their jobs of ensuring food security.

Transport of agricultural produce- importance, issues & related constraints.
  • Agriculture is our greatest industry, transportation our second greatest.  These two industries are dependent upon one another, and the national well-being is dependent on both.
  • A reliable and efficient transport system has a remarkable impact on agricultural marketing.
  • Agricultural produce is different from industrial goods, and have certain peculiar characteristics, because of which the quality of transport becomes as important as the availability of transport.   Like – agricultural products are bulky and perishable.  Most of them are consumable goods.  The packaging and transport need to ensure that the products are not bruised during transit.

Importance of transportation:

  • Transport enables agriculture and emboldens the farmer to invest more and increase production.   
  • And without this transport system, large quantities of painstakingly farmed produce would be laid to waste. 
  • On the contrary, if an efficient transport system exists, and the agricultural produce is handled with care, the farmer can get the best possible returns.
  • An efficient transport and marketing system can still ensure that unit costs remain low and retain the agriculture value chain at a robust level.
  • Keeping transport costs low helps the farmers earn a margin, as well as make it affordable for the consumer. 
  • On the contrary, if transport costs are high, then not only domestic marketing, but the potential for agricultural exports will also decrease as compared to countries with more efficient transport.
  • Transport creates a market for agricultural produce, enhances interaction among geographical and economic regions, and opens up new areas to economic focus.
  • Poor transportation in rural areas will result in low productivity, low income, and a fall in the standard of living. 

Issues and constraints in transportation:

  • Lack of modern road and rail infrastructure.
  • Lack of full regional connectivity especially with Northeast India.
  • Seasonally blocked routes in Himalayan and North-eastern states.

Steps were taken to improve transportation:

  • Kisan rails are the first-ever multi-commodity trains.
    • These trains with refrigerated coaches will help in bringing perishable agricultural products like vegetables, fruits to the market in a short period of time.
    • These will ensure that agro-products reach from one corner to another corner of the country.
  • Krishi Udan scheme to transport agricultural goods by air.
    • This will immensely help improve value realisation (on agricultural products), especially in the north-east and tribal districts.
  • Transport and Marketing Assistance (TMA): It aims to provide assistance for the international component of freight and marketing of agricultural produce which is likely to mitigate the disadvantage of the higher cost of transportation of export of specified agriculture products due to trans-shipment and to promote brand recognition for Indian agricultural products in the specified overseas markets.
  • Pradhan Mantri Gram Sadak Yojana: It is a nationwide plan in India to provide good all-weather road connectivity to unconnected villages.
  • Kisan Rath mobile application (app) to facilitate transportation of foodgrains and perishable during the lockdown.
  • The government has granted relaxation in the nationwide lockdown for activities related to agriculture-farming and allied activities with a view to addressing problems being faced by the farming community.

Further measures to improve transportation:

  • Shift from road to rail network: About 1.9% of the perishable fruits and vegetables are transported through rail, while 97.4% of the produce is transported through roads. This ratio needs to shift in favour of the rail network.
  • Investments: Indian farmers incur Rs 92,651 crore per year in post-harvest losses, the primary causes of which are poor storage and transportation facilities. Ironically, according to the high-level Dalwai committee report, an investment of Rs 89,375 crore- a figure marginally lower than the annual post-harvest losses- is all it takes to improve the state of storage and transportation facilities for food crops.
  • Dedicated freight corridor for agro-products.
Marketing of agricultural produce- importance, issues & related constraints.
  • Agricultural marketing is mainly the buying and selling of agricultural products.
  • Selling of any agricultural produce depends on a couple of factors like the demand of the product at that time, availability of storage etc.
  • In India, there are several central government organizations, which are involved in agricultural marketing like, Commission of Agricultural Costs and Prices, Food Corporation of India, Cotton Corporation of India, Jute Corporation of India, etc.
  • There are also specialized marketing bodies for rubber, tea, coffee, tobacco, spices, and vegetables.

Functions of Agriculture Marketing:

  • Exchange Functions: Buying, Selling, Storage,
  • Physical Functions: Transportation, Processing, Standardization
  • Facilitating Functions: Financing, Risk Bearing, Market Intelligence.

These agriculture marketing functions performed by farmers, traders, retailers, consumers, and manufacturers that raises the importance of an effective agriculture marketing system in India.

Importance of Agriculture Marketing:

  • Agricultural products are perishable; therefore, a failure to sell on-time results in a wasted harvest. All wasted harvest represents a cost of land, water, labour, storage – and no income to show for it.
  • Agricultural prices can be quite variable, impacted by changes in weather and harvests in far corners of the world.
  • For farmers, better marketing can ensure higher prices for the produce, and protection from price fluctuations. 
  • Manufacturers want the least cost, best quality produces from the farmer so that he can sell it at competitive, but profitable, prices.
  • Traders and retailers want high quality and reliable supplies from the manufacturer or farmer, at the most competitive prices.
  • Consumers are interested in obtaining high-quality products at low prices.
  • Reduced subsidy burden for government: An efficient marketing mechanism will reduce the need for government procurement at MSP and thus help it in fiscal consolidation.

Issues and constraints in marketing:

  • Lack of Grading and Standardization.
  • Presence of a Large Number of Middlemen.
  • Cartelization
  • High user fees
  • Malpractices in Unregulated Markets.
  • Inadequate Market Information.
  • Inadequate Credit Facilities.
  • Fragmented supply chain.
  • Poor market infrastructure.

Steps were taken to improve marketing:

  • electronic national agriculture market (eNAM): The government has created eNAM to connect all regulated wholesale produce markets through a pan-India trading portal.
  • e-governance portal AGMARKNET: It facilitates generation and transmission of prices, commodity arrival information from agricultural produce markets, and web-based dissemination to producers, consumers, traders, and policymakers transparently and quickly.
  • Kisan Credit Card scheme: to provide term loans for agricultural needs.
  • Formation and Promotion of FPOs(Farmer Producer Organizations): FPOs will be promoted under the “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
  • Market Intelligence and Early Warning System(MIEWS) Portal: To provide advisories to farmers to avoid cyclical production as well as an early warning in situations of gluts.

Further measures to improve marketing:

  • Promotion of cluster-based organisations.
  • Encourage Public-Private Partnership
  • Promote Direct selling- farm gate model.
  • Use of Artificial Intelligence: It can aid them in a range of decisions on matters pertaining to crop inputs to those related to markets and prices.
  • AgTech startups should be roped in for price discovery mechanism, so that price volatility can be controlled.
Recent legislation related to storage, transport & marketing of agricultural produce

Centre recently enacted three agriculture-related legislation, despite agriculture being a State subject, given that trade and commerce fall under the Central jurisdiction. They are:

  1. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020:
    • Provides for contract farming, under which farmers will produce crops as per contracts with corporate investors for a mutually agreed remuneration.
  2. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020:
    • Liberates farmers by giving them the freedom to sell anywhere.
  3. Essential Commodities (Amendment) Act, 2020:
    • To remove cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities.

All three laws will reform the Indian agriculture market:

  • Farmers will get a choice to sell their products as there will be more buyers.
  • It will also lead to the development of the agriculture business and create infrastructure for marketing, storage, and transportation of farm produce.
  • It will pave the way for the reform of the agriculture produce market committees (APMCs) or mandis.

However, farmers are protesting in some areas against agricultural legislation. They say could be exploited by the private sector to buy their crops at low prices.

Best practices in other countries

  • Vibrant Agri-futures markets: It is a standard way of reducing risks in a market economy. Several countries — be it China or the US — have agri-futures markets that are multiple times the size of those in India.
  • China spends a lot more on agriculture knowledge and innovation system (AKIS), which includes Agri R&D and extension.
  • China has built modern agricultural industrial parks to take advantage of collectivization.
  • USA has an Agricultural Marketing Service, that supports the fair marketing of U.S. agricultural products and collects information from salespersons, suppliers, brokers, and buyers on marketing conditions.
  • Brazil brought incentives and policies to encourage the expansion of storage capacity within the farm level and strategic locations.
  • Brazil aggressively took up road construction and modernization programmes to enhance connectivity.

 

Conclusion
  • Reforms in storage, transport & marketing of agricultural produce will go a long way in ensuring remunerative prices for farmers and reduce agrarian stress.
  • With the help of disruptive technologies like AI, big positive changes can be brought across Indian agriculture, and an increasing number of agri-tech startups in the country are working to develop and implement AI-based solutions.
  • All this can strengthen the rural economy and help India become self-reliant and reach the goal of $5 trillion economies.



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