1.

What characteristics of traditional Indian agricultural produce distribution

channels prevent against delivering simultaneous benefits to the farmer and
the consumer?
Characteristics:

The traditional Indian agricultural produce distribution channels are plagued by problems
of storage and wastage due to inadequate storage facilities. Experts estimate that as much
as 20% of grains stored in these conditions go to waste
Corruption is also a major issue. The produce is siphoned away into the black market and
then reported as which means the stock of grains
Another hurdle to these types of projects is attracting private partners, as many prospects
dislike working with government agencies such as the Food Corporation of India or their
state equivalents. Its not uncommon for these agencies to fall behind on their bills, and
there would be little recourse for the companies who operate the facilities
Fresh produce, such as fruits and vegetables, generally spoils quickly. Cold storage is an
effective method of extending shelf life. In most cases, however, the cost of such storage
is prohibitively expensive in India, stifling investment.
Often farmers work in remote areas, and as often as twice a week have to haul their
produce by foot as far as 10 kilometers to the nearest road where they sell their yield to
traders.
There is also the middle men who are an unnecessary hurdle who come between the
farmer and the buyer, yet they walk away with very high margins while the farmers get
very little.
The public infrastructure, including roads, ports and railways. This helps get goods to
market, or export, quickly and efficiently. While India has a surprisingly well developed
road network (#2 in the world) the quality is often poor. Similarly, the rail network is
fairly extensive but highly overcrowded, making overland transportation time consuming,
unpredictable and expensive.
The cost of cold storage is higher than the cost of the produce itself which makes it
unviable. Thus farmers are forced to sell their produce at low prices before they start
rotting.

All of these factors work against the farmer getting the right price for his produce while the
end consumer still ends up paying a high amount for the agricultural products. If they were
able to buy from the farmers directly, both the farmer and end consumer would
simultaneously benefit.

2. What supply chain best practices do you see as being relevant to the Indian
agricultural produce distribution system?
The supply chain need to be designed and built as a whole in an integrated manner with the
processes of new product development, procurement and order to delivery processes well
designed and well supported using IT tools and software.

In India, with no superstores, no economies of scale, too many intermediaries, there is a vacuum,
meaning there is no real channel master managing the supply demand situation and coordinating
the supply chain and managing the logistical activities. This provides a tremendous opportunity
for smart players to enter a growing market with a high potential of retail FDI. But one needs to
remember that the infrastructure capital outlays are high and the returns are long term.
Distribution directly affects cost and the customer experience and therefore drives profitability. The
ownership structure of the distribution network can have as big as an impact as the type of
distribution network

The choice of a distribution network has very long-term consequences

Consider whether an exclusive distribution strategy is advantageous
Product, price, commoditization, and criticality have an impact on the type of distribution
system preferred by customers

3. Organized retailing underway in India is likely to impact the traditional

distribution channels and transform the same radically. What major changes
do you visualize taking place in the agricultural produce distribution System
in India and how do u see the existing channels responding to the same?
India is all set to become the food supplier of the world. It has the cultivable land, all the seasons
for production of all varieties of fruits and vegetables, well developed agribusiness system that
works in its own way. Factors such as rapid growth in the economy, the technological
innovations in home appliances such as refrigerators microwave ovens, rise of families with dual
incomes and the changing food habits of the population all point to the increasing need for
healthy processed food. Different models are emerging including fruit and vegetable retail outlets
that directly procure produce from farmers or grower associations through various
formal/informal contractual arrangements.
Collection-cum-grading centers have been established in rural areas with all produce moving
through a central distribution facility having modern infrastructure including cold storage,
ripening rooms and controlled atmosphere chambers. Growers are required to follow certain
specifications and are often provided with some inputs and technical advice about agronomic and
post-harvest practices.
Coordinated supply chains fit well with the logistical requirements of modern food markets,
especially those for fresh and processed perishable foods. Coordinated supply chains involve
structured relationships among producers, traders, processors, and buyers whereby detailed
specifications are provided as to what and how much to produce, the time of delivery, quality etc.
These chains can be used for process control of safety and quality and are more effective and
efficient than control only at the end of the supply chain.