retail. My question to you is: there are already over half a dozen big domestic corporate houses who have made a mark in this kind of retailing. They have broadly evolved in last ten years or so but there is a general accusation against them that they have failed to put in required investment in preparing a robust backend platform which could have benefitted the state of cold chains in the country as well. What in your opinion could be the reason? I actually can’t answer why they have failed. But I can definitely say that in any sphere of life, competition always creates better choices for consumers. In food retail value chain, there are two major players who find themselves at problems all the time. One is farmer as producer and then consumer who is paying the price. If you bring considerations of these two in alignment with each other while establishing a supply chain mechanism, I don’t see any reason for failure. We can say that the impact which was expected in the retail supply chain has perhaps not taken place. We still have farmers saying that same mango which fetches Rs 10 at the farm gate is sold at Rs 120 per kg in a market like Delhi. Thus, consumer is paying a huge amount – almost ten to twelve times what the producer is actually getting for certain produce and both of them are extremely unhappy. It is expected that if more players join in the multi-brand retail bandwagon, the supply chain integration exercise would get a fresh impetus and would improve. Secondly, if there is a condition that a sizeable amount of your investment would go into the backend, it means post harvest to the market supply chain process would be strengthened. The perishables would be handled in a better way and this is what we are expecting. However, this is not something which would happen overnight. We feel that things will start changing in and around biggest consumption centers initially. It will not happen straightaway at small LOGISTICS TIMES November 2012
We are in communication with Corporate Affairs Ministry trying to evolve modality so that farmers’ organisations can be registered under Companies Act. What we are saying is that at village level, let’s organise farmers as Farmer Producer Organisations (FPOs).
villages and sleepy towns but in the long run, they would also be benefited. It could play out like the telecom revolution or other sectors which went into a high-growth trajectory. In last 20 years in India, we have seen some new sectors have suddenly become hot and one of the major contributory factor has been the emergenece of new age enterprenuers pushing those domains. My question is: what does NCCD intend to do to draw new enterprenuers to agri-business - more specifically in cold chain business? You have already highlighted the serious structural issues. The first and the foremost idea is to organise farmers. We are in communication with Corporate Affairs Ministry trying to evolve modality so that farmers’ organisations can be registered under Companies Act. What we are saying is that at village level, let’s organise farmers as Farmer Producer Organisations (FPOs). Similarly we can create Farmer Aggregator Organisation (FAOs). That means the pre-harvest upto harvest operations and post-harvest operations will be handled by the famers themselves. Some of the members of the farmers’ fraternity at the village level can work as producers and others
can become logistics suppliers and aggregators. We know that if farmers’ organisations will start setting up cold storages, the subsidy level will go up. But this would mean a more targeted approach in improving agri-production, establishment of more cold chain units and all related logistics requirements before market. Cold storages should be actually owned by farmers which has not happened in the country. It has gone to the people who do not have much at stake with the produce, unlike the producer farmer. This needs to be changed and FPOs & FAOs would eventually have to tie up with retail chain owners Credit is a major issue for cold chain segment. How will you deal with this issue? Credit issue is a major area of concern for us also. FIs are ready to give you loan for buying a car but not for agribusiness. But GOI is facilitating credit infusion through NABARD and other FIs and the quantum is jumping every year. We believe these agencies can also financially assist FPOs and FAOs. For last two year a special RIDF window (Rural Infrastructure Development Fund) has been created with NABARD for both cold and dry warehousing. An allocation to the tune of Rs. 7000 crores has been exclusively made for this purpose over last 2 years!