NOĒSIS

A FAO study throws up interesting numbers on food wastage across the world and splits up food wastage per capita into supply chain losses and consumer level losses. For developed countries, consumer level wastage is alarming but for countries like India, the supply chain level wastage is alarming because of the volume of food losses given the country’s size and the scale of its farm output. India is not unique in the level of its losses. According to the FAO,42 per cent of fruit and vegetables grown in the Asia-Pacific region, and up to 20 per cent of the grain, never reaches consumers because of poor post-harvest handling.

I think there are two key reasons why it is practically more difficult to reduce wastage in India, compared to the developed countries.

a.) Structural Challenge : It is important to note that supply chain issues (for agricultural produce) in India is much more complicated and difficult to sort out compared to North America and Europe, primarily because of structural differences in production. Indian agriculture is primarily small holder agriculture and hence disaggregated by nature. However, it is also said that the milk supply chain has done comparatively better than vegetables when it comes to reducing wastage. One of the key reasons behind that is structural “innovations” at the farmer level for aggregation i.e. pockets of successful co-operative institutions. While investments in cold chain infrastructure is key, India has to find ways of improving aggregation at the farmer levels and unless that is in place we will not find people making extensive investments in cold chain infrastructure even after the policy situation has improved.

b.) Political Intent: A closely linked reality behind “private” sector not being able to do much in setting up efficient procurement back-ends (and marketing linkages in general till date), is that the farmers are a “constituency” of the politicians and to ensure that politicians continue to get votes,it is critical to ensure that farmers continue to depend upon politicians or continue to have expectations from politicians for critical needs. If the politicians enable the cold storage investment environment too much in favour of private entities, the private enterprises, which have historically shown better effectiveness, might make a dent on the dependence of farmers on politicians. This is not a happy state for the vote hungry political class. To put things in perspective, the politicians (as lawmakers) have the tough task of ensuring that policies do not breed exploitation of the weak by the strong and they do need to be sure of the intent of the people who look at investment in procurement infrastructure from a return on investments perspective. However, an equally pertinent question is if “partial” socialism helps us in the long run.

While I wanted to cover this in a separate post, I thought I might as well place it here to give a complete picture of the complications around deciding upon policies and the seriousness around that.

A few years ago, a nation-wide study on assessment of harvest and post-harvest losses for 46 different agricultural commodities was carried out in 106 randomly selected districts. The study was carried out by CIPHET, Ludhiana and the figures of wastage are much lower than any estimate we get from other reports or what we hear from even the policymakers. The wastage levels as per that report is given below.

Cereals 3.9 – 6.0 per cent, Pulses 4.3-6.1 per cent, Oil seeds 2.8-10.1 per cent, Fruits & Vegetables 5.8-18.0 per cent, Milk 0.8 per cent, Fisheries (Inland) 6.9 per cent,Fisheries (Marine) 2.9 per cent, Meat 2.3 per cent, Poultry 3.7 per cent.

These numbers have been used as a justification to stop FDI in market linkage in India with the argument that the level of losses in India is not much. Well! that is how complicated policy making is.

(Also published on LinkedIn.)