Gains from farm to fork | india | Hindustan Times
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Gains from farm to fork

India is the second largest producer of fruits and vegetables in the world, account ing for 15 per cent of the world production. But from farm to fork, about 40 per cent of the produce is wasted, a whopping loss of Rs 50,000 crore annually, enough to modernise all Indian airports in one go. For every rupee that an Indian consumer spends on vegetables, the farmer gets only 20-22 paise, as against 70-80 paise in developed countries.

india Updated: Jan 22, 2006 23:32 IST

India is the second largest producer of fruits and vegetables in the world, account ing for 15 per cent of the world production. But from farm to fork, about 40 per cent of the produce is wasted, a whopping loss of Rs 50,000 crore annually, enough to modernise all Indian airports in one go. For every rupee that an Indian consumer spends on vegetables, the farmer gets only 20-22 paise, as against 70-80 paise in developed countries.

The Indian agriculture sector is stymied with outdated postharvest infrastructure, inadequate distribution network, multiple intermediaries, lack of cold storage, high cycle time and wastage during transportation and storage.

To make this lifeline sector grow, an effective supply chain is critical, particularly in processed and semi-processed agro-products. A World Bank study, advocating FDI in retail, says that India needs to invest $28 billion in the agro food industry to meet the rising demand of processed food and reduce wastage.

At home, an ICRIER- Department of Consumer Affairs report FDI in Retail Sector: India, published by Academic Foundation, says organised retailing led by international players, particularly in the food processing sector is prerequisite for growth in the agriculture sector. Lack of financial and technological strength with domestic players to set up sophisticated supply chain and FDI cap are dampening growth.

Foreign retailers in the farm sector can bring in multiple benefits as experience in China and Mexico shows. It can provide the forward linkages for mass marketing of processed and packaged goods. Large retailers establish a direct linkage with the farmers by cutting out many layers of middlemen, invest in cold storage and warehouse, develop processing facilities and export the products to meet their global requirements.

Thus, farmers get better prices and get access to global markets while consumers benefit in terms of lower prices and better quality.

Global experience, especially in China, has demonstrated that the only way that farmers can get better prices and export their produce is through improvement of the value added food chain. After the Middle Kingdom opened FDI in retail, the biggest beneficiary has been the farm sector. Its agriculture exports to the US nearly trebled from $3.86bn in 1999 to $9.96bn last year.

The potential is realised by Indian corporates, and companies like ITC, RPG and Godrej are entering the contract farm business. But the big push will certainly come once FDI is allowed in retail as it will boost the competitiveness of Indian agriculture through larger investment, higher productivity, higher income for farmers and enlarged capacity for risk management.