The challenges faced by agricultural supply chains in India
- Climate change
A changing climate is affecting agricultural production worldwide. Farmers in India are concerned about the unpredictability of the weather, which in recent years has had a major impact on their crops. For example, grape farmers in Maharashtra are suffering yield losses of around 40% this year due to powdery mildew and bunch rot caused by particularly early rains. Some vegetable farmers have lost their entire crop due to waterlogging caused by prolonged rainfall. Water scarcity and a depleting water table is a major issue for farmers in other parts of the country. The poor accuracy of weather forecasts, particularly before September when they are only about 40-50% accurate, make it difficult for the farmer to plan ahead and protect their crops.
- Scale of production
Small and marginal farmers with less than two hectares of land account for 86% of all farmers in India (Indian Agriculture Census 2015-16). Smallholder farmers are typically operating with little in the way of technical assistance, have poor access to inputs, limited resources and few links with buyers. Without knowledge of regional production/areas planted to particular crops, farmers are not able to anticipate crop prices so struggle to make good business decisions when choosing crops. The limited choice of buyers and lack of processing outlets for raw materials means farmers have little scope to diversify into alternative crops as there is no guarantee of finding a buyer. Rather than taking risks by adding new crops into the rotation, farmers tend to stick with crops with known buyers.
- Regulatory hurdles
Maximum residue levels (MRLs) are required for crops, with particularly stringent requirements for crops bound for export markets, and these requirements can vary substantially between markets (e.g. EU vs. the US). Some crop protection products in use in India are banned in export markets, creating challenges for farmers in controlling certain pests and diseases. Since crops are co-mingled prior to MRL testing, it is impossible to identify the farms that are non-compliant (those using banned products or exceeding MRL’s), which can lead to financial losses for the distributor. Testing for MRLs in India is not considered to be well standardised so samples are often sent to Europe, adding cost and extending the time required. High levels of non-compliance with MRLs also adds administrative and operational burden for buyers operating in India.
- Knock-on effects of policy
With 1.3 billion people and a prevalence of undernourishment of 14.5% (FAOSTAT, 2018), the government’s key priority is food and resource security, with less of a focus on environmental protection. This can lead to unforeseen impacts. For example, in 2010, the government initiated a policy in the Punjab region to delay the transplanting of rice for one month (from May to June) to reduce water demand from flood irrigation, since monsoon rains replenish the aquifers. This results in a later harvest (late October). Farmers then opt to burn stubble following harvest to speed up preparations for the next crop due to the shortened planting window. The prevailing wind blows smoke from stubble burning in key agricultural areas to major cities, contributing to extreme pollution events as seen in New Delhi in recent weeks. The government’s aim to protect water resources has thus had an unfavourable effect on air quality, highlighting the importance of developing holistic agri-environmental policies.