13th January, 2016 (MAINS)


Q1. What are the impediments in marketing and supply chain management in developing the food processing industry in India? Can e-commerce help in overcoming this bottleneck? [12.5marks/2015/GS-3] 200 words.

Please write answer in the comments section.

  • Ashi Agarwal

    Marketing impediments:
    1.There is limited access to the market information, literacy level among the farmers is low, multiple channels of distribution that eats away the pockets of both farmers and consumers.
    2.The government funding of farmers is still at nascent stage and most of the small farmers still depend on the local moneylenders who are leeches and charge high rate of interest.

    Supply chain impediments
    1.It mainly relates to poor infrastructure, complex tax infrastructure, weak distribution system, fragmented market, and lack of technology adoption.
    2.The cold chain capacity caters to less than 10 percent of the produce and within that facilities are so rudimentary that over 80 percent are only capable of handling potatoes.

    E-commerce can help in overcoming this bottleneck in the following ways:
    1.It can be used for quality control and cost cutting efficiencies by the food processing industries.
    2.The food industry can engage in e-commerce through:
    •Internet shopping for consumers called business-to-consumer (B2C) e-commerce.
    •Business-to-business (B2B) Internet market discovery exchanges used by food suppliers at any point in the supply chain, and
    •Business-to-business (B2B) relationships that reduce costs and increase efficiencies in the procurement, storage and delivery of food to retail stores or distribution centers.
    3.It allows retailers to share information about consumers’ purchases and preferences with food manufacturers and farmers and for tracking food products’ characteristics, source, and movement from production to consumer.

    • Shashi Thakur

      arranged nicely. though a bit irrelevant points. but well tried. keep it up.

  • DVM

    As per the census of India 2011 and Socio-Economic caste census of 2011 the majority population in India is still dependent on the Agricultural sector for their sustenance. India is going through the various problems of malnutrition, under nutrition, rapid increase in Food inflation etc which reduces the calorie intake of destitute who were already battered with other socio-economic problem. India has already gone through the problem of Food crisis which was averted by the boon of Green Revolution, even after becoming self sufficient in food production there were various problems associated with the food industry as below:

    1. Lack of Proper warehouse and refrigeration facilities which leads to the huge loss of food grains and other perishable food products like vegetables,fish,meat etc.
    2. Due to unabated growth of Agricultural Produce Marketing Committee(APMC) there is chain of middleman between farmers and consumers which reduces the profit of Farmers by purchasing at lower price and increases the food inflation rate by the means of hoarding and selling the commodities at higher cost.
    3. Focus on selling raw food grain and Inadequate focus on the food processing.
    4. Improper use of weedicides, pesticides and fumigation which causes the reduction in export of certain product in different countries where quality majors were stringent which ultimately leads to the loss of valuable foreign market as well as exchange as happened in the case of Alphonso which got faced the ban in European countries.
    5. Improper packaging and handling techniques leads to the reduction in the market demand for the product etc.

    In order to over come the various problems faced by the food Processing industries there is urgent need to increase the awareness among the farmers about the benefits of food processing Industry. The e-Commerce can help in developing this Industry in below ways:
    1. Help in reducing the clout of middleman by directly purchasing the food articles from farmers.
    2. Help in reducing the food inflation by reducing the chain of middle man and by increasing the healthy competition between different firm which will reduce the prices without compromising the quality.
    3. Will help in improving the infrastructure facilities like warehouse and refrigeration units due to increase in investment in this sector.
    4. will help in increasing the processed food industry in India which will help in earning the better profits and will also help in increasing the export sector.
    5. will Increase the rate of employment which will ultimately help in reducing the menace of unemployment and poverty etc.

    In order to Improve the Food processing industry in India only focusing on E-commerce will not suffice there is also need to improve the other area like:
    1. Increasing the awareness among the farmers about the benefits of food processing which will help them in earning better profits.
    2. Promoting the self Help groups(SHG) which will not only help in increasing the rate of employment but also will help in empowering the rural women by encouraging them to form and participate in SHG’s.
    3. Need to increase the Institutionalized banking facilities which will help rural population in general and farmers in particular the requisite capital required for initiating food processing units.
    4. Providing some benefits in the form of Grant in aids, subsidies, lower tax rates and tax rate concession to increase the participation.
    5. Creating food parks on the line of SEZ etc.

    In present situation the Food processing Industry in India remained an untapped potential in order to remove the in-equality and reduce the large scale migration from rural areas and to create SMART VILLAGES on the lines of SMART CITIES there is urgent need to focus on encouragement of Food processing industries in rural area which will help in holistic and sustainable development.

    • http://shashidthakur.com/ Shashi Thakur

      all the points are relevant. good collection of points.