Dr.Harsev Singh CEO Reliance Dairy Foods Ltd. Supply Chain & Infrastructure Bottlenecks Dr.Harsev Singh CEO Reliance Dairy Foods Ltd. 1 1

A supply chain can be looked into as set of agribusiness activities and products that lead to a produce that reaches the final consumer

Major Shift from Traditional Farming The Indian agricultural sector is witnessing a major shift from traditional farming to horticulture, meat and poultry and dairy products, all of which are perishables. The demand for these products are increasing owing to change in consumption habits of the consumers Due to this increase in demand, diversification and value addition are the key words in the Indian agriculture today.

Weak Infrastructure In India, the infrastructure connecting these partners is very weak. Each stakeholder: farmers, wholesalers, food manufacturers, retailers all work in silos. Demand forecasting is totally absent and the farmers try to push what they produce in to the market. Data integration, financial flow management, supply-demand matching, collaborative forecasting, information sharing, goods movement synchronization through efficient transport scheduling are lacking.

Weak Infrastructure Inefficient price signals Limited reach of mandis Too many intermediaries, information asymmetry: Inadequate infrastructure for storage Lack of cold storage infrastructure 

Infrastructure Bottlenecks Area Cause Effect Ports Inadequate capacity at major ports Untapped potential of non-major ports Outdated equipment Lack of warehousing Heavy congestion at most major ports leading to higher vessel turnaround time Inefficient handling Long waiting time Airports Few busy airports (Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad)   Numerous unused airstrips & relatively less used Lack of equipment for odd-sized packages, professional packers, etc Congestion at main airports    Inefficient handling resulting in pilferage/damage High cost of alternate arrangements (prices quoted by individual loaders) Roads Bad quality of roads Inadequate lanes / lack of maintenance Inadequate hinterland connectivity Do not support the axle weight of the trucks & cause the roads to break and cave in Bad road quality leading to poor speeds, accidents and high vehicle maintenance Inconvenience due to limited access to neighboring ports

Infrastructure Bottlenecks Area Cause Effect Railways Too many level crossings / minimal electronic controls / priority to passenger trains over cargo trains   Limited network and terminals of private players (container movement) Inadequate capacity / connectivity Choked rail network & resultant lower speeds of cargo trains Transportation delays & cost overruns Transportation delays Cold Chain Unreliable infrastructure / uneconomical size Inexperienced staff Less integrated services, inefficiency & resultant inconvenience Inefficient handling

Cold Storage The total value of India’s cold chain industry is currently estimated at USD 3 billion and reportedly growing at an annual rate of 20-25 per cent. The total value for the industry is expected to reach at USD 8 billion by 2015 It can be achieved through increased investments, modernization of existing facilities, and establishment of new ventures via private and government partnerships. India has 5,400 cold storage facilities, with a combined capacity of 23.66 million metric tons that can store less than 11% of what is produced.

Logistics Customers are demanding a “single point of contact” for all logistics services and are looking for “one-stop logistics shopping” unable to cope with complexities across their supply chains

Logistics Appreciation of high logistics cost and opportunities for major savings Increasing competition for both users and providers of logistics, who have to continually improve operations to remain competitive New types of operations, which can force changes to logistics – such as just-in-time, total quality management, flexible operations, time compression etc. Need for improved technology for identifying locating and tracking materials

in the logistics market Logistic Cost as a % of GDP National logistics cost vis-à-vis the share of 3PL in the logistics market Country Logistic Cost as a % of GDP Share of 3PL India 13-14 % Less than 10 % China 18 % USA 9.9 % 34 % Europe 7.1 % 54 % Source : Compiled from Various Sources

Areas Requires Strengthening Pre-cooling facilities Cold Storages Refrigerated Carriers Packaging Warehouse and Information Management systems Traceability Financial and Insurance Institutions

Way Forward Partnership should be in areas of Infrastructure creation / utilization Processing R&D Technology Transfer / Skill up gradation Creation of Cold Chain Development of a Robust & Effective Supply Chain Mproving market share

Conclusion Although it’s still early days, these solutions should lead to better supply chain management in Indian agriculture, reducing inefficiencies and increasing farmer realizations, as well as curbing food waste

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