Coping with Covid, the New Normal of Fruits & Vegetables Supply Chain

In the wildest of dreams no farmer expected an overnight change of the market situation. The nationwide lockdown started from 25th March. All most everything were shut down. Essential services although exempted, were under much of the confusion, state borders were sealed, movements restricted, labour moved out and police were on the street. While essential services, were allowed, non- essential goods and services clogged the roads, trucks got stranded on the highways. The migrant and daily wage labourers wanted to rush back to their villages when no transport means were available.

Lockdown effect on Agriculture markets

Agriculture markets (mandis) being part of the essential services was not under any obligation to be shutdown. But many of the operating middlemen (Adat), commission agents preferred to stay at home. Some left their operations to be managed by their Accountants (Munim’s). Consequently, a completely new market scenario emerged.

1.      Most mandis across the country operated at around 50% of their capacity. Some were closed too.

2.      Most cash rich Adat/Commission agents took the back seat, preferred not to operate during these hard times.

3.      The Munim’s/Mashakhors (small traders) /Petty-Adat whose credibility and credentials were unknown, were at the helm of the operation.

4.      The worst of it that the Munim’s/ Mashakhors /Petty-Adat lacked the requisite operational credential to make a legal entry in the mandis. Hence, had troubles at security-checks.

5.      Vehicles with Fruits and Vegetables could operate after the inspection, but empty vehicles/ vehicles with empty crates on return trips were held up at various check-posts.

6.      When these vehicles carrying essential items could not get return load the freight costs shot up.

7.      Migrant labours, even the skilled ones (required for banana/ grapes/mango) either left for home or were stranded.

8.      Driver’s refuse to go to certain specific localities which were suspected of Covid.

The farmer had little choice; but to operate. His crops were maturing and if it were fruits and vegetables, he could not even hold. Thus, he made an effort to send his produce to earn something, even at a very low price.

Supply chain operation during the lockdown

For a farmer the new norms of social- distance, hand wash and sanitization were unheard of. But the limited operational supply-chains demanded these, for without which they were not willing to pick up the goods. Farmers had little choice but to adopt the basic hygiene’s quickly in order to restore his supplies. But there were many farmers who could not manage their traditional supply chain. As a result of which there were stockpiles of farm produce at many localities. Government intervened with the option of railway freight. However, these had limited reach, and the fragmented lots had few takers for consolidation. The traditional supply lines to key consumption markets broke-down as there were little demand consolidation at the mandi levels. The unorganised supply system, which is almost 97% of it, collapsed within days of the lock down declarations. Yet, no one was accountable for it.

Urban Fruits & Vegetable retail operations

Most of states decided to shut down the local mandi, weekly bazaars or the rayatu (farmers) bazaars in order to avoid crowding. Small traders also failed to reach to such places in want of the public transport. As a result of this the consumer dependency on organised retail and e-commerce surged up dramatically. Many of these organised players were quick to adopt these sanitization practices and restore their operation quickly. Some of them marketed the hygiene features as their offerings to re-assure the customers. Many of the retailers came up with innovative ways to maintain social distance and hygiene. The statutory compliances became too difficult to be managed of frequent notifications from multiple agencies. Government too was on learning mode as to how to manage the Covid.

Consumers apprehensions confounded

As the smaller mandis were closed, the APMC consumption mandis became crowded. There were too many regulations like change of operation timing, alternate shop in operations, day specific mandi operations. There were mismatches of goods arriving, buyer’s presence and commission agent availability as a result of these the prices were swinging up and down. The mandi operations became chaotic, confused and callous. These started to lose control. At the same time there were hue & cry of farmers on distress sale and consumers too started making panic purchases with every wave of announcements. So, government in most places neither could close these operations, nor run it in a controlled way. There were many reports of surge in Covid cases, particularly in mandi operational areas. Urban consumers became anxious whether the vegetables are safe or not. Therefore, the food safety was hitting hard on their mind. They started to look out for safe and reliable options like organised MRF’s & online shopping options.

Prominence of supply chain issues

The farming supply chain issues which were there even without Covid became much prominent for the fact that, these were the only services that were operational. Issues like border restrictions, restricted trading within mandi jurisdiction, transport availability, freight cost, distress sale and delayed payments got amplified during this crisis. While the governments were taking decisions to prevent Covid, they were equally vigilant on distress the farming sector was undergoing. The economy came to stand still, with the only silver lining of Agriculture. Therefore, the governments’ stakes were high on it.

Decisions on Agriculture

Covid brought in a slew of decisions which were unheard of in Agriculture sector. DBT (Direct Bank Transfer) was at its best in its effectiveness. The Government wanted to reach out to farmers during this distress, and DBT came to its rescue. Money transfer was certain and right on its target. The next best decision was to declare “One market, One India”. Remove the APMC tax completely and allow transactions from anywhere. As the e-commerce demand were growing fast, government too rapidly added up APMC markets to e-NAM network which crossed 1000 plus. Freight and storage subsidy under the Operation Green was something unheard of. It was a decision, which was not only out of the box, but it could potentially bring in a level playing field for the farmers who do not have the access to market and want to catch up a distant market. The 6-month trial of storage and transportation subsidy could open a new set of subsidies for better marketing. The Prime minister’s call for ‘self-sufficiency (aatmanirbhar)’ and ‘Vocal for Local’ were building up positive sentiments for farmers.

The new emerging Normal

Consumers’ behaviours started to shift. The buying habits started to change. They preferred to order fruits & vegetables online than to move to crowded marketplace in fear of Covid. They no more are just looking for fresh vegetables, but are also looking for safe produce. Reliability and trust of a channel is adequately being weighed while making a choice of purchase. Food safety, traceability and low MRL’s are the consumers’ voice, which even farmers are hearing about. A small number of farmers also tried out selling on-line. Online Start-up’s suddenly ceased the opportunity of lockdown to become the stars. Their sales zoomed up. Sensing the potential strength of the future online markets, many large players looked at the investment opportunities thus Reliance launched its Jio-online platform and joined hands with were Face-book & Google. Sensing the consumer’s mood, there were vegetable washing products launched by Marico& ITC. Farmers too have become, wise as to plant only that much quantity that they are capable of selling. The unorganised supply chain of fruits and vegetables had a quick exposure of several uncommon phenomenons in a short period.

As per the Nielsen’s survey, the trend of staying at home and eating home-cooked meals (Ghar ka khana) will continue to be there for a long time. So also, the demand for immunity boosting fruits and vegetables will be high. The demand for products like raw turmeric, ginger, lemon, amla will be in an uptrend. Many meat substitutes or the vegan- meat will see the replacement of the non-veg component of popular burgers or even pizza. Jackfruits & Soya based products would be the front runners on the race. FSSAI (Food Safety Authority of India) has also recommended 6 foods (Amla, Orange, Papaya, Capsicum, Guava and Lemon) rich in Vitamin-C to boost immunity during this pandemic.

Implementation will make the difference

Covid fast forwarded many of the legislative decisions. Much is awaited, as to how these reforms are implemented to transform our fruits and vegetables distribution system. Do we really have the blueprints as to where we want to move, on which trajectory? Are we backed up with plans to achieve ‘doubling farmer’s income’? Or are we moving the Bihar way, sitting quiet after legislation.

Legislations cannot change the situation but the implementation of it. For example, the Government of Bihar repealed its APMC Act with effect from 2006. Today the market structure there is almost non-existent, and the assets have deteriorated. The market per se in Bihar has been just a strip of land.

Therefore, meticulous planning, multi- stakeholder involvement and massive replication of  pilots are essential to transform the existing supply chain system to a more responsive farmer centric one.

(Disclaimer: Opinions expressed are personal views not of any associated organization)