For farm 3.0 to become a reality, India needs an infrastructure
Trade and commerce took off like never before as the third wave of globalization swept the globe, and liberalization occurred in the 1990s in India. The grain industry didn’t hold back either and has subsequently developed. Logistics management in the agriculture sector is becoming an ever more important factor in ensuring that the production and grain supply chains work smoothly worldwide and that there is never a shortage since the demand for agricultural commodities is still high on a global scale.
Given that procurement occurs from many marketplaces and accounts for around 20% of the overall gross value of the commodity, logistics is crucial to a company’s ability to be successful. Farmers, millers, dealers, industries, and other participants in the value chain of grains today seek simple, quick access to freight with more pricing transparency. This illustrates how logistics economics are taken into account in the stakeholder’s everyday decision-making processes.
Every quintal of grain produced must be carried by truck at least once before it reaches its destination, making grain transportation a crucial link in the chain that determines the success of our food supply.
For negotiating and controlling transit vehicles, traditionally grain dealers, millers, and industries communicate with brokers through phone calls. The grain logistics sector connects 60 lakh individual fleet owners and railway networks with 2.5 million millers and 10 million dealers (wagon aggregators). The majority of the stakeholders operate in constrained lanes, rely heavily on brokers, and operate inside constrained networks.
Their whole business is based on scant information, few insights, opaque freight costs, drastic margin reductions, and excessively large commissions. As a result, fleet owners typically experience lengthy wait times and empty miles. It may be concluded that the current method is unreliable, labour-intensive, and ineffective. In addition to being a burden for dealers and millers, the issue mentioned above also causes difficulty for farmers. The farm gate level is where the logistical war begins. Even local transit ends up costing them a fortune.
According to statistics from the most recent estimates, grain logistics accounts for 55% of all freight transportation in India, and 90% of it uses an on-the-spot system. Due to the fact that “On-Spot” TAT for seeking & reserving a truck is crucial, delivering vehicles on time becomes extremely vital. In our market study, we also discovered that the lack of vehicles results in the cancellation of trade agreements 30% of the time.
Logistics is the bigger headache and the focal point of the entire supply chain. It suffers from numerous inefficiencies, a lack of freight transparency, truck shortages, higher brokerage and marginal cuts, frequent cancellations, and zero tracking, all of which contribute to a disorganized system with serious consequences.
Companies like Rivigo, BlackBuck, Delhivery, and others are now primarily focused on industries including e-commerce, retail, auto, cold-chain, and FMCG.
Due to changes in operational model, data, average order value, and stakeholders, these sectors are highly different from agribusiness, which suggests different economics in and of themselves. This demonstrates the requirement for an exclusive Agri logistics platform. Market linking cannot be effective until effective logistics are in place.
Services devoted to establishing an efficient, open and optimized supply chain for grain stakeholders are urgently required, along with a desire to boost farmers’ income over the long term by addressing the secondary side of the value chain.
The last ten months have seen a 20X growth rate in grain logistics, which is what makes up their GTM. A platform for procurement that brings buyers and sellers of grain together and efficiently connects them, together with a platform for freight that enables them to carry and dispatch goods in an orderly way, might be very helpful.
The ultimate goal should be to establish a situation in which all three major parties—the customer, the vendor, and the carrier—benefit. Platforms differ from other market participants in how they use technology to fill in the gaps. It’s imperative to scale up the logistical component while upholding stakeholders’ confidence. Utilizing flexible procurement services and finance based on factoring is made easier and more appealing for customers by treating logistics as an entry-level service. The customer’s complaints must always come first, and they must be made the main benefactor of the value chain for the ecosystem to be free of inefficiencies.
Edited by Prakriti Arora
