Logistics remains key challenge to Indian expansion [ Transfreez Mobile Refrigeration - India's Most Effective Cold Plate Reefers ]

Getting products on shelves is a significant challenge for food manufacturers and retailers in India, where an under-developed supply chain hampers such efforts. International food groups and logistics companies are working to overcome the lack of infrastructure and, for companies who can offer solutions, a significant commercial opportunity exists. Raghavendra Verma reports.

International companies with specialised logistics technologies able to improve the distribution of branded food products across India could secure significant business, especially those specialising in delivery to retailers, a Federation of Indian Chambers of Commerce and Industry (FICCI) seminar has been told.

Dr Arpita Mukherjee, of the Indian Council for Research on International Economic Relations explained how at the ‘Food Supply Chain in India: Analysing the Potential for International Business' seminar, staged on Friday (28 March) in New Delhi.

The key demand areas, she said, were: "Not actually couriering or freight forwarding but putting in systems like logistic tracking, implementing processes, cold chain technologies, mass track moving technologies, inventory management technologies and within stores the technologies that will improve the shelf life of the products."

Dr Mukherjee is one of the authors of a study on the subject, which was funded by British High Commission in New Delhi and released during the seminar. The report finds that the supply chain infrastructure in India is not well developed and the majority of international businesses have instead built their own supply chain network or are working closely with foreign logistics service suppliers to create them.

Indeed, according to Sachidanantham Swaminathan, general manager of supply chain management specialists GS1 India, his country's retailers are not helping the creation of effective supply chains, because different companies use contrasting inventory management and packaging systems. They fail to adopt global best practices regarding the common identification of products, services and processes, and are not transparent about how these operate.

This can cause confusion with distributors: "Due to non-sharing of information in retail [chain] there is a discrepancy in 15% to 20% of the purchase orders and the actual goods [delivered]," he said, "Most of the trucks have to wait for three to six hours at warehouse because the data does not match and then it goes into quarantine."

Lately, safety concerns, competitive pressures and regulatory requirements are creating demand for more traceability in the food sector said Rupinder Singh Bedi, chairman of task force on logistics management at the PHD Chamber of Commerce and Industry, which promotes good business practice.

"The use of IT for tracking sales and for demand forecasting" is widely known, he told the delegates. Indeed, if large international retailers make a significant move into India, "third party logistic providers will be in demand", he suggested.

According to Bedi, the Indian manufacturing industry could also thrive if it boosted its logistics capacity. There were opportunities to create specific food processing export hubs, for instance selling halal meat to the Middle East, organic food to Europe and the US. It could also build on India's strong vegetarianism tradition to create a vegetarian food export hub.

Sanjiv Rangrass, divisional chief executive of Indian tobacco and food giant ITC's agri-business division, highlighted his concerns over upstream food supply problems, including the uncontrolled use of pesticides, unhygienic processing and farm storage, as well as poor farm profits, which are a brake on improving standards. "Who is going to help the farmer?" he asked. "The entire supply chain has to start from there."

Regarding the business interests of foreign food manufacturers and their local traders, the British High Commission report noted that "due to higher tariffs, sporadic implementation of import restriction and regulations such as FSSA (Food Safety & Standards Act), 2006, it is difficult to import food products into India and this difficulty is likely to continue."

Dr Mukherjee advised that foreign players establish at least one small manufacturing unit in India, which will ease import red tape for other products.

"If foreign companies have a wholly owned subsidiary in manufacturing, they are pampered and treated as an Indian company. They can disable several barriers and avail [themselves of] the benefits of zero import and export duty," she told just-food on the sidelines of the event.

"If a company doesn't want to invest US$110m as Tesco [has done], it can still spend US$50m to open a manufacturing facility and have a better deal than Tesco."

The report cautions that developed country foreign company operating models and strategies may not be successful if replicated in India and the companies should be aware that India is a heterogeneous market where consumption patterns differ across states and sometimes within states. "They should have a clear understanding of the regulations, identify states with conducive policies and select the right partner."

The report added that brand consciousness among Indian consumers is low, but price consciousness is high and it may be difficult for food companies to reap short-term profits. "Sometimes, organised players have to partner with unorganised [unbranded] manufacturers and retailers to enhance their reach," said the report. "A long term phased investment plan (at least 3 to 5 years) with clear strategies will ensure success in the Indian market."

Transfreez Mobile Refrigeration - India's Most Effective Cold Plate Reefers

Source: Just food

Farmers may be allowed to sell directly to consumers [ Transfreez mobile refrigeration-India's most effective cold plate reefers ]

NEW DELHI: The finance ministry is drawing up a plan to facilitate direct selling platforms for fruit and vegetable farmers, a move aimed at cutting out middlemen and containing food inflation, which faces the risk of a re-emergence if monsoon falters. The ministry is working out changes in the Agricultural Produce Marketing Committee (APMC) Act, which governs marketing of agriculture produce, to allow farmers to sell directly to consumers that will save high intermediation costs.

The plan will be presented to the new government that will take office after the elections. "The idea is to cut cost of intermediation.... The platform would seek to bring about transparency and cut through middlemen by allowing sale through this platform," a senior finance ministry official told ET. The blue print is based on a study of Azadpur Mandi in Delhi, the biggest distribution centre for fruits and vegetables in the world, which despite scale has high intermediation costs.

The finance ministry estimates that the APMC Act pushes up the cost of vegetables in the Azadpur Mandi by 12-16 per cent, contributing significantly to the high difference in wholesale and retail prices of vegetables. A less layered marketing structure for vegetables has long been argued to bring down inflation in vegetables that was a few months back running at nearly 20 per cent.

Reserve Bank of India governor Raghuram Rajan has favoured cutting down intermediation costs. "There is a need to reduce the wedge between what the farmer gets and what is paid by the household by reducing the role, number and monopoly power of middlemen as well as by improving logistics," he said last month.

However, the ministry is not in favour of doing away with the APMC Act, which requires that all farm produce be brought to the desig-nated mandis by the farmers to be sold through registered intermediaries. It fears that if the law is repealed, unregulated private monopolies may spring up. Besides, many states may not be willing to go for a drastic revamp. Agriculture is a state subject and eventually it is up to the states how far they want to go.

The ministry of agriculture had, in 2003, formulated a model APMC Act but it is yet to be implemented by all states though some have allowed contract farming and direct sourcing from farmers while others have taken fruits and vegetables out of the ambit of the law. In states like Delhi, a mandi cess is levied even if corporates are doing direct sourcing. There are also issues concerning conditions for renewal of licences.

Congress vice-president Rahul Gandhi's call for keeping perishables out of the purview of APMC Act is yet to be fully implemented by Congress-ruled states. "The most important point is that farmers should have the choice to sell to mandi or outside mandi and prices should not be inflated only through middlemen," said Arpita Mukherjee, professor at think tank ICRIER.

Industry body CII has pitched for giving freedom to farmers to sell their produce and not restrict them to mandis besides establishing firm farm linkages and removal of procedural restrictions such as requirement of multiple licences to trade in each district of a state. The finance ministry hopes to offer a mandi reforms blueprint to the new government to bring in changes to cut down intermediation costs.

Transfreez mobile refrigeration-India's most effective cold plate reefers

Source: The Economic Times

Lack of awareness hits food processing scheme [Transfreez Mobile Refrigeration-India's most effective Cold Plate Reefers]

Jharkhand continues to battle food problems two years after the implementation of the National Mission on Food Processing (NMFP) programme. Experts blame the poor level of awareness among people for its apparent failure.

The centrally-sponsored programme aims to promote food processing through monetary assistance to the country's food processing industries. Part of the 12th five year plan (2013-17), the scheme was floated by the ministry of food processing.

Partnered by the state governments, the scheme provides monetary grants and guidance in a nine-fold scheme that includes modernization and setting up of processing industries, cold chains, reefer vehicles, abattoirs (slaughterhouses) and primary processing and collection centres in rural areas. While the Centre pays 75% of the grants, state governments had agreed to bear the rest.

In 2012, a flour mill was sanctioned in Dumka for which Rs 23.54 lakh was disbursed in the first installment. This apart, four educational institutes that included Xaviers Institute of Social Service (XISS) and Krishi Gramin Vikas Kendra (KGVK) Ranchi, were given sanctions to host entrepreneurship development programmes (EDP).

In 2013, five rice mills and a wheat mill were sanctioned funds for expansion and modernization projects in Hazaribag, Palamu, Dhanbad and East Singhbhum districts. Birla Institute of Technology (BIT) Mesra was sanctioned Rs 1 crore for setting up a five-year integrated food technology course, while the National Skills Foundation India (NSFI), Gurgaon hosted a seminar in the state.

The government has deployed a project management company through competitive bidding to aid the NMFP scheme in the state. Seminars, workshops involving the zila parishads have been conducted and advertisements too published, but Jharkhand is yet to achieve the desired results.

"Despite our best efforts, progress has been slow in comparison to other states such as Gujarat. For example, efforts to set up a cold chain proved futile as no one showed interest despite repeated persuasions." said DP Vidyarthi, deputy director of industries. "Our state being backward, it takes time for people to be aware of such schemes," he added.

Jharkhand's meat production was 162 MT in 2012 while that of milk stood at 19 lakh tones. But the state has not received its due share owing to lack of proper processing units. The lack of proper infrastructure could prove to be a major stumbling block for a state that is aiming for 5209 MT production of vegetables and 978 MT of fruits in 2014-15.

Transfreez Mobile Refrigeration-India's most effective Cold Plate Reefers

Source: Times of India

New year wishes from India's Leading Refrigerated Truck Manufacturers