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Industry experts estimate more than 30% of all fresh produce is lost or spoils before it reaches the market. On average, goods pass through six or seven middlemen before a consumer can buy it, resulting in tortuous journeys, big markups and poor quality.
In 1966 the government introduced a law that banned farmers from dealing directly with retailers and forced them to sell through licensed middlemen, called mandis. The law, was aimed to give farmers a fair and consistent price. But over the years it grew into a monster, gaining layer upon layer of intermediaries, none of whom added any value to the fruits and vegetables they traded even as they added on their own margins.
India lacks a network of cold storages and refrigerated trucking facilities that can efficiently transport fresh fruits and vegetables from a farm to the shop-floor while retaining its freshness.
The country's 35 states and territories run separate tax and duty systems. To get from Bangalore to Hyderabad, about 550 km away, for example, the driving time is about 16 hours, but stops at border and tax-inspection checkpoints add two to three hours to the …show more content…
Because profit margins are thin in the grocery business, shipping delays and spoiled merchandise can be harmful to the bottom line.
Solution
The McKinsey Global Institute, a think tank, estimates India's retail market will be worth $1.52 trillion by 2025, up from $370 billion in 2005. Though the relative importance of comestibles will shrink as people earn more disposable income, McKinsey estimates the food-and-beverage category will still account for 25% of all retail spending in 20 years. Big retailers like Reliance fresh and Future group have taken note of this big opportunity.
Government should improve infrastructure facilities like cold storage warehouses, roads and transport system. Tax laws must be rationalized and it should also liberalize laws and allow big retailers to source fruits and vegetables from the farmers directly.
Unfortunately, the government is too slow to react. The big retailers are taking things into their own hands. They are investing heavily into building their own end-to-supply chain system. They are pressurizing government to relax laws and rationalize
In 1966 the government introduced a law that banned farmers from dealing directly with retailers and forced them to sell through licensed middlemen, called mandis. The law, was aimed to give farmers a fair and consistent price. But over the years it grew into a monster, gaining layer upon layer of intermediaries, none of whom added any value to the fruits and vegetables they traded even as they added on their own margins.
India lacks a network of cold storages and refrigerated trucking facilities that can efficiently transport fresh fruits and vegetables from a farm to the shop-floor while retaining its freshness.
The country's 35 states and territories run separate tax and duty systems. To get from Bangalore to Hyderabad, about 550 km away, for example, the driving time is about 16 hours, but stops at border and tax-inspection checkpoints add two to three hours to the …show more content…
Because profit margins are thin in the grocery business, shipping delays and spoiled merchandise can be harmful to the bottom line.
Solution
The McKinsey Global Institute, a think tank, estimates India's retail market will be worth $1.52 trillion by 2025, up from $370 billion in 2005. Though the relative importance of comestibles will shrink as people earn more disposable income, McKinsey estimates the food-and-beverage category will still account for 25% of all retail spending in 20 years. Big retailers like Reliance fresh and Future group have taken note of this big opportunity.
Government should improve infrastructure facilities like cold storage warehouses, roads and transport system. Tax laws must be rationalized and it should also liberalize laws and allow big retailers to source fruits and vegetables from the farmers directly.
Unfortunately, the government is too slow to react. The big retailers are taking things into their own hands. They are investing heavily into building their own end-to-supply chain system. They are pressurizing government to relax laws and rationalize