Hamstrung by labour shortage and logistical woes, agri supply network struggling for survival

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The prolonged lockdown across the country has disrupted supply of essential food items and agricultural products to retail markets due to  closure of units providing logistical and processing facilities.

Companies operating in this space say that bulk buyers like large retailers are facing challenges procuring these items as mandis and wholesale centres are mostly shut. They feel there is an urgent need to look into ways of getting these cogs in the wheel operational.

A large part of what is being made available to the consumers through retail stores is actually from stocked up goods. But that is going to run out soon as consumers are known to panic in these times of crisis.

"Around 70 percent of the mandis are shut and the government only allows exchange of agricultural produce in these mandis. For a few months, I think exchange should be allowed outside these mandis so that trading can happen more seamlessly," said Mahesh Jakhotia, co-founder of Bijak, a Gurugram-based agricultural supply chain startup.

Procuring staples at a large scale is a challenge now, be it potatoes, onions, rice, pulses, wheat. The demand among consumers for these products is high but supply continues to be erratic.

"Manufacturing mills are not getting their supply of raw materials. They are now dependent on Food Corporation of India. Also, getting labourers for the mills and logistics providers for transportation continues to be a challenge," said Jakhotia.

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Vijay Pratap Singh Aditya, chief executive officer of EkGaon, which connects farmers with consumers through a technology platform said that wholesale players may have stocks for 15 days but they also need fresh supplies from processing centres.

He noted that the the mills not being operational is a big problem.

"In the Noida Transport Nagar, more than Rs 35,000 crore worth goods are stuck. Much of that is perishable and is bound to get spoilt," said Aditya.

The only items which have still managed to remain in good supply is vegetables and milk. Vegetables mostly do not need to be transported over long distances and milk production continued unabated during all these weeks of the lockdown.

While the government is slowly easing lockdown rules and certain industries are being made operational, industry observers believe that it will take time to get things back on track. With the large chunk of migrant workers gone to their natives, getting workers to restart factories will be challenging. Further every industry is dependent on a supply network and smaller manufacturers in such nodes need to become operational.

For instance, for fisheries to function, the packaging industry needs to get back online. Packaging can only work once paper mills start chugging and transportation bottlenecks are gone.

Big Basket co-founder Hari Menon recently took to social media to explain how they are facing severe shortage of labour which is causing online orders to get piled up and deliveries to get delayed.

"Places in the north east are dependent on other states like West Bengal for their supplies and that happens mostly through the highways. It is very difficult currently to book a big truck. These kinds of localised crisis has already started taking shape," said Aditya.

With all the major cities been identified as 'COVID-19 hotspots', these issues are not going to be sorted soon.

The supply bottlenecks have also compounded problems for restaurant owners, who are running takeaway operations. They need raw materials to prepare food but their regular suppliers have mostly vanished. A restaurant owner in New Delhi explained how he had separate suppliers for meat, vegetables, fruits and staples.

"Usually, there is an agreement between restaurant owners and these suppliers and payments are made only once in a month or six months depending on the credit cycle, all those supply chains have been disrupted, these chains cannot be replaced at such a short notice," he said.

LocalCircles, a hyperlocal crowdsourcing platform said that as per their surveys conducted over 17,000 respondents there is a slight improvement in availability of essential goods through ecommerce.

Still 42 percent of the respondents did not find essentials through online platforms. In case of retail stores, 33 percent respondents could not find their essentials, over the last two days.

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