Answer: 

Introduction:

The food processing industry encompasses a wide range of activities, including the processing, preservation, packaging, and distribution of food products. It is critical to India’s development as it establishes a vital linkage and synergy between the two pillars of the economy, the Industry and Agriculture.

Body:

But food processing industries face many challenges especially in marketing and supply chain management.

Issues in agricultural marketing and supply chain management:

• Poor transportation infrastructure: There is fragmented market and poor mandi linkage to farmers which impede transportation. There is a lack of multi-modal transport system to efficiently transport perishable commodities.
• Accessibility: Farmers could buy and sell only in the government-designated Agricultural Produce Marketing Committee (APMC) market-yards, making accessibility an issue.
• Intermediaries: There is a lack of direct access to market for the farmers that lead to their exploitation in the hands of intermediaries. Market is dominated by organised traders
• Information asymmetry: There are information irregularity between the buyers and sellers that lead to corrupt practices, giving inaccurate input data.
• Lack of storage infrastructure: There is a lack of storage facilities that often lead to spoilage of the produce. This leads to large post-harvest losses.
• Dominance of small-scale industries: Food processing sector is mostly dominated by MSMEs and they face issues of non-availability of institutional credit, outdated technology, infrastructure constraints, especially lack of integrated cold storage, skilled manpower shortage, etc.
• Demand forecasting is totally absent and the farmers try to push whatever they produce into the market.
• Informalization in Food Processing Industry: The food processing industry has a high concentration of unorganized segments, representing almost 75% across all product categories. Thus, causes inefficiencies in the existing production system.

E-commerce can help in overcoming several of these issues by:

• Middlemen elimination: E-Commerce presents an advantage to both consumers and sellers. It eliminates most middlemen and inventory reduction which makes it easy for a seller to pass on the benefits to consumers at low prices.
• Aggregation: E-commerce can connect with FPOs or by itself connect multiple farmers in a region. This aggregation is useful for both the e-commerce firms as well as farmers.
• Better quality: E-commerce authorities can work to encourage farmers to produce better quality crop and meeting exchange standards. The assurance of a higher premium on this produce can act as a boost to farmers.
• Better sales: For the farmers, it promises more options for sale. E-commerce would increase their access to markets through warehouse-based sales and thus obviate the need to transport his produce to the mandi.
• Better price for farmers: Price distribution alerts through mobile phones could serve as a reliable reference price for farmers and correct the information asymmetry. Rising internet usage and penetration of smartphones aids this.
• Monitoring: RFID, GPS and such other technologies can be easily applied today for monitoring the warehouses for the incoming and outgoing stocks.
• Customer Centric: For consumers, easy delivery becomes an advantage with low prices while, on the other hand for sellers, cross-boundary selling gives multiple benefits including assured markets and higher returns.
• Accessibility: It helps by providing an accessible nationwide market for the farmer with equal prices for the quality of his produce.

Conclusion:

E-retailers engagement with FPO’s may bridge technological gaps and bring more effective use of technology giving consumers a quality out-put and farmers and retailers a far better price. Government has promoted private players such as Big Basket to fill the gap of the B2C market through policy initiatives like direct purchases and e-trading. Overall, E-commerce has the potential to alter the agri-marketing landscape in favour of the farmers of India.

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