An agricultural value chain is defined as the process or activities by which a company adds value to agricultural produce and supplies the product from farmgate to the end consumers (farm to fork). The need of the hour for Indian agriculture is to create commodity-specific value chains that contribute to overall growth.
Consumer preferences are changing as incomes rise across the board, and a shift from a cereal-based food diet to a fruit and vegetable-based diet is underway.
India is the world’s leading agricultural commodity producer. Despite this record level of global production, farmer income has not increased significantly. The establishment of a value chain for perishable commodities such as fruits and vegetables can be critical because it can reduce the price spread for farmers, allowing them to earn higher profits. Improvements in infrastructure, such as road networks, mandis, and storage facilities, can aid farmers in effectively conducting the delivery process in nearby markets and maintaining the quality of products.
Encouraging e-NAM among farmers, which is a unified pan-India agricultural commodity trading portal can help in increasing the transparency of commodities exchange and encourage the development of an Interstate value chain link. Likewise, Operation Greens Scheme which was launched in 2018 for TOP (Tomato, Onion, and Potato) can change the current scenario of the agricultural value chains in India.
The development of FPOs, cooperatives, and SHGs will improve the bargaining power of small and marginal farmers and help in forming strong vertical farmer-market linkages. Contract farming which is a pre-sowing agreement between a corporation and farmers can protect farmers from future price volatilities and build a trust level between the two that can help in building long-term relationships.
To improve the global value chain, policies such as high tariffs and import restrictions must be carefully reviewed. Flexibility in trade permissions can prove as a lending hand to expand the market access in the value chain. The provision of microfinance to small traders and small farmers will eliminate the dependency on money lenders in the market which charge very high-interest rates. Access to finance with low-interest rates help local firms in the value chain to acquire the required resources and export agricultural commodities in the external markets. Recently India crossed the milestone of 50 billion dollars export of agro-commodities.
