How Much of India's Agricultural Produce Is Wasted Annually?

Note: This is the first in a two-part series. In Part 2, we will discuss the losses incurred by government agencies in the storage of procured commodities.

The agitation by India’s farmers on Delhi’s borders has completed one month and the sixth round of talks two days ago may have provided a window of reconciliation.

However, the more contentious issue of repeal of the three farm laws and legal guarantee for minimum support price (MSP) stills remains on the table.

While a number of commentaries have been written on various aspects of food management by the government, there are two important dimensions that have been touched upon in polarised speeches, but not really debated.

The broader issue – just how much of India’s agricultural production is lost to waste due to a lack of appropriate infrastructure?

Also read: Over 1,500 Tonnes of Food Grains Wasted at FCI Godowns During Lockdown: Govt Data

This question involves two aspects. The first relates to losses in the food supply chain and the second relates to losses in government warehouses storing wheat and rice.

Generally speaking, ‘food loss’ takes place from the farm up to the retail-level, while the term ‘food wastage’ is used for loss of food at the retail, food service, and household level.

In many countries, food waste has been studied but there is no authentic study of the same in India.

The food items for which the best-to-use date has passed are discarded by supermarkets but the extent of the value of such food items is also not known. The United Kingdom (UK) has taken a lead in the direction of reducing food loss and food waste. Compared to the 2007 baseline, it has reduced the loss and waste by 27%.

Agri-losses

In India, the Central Institute of Post Harvest Engineering and Technology, Ludhiana (CIPHET), an institution of the Indian Council of Agricultural Research (ICAR) has conducted two detailed studies of agri-losses.

The first one was conducted between October 2005 and February 2007 on the recommendation of the parliamentary standing committee of the ministry of agriculture. CIPHET submitted its report to the committee in 2010 and it was finally published in August 2012.

The second study was sponsored by the ministry of food processing industries. It was based on production data of 43 crops and livestock produce in 2012-13 and wholesale prices of 2014. The study was conducted in 120 districts in 14 agro-climatic zones and the report was published in March 2015.

The losses incurred at various stages of production and movement in cereals, pulses, oilseeds, plantation crops, spices, vegetables, fruits, milk, fisheries, poultry and meat were studied. The study of farm-level operations included harvesting, collection, sorting, grading, drying, packaging and transportation. The losses in the storage channel included storage at farm level and godown/cold storage, wholesaler, retailer and processing unit.

Contrary to the popular perception of loss of about one-third of agricultural and horticultural production, the CIPHET study of 2012-13 found that the overall losses were much lower.

In the case of cereals, losses ranged between 4.65% (maize) and 5.99% (sorghum). In the case of wheat and paddy, the losses were 4.93% and 5.53% respectively. Moreover, the losses were higher at the level of farm operations. They were 4.67% in the case of paddy and 4.07% in the case of wheat. The loss in storage was only 0.86% for both wheat and paddy.

As expected, the perishable crops suffered much higher losses. In the case of mango, the total loss was 9.16%. Here also, the loss at farm operations was much higher at 6.92% than the loss in storage at 2.24%. The loss in guava was 15.88% while the same in the case of apple was 10.39%.

Also read: Is the Agricultural Package Addressing Challenges Small Farmers Face in a Pandemic?

In the case of vegetables, the loss in the case of potato was 7.32% out of which 6.54% was at the level of farm operations while the loss in the storage channel was only 0.78%. This is due to the large scale storage of potatoes in cold stores. On the other hand, the loss in tomato was 12.44% which was contributed by 9.41% at the level of farm operations and 3.03% in the storage at wholesale, retail and processing levels.

The total loss in the case of inland fish was 5.23%, out of which only 1.05% was in the storage channel. For poultry meat, the total loss was 6.74% but here the major loss was in the storage channel at a high of 4%.

Due to the success of operation flood, the total loss in milk was only 0.92%. Of this, only 0.21% was contributed by the storage channel.

Table:1 – Losses in the harvest and post-harvest operations (percent)

(Source: Report on the assessment of quantitative harvest and post-harvest losses:  ICAR-CIPET, March 2015)

The study estimated the total volume of losses for all commodities to be about Rs 92,651 crore. 

According to Estimates of Value of Output (Central Statistical Organisation, 2016), the value of production of horticulture in 2012-13 was Rs 2,84,000 crore while the estimate of losses was about Rs 31,500 crore. This comes to about 11%.  The value of production of livestock in 2012-13 was Rs 5.08 lakh crore while the estimate of losses was Rs 19,000 crore. Thus, the losses were only about 3.7% of the value of production.

Need for raising awareness of farmers

It is clear that the answer to reducing losses in agriculture and horticulture sub-sectors lies not only in setting up cold chains and storage facilities but also in improving the farm-level operations. Reduction of losses during harvesting and threshing as well as sorting and grading of produce is as important as setting up modern storage/cold chain facilities at various levels of marketing after the produce has been sold by the farmers. Education of farmers for better harvesting practices, improved aggregation through FPOs and reduction of the time lag between harvesting and sale of produce can reduce the losses in the supply chain. 

The CIPHET study of 2012-13 also found that average losses for food grains, oilseeds, fruits and vegetables had declined by about 2% as compared to the previous study of 2005-07. The losses had declined in the case of apple, guava, mango, papaya, green pea, mushroom, potato, tapioca, inland fisheries, mustard, groundnut and wheat. But they had increased in the case of paddy, maize, soybean, eggs, marine fish, poultry meat, milk, onion, banana and citrus.

Some of the increase in losses could be attributed to the increase in production between the two studies.

In the last few years, the supply chains of apples, banana, peas and eggs have attracted large private investment. This would have reduced the losses but the exact quantum will be known only when the next study is conducted.

Also read: How India Can Improve Its Food Security After the Pandemic Passes

It is unlikely that in the short-term, corporates will invest large sums in improving the supply chains of perishable produce incurring losses like horticulture and meat unless they see an opportunity to sell the produce through organised retail, preferably through their own outlets. Poultry and milk have attracted private investment as the marketing is better organised and the corporates (including Amul) dominate the organised market. This has resulted in lower losses despite their high perishability. 

Since 2014, several states have delisted fruits and vegetables from the purview of their APMC Acts. It means that trading was possible outside the APMC, without paying any market fee and other charges. Several startups and e-commerce players have entered this space but informal interactions with them show that they have not found it viable to source their produce from farmers directly. They still use the APMCs in large cities for purchasing fresh produce. 

If the three laws passed by the parliament stay on the statute books, the corporate interest may first manifest itself in higher value and non-perishable produce like pulses and oilseeds which can be sold through organised retail, including e-commerce. 

Now that the Essential Commodities (Amendment) Act, 2020, will be triggered only if the price rise in non-perishable is 50% higher than the average in preceding one/five years, they may find that enough space exists for them to make handsome profits by sourcing the produce directly from farmers/FPOs.

For perishable commodities, it seems that the state and the Centre will have to find more resources for investment in supply chains so as to reduce losses in farm operations as well as storage channels. 

Siraj Hussain retired from the Indian government as Union agriculture secretary. Presently, he is a visiting senior fellow, Indian Council for Research on International Economic Relations (ICRIER).