Technology and Post Harvest Losses – An Inverse Relationship

Posted on July 22nd, 2022

Although India continues to lead the production of staple cereals, fruits, and vegetables, the average productivity for many crops remains low and farmers are not well compensated. The last decade has witnessed the agri-tech industry flourishing in the country, which provided a much-needed impetus to the sector’s growth.

“Today, technology can address most of the challenges that farmers face – from soil issues, climate and irrigation, to supply chain gaps.”

Despite the remarkable progress made in increasing global food production, the FAO estimates1 that an estimated one-third of all food produced globally is lost or goes to waste and approximately half of the population2 in the Third World does not have access to adequate food supplies due to wastage in the post-harvest phase. An important issue that concerns the country’s scene to address post-harvest wastage, is not setting a Sustainable Development Goal (SDG) target for the same.

India is one of the few countries to have conducted two national surveys, led by the Indian Council of Agricultural Research (ICAR), as well as several sub-national studies and case studies by universities, local research institutions, non-governmental organizations, and international organizations, to estimate post-harvest losses of selected crops at various supply chain stages. However, no similar research of such scale to measure food waste has been undertaken.

Another primary concern is that even though India continues to lead in the production of staple cereals, fruits, and vegetables, most marketplaces in India do not have systems in place that can sort commodities objectively on various parameters such as colour, size, and visual defects.

This lack of standardization for horticulture commodities has also ensured that produce is not to be traded on electronic spot trading platforms. In addition, because the quality of produce is always uncertain and crops are perishable, a fragmented supply chain ensures that market linkage is localized. Thus, there is never enough storage time to figure out the right buyer or market for a commodity, which compounds the problem.

A collective solution to mitigate many such challenges is by incorporating post-harvest technology, which is available in a gamut of types, catering to each issue individually. Innovative solutions like precision farming, artificial intelligence-assisted automation, and sensor and drone-based agri-input applications are reshaping the agri-farming ecosystem.”

From harvesting to processing, to quality control, assaying, marketing, and trade settlements, post-harvest activities are a system of operations that are both technical and economic and are designed to minimize post-harvest losses, improve distribution, and ensure that the product is readily available for marketing.

“Technologies such as quality control and assaying4 ensure that the population’s food requirements are met by eliminating avoidable losses.”

Globalization, population growth, and rising average income all contribute to an ever-increasing need for nutritious food in both quantity and quality. This technology3 ensures that the food requirements of a growing population can be met by creating nutritive food items from raw commodities by proper processing and fortification. The presence of digital platforms that can be accessed by producers and buyers also entails that fair price for goods is ensured. In addition, smart warehousing, credit availability, and timely payments ensure that growers are provided with all the tools for them to execute trade contracts.

Rapid industrialization has shifted the horticulture industry to urban areas in India from rural areas, where 70% of the population5 depends on agriculture. This has resulted in capital drain and decreased employment opportunities in villages, which has consequently caused a mismatch of economic growth and standard of living.

“Therefore, technology and digitization must be leveraged to establish technological interventions across the horticulture value chain to promote real-time decision-making.”

Information asymmetry is present in almost every sector of the nation. Digitization has the potential to reduce this asymmetry to a very large extent, which will subsequently increase the efficiency of the value chain. Technological interventions such as Artificial Intelligence and Machine Learning for quality assessment, market linkages, and integrated supply chains for storage and transportation have become critical for this sector.6 Fintech-led credit and insurance services, predictive pest control, real-time yield prediction, and intelligent machinery have all played a role in increasing output.

The establishment of digitally connected supply chains due to its inherent transparency, fairness, and access to real-time information through all stages of agriculture can transform the agri-tech sector.

Connected supply chains empower farmers to choose buyers across markets thus guaranteeing the best available price7.

In addition, the availability of data and usable data trends is instrumental for growers and buyers to manage their crops, inventory, and market connectivity. This also leads to defining and maintaining the quality standards of produce that will help in achieving overall food security and prosperity for all stakeholders. It is expected that a clear definition of market-acceptable parameters for produce and mobile-based technology for instant inspection will see widespread adoption amongst the grower and trader community.

Quality assessment also brings in objectivity and ensures that the right material reaches the right market and is consumed within time, thus reducing wastage. It works on the philosophy of First Expire, First Out (FEFO), which means that produce that is on the verge of getting spoiled can be sold first.

One of the biggest issues that plague the agricultural sector is the seasonality of labour8. With enhanced digitization and mechanisation, this risk and associated costs can be mitigated.

“Advanced sorting, grading, packing machines and post-harvest storage equipment are being developed, which will reduce wastage and increase productivity.”

We also anticipate that combining drone and satellite imaging with smart image recognition algorithms will become the norm for real-time mapping of crop yield estimates9. This will allow governments, corporations, growers, and buyers to understand volumes of production better and, therefore, predict price movements better. The post-harvest value chain is a monumental aspect of agricultural production.

However, inefficiencies in this value chain stifle farmer incomes and pose a barrier to the realisation of the full potential of the country’s agriculture sector. However, the presence of innovative solutions for procurement, price forecasting, dynamic product pricing, technology-enabled farm value additions, commodity grading/sorting, and traceability will go a long way toward decreasing food wastage.

A multi-stakeholder action coalition for sustainable post-harvest systems, can create cooperation and partnerships, prioritise the agenda to conduct impactful research, organize action, support the implementation of policies, and/or bolster existing ones. As a start, the private sector with the government to strengthen linkages will further help to streamline the supply chain and provide adequate remuneration to the farmer.

Therefore, it is key that technology is leveraged to improve food security, by reducing food losses during the post-harvest stage for horticulture produce. For more efficient and sustainable food supply chains, bringing gainful production to farming, discovering ways to limit food wastage, and maintaining nutritional security, supply chains must be integrated from farm to fork.

 

Reference

Mapping Horticulture & Agri-Food Loss : How Technology can Drive Sustainability and Global Impact

Posted on July 14th, 2022

Introduction

Every bite of food tossed into the bin is an action spent on expanding some increasingly complex, yet known problems. Minimizing food waste should be globally prioritised since it keeps food out of landfills, and lowers food expenses at a macro level—by cutting disposal costs across restaurants, farms, and other organisations dealing with food materials.

But first, we need to properly understand the two forms of unwanted food disposal. “Food Loss” refers to underutilised agricultural, forestry, and fishing products, that occurs during the food manufacturing and distribution stages, while “Food Waste” refers to edible food that is thrown away, squandered, or expired, and mostly occurs at the retail stage.

According to the Boston Consulting Group, about 2.5 billion tonnes of food are wasted or lost globally each year, with one-third of it occurring during the production stage. Curbing, if not at least largely reducing various catalysts of food wastage and loss is crucial, as other than contributing to shooting up figures in food indices, various additional unnecessary expenditures on services such as imports, packaging and processing, and distribution among other things are meaninglessly spent upon.  

Over 40% of the food produced in India is lost each year due to fragmented food systems and inadequate supply chain management, as per the FAO. With 74 million Indians likely to be at risk of suffering from increased hunger levels, it is important to proactively respond to the issue.

A landfill of rubbish but a mountain of chaos

Food wastage is known to cause economic losses and negatively impact the environment. According to some recent observations made by the FAO, one-third of all food produced globally for human consumption is wasted, thereby costing the world’s economy US$1 trillion annually. Food wastage can both, directly and indirectly, impact the environment, by leading to the emission of greenhouse gasses, increased water scarcity, risks to biodiversity, and soil erosion on a global scale. 

In India, due to a fragmented and inefficacious supply chain system, almost 40% of food is wasted annually. The household food waste estimate in the country is 50 kg per capita each year, and when described on a cumulative basis, 68,760,163 tonnes a year.

By 2030, it is estimated that the annual wastage and loss of food will hit US$ 1.5 trillion. Not dealing with the same, will yield in various disasters, such as shortage of fresh water, and hunger among other things. With about 820 million people malnourished across the world, the global food system’s inefficiency will cause significant economic and sustainability impacts.

Businesses, particularly those in the food value chain, can handle significant clout in the market. They should be agents of leading the change, by addressing the concern of global food loss and waste at multiple levels.

Incorporating technology

The first important step to reducing food loss and waste is measuring them. By using technologies to sort and grade agricultural produce, the harvested crops can be effectively classified into different categories. Most marketplaces in India do not have systems in place that can sort commodities objectively on various parameters such as colour, size, and visual defects.

Human mistake is responsible for 10.9% of all food waste in production operations, according to research, and production defects account for 8.7% of the total. A paramount measure to save consumable food from being wasted and/or lost is keeping information about the state of the inventory transparent and traceable.

By standardizing the use of blockchain technology to digitise supply chains, food businesses can share data in real time, from farm to shelf, offering deeper visibility. This will help companies measure first to manage the losses and wastage later, thereby saving billions of dollars annually. According to the Champions 12.3 study, for every US $1 spent on curbing food loss, you save US $14. 

“Blockchain helps in breaking the silos of the supply chain, by enhancing the food items’ traceability, safety, and shelf-life.”

We see tremendous efforts by the Agritech community in India which offer services that cover every aspect of agriculture, from planting to harvesting. Farmers will be able to estimate crop growth and production, analyse field stress, monitor soil health, develop broader market linkages, and test grain quality by combining AI, image processing, RPA, and data analytics. When disputes about the food products’ quality arise at the buyer’s entry points, perishable food items are frequently blocked from accessing the market. This will cause them to deteriorate, which will ultimately result in their waste.

Imparting modern logistical services with quality-mapped traceability, where real-time tracking of the produce during their movement, will help in avoiding disputes over the produce’s quality after reaching buyers across the chain. 

Also, equipping warehouse technologies, and digitally controlling storage parameters for efficient management of inventory will help result in a much more profitable farm-to-fork supply chain. Modernized controlled atmospheric storage (CA) and dry storage warehouse facilities on basis of commodity requirements, will greatly assist in maintaining quality, and reducing perishability factors.

The same may be said regarding food waste at the business level. A digital tool, such as an image-based quality determiner can analyse food, assess how fresh it is, and then provide alternatives on what to do with it rather than throwing it away. A study found that one-third of the rejected items were worth restocking and selling the next day after examining food products using such technology, notably fruits, vegetables, and other perishables that were heaped to be discarded at the end of a work day. 

 

Reference
  1. https://blogs.intellolabs.com/en/before-we-reduce-food-loss-we-need-to-measure-it
  2. https://www.greenly.earth/blog-en/global-food-waste-in-2022
  3. https://blogs.intellolabs.com/en/before-we-reduce-food-loss-we-need-to-measure-it
  4. https://www.indiatoday.in/india/story/india-hunger-index-global-food-policy-report-1950452-2022-05-17
  5. https://moveforhunger.org/the-environmental-impact-of-food-waste
  6. https://www.canr.msu.edu/news/reducing_food_waste_has_economic_environmental_and_social_benefits
  7. https://www.greenly.earth/blog-en/global-food-waste-in-2022
  8. https://indianexpress.com/article/opinion/columns/food-waste-index-report-india-coronavirus-hunder-index-7261909/
  9. https://www.ndtv.com/india-news/india-wasted-over-68-million-tons-of-food-in-2019-globally-931-million-tons-food-wasted-un-report-2384225
  10. https://blogs.intellolabs.com/en/why-food-loss-and-food-waste-matter</a
  11. https://docs.google.com/document/d/1h9P-4Hru8SbTW4RsQ-nNuojs3HgUI4QUDxa6gkYjhSI/edit#

Need for Quality Assessment in Trade

Posted on June 27th, 2022

Introduction

Changing climatic conditions, short shelf life, lack of quality standardization, fragmented supply chain, and production of highly perishable commodities due to improper storage facilities lead to tonnes of produce being wasted annually. Moreover, the traditional methods of conducting checks based on the size, colour, taste and feel of the commodity continue to pose a significant challenge.

With seasonal variations, lack of skilled labour, localised markets and the dire need for objective and standardized quality parameters, deep technology and digital trade support have become the need of the hour. To bridge the gap between the farmers, growers, buyers and consumers, Praman has streamlined quality processes and created an equitable and symmetric trading market.

How is Praman changing the ecosystem?

Traditional sorting is subjective, lacks standardization and is largely limited to its geographic location. Praman uses data science, artificial intelligence, and computer vision, to objectively measure the surface quality of fruits, vegetables and spices. The Quality Assurance technology is image-based and processed through a proprietary and patented auto validator engine in real-time. All that needs to be done is capture images of their produce, one can also use a mobile phone. A quality report is automatically generated that is accessible to all users through a dashboard on any device.

Such quality assessments ensure a fast, efficient and reliable process, that not only eliminates the need for manual assessment but also ensures fair prices and extensive market discovery. Furthermore, Praman ensures that the quality of the produce is mapped at every stage from procurement to receipt, hence making the process more transparent and efficient, thus significantly reducing any rejections and wastage.

Let’s take cardamom trading as an example. During the grading process, the size, colour, litre weight and defects are a few primary quality criteria taken into account. However, subjectivity in manual grading causes massive fluctuation in pricing during auctions.

“Praman’s quality assaying technology, powered by Intello Labs, is more than 95% accurate in cardamom quality grading compared to the 70% accuracy when using manual methods. This objectivity and precision make fairer pricing and true price discovery possible for both the grower as well as the trader.”

Apart from having the largest repository of images (over 300 million) for quality mapping, Praman also offers a number of different assessment tools, like the Grading Machine, which is powered by Intello – Praman’s parent company. The Grading Machine provides a crystal clear picture of every pod attribute – size, colour, thrips and split as it delivers 360° full surface defect scanning.

The market linkages of horticulture and fresh produce trading had been contingent on manual assaying processes and agents. The Praman Exchange was one of the first successful exchanges to facilitate spot-trading, auctions and reverse auctions on a digital and large-scale format. As a truly digital Exchange, besides automating workflow, Praman leverages the Intello Labs’ technology that makes data on the quality of the agri-produce remotely accessible, allowing traders to participate in real-time from anywhere, without the need to be physically present at auctions or market yards. This is democratizing the horticulture trading space with objectivity and true price discovery.

By conducting multi-channel and multi-commodity quality assaying and sorting, only the right produce reaches the next link of the supply chain. This allows farmers to sell the maximum volume of their harvest, and because of the standardised benchmarking for each commodity that can be done through the Exchange, it also allows farmers to quote the best price.

It has become evident by the results of the Exchange since its launch in August 2021, with the monthly transactions on the platform has exceeded INR 400 crore, making it the largest Horticulture Exchange in the world.

It is also key to mention that Praman’s journey toward becoming the largest horticulture Exchange in India is built on trust. As of May 2022, over 50,000 growers and sellers, 10,000 buyers and 700 partners such as NITI Aayog, NAFED, the Spice Board of India, AP MARKFED, and J&K Horticulture Board, are working with Praman.

“All users on the Praman Exchange are registered through a simple but verifiable KYC process which solidifies the Exchange as one that is safe and secure. With its cutting-edge technology, Praman aims to create a robust environment for buyers and producers to trade efficiently, economically and fairly.”

By eliminating irregularities in the supply chain, improving the scope quality assessment, providing access to a platform that enables fair price discovery, creating a strong market linkage by driving geographic expansion and market outreach for both buyers and sellers, and providing an array of services such as logistics, warehousing, and credit facilitation to enable seamless execution of trade contracts, Praman is making a massive dent in eliminating the food wastage problem that plagues the country.

Need for an Exchange Market platform to Ease Spice Trade in India

Posted on June 20th, 2022

Despite the pandemic, the country presently enjoys a dominant share in the global spice market by exporting 225 different spices and spice products to more than 180 countries. However, as most of the spice trading in India is still conducted in the traditional model, it brings with it a host of problems – especially in ensuring product quality.

“The traditional methodology of conducting quality checks involves manual observing, grading, and bidding. This brings in subjectivity, increases the margin of error, and complicates price discovery.”

This lack of quality control harms the profit margins as well. For instance, cardamom absorbs moisture from the atmosphere and the quality of the sample deteriorates if not distributed properly and in a stipulated time.

In addition, setting up an online exchange for spices also brings its own set of challenges. The most common is the manual collation of data for spices. Because data collection cannot happen at one location, the AI machines used for this activity must be kept at every client location. Because these machines need to be operated manually, it adds to the overall cost. In addition, internet connectivity issues also play a spoilsport.

In 2019, there were about 54 internet subscribers per 100 inhabitants. The total number of internet subscribers was around 719 million. India’s share of the world population is about 16-17%, yet it constitutes only about 10% of the world’s internet population.

This is where Praman comes in.

Praman’s Exchange is purpose-built for spice trading, especially cardamom. It uses the current industry best practices and builds on them using innovative design and new-age data integration. The platform is designed for smooth auctions at multiple locations simultaneously.

“The Praman Exchange provides buyers & sellers with various trade formats such as open auctions, spot trades, reverse bids, and private auctions on the same platform which is integrated with a payment facility, analytics-backed suggestions, and detailed documentation of trades on the app.”

Praman also provides accurate data that is fed directly into the Exchange platform. This minimizes the margin for manual error, ensures better decision-making, and removes any inefficiencies in spice trading.

Praman’s AI-enabled Exchange platform reduces information asymmetry and provides users with access to accurate and real-time quality grading through its proprietary technology. For instance, Praman’s state-of-the-art Intello Grade machine utilizes cutting-edge AI and computer vision technology to grade each sample and provides quick, objective, and accurate descriptions across the size, colour, weight, and health spectrum.

For training the AI model, Praman maintained a database and created a standardized quality index. We spent months manually collating data such as defects, colours, litre weights etc, in coordination with some of the largest global retailers – their warehouse and collection centres and our internal quality control teams along with measurable refraction samples based tests conducted in laboratory-controlled settings.

“This has ensured that Praman’s quality assaying technology is more than 95% accurate in quality grading compared to the 70% accuracy when using manual methods. This objectivity and precision ensure that fairer pricing and true price discovery exist for both the grower as well as the trader.

This machine is key to the bidding processes. Praman strongly believes that this technology will assist farmers, growers, and sellers to benchmark their products and negotiate higher prices. By moving the spice trade online, a greater number of buyers can be brought in as bids are accepted without any geographical constraints. This system creates competition, leading to further value for the farmers & sellers. And this system is working.

“The Praman Exchange, in a short timeframe, has been able to achieve zero produce loss trade in 99% of their smart contracts, thus providing a price realization that was 12% higher than what the farmers, growers, and sellers got before, and accounts for over 70% of market share of cardamom trade in India.”

As Praman currently works with over 34,000 growers, 5,000 buyers, and 700 partners, including corporate giants and government agencies, it is safe to say that farmers are already enjoying the benefits of the platform and feeling optimistic about the future.

Praman: Changing the Horticulture Trading Ecosystem

Posted on June 6th, 2022

Although commodity markets have been around in India since 2002, Agri commodities consist of only 12% of total trade in commodities. This is because of multiple issues; for instance, horticulture products are highly perishable in nature, a lack of objective quality standardization, in addition to the highly fragmented supply side makes manual quality assessment difficult. This has increased the problem of information asymmetry.

Despite India contributing 11% to total global agriculture and agriculture being the largest source of livelihood for most of the country’s population, the sector witnesses trade losses worth US$ 300 billion annually.

Why was Horticulture not Traded?

According to reports, horticulture is a massive US$1.5 trillion market globally with 80 million growers.  India’s share in the global horticulture produce is around 15%. Despite agriculture being one of the biggest sources of India’s exports and employment,  this segment of horticulture products is not traded through spot trading and digital exchanges.

Approximately 37% of farmers sell their harvest at a reduced rate, which lowers their already scant margins. In addition, if their produce is rejected, they bear the additional cost of transportation back and forth from the procurement centre or mandi. Further, both growers and buyers must be at the same location to trade. This restricts the number of buyers and tilts the bargaining power towards local participants, hampering competition. 

“Fresh produce and horticulture commodities such as fruits, vegetables and spices are highly perishable, and movement restrictions and labour shortages that arose as a result of the pandemic-induced lockdown led to huge wastage and food loss.”

The lack of objective quality standardization and high fragmentation at the supplier side made it difficult to aggregate and assess quality, which further compounds this problem.

For horticulture commodities to be traded, an electronic spot trading platform pre-supposes standardization of commodities to serve as an effective price discovery platform. Therefore, it is essential to achieve standardization before offering a commodity for spot trading on an electronic spot exchange.

Even globally, commodity exchanges like the Tokyo Commodity Exchange (TOCOM) or the Chicago Mercantile Exchange (CME), trade futures and options on a range of energy commodities but not horticulture. This is because the presence of wide quality variations in farm produce within a state, and even wider variations across states, pose a challenge to define common quality parameters before it is offered for trading. In addition, the traditional scientific assaying of commodities takes time before they can be recorded into an online trading system for trading.

Praman: Building a Robust Horticulture Ecosystem

The first, and the most crucial step, to address this issue is the installation of quality assessment at every step of the value chain, starting at the procurement stage.

“Using proprietary Intello Labs AI technology into an agri-trade exchange platform for buyers, Praman eliminates information asymmetry, brings transparency and traceability, and creates an environment where sellers and buyers can discover trade and prices on the basis of quality. “

This stops the whiplash effect in the postharvest supply chain and eliminates waste. The creation of a web of linked markets is dependent on objective real-time quality assessment. Traditional sorting of horticultural commodities is a manual process, which also makes it prone to errors.

“Praman leverages data science, Artificial Intelligence, and computer vision to create a multicommodity, multichannel sorting technology that can almost eliminate such issues while ensuring food safety and compliance with the toughest of regulations.”

The agri-tech platform uses Intello Labs’ pioneering technology for spot-quality assessment, that are both digital and scalable, which are the benchmark for thousands of farmers, farmer producer organisations (FPOs), modern trade corporations, and general trade buyers across the country and the world seamlessly, globalising market linkage.

Since its launch in June 2021, the monthly transactions on Praman have crossed INR 400 crore, making it the largest B2B horticultural spot exchange in the world!

Praman completely eliminates the need for on-location trading, and because auctions are conducted remotely, it lowers the barrier of entry as sellers and buyers from any location can participate. This has also increased farmer incomes by as much as 12 to 15%. In addition, due to the short market time, the cost of shrinkage is saved and the transaction costs are lowered. Every buyer has access to verifiable and quantifiable quality reports, which adds an elevated layer of transparency.

“With Praman, farmers can benchmark their produce to similar lots in the market and quote the ongoing price. It hands the power back to growers, allowing them to negotiate a higher base price.”

The horticultural supply chain is one of the toughest and most complicated that exists today. Join us as we use advanced technological solutions to streamline quality processes across the supply chain to create an equitable and symmetric trading market between buyers and sellers.

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