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Disruptions in Supply Chain – The Prime Reason for Spike in Prices of Commodity: Pankaj Khandelwal

Pankaj Khandelwal, Chairman & Managing Director of INI Farms

Covid -19 has totally exposed the world of its shortcomings industries that worked like well-oiled machines are now only able to work in a very janky manner, one such industry that affects the agricultural industry the most in the supply chain industry used for the import and export of produce.

In this regard, Krishi Jagran’s Abin Joseph had a small interaction with Pankaj Khandelwal, Chairman & Managing Director of INI farms which is India’s most prominent exporter of Bananas and pomegranates for his expert opinion on this matter.

INI Farms is a worldwide horticultural leader based in India. INI, which is focused on developing a tech-driven global fruit brand, has a presence in over 35 countries and works with over 5,000 farmers through its brand Kimaya. It has established itself as the market leader in pomegranate, banana, and fresh-cut exports, and is among its top three exporters by volume.

Read this exclusive interview!

The New Normal has been a challenging concept to adapt to for many how are you adjusting to it? 

Yes, the past 2.5 years have been really difficult for everyone however as we were in the essential sector we somehow have just gotten used to it. we have seen that every problem brings opportunities too and like we have seen there is a lot of growth too so we have just adapted to it now.

The pandemic has caused a lot of industries to shut down however the agricultural industry was able to do well. As a person in the export of Agricultural produce, what challenges did you face due to the pandemic?

From an Agriculture perspective especially from the perspective of food production, it was very essential for agriculture to do well hence agriculture booming and continuing to grow is not surprising (as we all needed to take care of it as a society), “Chahe aur kuch ho chahe nahi ho hame ye to ensure karna padega ki sab ko khana peena mil paye” was his apt reply.

From the perspective of Industry exports, exporters had to continuously keep a check on the status of markets and ports on whether they were open or not, Things have surely started improving in the last 6 months.

So yes demand was there however there was a delivery problem, this problem in the supply chain will probably go away with the opening up of global economies however this global supply chain problem will probably not go away soon.

There was a huge spike in the rates of Wheat, Cotton, Soybeans, and Pomegranates too, what do you think is the key reason behind this huge spike in rates?

Different commodities behave differently in the market, so 2 factors should be kept in mind when we see a spike in prices 

1) What kind of production cycles are there and whether there have been any implications on the production or not.

2) 2-3 times increase in prices of sea freight, its implications being shorter distance markets getting more traffic than longer distance traffic, for example: Recently Indian wheat was preferred in west Asia and South Asia. However, it would be at a huge disadvantage in long-distance markets like Europe which would prefer closer nations for imports.

 And this is the reason for the spike in prices too.

Why do you think that Freight rates are increasing? Is it because of the rise in crude oil rates?

  • Yes crude oil also plays a role in the increase in freight rates, however, its implications are very small, the main factors are the following :

  • containers getting stuck at various ports which lead to people not being able to find containers to send, their produce in. As they were stuck some ports that they were stuck in had no demand and places with high demand had no containers.

  • Plying of vessels due to disruptions in the shipping of vessels.

  • High rates for imports in China hence containers are not able to come back fromChina. Some Developing countries require only imports and don’t export hence freight rates increase to bring back the freight vessels with empty containers.

As an exporter what do you prefer more Sea freight or Air Freight?

Obviously, Sea freight is way cheaper than Airfreight. However, an exporter of produce has to be careful while selecting because some products like berries, etc. have a short shelf life and therefore require to be sent earlier.

Recently 5 companies were banned by APEDA for their Organic certifications so, as an exporter how does one ensure that their products are always up to par with the guidelines?  

Food safety standards, compliances, and certifications are becoming more critical. So, to maintain the standards of the produce exporters should work closely with farmers. Hence, it’s intense knowledge-driven work that needs to be taken care of. So personally, we at INI farms work with farmers very closely, train them and also test the product to see whether the compliances to the markets are being met or not as the global food safety standards are becoming more critical day by day and continuously rising that's one of the reasons for the recent ban of companies in my opinion.

What advice would you give to the farmers who want to get into the Export business?

Exporting would surely increase the income of the farmer how they should get associated with the right organizations, FPO, or exporters who have experience in the field. As we discussed before food safety standards are increasing hence an experienced hand that can help guide them would be the main essential step towards becoming an exporter.

Farmers should also work in partnerships and gain experience in the business to not get exploited.

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