Sowing prosperity : Boosting Agricultural productivity

Public Private Partnership in Agriculture Roadway to harness productivity

Team : Leading Light

The Indian food and agriculture industry has made significant strides in the past few years. It met the challenge of securing the production of basic staples like wheat and rice to feed India’s growing population. Agricultural GDP increased at an annual rate of 3 percent between 1980 and 2012, making India the largest producer by value(behind India and China).

However, the sector is yet to realize its full potential in terms of yield, processing and exports. Give India’s agro climatic conditions, the sector fulfils only 50 to 60 percent of the potential yield for most crops. Despite the volumes, India’s share in global exports in below par compared to the top five agricultural producers.

0

20

40

60

80

100

1950-51 1970-71 1990-91 2000-01 2009-10

% GDP

work force

The graph shows a rapid decline in the % share of agriculture in the GDP. While the growth of other sectors soared high, agriculture was left out. The liberalization of the economy in the 90s further pushed agriculture to the brink as the secondary and tertiary sector industries got a lion’s share of investments from foreign players

Five themes that could transform the Sectors performance are: 1. Accelerate Sustainable yield improvements. i). Launch of “National Agricultural Technology Mission” ii).Creation of “National Agricultural Sustainability Mission”

2. Promote win-win farmer industry interaction.

i). favorable policy regime, which improves agricultural marketing mechanisms

3. Scale up food processing and exports

i). Stimulate food processing through emphasis on quality and branding. ii). Creation of mega demand servicing and export hubs iii).Attract and develop private Investments and world class expertise

4. Invest selectively in infrastructure, with private participation.

5. Nurture the next generation of agri-business technocrats and entrepreneurs.

i).Scale up agricultural extension services through private participation and new infrastructure ii).Set up agri-business focused angel and venture capital funds as PPP initiative between central and state governments and private capital providers

PPP to harness the Productivity of Agriculture

• Several initiatives have been suggested to fully harness the agricultural potential of India but the one we’ll be focusing on would the Public Private Partnership in Agriculture.

• PPP is defined as a contract between a public client and a private service provider created to do business to achieve common objectives.

• Agriculture is one such sector where the usefulness of PPP hasn’t fully been explored in India.

What is required for Private Sector Participation? It needs to be kept in mind that Private Companies are profit driven and private

money only flows when the returns are better and commensurate with alternatives. For this to happen and for agriculture to be lucrative for private investments, the

financial aspect of the existing system needs to be restructured to suit their needs. Government should give incentives in such areas where the viability is low and

encourage private participation. Policy clarity: Policy uncertainties are the biggest deterrent to private investment. It is

important that there is a clear policy direction reflected in the governance to give private investors the comfort of security of their investment if the private investment is to be attracted. This may include amendments/reform to existing legislation.

Demand Driven Approach to Agriculture: Private Players being customer driven would like it better if the agriculture patterns were to be restructured according to the consumer needs.

HUMAN RESOURCE DEVELOPMENT Establishment of a Agricultural Training Institutes (ATI): • Necessary to strengthen and develop skilled human resource that can make most out of the emerging opportunities in place of overemphasized misgivings • Respond rapidly to changing technologies and labor market demand • Required to minimize (i) shift from artisans to unskilled employment, (ii) unemployment due to seasonal factors and (iii) migration from rural to urban areas • Needed to promote science and market-driven agriculture. This trend ropes in increasingly prominent role of private sector

ATI – Structuring Proposal: • It’s a two-year program is divided into six semesters. A semester consists of one-month in-school and three-month on-the-job training. During this period, students will earn academic credits and certificates in crop production, animal production, aquaculture production, horticulture, or food processing, depending on their choices. At the end of the program, students will receive a diploma in Agriculture Entrepreneurship. • The program as described Should be considered as part of the plan to extend the basic education curriculum by two more years. • The idea being that students shall be prepared for the world of work when they finish high school since most of them by personal circumstances will have to end their schooling by then. • Thus, this bridge program shall afford them the chance to earn the necessary job qualifications when they enter the job market or they start their own farm business enterprise.

Agricultural Training Institute

STUDENTS

PRIVATE

CORPORATION

NGO

ON JOB TRAINING

Trainees

FARM ENTREPRENUER

Organizational design: Main characteristics of effective organizational design are • Representation • Decision making • Information exchange and communication among partners • Monitoring and evaluation • Administration of financial resources

Decision tree of partnership structure

Formal

Horizontal Hierarchical

Informal

Farmer1

Farmer2

farmer3 NGO/Govt.

official

Private representative

Organizational design at village level

• At the village level there should be Operational team structure. • At the Nodal level It should be an managerial structure. • Initial years NGOs help the farmers in decision making but once the ATI becomes completely functionary then they are replaced by farm entrepreneurs.

Managing committee

Ratifies partnership agreement, Makes decisions of strategic administrative

nature, Approves Work plans, Monitors progress

Delegates of farmers

Delegate of Private

Delegates of Farmers

Delegate of Private

Operating committee Decision making committee

Organizational committee at Nodal level

Delegates to Managing committee are the elected representatives from each village farmer community by proportional representation. The delegates may be farmers or any NGO those are elected by farmers.

NGO(s)

Promoter (Entrepreneur/s

or company/s)

Knowledge Bank

Government

Financiers/Investors

COOPERATIVE PRODUCER COMPANY

Local community

• Structuring, Social Equity based inclusive devt.

• Advisory, PPP implementation, private participation.

• Govt. facilitation • Fiscal concessions/social

equity investment.

• Private Sector Efficiency

• Branding

• Development & Implementation

• Capital & overall Management

Carbon Credits are ploughed back as Social Equity

• Showcase/replication of Establishment model

• Emission trading/carbon Credits

• Contribute Land at commercial rates

• Structured Participation in Management (cooperatives/producer)

• Equity in project (Social Equity)

• Employment • Empowerment

• Facilitators • Synergetic Partnerships

Social Equity based PPP structure

Responsibility of Government Design national level policies in consultation with states with responsibility matrix well defined. Policies during calamities should be encouraging.

Refocusing the role of the government to provide appropriate regulatory framework to ensure competition. Bring in private sector to do the management and implementation on PPP mode.

Improving agriculture performance and sustaining it over the long term requires a careful reorientation of government expenditure priorities through viability gap funding agriculture infrastructure. Government support is very vital and will play a catalytic role. Support should progressively move away from subsidy to equity in agribusiness projects. Withdrawal of government from commercial activities while ensuring equitable distribution of profit and stop private cartel.

Risks and Complications: Private companies are profit oriented. There is potential threat to farmers from private players. Extending ATI under Free Education purview is costly and adds burden to governments’ budget. If the control goes completely in to private players there may be threat to food security to our own country.

GM seeds may completely replace the natural varieties and may face danger of extinction.

Branding of agricultural products may results in high increase in prices.

vigilance is necessary by government for welfare of farmers.

References: • Indian Council of Agricultural Research, New Delhi- industry meet,2007 • http://www.cgiar.org/ • International food Policy research institute, sustainable solutions for enduring poverty and hunger. • 4th Global summit on second green revolution,2012. • Food and agriculture development action by Confederation of Indian Industry,2012.