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OPPORTUNITIES IN

AGRIBUSINESS

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PRESENT SENARIO IN INDIA

The largest grower of fruits 15% of worldoutput Low share of global Exports at 0.5%

The second largest grower of vegetables 11 % of world output Low share of global exports at 1.7%

Cold storage facility available for only 10% of produce

Lowest cost producer of fruits &vegetables Low farmer income

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Low processing 2.20 % in fruits

Value addition 20%

Indias current share in world trade ofprocessed foods 1.60 %

Poor lab to land transfer of technology and

adoption of new varieties.

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Market surplus of fruits & vegetables 88% Farmer sells immediately due to perishability & absence

of proper infrastructure to keep it for longer period

Post Harvest wastage of fruits &vegetables 25 to 35% valued at over Rs45,000 crore Losses as above in India is more than consumption of

same in UK

Farm gate price 25% of domestic consumer retailprice against 50% in developed countries

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POTENTIALS

1. Optimal Agro climatic conditions

2. Political environment

3. Strong credible coordinating & Promotion agency

4. Strong Corporate leadership

5. Strong Consumer base

6. Strong Demand

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AGRO CLIMATIC CONDITIONS

Favorable Growing conditions

Sizeable irrigated acreages.

High land productivity, land being a very scarce

resource

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POLITICAL ENVIRONMENT

Attracts Investment

Provides Stability

Encourages Infrastructural development

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STRONG CREDIBLE COORDINATING

& PROMOTION AGENCY

R & D initiatives including development of highyielding varieties

Financial & Technical Assistance

Extension activities Grower awareness

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STRONG CORPORATE

LEADERSHIP

Risk taking abilities

Managerial skill development

Risk mitigation

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CONSUMING AND PROCESSING

INDUSTRY

Internal consumption to avoid surplus stockaccumulation

Encourages Economies of scale

Globally Competitive to serve wider base ofconsumers.

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CHALLENGES

Low level of value addition

Bottle necks in cold storage including during transit

Non Efficient storage/warehousing, processing & marketingtechniques

Non adoption of efficient technology

Infrastructure and others

Shortage of power

High electricity tariff

Low area under Irrigation High capital cost -Inadequate institutional finance at low rates

High insurance premium in risk coverage

Farm connectivity by road yet to take off

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Quality and consistency at grass rootlevels Inputs delivery not in time Innumerable varieties Poor procurement and logistics Lack of cheap and timely credit

Weak and ineffective supply chain Non professional management Low revenue rentals Non Efficient and competitive retailing High wastage

Absence of a Successful Business Model

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Control of markets by few traders andagents who command large storagecapacity

Discouragement of farmer lower returnsact as disincentive

Larger intermediaries exerts negative

pressure on farmer margin, anddeteriorates quality due to multiplehandling

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Higher Tax duties including on packagingmaterial

Non adoptive of cost effective technology

High working capital requirement

High cost of finance

Infrastructural constraints

Dependence on intermediaries inadequate farmer processor linkages

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OPPORTUNITIES

Indian domestic market

Diversifying into new markets and productsegments

52% cultivable land as against 11% worldwide

Unsurpassed Natural Advantages

All the 15 major climates of the world 46 out of the 60 soil types

17% animal, 12% plant and 10% fishgenetic resource of the world

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Food processing sector ranks fifth in terms ofcontribution to GDP

Indian urban food market estimated at 350,000

crore Estimated investment in Food processing sector

during 11th plan 1 lakh crore

Horticulture crops Fruits vegetables and flowers

cover 7% of cropped area of the country

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India ranks First in production of mango (65% ofworld) Bananas (11% of world) and papayas

India ranks Second in production of Lime and

lemon Move to invest in 10 mega food parks in the

country

Indian food processing industry averaging a

growth of 10%

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Good governance Strong , Stable and reform oriented government

WTO signatory

Strong economy comparatively resilient to the currenteconomic crisis

Vision to solve the power situation Nuclear energy

Improving relationship with neighboring countries and amore important role in the global trade

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Included in the list of Priority sector lending by bankssince 1999

Most of processed food Exempted from purview oflicensing under the industries (Development &

regulation) Act, 1951, except items reserved for smallscale sector & alcoholic beverages

Excise duty for processed fruits & vegetables, foodmixes etc. NIL

Excise duty on reefer vans reduced from 16 to 8%

Reduction in customs duty on food processingmachinery

Tax breaks

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STRONG CORPORATE LEADERSHIP

IT Hub of the world

Telecom hub

Acquiring global companies India managers at the Helm of many

Fortune 500 companies

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Large young earning population

50% of population under 25 years of age

Ready to experiment and try out new products Increase in number of upper middle class & middle class by 159 %

& 63 % respectively

Urban population projected at 40% by 2020

Middle class of 200 250 million spread acrossthe country to increase to 580 million by 2025

Dual income households

Higher disposable incomes

Ready to try out value added products

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STRATEGY

Reduction of wastage /spoilage to be tackled Accelerated establishment of cold chain networks

Irradiation facilities and pest free warehouses

Encourage SSI units and corporate to set up food processing

units Improvement of productivity both land and manpower

Example the case of Rubber where India has the highest landproductivity in the world

Change in cultivation practices such as irrigation for paddyrather than method of flooding the fields

Price stability Make farming remunerative to attract talent and retain

farmer interest

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Incentives to Corporate to enter core farming landceiling restrictions

Increase Mechanization to tackle low availability oflabour and to remain a low cost producer

Liberalized credit norms for agricultural production ,marketing and infrastructure development

Changes in market regulatory framework to allowcorporate to establish market yards

Review of legal instruments to facilitate entry in

marketing activities Tax holidays and incentives

Excise exemptions.

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CONCLUSION

Food sector the highest multiplier effectof any industry 2.4

Tripling the size of the industry would

generate Direct employment 28 lakh and Indirect employment

74 lakh

Thrust in agriculture to be provide the

next push to GDP and prosperity Enhanced export earnings to compensate

for any slow down in IT related exports