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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