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Marketing Reforms & Enhancing competitiveness

New Delhi 22-2-2006

An overview of Indian Agriculture


(Production side)

Comparative advantages:

Second largest arable land in the world Diverse agro-climatic zones across the country, Round the year sunshine

Potential to cultivate a vast range of agricultural products Large marketable surpluses and abundant raw material for processing

Vast pool of skilled manpower in research extension

and

These advantages being leveraged, for India to be a


leading food supplier to the world.

Area and production of Agricultural products


tonnes) (Production in million

India 151 55 72 124 29 91 47 82 25 15 245 0.85

Indias Rank in World Production 2 1 2 2 3 1 2 2 3 1 2 1 2

Arable Land Irrigated Land Wheat Rice, Paddy

(Million ha) (Million ha)

Coarse grains (including maize) Milk Fruits Vegetables Edible Oilseeds Pulses Sugarcane Tea Cattle
(million)

186

India is the front ranking producer of many perishable commodities

China : $195 bn;

USA : $150 bn; $105 bn.

India -

India produces 41% of worlds mango, 23% of Banana, 24 % of cashew nut, 10% of onion, 30% of cauliflower, 36% of Green Peas.

India has 53% of worlds buffalo and 17% of goat

And a 8000 km of coastline

India rising high on food demand curve


Evolution of global food demand
Diet / functional / organic foods C onvenience foods Snacks / prepared meals Dairy, meat, fresh fruits fruit juices, beverages Eastern Europe India , China, Latin America Nortth America, Japan, Western Europe, Australia

Carbohydrate Africa (Sub -Saharan) staples Surviving Mass Market ConvenienceQuality Food Service Hygiene Snacking High Technology

ource: Rabobank International

Indias competitiveness in global markets

dia's share in global production (2001-03)


11%
(Large producer)

Vegetables Fruits 0% 5%

15% 10% 15% 20%

India's share in global exports Vegetables 2.1% 1.7% 0.4% 0.5% 2% 4% 6% 8%

(1991-93

(2001-03

an prices as a % of world prices (2001-03) 53%


(Low cost producer)

Vegetables

Fruits

(Nominal)

Fruits

63%

0%

0% 20% 40% 60% 80% 100%


Source: UN COMTRADE Statistics, World Bank Staff Estimates

What is wrong?

Food processing still at a nascent stage

Level of processing (Fruits & Vegetables)

Level of Processing (Perishable products) Organized Unorganized Total Fruits / Vegetables 1.3%

USA France -

80 % 70 %

0.8% 22% 15% 21% 6%

Malaysia- 80 % Thailand India 30 % 1.3 %

2.2%

Milk /milk products

13% 21% 6% 8%

35%

Buffalo Meat Poultry Marine Products

Present Scenario in Value Chain

Cost Build Up For One Kg. Basket Of Fruit


11.6

1.7 4.1 3.3 FARMER TRADER WHOLESALER

2.5

RETAILER

Retail Markups
100 160 220

CONSUMER PRICE 350

FARM GATE PRICES 8

MILK

FISH

FRUITS &VEGETABLES

Domestic markets scenario


Infrastructure for marketing of perishables

Primary grading/ collection centers - non existent Warehousing and cold storage - inadequate Cold chain - non existent Quality certification system - non existent Transportation for perishables - non existent Rural markets - complete lack of infrastructure Wholesale markets - in government control, lack
modern facilities

Private / direct markets - not permitted


Post harvest losses: 25 to 30 % in perishables

APMC Reforms - Status

States where reforms not done Orissa, Assam, Mizoram

States where partially

reforms

done

Haryana, Karnataka, NCT of Delhi, Chandigarh, Maharashtra, UP Gujarat

Arunachal,Tripura, Meghalaya,

J&K, Uttaranchal, Goa,

West Bengal, Pondicherry, Chattisgarh,

Bihar and Jharkhand

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AGMARKNET

Market nodes connected - 2408 Markets reporting data 1295 Good performing States AP, Maharashtra, Karnataka,
Gujarat

States requiring Improvement HP, Assam, Kerala,


Things to do:

Uttaranchal, Bihar Jharkhand,

Posting data on daily basis Creating awareness on the information portal Suggest user-friendly formats for data dissemination Utilization of funds for market led extension
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Rural Godown Scheme

Storage capacity created 158.68 lakh MTs Excellent performance


Maharashtra, Punjab, Andhra Pradesh, Madhya Pradesh, Haryana Bihar, Gujarat, West Bengal, Uttaranchal, etc

Poor off-take

in

Scope exists for more storage space near to farmers

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Infrastructure Scheme

S.No . 1 2 3 4 5

State

No. of Projects 17 39 35 33 54 178

Financial outlay Rs in crores 15.4 30.2 28.59 4.94 35.27 114.36

Eligible subsidy Rs. in crores 1.96 1.08 6.71 1.19 1.69 12.62

Andhra Pradesh Kerala Madhya Pradesh Punjab Tamil Nadu Total

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Venture Capital Scheme

SFAC provides up to 26% of the project equity as


Venture capital + PDF for detailed project reports Progress since July, 2005

38 projects funded

involving 11.62 crores venture capital investment of 125.42 crores, direct employment for 3221 people and assured market to 26,650 families

All States should make use of the scheme

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Terminal market

Hub-and-Spoke Format: Terminal Market (the hub) to


be linked to number of collection centres (the spokes).

Collection centres (Spokes) to be conveniently located


at key production centres to allow easy access to farmers

Provide state of art facilities for



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Electronic auction, Grading, washing and packing lines, Processing and exports, Banking Transport including reefer vans etc. Advisory on input, price and quality

Thanks

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