AGRIBUSINES

S
AN INDIAN PERSPECTIVE

PRESENTED BY:

SANCHITA BANERJEE (87)

SUDIPTA SWAIN (105)
TANVEER UL HAQ (108)
VIKAS NIGAM (115)
 Contents
Ground Reality
Agribusiness, An Introduction
Major Players
FDI
Infrastructure
 Key Drivers
SWOT Analysis
Recommendations
Success Mantra
References
 Agribusiness: Ground

Reality
The total size of Indian agribusiness is Rs.
11.5 trillion.
 58% of Indian population depends upon
agriculture for livelihood.
 The largest grower of fruits – 15% of world
output
– 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.
–
 Agribusiness: Ground
Reality
 Lowest cost producer of fruits & vegetables
– Low farmer income – farmer suicide
 Second highest producer of milk
– Organized dairy accounts for only 13% of
milk produced
– Only 70,000 Ton cold storage capacity for
90 million Tones produced
– Poor yield per cow
 Second largest cattle population
– 5500 registered & 25770 unregistered
slaughter house with no chilling,
freezing & cold storage facility as hot
meat market prevails
 Ground Reality (Contd…)
 Fifth largest producer of eggs
– Poultry meat sold as hot in retail market
 Sixth largest producer of fish
– 20 – 30% damage and no cold storage facility
in WB, AP, Goa
 Low processing
– 2.20 % in fruits
– 35 % in milk
– 6 % in poultry
 Value addition – 20%
 India’s current share in world trade of processed
foods – 1.60 %
 Poor lab to land transfer of technology and
adoption of new varieties. example of
pineapple
 Ground Reality (Contd…)
 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 Rs 45,000 crore
 Losses as above in India is more than consumption of same
in UK
 Market surplus of food grains– 60%
 Farmer keeps some for own consumption, seed purpose and
to give to labour as wages
 Loss in above equal to annual food grain production in
Australia
 Cost of wastage 6 times amount spent on food subsidy
 Farm gate price 25% of domestic consumer retail price against 50%
in developed countries
Agribusiness: A definition
 In developed countries agribusiness is defined as the
total output arising from the farm production and
product processing at both pre- and post- farm
gate levels.
 In developing countries like India it encompasses 4
subsectors. Agricultural inputs, Agricultural
production, agro-processing, marketing and trade.

 Major Players in Indian
Agribusiness
 Hindustan Unilever Ltd.
 I.T.C.
 Cadbury India
 Pepsico.
 Godrej Agro
 Bharti Agro
 Dabur India
 Coffee Day
 Tata Tea
 Duncans Industries
 Bayer India
 Rallis India
 Dupont India



 FDI In Agribusiness
 51% of FDI is allowed in retailing of foods in areas like
dairy, marine, poultry, fruits and vegetables.
 100% FDI is already allowed in food processing.
 Investment is restricted in selected plantation crops and
alcoholic beverages.
 Negligibly small proportion of FDI is allowed in
infrastructure, cold storage and supply chain.
 100% foreign direct investment (FDI) allowed through
the automatic route covering horticulture,
floriculture, development of seeds, animal husbandry,
pisciculture, cultivation of vegetables, mushroom and
services related to agro and allied sectors


Impacts of FDI in Agribusiness
FDI in Indian agriculture sector and the


developments are as follows:

 Farm credit target of Rs.225,000 crore for 2007-08
has been set with an addition of 50 lakh new
farmers to the banking system
 35 projects have been completed in 2006-07 and
additional irrigation potential of 900,000 hectares
to be created and training of farmers arranged
 Loan facilitation through Agricultural Insurance and
NABARD has also been facilitated
 Corpus of Rural Infrastructure Development Fund to
be raised

 Impact of FDI (Contd…)
FDI Inflows to Agriculture Services has effected


development of rural infrastructure, like -

 To connect 66,800 habitations with population over
1000 with all weather roads
 To construct 1,46,000Km of new rural roads
 To upgrade and modernize 1,94,000Km of existing rural
roads
 Total investment of Rs. 1,74,000 crore envisaged under
"Bharat Nirman", investment on rural roads estimated
to be at Rs. 48,000 crore
 To provide corpus of Rs. 8000 crore to Rural
Infrastructure Development Fund (RIDF)



 Need For Infrastructure
 The market size is already large and is continuously
expanding but the market system has not kept pace,
which led to presence of the middlemen and
intermediaries (un-organized sector)
 An estimated Rs. 50000 crores are lost annually in the
marketing chain, due to poor marketing infrastructure
and poor cold storage facilities and inefficient Supply
Chain Management.
 30% of the perishable goods are lost before reaching the
market itself.
 Due to improper handling (cleaning, sorting, grading
and packaging) at the farm-gates 7% of the grains,
10% of spices are lost before reaching market.
 Need For Infrastructure
(Contd.)
 Due to lack of infrastructure only 7% of
total agricultural output is from food
processing industry.
 Only 7161 market yards / sub- yards have
been constructed which is inadequate.
 Lack of rural infrastructure has led to
shortening of marketing channel,
which is not able to meet the demand
for value added services and
geographical expansion.
 Contract farming has thus been
hampered.



 Need For Infrastructure
(Contd.)
 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

 Need For Infrastructure
(Contd.)
 Quality and consistency at grass root
levels
 Inputs delivery not in time
 Innumerable varieties
 Poor procurement and logistics
 Lack of cheap and timely credit

 Supply Chain – a
Comparison
Consumer
In d ia Trader Wholesaler Retailer
Commission
Farmer Consolidator Agent

Hig h wa s t a g e a n d
lo w m a rg in s

Consumer
Retailer
De ve lo p e d Wholesaler
c o u n t rie s
Farmer Hig h
in ve s t m e n t s –
Lo w wa s t a g e -
b e t t e r m a rg in s
Goverment Policies Since 1991
 National Agriculture Policy (2000)
 National Seeds policy (2002)
 Cooperative Policy
 Agricultural Price policy
 Agricultural Extension Framework (2001)
 WTO/GATT agreement (1994)
 Goverment Policies
(Contd…)
 Government declared 2006-2007 as the Year Of
Agricultural Renewal.
 Bio- Technology
 Proper use of natural resources.
 Bio-Mass and fertilizers.
 Live stock.
 Exportable suprplus.
 Goverment Policies
(Contd…)
 Agro-climatic zones.
 Research and Development.
 Easy credit.
 Package insurance policy.
 Technology mission.
 Excise exemptions.

Impact of the Socio- Economic
Environment
 High demand in processed food.
 Increase in the number of supermarkets.
 Drivers to be Global Agri- Power
2

Strong Demand

4
5
Role of Key Drivers
SWOT ANALYSIS
Strengths And Weaknesses
ral adv antage
Inherent Natu

Literate workforce

ply chain
ak & in e ffective Sup
We
 India …… A land of
opportunities
 52% cultivable land as against 11% world wide
 Unsurpassed Natural Advantages
 All the 15 major climates of the world
 46 out of the 60 soil types
 17% animal, 12% plant and 10% fish
genetic resource of the world
 Food processing sector ranks fifth in terms of
contribution to GDP
 Indian urban food market estimated at 350,000
crore
 Estimated investment in Food processing sector
during 11th plan – 1 lakh crore

 India …… A land of
opportunities
 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 across
the country to increase to 580 million by 2025
 Dual income households
 Higher disposable incomes
 Ready to try out value added products

 Threats
 Excessive dependency on monsoon for irrigation.
 Increasing soil erosion because of floods.
 Utilisation of scarce resources – MORE CROP PER
DROP, power etc.
 Varying taste preference within the country
 Increasing International Competition
 Non tariff barriers
 Integrated Food law to remove multiplicity of food
laws & regulatory agencies

 Recommendations
 Reduction of wastage /spoilage to be tackled on a war
footing
 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
land productivity in the world
 Change in cultivation practices such as irrigation for
paddy rather than method of flooding the fields
 Price stability
 Make farming remunerative to attract talent and retain
farmer interest

Recommendations (Contd.)
 Incentives to Corporate to enter core farming – land
ceiling restrictions
 Increase Mechanization to tackle low availability of
labour and to remain a low cost producer
 Liberalized credit norms for agricultural –
production , marketing and infrastructure
development
 Changes in market regulatory framework to allow
corporate to establish market yards
 At present 7521 regulated markets which lack critical
infrastructure, need to be tackled accordingly.
 Review of legal instruments to facilitate entry in
marketing activities
 Tax holidays and incentives

HOW TO BE SUCCESSFUL ?
 The Requirement: Striking a
Balance

Size

Partnerships Solutions

Speed Cost
Flexibility

Its not only about price, lead time and innovation it is also about striking a balance between
all the requirements.
 BE CAUTIOUS !!!!!!!
CASE STUDY OF A FAILURE
 INDIA
SONE KI CHIDIYA
 References
 Reserve Bank Of India
 Centre For TradeAnd Development
 Performance Of Agro Industry In India By G.K.
Chadha
 Govt. Of India 11th Five Year Plan
 N.A.A.S. (National Academy Of Agricultural
Sciences)
 www.markettradefair.com
 India Unbound by Gurcharan Das; Penguin Books
India
