AGRIBUSINESS IN INDIA

A overview

By Abdul Ali

AGRICULTURE IN INDIA

Over 700 million people i.e.69% of the population depends upon the rural economy for their livelihood.

Large number of rural population lives on USD 175 per capita in comparison to the average National per capita income of USD 480.

Though, India is the second largest producer in agriculture produce in the world but yields are still very low.

INDIAN AGRICULTURE-STRENGTH

ITEMS RANK SHARE PRODUCTION In Mill.Tonnes)

India World

TEA I 27.0% 0.75 2.99 Milk I 12.0% 73.10 568.48 Cattle Pop. I 14.8% 218.80 1350.00 Sugar cane II 12.2% 315.10 1278.00 Fruits II 11.6% 49.19 475.14 Vegetables II 12.0% 61.69 670.59 Paddy II 21.3% 134.15 598.85 Wheat II 10.7% 74.25 576.31

Source-APEDA

INEFFICIENCIES OF INDIAN AGRICULTURE

Indian wastes more fruits & vegetables than are consumed in UK

Cumulative waste is about $ 6.7 billion which is equivalent to 40% of the total horticulture produce

Poor infrastructure and logistics support Rough and unorganized handling\ India has 70% more arable land but

produces 30% less than China

FOOD PROCESSING INDUSTRY IN INDIA

India ranks first in the world in cereal and milk production and second in fruits & vegetables and in five producers of groundnut, rice, wheat, tea, coffee, sugar, spices & oil seeds.

Even with an industry size of US $ 70 billion,we process less than 2%.

The industry has about 1.6 mn direct employees and accounts for about 13% of the country’s exports and 6%of the industry investment.

FOOD PROCESSING INDUSTRY-Major Challenges

Awareness about processed foods Backward and forward linkages Marketing network Cold chain and supply logistics Lack of linkages with Industries, Government and

Institutions Taxation in line with other Nations Complex Food Laws

Indian Food Processing Industry-Shortcomings

The small players who are unorganized are about 70% and accounts for about 50% of the value.

The organized is small but is growing. India’s share in global scenario is about 2% which

is insignificant. No Indian brands have global presence. Most of the exports are in bulk and lack branding. Mostly units are involved in primary value

addition .The secondary and tertiary value addition units are minimal resulting low value addition.

Lots of wastage due to post harvest looses.

Indian Food Processing Industry-Outlook

Fruits & Vegetable processing which is about 2% and expected to grow by 10% by 2010 and 35% by 2025(MOFPI).

MOFPI estimates the size of food processing Rs 3105 Billion including Rs 990 billion of value added products.

Food processing Industry is estimated to grow by 9-12% on the basis of the GDP growth rate of 6-8%.

FOOD INDUSTRY DIVISION

FOOD RETAIL : Only 1% is the organized retail segment. : Situation is changing fast due to change in life style, change in taste, increase in income options : Current estimate size is about US $6 billion. RTE FOODS : : The size is almost doubled during last one decade and estimated to be about USD 5 billion and expected to be doubled in next five years. FOOD PARKS :30 locations to promote with Rs 50 Cr grants for each.

SHIFTING CONSUMER PREFERENCES

From Traditional to modernized traditional

From Globalize to Indianize From functional to Life style From value for money to value for

time & conveniences From cautious to Experimental Over the counter to touch and feel

EVOLVING CONSUMERS

BEVERAGES : Rise in coffee drinkers : Rise in fruit drinks sale :Rise in wine and liquor sale PROCESSED FOODS :Focus on Food safety :Increase in private label :Growing premium foods :Increase in tendency of disposability LIFESTYLE :Eating out :Health & supplementary foods :Organic foods :Focus on looking and feeling good

QUALITY IS THE KEY FOR WORLD MARKET

After WTO and specifically after signing SPS (Sanitary & phytosanitary measures),

Trade related Intellectual property rights(TRIPS), Technical barriers of trade (TBT) the competitiveness has increased.

Food safety and compliances of the international laws will be directly correlated with the world market share.

OPPORTUNITY FOR INDIA

India can be a major players for the following :

Supply Chain Management with reference to Halal Foods,Sea Foods,Vegatarian Foods,Organic foods.

REQUIRED INTERVENTIONS

Generic promotions for creating awareness

Processor and farmers linkages Industry and University/Institution

partnership Amendments in basic food laws and

transparency in governance Easy and relaxed tax laws Stable policies Direct and more incentives to promote

processing units