Opportunities In Agribusiness

OPPORTUNITIES IN AGRIBUSINESSOctober 2009

Athena ServicesA 404, Golden Rays, Chandivali Farm Road, Chandivali, Andheri(E), Mumbai - 400072

Tel: +91-98203 76918 Website: www.athenaservices.in

CONTENT

Opportunities in Commodities

Agriculture Scenario – India and the World

Opportunities in Horticulture

Opportunities in Animal Husbandry

CONTENT

Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports

Horticulture Scenario– India and the World

Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain

Case StudyCase Study

Production (million MT)

64 5624

5 3

149

7635

6 5

502

127

448 7

0

100

200

300

400

500

600

  China   India   Brazil   SouthAfrica

  Chile

1980

1990

2004

Source: UN COMTRADE, 2005

Horticulture Scenario – India and the World

Indian is amongst the largest producer of Horticulture Products

Source: UN COMTRADE, 2005

0.5%

0.2%

0.2%

0.5%

10.8%

0.2%

0.1%

0.9%

11.1%

2%

2%

7%

8%

10%

12%

21%

22%

38%

Grapes

Apple

Tomato

Potato

Onion

Lime/lemon

Banana

Peas

Mango

India's share in global production and exports

Production

Exports

Horticulture Scenario – India and the World

India has an insignificant share in global trade

1,188

669

805

455 455 463

911

227189

863

630

444

316 288222

175 15591

-

200

400

600

800

1,000

1,200

1,400

Fresh grapes Peas, freshor chilled

Guavas,mangoes andmangosteens

Bananas,includingplantains,

fresh

Lemons andlimes, fresh

or dried

Apples, fresh Tomatoes,fresh orchilled

Onions andshallots,

fresh or chill

Otherpotatoes,fresh orchilled

World

India

Average Price in $/MT (2001-03): India vs. World(Price prevailing at the originating ports)

Source: UN COMTRADE, 2005

Horticulture Scenario – India and the World

India is a relatively low cost producer / exporter

Source: UN COMTRADE, 2005

63%

53%

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

Fruits

Vegetables

Indian prices as a % of world prices (2001-03)

15%

11%

0% 5% 10% 15% 20%

Fruits

Vegetables

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

0.5%

1.7%

0.4%

2.1%

0% 2% 4% 6% 8% 10%

Fruits

Vegetables

India's share in global exports

(2001-03)

(1991-93)

Horticulture Scenario – India and the World

The Indian farmer is globally competitive but Indian agriculture is not

United State's Imports

0%

5%

10%

15%

20%

25%

30%

35%

0 2000 4000 6000 8000 10000 12000 14000

Distance in Kms.

Sha

re o

f US

impo

rts

(in %

)

Mexico

Chile

EcuadorCanada

NZ

Costa Rica

Guatemala

ColombiaHonduras

Peru

Tw o neighborsaccount for almost

45% its imports

Another 50% is accounted byselect Cairns

group countries

Source: UN COMTRADE, 2005; CEPII

Horticulture Scenario – Global Trade

Horticulture Trade is a proximity led business

EU's Imports

0%

3%

6%

9%

12%

15%

0 2000 4000 6000 8000 10000 12000 14000

Distance in Kms.

Sha

re o

f EU

impo

rts

(in %

)

Spain

Chile

Ecuador

Belgium

NZ

Costa Rica

Germany

Colombia

Cameroon

Exports by 6 membercountries account for50% of total importsNetherlands

France

Italy

South Africa

Brazil

Panama

Another 25% is accounted byselect Cairns group countries

Source: UN COMTRADE, 2005; CEPII

Horticulture Scenario – Global Trade

Horticulture Trade is a proximity led business

Source: UN COMTRADE, 2005; CEPII

10%

29%

17%

34%

7%

1% 1%

y = -0.1478Ln(x) + 1.3872R2 = 0.8235

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0 2000 4000 6000 8000 10000 12000 14000

Distance in Kms.

South Asia

Middle East

East Asia

Western Europe

Rest of the World

Africa US and Canada

India

Source: UN COMTRADE, 2005; CEPII

Horticulture Scenario – Indian Exports

India exports mostly to proximate markets

28%

9%

14%

18%

6%

24%

1%

y = -0.0141Ln(x) + 0.2697R2 = 0.0126

0%

10%

20%

30%

40%

0 4500 9000 13500 18000

Distance in Kms.

Latin America

Middle East

East Asia

Western Europe

Rest of the World

Africa

US and Canada

Chile

Source: UN COMTRADE, 2005; CEPII

Horticulture Scenario

But successful exporters like Chile have broken the ‘distance’ barrier

Sh

are

in

Ch

ile

an

ex

po

rts

CONTENT

Role of Farm Level Innovations in Horticulture Exports

Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World

Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain

Case StudyCase Study

Ref: FAO

India is the largest producer of banana with a share of 27% of the world’s total banana production

World Banana Production

Ref: FAO

India does not appear in the list of top banana exporting countries

World Banana Trade

Ref: FAO

India exports/production ratio is extremely low

World – Production vs Exports

Banana Project - SWOT Analysis

Strength Weakness

Scalability of Production through Contract Farming Model

Lower Production Cost and Better Soil/Climate Conditions

Proximity to ME and EU compared to other Asian exporting countries

Gap between Export Quality Requirements and Available Quality

Lack of Infrastructure

Lack of Pre/Post-harvest Technology

Lack of Certifications

Opportunity Threat

World wide Supply Crunch and Increase in Prices in Recent Years

Social Impact on Farmers with Job Creation Opportunities

Put India on World Banana Map

Currency Fluctuations

Increasing Oil Prices

Inflation

Stringent Norms of Europe Market

Recent Global Meltdown

If the critical steps are taken right, there is a big potential in banana exports business

Banana Project – Critical Steps to Implementation

Farm Level Innovations and Improvements

Production

Pricing Model

Tec

hn

olo

gy

Farm Level Innovations and Improvements – Pricing Model

We replaced the market supply-demand driven model with base + incentive model

Farm Level Innovations and Improvements – Pricing Model

We replaced the market supply-demand driven model with base + incentive model

Base PriceBase Price

1

Base PriceBase PriceBase PriceBase Price

Farm Level Innovations and Improvements – Pricing Model

We replaced the market supply-demand driven model with base + incentive model

1

Base PriceBase Price

IncentiveIncentive

Farm Level Innovations and Improvements - Production

Pre Harvest Harvest Post Harvest

• Input Management

• Tissue Culture

• Irrigation

• Plant and Fruit Care

• Pest and Disease Management

• Bulk Procurement

• Innovative inbound-logistics system development

• Cut to Cool

• Crates

• Proximate packhouses

• Washing and Processing

• Precooling and Cold Storage

Farm Level Innovations and Improvements - Production

Pre Harvest HarvestHarvest Post HarvestPost Harvest

• Input Management

• Tissue Culture

• Irrigation

• Plant and Fruit Care

• Pest and Disease Management

• Bulk Procurement

• Innovative Innovative inbound-logistics inbound-logistics system system developmentdevelopment

• Cut to CoolCut to Cool

• CratesCrates

• Proximate packhousesProximate packhouses

• Washing and Washing and ProcessingProcessing

• Precooling and Cold Precooling and Cold StorageStorage

Farm Level Innovations and Improvements - Production

Pre HarvestPre Harvest Harvest Post HarvestPost Harvest

• Input ManagementInput Management

• Tissue CultureTissue Culture

• IrrigationIrrigation

• Plant and Fruit Plant and Fruit CareCare

• Pest and Disease Pest and Disease ManagementManagement

• Bulk ProcurementBulk Procurement

• Innovative inbound-logistics system development

• Cut to Cool

• Crates

• Proximate packhousesProximate packhouses

• Washing and Washing and ProcessingProcessing

• Precooling and Cold Precooling and Cold StorageStorage

Farm Level Innovations and Improvements - Production

Pre HarvestPre Harvest HarvestHarvest Post Harvest

• Input ManagementInput Management

• Tissue CultureTissue Culture

• IrrigationIrrigation

• Plant and Fruit Plant and Fruit CareCare

• Pest and Disease Pest and Disease ManagementManagement

• Bulk ProcurementBulk Procurement

• Innovative Innovative inbound-logistics inbound-logistics system system developmentdevelopment

• Cut to CoolCut to Cool

• CratesCrates

• Proximate packhouses

• Washing and Processing

• Precooling and Cold Storage

Farm Level Innovations and Improvements - Technology

•Introduction of new pesticides

•Introduction of new fertilizers

•Introduction of innovative nutrient management system

CONTENT

Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports

Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World

Challenges in Horticulture Exports Supply Chain

Case StudyCase Study

Source: Value Chain Survey, The World Bank

Farmer, 13.5Intermediary, 5.4

Exporter, 24.2

International freight & insurance, 53.6

Importer, 23.5

0

20

40

60

80

100

120

1Different stages of the supply chain

Rs

per

Kilo

gram

Farmgate price=Rs.13.5

Retail price=Rs.120.3

CIF price=Rs.96.8

FOB=Rs.43.2

Wholesale price=Rs.18.9

Horticulture Exports Value Chain

Horticulture Exports Supply Chain

Production Procrmnt Inbound Logstcs

Ops Outbnd Logstcs

Sales &

Mktg

Quality Finance Human Resource

•R&D Investment

•Improvement of Farming Practices

•Business Model

Production ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs

OpsOps OutbndOutbnd LogstcsLogstcs

Sales Sales & &

MktgMktg

QualityQuality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

•Alignment with Market Requirements

•Certifications – GLOBALGAP

•Critical Control Point

ProductionProduction Procrmnt Inbound Inbound LogstcsLogstcs

OpsOps OutbndOutbnd LogstcsLogstcs

Sales Sales & &

MktgMktg

QualityQuality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

•Crates Usage

•Bruising Control

ProductionProduction ProcrmntProcrmnt Inbound Logstcs

OpsOps OutbndOutbnd LogstcsLogstcs

Sales Sales & &

MktgMktg

QualityQuality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

•Cold Storage Operations

•Labour Management

•Processing and Sorting

•Critical Control Point

•Certifications – ISO22000

ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs

Ops OutbndOutbnd LogstcsLogstcs

Sales Sales & &

MktgMktg

QualityQuality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

•Stuffing Management

•Temperature Control

•Role of Shipping Line/TPL

ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs

OpsOps Outbnd Logstcs

Sales Sales & &

MktgMktg

QualityQuality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

•Standard Certifications – ISO, GlobalGAP

•Internal Quality Systems

•Customer Oriented Quality Systems – IQMO

ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs

OpsOps OutbndOutbnd LogstcsLogstcs

Sales Sales & &

MktgMktg

Quality FinanceFinance Human ResourceHuman Resource

Horticulture Exports Supply Chain

Exporter

Wholesaler/Importer

Service Provider

Supermarket

Open Market

Consumer

Country/Trade Barrier

Horticulture Exports Supply Chain

CONTENT

Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports

Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World

Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain

Case Study