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A PROJECT REPORT
ON
Indian Agri-business: An Emerging Market
SUBMITTED BY
RAJIV KUMAR SHARMA(06BS2648)
Management Research Project
A PROJECT REPORT
ON
Indian Agri-business: An Emerging Market
SUBMITTED BY
RAJIV KUMAR SHARMA(06BS2648)
Under the guidance of:
Prof. Dipankar Dey, Faculty, IBS – Kolkata
7
Acknowledgements
I express my sincere thanks to Prof. Dipankar Dey, Faculty, ICFAI Business School – Kolkata,
for giving me an opportunity to do a project report on an exciting and my favorite topic “Indian
Agri-business: An Emerging Market” and guiding me all the way to complete my project. I
would also thank him for his guidance and encouragement, which has helped me to gain a lot
of insights and knowledge about the Indian and global agriculture industry.
I would also like to thank my dear friend R.Rakesh Nath for giving me suggestion and support
at dubious situation.
Above all I thank the ALMIGHTY for his blessings that helped me to overcome all difficulties
that I have faced during the time of the project.
8
Table of Contents
Abstract....................................................................................................................... (v)
Introduction...................................................................................................................1
Indian Agriculture Sector
Industry Overview
Trends in the Indian Agriculture Sector.......................................................................8
Issues and Challenges in the Agriculture Sector.........................................................10
Towards Agricultural Renewal and Renaissance........................................................12
Emerging Trends in the Indian Agriculture Sector.....................................................22
Key Players in the Indian Agriculture Sector..............................................................29
Conclusion...................................................................................................................33
References....................................................................................................................34
9
Abstract
The process of planned economic development in India began with the launching of First Five Year Plan in April 1951. At that time, the country was faced with severe food shortage and mounting inflation. The plan accorded pride of place to programmes for agriculture and community development. This was a natural priority for the plan which sought to raise the standard of living in rural areas and also to overcome food shortages. Successive Five year Plans have aimed at improving irrigation facilities, encouraging the use of fertilisers, improved varieties of seeds, implements and machinery and institutional credit. As a result, there has been a significant increase in the use of modern inputs leading to higher productivity and production. Satisfactory progress has been made not only in the production of major foodgrains but also in horticultural crops.
Agricultural sector occupies a key position in the Indian economy. It provides employment to about 65 per cent of the working population of India. Around one-quarter of India's national income originates from this sector. Agricultural products like cereals (mainly rice), tea, coffee, cashew, spices, tobacco and leather are important items of India's exports and hence foreign exchange earnings.
This project will show the developments in Indian agriculture during the post-independence period, explains the key reform measures undertaken for the development of agriculture in the wake of economic liberalisation and examines current issues pertaining to this vital sector of the Indian agribusiness.
10
Introduction
Indian Agriculture Sector
‘India’s agricultural policy must be ‘grain-centric’, like that of China, which does not allow
shrinkage of the cultivable area under food-grains’.
The spectacular story of Indian agriculture is known throughout the world for its multi-
functional success in generating employment, livelihood, and food, nutritional and ecological
security. Agriculture and allied activities contribute about 30% to the gross domestic product
of India.
With arable land area at 168 million hectares, India ranks second only to the U.S. in
size of agriculture. A well-developed agricultural research system, a significant area of almost
60 million hectares under irrigation and an increasing productivity in major crops enable Indian
agriculture to become a globally competitive player. The United Nations estimates that with
assured irrigation, India's food grains output can increase SIX times within five years- enough
to feed two planet Earths.
Achievements of Indian Agriculture:
India is the largest producer of wheat in the world
India is the largest producer of Rice in the world
India is among the largest vegetable oil economies in the world
India is the largest producer of Tea in the world
India is the second largest producer of Fruits in the world
India is the largest producer of Milk in the world
India is the largest producer of Coffee in the world
India is the largest producer of Cotton in the world
Indian Agriculture by its sheer size and quantum of the activity can dictate global
markets directly and indirectly. Majority of rural population still depend on agriculture for their
livelihood and over 700 million farmers involved agriculture related activities.
11
India has 52% of cultivable land and varied climates. With sunshine round the year, it’s
the world’s best country to grow crops round the year. Due to Urbanization and rapid growth
in the metropolis there is increased demand in the food supply. Too many layers of middlemen,
weak supply chain, lack of proper information to the farmers, are some of the factors leadings
to wastage and inefficiencies in food supply chain and gives opportunity to improve by using
IT and collaborations though “Farm to Fork Strategy”.
Vision of Indian Agriculture:
Taking latest technology to Door Steps of Indian Farmers and making Indian
Agriculture as highly viable economic activity in the global environment.
Mission of Indian Agriculture:
Improving the farm productivity and minimizing the supply chain wastage by using
globally available best technologies such as biotech, precision farming & innovative organic
farming practices & IT tools.
Quality Mission:
Adopting global quality standards to meet global customer needs by creating awareness
about end customer requirements among all stake holders in the entire food supply chain.
India has by now had the benefit of half a century of planning on the farm front. One
important way of assessing a country’s true independence is to critically examine how
independent it is in terms of food security. After all, no country can be termed truly
independent if its food requirements are met even partly by imports, like India. More so, when
politicians and the farm fraternity have been claiming for almost two decades now, that India,
indeed, is “self-sufficient” in food.
Pre-Independence phase:
There has been a wrong notion that the Bengal famine was caused due to food shortage
per se. A critical scrutiny of the facts reveal that Indians died in thousands not because of
shortage of food, but because, first, much of what was produced in the country was carted off
12
to meet the War efforts of the Imperial masters; and second, the failure to deliver food on time
where it was most needed due to inefficient transport system.
It has been a myth that has been propagated for long that this was the prime reason to
seek foreign “aid” — the Public Loan (PL) 480 programme of the US in food — and a
subsequent justification to turn to the US to guide India’s agricultural destiny. There is another
myth — more than 5.5 million tonnes of foodgrains, primarily wheat, were “exported” during
the NDA regime at very low prices, causing severe loss to the exchequer, on the pretext that
India was surplus in food, while in reality millions of Indians were starving.
Industrial agriculture:
It was in the late 1950s and early 1960s that industrial agriculture, also called the
‘Green Revolution’, was launched on Indian soil. The main feature of this industrial agriculture
was “high-input technology” — primarily chemical fertilizers and pesticides — coupled with
copious irrigation water.
The International Centre for Maize and Wheat Research in Mexico was experimenting
with dwarf wheat which needed heavy doses of chemical fertilizers. The American factories,
which were manufacturing lethal chemicals as a War effort to support the Allies (the UK and
France), were converted to produce chemical fertilizers and pesticides, and Washington was in
desperate need of finding a market for these products.
India was a vast market, and it had no fertilizer plants of its own. The dwarf wheat was
brought into India, the seeds multiplied and undivided Punjab chosen as the ‘cradle’ for this
industrial agriculture, because the State already had plenty of water. The virgin soils of Punjab
initially responded with huge yields, but by the mid-1970s, yields began to plateau, rampant
diseases such as the rust erupted like wild-fire, and with them the spread of the deadly
Parthenium weed — imported along with the contaminated wheat.
A similar situation was unfolding with rice. The Ford Foundation took the lead in
establishing the International Rice Research Institute (IRRI) in Manila, Philippines, and the
Washington-controlled Consultative Group for International Research in Agriculture backed
the project. Following Richard Nixon’s dictum to use food as a weapon, the game-plan for
India was to seize, either through covert administrative and/or political pressure or through
monetary lure, the vast and varied (more than 25,000) rare rice germplasm under the control of
13
the Central Rice Research Institute in Cuttack, Orissa. This game-plan was scuttled by Dr
Riccharia, who was then the Director of the Institute.
Technology ‘fatigue’:
By the late 1970s, the once-fertile soils of Punjab, Haryana and Western Uttar Pradesh
were beginning to show fatigue — soil degradation, ground-water pollution with excessive
chemicals, aquifers drying up and vanishing bio-diversity due to the continuous rice-wheat
monoculture. Farmers were beginning to question the advisability of chemical agriculture, and
organic farming started to catch on. But many protagonists of the Green Revolution wanted an
‘Evergreen Revolution’ and in came the genetically modified crops.
Once again, the inspiration was from the US. A private MNC engaged in global
agribusiness introduced the Bt cotton for an unheard of price of Rs 1,950 for a 450-gm packet,
while the native hybrid cost just Rs 350. In Vidarbha district of Maharashtra, the ‘cotton bowl’
of India, thousands of farmers committed suicide when the crop failed, their investments in
seed and fertilizers not matching the cotton price, which is a monopoly control.
During the Tenth Plan period, agricultural growth was just 1.78 per cent, while the
target was 4 per cent. In 2001, New Delhi dismantled the quantitative restrictions on more than
2,000 items, of which the majority were agricultural products. Pricey American and Australian
apples filled up the shelves of classy departmental stores in the metros, while cheap Vietnam
pepper and Guatemalan cardamom edged out the once-famous Malabar pepper and Wynad
cardamom.
The once-prosperous Malabar and Wynad regions saw thousands of farmers
committing suicide, and the State could do nothing to stop the Washington-inspired
liberalization policies. New Delhi’s focus shifted from the primary agriculture sector to the
services sector, primarily the IT sector. Cheap farm credit was unavailable, and small and
marginal farmers felt throttled. Extension services were in a shambles.
Impact of globalization:
When the UPA Government came to power in 2004, the National Commission on
Farmers, constituted during the previous NDA government, saw a change of guard. More than
14
three years down the line, farmers’ suicides continue unabated and the newfound enthusiasm
for the Special Economic Zones is taking away prime agricultural land for purposes other than
agriculture.
A passing mention has to be made here with regard to the ongoing WTO negotiations.
The most-recent draft modalities for agriculture and non-agricultural market access on
industrial tariffs need to be balanced, as the latter does not appear to be in the interests of the
developing countries, as they would be subject to steeper tariff cuts.
The challenges ahead:
Food import, in all probability, will become a permanent feature, unless we correct it
now. India’s agricultural policy must be ‘grain-centric’ like that of China, which does not
allow shrinkage of cultivable area (69 per cent as of now) put under food-grains. Two
important aspects of farming that must be addressed on a war footing are implementation of a
clear water-use policy and energizing its extension activities.
Sadly, despite huge investment, India has failed to harness the potential of rain-fed
areas due to faulty water-use planning like giving undue importance to mammoth irrigation
projects. A better alternative would be to have a number of decentralized minor irrigation
projects focusing on local water resources, which must include water harvesting as well.
As of now, the weakest link in India’s agricultural efforts is its totally inefficient
extension services. Only 0.9 per cent of the farmers make use of the hundreds of Krishi Vigyan
Kendras (KVKs) spread across the length and breadth of the country. Close to half-a-lakh of
village and block-level extension workers with no knowledge of the advances in technology
are but a financial burden on the exchequer.
The third most important factor is the easy availability of credit. Despite a plethora of
credit agencies, including NABARD, the farmer is still at the mercy of the unscrupulous
money-lender. The interest rate is undoubtedly important, but more important is the efficiency
and speed of lending that is totally absent in governmental lending agencies that are at the root
of much farmer distress. This needs to be addressed with ruthless efficiency.
The only way forward for Indian agriculture is when agricultural scientists and
technologists consider the Indian farmer as a collaborator rather than just a ‘target’ of their
15
research and/or innovation. In terms of infrastructure and fund support, India has the largest
public-funded agricultural sector in the world, next to the US. By comparison, countries like
China and Brazil are far behind. Yet, these two countries have much more to show on the farm
now than India can.
Sixty years after Independence and 10 Five-Year Plans later, Indian agriculture is still
at the crossroads. In all probability, India will once again import close to 5 million tonnes of
wheat. Last year, it imported 5.5 million tonnes. Instead of helping farmers grow more, the
nation lives on imported food.
Industry Overview
The Indian Agriculture Industry is on the brink of a revolution that will modernize
the entire food chain, as the total food production in India is likely to double in the next ten
years. In the initial years in India agricultural activity was limited to the production of food
grains and a few cash crops such as cotton, sugarcane and jute, but recent years has seen a
remarkable shift in the agricultural scene, including increasing diversity in a range of products
and greater sophistication with the creation of critical infrastructural facilities like cold storage,
refrigerated transportation, packaging, quality control etc. The Indian Agriculture sector is now
set for a leap with the introduction of new technology like IT and biotechnology.
As per recent studies the turnover of the total food market is approximately Rs.2,
50,000 crores (US $ 69.4 billion) out of which value-added food products comprise Rs.80, 000
crores (US $ 22.2 billion). The Government of India has also approved proposals for joint
ventures, foreign collaborations, industrial licenses and 100% export oriented units envisaging
an investment of Rs.19,100 crores (US $ 4.80 billion) out of which foreign investment is over
Rs. 9,100 crores (US $ 18.2 Billion). The agricultural food industry also assumes significance
owing to India's sizable agrarian economy, which accounts for over 35% of GDP as well as
accounting for 13% of India's exports and employs around 65 per cent of the population. Both
in terms of foreign investment and number of joint-ventures / foreign collaborations, the
consumer food segment has the top priority. The other attractive features of the Indian agro
industry that have the capacity to lure foreigners with promising benefits are the deep sea
fishing, aqua culture, milk and milk products, meat and poultry segments.
16
Excellent export prospects, competitive pricing of agricultural products and standards
that are internationally comparable has created trade opportunities in the agro industry. This
further has enabled the Indian Agriculture Industry Portal to serve as a means by which every
exporter and importer of India and abroad, can fulfill their requirements and avail the benefits
of agro related buy sell trade leads and other business opportunities.
This Indian agro industry revolution brings along the opportunities of profitable
investment and agriculture-industry-india.com provides the B2B platform with agro related
catalogs, trade leads, exporters & importers directory etc. that help to make way to profit easy.
India's potential to become a leading player in the agriculture sector is proved by the fact that it
already has the makings of one. It is the largest producer of milk, fruits, pulses, cashew nuts,
coconuts and tea in the world, second largest producer of rice and wheat in the world, and
fourth largest in coarse grains. India is also one of the largest producers of cotton, sugar,
sugarcane, peanuts, jute, tea and an assortment of spices. India is poised to become the world's
food basket on the back of a number of Government initiatives and investment opportunities
across various areas of agriculture.
17
Trends in the Indian Agriculture Sector
Agriculture is the main stay of the Indian economy as its performance is dependent
upon the growth of Agriculture sector. It contributes nearly 25% of India’s Gross Domestic
Product (GDP) & 13% of total exports. It provides employment to 60% of the country’s work
force and livelihood security to more than 650 million people. The average annual growth rate
in agriculture, including allied sectors, declined from 4.7% during the Eighth Plan (1992-97) to
2.1% during the Ninth Plan (1997-2002). It further went down to 1.2% during the period 2002-
05, i.e. the first three years of the 10th Five Year Plan 2002-07. Contrary to the targeted
average annual growth rate of 4%, the growth rate in 2002-03, the first year of the Tenth Plan
(2002-07), was negative (-7.0%). This reflected the impact of the severe drought of 2002-03.
Favorable monsoon facilitated an impressive growth rate of 9.6% in 2003-04.
Growth in the agriculture sector may well be judged by the increase in agricultural production
over time. Three factors account for the increase in the total production of agricultural output:
(a) Increase in the total area under various crops.
(b) Increase in the yield rate of various crops.
(c) Substitution of more remunerative crops in place of less remunerative crops.
In physical terms, relative changes in yield rates of different crops may effect
substitution. However, in economic terms, relative changes in prices of different crops also
may effect substitution.
Very many crops are raised in the agriculture sector of India. However, all crops are not
equally important. Rice, wheat, maize, millets and pulses are the major food crops. Oilseeds,
18
sugarcane, cotton, jute & Mesta, and potatoes are the major cash crops. Tobacco, chillies,
ginger, onions, turmeric, tapioca, sweat potatoes, etc. are minor cash crops. Among plantation
crops tea, coffee and rubber are important. One may employ the area under a crop as an
indicator to judge the importance of a crop, though keeping in mind that it is only a partial
indicator of its economic importance.
India’s Ministry of Agriculture has estimated that the food grains production in the
country for the year 2007-08 is likely to exceed 219.32 million tonnes, including the estimated
rice production at 94.08 million tonnes. The Ministry estimated that the maize production is to
touch 16.78 million tonnes during 2007-08. Total wheat production is estimated at 74.81
million tonnes, while 36.09 million tonnes of coarse cereals and 14.34 million tonnes of pulses
are estimated.
The Ministry revealed that the oilseeds production during 2007-08 is estimated at 27.16
million tonnes with groundnut estimated at 7.29 million tonnes, soyabean at 9.45 million
tonnes and rapeseed and mustard at 7.07 million tonnes. Production of cotton is estimated at
23.38 million bales of 170 kg each, while production of sugarcane is estimated to touch 340.32
million tonnes during 2007-08.
As compared to 2006-07, the Ministry informed that rice production is estimated to
increase by about 7 lakh tonnes and coarse cereals production is estimated to increase by about
2 million tonnes (mainly contributed by maize) during 2007-08. It has further revealed that the
oilseeds production is estimated to increase by about 3 million tonnes (mainly contributed by
groundnut) and cotton by about 7.5 lakh bales during 2007-08 over 2006-07.
19
Issues and Challenges in the Agriculture sector
Since the first green revolution in 1960’s the food grain production has increased
significantly from 82 million tonnes in 1960-61 to 129 million tonnes in 1980-81 and 213
million tonnes in 2003-04 to 219 million tonnes in 2007-08, to meet out food security and
attain self sufficiency specially in the production of our stable food rice and wheat. Green
revolution introduced the use of improved inputs – fertilizers, pesticides, seeds and irrigation
facility. But the impact of green revolution was mostly evident in areas with irrigation
facilities. In late 1980’s the country saw another set of reforms initiated by broad trade
liberalization and depreciation of exchange rate which made the terms of trade in favor of
agriculture. Reforms focused on liberalization of export trade mainly due to some surpluses
created in rice and wheat. But overall in recent year’s economy has seen a decline in the rate of
growth of agricultural sector and also its share in GDP.
At 1999-2000 prices (Table 1) the share of agricultural sector in GDP has declined
from 26.2 per cent in 2000-01 to 21.7 Per cent in 2005-06. The rate of growth of the sector has
also been fluctuating from 0% in 2000-01 to -5.9 per cent in 2002-03 and as high as 9.3 per
cent in 2003-04 which again dipped to 0.6 per cent in next year. This is primarily because of
shift in area and declining yields, thus resulting in slow down in production. Table 2 shows that
area under rice, wheat, coarse cereals have been declining. The decline in production is even of
a higher tune than the area decline, and this is due to low yields. Whereas we see area shift
towards pulses, oilseeds, cotton and other non food grains.
20
In
this
backdrop the various issues and challenges identified, that Indian agriculture face are –
declining productivity, poor irrigation and water management, declining agricultural research
and extension activities, distorting markets due to government intervention, declining public
and private investment, unorganized agricultural credit and insurance, poor infrastructure
development, inefficient supply chain and marketing strategies, slow development of agro-
processing units.
21
Towards Agricultural Renewal and Renaissance
The year 1968 marked the beginning of the Green Revolution leading to quantum
jumps in the productivity and production of wheat rice. The last 10 years have witnessed a
fatigue in the Green Revolution with the growth rate in food grain production falling below
population growth. Thus, human numbers are increasing faster than our capacity to make the
goal of “Food for All” realty. At the same time, consumption is not going up due to inadequate
purchasing power at the household level. A famine of jobs/livelihoods as a result of poor
growth of opportunities for employment in the rural non-farm and off-farm sectors is leading to
a famine of food at the household level. According to the Union Planning Commission, we are
off-track in achieving the UN Millennium Development goal of reducing the number of hungry
persons by 2015. Also, we are off-track in reducing infant and maternal mortality rates and in
achieving universal primary education.
Doubling Productivity:
Agriculture being constrained by availability of land, the productivity remains the most
crucial factor based on which is the future of India’s food security. Long term food security
goal can only be attained if there is sustainable agriculture. At the farmers’ level, sustainability
concerns are being expressed that the input levels have to be continuously increased in order to
maintain the yield at the old level. This poses a threat to the economic viability and
sustainability of crop production. A sustainable farming system is a system in which natural
resources are managed so that potential yield and the stock of natural resources do not decline
over time.
Our Prime Minister has rightly emphasized the need to double the annual food grain
production from the present 210 million tonnes to 420 million tonnes by 2015. This will call
for producing at least 160 million tonnes of rice and 100 million tonnes of wheat. Pulses, oil
seeds, maize and millets will have to contribute 160 million tonnes. In addition, the national is
to raise the production of vegetables and fruits to over 300 million tonnes by 2015. Since land
is a shrinking resource for agriculture, the pathway for achieving these goals has to be higher
productivity per unit of arable land and irrigation water. Factor productivity will have to be
doubled, if the cost of production is to be reasonable and the prices of our farm products are to
be globally competitive. Enhancing small farm productivity and increasing small farm income
22
through crop-livestock integrated production systems and multiple livelihood opportunities
through agro-processing and biomass utilization, are essential both to meet food production
targets and for reducing hunger, poverty and rural unemployment.
Taking into account the Total Factor Productive (TFP) growth of major crops in India,
it has been found that the technological gains of early years of green revolution have exhausted
their potential. Agriculture has been experiencing diminishing returns to input use and a
significant proportion of the gross cropped area has been facing stagnation or negative growth
in TFP. Research, extension, literacy and infrastructure have been identified as the most
important sources of growth in TFP. Development of markets improves input-output market
interface and it is of crucial importance for growth in productivity. Human resource
development is central to adoption of technology and promotion of sustainable development.
In agriculture, education creates conditions that enable farmers to acquire and use knowledge
for decision making regarding allocative and technical matters effectively.
Improvement in standards of rural literacy, leads to growth in adoption of technology,
use of modern inputs like machine, fertilizers, and yield. In case of rice and wheat in India,
literacy is found to have a positive and significant relation with crop productivity and a strong
link with farm modernization. Rural education contribute to improvement in adoption of high
yield variety seeds by about 25-47 percent, fertilizer use by 18-22 percent, about 6-8 percent
in modernization and 5-8 percent to improvement in yields for rice and wheat. Collaborations
with the domestic and international research institutes and private research centers will help in
reducing knowledge and yield gaps. More than half of the required growth in yield to meet the
target of demand must be achieved from research efforts by developing location-specific and
low input-use technologies with emphasis on the region/sub-regions/districts where the current
yields are below the potential national average yield.
The sharp fall in the total investment, especially in the public sector investment, in
agriculture has been the main cause for the deceleration of agricultural growth and
development. Moreover, the ratio of amount spent on extension to that on research has been
falling. A vast untapped yield potential still exists. This coupled with the second-generation
technologies and heterogeneity in production environment warrants much more intensive
extension efforts. The slowing-down of emphasis on extension will further widen the gap in
the adoption of technology. Extension services need to be strengthened by scaling-up
investment levels and improving the quality of extension. The first step in this direction should
23
be to increase the availability of operating funds. This will result in accelerating TFP growth,
improving the sustainability of the crop sector and in minimizing the yield gap in the region.
Yield growth and TFP growth together would help in increasing production along with
emphasis on development of factors that help in achieving this goal.
Year of Agricultural Renewal:
The cost-risk-return structure of farming is becoming adverse. Indebtedness is growing
in rural areas. In Maharashtra, over 55% of the state’s farm households are in debt. According
to NSSO, the average monthly per capita consumption expenditure of farm households across
India was Rs.503 in 2003. Endemic hunger (or chronic under-nutrition) is high both in families
without assets like land or livestock, as well as in families with small land holdings without
access to irrigation. If we do not attend to the problems of small farm and landless agricultural
labor families with a sense of urgency and commitment, the “Indian Enigma” of the co-
existence of enormous technological capability and entrepreneurship on the one hand, and
extensive under-nutrition, poverty and deprivation, on the other, will not only persist, but will
lead to social disruption and violence and increasing human insecurity. Without peace and
security, enduring economic progress will not be possible. The National Commission on
Farmers has therefore recommended that the agricultural year 2006-07 be designated the Year
of Agricultural Renewal.
In the year 2006-07, an integrated package of measures was introduced in every part of
the country to increase farm productivity and profitability in perpetuity, without any ecological
harm. These programs covered all the major agro-ecological regions. With this the present
agricultural crisis can be converted into an opportunity for not only reversing the decline, but
for taking the agricultural revolution a step forward by helping the farm families to bridge the
gap between potential and actual yields in all major farming systems through mutually
reinforcing packages of technology, services and public policies. These programs were
initiated by Central and State governments, Panchayati Raj institutions, Agricultural,
Veterinary, Rural and Women’s Universities and IITs, Private and Public sector industries,
Civil Society Organizations and Mass Media in order to foster productivity, quality,
sustainability, profitability and employment revolutions in the farm sector in over 600,000
villages in the country. It also aimed at promoting job-led economic growth in our villages.
24
The following are the major components of the action plan for the Year of Agricultural
Renewal:
1. Soil Health Enhancement:
The following steps were taken to launch a Soil Health Care movement in the country:
Re-tool and re-equip all Soil Testing Laboratories in order to enable them to
provide each farm household with a Soil Health Card, which contains integrated
information on the physics, chemistry and microbiology of the soils.
Promote through campaigns and demonstrations, the introduction of
fodder/grain legumes in the crop rotations as also the cultivation of green and
green-leaf manure crops.
Composting of all agricultural residues and wastes and the use of microbial
fertilizers and farmyard manure should be promoted to the maximum extent
possible.
Methods of improving soil health through integrated nutrient supply will have
to be prescribed and farmers should be assisted to adopt the recommendations.
All staff working in Soil testing Laboratories should be retrained.
Integrated wasteland and biofuels program should be promoted.
The Agri-clinics program should be restructured and revitalized and farm
graduates should be encouraged to take a career of self-employment in the rural
service sector.
Community Land Care movements may be launched by Panchayats.
2. More Crops per Drop of Water:
Water is a public good and a social resource and not private property. The privatization
of water supply distribution is fraught with dancers and could lead to water wars in local
communities. Increasing supply through rainwater harvesting and recharge of aquifer should
become mandatory. Also, nationally accepted strategy for bringing 10 million hectares of new
area under irrigation under the Bharat Nirman program should be developed. Demand
Management through improved irrigation practices should receive priority attention.
25
A Water Literacy movement should be launched and regulations should be developed
for the sustainable use of ground water. Seawater farming should be promoted in coastal areas
through the cultivation of mangroves, salicornia and appropriate halophytic plants. The
conjunctive use of rain, river, ground, sea and treated sewage water should become the
standard method for effective use of available water resources. In water scarce areas, the land
use system should place emphasis on the cultivation of high value-low water requiring crop,
such as pulses and oilseeds. More crops per drop of water should not remain just a slogan.
Watershed Management should be linked to different Technology Missions. Low-cost green
houses can be promoted in areas where evaporation exceeds precipitation during many months
in a year. Panchayats may be assisted in launching water literacy and water quality
management programs.
3. Agricultural Credit and Insurance:
The cost of production of agricultural commodities is increasing with the increasing
risk of climate change and diversification to high value commodities. This further invokes the
need to strengthen our credit and insurance policies for the farmers and most importantly for
the small and marginal farmers. Their have been incidences of increase in farm debts, primarily
due to lack of availability of credit in time and lack of an organized credit structure. The small
farmers are still largely dependent on the informal credit supplies, which usually make them
pay a higher rate of interest. A problem is that the organized credit structure through
commercial banks has not been able to reach to the most needy farmers and landless poor. Lot
of studies have emphasized that it is the lack of credit availability that adoption of improved
seeds, fertilizers and modernization could not be taken up by the farmers, which has a long
term impact on out agricultural production and food security. This even further necessitates the
demand of an efficient and organized credit system. Credit reforms consist of the following
measures:
Interest rate on Agricultural loans: The spread between the deposit and
lending interest rates in India is high by international standards. There is a need
to improve the efficiency in the financial intermediation by controlling both the
transaction cost and risk cost. On the part of the Government, crop insurance
and the speed and manner in which the debt recovery process operates also need
to be considerably improved. Keeping in mind the decline in the profitability of
agriculture, and increasing farmers’ distress and indebtedness, the government
26
may consider providing support to the banking system for reducing the rate of
interest for crop loans to 4% during the Year of Agricultural Renewal. The
agricultural insurance schemes need to be effectively implemented across the
country. Its scope of the schemes should be widened and based on practical
problems faced by the farmers in a particular region. Since the agriculture is still
largely dependent on monsoon, the weather as a parameter to insurance facility
needs to be strongly considered. The prevailing crop insurance covers only 5
per cent of the farmers and thus the schemes on insurance need to be expanded.
Compounding of Interest on Arrears: The compounding of interest on arrears
may be applied only in the case of recalcitrant borrowers who do not pay the
due in spite of having adequate repaying capacity. The farmers facing erosion in
income and consequently their repaying capacity due to market failure should
not be charged compound interest on arrears.
From Micro Finance to Livelihood Finance: There is an urgent need for a
paradigm shift from micro finance to livelihood finance, as the access of the
poor to micro-finance alone is not likely to alleviate their poverty. Livelihood
finance is a comprehensive approach to promoting sustainable livelihood for the
poor, which includes financial services, agricultural and business development
services and institutional development services.
Access to institutional credit in poverty stricken tribal areas: Special efforts
are required to improve the access to institutional credit in poverty stricken
tribal areas in the dry land agricultural regions like the Kalahandi belt of Orissa,
tribal areas of Chhattisgarh/Madhya Pradesh/Andhra Pradesh and the Vidarbha
region of Maharashtra.
Agri-risk Fund: There are areas in our country, which have recurrent and
frequent drought/floods etc., which cripple the incomes of the farmers. The
Government of India may step into create an Agricultural Risk Fund to provide
relief to the farmers in the case of successive droughts, and also waiver of
interest on loans in areas hit by droughts, floods, heavy pest infestation etc.
Credit for low cost/sustainable agriculture: There is a need for developing
suitable project profiles for low input sustainable agriculture and aquaculture.
Institutional credit should also be made available for viable projects of
sustainable farming practices including the upkeep of traditional breeds of
cattle.
27
Rural Insurance Development Fund: A Rural Insurance Development Fund
may be created to take up development work for spreading rural insurance.
Crop Insurance: Crop insurance is covering about 14% of the farmers. The
need is to expand the cover to all farmers and all crops in a time bound manner.
The scheme needs to be made more farmer-friendly and premium reduced.
Establish Credit Counseling Centers where severely indebted farmers can be
provided with a debt rescue package of information in order to get them out of
the debt trap, and thereby save them from committing suicide.
Develop and introduce an integrated credit-cum-crop-livestock-human health
insurance package.
Promote credit and insurance literacy through the Every Village Knowledge
Centre movement. For this purpose, introduce policies for more extensive use
of Community Radio linked to the internet/cell phone.
4. New Models in Marketing and Supply Chain Management:
Improvement in the agriculture sector needs an improvement and strengthening at all
the levels of the supply chain- inputs delivery, credit, irrigation facility, farmers diversifying,
improve procurement, minimizing post harvest loses, cold storage chains, better and efficient
processing and marketing techniques, efficient storage, ware houses and also efficient and
competitive retailing. Timely availability of inputs is one of the key factors to efficient farming
system. The development of organized input market and infrastructure for its storage and
distribution will add to the productivity of the agricultural sector. Development of cold chain
network will help in particular with the perishable commodities and reduce their post harvest
losses. Improving the post harvest management means an overall improvement in the per unit
productivity.
In last one decade various marketing models have been initiated. Mother Dairy
cooperatives in fresh fruits and vegetables under the name of SAFAL, further their alternative
whole sale market – SAFAL Market. The traditional Indian markets have a non-existent
infrastructure of packing, grading, sorting and cold storages. The commission agents and
traders dominate the supply chain and are the major price setters, thus most of the times
28
farmers are dependent on them for credit. Farmers are not aware of the price setting
mechanisms as the system is not transparent and thus don’t have any incentive to produce
efficiently. In this direction SAFAL market in Bangalore has tried to remove these constrains
and build up an efficient supply chain with strong backward linkages with the farmers and
forward linkages with wholesale purchasers. ITC with its e – chaupal, Mahagrapes farmers co-
operative and many other private initiative in this direction are trying to remove the
inefficiencies in the existing supply chains and reduce post harvest losses, increasing the
incentive to the farmer that motivate them to produce efficiently. Post harvest loses generally
range from 5-10% for the non-perishable commodities and about 30% for the perishable
commodities. Thus, there is a need to invest in post harvest management, efficient post-harvest
handling, development of infrastructure, warehouses to prevent huge losses due to inefficiency.
Setting up of the futures market is another step in the direction of stabilizing prices and
creating a continuous supply of agricultural produce. Through the futures trading the farmers
can become a part of the trading system getting maximum benefits from trading directly and
creating further awareness among his community. This also encourage creating a single market
for agricultural produce.
5. Government Intervention Policies – Need to be reformed:
Government intervenes into the markets to stabilize food prices, for public distribution
programs, dealing with the issues of food security etc. But there is a need to bring reforms in
some of the government interventions to make the agricultural sector grow effectively in the
light of changing structure of production, consumption and marketing but with definitely
keeping in view the food security of the most vulnerable group of the society. Lot of reforms
have been initiated in the agriculture sector, which further requires continuous support of the
state and central government, farmers, consumers and private players in strengthening it
further.
Minimum Support Price: The Government announces the Minimum Support
Price (MSP) for 24 major crops keeping in view the interest of the farmers and
this price support policy acts as insurance to farmers against any sharp fall in
the farm prices. The MSP is determined based on the recommendations given
by the Commission on Cost and Pricing that recommends the price annually,
taking into account factors like cost of production, change in inputs prices,
29
trends in market prices, demand and supply situation etc. MSP is done for the
objective of procurement of these basic agricultural food and non food products
for the public distribution scheme (PDS).
Agricultural Produce Marketing Committees (APMC): APMC act prohibits
transaction outside the regulated mandis; do not allow direct marketing and
direct procurement of agricultural produce from farmer’s fields. This act is
coming in the way of new private initiatives in the modern retailing and
upgrading of the supply chain especially in the field of fruits and vegetables. In
the case of SAFAL market set up in Bangalore, Karnataka government had
amended its APMC act in favor of both farmers and consumers. Thus initiatives
should also be taken up by other state governments and adopt the model APMC
act which proposes to remove the controls on the movement, storage and
marketing of agricultural commodities, and enables setting up of commodity
exchanges to enable futures trading. This will provide farmers with the freedom
to sell their produce where it’s more profitable to them rather than in the
existing market administered by the APMCs. This will also strengthen the
contract farming that will create the provision for direct sales of farm produce
through contract farming.
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Agricultural Trade Liberalization: After the Indian economy liberalization
was initiated in 1990’s, the terms of trade was moved in favor of agriculture by
real devaluation of rupee. An agricultural trade surplus would have seen the
upliftment of the agricultural sector with a positive impact on the economic
conditions of the farmers dependent on this sector. Under the policy of trade
liberalization and complying the WTO rules by 2001, all quantitative
restrictions to imports of agricultural produce was reduced in India. Tariffs were
also reduced for number of commodities like edible oil, pulses and cotton. The
imports of pulses and edible oil was huge in India, which was not only because
of reduction in tariffs but also because of increased domestic demand and
inability to meet it due to low productivity in these two commodities and also
poor performance of processing units, due to which there are huge post harvest
losses too. The liberalization of agricultural exports also led to an increase in
exports in initial period of liberalization but in recent years the export
performance of the agricultural sector has not been that good. For wheat and
rice fluctuating in exports and in recent past even imports of wheat has created
an uncertainty in the agricultural trade position of India. On the other hand for
fresh and processed fruits and vegetables high tariffs are been imposed thus
protecting the domestic sector from imports. Fall in the world agricultural prices
further made some of our agricultural exports non-competitive.
An Indian Trade Organization:
The Union Minister for Commerce and Industry and the Government of India have
done a commendable job in safeguarding the interest of farm women and men in the recent
WTO negotiations at Hong Kong. They have put together a broad-based coalition of the
concerned. Postponement of agreement in agricultural negotiations will prolong the unequal
trade bargain entered into at Marrakesh in 1994. As a national self-empowerment measure, we
should consider establishing an Indian Trade Organization (ITO) and our own boxes for
domestic agricultural support on the model of WTO’s Blue, Green and Amber boxes. The
Indian Trade Organization (ITO) can be virtual organization, specializing in WTO affairs. It
can serve as a brain and information bank of enabling government to take informed and
proactive decisions. The ITO should serve as a friend and guide to small farm families and
31
should provide proactive advice on land use and crop planning. The ITO should also help in
building a long-term memory system in relation to home and external trade and help
checkmate adverse global trade trends by stimulating timely national action.
Overall economic growth rates have little meaning if we do not look after the economic
health and survival of over 60% of the population. The above mentioned programs can help to
launch the country on the path of an ever-green revolution in agriculture characterized by
continuous improvements in productivity and profitability without associated social or
ecological harm.
Emerging Trends in the Indian Agriculture Sector
The “Green Revolution” did help India achieve self sufficiency in food grain
production. But today, the Indian agricultural sector is facing a series of new challenges. The
sector is growing at a much slower pace of less than 2% per annum whereas the overall GDP
growth rate is about 9%. For the same area under cultivation, the average productivity of the
Indian agriculture sector is significantly lower than that of developed nations. Post harvest
losses in the horticulture (fruits & vegetables) sector, account for almost 30 per cent of total
production. With increasing urbanization, growing population and depletion of scarce natural
resources like water, increasing agricultural productivity is the only option left to meet the
growing demand for food.
Demand for bio-fuels is increasing exponentially with rapid rise of crude oil prices and
several nations across the globe including India mandating some percentage blend of bio-fuels
to gasoline/diesel. As most of the bio-fuels feedstock is agriculture produce, it is posing
additional challenges for the agricultural sector.
Emerging Trends:
In view of these national level challenges, several encouraging trends have been
emerging in recent years. The most recent and important one being marketing reforms for the
agricultural produce. These reforms will lead to better farm gate price and also pave the way
for contract farming, since the non-value adding intermediaries in the agricultural supply chain
will be eliminated. The Government’s encouragement of the food processing sector through
subsidies, establishing food parks and allowing 100% FDI in infrastructure is heartening as
32
well. The shelf life of perishable agricultural produce can be improved significantly through
processing as currently as only 2% of the produce is processed whereas in developed nations it
is almost 30-40 per cent. Export of agricultural commodities is another area that is gaining
attention with increased participation from the corporate sector.
These trends indicate a significant opportunity for the Indian farming community,
provided quality and productivity challenges are met. Technology adoption coupled with the
right social policies can be of great help in addressing these challenges.
Key Technologies:
Several technological advances in bio-technology, scientific farming and marketing of
agricultural produce demonstrated elsewhere in the world could be leveraged, customizing
them for the Indian scenario. Opportunities for technology deployment in the farming cycle
involves three stages, namely, crop production, post-harvest management, and marketing from
a farmer’s perspective.
Production Technologies:
Crop planning plays a very significant role. At this stage besides finances, the most
important decision of selecting the crop for cultivation is taken. Standard crop rotation
practices, expected market price, crop cycle time, soil and season are analyzed. Collectively
these decisions may have a greater impact in terms of either creating a market glut or shortage.
Information and Communication Technologies (ICT) like statistical modeling, forecasting and
data analytics technologies for market supply/demand analysis, weather modeling and crop
yield predictions can be developed at a macro level.
Moving on to cultivation, appropriate seed selection plays a major role in determining
productivity. Bio-technology offers much promise in terms of high yielding seed varieties and
new pest resistant seeds. Through scientific farming practices it is possible to ascertain, the
effects of weather, pest infestation on yield and the optimal amount of nutrients required. Drip
irrigation, as a farming practice has been gaining popularity. Drip irrigation provides the right
33
amount of water at the right location – at the plant root zone and has many advantages over
conventional flood method of irrigation, like higher yield, water/energy savings, lesser weeds,
etc. Most drip irrigation solutions require a water source and pump and quality water,
availability of power and maintenance and agriculture knowledge.
Though subsidies are provided by the Government on initial investments, there is the
additional cost of system maintenance, and the challenges of having the necessary
infrastructure and technical support within a community to maintain these systems effectively.
Information dissemination and management is another area where technology platforms based
on social networking such as Web 2.0 can help to inculcate scientific farming practices, help
agriculturists share farming knowledge and best farming practices.
Post-harvest Technologies:
Post harvest management has been ignored for quite sometime and has been gaining
significant attention in recent years. Post harvest technologies can help in minimizing wastage
and improve the shelf life while maintaining the quality of the produce. These technologies
include automatic grading and sorting of produce, sensors for checking produce quality,
packing and cold chain infrastructure for improving the shelf life of perishables and effective
energy management and maintenance of the cold chain infrastructure, efficient logistics for
transporting the agriculture produce, etc. Various sensors coupled with RFID technology are
being mandated through international standards to track and establish traceability in the food
supply chain. These standards will become mandatory in coming years and Indian exporters
are expected to adhere to these standards.
Marketing:
Information and communication technologies (ICT) play a major role collating and
disseminating market related information. Newer approaches and models are being tested to
accurately gather both demand and supply related data. Commodity exchanges have been
gaining lot of popularity and futures trading offer the benefit of risk mitigation to farmers. But
adequate training and understanding in futures trading is essential in order to reap the benefits.
34
Before deploying new technology in the agricultural sector, various factors such as
technology maturity and robustness, short and long term investments by various stakeholders,
availability of necessary infrastructure and the support systems required, need to be evaluated.
For example, protected cultivation offers numerous benefits in terms of high yields by
protecting crop from adverse weather and pest infestations.
Multi-faceted approach:
By the same measure, the results could be disastrous if the correct farming practices are
not adopted. Also, it requires involvement of multi disciplinary experts – agronomists to
identify appropriate markets for the produce and to justify the investments, technologists to
establish correct farming practices, like soil quality management, micro-nutrient management,
water management experts, etc. in order to customize these solutions for particular regions.
The required farming practices need to be experimented through field trials along with
farmers and the results of these studies along with risks need to be evaluated. Challenges of
scaling up some of these technologies can only be understood through field trials with farmers.
In conclusion, an integrated multidisciplinary approach coupled with necessary support
systems is the key to any successful, scalable and sustainable technology deployment to have a
significant impact. The farming community has realized the potential available to them and is
taking steps to leverage the benefits to the optimum.
The Horticulture Boom:
Horticulture is a generic term for a diverse range of products spanning fruits,
vegetables, spices, coconut, medicinal & aromatic plants, mushrooms, cashew, cocoa etc. The
boom in this sector over the past decade is evident from the rise in its share in the total
agricultural output, employing about 24.5% of the total cultivated area. Besides providing
nutritional and livelihood security and helping alleviate poverty and generate employment, this
sub-sector sustains a large number of agro-industries, which generate huge additional non-
farming employment opportunities.
Fruits and Vegetables Production:
35
The total production of fruits and vegetables in the world is around 370 million tons
(MT). India ranks first in the world with an annual output of 32 MT. While there are almost
180 families of fruits that are grown all over the world, citrus fruits constitute around 20% of
world’s total fruit production. Major Indian fruits consist of mango, banana, citrus fruits, apple,
guava, papaya, pineapple and grapes. The fruits are processed into various products such as
fruit juices & concentrates, canned fruit, dehydrated fruit, jams & jellies etc. India with its
current production of around 32 million MT of fruit, accounts for about 8% of the world’s fruit
production. The diverse agro-climatic zones of the country make it possible to grow almost all
varieties of fresh fruits and vegetables in India. The fruit production in India has recorded a
growth rate of 3.9%, whereas the fruit processing sector has grown at about 20% per annum.
However, the growth rates have been extensively higher for frozen fruits & vegetables (121%)
and dehydrated fruits & vegetables (24%).
India is the second largest producer of vegetables in the world (ranks next to China)
and accounts for about 15% of the world’s production of vegetables. The current production
level is over 71 MT and the total area under vegetable cultivation is around 6.2 million hectares
which is about 3% of the total area under cultivation in the country. In case of vegetables,
potato, tomato, onion, cabbage and cauliflower account for around 60% of the total vegetable
production in the country. Vegetables are typically grown in India in field conditions; the
concept is opposed to the cultivation of vegetables in green houses as practiced in developed
countries for high yields.
The Flowering of Floriculture:
The domestic floriculture industry has been witnessing an unprecedented growth during
the past years and has also been getting increased acceptability in world markets, currently
estimated at US$ 50 billion. The floriculture industry has been growing at an annual rate of
17%, which has also seen a number of corporate houses entering the fray during the past three
to five years. Higher standards of living and the growing desire to live in an environment
friendly atmosphere have led to a boom in the domestic market as well. The export of cut
flowers has been identified as a thrust area at the national level. The estimated area under
flower cultivation is 106,000 hectares and the major flower producing states are Karnataka,
Tamil Nadu, Bengal, Andhra Pradesh and Maharashtra.
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Livestock and Fisheries:
In addition to the horticulture sector and crop diversification, the livestock sector has
also gained a lot of significance. Livestock is an important sub-sector of economy. It
contributes 49% to the agriculture value added and 11% of the GDP. Development of livestock
has strong linkages with other sectors such as rural development, industries, environment and
poverty alleviation. The main focus of livestock and fisheries development is to achieve self
reliance in livestock products and improve productivity of animals in terms of milk and meat.
The livestock sector also plays an important role in the utilization of non-edible agricultural
by-products, apart from being an important foreign exchange earner.
Milk Production:
The milk production depicts an increasing trend i.e. it increased from 27.8 million tones
in 2002-03 to 33.2 million tones in 2006-07. The main contributing factors were increase in
number of milch animals, improvement in veterinary care facilities and artificial insemination
coverage, and higher milk prices.
Meat Production:
37
The meat production depicts a rising trend, as it increased from 2.1 million tones in
2002-03 to 2.6 million tones in 2006-07. Increase in meat prices and the number of livestock
were the contributing factors.
Fish Production:
The fish production depicts a rising trend. It increased from 0.57 million tones in 2002-
03 to 0.61 million tones in 2006-07.
The Rise of IT in the Agriculture sector:
38
The application of information technology (IT) in agriculture is usually associated with
markets in developed countries and capital intensive methods of production. However, its
relevance to the rural economy in a country like India cannot be overlooked. IT can effectively
be used to disseminate technology, streamline the supply chain for food processing and other
agro-industries, leading to better price realization by farmers. There are many efforts underway
which demonstrate the concrete benefits of IT for the rural population and the sector as a
whole.
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Key Players in the Indian Agriculture Sector
BRITANIA INDIA LTD (BIL)
Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently
the Groupe Danone(GD) of France (a global major in the food processing business) and the
Nusli Wadia Group hold a 45.3% equity stake in BIL through AIBH Ltd (a 50:50 joint
venture). BIL is a dominant player in the Indian biscuit industry with major brands such as
Tiger, Mariegold, Fifty-Fifty, Good Day, Pure Magic, Bourbon etc. The company holds a 40
per cent market share in the overall organized biscuit market and has a capacity of 300,000
tons per annum. Currently, the bakery product business accounts for 99.1 per cent of BIL's
turnover.
Britannia Industries Ltd (BIL) plans to increase its manufacturing capacity through
outsourced contract manufacturing and a greenfield plant in Uttaranchal to expand its share in
the domestic biscuit and confectionery market.
DABUR INDIA
Dabur is one of the largest domestic FMCG companies, specializing in natural
healthcare, personal care and food products. It was incorporated in 1975 with an emphasis on
generic ayurvedic products. In the mid-1990s, this New Delhi-based company started
diversifying into various businesses such as food, confectionery and merchandise exports.
Dabur now enjoys a strong market position in the ayurvedic and herbal categories in the
personal care and healthcare segments.
INDIAN TOBACCO CORPORATION (ITC)
Rated among the world's leading companies by Forbes magazine, ITC ranks fourth in
net profit among the country's private sector corporations. ITC has a diversified presence in
cigarettes, hotels, paperboards & specialty papers, packaging, agribusiness, branded apparel,
packaged foods & confectionery, greeting cards and other Fast Moving Consumer Goods
(FMCGs). While ITC is an outstanding market leader in its traditional businesses of cigarettes,
hotels, paperboards, packaging and agri-exports, it is rapidly gaining market share even in its
nascent businesses of branded apparel, greeting cards and packaged foods & confectionery.
40
ITC is also one of the largest exporters of agri-products in the country and one of the largest
foreign exchange earners worth US$ 2 billion during the past decade. The company's e-
Choupal initiative has been significantly helping the domestic farm sector enhance its
competitiveness by empowering farmers through the power of the Internet.
MARICO
Marico is a leading Indian group incorporated in 1990 and operating in consumer
products, aesthetics services and global ayurvedic businesses. The company also markets food
products and distributes third party products. Marico owns well-known brands such as
Parachute, Saffola, Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and
the Sil range of processed foods. It has six factories and sub-contract facilities for production.
The overseas sales franchise of Marico's branded FMCG products is one of the largest
among Indian companies. It is also the largest Indian FMCG company in Bangladesh. The
company plans to capture growth through the constant realignment of their portfolio along
higher margin lines and focus on volume growth, consolidation of market shares, strengthening
of flagship brands and new product offerings.
MOTHER DAIRY
Mother Dairy, Delhi was set up in 1974 under the Operation Flood Programme. It is
now a subsidiary of a wholly owned company of the National Dairy Development Board
(NDDB). Mother Dairy markets and sells dairy products under the Mother Dairy brand (like
liquid milk, dahi, ice creams, dairy whitener and butter); Dhara range of edible oils and the
Safal range of fresh fruits and vegetables, frozen vegetables and fruit juices at a national level,
through its sales and distribution networks for marketing food items.
RUCHI SOYA INDUSTRIES LTD (RSIL)
Ruchi Soya Industries Ltd is an agro-based industry with an annual turnover of US$
575 million. RSIL is the flagship company of Ruchi Group. It is a fully integrated soya
processor and the first company in the country to export soya meals and manufacture edible
grade soya flour and textured soya proteins. Ruchi is the unmatched market leader for its
Nutrela chunks and granules. Nutrela has also gained an overseas demand in recent years.
41
AGRO TECH FOODS LTD.
The company is one of the market leaders in the edible oils and branded food sector.
ConAgra Foods Inc of USA along with Tiger Brands of South Africa holds a majority stake of
51.3% in the company through CAG Tech Holdings, Mauritius. With well-known brands like
Sundrop, Health World, ACT II and Rath as part of its portfolio, the company holds a
dominant market share and leadership in the refined oil segment.
CADBURY INDIA LTD (CIL)
Cadbury India Ltd is a 93.5% subsidiary of Cadbury Schweppes Plc, UK, a global
major in the chocolate and sugar confectionery industry. CIL was set up as a trading concern in
1947 and subsequently began its operations with the small scale processing of imported
chocolates and food drinks. CIL is currently the largest player in the chocolate industry in India
with a 70% market share. The company is also a key player in malted foods, cocoa powder,
drinking chocolate, malt extract food and sugar confectionery segment. The company had also
entered the soft drinks market with brands like “Canada Dry” and “Crush”, which were
subsequently sold to Coca Cola in 1999. Established brands include Dairy Milk, Perk, Crackle,
5 Star, Éclairs, Gems, Fructus, Bournvita etc. The company plans to increase the number of
retail outlets for future growth and market expansion.
HINDUSTAN UNILEVER LTD (HUL)
Hindustan Unilever Ltd is a 51% owned subsidiary of the Anglo-Dutch giant Unilever,
which has been expanding its operations in India. It is the country's biggest consumer goods
company. HUL is among the top five exporters of the country and also the biggest exporter of
tea and castor oil. The product portfolio of the company includes household and personal care
products like soaps, detergents, shampoos, skin care products, color cosmetics, deodorants and
fragrances. It is also a market leader in tea, processed coffee, branded wheat flour, tomato
products, ice cream, jams and squashes. HUL enjoys a formidable distribution network
covering over 3,400 distributors and 16 million outlets. In the future the company plans to
concentrate on its herbal healthcare portfolio and confectionery business. Its strategy for
growth includes focusing on the “power brands”, growth through consumer relevant
42
information, cross category extensions, leveraging channel opportunities and increased focus
on rural growth.
NESTLÉ INDIA LTD (NIL)
Nestlé India Ltd, a 59.8% subsidiary of Nestlé SA, Switzerland is a leading
manufacturer of food products in India. Its products include soluble coffee, coffee blends and
teas, condensed milk, noodles (81% market share), infant milk powders (75% market share)
and cereals (80% market share). Nestlé has also established its presence in chocolates,
confectioneries and other processed foods. Soluble beverages and milk products are the major
contributors to Nestlé's total sales. Examples of its popular brands include Nescafé, Milkmaid,
Maggi and Cerelac. The company has entered the chilled dairy segment with the launch of
Nestlé Dahi and Nestlé Butter. Nestlé has also made a foray into the non-carbonated cold
beverages segment through the placement of Nestea Iced Tea and Nescafé Frappe vending
machines. Exports contribute to almost 23% of its turnover.
COCA COLA
Coca-Cola started its India operations in 1993. Coca-Cola in India comprises of 27
wholly company-owned bottling operations and another 17 franchisee-owned bottling
operations. A network of 29 contract-packers also manufactures a range of products for the
company. Leading Indian brands like Thumps Up, Limca, Maaza, Citra and Gold Spot exist in
the company's international family of brands along with Coca-Cola, Diet Coke, Kinley, Sprite
and Fanta, plus the Schweppes product range. During the past decade, Coca-Cola has invested
more than US$ 1 billion in India.
PEPSICO
PepsiCo is a world leader in convenient foods and beverages, with revenues of about
US$ 27 billion. PepsiCo brands are available in nearly 200 markets across the world. The
company has an extremely positive outlook for India. PepsiCo entered India in 1989 and is
concentrating on three focus areas - soft drink concentrate, snack foods and vegetable & food
processing. PepsiCo's success is the result of superior products, high standards of performance
and distinctive competitive strategies.
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44
Conclusion
Strengthening of agriculture will help in upliftment of the farmers but also benefit the
larger section of the rural poor who are directly engaged in agriculture or indirectly linked with
agriculture as consumers. Efficient way of production, stabilized prices, higher income from
agriculture would create a more conjugative environment in the country for the development of
the economy as a whole and of rural population in particular. One of the most important
component of the much needed reforms is not only implementation of the policy in time but
also simultaneous review and evaluations of the impact of the policies and taking immediate
steps to rectify the negative impacts if caused by any of the policies. Inter sectoral linkages and
organization of the agricultural sector needs to be taken up. Sustainability is another key issue.
In the present context sustainability with natural resource management has become more
relevant. The visible institutional changes with new models of marketing and cultivation
should be supported by government policies too. Priority investment areas identified need to be
worked on without loss of time. Risk management and incentive based system will motivate
farmers to efficient agriculture. Empowerment of the small and marginal farmers through
education, reforms and development will ensure a better, efficient and strengthened Indian
agriculture. Motivation new models in production and marketing along with creating
awareness and imparting education to small farmers will help in development of the sector and
more importantly improving the economic status of poor farmers. The action plan to strengthen
agriculture in India needs to be on domestic reforms through reduction of government
intervention in the market economy but playing major role as evaluator and implementation of
the policies, increased investment and prioritizing the area to invest, parallel action plans in
this direction are needed in research to increase productivity and irrigation and water
management.
45
References
Ahluwalia, Montek S. (2005). Reducing Poverty and Hunger in India: The Role of Agriculture. IFPRI 2004-2005 Annual Report Essay.
AGRIBUSINESS IS “HAPPENING” IN INDIA, R SUBRAMANIAM Associate Vice President, Avalon Consulting, Mumbai.
Corporate agriculture: The implications for Indian farmers, Jayati Ghosh, December 2003.
Trends in Growth of Agriculture Sector of the Indian Economy, Prof. S K Mishra, Dept. of Economics, NEHU, Shillong.
Sustainable Agriculture for Food Security, Dr. B.B. Mishra, May 2005.
Ever-Green Revolution and Sustainable Food Security, M.S. SWAMINATHAN.
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www.ncaer.org/indianEconomyAgriculture.html
www.mpra.ub.uni-muenchen.de/6150/MPRA Paper
www.abareconomics.com
www.sas.upenn.edu/casi
www.ibef.org
www.ifpri.org
www.fao.org
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