Agribusiness in India


Presentation Description

Agribusiness in India : Prospectus and problems


Presentation Transcript

seminar On Agribusiness in India : Prospectus and problems:

seminar On Agribusiness in India : Prospectus and problems Vijayachandra Reddy.S . PGS09AGR4921 Ph.D.Scholar Department of Agricultural Economics Major Advisor Dr.S.M.Mundinamani UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DHARWAD

PowerPoint Presentation:

Introduction and Concept of Agribusiness Key drives in Agribusiness Agribusiness through decades Unique Dimensions of Agribusiness Characteristics and Components of Agribusiness Environment Agri-business: Shift In Focus Key opportunities Area Few suggested models Alternate Business Philosophies Indian Corporate in Agriculture Problems in Agribusiness Policy Initiatives Case studies Conclusion Flow of Presentation

PowerPoint Presentation:

John H. Davis in 1955 Agribusiness is emerging as a specialized branch of knowledge in the field of management sciences. In this context, agribusiness can be defined as science and practice of activities, with backward and forward linkages, related to production, processing, marketing, trade, and distribution of raw and processed food, feed and fibre, including supply of inputs and services for these activities.

PowerPoint Presentation:

Concept Of Agri-business Agribusiness Concept revolve around activities of commercialization of agriculture, which refers to market orientation of agricultural production and marketing process. Transition from subsistence to commercial agriculture. The agribusiness system is made of thousands of businesses ranging from the small producers to large corporations It is the management that drives and directs the firms , farms and food companies that come together in the whole agribusiness system Each of these businesses have managers responsible for assuring successful completion of the functions, tasks and activities.

PowerPoint Presentation:

Laws and Govt. Policies Customs and Values Competition Infrastructure (transport, communication, education etc.) Consumer Tastes and Preferences Domestic and Global Economy Science and Technology Concept Of Agri-business Agribusiness AG. INPUT SUB-SYSTEM AG. PRODUCTION SUB-SYSTEM AG. MARKETING & PROCESSING SUB-SYSTEM

Role of Key Drivers in Agri-business:

Role of Key Drivers in Agri-business

PowerPoint Presentation:

Reardon , 2008

PowerPoint Presentation:

Unique Dimensions of Agribusiness It can be argued that management theory and principles are the same for any business enterprise. So what is so unique in agribusiness? Product Characteristics Perishable Raw material More bulky Uncertain quantity and quality Production Characteristics Seasonal Small scale Scattered Specialized Consumption Characteristics Continuous Price inelastic demand

Agri supply chain – a comparison with Developed countries:

Agri supply chain – a comparison with Developed countries India Developed countries High investments – Low wastage - better margins High wastage and low margins Farmer Commission agent Consolidator Trader Wholesaler Retailer Consumer Farmer Wholesaler Retailer Consumer Source: Report from the Economic Research Service,2008

Characteristics of Enabling Environment for Agribusiness in India :

Characteristics of Enabling Environment for Agribusiness in India Based on the vision document for the Ministry of Food Processing Industries (2005-2015), the industry targets are as follows: Industry should aim to increase processing of perishables 20% Increase value addition from the present level of 20% to 34% Share in global trade up from 1.6% to 3% The national policy aims to increase the level of food processing to 25 % by 2025 12

PowerPoint Presentation:

Sanjeev Kapoor IIM, Lucknow 2009

PowerPoint Presentation:

Components of Environment Market Environment Consists of the factors which have an impact on agri-business market, like client factors such as needs, preferences, and buying behavior of customers. marketing intermediary factors such as middlemen, distribution channels and delivery systems. Competitor-related factors such as different type of competitors, entry and exit of major competitors, and nature of competition.

PowerPoint Presentation:

Components of Environment Social Environment Demographic Characteristics: population density and distribution, migration and rural urban mobility. Social Attitudes social customs, beliefs, practices, and changing life style patterns. Educational levels and awareness of the members of society Social concerns , such as environmental pollution Technological Environment Technological development and change -can change cost of production -can create new market Cost and availability of technology Transfer of technology

PowerPoint Presentation:

Regulatory Environment Regulation of activities by the govt. agriculture price policy import and export policy policy related to subsidy on inputs fiscal policy Economic Environment The economic stages existing at a given time in the country. The economic structure adopted, such as capitalistic, socialistic or mixed economy. Economic planning, such as five-years plans, annual budgets etc. Economic indices, like distribution of income, per capita income, rate of savings and investments, and balance of payment. Infrastructural factors such as financial institutions, transport, communication.

PowerPoint Presentation:

GOVT. SUPPORT FOR HORTICULTURE BUSINESS The Horticulture Board through Govt. of India provides technical, financial, logistics, MIS, consultancy and Marketing support. N Sambasiva Rao & Umesh Mishra 2009

Emerging Sectors in Agribusiness:

Emerging Sectors in Agribusiness IT in agriculture and rural development. Post Harvest management and value addition. Horticulture and food products marketing. NGOs in agriculture and rural development. Agriculture Extension Services. Consulting and other knowledge based activities. Biotechnology research and commercialization. Corporate farming and farm management. Agriculture supply chain management. Rural and agri-foods retailing.

PowerPoint Presentation:

Agri-business: Shift In Focus From deficit management to surplus management From production oriented approach to market oriented approach From managing shortages to stimulating demand Agri-business -Focus Transformation from commoditization to commercialization of Agriculture Market orientation of agriculture sector Moving from current supply driven production system to demand driven system (quantity and quality) Dissemination of market information Linkage production with agro-processing sector promoting competition and transparency of agriculture produce marketing

PowerPoint Presentation:

Key opportunities Area

PowerPoint Presentation:

Land Preparation Seed sowing Nutrition application crop protection irrigation Harvesting Storage F A R M E R MARKET Trader Processor1 Processor2 Retail chain Main product By product End user Equipments Services Warehouse Transportation Post harvest trt Services Equipment Soil amendment Biological services Seeds Seed treatment pdts Services Equipments Fertilizers Micronutrients PGRs Fertigation servi c es Pesticides Equipments Services Equipments Irrigation systmes Water treatments services Trading Infrastructure Processing Packaging Marketing Channel Placement Transportation Equipments Services Display retailin g Source: S.S. Acharya,2007

Few suggested models:

Few suggested models Win-Win Mandi Model Agricultural franchising Model Customer Oriented Agri -Partnership (COAP)

Agribusiness Franchising Model:

Agribusiness Franchising Model iii Input Agri-Services partners for best & Safe Technologies -seed -fertilizer -post Harvest Services provided -selling quality farm inputs(SFP) -Renting farm equipments -Arranging credit by partnering banks -Farm advice & Traning -Procuring & processing -Market linkages Private Extension brand INNOVATIVE AGRIBUSINESS SHOP By aggregating factors of production Specific Farming solutions - crop - Region - Market Corporate Eg.Godrej Aadhar

Corporate to enable stakeholders Needs:

Corporate to enable stakeholders Needs Consumers of Agri Produce Corporate Farmer - low residues - Traceability/ transparency Better nutritional value longer storability knowledge cheaper price remedial rights - Integrating technologies,Offering it as a package to the farmer - Squeezing out the value loses across the value chain during growing, procurement & processing. - creating infrastructure closer to the farm - providing centralised market access Consumer health Farmer entrepreneurship Corporate farming using farmer as implementer Lower cost of inputs/favorable cost Benefit ratio Low pollution precision safety for user Knowledge easy availability consistently good quality Credit better value for his produce

PowerPoint Presentation:

Alternate Business Philosophies Production Orientation: Focus: Exploitation of technical capability (maize grows well here so we grow maize) Objective: Profits through supplying to markets where task is one of allocating supplies between different markets Selling orientation: Focus: Promoting the consumption of the product that you are able to produce (Let us sell as much of the maize as possible) Objective: Profits through persuading the people that what you have is what they really want Marketing orientation: Focus: Identifying wants and needs of the consumers and matching those with your resources (Income has risen and people want more vegetables, so let us diversify) Objective: Profits through provision of customer satisfaction by meeting their needs and wants

Key Issues:

Key Issues Demand patterns are changing Agri -food system is transforming Organized retail (food & grocery) is rapidly expanding Other front end players (processors, logistic suppliers, etc) are responding But, the farm sector is fragmenting Challenge lies in… Retail sector creating opportunities for mainstream participation

Organized Retail in India ~ unfolding revolution:

Organized Retail in India ~ unfolding revolution Total retail ($322 bn in 2006/07 ) likely to grow @ 13% annually (to $590 bn in 2011/12).* Organized retail (comprising of just 4% of total retail) to grow at (45-50)% & (account for 16% by 2011/12).* Total food (accounts for nearly 60% of the retail pie), organized segment hovering around 1%. *Source; ICRIER Retail Report, 2009

Transforming Agri-food System:

Transforming Agri -food System RBHs Source: Gulati & Gupta, 2008 emerging linkages emerging linkages

PowerPoint Presentation:

Market Information (incl. food safety) Retailers & Agro processors Input delivery & Extension services Farmers’ clusters Source: Gulati & Ganguly, 2008 Credit & Insurance In retail-clusterization of the backend

How have farmers benefited?:

How have farmers benefited? Studies confirm that farmers have benefited in the past through farm-firm tie-up (contract farming, cooperatives, producers 'organization) Through reduced transaction & marketing costs, better prices & access to niche markets However farmers are still vulnerable to production and price shocks and there is a need to establish better firm-farm linkages.

Contract Farming in India :

Contract Farming in India A contract to purchase a specified quantity of produce at a pre-agreed price – Fixed price – Market linked price Quality of produce specified in contract or benchmarked to certain agreed standards Penalty for default usually specified in the contract but rarely enforced Relationship generally built on Trust

Building Blocks of “Trust”:

Building Blocks of “Trust”

Missing or Inadequate Rural/Agri Services:

Missing or Inadequate Rural/ Agri Services Input services : quality inputs (seeds, fertilizers and alike), agri equipments, extension services, credit & insurance, etc Output services: buyback & open ended procurement systems, contract farming & warehousing facilities. Consumer services: FMCG, & other consumables. Other services: health & medical facilities, money transfer facilities, entertainment facilities such as food joints, movie hall, parks, etc.

Bridging the Information Gap:

Bridging the Information Gap Effective extension services and communication – the key to developing a successful relationship and building trust. Enabling the farmers to access correct market feedback : – Word of mouth is important – Seeing is believing Ultimate goal is ‘Demand Driven’ agriculture

Indian Corporates in Agriculture:

Indian Corporates in Agriculture Harrisons Malayalam Ltd Punjab-Pepsi Partnership ITC ‘e-chaupal’ Haryali Kisaan Bazaar Mahindra Shubh Labh Cargill Farm Gate Business Tata Kisan Sansar

Harrisons Malayalam Ltd …… over the years:

Harrisons Malayalam Ltd …… over the years HML’s predecessors Malayalam Plantations Limited and Harrisons & Crosfield Limited sterling companies incorporated in England – history of 150 years. In 1979, these companies incorporated as Indian Companies under the names Malayalam Plantations (India) Limited and Harrisons & Crosfield (India) Limited. In 1984, the two companies merged to form Harrisons Malayalam Limited. HML became part of the RPG Group in the year 1989. RPG Group - one of India's largest industrial conglomerates, with over 20 companies in its fold, spread over 6 business sectors with an annual turnover over USD 3.25 Billion Winner of the maximum number of awards at “The Golden Leaf India awards” (TGLIA) for quality teas

Vital Statistics ……….:

Vital Statistics ………. Largest plantation company based in South India. Single Largest Private Sector Employer in Kerala. HML has 25000 hectares of land under its fold 6000 hectares - in Tea, 8000 hectares - in Rubber Single largest producer of Natural Rubber in the Country Second largest producer of Tea in South India. Largest Corporate grower of Pineapple Presence in other horticulture crops – banana, passion fruit, cocoa, coconut, arecanut and spices Largest exporter of Tea in South India – Some Important customers - Twinings – UK, Saralee – Netherlands, Elink Schurmann – Rotterdam, May Co – Russia, Baeshan – Saudi Arabia , A F Jones – Sri Lanka Vital Statistics ……….

Caring for People and environment – The HML way:

Caring for People and environment – The HML way An equal Opportunity employer with 7700 men and 8800 women workforce Winner of FICCI awards thrice for corporate initiatives in family welfare as a result of its Comprehensive Labour Welfare Scheme – aimed at improving the quality of life of the employees and their dependents. Pioneer in corporate social responsibility in Kerala with initiatives such as “ Rakshita ” a centre for development of children and adults with multiple disabilities Providing free medical aid for underprivileged in Rural Kerala. The only company in this sector to bag the Kerala State Pollution control award for its factory on more than one occasion emphasizing the responsibility and initiative taken by the company in preserving the natural resources for future generation.

PowerPoint Presentation:

I hope we still remember the production function Q = f ( C, L, B , e ) Q ….. product C ….. capital L ….. labour B ….. biological factors (land, animals , plants ..) e ….. technological development

Policy initiatives :

Policy initiatives Use of foreign brand names is now freely permitted. After the enactment of the proposed Food Safety and Standards Bill, 2005 in India, the food processing sector would be governed by only one law and one regulator, instead of 13 different laws.

PowerPoint Presentation:

Duty-free import of goods for development, operation, and maintenance of SEZ units • 100-percent income tax exemption on exports from SEZ units for the first 5 years, 50-percent exemption for years 6-10, and a 50-percent exemption of reinvested export profits for years 11-15 • External commercial borrowing by SEZ units up to $500 million/year, without restriction, through recognized banking channels • Exemption from central Government sales and service taxes • Exemption from State sales taxes and other State levies. Contd..

Taxation: a 100 percent tax deduction on profits for five years and 25 percent for the next five years especially to the upcoming agro-processing industries. the government has proposed a comprehensive goods and services tax (gst) by 2010. this will serve to integrate the economy and make india a single common market. industry players are of the opinion that the gst will provide a relief to the food and beverages sector against the multiple taxes imposed at various levels today.:

Taxation: a 100 percent tax deduction on profits for five years and 25 percent for the next five years especially to the upcoming agro-processing industries . the government has proposed a comprehensive goods and services tax ( gst ) by 2010. this will serve to integrate the economy and make india a single common market. industry players are of the opinion that the gst will provide a relief to the food and beverages sector against the multiple taxes imposed at various levels today .

PowerPoint Presentation:


Emphasis for Infrastructure Development:

Emphasis for Infrastructure Development Food Parks: Western Agri Food Park (P) Ltd Pune , Maharashtra Food Park at Kandua , West Bengal Packaging Centre Integrated Cold Chain facilities Value added centres

Supporting Institutions:

Supporting Institutions Agricultural and Processed Food Products Export Development Authority (APEDA) Small Farmers Agribusiness Consortium

Entrepreneurial Training institutes:

Entrepreneurial Training institutes Agri-Clinics and Agri-Business Centers Indian Institute of Entrepreneurship (IIE), Guwahati. National Institute of Small Industry Extension Training (NISIET), Hyderabad. National Institute for Entrepreneurship and Small Business Development (NIESBUD), New Delhi.

PowerPoint Presentation:

Problems in Agribusiness Production and Organizational problem Policy and Taxation problems Marketing Problems

PowerPoint Presentation:

Present Scenario-Problems Agriculture – the mainstay of global economy- more in developing countries like India. Meeting nutrition requirement of the population with declining available land poses the real challenge. In India alone, we would short of 25 MMT of food grains by 2010-11 with present growth rate of food grains production. Declining growth rate of food production a serious challenge as triple growth rate needed to feed the ever growing population of the country by 2025.

PowerPoint Presentation:

Is Agriculture Revolution is falling ? Source : Annual Report, IARI 2010

PowerPoint Presentation:

Crop Productivities Continue to be Low Source : Annual Report, IARI 2010

Ground reality – a study in contrast with Problems:

Ground reality – a study in contrast with Problems Source: Task force Report on Development of cold chain in India – GOI 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 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


(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 Source: Task force Report on Development of cold chain in India – GOI

PowerPoint Presentation:

Level of Processing in Food Processing Sector Items Level of Processing in Organized sector (%) Level of Processing in Unorganised sector (%) Total processing (%) Fruits & Vegetables 1.2 0.5 1.7 Dairy Products 15 22 37 Meat 21 - 21 Poultry 6 - 6 Marine Fisheries 1.7 9 10.7 Shrimps 0.4 1 1.4 Source:Trade Council of Denmark – India, 2010

PowerPoint Presentation:

S. No Steps involved Persons/ Officers to be contacted 1 Product selection and assistance in preparation of project report/feasibility/report/market survey Small Industries Service Centre, Bangalore 2 Obtaining provisional /permanent registration certificate District Industries Centre of the concerned district where the unit is to be set up 3 Registration under sales tax The Commissioner of Commercial Taxes, Bangalore 4 Registration under central excise The Collector of central Excise & customs, Bangalore 5 Obtaining Finance Nationalized banks Private Commercial banks Tamil Nadu Industrial Investment Corporation Small Industries Development Bank of India 8 Registration under ESI Act (applicable for units employing 20 or more workers) Employees State Insurance Corporation, Bangalore 9 Obtaining ISI Certificate Bureau of Indian Standards, Nanak Bhavan, New Delhi 10 Obtaining the Trade mark registration Registrar of Trade markers, 9 Judge jumbulingam Mudaliar road, Chennai 11 Obtaining patent Right The Controller of patents and Design, 776 Triplicane high road, Chennai 12 Obtaining license under food products order for manufacture of food products Deputy director, Directorate of Marketing 7 Inspection, Ministry of Food & Agriculture, Sastry Bhavan, 35 Haddows Road, Chennai-600006. 13 Obtaining Information on manufacturing of essential oils Central Institute of Medicinal 7 aromatic plants, Regional Centre, UAS, GKVK Campus, Hebbal , Bangalore Whom to approach for what

PowerPoint Presentation:

Problems of trained agripreuners under the scheme of Agriclinics and agribusiness centers in starting and running their Agriventures - A study in south India By Rajashekar Karjagi, L.B.Kunnal, H.S.S.Khan and H.S. Vijaykumar Department of Agricultural Marketing, Co-operation and Agribusiness Management U.A.S., Dharwad

PowerPoint Presentation:

Public extension finds itself unable to meet changing demands of farming community, tapped as it is an out dated technology, they focused on centralized, institutional arrangements and constrained in terms of financial and human resources, lacking in skill and capacities. In this connection Ministry of finance Government of India announced a scheme of “Agriclinics and Agribusiness Centers” on February 28, 2001 . This scheme is being implemented jointly by NABARD, MANAGE and SFAC since from 9th April, 2002 by launching this programme formally. Methodology Out of 14 training centres in south India, 9 training centers were selected randomly by following proportionate sampling procedure. Hence, three centers from Andhra Pradesh, two centers from Karnataka, one center from Kerala and three centers from Tamil Nadu were selected. Fifteen trained agripreneurs were selected from each training institute to collect the information on problems faced by them in establishing and running their agriventures. Their suggestions on successful operation of AC and ABCs scheme was also collected from a total sample of 180 trained agripreneurs in South India .

PowerPoint Presentation:

To study the problems faced by the trained agripreuners in establishing and running their agri venture, the data was collected from 99 agripreuners, who have not started their agriventure.

PowerPoint Presentation:

Similarly, the data on problems faced by agripreuners in running their agriventure was collected from 46 trained agripreuners, who have already established their agri venture.

PowerPoint Presentation:

Outcome of the study The major suggestions given by the trained agripreuners includes linking the financial institutions with training institutions, banks should follow the guidelines of RBI and private agriclinics should be treated on par with the government agriclinics especially in distribution of seeds and other inputs on subsidy basis. High rate of interest, lack of subsidy component and lack of hand holding support from the training institutes were the major problems faced by the agripreuners in establishing their agri ventures. Government should promote agricultural graduates to start agriclinic at every gram panchayat level, encourage to allocate both central and state government farm lands (which are under loss due to improper management due to lack of resources) to agripreuners on contract basis, increase the duration of the training programme, frequent interactions, better coordination and get together of agripreuners at least quarterly once and scheme should be put to final year B.Sc.(Agri) RAWE programme which facilitates them to learn management skills were some other suggestions made by the trained agripreuners for the successful operation of AC and ABCs in the study area.


Conclusion Indian Agribusiness is at an interesting crossroads facing huge growth opportunities. It must gear up for and facilitate agriculture revolution through farmer- corporate partnership. Focus on market orientation is must. Reduce loss through bringing all operations on single platform. Need for wealth creation for farmers & investors, infrastructure development ,critical commitment and discipline could provide Global leadership. Transformation from seller-buyer relation to strategic partnership between corporate and farmer for a win-win outcome. Exposing traditional Indian agriculture to modern technologies, creating large scale processed food manufacturing and food chain facilities and consequently generate employment and export earnings.

PowerPoint Presentation:

Thank you

authorStream Live Help