Agriculture in India

Overview
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Overview
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Importance of agriculture(1/3)

SURVIVAL ( physical, mental- short term , long term) First S in 6 S framework

To those who are hungry, God is bread- Gandhi 1946

Everything else can wait, but not agriculture- Nehru 1947

UNICEF 2006: India has the largest no of malnourished children in the world
(57m/146m)- an index of widespread poverty and deprivation

15 % GDP, 60% people

An Indian tragedy of extensive poverty and deprivation persisting under the

conditions of impressive progress in the industrial and services sectors will
continue so long as we refuse to place FACES before FIGURES.- M.S. Swaminathan,
Chairman, National Commission on Farmers, 2006

As per ESCAP Studies, Persistent poverty and widening inequality is the result of
decades of neglect of agriculture, despite it being the mainstay of the poor.

Food Security , Nutrition Security: Art. 21 of Constitution of India

Importance (2/3)
Driver of Economic Growth

Agriculture
Agriculture
(Cereals
(Cereals &
&
Pulses)
Pulses)

Industry
Industry
(Food
(Food
Processing)
Processing)

Services
Services
(Retail)
(Retail)

Consumer
Consumer

Every Job created in Agriculture creates another 1.5 Jobs

in the Economy
Every dollar of value generated in agriculture results in
another $1.75 value addition to the Economy. (Virginia
University Study , 2008)
Every 1 % reduction in unemployment increases GDP by
3 % (Okuns Law)

Importance (3/3)
Driver of Growth With Equity

Assumption:

Total Workforce: 100 persons,

Share of
Workforce
Servic
es28

Industry
14

Agriculture
58

Total GDP: Rs.100

Services
57
2.04

Industry
29

2.07

0.24

Agri
14

GDP per capita

Share in GDP

Definition
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Defining Agriculture

All forms of activities connected with growing, harvesting,

and primary processing of all types of crops, with the
breeding, raising and caring for animals, and with the
tending , gardens and nurseries . ( Joint ILO/WHO Committee
on Occupational Health, 1962.)

Main Economic Activities:

Crop Cultivation

Forestry

Fishing

Livestock rearing

Horticulture

Timeline of Indian Agriculture (1/3) pre independence

Why History: We are product of History; Indian Agricultural

problems have roots in the history

Ancient India: Indus Valley Civilization- Urban CivilizationAgri was the mainstay of the Economy- Large Granaries.

Vedic Civilization- Based in Agriculture & Livestock

Medieval Period: Indian Spices- Attraction for International

Trade & imperialist interests. British rule: Robert Clive
Fought for land and land revenue, Land as a tradable
commodity, contract farming method, beginning of
systematic study of agriculture.

Timeline of Indian Agriculture (2/3)

post independence

Post-Independence- phases : Agriculture-

Agribusiness-Agro Industry; Land Reforms, Critical

analysis of Green Revolution

Timeline of Indian Agriculture (3/3)

Present context

Structure

Technology

Traditional Farming

Subsistence Farming

Contract Farming

Conventional Farming

Corporate Farming

Organic Farming /
Biodynamic Farming

Present position
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Present Position of Agriculture

Data regarding production , export & import of

main agri produces

Indias position in global agriculture
Data as to land holding pattern
Profit position of Indian Agriculture

Key crop varieties in India

Leading food grain-producing states in India

Agricultural products in
India

India in Global Economy

Yield of selected crops in India, China, Asia-Pacific and World,

2004-06 (Kg/ha)

Source: FAO/RAP,
2007

Hunger alarming in parts of Asia: 2010 Global

Hunger Index (GHI)

Source: von Braun, 2011

Innovative Capacity- Compared

Land Holding Pattern of Traditional

Farmers

Corporate Farmers in India

N
o

Company

Area
(acres
)

Description

1.

IEEFL, Pune (Subsidiary of

Ion Exchange India Ltd)

1700

1. Lands bought at a rate of

Rs.25000 per acre
2. Certified Organic Production of
Fruits

2.

Jamnagar Farms Pvt Ltd ( a

Subsidiary of Reliance
Mukesh )

7500

The largest Mango Orchard in Asia

3.

Anil Dhirubhai Group

3500

Fruits & Vegetables

Field Fresh ( Bharti+

Rothschild)

4300

Multi product Farm

Sathuj Agriculture Pvt Ltd,

New Delhi

5000

Vegetables & Fruits

Nijjer Agro, Amritsar

4000

Vegetables & Fruits

Vimal Dairy, Ahmedabad

1200

Dairy Production

SYP Agro, Ahmedabad

2300

Onions & other Spices for Export

Few Indian Corporate Farmers Outside India

N
o

Company

Country

Area (ha)

Purpose

1.

Karuturi Agro
Products

Ethiopia

300000

Palm, Cereals &

Pulses

2.

Ruchi Soya
Industries

Ethiopia

152649

Soyabean

3.

KS Oils

Indonesia

130965

Palm plantation

4.

Sterling Group

Argentina

19000

Peanuts & Olive

5.

Olam International

Uruguay

63000

Dairy, Palm, Peanuts

6.

Varun International

Madagaskar

232000

Rice, Corn, Pulses

7.

Shree Renuka Sugars Brazil

133000

Sugarcane

8.

Chadha Agro

Ethiopia

100000

Sugarcane

9.

Vedanta Harvests

Ethiopia

50000

Tea & Spice

10 Neha International

Zambia

13000

Maize, oilseeds

11 Adani Group

Argentina

23000

Edible Oil & Pulses

Profit Position of Agriculture

Two Ends of the Spectrum of Farmers in India

A Marginal Farmer in
India

A Corporate Farmer Karututi Global (Rs in Lakhs)

Land Cultivated: 0.75 Hectares

Total Income: 63872.65

Total Expenditure:
46226.38

PBT:

PAT: 15497.45

No.1 Global Cut Flowers

Producer and Trader

Investment: Rs.12,200
Total Returns Expected: Rs.20,800
Labour Input: 5-6 months of work by

farmer, his adult son & daughter-in-law

Net Profit: Rs.8600 or Rs.1720 per

month
Amount each of the members would

have earned had they worked as daily

wage for 30 days: Rs.1800 (Rs.60 per
day)
Source: Times of India, New Delhi, April 4,
2008.

15635.24

Source: www.karuturi.comannual report 2011.

Overview
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Porters Competitive advantage

Framework for Nations
CONTEXT
FOR FIRM
STRATEGY
& RIVALRY

GOVT.

DEMAND
CONDITIONS

FACTOR
CONDITIONS

RELATED &
SUPPORTING
INDUSTRIES

Factors Influencing the

demand
Increasing population around the World

Increase in wages and Urbanization

Diversification in the Consumption pattern

Health Consciousness among Consumers:

Organic food

World Population Growth Through History

12
11

2100

10
9

Billions

8 Old
Stone
7 Age

Modern
Age
Bronze Iron Middle
Age Ages
New Stone Age Age

2000

Future

5
4

1975

1950

2
1

Black DeathThe Plague

1900
1800

1+ million
700060005000 4000 3000 20001000A.D. A.D. A.D. A.D. A.D. A.D.
years B.C. B.C. B.C. B.C. B.C. B.C. B.C. 1 10002000300040005000

Source: Population Reference Bureau; and United Nations, World Population Projections to 2100
(1998).

Population Estimates of various Continents

Population 2011

Projected Population 2025

Projected population 2050

Europe

725
746
740

Asia

5284
Africa

4780
4216
2300

America

1444
1051
1216
1068
942

Continents

1000

2000

Source: Population reference

bureau

3000

4000

5000

6000

Millions

Indian Population projection and age

structure

Demographic
Indicators
Total
Population(millions
)
Age Distribution
(percent)
0-14 years
15-64 years
65+ years
Median Age

200
0
101
0

200
5
108
9

201 201 202 202

0
5
0
5
1159 1229 1305 1380

35.7
59.8
4.5
23

33.3
62.0
4.8
24

29.9
65.0
5.1
25

26.7
67.7
5.6
27

25.0
68.7
6.3
29

24.5
68.3
7.2
30

Source: Indian Demographic scenario-2025, P.N. Mari Bhat, Population

Research Centre, Institute of Economic growth, Delhi, June 2001.

Opportunities of Indias
urbanization to 2030

5 times the number by GDP will have multiplied by 2030

590 million people will live in cities, nearly twice the population of the
United States today

270 million people net increase in working-age population

70 percent of net new employment will be generated in cities

91 million urban households will be middle class, up from 22 million

today

68 cities will have population of 1 million plus, up from 42 today;

Europe has 35 today

$ 1.2 trillion capital investment is necessary to meet projected

demand in Indias cities

Source: Mckinsey Global Institute

Source: The Rise of Indias Consumer Market (May 2007), McKinsey Global

Source: The Rise of Indias Consumer Market (May 2007), McKinsey Global

Per capita Food Consumption

projection (kgs)
Per capita food demand for cereals
by crop and region,1997 and 2020

Source: IMPACT projections, June

2001

of food items in India at GDP of 7

%. (Unit: Kg)

Source: Surabhi Mittal, Structural

Shift in demand for food, August
2006

Diversification in the Consumption

Pattern

Consistent GDP growth of 5% to 6% upto 2050

Increased consumption of Value-added Processed

Food, RTE foods, and shopping etc.

Changing perception of alcoholic beverages in

India from taboo to socially acceptable

Source: Xavier Cirera & Edoardo Masset, Income Distribution Trend and
Future Food Demand

Market Potential for Organic

Products

Source:
www.iccoa .org

AGRICULTURAL POLICIES

Policy of food self-sufficiency in staple foods rice and wheat

In the 1960s and 70s, widespread adoption of high yielding rice and

wheat varieties occurred

Policies initially focused on expanding cultivated area, land reform,

community development, and restructuring rural credit institutions

Trade was strictly regulated through both quota restrictions and high

tariff rates
Together, these initiatives led to dramatic leaps in agricultural

production and made India self-sufficient in food grain production at

the national level

AGRICULTURAL POLICIES

Production gains from Green Revolution technologies continued

through the mid-1980s and then slowed

Input budgets began to strain govt. budgets
Unlike reforms in other emerging economies , the series of

reforms instituted since 1991 in India left its agriculture sector

relatively untouched, except for the removal of export controls
2 major impacts of 1991 reforms
Increased per capita incomes and strengthened domestic demand
Reduced industrial protection and improved agricultures terms of trade

AGRICULTURAL POLICIES
However, growth of the sector has actually

slowed since the mid-1990s

Apparently contradictory trends lies

with Indias agricultural policies and

their performance
Indias main policy goals are

To attain food sufficiency

To ensure remunerative prices to farmers

To maintain stable prices for consumers

POLICY INSTRUMENTS

POLICY INSTRUMENTS
Regulated
Markets
Input Subsidies
Agricultural
Trade Policy

Complex regulatory framework

Food-processing industries were limited by
regulation to small-scale capacities
State linked firms have been favored in
transportation, marketing and distribution of
agri-food commodities

Subsidizes fertilizer, power, fuel,

irrigation
Input subsidies have doubled in the past
decade to about $8 Billion

Import liberalization for agri-food trade

remains slow
In 2001, replaced quantitative restrictions on
imports of all agricultural products with
import tariffs

POLICY OUTCOMES AND

CHALLENGES

The combination of administratively determined output prices

and consumer subsidies has undermined the role of market
forces in Indias agri-food sector

Private sectors participation in the efficient operation of agrifood markets is discouraged

Measures have led to higher domestic food prices

Food subsidies were instituted to minimize the impact of

higher food prices on consumers

Input subsidies have contributed to the excessive use of

inputs and resulted in a number of agro-environmental
problems, such as soil salinity and ground water depletion

The growing cost of input and food subsidies has also

contributed to fiscal deficits

POLICY OUTCOMES AND

CHALLENGES

Expenditures on subsidies also could have been invested in

research, education and infrastructure to improve productivity and
competitiveness of the sector

Production of staples was favored

Vertical coordination in the value chain as well as the development

of the horticultural industry were hindered

Most agriculture related responsibilities are under state jurisdiction

Existing policies have benefited special interests which oppose

significant reforms

RECENT POLICY
DEVELOPMENTS

National Agricultural Policy was introduced with an aim to

attain annual growth of 4% in agri sector during 2000-20

However, little concrete action has been taken at the central

and state level to implement the proposed policy measures

The agri-food sectors growing subsidy bill and declining

investment have been acknowledged but were not addressed

Taken some steps to make agri markets more responsive are

Revising the APMC Act to allow contract farming;
Removing the reservations for small scale firms on food
processing industries;
Removing restrictions on futures trading on many
commodities;
Allowing up to 100% foreign ownership in many
agribusiness sectors, except in some forms of retailing and

PROSPECTS

In general, Indian economy has been opening and growing

steadily

But, slow growth in the agricultural sector remains a cause

for concern

Fundamental reforms are needed to realize the full potential

of the sector

More open trade policies and forward-looking domestic

policies are to be adopted

The following areas will be critical to the prospects for Indias

agri-food sector:
Water scarcity and valuation;
Reforms in commodity price policy;
Public and private investment in rural infrastructure and
logistical services for agri-food value chain;

Factor Conditions

Rivalry & Support Industries

Firm
Firm Structure,
Structure, Strategy
Strategy and
and
Rivalry
Rivalry
Poor Structure and Strategy
No competitive Spirit

Related
Related and
and Support
Support Industries
Industries
Seeds Supplier
Bank Loans
Technology Provider
Fertilizer Company
Processing Companies

PESTEL ANALYSIS

53

POLITICAL
India lives in its villages
- Mahatma Gandhi

Often related directly to the Central Govt.

Rashtriya Krishi Vikas Yojana
MGNREGA
Revamp of Accelerated Irrigation Benefit Program

ECONOMIC [1/2]

Agriculture not only gives riches to a nation, but the only

riches she can call her own
- Samuel Johnson

Micro Finance
Introduced by NABARD
Total 547 banks 47 Commercial banks, 158 RRBs, 342
cooperative banks are involved in the operation of Self
Help Group (SHG)- Bank Linkage Program
Enabled nearly 32.9 million people in the country to
access micro finance

facilities
Institutions must provide a wide range of financial
services including
savings and insurance
Role of private sector is crucial

ECONOMIC [2/2]

The first farmer was the first man, and all historic nobility
rests on possession and use of land - Ralph Waldo Emerson

Inflation

Increased material input costs increases the sectors cost of

production

Shifting of production costs to consumers is limited by competitive

imports, thus reducing farmers rate of return

The low current income from farming motivates farmers to

seek higher support prices and to extend price support
policies to more commodities, which in turn results in further
higher prices and higher rates of inflation

The high input prices lead farmers to recourse to more noninstitutional credit, which ultimately leads farmers into a debt trap

Paying higher prices for imports, even as domestic farmers are

SOCIAL
The divine chemistry works in the subsoil Nathaniel Hawthorne
Harassment by moneylenders
Inability to repay debts following crop loss
Literacy rate has increased
Migration to urban areas
Hygienic conditions improved, but not on par with

developed nations
Suicides - 1 in every 10,000 farmers commits a suicide
Measures taken by the govt. have not yielded desired
results

TECHNOLOGICAL
Agricultural
Mechanization

Replacement of traditional
and inefficient machine
implements by improved ones
Outsourcing the Training
4 Farm Machinery Training
and Testing Institutes
17 State Agro Industries
Corp.s
Demo of newly developed
agricultural/horticultural
equipments

Agricultural
Commodities
Exchanges
NCDEX and MCX were

introduced in 2003
Introduced future trading
in Agri Commodities

ENVIRONMENTAL [1/2]
Dependency on
Monsoon

Only 40% of farm land is

irrigated
Between June 1 and July 15,
rains have been 43 per cent
below normal in the crucial
Northwest region, the nation's
'Grain Bowl
The cumulative seasonal
rainfall between 1st June and
15th July is 27 per cent below
normal levels, which has
adversely affected the Khariff
sowing

Global Warming
Horticultural crops are more
susceptible to changing
conditions than arable crops
Field vegetables will be
particularly effected by
temperature changes
Water deficits will directly
affect fruit and vegetable
production
Poultry and pigs could be
exposed to higher incidences
of heat stress influencing
productivity
Increase in disease
transmission by faster growth
rates of pathogens in the

ENVIRONMENTAL [2/2]

LEGAL [1/2]

Irrigation

The policy of entrusting the

maintenance of small
irrigation works to the
Panchayat Raj
organizations has been
accepted by many states
A draft model bill for
introducing a legislation to
regulate and control the
development of groundwater to Prevent overexploitation and
deterioration in water
quality

Crop Protection

The Destructive Insects

and Pest Act, 1914,
provided for means against
the entry of diseases from
other countries into India
A chain of plant quarantine
and fumigation stations
has been established in all
important airports and
seaports and land frontiers

LEGAL [2/2]

Fertilizers
The fertilizers (Control) Order,
1957, under Clause 111 of the
Essential Commodities Act,
1955 envisaged the statutory
control of the prices of three
major fertilizers
The Fertilizers Movement
Control Order, 1973, in May
1973 under Clause IV of the
Essential Commodities Act,
1955, ensures the equitable
distribution of fertilizers in
various states and stops the
unauthorized inter-state
movement of fertilizers

Soil and Water

Conservation

Most of the states have

enacted legislation,
empowering their
governments to take up
early anti-soil erosion
measures
Other Acts which have an
indirect bearing on the
subject of soil and water
conservation dealing with
the preservation and
protection of forests

Brief Case
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Mango supply chain in TN

Indian mangoes account for 40% of

world mango production although they
are mainly meant for the domestic market

Less than 5% of the produced mangoes are processed

Mango pulp is the main export product both in terms of

volume and value (Babitha, 2009).

Mango pulp accounts for about 20% of the processed fruits

and vegetables exported from India (MFPI)

Key locations

Chittoor District of Andhra Pradesh and Krishnagiri

District of Tamil Nadu, both in South India, are the main
sourcing centers of Indian mango pulp (Mehta and
George, 2003)

Krishnagiri is the largest mango producing district in

Tamil Nadu, about 6000 metric tons of the varieties
Totapuri and Alphonso are used for pulp production
(Raj, 2008)

Weaknesses & Threats

The main weaknesses include :

Lack of marketing,
Low innovatively produce
Few processing varieties,
Under capacity performance of the processing plants (on average of

50 days per year)

Poor infrastructural works such as storage and cool chain facilities
Repeated power cuts during the period of processing

The major threats for the Indian mango pulp sub- sector include :
The availability of other sources that supply mango pulp of good

quality
Low volume of mangoes available for large pulp processing factories

due to high fragmentation of mango growers

Increased need for high volumes and standardization in the

international market

Mango production in TN

According to Raj (2008), there are 385 fruit processing units in Tamil
Nadu out of which 80% are small industries with an average capacity of
5,5 tons per day and the remaining units are medium scale with an
average capacity of 80 tons per day

Tamil Nadu accounted for 4 to 5,6 % of the total Indian mango

production in recent years (National Horticulture Board)

The main varieties of mango grown in Tamil Nadu comprise Totapuri,

Sendhuri/Sentharu, Peter and Neeham

Totapuri accounts for approximately 80% of the total production while

the others are mainly grown for the regional market with respectively
5%, 5% and 10% of total production

Table 2.1: Major export partners of Tamil Nadu for fresh mangoes
and mango pulp.
Source: Domestic & export market intelligence cell
Fresh mangoes

Mango pulp

Bangladesh (58%)

Saudi Arabia (32%)

United Arabian
Emirates (18%)

United Arabian Emirates (18%)

Saudi Arabia (6%)

Netherlands (8%)

Kuwait (3%)

Kuwait (7%)

UK (2%)

UK (4%)

Belgium (2%)

Germany (2%)

USA (2%)

Sudan (2%)

Bahrain (1%)

Canada (2%)

7
8
9
10

Spain (1%)
Oman (1%)

Supply chain of mango pulp in

India
Producers
Producers
Europe
PrePreharvest
harvest
contractor
contractor

Importer
Importer
Wholesaler
Wholesaler

Commissio
Commissio
nn Agent
Agent

Retailer
Retailer

Processor
Processor
ss

Customers
Customers
Retailer
Retailer

Customer
Customer

Exporter
Exporter

Value (Rs/kg)
fresh mango
and mango
pulp

Proportion at Proportion at
the final price the final price
in India %
in Europe in %

Farmer price

11.3

2.32

PHC selling price

5.25

8.4

1.74

Wholesaler
selling price

6.73

5.56

1.14

Processor selling
price

9.25

9.5

1.19

Exporter price

26.54

65.14

13.4

Importers selling
price Europe

129

79,42

Regulations

The mango pulp imported in the EU territory must

comply with general conditions and specific

provisions designed to prevent risks to public
health and protect consumers' interests
EU declares that the minimum content of mango

as ingredient of the concentrated pulp fruit

ingredient shall not be less than 30% m/m
[mass/mass]

Quality

After processing the mango pulp it is filled into cans, jars or bags of different
materials. Depending on the production process the subsequent storage
period ranges from 12 to 18 months.

For a mango pulp to be exported from India to the European market, it is a

must to be HACCP certified

HACCP is a systematic approach to identify, evaluate and control steps in

food processing that are vital to food safety (Trienekens & Zuurbier, 2007)

However, HACCP has not been followed in the pulp industry in India by the
majority of small exporters

They generally agree that market access will undoubtedly be increased by

HACCP, but they have several difficulties to adopt it (Mehta & George 2003).

Overview
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

Overview
Justification: Importance of Agriculture
Definition and brief history of Agriculture
Present position of Indian Agriculture in the World
Analysis using Porters Competitive Advantage framework for
Nations
Brief Case : Mango Value Chain
A short video on Indian Corporates in Ethiopia
Summary , Q&A

THANK YOU

75