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GlobalAgriSystem, Agril

GlobalAgriSystem, Agril

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Published by: api-3833893 on Oct 18, 2008
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08/25/2014

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Development of Agri Infrastructure

Opportunities for Private Sector

A presentation by S. K. Sharma

Structure of Presentation
SECTION 1-The Need Sector characteristics Role of Public and Private sector SECTION 2- Opportunities Opportunities across value chain The way forward

10/4/2006

2

The Indian Paradox
We are among the top few producers of many agricultural commodities in the world… The post-harvest value loss of fruits and vegetables estimated to be 25 to 40 %, amounting to more than Rs. 30,000 crores… We have a middle class of 250-300 million people with adequate purchasing power to buy manufactured goods… More than 60 million tonnes of food grains are lying in stock in the Central Pool…

Yet our share in world food trade is only 1.6 %

Yet less than 2 % is processed !

Yet value addition to agricultural products is less than 7%

Yet more than 130 million people go to bed hungry every day !
3

10/4/2006

State of Indian Agriculture
Low productivity Low level of technology Poor infrastructure and logistics Low investment / capital formation Undeveloped and imperfect markets High level of wastages / post harvest losses High dependence on agriculture for livelihood
63% of the population depend on an activity which contributes only 24 % of the GDP

10/4/2006

Agriculture has been ‘a way of life’ Not a commercial activity !

4

Value Addition
Comparison of value added in agriculture and food processing* Per cent India Agriculture Food processing

~94 79 ~70 58 47 53 21 ~30 42

~6

Brazil

Thailand

New Zealand

USA

33875

10/4/2006

5

Source:Indiainfoline; Bloomberg

The Internal Challenge
To ensure the transition of Indian agriculture from a “Low input-Low output” farming system to a “High input – High output” system Provide continued Food Security to the nation Increase Value Addition Cut costs by efficient Supply Chain Management Provide Consumer Satisfaction by giving him value at a price he can afford Be Internationally Competitive
10/4/2006 6

External Challenges
Globalization
Availability of choices Threat of imports Lack of level playing field

Rapid Advances in Science and Technology
Biotechnology / Genetic engineering Mechanisation / New processing techniques

Changing consumer preferences and concerns
Variety, nutrition and convenience Safety - tracing and tracking Concern for the environment and ecology

Speed to Market - the Key to Success
Innovation to introduction
10/4/2006 7

Need for a Holistic Approach
Restructure the Supply Chain to remove inefficiencies- enhanced income to the farmers, reduced consumer prices Reorganise the Agricultural Marketing System to ensure transparent price setting and facilitate value addition Reform the Food Laws and clean up the regulatory bottlenecks to provide a hassle- free environment to processors Rationalise the Taxes and Levies on processed food products to make them affordable to average man on the street
10/4/2006 8

Participatory Model
Government as facilitator
Government has to give initial push for modernizing the sector Play umpire role between the users (mostly small growers and traders) and the service providers for fair deal to all stakeholders (agriculture being the livelihood of 65% of population) Identify & showcase opportunities Support through policy, incentives and financial participation

10/4/2006

9

Participatory Model
Private sector
Brings in technology, management and financial strengths Marketing Chain integration

10/4/2006

10

Opportunities in Agri Infrastructure (other than wholesale market)

10/4/2006

11

Opportunities Across Value Chain
Agricultural Inputs Agricultural production Procurement Processing Marketing

• Seed production and processing •Warehousing

•Contract farming •R&D and Demonstration farms •Leasing state farms

•Procurement centers •Consolidation grading, packing • Bulk storage •Logistics & Transportation, Cold chain

•Post harvest / shelf life enhancement treatments •Product development •Large scale processing facilities

•Wholesale & Terminal markets •Distribution network • Retail outlets - Food chains

10/4/2006

12

Major Thrust Areas
Common facilities in the wholesale markets
Cold stores Export facilitation centers Grading & Packing facilities

Post harvest centers
Integrated pack houses Ripening centre Irradiation & VHT

Cold Chain Perishable Cargo Centers at Airports Quality testing labs
10/4/2006 13

Investment opportunities
Supply chains
Apple, Banana, Onion, Mango, Vegetables

Irradiation centers (potato, onion, spices, wheat products etc) VHT for export to Japan and Australia CCM for chilled and frozen products Silos and bulk handling systems for grains

10/4/2006

14

Investment opportunities
Perishable Cargo Centers at Airport
F&V availability, net of losses, to be 230-235 million MT Domestic consumption 192 million MT (at 420 gm per recommendation by NIN), Processing take up 23-24 million MT High surplus for exports Will require more than 3-4 MMT handling capacity as against less than 0.2 MMT Potential locations, Amritsar, Ahmedabad, Hyderabad, Bangalore, Cochin, Kolkatta, Guwahati etc.
10/4/2006 15

Investment opportunities
Railways: Integrated system for movement of perishables
Packhouses to be linked with nearest station Handling and holding facilities at station Movement by refer vans (can be attached with major mail trains, full refer trains on trunk routes) Handling and holding facilities at receiving stations
For Example, Litchi from Bihar can be delivered in all major metros in 2-3 days as against 5-6 days by truck
10/4/2006 16

REDEFING THE SUPPLY CHAIN

Wholesale Market
Field (contract farms)

Local Market

Consolidation Center

Pack House
Distant Market

Cash & Carry Outlet

10/4/2006

17

The Way Forward
Government role
Production enhancement (NHM implementation for doubling production by 2012) Enabling policy regime (interstate barriers, essential commodities, food laws, Agriculture Marketing Act Identify & showcase opportunities for private sector participation Fiscal and financial incentives
10/4/2006 18

The Way Forward
Private sector
Entrance of corporates in Agri business (Project feasibilities and DPRs) Technology and management inputs Chain integration & market led production Branding and retailing

10/4/2006

19

Public Private Partnership– Export of
grapes, a success story
India emerges among top ten producers in early 90’s (perhaps only country to produce in tropical climate) APEDA started intensive farmer training for export oriented production in collaboration with growers association Over 125 modern packhouses fully equipped with grading, pre-cooling and high humidity cold storage set up by private sector Farmers and exporters work in close co-operation with importers and even supermarkets to meet strict quality standards Refrigerated containers stuffed at Packhouse and directly shipped
10/4/2006 20

Success story ------- Contd
Most exporters have complete backward linkages with farms to grow export quality fruit National Research centre for grapes support on R&D and technology APEDA supports quality system with assistance for EUREPGAP certification, upgradation of testing Labs to international level and subsidizing tesing costs Already export of 40,000 MT established Export now going to more than 25 countries meeting all requirements of SPS and buyer specification
10/4/2006 21

Reach us: globalagri@vsnl.com www.globalagri.com K 13 A, Hauz Khas Enclave, Delhi 16; Ph 26527123

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