Agriculture

Introduction India is the second-largest producer of food in the world and holds the potential of being the biggest on global food and agriculture canvas, according to a Corporate Catalyst India (CCI) survey. The food processing industry is one of the largest in India in terms of production, consumption, export and expected growth. The Indian food industry is projected to reach US$ 300 billion by 2015. Agriculture sector has touched a growth rate of 4.4% in the second quarter of 2010-11 thereby achieving an overall growth rate of 3.8% during the first half of 2010-11. The sector witnessed a growth of 5.1 per cent in 2005-06, 4.2 per cent in 2006-07, 5.8 percent in 2007-08, (-) 0.1 percent in 2008-09 at 2004-05 prices. The low growth rate of 0.4 percent recorded by this sector in 2009-10 was mainly due to poor rainfall in 2009. As per the Advance Estimates (AE) of Central Statistical Organization for the year 2010- 11, the agricultural sector contributed about 14.2 per cent to the GDP, at 2004-05 prices. There has been a continuous decline in the share of agriculture in the GDP from 17.4 percent in 2006-07 to 14.2 percent in 2010- 11 as per Advance Estimates at 2004-05 prices. Falling share of agriculture in GDP is an expected outcome in a fast growing and structurally changing economy. The sector is critical from the income distribution perspective as it accounted for about 58 per cent employment in the country according to Census 2001. In terms of composition, out of the total share of 14.5 per cent that agriculture and allied sectors had in GDP in 2010-11, agriculture alone accounted for 12.3 per cent, followed by forestry and logging at 1.4 per cent and fishing at 0.7 per cent. The average annual growth in agriculture and allied sectors realised during the first four years of the Eleventh Plan Period, i.e. 2007-08 to 2010-11, is 3.5 per cent. Market Dynamics As per the second Advance Estimates, production of foodgrains during 2011-12 is estimated at an all time record level of 250.42 million tonnes (MT) which is a significant achievement mainly due to increase in the production of rice and wheat. Rice witnessed production of around 95.98 MT, Coarse cereals of 43.68 MT,

As per the International Trade Statistics 2011.60 billion) by 2020.7 per cent share of world trade in agriculture in 2010. India's agricultural imports amounted to US $ 17. Major Developments & Investments Spice Board of India plans to promote exports of spices by establishing 25-30 spice parks in different parts of the country.1 MT in 2010-11. India's total rice export in 2011-12 is expected to be 6. oilmeal exports from the country has registered 8 per cent growth in volume and touched a figure of 5. Sugar output in India grew 13 per cent in October 2011-March 2012.38 MT. published by the World Trade Organization (WTO). During the last financial year. . according to data released by the Department of Agriculture and Cooperation. India has emerged as world's top rice exporter overtaking traditional leaders.2 billion with a 1. according to the Agricultural and Processed Food Products Export Development Authority (APEDA).2 MT as compared to 20. India is among 15 leading exporters of agricultural products in the world.Pulses of 18. cotton yarn exports have increased by 15 per cent during 2011-12. Further. Vietnam and Thailand.24 MT and Sugarcane of 342. On the other hand.5 billion with a 1.45 MT in the same period last year. due to rising demand in the foreign markets.68 million kg of cotton yarn were exported. as per Dr G K Vidyashankar.5-7 MT. as compared to 720 million kg in 2010-11.000 crore (US$ 5. to touch 23. Meanwhile. This will help in achieving export of spices worth Rs 30. according to the data compiled by the Directorate General of Foreign Trade (DGFT). according to the Indian Sugar Mills Association (ISMA). during 2010-11. which is around 7 per cent of the country's total production. Exports of agricultural products are expected to cross US$ 22 billion mark by 2014 and account for 5 per cent of the world's agriculture exports.2 per cent share of world trade in agriculture in 2010. 872.5 MT in the financial year 2011-12 as compared to 5. India's agricultural exports amounted to US$ 23.

Crore) Year 2006-7 2007-08 2008-09 2009-10 2010-11 GDP of Agriculture 619190 655080 654118 656975 692499 and Allied Sectors Percent to total GDP 17. the agriculture sector contributed approximately 14. The factors driving the growth of farm mechanisation in the northern region are high quality. Maharashtra Government has invited corporates to propose integrated agricultural development (PPP-IAD) projects through public private partnership (PPP). traders and exporters. Gross Domestic Product (GDP) of Agriculture and Allied Sectors and their share in total GDP of the country during the last 3 years including the current year.38 million) as compared to Rs 2. to touch Rs 4. The National Bank for Agriculture and Rural Development (NABARD) has increased financial assistance in Gujarat by 50 per cent in 2011-12.2 Source: Central statistical organistaion.6 14.Ministry of statistics and programme implimentaion. Agriculture GDP: As one of the world’s largest agrarian economies.Of India.5 Total Agriculture & Allied Sector 5. rural development and rural infrastructure development in Gujarat. IDBI Capital will be providing funding for the PPP-IAD projects. at 2004-05 prices is as follows: (Rs. according to Analysts.6% of India’s GDP (at 2004-05 prices) during 2009-10.8 15. The assistance is mainly for supporting agriculture. especially small and medium enterprises (SMEs) and their vendors. Farm equipment manufacturers in the northern region.1 . Spices Board. Govt.340 crore (US$ 810.4 16. are upbeat over the robust demand for farm equipment in the domestic market.7 14.73 million) in the previous fiscal.894 crore (US$ 539. These parks would give a common platform for farmers. Growth (over the previous year) in the Total GDP and that in the GDP of Agriculture and Allied Sectors at 2004-05 prices is given below: Period 2005-06 9.Deputy Director (Marketing). low cost and trouble-free maintenance.

71 million tonnes and 89.4 5.The production of wheat and rice in 2009-10 is estimated at 80.20 million tonnes comprising 103. production of all cereals was placed at 203.3 2008-09 6.90 million tonnes in 2008-09 (final estimates).13 million tones respectively.6 2007-08 9. development of State Farms. Further.8 (-) 0.4 Agricultural Production: As per the fourth advance estimates 2009-10.84 million tonnes of kharif foodgrains and 114.8 2009-10 8.1 0.93 million tonnes in 2009-10. Capital formation in private sector includes– construction activities in private sector including improvement/ .36 million tonnes of rabi foodgrains. afforestation. food grains production is estimated at 218.0 2010-11 8.2 5.2006-07 9. However.72 million tonnes in 2008-09 to 24. Capital Formation in Agriculture: Investment or Capital formation in public sector includes irrigation works.6 Source: Central Statistical Organization 4. production of oilseeds decreased from 27. command area development. etc. This was due to decrease in production of groundnut and castor seed.61 million tonnes as against 219. land reclamation.

such as planning production. It also includes livestock development. agro.and food processing. farm houses.8 per cent in 2005-06 to 20. Agricultural marketing Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. packing. Numerous interconnected activities are involved in doing this.reclamation of land. agriculture machinery / equipment. storage. growing and harvesting. transport equipment. construction of non-residential buildings. distribution. Productivity increase in agriculture is largely dependent on capital formation. wells and other irrigation works etc. . Gross capital formation GCF (investment) in agriculture sector relative to GDP in this sector has shown a steadily increasing trend from 15. transport. The machinery component includes tractors. grading.3 per cent in 2009-10.

leaving out a few metropolitan cities. Businesses that have lower costs. (and) paying labor". In Western countries considerable agricultural marketing support to farmers is often provided. Support to developing countries with agricultural marketing development is carried out by various donor organizations and there is a trend for countries to develop their own Agricultural Marketing or Agribusiness units. Rural Market "The future lies with those companies who see the poor as their customers. Since the 1990s trends have seen the growing importance of supermarkets and a growing interest in contract farming. Marketing systems are dynamic. the global management guru. both of which impact significantly on the way in which marketing takes place. trader. they are competitive and involve continuous change and improvement." . Those that have high costs. Marketing has to be customer-oriented and has to provide the farmer. marketing extension. renting equipment. In India. and can deliver quality products. fail to adapt to changes in market demand and provide poorer quality are often forced out of business. This requires those involved in marketing chains to understand buyer requirements. arguing that marketing is everything a business does. both in terms of product and business conditions. The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. Some definitions would even include “the acts of buying supplies.C. training in marketing and infrastructure development. processor. are more efficient. K. Activities include market information development. Prahalad . with a profit. . etc. In the USA. are those that prosper. for example. all the districts and industrial townships are connected with rural markets. Such activities cannot take place without the exchange of information and are often heavily dependent on the availability of suitable finance.advertising and sale. often attached to ministries of agriculture. the USDA operates the Agricultural Marketing Service. transporter.

pesticides. However. In India. The rural market in India is not a separate entity in itself and it is highly influenced by the sociological and behavioral factors operating in the country.The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. and so on The concept of rural marketing in India is often been found to form ambiguity in the minds of people who think rural marketing is all about agricultural marketing. Rural marketing in Indian economy can be classified under two broad categories. The rural market in India brings in bigger revenues in the country. Rural Marketing in India Economy covers two broad sections. To be precise. One of the biggest cause behind the steady growth of rural market is that it is not exploited and also yet to be explored. The rural population in India accounts for around 627 million. rural marketing determines the carrying out of business activities bringing in the flow of goods from urban sectors to the rural regions of the country as well as the marketing of various products manufactured by the non-agricultural workers from rural to urban areas. . namely:   Selling of agricultural items in the urban areas Selling of manufactured products in the rural regions Some of the important features or characteristics of Rural Marketing in India Economy are being listed below:  With the initiation of various rural development programmes there have been an upsurge of employment opportunities for the rural poor. all the districts and industrial townships are connected with rural markets. seeds. leaving out a few metropolitan cities. These are:   The market for consumer goods that comprise of both durable and nondurable goods The market for agricultural inputs that include fertilizers. The rural market in Indian economy generates almost more than half of the country's income.3 percent of the total population. as the rural regions comprise of the maximum consumers in this country. which is exactly 74.

the maximum number of consumers. and various schemes to cut down the poverty line have improved the condition of the rural masses. It covers the maximum population and regions and thereby. The steps taken by the Government of India to initiate proper irrigation. The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. prevention of flood.   . infrastructural developments. The social status of the rural regions is precarious as the income level and literacy is extremely low along with the range of traditional values and superstitious beliefs that have always been a major impediment in the progression of this sector. grants for fertilizers.

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• Customer switching costs are low. HIGH LOW Unfavorable Favorable • Low Switching Cost. •Prices of substitutes are low. they are able to negotiate price with the company • Numerous substitutes are available. Buying product of one brand or the other does not cost customer anything leading to high competition. . • Little product differentiation. • •Cost of switching suppliers is low. • No dominating firm.Porter’S Five forces model Bargaining power of customers Bargaining power of supplier Threats of potential entrants HIGH Unfavorable • Too many small firms. Threats of substitute products MEDIUM Competitive Rivalry MEDIUM • Multitude of choices. • Considering buyer power retailers. •Large number of suppliers in the country • Buyers are numerous and fragmented.