Emerging Trends in Indian Agribusiness Sector: Prospects and Policy Options Vijay Paul Sharma Chairman, Agribusiness Management Indian Institute of Management.

Emerging Trends in Indian Agribusiness Sector: Prospects and Policy

Options

Vijay Paul SharmaChairman, Agribusiness Management

Indian Institute of ManagementAhmedabad 380 015

Email: [email protected]

Vijay Paul Sharma

Structural Transformation of Indian Economy: Major Drivers

Constraints Restricting Participation of Smallholder Producers in Markets

Policy Issues and Priorities to Accelerate Growth

Presentation Outline

Vijay Paul Sharma

STRUCTURAL TRANSFORMATION OF

INDIAN ECONOMY

Vijay Paul Sharma

Vijay Paul Sharma

Still Single Largest

Employer in the

Economy?????

39%

12.1%

DRIVERS OF STRUCTURAL TRANSFORMATION

Vijay Paul Sharma

Increasing Urbanisation

Rising Demand for High-Value Agri. Products

Higher Disposable Income

Expenditure on Non-Food Items

Demand Drivers

Changing Demographics65% population

<35 years

Increasing Number of

Working Women12% in 1961 to 25%

Changing Lifestyle and Aspirations

Vijay Paul Sharma

Increasing Trade

Opportunities

Composition of Consumer Expenditure: Rural

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Composition of Consumer Expenditure: Urban

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Diversification of Indian Agriculture: Demand Drivers (Rural

India)

Source: NSSO (2013)

Diversification of Indian Agriculture: Demand Drivers (Urban

India)

Expanding Agricultural Trade Surplus

IGIDR Silver Jubilee Conference Vijay Paul Sharma

Private Sector Participation:

Contract Farming

Emergence of Organized Food

Retail– from 1% to 7-8%

Technological InterventionsCotton & Maize

Supply Drivers

Improved Infrastructure

Entry of Fast-Food Supply Chains:

KFC, McDonald’s, Pizza Huts, etc….

Vijay Paul Sharma

Increased Investment

Cotton Production & Yield: Impact of Technology

Vijay Paul Sharma

Maize Production & Yield: Impact of Technology

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Increased Investment in Agriculture

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Have Indian Farmers Responded to Market

Signals?

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Diversification of Indian Agriculture: Supply Side

Response

TE1983-84 TE2011-12

Source: CSO (2013)Vijay Paul Sharma

MAJOR CONSTRAINTS RESTRICTING

SMALLHOLDER PARTICIPATION IN

EMERGING MARKET OPPORTUNITIES

Vijay Paul Sharma

Lack of Quality Post-Harvest Infrastructure

Number of Small Farms

& Fragmentation of Farms

Major Constraints

Food Safety & Quality

Standards

Availability & Cost of Labour

Lack of Access to Technology, Inputs

and ServicesVijay Paul Sharma

Lack of Irrigation Facilities

Land Tenure Systems

Inconsistency in Trade Policy

High Risks in Agriculture;

Low Productivity

Rising Number of Smallholders & Declining Farm Size

Avg. Size 2.28 1.84 1.55 1.33 1.16

Source: GoI (2012)Vijay Paul Sharma

Average Farm Size (2010-11):

State Level Difference

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Input & ServicesSeed, Fertilizer

Pesticides, Credit

SmallProducers

Agro-Processers

Markets/Retailers

Logistics Providers

Fast Scaling-up of

other Segments of Value Chain

Shrinking/Fragmenting Farms & Small

Production Units

Low/Uneven Bargaining Power

Exploitation

Need for Collective

Action

Missing Direct

Market

Linkage

Poor Access

Vijay Paul Sharma

Trends in Sectoral GDP Growth: High Fluctuations in Agriculture

Vijay Paul Sharma

Inter-state Performance of Agri. Sector (GSDP): 2001/02 to

2010/11

IIMA-IFPRI Workshop on Food Security Vijay Paul SharmaSource: CSO (2012)

Scope for Raising Yield Levels

Rice & Wheat Yield in Major States TE2011-12

Vijay Paul Sharma

Competing Uses of Land: in Net Sown Area

Vijay Paul SharmaAIM MDP Jan 2013

Changes in Net Sown Area: State-level Analysis (TE1994-95 and

2009-10)

Reduction in NSA (‘000 ha)

States

>500 Tamil Nadu (836), Odisha (703), Maharashtra (603) – Mainly due to in Area under Non-Agri. use

100–500 Karnataka (333), Bihar (324), West Bengal (190), Kerala (157)

<100 M.P. (75), H.P. (30), Punjab (16), UP (2)

Increase in NSA (‘000 ha)

States

>500 Gujarat (774) - Due to in Fallow & Waste Lands

100-500 Rajasthan (477), A.P. (140)

<100 Haryana (58), J&K (3)Vijay Paul Sharma

Source: Govt. of India (2012)

Reforms in APMC Act

Stage of Reforms

States/UTs

Reforms Done A.P., Arunachal Pradesh, Assam, Goa, Gujarat, H.P., Jharkhand, Karnataka, Maharashtra, Mizoram, Nagaland, Odisha, Rajasthan, Sikkim, Uttarakhand

Partially Done Direct Marketing: NCT Delhi, M.P. and ChhattisgarhContract Farming: Chhattisgarh, Haryana, M.P., Punjab, Chandigarh

No APMC Act Bihar (repealed in 2006), Kerala, Manipur, A&N Island, D&N Haveli, D&D, Lakshadweep

Already provides for reforms

Tamil Nadu

Admn. Action Initiated

Meghalaya, Haryana, J&K, West Bengal, Puducherry, NCT of Delhi and U.P.

Vijay Paul Sharma

Policy Issues and Priorities to Accelerate Agricultural

Growth

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Policy Priorities

Improve Crop Productivity Increase in Public Investment in Agri. R&D including

Extension Strengthen Market Linkages/Vertical Integration

Better Rural Infrastructure – Public Investment Post-Harvest Management and Market Infrastructure –

Public & Private Sector Vertical Coordination in Agri-Food Chains – Contract

Farming Collective Action for Smallholder Market Access – FPOs,

Coops, Producers Cos., etc. Strengthen Market Information Systems – PPP Mode

Vijay Paul Sharma