ISBSynergy888

Manthan: Boosting Agricultural Productivity

Team Details

Abhishek Kumar Priyank Kanade

Shrijit Venkatesh Harmeet Singh Saroya

Vikas Kumar

Boosting Agricultural Productivity

Boosting Agricultural Productivity

Growth in wages and

remunerative prices

Growth in per hectare

output and productivity

Access to credit for crafting

agricultural growth

Creation of infrastructure

and cold storage facilities

Problem Statement: Boosting Agricultural Productivity Our Approach: • Understand current

agricultural sector • Identify the pain-points

plaguing Indian agricultural sector

• Cultivate solutions targeting the pain points

• Overall, a 4 pronged final approach for better productivity

Indian Agricultural Industry – A Snapshot • Indian economy has grown steadily –7% in last 10 years • Low and inconsistent growth in agricultural sector – it is dependent on the monsoon • Agriculture contributes 18% to GDP but 60% population lives off agriculture • Mostly small marginal farms with low inputs • Yield levels are generally much lower than world averages • Total cropped area is 197 million hectares • Highest area under irrigation (40%) • Green revolution helped India gain self sufficiency in food production • Agricultural production increased from 50 million tons to 227 million tons; however,

growth flat over last 10 years • Population, currently at 1.15 billion, is continuing to increase • Tremendous pressure to increase agricultural productivity • New technologies must be deployed • Seed industry will continue to play a key role

Sector Identification – Indian Agricultural Industry

Ancillary Support to Produce

• Agricultural machinery

• Seed technology

• Fertilizer technology

• Irrigation technology

• Supply chain-cold storages

• Technology in Ancillary support-Manufacturing technique

• Biotech-To increase output

• Weather forecasting technology

Processing of Produce

• Packaged processed foods

• Technology to increase value-add

• Supply chain & logistics

Animal husbandry

• Dairy Industry

• Meat

• Poultry

• Technology for high produce

• Supply chain-cold storage

• Leather goods

Beverages

• Non-alcoholic beverages

• Beer

• Other alcoholic beverages

• Technology

• Supply chain

Approach for Boosting Agricultural Productivity

Boosting Agricultural Productivity

Growth in wages and

remunerative prices

Growth in per hectare output and productivity

Access to credit for crafting

agricultural growth

Creation of infrastructur

e and cold storage facilities

Growth in Wages and Remunerative Prices

Skill development

Effective Diversification

Market Linkage for Best Prices

• Address underemployment: Under-employment rate of 20.9% primarily due to seasonal nature of agriculture (Jan 2013)#

• Skill enhancement in food processing and cultivation techniques for crop diversification to overcome underemployment and to improve wages

• Training: To enable the effective use of mobile and internet platforms

#Source: http://www.census.gov.ph/content/employment-rate-january-2013-estimated-929-percent-results-january-2013-labor-force-survey

• Extending Diversification through Demonstration: Support to farmers for crops , such as , sunflower, safflower, pulses and other field crops. Other farmers may opt to diversify to get better prices and reduce their dependence on low income yielding crops.

• Microfinance to support seed purchase and financing farm equipments.

• Contract farming: Providing grading and traceability features to enable contract farming and exports

• Supply Chain Management: Improving cold storage facility and market connectivity to reduce waste (details in next slide)

• Demand Forecasting: Better demand forecasting and making farmers aware of commodity price forecasts to enable them to make well-informed decisions

Boosting Output and Productivity

Indian Seed Industry-Current Status

PAIN POINTS PROPOSED SOLUTION

• Indian seed market, estimated at US$1.1 billion, is the 6th largest in the world • It has grown @ 12% compared to <5% growth of global seed market

•Private sector not investing in self pollinated crops to develop and promote new varieties

•Seed replacement ratio continues to be low

• Large acres of self pollinated crops – rice, wheat, legumes, etc.

• Low hybrid adoption rates in most crops due to marginal growing conditions and/or subsistence farming

•Medium and small sized companies should make investments in research and seed processing infrastructure

•More than 40 seed companies have Govt. recognition for their R&D units and this number should grow over 100.

• Indian companies should introduce increased GM trait in their germplasm

•More investment in innovative biotechnology research

Boosting Output and Productivity

Move away from Primitive Methods of Agriculture

Fragmented Land Holding

Lack of Knowhow

Low level of Mechanization

Low affordability to employ best

practices

Over-Dependence on Labor &

Shortage of Labor Primitive

Methods of Agriculture

…Low level of Mechanization

Boosting Output and Productivity

… due to extremely low land holdings ...along with other factors has resulted in

very low mechanization

Affordability is low to begin with

Low education and skill levels results in negligible uptake in advanced, value generating, technologies

Holding size (hectares)

# holdings (M)

<1 1 to 2 2 to 4

0

1

23

76

121

4 to 10

60

30

7 120

>10

150

14

90

Total

Source: Central Institute of Agricultural Engineering (CIAE), Bhopal; CII: Wealth Creation in the Farm sector of India: Ten point agenda for Policy Intervention

Fragmentation - a result of various land holding acts

The average size of land holding has continued to decline (from 2.63 ha in 1996 to 1.06 ha in 2003–2004)

Situation further worsened by labor shortages: ‐ Alternate employment opportunities ‐ Guaranteed employment schemes (NREGA ) and

subsidies

Dominance of small holdings

Prohibitively high cost per acre of technology application

Farm mechanization continues to significantly lag behind global norms

Boosting Output and Productivity

Full suite of advanced agricultural technologies combined...

...that will significantly impact a farmer's bottom line...

• Radical improvement in productivity from application of modern technology

• Lower/ eliminate capital expenditure required on mechanisation – Convert the farmers’ capex into opex

Agronomy

High Quality Crop Care

Mechanisation

Sensing and precision actuation

...to create a “technology as a service" offering...

...effectively unlocking demand for mechanisation technology and its

application

• Creates the ability to aggregate demand for mechanisation

• Allows low cost provision of services due to economies of scale

Pay Per Use Service Offering

Reasonable Prices

Government Private

Partnership

Technology, as a Service, must reach the bottom of Pyramid

Enabling Access to Credit and Micro-finance

• Need for an exclusive regulator body for MFIs.

• Need for transparency of interest rates Unregulated MFIs

• Launch training programs for clients.

• Require more informed decision from MFIs before lending. Loan Defaults

• Uniform distribution of MFIs in rural and urban areas.

• More collaboration with foreign MFIs to bring in best practices in technology and process.

Low Depth of Outreach

• Introduce better savings and insurance services. Inflexible Products

Supporting Infrastructure and Cold-Storage Facilities

Problems in Supply Chain Management for Agricultural products

Inflation

Low monetization opportunity for producers

Higher cost of production

PAIN POINTS PROPOSED SOLUTION

• Improve rural infrastructure and cold storage facilities

• Collection points from farmers for direct sale

Better connectivity

• Lesser intermediaries

• Competition among buyers

• More bargaining powers for farmers

Reduce unwanted

supply chain cost

• Short-term production loans for farmers

• Quick settlement mechanisms for contract (commodity or market) disputes

Unrestricted cash flow

during high inflation

• Intermediaries inappropriately benefited during inflation, farmers left with minimal share of sale

• Inflation → higher living cost → high cost of production → squeezing down profits

Challenges and Mitigation factors to proposed solutions

• Resistance of the rural class to adapt to new changes

• Transparency and Regulatory challenges in controlling MFI

• Wholesalers and intermediaries will oppose these moves

Challenges

• Change Management – Adopting changes

• Strong Regulatory body

• Get buy-in from the stakeholders on the proposed solutions

Mitigation Factors

Thank You