Agro-Business in India
Agro-Business
India- perceived to be the land of sowftware industry, engineers, rapid industrialization, exports and one of the fastest growing economies in the world. Construction, manufacturing, textiles, leather, IT and telecom solutions, engineering goods are considered to be the key sector of Indian economy. But seldom, any consideration is paid to the fact- that a major chunk of its GDP comes from agriculture which also employs 65% of the population. Being one of the largest and oldest agriculture based economies in the world, feeding over a billion people. And as liberalization ushered in industrialization for the rest of the economy to grow, Agro-business today holds the fort for doing the same for agriculture.
Employing over 600 million people (more then Europe’s population), in various roles of farmers, marginal farmers, landless farmers and laborers, agriculture remains the main stay of occupation for majority of Indians. As Green revolution in the 1960’s brought modernization to some parts of the Indian agriculture spurring growth. Agro-business today has assumed the same role. The agro-business or industry is not only multi-nationals companies but sugar mills, cotton mills, edible oil processing units, jute mills and one of the most well know Indian co-operative farming company of milk harvesting -AMUL.
The industry works on various levels from growing of crops- edible oil, fruits, sugarcane to aqua-culture of harvesting fishes, shrimps. The second level of processing of crops, meat and milk into sugar, cotton yarn, butter, pasteurized milk, canned food items like meat and other perishable contents. The third level on which the industry operates is of packaging of these items into well known brads like Amul and ITC food products. The agri-business provides solutions to farmers in employment of latest technologies in farming and packaging and selling of the final product.
Agro-business of growing, processing and packaging of edible, ready made/ cooked items can also be viewed as complete manufacturing process. The recent trends in India and abroad has given more impetus to this industry with growing income levels, middle class and a prospected market of over $100 billion in processed food items like sugar, wheat, pulses, and canned food items. This enormous potential has attracted the private sector into this industry, the like of ITC, Nestle, HUL and others. These companies have entered the market with high investments and employment of new and international standards and technologies.
The industry also entails other roles like agricultural inputs like equipment, processing units, cold storage facilities, better transportation to link the supply chain of perishables. Even the production of agro-chemicals (fertilizers, herbicides and pesticides), and improvement of irrigation are the other key sectors of this industry. With modernization of agriculture on governments mind new projects like agri-businesses joint ventures with foreign collaborations have been approved. These new policy initiatives have opened the gates for many international players like Monsanto (seeds), Mott MacDonald and others to enter this sector. With new plans afloat for processing and export oriented units at an investment of Rs.19100 crores of which foreign investment is over Rs. 9100 crores.
The domino effect of agro-business has led to high yield, more profitability for farmers and development of agriculture on an industrial level. Today, growing, processing and marketing of food products has taken on a new and professional portfolio. Apart from Indian markets- exports are also pursued vigorously. Not only is the semi-processed segment of tea, coffee and sugar (sugar being the largest segment of agri-business domestically) focused upon but also on canned food items like fish, shrimps, meat. With better branding, attractive pricing and aggressive marketing, this sector has shown growth in the exports segment as well.
With high inflation and rising food prices, agri-business will play a crucial role in stabilizing the situation. High yield of crops can be sustained through constant efforts of the industry- by providing the farmers with new technologies, seeds and better equipment. The demand can also be met by speeding up processing units and well connected linkages in the supply chains. The government has acknowledged the needs of this industry in the past and with the current situation may also formulize policy for further advancement of this sector.
The development of agro-business in India, will not only improve the infrastructure for high yields, storage, processing of crops and other products but will also create other essential infrastructure of roads, electrical transmission, and a broader market in rural areas. The social benefits will also be enormous with farmers getting higher returns and profitability for agriculture. With more fertilizer units and sustainable price will ultimately lessen governments subsidizes of thousand of crores- on fertilizers and MSP (Minimum Support Price). Finally the consumers will benefit the most, in getting ready made/ cooked, canned food items and competitive pricings.
- Rohit Vaid
Dear Mr. Vaid
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A very crisp and well written article Rohit! Agriculture in India draws its significance from the vital supply and demand links with the manufacturing sector and plays a major role in the overall socio-economic development of India. Some sort of “sophisticated diversification” measures in farming and agro-processing industry is already seen with major banks reaching out in a big way to aid and promote this sector.The economic liberalisation has significantly reduced the structural rigidities in the system. At the same time I feel that imbalance in socio-economic development and urban-rural divide can only be arrested if the infrastructure in rural areas is made sustainable, qualitative and a growth oriented business environment is created. While major initiatives in removing this imbalance are yet to take momentum and shape, there exist certain deterministic steps towards achieving the goal. Agrobusiness can be a medium to address this imbalance particularly at the grassroots level.
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