Transcript Dr. Vijay Paul

Emerging Trends in Indian
Agribusiness Sector:
Prospects and Policy Options
Vijay Paul Sharma
Chairman, Agribusiness Management
Indian Institute of Management
Ahmedabad 380 015
Email: [email protected]
Vijay Paul Sharma
Presentation Outline
 Structural
Transformation of Indian Economy:
Major Drivers
 Constraints
Restricting Participation of
Smallholder Producers in Markets
 Policy
Issues and Priorities to Accelerate
Growth
Vijay Paul Sharma
STRUCTURAL
TRANSFORMATION OF INDIAN
ECONOMY
Vijay Paul Sharma
39%
12.1%
Vijay Paul Sharma
DRIVERS OF STRUCTURAL
TRANSFORMATION
Vijay Paul Sharma
Increasing
Number of
Working Women
12% in 1961 to 25%
Increasing
Urbanisation
Higher Disposable
Income
 Expenditure on
Non-Food Items
Rising Demand
for High-Value
Agri. Products
Demand
Drivers
Changing
Demographics
Increasing Trade
Opportunities
65% population
<35 years
Changing
Lifestyle and
Aspirations
Vijay Paul Sharma
Composition of Consumer
Expenditure: Rural
Vijay Paul Sharma
Composition of Consumer
Expenditure: Urban
Vijay Paul Sharma
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
Technological
Interventions
Cotton & Maize
Emergence of
Organized Food
Retail
Private Sector
Participation:
Contract Farming
– from 1% to 7-8%
Supply
Drivers
Improved
Infrastructure
Increased
Investment
Vijay Paul Sharma
Entry of Fast-Food
Supply Chains:
KFC, McDonald’s,
Pizza Huts, etc….
Cotton Production & Yield:
Impact of Technology
Vijay Paul Sharma
Maize Production & Yield:
Impact of Technology
Vijay Paul Sharma
Increased Investment in
Agriculture
Vijay Paul Sharma
Have Indian Farmers
Responded to Market Signals?
Vijay Paul Sharma
Diversification of Indian
Agriculture: Supply Side Response
TE1983-84
TE2011-12
Vijay Paul Sharma
Source: CSO (2013)
MAJOR CONSTRAINTS
RESTRICTING SMALLHOLDER
PARTICIPATION IN EMERGING
MARKET OPPORTUNITIES
Vijay Paul Sharma
Inconsistency in
Trade Policy
Lack of Quality
Post-Harvest
Infrastructure
Number of
Small Farms
High Risks in
& Fragmentation
Agriculture;
of Farms
Low Productivity
Availability &
Cost of Labour
Major
Constraints
Lack of Irrigation
Facilities
Land Tenure
Systems
Food Safety &
Quality
Standards
Lack of Access to
Technology, Inputs
and Services
Vijay Paul Sharma
Rising Number of Smallholders &
Declining Farm Size
Avg. Size
2.28
1.84
1.55
Vijay Paul Sharma
1.33
1.16
Source: GoI (2012)
Average Farm Size (2010-11):
State Level Difference
Vijay Paul Sharma
Shrinking/Fragmenting
Farms & Small Production
Units
Fast Scaling-up of
other Segments of
Value Chain
Low/Uneven
Bargaining Power

Exploitation
Input & Services
Seed, Fertilizer
Pesticides, Credit
Markets/
Retailers
AgroProcessers
Logistics
Providers
Small
Producers
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 Sharma
Source: 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
AIM MDP Jan 2013
Vijay Paul Sharma
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)
Source: Govt. of India (2012)
Vijay Paul Sharma
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 Chhattisgarh
Contract 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 Tamil Nadu
for reforms
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
Vijay Paul Sharma
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