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Agricultural Marketing and Management in India: Role of Private Sector

Agricultural Marketing and Management in India: Role of Private Sector. Current situation….Driving the Agenda. Indian agriculture sector in times of economic recession

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Agricultural Marketing and Management in India: Role of Private Sector

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  1. Agricultural Marketing and Management in India: Role of Private Sector

  2. Current situation….Driving the Agenda Indian agriculture sector in times of economic recession There are predictions that the processed food sector won’t grow as much as hoped for and the exports from for the processed foods and also for other food grains as bad as one could expect for the rest of the Indian goods and services. India agricultural sector is in crying need of attention For a country, nearly 65 per cent of whose population depend on agriculture and nearly 20 per cent of the country's GDP comes from agriculture, a 5.8 per cent share of agriculture in gross capital formation (lowest ever share recorded) is nothing less than criminal. India short by 10 million tonnes cold storage facility The country is short by 10 million tonnes of cold storage capacity due to which about 30- 40% of agricultural produce goes waste every year. Better logistics, marketing key to agro export growth Increased emphasis on infrastructure development and marketing to support agro exports is the key for sustained growth in the international markets. to promote exports, the emphasis should be on growing infrastructure and application of technology for harvest and post-harvest to transfer high-quality produce to the consumer India needs to invest in agricultural infrastructure Though India has comparative advantage compared to the rest of the world on the issue of food security, there was an urgent need to focus on agricultural infrastructure to retain that advantage.

  3. Agriculture marketing and management system in India Poor infrastructure costs India Rs 50,000 croreagri loss every year • Major challenges is inefficient marketing system, representedby poor linkages, multiple marketing layers and inadequate infrastructure • Results in loss of produce due to inadequate infrastructure • Focus should be on increasing marketing efficiency POST HARVEST WASTAGE Food grain production Wastage at various stages of value chain (%of total production) Perishable production- Fruits and vegetables

  4. Investment in Agriculture Marketing- Comparison Trends in private and public investment in marketing infrastructure in India “India lacks in public investment ……needs private sector interventions” Per tonn public investment (In USD) India Vs. Brazil

  5. Returns on Agriculture Marketing- ITC • 4 mn farmers growing various crops - soyabean, wheat, rice, pulses etc. • >40,000 villages through 6500 kiosks across 10 states (MP, Haryana, UP, Uttarakhand, Karnataka, AP, Rajasthan, Maharashtra, Kerela &Tamil Nadu) • More direct control over the quality of product • Company benefits from net procurement costs which is ~2.5% lower • ITC recovers its equipment costs from an e-Choupal in the 1st year of operation • The venture as a whole is profitable & both farmers and ITC save ~ US$6 (Rs 270) per metric ton ITC Sanchalak & Samyojak Farmers

  6. Returns on Agriculture Marketing- PepsiCo • Various initiatives to help farmers improve production and income in Punjab, U.P., Karnataka, Bihar, West Bengal, Gujarat and Maharashtra • PepsiCo envisages to strengthen its farmer connect from 21,000 to 50,000 by 2012. • Contract farming and investment in quality improvement and processing programs. • Assisted in increasing the yield and quality of the product • Gross margins for farmers higher than those selling to traditional markets- Value of output more than traditional produce (nearly 17% -20%) • PepsiCo benefits by paying 1/3rd of the market price for per kg of the production V

  7. Why are private companies still apprehensive about investing in agri marketing Lack of support infrastructure The villages/ farm lands do not have adequate connectivity in terms of roads, power, telecommunication, irrigation etc. Lack of awareness & literacy level High initial investment in terms of providing training, awareness and high capital cost Licensing procedures Lengthy procedures for getting license for setting up warehouses, regulated markets etc. Fragmented farm lands Fragmented farmlands leads to less economies of scale & reduces benefits of technology especially in contract farming. More than 60% land owners with less than 4 hectare land Operational restrictions Limits on storage in terminal markets, different state level policies etc.

  8. Proposed measures to augment private investments Innovation • Promote advent of international agri logistics/ supply chain/ retail companies, which bring in efficiency best practices • Promote more Mega parks in association with private developers • Provide capital incentive and output based incentive • Increase FDI in agri-retail and agri insurance Sustainable Growth Nurture the Growth • Reduce the licensing procedures • Promote the concept of “Entrepreneurial Banks” for farmers and mid scale investors Strong Foundation • Government activation on support infrastructure, power, irrigation • Multimodal transport, roads in interiors • Creating awareness through “Agri Marketing Drive” in rural areas by linking MIS with schools.

  9. Thank you

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