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Emerging Trends in Indian Agribusiness Sector: Prospects and Policy
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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
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
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
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
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
Vijay Paul Sharma
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
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