Course Code- MBA 108

Course Name- Agribusiness Management

UNIT- I

Aditya Pratap Singh

(Instructor, ABM)

Department of Management Studies

School of Entrepreneurship and Management
Agri-business as a concept was born in Harvard University in 1957 with the publication of a
book “A concept of Agri-business”, written by John David and A. Gold Berg. It was introduced
in Philippines in early 1966, when the University of the Philippines offered an Agri-business
Management (ABM) programme at the under-graduate level. In 1969, the first Advanced
Agribusiness Management seminar was held in Manila.
Definition of Agri-business:
“Agri-business is the sum total of all operations involved in the manufacture and distribution
of farm supplies, production activities on the farm, storage, processing and distribution of farm
commodities and items made from them” (John David and Gold Berg)
Agri-business involves three sectors:
1. Input sector: It deals with the supply of inputs required by the farmers for raising crops,
livestock and other allied enterprises. These include seeds, fertilizers, chemicals, machinery
and fuel.
2. Farm sector: It aims at producing crops, livestock and other products.
3. Product sector: It deals with various aspects like storage, processing and marketing the
finished products so as to meet the dynamic needs of consumers. Therefore, Agribusiness is
sum total of all operations or activities involved in the business of production and marketing
of farm supplies and farm products for achieving the targeted objectives.
Agriculture has evolved into agri-business and has become a vast and complex system that
reaches far beyond the farm to include all those who are involved in bringing food and fiber to
consumers. Agri-business include not only those that farm the land but also the people and
firms that provide the inputs (for ex. Seed, chemicals, credit etc), process the output (for ex.
Milk, grain, meat etc), manufacture the food products (for ex. Ice cream, bread, breakfast
cereals etc.), and transport and sell the food products to consumers (for ex. Restaurants, super
markets).

Reforms in Agriculture
1. Land Reform
Land reforms in India have been a significant aspect of the country's socio-economic policies,
aimed at addressing issues of land inequality, land tenure systems, and agricultural productivity.
These reforms have undergone various phases since independence in 1947.
Objectives of land reforms:

• Redistribution of land across society so that land is not held in the hands of a few people.
• Land ceiling to disburse surplus land amongst small and marginal farmers.
• Removal of rural poverty.
• Abolition of intermediaries.
• Tenancy reforms.
• Increasing agricultural productivity.
• Consolidation of land holdings and prevention of land fragmentation.
• Developing cooperative farming.
• To ensure social equality through economic parity.
A committee, under the Chairmanship of J. C. Kumarappan was appointed to look into the
problem of land. The Kumarappa Committee's report recommended comprehensive agrarian
reform measures.
The Land Reforms of the independent India had four components:

• The Abolition of the Intermediaries

• Tenancy Reforms
• Fixing Ceilings on Landholdings
• Consolidation of Landholdings.
• Co Operative farming
Abolition of the Intermediaries
The first big change was getting rid of the zamindari system. This system had middlemen called
zamindars who came between the farmers and the government. The change took away the
special rights of the zamindars over the land. It made the farmers stronger and reduced the
power of the zamindars. This change helped the actual farmers who work on the land.
Tenancy Reforms
Tenancy reforms were brought in to control rent, give tenants the right to stay on the land
securely, and sometimes even give them ownership. These reforms aimed to either stop renting
out land completely or to set rules about rent to protect the tenants.
Ceilings on Landholdings
The Land Ceiling Acts were laws that set limits on how much land an individual farmer or farm
household could own. Simply put, these laws said that there was a maximum amount of land
that someone could have, and if they already had more than that, they couldn't acquire any
more. The main reason for these laws was to stop too much land from being owned by just a
few people. They wanted to make sure that land was more evenly spread out among farmers
and households. So, if someone already had a lot of land, they couldn't get any more, which
helped to prevent land from being concentrated in the hands of just a small group of people.
Consolidation of landholdings
Consolidation of landholdings means bringing together small pieces of land that belong to one
farmer into a single, larger plot. As more people live in rural areas and there are fewer jobs
available outside of farming, there's more demand for land. This leads to a situation where land
gets divided into smaller and smaller pieces over time. When land is divided up like this, it
becomes hard to manage irrigation and keep an eye on all the different plots.
To solve this problem, governments introduced land consolidation programs. These programs
helped farmers who owned several small plots of land in the same area to combine them into
one bigger piece of land. This was often done by buying or swapping pieces of land with other
farmers. Almost every state except Tamil Nadu, Kerala, Manipur, Nagaland, Tripura, and parts
of Andhra Pradesh passed laws to support land consolidation.
Cooperative farming
Cooperative farming in the Indian context refers to a collective approach to agricultural
production where farmers pool their resources, such as land, labor, machinery, and capital, to
work together as a cooperative enterprise. The concept of cooperative farming emerged as a
means to address various challenges faced by small and marginal farmers, including limited
access to resources, low bargaining power, and inadequate market integration.

2. Green Revolution
The term ‘Green Revolution’ refers to the new agricultural technology developed during the
1950s and 1960s by a team of agricultural experts at the International Centre for Maize and
Wheat Improvement in Mexico and at the International Rice Research Institute (IRRI) in
Philippines. The technology developed at these two centers was subsequently adopted by most
of the developing countries in Asia and Latin America contributing to improving the
agricultural productivity and attain self-sufficiency in food grains in these countries. The
technology involved the use of high yielding variety (HYV) seeds and adoption of a package
of modern agricultural inputs, tools and practices (like chemical fertilizers, pesticides, assured
and controlled irrigation, tractors, threshers, electric and diesel pumps, etc.).
Components of Green Revolution
The core components of new agriculture strategy are:
(i) Use of High-Yeilding Variety (HYV) seeds that matures in short span of time.
(ii) Application of fertilizers, manures and chemicals in the agriculture production.
(iii) Mechanization of farming with the use of machines like tractors, harvesters pump sets etc
in the agriculture occur in a big way.
(iv) Better Infrastructure facilities in terms of better transportation, irrigation, warehousing,
marketing facilities, rural electrification were developed during the period of green revolution.
Impact Of Green Revolution
I. Positive Impact
1. Increase in Production and Productivity of Food Grains
One of the most important impacts of green revolution (GR) was on raising the production and
productivity of cereal crops, especially wheat and rice. The cereal production was increased
due to three factors: (i) increase in net area under cultivation; (ii) growing two or more crops
in a year on the same piece of land; and (iii) use of HYV seeds. The GR resulted in a significant
increase in the production of food grains from 72.4 million tons in 1965-66 to 131.9 million
tons in 1978-79 establishing India as one of the world’s biggest agricultural producers.
2. Employment Generation
The impact of GR technology on employment generation in agriculture has been contentious.
Critiques of Green Revolution argue that increased mechanization of farm practices in the
green revolution regions reduced the employment absorption in agriculture. C. H. Hanumantha
Rao, for instance, observed that GR technology in terms of ‘seeds-fertilizer-irrigation’ package
had substantial positive impact on employment generation in agriculture but increased use of
farm machines such as tractors contributed to a reduction in the employment generated.
However, the use of tractor and other modern machines increased the aggregate level of
employment by raising cropping intensity, farm productivity and changing cropping pattern.
Moreover, farm machines and equipment also helped generate additional employment in the
non-farm activities by way of forward and backward linkages. In other words, the use of
technology and better inputs have created significant employment opportunities in the non-
agricultural sectors of manufacturing as well as service sectors.
3. Income Generation:
Higher agricultural productivity resulting from the Green Revolution contributed to increased
farm incomes for many farmers. The adoption of HYVs and modern farming techniques
allowed farmers to produce more crops on the same amount of land, leading to higher revenues
and improved living standards for farming households.
4. Technological Innovation:
The Green Revolution facilitated the adoption of modern agricultural technologies and
practices in India. It encouraged research and development in agriculture, leading to the
development of new seed varieties, improved irrigation systems, and better farm machinery.
These technological innovations continue to benefit farmers and contribute to sustainable
agricultural development.
5. Infrastructure Development:
The success of the Green Revolution prompted investments in rural infrastructure such as
irrigation systems, roads, storage facilities, and agricultural extension services. These
investments helped in improving connectivity, market access, and post-harvest management,
thus further enhancing agricultural productivity and rural livelihoods.
II. Negative Impact
Decline in Soil Fertility
GR technology has caused deterioration in soil fertility.
1. Environmental Degradation:
The intensive use of chemical fertilizers, pesticides, and water during the Green Revolution led
to environmental degradation. Soil erosion, depletion of groundwater resources, water
pollution, and loss of biodiversity were among the environmental consequences. Chemical
runoff from agricultural fields also contributed to pollution of rivers, lakes, and other water
bodies.
2. Loss of Agro-biodiversity:
The focus on a few high-yielding crop varieties led to a decline in the cultivation of traditional
and indigenous crop varieties, resulting in loss of agro-biodiversity. This loss of crop diversity
increased the vulnerability of agricultural systems to pests, diseases, and adverse environmental
conditions, posing long-term risks to food security and agricultural sustainability.
3. Health Risks:
The indiscriminate use of chemical fertilizers and pesticides during the Green Revolution
raised concerns about human health risks. Exposure to toxic chemicals used in agriculture was
associated with various health problems among farmers and rural communities, including
respiratory illnesses, skin diseases, and reproductive disorders.
4. Depletion of Groundwater Resources
Development of tube-well technology in 1960s is one of the vital factors in bringing the green
revolution in the Indo-Gangetic regions. However, the exponential growth of tube-wells in
these regions has also been the main reason in the rapid decline of groundwater resources.
While groundwater irrigation is preferred on the equity, efficiency, and private investment
grounds, many government policies [e.g. agricultural subsidy on critical inputs, lack of
effective regulation on sustainable groundwater usage, etc.] have contributed to rapid depletion
of ground water resources.

Food Processing
Food processing refers to the conversion of raw agricultural products into value-added products
for human consumption.
India has made vast progress overtime in providing food security for its people and has become
largely self-reliant in agriculture. Accordingly, the policy focus has shifted from attaining self-
sufficiency to generating higher and stable income for the farming population. Food processing
industry (FPI) is one area which has the potential to add value to farm output, create alternate
employment opportunities, improve exports and strengthen the domestic supply chain. India,
with about 11.2 per cent of total arable land in the world, is ranked first in the production of
milk, pulses and jute, second in fruits and vegetables and third in cereals. It is also the sixth
largest food and grocery market in the world. The Government of India has been pushing a
range of reforms through its Central Sector and Centrally Sponsored Schemes to encourage
sustainable production and enhance farmer’s income. Food processing sector is seen as the
sunrise sector of the Indian economy and is the fifth-largest industry in terms of production,
consumption, exports and potential growth. During the last five years ending 2019-20, Food
Processing Industries (FPI) Sector has been growing at an average Annual Growth Rate of
around 11.18 per cent.
The food processing industry in India is at a nascent stage, accounting for less than 10 per cent
of total food in India (Government of India, 2016). As per the study conducted on Level of
Food Processing in India (Deloitte study 2020-21), processing level in India is at 4.5 per cent
for fruits,2.70 percent for vegetables, 21.1 per cent for milk, 34.2 per cent for meat and 15.4
per cent for fishery. Food wastage remains a concern as nearly forty percent of perishables
commodities is wasted in India. It is expected that improvement in food processing would
reduce wastages in agricultural produce.
During the last five years ending 2019-20, Food Processing Industries (FPI) Sector has been
growing at an average Annual Growth Rate of around 11.18 per cent.
Food Processing Industry is one of the major employment intensive segments having a share
of 12.38 per cent in the employment generated in all Registered Factory sector in 2017-18.
According to the latest Annual Survey of Industries (ASI) for 201718, the total number of
persons engaged in registered food processing sector was 19.33 lakh. Unregistered food
processing sector supports employment to 51.11 lakh worker as per the NSSO 73rd Round,
2015-16.
The food processing industry in India is primarily concentrated in the northern and western
regions of the country. The states of Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu,
and Gujarat are the leading contributors to the sector. The food processing industry’s vision for
the next five to ten years should be to increase the sector’s contribution to the GDP from the
current 8% to 20%. The food processing sector is one of the critical drivers of growth and has
been acknowledged as a high priority industry by the government of India, as it has shown
enormous potential for creating employment opportunities and generating income in the
country.
The food processing sector in India faces various challenges, such as inadequate infrastructure,
lack of proper storage and cold chain facilities, and a fragmented supply chain. These issues
hamper the growth of the sector and increase the wastage of agricultural products. However,
the government has taken various initiatives, such as the Pradhan Mantri Kisan Sampada
Yojana, to promote the growth of the food processing industry in the country.
Government Schemes to support FPI
1. Mega Food Parks Scheme
Mega Food Parks Scheme, aims to create a modern food processing infrastructure for the
processing units based on a cluster approach. The scheme intends to facilitate establishment of
an integrated value chain, with food processing at the core supported by requisite forward and
backward linkages. The scheme provides for a capital grant at the rate of 50% of the eligible
project cost in general areas and 75% of the eligible project cost in difficult and hilly areas i.e.,
North East Region including Sikkim, J&K, Ladakh, Himachal Pradesh, Uttarakhand and
Integrated Tribal Development Programme (ITDP) notified areas of the States subject to a
maximum of Rs. 50 Crores per project. Twenty two Mega Food Park projects across the country
have been made operational. About 60 units are functioning in these parks providing
employment to more than twenty-two thousand people directly. In addition, more than 6 lakh
people are getting employment through franchises, dealership/ distributorship etc.
2. Operation Greens
In the budget speech of Union Budget 2018-19, a new Scheme “Operation Greens”. MoFPI
has been implementing central sector scheme “Operation Greens – A scheme for integrated
development of Tomato, Onion and Potato (TOP)”. Since 2021 Operation Greens Scheme has
been expanded from TOP to Twenty-Two Perishable products in order to boost value addition
in agriculture and allied products and their exports.

Effect of LPG on Agriculture

India entered in the process of LPG by 1991, when there was a severe economic crisis in the
country.
Liberalization, privatization, and globalization (LPG) have had a significant impact on Indian
agriculture since their introduction in the early 1990s. Here's a detailed overview of their
effects:
Liberalization:

• Liberalization in India refers to the opening up of the economy, removal of trade barriers,
and reduction in government regulations. In agriculture, liberalization led to the
dismantling of the License Raj system, which had previously restricted private investment
and participation in the sector.
• It allowed for greater participation of private players in agricultural activities, including the
setting up of agribusinesses, contract farming, and direct marketing.
• Liberalization facilitated the entry of multinational corporations (MNCs) into the Indian
agricultural market, both in terms of input supply (seeds, fertilizers, pesticides) and output
marketing.
Privatization:

• Privatization involved the transfer of ownership, control, and management of state-owned

enterprises to the private sector. In agriculture, this translated into the privatization of
agricultural infrastructure such as storage facilities, processing units, and marketing
channels.
• State-led procurement agencies were gradually replaced by private traders and
corporations, leading to a shift in the dynamics of agricultural markets.
• Privatization also encouraged the development of contract farming arrangements, where
private companies contract with farmers to produce specific crops, often providing inputs
and technical assistance in return.
• Prior to privatization, the food processing sector in India was predominantly controlled by
government-owned entities, which often faced inefficiencies and lacked innovation due to
bureaucratic constraints. With privatization, private companies were incentivized to invest
in food processing due to the potential for profit-making in a liberalized market
environment. Private firms bring in capital, expertise, and technological advancements that
are essential for modernizing food processing operations.
Globalization:

• Globalization refers to the integration of economies and societies through cross-border

flows of goods, services, capital, and technology. In agriculture, globalization opened up
opportunities for Indian farmers to access international markets.
• Increased global trade facilitated the export of agricultural produce from India to other
countries, providing new avenues for income generation for farmers.
• However, globalization also exposed Indian farmers to international competition,
especially in sectors where they were not competitive, leading to concerns about farmers'
livelihoods.
• Additionally, globalization brought about the adoption of modern agricultural practices and
technologies, as well as the importation of genetically modified organisms (GMOs) and
high-yielding varieties of seeds.