Marketing Reforms

&
Enhancing competitiveness

New Delhi
22-2-2006

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 An overview of Indian Agriculture
(Production side)

Comparative advantages:
 Second largest arable land in the world
 Diverse agro-climatic zones across the country,
 Round the year sunshine
Potential to cultivate a vast range of agricultural products
Large marketable surpluses and abundant raw material for processing
Vast pool of skilled manpower in research and extension

These advantages being leveraged, for India to be a leading food supplier

to the world.
 Area and production of Agricultural products
(Production in million tonnes)
India India’s Rank in World
Production
Arable Land (Million ha) 151 2
Irrigated Land (Million ha) 55 1
Wheat 72 2
Rice, Paddy 124 2
Coarse grains (including maize) 29 3
Milk 91 1
Fruits 47 2
Vegetables 82 2
Edible Oilseeds 25 3
Pulses 15 1
Sugarcane 245 2
Tea 0.85 1
Cattle (million) 186 2
 India is the front ranking producer of many perishable commodities

China : $195 bn; USA : $150 bn; India - $105 bn.

India produces India has

» 41% of world’s mango,
» 23% of Banana,
» 24 % of cashew nut,
» 10% of onion,
» 30% of cauliflower,
» 36% of Green Peas.
•53% of world’s buffalo
and
• 17% of goat
And a 8000 km of coastline

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 India rising high on food demand curve

Evolution of global food demand

Diet /
functional / Nortth America,
organic foods Japan, Western
Europe, Australia
C onvenience
foods Eastern
Europe
Snacks /
prepared
meals India , China,
Dairy, meat, Latin America
fresh fruits
fruit juices,
beverages
Carbohydrate Africa
staples (Sub
- Saharan)

Surviving Mass Convenience Quality High Technology

Market Food Service Hygiene
Source: Rabobank International Snacking
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 India’s competitiveness in global markets

India's share in global production (2001-03)

Vegetables 11%
(Large producer)
India's share in global exports
Fruits 15%
2.1% (1991-93)
Vegetables
0% 5% 10% 15% 20% 1.7% (2001-03)

Indian prices as a % of world prices (2001-03)

0.4%
(Nominal)
Vegetables 53% Fruits
0.5%
(Low cost producer)

Fruits 63% 0% 2% 4% 6% 8%

0% 20% 40% 60% 80% 100% What is wrong?

Source: UN COMTRADE Statistics, World Bank Staff Estimates
 Food processing still at a nascent stage

Level of processing Level of Processing

(Perishable products)
(Fruits & Vegetables)

 USA - 80 % Organized Unorganized Total


Fruits / Vegetables 1.3% 0.8% 2.2%
 France - 70 %

Milk /milk products 13% 22% 35%
 Malaysia- 80 %

Buffalo Meat 21% - 21%
 Thailand- 30 % 
Poultry 6% - 6%

 India - 1.3 % 
Marine Products 8% 15% 21%

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 Present Scenario in Value Chain

Cost Build Up For One Kg. Basket Of Fruit

2.5 11.6
1.7
4.1
3.3

FARMER TRADER WHOLESALER RETAILER CONSUMER

PRICE
Retail Markups
350
220
160
100

8 FARM GATE PRICES MILK FISH FRUITS &VEGETABLES

 Domestic markets scenario

Infrastructure for marketing of perishables

 Primary grading/ collection centers - non existent
 Warehousing and cold storage - inadequate
 Cold chain - non existent
 Quality certification system - non existent
 Transportation for perishables - non existent
 Rural markets - complete lack of infrastructure
 Wholesale markets - in government control, lack modern
facilities
 Private / direct markets - not permitted
Post harvest losses: 25 to 30 % in perishables

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 APMC Reforms - Status

States where reforms not done States where reforms done partially

 Orissa, Assam, Mizoram Haryana, Karnataka,

 Arunachal,Tripura, Meghalaya, NCT of Delhi,
 J&K, Uttaranchal, Goa, Chandigarh,
West Bengal, Pondicherry, Maharashtra, UP
Chattisgarh, Gujarat
 Bihar and Jharkhand

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 AGMARKNET

 Market nodes connected - 2408

 Markets reporting data – 1295
 Good performing States – AP, Maharashtra, Karnataka,
Gujarat
 States requiring Improvement – HP, Assam, Kerala,
Uttaranchal, Bihar
Jharkhand,
Things to do:
 Posting data on daily basis
 Creating awareness on the information portal
 Suggest user-friendly formats for data dissemination
 Utilization of funds for market led extension

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 Rural Godown Scheme

 Storage capacity created – 158.68 lakh MTs

 Excellent performance Punjab, Andhra Pradesh,

Madhya Pradesh, Maharashtra,
Haryana

 Poor off-take in Bihar, Gujarat, West Bengal,

Uttaranchal, etc

 Scope exists for more storage space near to farmers

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 Infrastructure Scheme

S.No. State No. of Financial Eligible

Projects outlay subsidy
Rs in crores Rs. in crores
1 Andhra 17 15.4 1.96
Pradesh
2 Kerala 39 30.2 1.08

3 Madhya 35 28.59 6.71

Pradesh
4 Punjab 33 4.94 1.19

5 Tamil Nadu 54 35.27 1.69

Total 178 114.36 12.62

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 Venture Capital Scheme

 SFAC provides up to 26% of the project equity as Venture capital

+ PDF for detailed project reports

Progress since July, 2005

 38 projects funded
 involving 11.62 crores venture capital
 investment of 125.42 crores,
 direct employment for 3221 people and
 assured market to 26,650 families

 All States should make use of the scheme

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 Terminal market

 Hub-and-Spoke Format: Terminal Market (the hub) to be

linked to number of collection centres (the spokes).

 Collection centres (Spokes) to be conveniently located at key

production centres to allow easy access to farmers

 Provide state of art facilities for

– Electronic auction,
– Grading, washing and packing lines,
– Processing and exports,
– Banking
– Transport including reefer vans etc.
– Advisory on input, price and quality

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 Thanks

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