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Oppurtunities
Oppurtunities
Agribusiness is defined as all business enterprises or sales to farmers / traders / consumers. The transaction may involve either an input or a produce or service and comprises of items such as: 1. Productive resources (feed, seed, fertilizer, equipment, energy, pesticides, machinery, etc.) 2. Agricultural commodities (raw and processed commodities of food and fiber) 3. Facilitative services (credit, insurance, marketing, storage, processing, transportation, packing, distribution, consultancy, soil testing etc.).
Low processing
2.20 % in fruits
Value addition 20% Indias current share in world trade of processed foods 1.60 % Poor lab to land transfer of technology and adoption of new varieties.
Post Harvest wastage of fruits & vegetables 25 to 35% valued at over Rs 45,000 crore
Losses as above in India is more than consumption of same in UK
Farm gate price 25% of domestic consumer retail price against 50% in developed countries
POTENTIALS
1. 2. 3. 4. 5. 6. Optimal Agro climatic conditions Political environment Strong credible coordinating & Promotion agency Strong Corporate leadership Strong Consumer base Strong Demand
POLITICAL ENVIRONMENT
Attracts Investment Provides Stability Encourages Infrastructural development
CHALLENGES
Low level of value addition
Bottle necks in cold storage including during transit Non Efficient storage/warehousing, processing & marketing techniques Non adoption of efficient technology
Control of markets by few traders and agents who command large storage capacity Discouragement of farmer lower returns act as disincentive Larger intermediaries exerts negative pressure on farmer margin, and deteriorates quality due to multiple handling
Higher Tax duties including on packaging material Non adoptive of cost effective technology High working capital requirement High cost of finance Infrastructural constraints Dependence on intermediaries inadequate farmer processor linkages
OPPORTUNITIES
Indian domestic market Diversifying into new markets and product segments 52% cultivable land as against 11% world wide
Unsurpassed Natural Advantages All the 15 major climates of the world 46 out of the 60 soil types 17% animal, 12% plant and 10% fish genetic resource of the world
Food processing sector ranks fifth in terms of contribution to GDP Indian urban food market estimated at 350,000 crore Estimated investment in Food processing sector during 11th plan 1 lakh crore Horticulture crops Fruits vegetables and flowers cover 7% of cropped area of the country
India ranks First in production of mango (65% of world) Bananas (11% of world) and papayas India ranks Second in production of Lime and lemon Move to invest in 10 mega food parks in the country Indian food processing industry averaging a growth of 10%
Good governance
Strong , Stable and reform oriented government WTO signatory Strong economy comparatively resilient to the current economic crisis Vision to solve the power situation Nuclear energy Improving relationship with neighboring countries and a more important role in the global trade
Included in the list of Priority sector lending by banks since 1999 Most of processed food Exempted from purview of licensing under the industries (Development & regulation) Act, 1951, except items reserved for small scale sector & alcoholic beverages Excise duty for processed fruits & vegetables, food mixes etc. NIL Excise duty on reefer vans reduced from 16 to 8% Reduction in customs duty on food processing machinery Tax breaks
50% of population under 25 years of age Ready to experiment and try out new products
Increase in number of upper middle class & middle class by 159 % & 63 % respectively
Urban population projected at 40% by 2020 Middle class of 200 250 million spread across the country to increase to 580 million by 2025
Dual income households
STRATEGY
Reduction of wastage /spoilage to be tackled
Accelerated establishment of cold chain networks Irradiation facilities and pest free warehouses Encourage SSI units and corporate to set up food processing units
Price stability
Make farming remunerative to attract talent and retain farmer interest
Incentives to Corporate to enter core farming land ceiling restrictions Increase Mechanization to tackle low availability of labour and to remain a low cost producer Liberalized credit norms for agricultural production , marketing and infrastructure development Changes in market regulatory framework to allow corporate to establish market yards Review of legal instruments to facilitate entry in marketing activities Tax holidays and incentives Excise exemptions.
CONCLUSION
Food sector the highest multiplier effect of any industry 2.4 Tripling the size of the industry would generate
Direct employment 28 lakh and Indirect employment 74 lakh
Thrust in agriculture to be provide the next push to GDP and prosperity Enhanced export earnings to compensate for any slow down in IT related exports