Documente Academic
Documente Profesional
Documente Cultură
Year
January 2014
Author
Food and Agribusiness Strategic Advisory and Research (FASAR) Group, YES BANK
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AGRI-INFRASTRUCTURE IN INDIA
MESSAGE
It gives me immense pleasure to note that ASSOCHAM is organizing the 6th Agri
Business Summit: Infrastructure, Value Chain & Partnerships on January 13, 2014 in
New Delhi.
Agricultural in India has posted significant growth in the past few decades but still faces
challenges like improving agricultural productivity, minimizing post harvest losses, increasing value addition
and processing levels. These impediments require collaborative efforts by the Government and Private sector
to bolster Indian agriculture. Value addition in agriculture, be it high value organic crops, specialty grains
or agricultural commodities, presents a tremendous opportunity to integrate agriculture with industry and
market. However, to tap this opportunity, India has to address the gaps in infrastructure supporting the
agricultural sector based on analysis of key challenges across various segments of the agri-business supply
chain. Improving post-harvest and marketing infrastructure is perhaps the key to unlocking the potential of
Agri-Business in India.
I would like to thank the Ministry of Food Processing Industries (MoFPI), Ministry of Development of North
Eastern Region (DoNER), Department of Bio Technology (DBT), National Bank for Agricultural and Rural
Development (NABARD) and National Institute of Food Technology Entrepreneurship and Management
(NIFTEM) for their support. I also thank our Platinum and Knowledge Partner YES BANK for its extensive efforts
in putting together this report. I also wish to thank all our Sponsors, Exhibitors and Media Partners for their
overall support. I must acknowledge the hard work put in by Dr. Ombeer S.Tyagi and his team members
Sandeep Kochhar, Vipul B. Gajingwar and Nitesh Sinha in the preparation of this Summit.
I not only wish the Summit a great success but also assure all stakeholders that ASSOCHAM shall continue to
organize such programs for larger public benefit with great degree of excellence.
D.S. Rawat
Secretary General, ASSOCHAM
AGRI-INFRASTRUCTURE IN INDIA
Foreword
The story of Indian agriculture has been one of tremendous growth, both on the supply
as well as demand fronts. On the supply side, we are on the verge of a substantially
higher Agriculture GDP growth (over 5%) on the back of record production, thereby
positioning India on the cusp of becoming the worlds largest agri-producer. Production
data points across categories clearly indicate the success India has achieved in this
direction. Coupled with the impending adoption of various technologies at the farm
level, in the long term, these numbers are only bound to rise over the next few years. On
the demand side, the per capita consumption for most categories of food is rising and with the ever increasing
population, we will continue to have a robust national market for our agricultural produce.
It is the balancing act between managing this huge production surge and meeting the demands of the
discerning end consumer, that underlines the need for substantially improved Agri-Infrastructure in India.
Coupled with the challenges of ensuring lowering of food wastages across the value chain and of improving
operating efficiencies across the chain, Agri Infrastructure in India has a critical role of national importance to
play. This assumes further significance in light of Food Security priorities of our country.
A host of challenges and opportunities exist in the augmentation, creation and improvement of the agriinfrastructure in India across various stages. These include farm-gate (pre-harvest, harvest), post harvest
(marketing, storage, logistics) and food processing (with a focus on sectors like Dairy where a second White
Revolution is needed to actualize the full benefits of the first one). A well formulated Government policy,
with adequate focus on appropriate technology, PPP and other partnership models as well as creation of an
enabling environment for inviting private enterprise and capital are some of the ingredients that will drive
Agri Infrastructure investments in India.
Towards the foregoing, I am pleased to present the ASSOCHAM - YES BANK knowledge report AgriInfrastructure in India The Value Chain Perspective which highlights the key issues, challenges,
opportunities as well as suggests the way forward for development of Agri Infrastructure in India. The report
also captures some remarkable models which have been hugely successful in this sector. I am confident that
the contents of the knowledge report will provide important insights to policy makers, industry leaders and
stakeholders in the Agri-Infrastructure space, which will take us further along the road towards achieving food
security for the nation.
Thank you.
Sincerely,
Rana Kapoor
President, ASSOCHAM
AGRI-INFRASTRUCTURE IN INDIA
Contents
Introduction..........................................................................................................................................................................................7
Pre Harvesting Infrastructure....................................................................................................................................................... 11
Farm Mechanization........................................................................................................................................................................ 21
Storage, Warehousing and Logistics......................................................................................................................................... 31
Agricultural Marketing Infrastructure....................................................................................................................................... 45
Dairy Infrastructure......................................................................................................................................................................... 57
Food Processing................................................................................................................................................................................ 67
Development of Agriculture Infrastructure in India: Way Forward................................................................................ 79
References........................................................................................................................................................................................... 83
AGRI-INFRASTRUCTURE IN INDIA
Introduction
Background
Since independence, agriculture has been the mainstay of the country and is one of the prime contributors
for the Indian economy. The contribution of agriculture and allied services to Indian GDP in value terms grew
by 5.1 times from INR 1,47,216 crores in 1951-52 to INR 7,52,746 crores in 2012-13 (according to 2004-05
prices). But the faster growth of the services sector combined with slower growth rate in agriculture resulted
in the decline in the contribution of agriculture and allied services to the economy. The sector contribution to
the countrys GDP stood at 13.68% in the year 2012-13 while the same in the year 1990-91 and 1970-71 was
around 31.4% and 44% respectively.
Despite playing a key role in Indias economy, agriculture sector is suffering from major roadblocks out of
which agriculture infrastructure is one of the most prominent. The sector is heavily exposed to the vagaries of
weather conditions. Several issues like lack of proper irrigation and water management, low mechanization,
insufficient investments in the sector, low export orientation etc., are limiting the productivity of the farms
in the country. The share of the farmer in the consumer rupee is low and the supply chain is plagued by
intermediaries. There are huge amount of post harvest losses ranging between 25%- 40% of the production,
across the value chains, mainly due to lack of scientific management and storage facilities at right locations.
The food processing levels are substantially lower than most emerging and developed economies with only
6% of agricultural produce being processed properly. This shows us the need for interventions at different
levels with key focus on development of agricultural infrastructure.
Definition
Agricultural Infrastructure refers to any physical structure(s) which aid/ facilitate the competitiveness of
the productive agricultural sector, and the related organizational systems that support their planning,
procurement, design, construction, regulation, operation and maintenance.
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
and communication technology, wholesale, private and regulated markets), adds value to the domestic
economy (agro-processing and packaging facilities) and enables produce to move rapidly and efficiently from
farm-gate to processing facilities and on to wholesalers (logistics, transportation and storage).
AGRI-INFRASTRUCTURE IN INDIA
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Exhibit 1: Share of Public & Private Investment in Agriculture and Allied Sectors (INR crores)
AGRI-INFRASTRUCTURE IN INDIA
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
met by private seed companies in production of seeds of some of the major crops. The following table shows
the participation of private sector in the production of seeds of some of the major crops in the country.
Exhibit 3: Share of Seeds of Major Crops Supplied by Private and Public Sector Companies (2011-12)
Crops
Paddy
42.5
57.5
Wheat
53.4
46.5
Maize
94.7
5.2
Bajra
89.6
10.3
Jower
80.6
19.3
Pulses
30.5
69.5
Soybean
42.0
57.9
Groundnut
34.6
65.3
Sunflower
96.9
3.0
25.9
74.1
Cotton
96.5
3.4
Source: Indiastats
A number of schemes were launched by the government to promote creation of infrastructure facilities to
promote research development, to improve production, processing and storage of quality seeds, testing
laboratories for maintaining quality standards and distribution channels to ensure the reach. The main one is
the Central Sector Scheme for Development and Strengthening of Infrastructure Facilities for Production and
Distribution of Quality Seed. Under this scheme assistance through credit linked back-ended capital subsidy
is provided for 25% of project cost with a cap of INR 25 lakhs is provided for boosting seed production in the
private sector. Development of infrastructure facilities in the sector was also identified as one of the thrust
areas for National Seeds Policy, 2002.
Also two National level corporations namely National Seeds Corporation (NSC) and State Farms Corporation
of India (SFCI) were created and at the state levels State Seed Corporations (SSC) were established in the
sector. Under the Seed act, Central Seed Committee (CSC) and Central seed certification board are designed
as apex bodies related to seed sector. Also State seed certification agencies, state seed testing laboratories,
Central seed testing laboratories, Seed law enforcement authorities and National seed research and training
center have been set up to deal with all the matters relating to quality regulation of seeds.
AGRI-INFRASTRUCTURE IN INDIA
Andhra Pradesh
Assam
Bihar
Chhattisgarh
Delhi
Gujarat
Goa
Haryana
Himachal Pradesh
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Odisha
Puducherry
Punjab
Rajasthan
Sikkim
Tamil Nadu
Tripura
Uttar Pradesh
Uttarakhand
West Bengal
Total
93
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Substantial investments in R&D infrastructure have also been made by the private players in the seed
sector to enhance their product portfolio and cater to the needs of the expanding markets. Allowing FDI in
different sectors of agriculture attracted investments from private players into seed sector and majority of the
investments are used in establishing necessary infrastructure.
The sector faces several challenges like low seed replacement ratios, issues with quality of seeds and their
distribution. There exists a mismatch between the seed multiplication ratio from breeder to foundation
seed and from foundation to certified seeds. To tackle these challenges, efforts must be made by sufficiently
investing in building seed infrastructure. There is also a significant need to reinforce the seed production as
well as distribution systems and public and private player has to play a major role in this sector.
Irrigation
Across the nation, water shortages are triggering growing concern and an acceleration of efforts to increase
water use efficiency. Irrigation is the largest consumer of water resources and demand of water for irrigation is
increasing day by day. Time and amount of water application is very important for its growth. Every crop has
unique requirement of water at different stages from pre sowing till final harvest of the crop.
National Water Policy-2002 has also specified that Water is a scarce and precious national resource to be
planned, developed, conserved and managed as such, and on an integrated and environmentally sound basis,
keeping in view the socio-economic aspects and needs of the states. It is one of the most crucial elements in
developmental planning. As the country has entered 21st century, efforts to develop, conserve, utilize and
manage this important resource in a sustainable manner, have to be guided by the national perspective.
AGRI-INFRASTRUCTURE IN INDIA
In terms of investment by government, major & medium irrigation comprises of 57% of total investment
in irrigation which covers only 35% of total irrigated area. Also the irrigation infrastructure in the country
is ageing. More than 60% of the dams are about two decades old. Canals and tube wells require annual
maintenance apart from regular replenishments in constant allocated funds. Again there are spillover costs
and time overrun from previous five year plan to next plan which causes delay and financial losses.
Ground water roughly contributes 60-65% of total irrigated area in the country. Apart from being individually
managed source, ground water is also more efficient form of irrigation, with crop yields per cubic meter of
water being 1.2-3 times higher than surface irrigation. Researchers have predicted an acute water shortage in
near future. By 2050, about 22% of geographic area and 17% of the population will be under absolute water
scarcity. In 2010, per capita availability of water was 1,704 cubic meters and is projected to slide down to 1,235
till 2050. Also ground water quality is affected by arsenic, iron, fluoride content, fertilizer and pesticide use and
saline water intrusion in coastal regions.
The department of Agriculture & Co-operation has been implementing programs such as National Watershed
Development project for Rainfed Areas (NWDPRA) and Watershed Development Project in Shifting Cultivation
Areas (WDPSCA). Till the end of third year of 11th five year plan, around 20.81 million ha area has been
developed under these programs. The projects under Integrated Watershed Development Program (IWDP)
are being implemented in 470 districts of all 28 states throughout the country. For optimum use of resources,
sustainable outcomes and integrated planning, Drought Prone Area Program (DPAP), Desert Development
Program (DDP) and Integrated Watershed Development Program (IWDP) were merged to form Integrated
Watershed Management Program (IWMP).
National Water Mission has set a target of improving water use efficiency by 20% by the year 2017. NWM
stresses upon achieving this target by ensuring improved irrigation efficiency both on the demand as well as
supply side.
Strategies for Improving Water Use Efficiency
Irrigation Management: Irrigation supplies should be more reliable and demand based. The charges for
irrigation water should be on volumetric basis
Managing cropping pattern: The cropping pattern in a command area is planned or modified on the basis
of study of soils, climate, rainfall, existing cropping patterns and marketability of the produce.
Increasing awareness through training and education: Information about optimum irrigation needs and
timing of irrigation about different crops. Thus creating awareness among farmers will help in minimizing
wastage and improving irrigation efficiency.
Modernization and Renovation of existing irrigation projects: The structural deficiencies, lack or inadequacy
of storage, loss of water due to seepage from unlined canals, distributaries and field channels are some
of the most usual problems faced by the existing structures. Thus irrigation projects for improvement of
existing irrigation infrastructure must be given priority.
On Farm Development Works: This work includes maintenance/ renovation of field channels/ water
courses, surface drainage system, field channel protection works etc.
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Due to acute water shortage in some parts of the country and over reliance on rainfed agriculture, it is
imperative to switch to micro irrigation system in India. Low cost drip and sprinkler irrigation system are being
used widely now days by farmers which help to increase their produce by effectively using water and fertilizer,
also decreasing on incurred input cost.
Micro Irrigation and Drip Irrigation
Irrigated area in India consists of about 36% of the net sown area and agriculture sector accounts for 83% of
all water uses, rest being used for domestic purposes, industrial and energy sectors and other consumers. A
considerable loss in water conveyance and application occurs in traditional irrigation method which is being
minimized by adopting micro irrigation method (drip & sprinkler system).
In Sprinkler method of irrigation, water is sprayed into the air and allowed to fall on the ground surface and is
developed by flow of water under pressure through small orifices or nozzles. The amount of irrigation water
required to refill the crop root zone can be applied nearly uniform at the rate to suit the infiltration rate of
the soil by careful selection of nozzle sizes, operating pressure and sprinkler spacing. Drip Irrigation involves
technology for irrigation plants at the root zone through emitters fitted on a network of pipes (mains, submains and laterals). The emitting devices could be drippers, micro sprinklers, mini-sprinklers, micro-jets,
micro-sprayers, foggers etc. designed to discharge water at predetermined rates.
Advantages of Micro Irrigation Methods
Increased Yield
Early Maturity
Water & Fertilizer Saving
Increased Fertilizer Use Efficiency by crops
Energy and Labour saving
Irrigation of Marginal and Undulated land
Reduced/ Controlled Weed growth
Lesser incidence of Disease and Pests
Easier Inter-culture operations
Poor quality and some saline water can also be used effectively
Waste and Fallow land can be brought under irrigation
Due to growing significance of drip irrigation and its relevance in diverse agro climatic conditions and variety
of crops, government has also under taken measures to promote drip irrigation to farmers and producers. Low
cost drip and sprinkler irrigation system are being used widely now days by farmers which help to increase
their produce by effectively using water and fertilizer, also decreasing on incurred input cost.
10
AGRI-INFRASTRUCTURE IN INDIA
11
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
12
AGRI-INFRASTRUCTURE IN INDIA
The ICT kiosks link the farmers to the consortium and support the community information space. Farmers are
quite prepared to pay for useful information, such as local weather forecasts and customized solutions to their
day to day problems. Each Kiosk has a computer with digital camera, continuous power supply, printers, video
conferencing facilities and a portal for local intranet network. ICTs have the potential to reach farmers to the
last mile with timely and accessible contents but the contents delivered has more relevance if its localized
and context specific which have important impacts on farm management. ICT Kiosks can help the capacity
building process in a financially viable & socially acceptable way if it is designed in a way to promote two way
communications (from researcher to farmer and vice versa)
The Information & Communication Technology in agriculture extension includes:
Mobile Telephony
Video Shows
Information Kiosks
Web Portals
Rural Tele centers
Video Conferences
Offline Multimedia CDs
Innovative Community Radio & Television Programs
Open Distance Learning etc.
There are two pre-requisites to implement effective technical services. First, analyzing the technical capacity
(infrastructure, connectivity, affordability etc.) and second being the staff capabilities in software development,
IT, local government offices or research centers. ICT service will include ICT policy, rural connectivity, and user
fees; the information and communication needs of potential stakeholders; existing communication channels
and knowledge sources; lessons related to previous information dissemination and networking efforts; farm
diversity; and demographic, political and environmental demands.
13
AGRI-INFRASTRUCTURE IN INDIA
2. Farm Mechanization
Indian agriculture, in the recent times, is facing two pronged crisis of rising farm wages and scarcity of farm
labour. The migration of farm labour to industrial and urban centers for employment opportunities and
secondly due to policy interventions like MNERGA, launched in 2006, has resulted in escalation of farm wages.
The farm population has also nearly shrunk by 8-9 million during 2001-2011.
Exhibit 6: Average Daily Farm Wages and Farm Employment (in INR)
Source: Ministry of Labour & Employment and National Sample Survey Organization (NSSO)
The average farm wages shown above is calculated by averaging daily wage cost of agricultural operations
such as ploughing, sowing, weeding, transplanting, harvesting, winnowing and threshing. The average daily
farm wages in India is showing an increasing trend over the years and the participation of labour in farming
activities has shown a decreasing trend, with participation into non-farm activities like manufacturing, trade,
hotel & restaurant, construction, transport, storage & communication, mining and other services.
15
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
This has resulted in renewed attention on the Farm Mechanization, as it will be growth driver of agricultural
productivity. Farm mechanization plays an important role in facilitating agricultural growth through efficient
utilization of inputs. Farm mechanization ensures timeliness of agricultural operations, reduces cost of
production, as well as reduces drudgery in carrying out various agricultural operations.
Exhibit 7: Evolution of Agricultural Machinery
Processes
Traditional Practice
Current Practice
Land Development
Tillage
Seedbed preparation
Tractors
Mould Board Plough
Power Tiller
Dibblers
Seed Drill
Zero Till Seed-cum-Fertilizer Drill
Weeding
Power Weeder
Plant Protection
Blower
Power Spray
16
AGRI-INFRASTRUCTURE IN INDIA
The various mechanized farm equipments used for farming activities are:
Exhibit 8: Farm Machinery Major Components
Savings
Saving in Seeds
Saving in Fertilizers
Increase in Cropping Intensity
Saving in Time
Reduction in Manual Labour
Overall Increase in Farm Productivity
Percentage
15-20 %
15-20%
5-20%
20-30%
20-30%
10-15%
17
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Agricultural Implements
Reapers
Agricultural Tractors Wheeled
Cultivator
Power Operated Thresher
Trailers
Seed Fertilizer Drill
Disc Harrow
Leveller
Mould Board Plough
Combine Harvester-Self Propelled
Potato Diggers
Agricultural Power Tillers
Sugarcane Crusher
Crawler Tractor
Rice Planter
Rotovator
Maize Sheller
Combine Harvester-Tractor Operated
Planter
18
AGRI-INFRASTRUCTURE IN INDIA
Industry Size
Indian Farm Equipment contributes to nearly 10% to the global farm mechanization industry and exports
have been significantly rising in recent years. The industry is growing at a CAGR of 4-5%.
Exhibit 11: Market Size of Farm Equipment
Exhibit 12: Projection for Production and Export of Agricultural Machinery and Implements in India
Export
(in nos.)
Tractor
6.56
80,000
Power Tiller
0.65
Combine Harvester
0.1
100
Power Thresher
0.5
2,000
Rotavator
0.47
500
0.71
2,000
Sprayers
8.5
8.5
1.5
1,000
Agriculture Trailers
2.18
3500
0.25
3500
19
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Thresher
Rotovator
Self Propelled
Vertical
Conveyor
Reaper
Zero Till Seed
Drill
Multi Crop
Planter
Nature of Market
Price sensitive market; sales
dependant on government
subsidy and there is no subsidy
on tractors above 30 HP
20
Trends
Demand would grow for the
less than 50 HP tractors for
smaller holdings of 7-8 Acres.
The 60-65 HP segment would
grow due to contract farming
Size of the combines should
be according to farm plots
and in India very simple
machines are required with
right pricing
Great scope of education and
training to farmers to explain
to them more about the
product
AGRI-INFRASTRUCTURE IN INDIA
Nature of Market
Trends
Power Tiller
Laser Land
Leveller
Rice
Transplanter
Power Spray/
Manual Spray
Power Weeder
Approximately
60,000-70,000 units
annually growing at
10%
Approximately 2,000
units annually
Tractor Industry
The penetration of tractors in India has grown steadily post the green revolution of the 1970s and the tractor
population is estimated to have risen to 3.99 million units. The tractor industry is expected to reach INR 320330 billion by 2014-15, at a compounded annual growth rate of 8-10%. Mahindra and Mahindra, TAFE and
Escorts are the major tractor manufacturers in India with a market share of 73% of tractor sales. Tractors are
classified as small, medium and large, based on the power delivered by the engine, i.e., horse-power (HP). The
average size of tractors in India is 35 HP.
21
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Exhibit 14: Tractor Sales and Market Segmentation of Major Companies in India (in 2012-13)
22
AGRI-INFRASTRUCTURE IN INDIA
Government Policy
The Ministry of Agriculture is also implementing various major schemes for promotion of farm mechanization
as under:
Macro Management of Agriculture (MMA)
Rashtriya Krishi Vikas Yojana (RKVY)
National Food Security Mission (NFSM)
National Horticulture Mission (NHM)
Promotion and Strengthening of agricultural mechanization through training, testing and
demonstrations.
Apart from these, Government is considering a Sub-Mission on agricultural Mechanization (SMAM) for
promoting farm mechanization during 12th Five Year plan. To promote farm mechanization amongst small
and marginal farmer and to facilitate custom hiring facility, the Government is also considering providing
assistance on procurement of agricultural machinery to establish custom hiring centres, to individual
Entrepreneurs, Self Help Group (SHG)/ User Groups (UG) of farmers, Cooperative Societies etc.
23
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
SMAM puts Small and Marginal Farmers at the core of the interventions with a special emphasis on reaching
the unreached. Besides, the Mission also proposes to cater to adverse economies of scale by promoting
Custom Hiring Services through rural entrepreneurshipmodel. The Mission will aim at catalyzing an
accelerated but inclusive growth of agricultural mechanization in India by way of:
Increasing the reach of farm mechanization to small and marginal farmers and to the regions where
availability of farm power is lower;
Offsetting adverse economies of scale and higher cost of ownership of high value farm equipments
by promoting Custom Hiring Centres for agricultural machinery;
Passing on the benefit of hi-tech, high value and hi-productive agricultural machinery to farmers
through creating hubs for such farm equipments;
Promoting farm mechanization by creating awareness among stakeholders through demonstration
and capacity building activities;
And ensuring quality control of newly developed agricultural machinery through performance
evaluation and certification at designated testing centers located all over the country.
24
AGRI-INFRASTRUCTURE IN INDIA
Warehousing
Warehousing accounts for the largest share of around 6-7% in the logistic segment in India. Warehousing plays
a very crucial role in strengthening agricultural supply chain, ensuring food security and price stabilization. It
solves the problem of glut & scarcity by maintaining uninterrupted supply of agricultural commodities in off
season. It is backbone for developing trade & commerce and agro processing industry as these cant thrive
without having a strong warehousing system. Efficient and strategic storage system reduces the wastage on
one hand, while on other helps in building JIT supply chain and plugs in demand supply gap.
Current scenario of Warehousing
The grain storage capacity in India has not been keeping pace with the marketable surplus and during the
peak marketing season around 30 to 40 % of the grain is stored in an unprofessional manner. As the MSP for
various commodities have been better than the market prices in most of the cases, the Government share in
purchase of food grain like wheat, rice, mustard seed, barley, bajra, maize has substantially increased over the
years.
25
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
According to a latest estimates, the warehousing capacity available in India, in Public, co-operative and private
sector is about 112.36 million MT. Another 35 million MT of warehousing capacity is required during the 12th
five year plan period for the storage of all major crops highlighting the huge demand supply mismatch.
The warehouses in our country have been built following the traditional norms and without proper specification.
They lack in optimal size, adequate design, ventilation facility, inventory management and storage system.
Even some of the modern warehouses dont meet international standards.
Industry Structure
Warehousing industry is highly fragmented in India with organized segment having an estimated share of
almost 90% of total ware house capacity. In terms of value, market size of warehouse in FY 09 was INR 19,200
crores and it grew to INR 22,810 crores in FY 11 and is expected to grow to INR 35,100 crores in FY 16 with a
CAGR of 9%. In this, only 12% accounts for agro and the remaining is industrial warehousing. Warehousing
space was 1.4 billion square feet in FY 09 and it grew to 1.52 billion square feet in FY 11 and expected to
grow to 1.84 billion square feet till FY 16 with a CAGR of 4%. In this, only 29% accounts for agro and 71% for
industrial warehousing. The agricultural warehousing requirement is projected to grow to 0.61 billion sq ft by
2015-16 from an estimated 0.52 billion sq ft in 2012-13. Currently, 70% of the warehousing space is owned by
government agencies.
Exhibit 15: Current status of warehousing capacity in India
Source: Warehousing Development and Regulatory Authority (WDRA), YES BANK Analysis
26
AGRI-INFRASTRUCTURE IN INDIA
Exhibit 16: Gap in Storage Capacity with FCI (in lakh MT)
Source: Report of the CAG on Storage Management and Movement of Food Grains in Food Corporation of India (FCI)
27
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Silo Storage
Silos are usually constructed of steel or reinforced concrete and comprise high cells of various cross-sections
placed side-by-side. They have inlets and hoppers for loading and unloading respectively. Mechanical
management is also provided for loading and unloading in case of large capacity silos.
In India, bulk storage metallic silos were erected in the year 1958, in Hapur, Uttar Pradesh. Food Corporation
of India (FCI) is having its own silos with a capacity of 4.62 lakh tonnes which were set up in the years 19601982. Out of this capacity, 1.10 lakh tonnes are currently being utilized. Under the national policy of bulk
storage and handling, a capacity of 5.50 lakh tonnes has been created through silo structure out of which 2
lakh tonnes is at Moga in Punjab and 2 lakh tonnes at Kaithal in Haryana.
Some of the private players have also initiated installation of Steel Silos such as Adani Agri Logistics and
LT Foods. The silos, set up by private partner Adani Agri Logistics Ltd. are located at Chennai (Tamil Nadu),
Coimbatore (Tamil Nadu), Bangalore (Karnataka), Navi Mumbai (Maharashtra) and Hooghly (West Bengal).
28
AGRI-INFRASTRUCTURE IN INDIA
The transportation of foodgrains from Moga and Kaithal takes place in bulk in customized wagons which are
then procured by the investor i.e. Adani Agri Logistics Ltd.
Food Corporation of India (FCI) has floated a tender for building giant and ultra-modern steel silos in several
parts of the country for modernization of its food grain logistics. The silos will be operated under Design,
Build, Finance, Own and Operate (DBFOO) model for a total of 17.50 lakh tonne capacity in 36 locations across
in nine states under the public-private partnership (PPP) mode.
Successful Silo Projects in PPP Mode India
Punjab Silos LT Foods: In Punjab, which produces more food than any other state in India (22%
of the national total) had a shortage in storage capacity of seven million tons of foodgrains storage
during the period. In response, the state government launched a pilot public-private partnership
to allow a private firm to build, own and operate a 50,000 metric ton storage facility, using modern
technology and inventory management methods. LT Foods, a leading exporter of basmati rice with a
strong distribution network, won the 30 years concession to build and operate modern, temperature
controlled steel grain silos with a capacity of 50,000 MT. the facility enhances Indias ability to meet its
food security objectives by increasing storage capacity, reducing losses and increasing the efficiency
of purchasing and distributing grain. If successful, the pilot will be expanded to add capacity of 2.5
million MT in Punjab alone.
FCI Adani Agri Logistics: In a pilot project during 2012, FCI had entered into a BOO agreement for
20 years with Adani Agrilogistics, an arm of the Adani Group, for setting up two silos with a capacity
of more than 500,000 tonne at Moga in Punjab and Kaithal in Haryana in 2005. The company has since
invested INR 650 crores for building the two-base silos and five-field depots (at Chennai, Coimbatore,
Bangalore, Navi Mumbai and Hooghly).
Madhya Pradesh: Madhya Pradesh Warehousing & Logistics Corporation (MPWLC) had in Dec 2013,
awarded contracts for eight locations for set up of Steel Silos, each of 50,000 MT each for development,
operation and maintenance of Silos and storage of wheat through Public-Private Partnership (PPP) on
Design, Build, Finance, Operate and Transfer (DBFOT) basis.
Silo Bags
Till now, grain storage capacity enhancement has been in shape of flat storage or godown storage, in which
bulk, handling is not feasible. Steel silos being costly were not taken up aggressively. Bulk handling will be
widespread in the near future. Silo Bags offer the most efficient, economical and bulk handling system for
uncertain storage requirements which will be known only during the harvesting season. Silo bag storage
technology which was introduced in the country for the first time in 2011 is very much relevant to Indian
conditions as it promotes bulk handling at economical cost; Moreover, it is a mobile, flexible & quick storage
solution. Currently over 2 lakh MT of storage has been set up in this system in Madhya Pradesh, Rajasthan and
Maharashtra.
29
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Silo Bag is a hermetic storage technique, where the oxygen is removed from the bag, as it suppresses
the generative capacity of insects, pest and fungi. It is made of polyethylene, sized in 60/75 meters
long and 2.75 meters in diameter designed for storing grains in the open complex. Commodities such
as Wheat, Maize, Mustard, Barley, Soya and others can easily be stored and their quality and quantity
will remain intact from two to three years.
Exhibit 17: Comparison of Warehouses, Stand alone Silo and Silo Bags
Warehouse
Capex
Large one time capex, does not Large one time capex, does not Can take care
suit varying requirements
suit varying requirements
requirements
of
varying
At least 2 years
One Month
Partially Possible
Always Possible
Mechanized
Mechanized
Fixed
Fumigation Required
No fumigation required
Insignificant
Zero loss
Not Possible
Possible
30
AGRI-INFRASTRUCTURE IN INDIA
Agri Logistics
Road & Rail Transportation
Although India boasts of being the second in the world in terms of farm output, supply to end consumers
is highly fragmented and inefficiencies are present due to presence of chain of intermediaries, inadequate
infrastructure, logistics, storage and transportation facilities.
Railways are preferred for foodgrain transportation while road transport is also used extensively due to lack
of adequate rail infrastructure as well as the need for movement of small lots over smaller distances. Even the
Food Corporation of India (FCI) is dependent on roads for last-mile and secondary transportation.
Exhibit 18: Percent share in Foodgrains Movement (2006-07 to 2012-13)
In the case of FCI, 80-85% of the total produce from the local markets is carried by rail to their godowns or
warehouses.
31
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Overall
Movement
Movement
Ex-North
(in MT)
Rail
Road
Total
Inter
Intra
Total
2006-07
203.3
18.5
221.8
175
1.6
176.6
2007-08
204.0
17.8
221.8
178
1.9
179.9
2008-09
204.6
20.6
225.2
167.4
2.2
169.6
2009-10
249.2
26.7
275.9
188.5
0.8
189.3
2010-11
279.6
25.6
305.2
221.2
3.3
224.5
2011-12
303.2
24.5
327.7
201
7.5
208.5
Foodgrains are brought to the nearest of the mandis from surrounding farms generally by roads. FCI has
around 1,820 storage hubs across India, which helps limit lead distances (from FCIs facilities to the public
distribution centres) to 100-150 km.
Various challenges encountered are:
Transportation of foodgrains entails high first- and last-mile costs due to the presence of several small
distributors and farmers
Cost of loading/unloading is higher, as it is done manually.
Storage facilities at railways are inadequate, and consignments often get damaged due to humidity
or rain.
There was a shortfall in the supply of rakes by the railways thus affecting procurement of foodgrains
for FCI. The shortages in rakes ranged between 6 to 17% during the six year period from 2006-07
to 2011-12. According to computer based Linear Programming developed by FCI exclusively for ExNorth the compliance levels (shortest route between dispatch & receipt centers involving least cost)
are as low 49%. Inefficiencies in movement of food grains majorly diversion of rakes, payments for
demurrage etc.
Transit & Storage losses of foodgrains amounting to transit loss of almost INR 100 crores and storage
loss of INR 41 crores for FCI between 2006-07 to 2011-12.
Air Cargo Transportation: The demand for air cargo transportation has increased significantly over the last
few years, because product life cycles have shortened and demand for rapid delivery has increased. Efficient
supply chain management particularly in case of perishables therefore offers significant benefits including
lower inventory and intermediary costs; and simplicity in order placement, delivery and management of
suppliers and customers. These benefits directly contribute to making businesses more competitive.
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AGRI-INFRASTRUCTURE IN INDIA
Perishables Air Cargo Facilities: The composition of trade in fresh agro-food products is shifting towards
horticultural products, fruits and vegetables, fish, and spices which have led to an increase in demand for
airfreight to meet the delivery times. The quality of logistics is an essential element of competitive advantage.
Cost is equally important and provides an advantage for countries that already have well-developed air freight
routes, whether through scheduled freighters or space on passenger flights.
Cool chain processes effectively safeguard product quality and maximize shelf life, thereby enhancing
profitability. But currently there is lack of sufficient cold storage capacity for perishables cargo in most of the
major cargo handling airports in India. Currently airports in all the four metropolitan cities i.e. Delhi, Mumbai,
Chennai & Kolkata have centre for perishables cargo most of which are managed by Airports Authority of
India. In addition perishables cargo facilities are available in Amritsar, Kochi & Ahmedabad airports.
AAI has also set up perishables centre at Guwahati, Lucknow, Coimbatore airports. GMR Hyderabad
International Airport too has set up a Centre for perishables cargo with a handing capacity of 12,000 tonnes.
Most of the facilities are funded with a subsidy component from APEDA (The Agricultural and Processed Food
Products Export Development Authority) and investment by AAI and other private operators for airports to
cover for land cost and infrastructural facilities like roads, freighter bay and land.
Benchmarked against these best practices in the world, it is observed in most Indian airports there is need
to focus more on these areas so that handling of e.g. agricultural and other perishables. Most of the facilities
present are highly inadequate in terms of handling of perishable produce. Even now many airports do not
have any perishables cargo centres. India should aim to benefit from the benefits of cold chain logistics for air
cargo operations like other countries.
Perishables Handling Area Dubai Cargo Mega Terminal
Possibly the most advanced cold storage is the Dubai Flower Center, a multi-storey facility located
next to the Dubai Cargo Village. It is designed for the storage and processing of flowers imported
primarily from Africa for both the local market and for distribution to the region. The initial phase on
this center is designed for an annual throughout of up to 1,80,000 tonnes of flowers. The perishable
handling area in Dubai Cargo Mega Terminal is about 4,623 square metres floor space, with 3,927
square metres of 218 individual cells of temperature zones.
Cold Storage
The Cold Chain Industry in India comprises majorly of two segments i.e. temperature controlled warehouses
and temperature controlled vehicles. The total industry size is estimated at INR 150-160 billion in 2012-13
(CRISIL Research). 88-90% of market share is of the temperature controlled warehouse and balance 10-12% of
temperature controlled transportation. The number of reefer vans (2012) in India was estimated to be 7,000
units.
33
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
34
AGRI-INFRASTRUCTURE IN INDIA
35
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Year
Before 2004
2,607
54.02
2004
4,748
195.52
2007
5,316
233.34
2009
5,381
244.5
2010
5,837
269.03
2012
6,156
286.82
2012 (Sept.)
6,307
301.10
Source: National Centre for Cold-chain Development (NCCD) and Directorate of Marketing and Inspection
Over the years, there has been a steady growth both in terms of number of cold storage units as well as capacity
created. During 2005-09, the number and capacity of cold storages in India increased at a CAGR of 3.01%
and 5.66% respectively. Out of the 301 lakh MT cold storage capacity, nearly 140 lakh MT has been created
between 2000-2011 on account of interventions by National Horticulture Board (NHB), National Horticulture
Mission (NHM), Horticulture Mission on
Exhibit 24: Region-wise Spread of Cold Storages in India (2012)
North East and Himalayan States (HMNEH),
Agriculture and Processed Foods Export
Development Authority (APEDA), Ministry
of Food Processing Industries (MoFPI)
Department of Animal Husbandry (DAHD).
As per report of the Task Force on
Development of Cold Chain in India,
the all India capacity utilization is
around 48% while Andhra Pradesh has
the highest capacity utilization at 92%
followed by Karnataka 60%, Maharashtra
(55%), Rajasthan (52%), Gujarat (51%),
Uttar Pradesh (46%) and Punjab (43%).
Majority of states have capacity utilization
lower than national average which is due
to significant number of potato stocking
cold storages in these states which remain
closed during the lean seasons. It is higher
in Andhra Pradesh because of storage of
red chilies, usually stored round the year.
36
AGRI-INFRASTRUCTURE IN INDIA
Storage units in Maharashtra, parts of Gujarat and the countrys southern states are designed for storing
commodities such as dairy products, fruits, processed fish and meat products, and seasonal vegetables.
Taking into consideration the Geographic spread majority of the cold storages are located in and around
potato growing areas.
Reefer Vans (Refrigerated Transport)
In India, unlike Western Europe or USA, cold chain distribution or refrigerated transport is still at a nascent
stage. When compared with the world standards for cargo movement through cold chain, India is still far
behind. The percentage of movement of fruits and vegetables through cold chain in USA is around 80 to 85%,
Thailand is 30 to 40% while it is negligible in India.
Currently, most of the refrigerated transport segment is fragmented with large number of small, non integrated
private players focusing on select commodities /regions. Their key assets comprise of modified trucks with
additional insulated fixed containers and air conditioning units. Currently there are about 6,500-7,000 Reefer
vans in India. Market studies have revealed that about 40% of the vehicles are for long haul movement while
60% vehicles are for short haul movement. Also, 70% of revenue in the market is from primary movement and
the balance 30% is from secondary movement.
Market size of the Refrigerated Transportation segment is expected to increase to INR 19-21 billion in 201516 from INR 12-14 billion in 2012-13, a CAGR of 16-18%. Confectionery, ice creams, meat and fish products,
processed foods and pharmaceuticals are expected to be key growth drivers.
Exhibit 25: Share of Commodities in Refrigerated Transportation Space
37
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
38
AGRI-INFRASTRUCTURE IN INDIA
39
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
40
AGRI-INFRASTRUCTURE IN INDIA
Stage of Reform
States/Union Territories
Reforms done for Direct Marketing; Contract Farming Andhra Pradesh, Arunachal Pradesh, Assam, Goa,
and Markets in Private/Cooperative Sectors
Gujarat, Himachal Pradesh, Jharkhand, Karnataka,
Maharashtra, Mizoram, Nagaland, Odisha, Rajasthan,
Sikkim, Tripura and Uttarakhand .
Partial reforms
NCT of Delhi, Chhattisgarh, Haryana, Madhya Pradesh,
Punjab and Chandigarh
States/ UTs where there is no APMC Act and hence Bihar, Kerala, Manipur, Andaman & Nicobar
no reforms
Islands, Dadra & Nagar Haveli, Daman & Diu, and
Lakshadweep.
States/ UTs where APMC Act already provides for the Tamil Nadu
reforms
States/ UTs where administrative action is initiated Meghalaya, Jammu and Kashmir, West Bengal,
for reforms
Pondicherry and Uttar Pradesh.
Source: Ministry of Agriculture
The number of regulated agricultural markets stood at 7,190 in March 2012 as compared to just 286 in 1950.
The average area served by these regulated markets comes close to 457 sq. km which is considerably higher
than 80 sq. km that has been recommended by the National Farmers Commission. Accordingly there is a huge
deficit of regulated markets in India which can efficiently handle the marketable surplus.
There also exists an uneven spread of these regulated markets within states and also within districts of each
state. For example average area served by each regulated market varies from 118 Sq. Km per market in Punjab,
130 in West Bengal, 156 in Haryana, 304 in Andhra Pradesh, 347 in Assam, 349 in Maharashtra, 378 in Karnataka
and 389 in Uttar Pradesh. States like Himachal Pradesh, Meghalaya and Sikkim, are among those where the
average area served by a regulated market is more than one thousand sq.km.
Exhibit 27: Agricultural Produce Markets in India (As on March 2012)
West Bengal
Maharashtra
Uttar Pradesh
Bihar
Punjab
Total Markets
(wholesale + Rural
primary)
7,204
4,381
4,048
1,794
1,771
Total Regulated
Markets
(principal +
submarket
yards)
685
881
613
Act Repealed
425
41
Area covered
Requirement of
by regulated
Markets
markets (sq. km)
130
349
389
118
1,109
3,846
2,982
1,177
630
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Madhya Pradesh
Odisha
Kerala
Karnataka
Assam
Chhattisgarh
Tamil Nadu
Andhra Pradesh
Jharkhand
Rajasthan
Tripura
Haryana
Gujarat
Nagaland
Meghalaya
Manipur
Mizoram
Arunachal Pradesh
Himachal Pradesh
Uttarakhand
Delhi
A&N Islands
Goa
Jammu & Kashmir
Sikkim
Puducherry
Total Markets
(wholesale + Rural
primary)
1,567
1,548
1,362
1,237
1,140
1,134
977
905
804
746
638
478
334
193
123
118
115
85
77
66
30
28
28
24
19
9
Total Regulated
Markets
(principal +
submarket
yards)
521
314
Act not enacted
507
226
184
292
905
201
434
21
284
400
18
2
Act not enacted
131
50
58
18
0
8
1
9
Area covered
Requirement of
by regulated
Markets
markets (sq. km)
592
496
378
347
734
445
304
397
789
499
156
490
921
11,215
639
1,113
963
82
463
7,096
55
3,854
1,946
486
2,397
980
1,689
1,626
3,438
996
4,278
131
553
2,450
207
280
279
264
1,047
696
698
19
103
46
2,778
89
6
42
AGRI-INFRASTRUCTURE IN INDIA
and open auction platforms exist in only 67% of the regulated markets. Drying yards are also an essential
feature of regulated markets because some commodities when brought for sale contain higher moisture than
desired level and hence require drying. Such drying space is available only in 25% of the markets. Platform
in front of shops exist in 63% of the markets. Cold storage units are needed in the markets where perishable
commodities are brought for sale. The cold storage units exist only in 9% of the markets and grading facilities
exist in less than 33% of the markets. The basic facilities viz. internal roads, boundary walls, electricity, loading
and unloading facilities and weighing equipment are available in more than 80% of the markets.
Exhibit 28: Status of facilities in regulated markets
43
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
44
AGRI-INFRASTRUCTURE IN INDIA
the Terminal Market (the hub) is linked to a number of collection centres (the spokes). The spokes are
conveniently located at key production centres to allow easy farmer access and the catchment area
of each spoke is based on meeting the convenience of farmers, operational efficiency and effective
capital utilization of the investment.
Electronic auctioning is an important aspect for transparent transactions in a terminal market
Facility for direct sale to exporter, processor and retail chain network under a single roof.
Storage infrastructure thus offering the choice to trade at a future date.
A one-stop-solution that provides transportation support, cold chain support, facility for storage
(including warehouse, cold storage, ripening chamber), facility for cleaning, grading, sorting,
packaging and palletization of produce, extension support and advisory to farmers.
The Terminal Market would be built, owned and operated in a Public-Private-Partnership Mode by a
Corporate/ Private/Co-operative either by itself or through adoption of an outsourcing model.
Though several states in India have announced MTM projects through PPP model, no major progress has
been achieved so far due to slow pace of marketing reforms. Implementation and successful operation of this
path-breaking initiative would necessitate State Government support and a conductive regulatory and legal
framework.
Unity Infra projects and Deepak Fertilizers and Petrochemicals (DFPCL) will set up Indias first ultra
modern terminal market in Mumbai marking the entry of corporates into agricultural marketing, a
sector currently dominated by the government.
45
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
episode clearly states lack of regulation in the system. A commodity spot exchange is neither allowed to offer
forward contracts nor settle contracts beyond 11 days. However, NSEL was doing both. After a few warnings
by the concerned department, a notice was sent to the exchange and the settlement cycle of contracts was
shortened resulting in a situation where absence of collateral to back the commodities exposed the flaws in
the system. This is one instance of wrongful intentions of a specific organization and not a comment on the
electronic markets functioning, which with due systems and processes can ensure such instances do not
occur again.
Private Mandis
Private Mandi is a relatively new concept in India. Conventionally only the public sector set up mandis in the
state, however with reforms coming in, even private players are now trying their hand at setting up state of
the art infrastructure for the farmers. Private Mandis shall ensure transparent pricing, correct weighment,
recording of all transactions and good facilities to buyers as well as sellers. However, they are likely to face stiff
challenges like
Diverting the flow of goods to the private mandis
Establishing new relationship with farmers
Attracting traders and buyers
Providing competitive prices
Competing with the existing system of mandi
Farmers views that price realization in a private mandi would not be as high as the traditional mandi
Resistance of adhatiyas to move out from existing system
Existing strong relationship between farmers and adhatiyas
46
AGRI-INFRASTRUCTURE IN INDIA
The decision to delist fruits and vegetables from their Agricultural Produce Markets Committee
(APMC) Act by January 15, 2014 from all Congress ruled states shall give free choice to farmers to
sell their produce. The move to remove middlemen is seen as an effective way to check hoarding
and price rise. Presently, farmers have to sell at mandis that is normally a closed group of traders
who indulge in cartelization. It would allow people, be it individuals or traders, to buy directly from
the growers and would end the exploitation of farmers. Farmers are forced to sell their produce at
lower price determined by a cartel of traders in the mandis. The Congress-ruled states will also initiate
steps to open fair price shops, government-owned or run by womens self help groups, to sell fruits,
vegetables and eggs.
Challenges in Marketing of Horticultural Crops
Horticultural crops are highly vulnerable to market fluctuations
Producers are unaware of the demand patterns
Complications due to perishable nature of the crop which often leads to distress sale by farmers
Absence of storage facilities like cold storage/CA chamber
Lack of supporting infrastructure like connecting roads, power etc.
Absence of processing infrastructure
Available cold storages meant for single commodity only (majority for potatoes)
Lack of quality consciousness amongst farmers due to lack of price differential for better quality
To capitalize on Indias strengths, the Government should ensure adequate infrastructure for storage as well as
processing. The frequent occurrence of either glut or scarcity in the market is due to lack of planning by farmers
and an unorganized environment where the grower has no control. Increased post-harvest management can
help in regulating and stabilizing demand and supply. This alone can ensure optimum returns to the farmer.
Most crops are harvested within a short span of two months. A good post-harvest infrastructure can ensure
that the produce is available to consumers across the year in quality that is acceptable to them. Also, the
government should not overlook the fact that providing subsidies for setting up cold storages or food parks
alone is not sufficient unless supporting infrastructure like power availability, connectivity to markets, water
supply etc. is in place.
47
AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Most of the regulatory markets lack facilities for handling of produce like less space for auction
platform, inadequate number of shops and godowns in the premises etc. thereby reducing the
effective participation of traders
Only around 7% of the total quantity sold by farmers is graded before sale. This is due to lack of
facilities as well as lack of incentives for growing superior quality produce.
There are about 22,500 rural periodic markets in the country. The minimum necessary infrastructural
facilities do not exist in these rural periodic markets
Licensing system in APMCs which makes it compulsory to own a shop/godown in the regulated
markets to own a license has led to the monopoly of these licensed traders acting as a major entry
barrier in existing APMCs for new entrepreneurs thus, preventing competition.
High market fee is another challenge that needs to be overcome. In some states the total market
charges including market fee, commission, purchase tax, weighment charges etc. works out to be
around 15%. Also, the market charges vary from state to state and there is no standardization on these
charges.
The long gestation period in agriculture marketing infrastructure projects and the seasonality of
agricultural produce which affect the economic viability of the projects is a deterrent for investments
in the sector.
ITC e-Choupal: Agri Infrastructure
For Empowering Farmers, Raising Productivity and Incomes
Indian agriculture is a paradox of immense proportions. Despite abundant arable land, diverse
agro-climatic zones, hardworking farmers, farm productivity in India remains low. Farm sizes are
fragmented, impacting both economic scales as well as the bargaining power of the farmer. Wide
geographic dispersion makes it difficult to access critical information like market prices, news that
impact prices and weather forecasts on real-time basis. Besides, there is tremendous heterogeneity in
the conditions of different farmers that necessitate customized solutions, which in turn increases costs
and complexity. All this spirals a vicious circle of lower productivity, low farm incomes, inadequate
investments and low capacity to absorb knowledge.
It was in this context that the ITC e-Choupal was conceived as an innovative market-led social
business model to enhance the competitiveness of Indian agriculture. Designed to empower farmers
and raise rural incomes, the e-Choupal helps create a virtuous cycle of higher productivity, enlarged
capacity for farmer risk management, and thereby larger investments to enable higher quality. The
e-Choupal network has provided a unique source of competitive advantage to ITCs Foods Business
by enabling identity-preserved procurement and also by driving supply chain/logistics efficiencies
thereby reducing transaction costs. By leveraging the power of Digital Technology, the e-Choupal
empowers farmers with a host of services related to know how, best practices, timely and relevant
weather information, transparent discovery of prices and much more. This connects farmers with
markets and facilitates virtual integration of the supply chain thereby creating significant efficiencies.
48
AGRI-INFRASTRUCTURE IN INDIA
The e-Choupal system enables efficient transmission of market signals empowering farmers to align
their produce with market needs.
Recognizing that enhanced farm productivity can significantly raise rural incomes, the ITC e-Choupal
promotes sustainable agricultural practices to small/ marginal farmers through the Choupal
Pradarshan Khet.
The services are customized to meet local conditions, ensure timely availability of farm inputs including
insurance and credit, and provide a cluster of farmer schools for capturing indigenous knowledge.
The e-Choupal network also contributes to the entire rural ecosystem by building community assets
and providing income generation opportunities.
The ITC Choupal Integrated Watershed Development programme promotes the development and
local management of water resources through community-based participation. Over 4,000 water
harvesting structures provide soil and moisture conservation to nearly 1,30,000 hectares. The ITC
Choupal Livestock Development Programme aims at upgrading livestock quality to boost milk
productivity. This programme has covered over 8,00,000 milch animals.
The e-Choupal network also comprises physical infrastructure in the form of Choupal Saagars, which
offer multiple services such as procurement and storage, a store front for agricultural equipment and
personal consumption products amongst others. In addition, the e-Choupal network serves as an
effective rural marketing platform together with other channels established by ITC in rural markets.
Several companies ride this channel for access to rural markets.
The e-Choupal system helps in refining rural marketing efforts by understanding the gaps in the
current scenario as well as channel
alternatives, thereby contributing
to the creation of a system that is
effective and cost efficient to take care
of the market heterogeneity across
geographies. The ITC e-Choupal has
benefitted over 4 million farmers
across 40,000 villages in rural India,
transforming Indian agriculture
to serve the evolving needs of the
consumers, while at the same time
improving the quality of life of millions
of farmers in the country.
49
AGRI-INFRASTRUCTURE IN INDIA
5. Dairy Infrastructure
Overview
India ranks first in milk production in the world producing 132.43 million tons of milk (2012-13) and accounting
for approximately 17% of worlds milk production. As per Economic Survey Statistics, 2012-13, the per capita
availability of milk has increased from 176 grams per day in 1990-91 to 290 grams per day in 2011-12 and
this is comparable with the world per capita availability of milk at 289 grams per day for 2011. Strong farm
gate prices supported by growth of the Indian economy and the rising domestic demand for value-added
dairy products are factors contributing to increased milk production. Growing private investment in dairy
processing facilities is also expected to provide further impetus to Indias milk production over the coming
years.
As per CRISIL Research, the Indian milk and milk products industry is expected to grow by 13-15% CAGR to
INR 450,000 crores by 2015-16 from around INR 3,05,000 crores in 2012-13. The market size of milk and milk
products (2012-13) has been given below:
Exhibit 30: Market size of milk and milk products (2012-13)
Segment
Overall Industry
Milk
Curd and Yogurt
Buttermilk and lassi
Ghee
Butter
Ice Cream
Cheese
Paneer
Dairy Whiteners and
Creamers
Market Size
(INR 000 crores)
305.0-310.0
190.0-193.0
19.0-20.0
10.0-10.5
42.0-42.5
11.0-11.5
3.5-4.0
4.5-5.0
21.5-22.0
2.3-2.5
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The Value Chain Perspective
Also, milk is amongst the agri produce which fetches a high realization for the farmers making dairy farming
a lucrative option. Considering the value chain analysis for sale of processed whole pouch milk through
cooperative model, the realizations are at INR 42-44 per litre, of which approximately 65-70% goes to the
farmer. The agents at various village collection centers are paid INR 1-2 per litre of unprocessed milk. The cost
of processing the milk is usually around INR 2 per litre, and the transportation, chilling, packaging and selling
costs for the pouched milk range between INR 6-8 per litre.
But despite the exponential growth of dairy industry, the country is still facing challenges of poor milk quality,
low yield, lack of infrastructure and fragmented production. A number of infrastructure related bottlenecks
are still present in both back end and front end supply chain. The Indian government is promoting the
industry to overcome these challenges through various development schemes and by providing assistance to
cooperatives. The government has recently approved an outlay of INR 1,800 crores to implement the National
Programme for Bovine Breeding and Dairy Development (NPBBDD) during the 12th Five Year Plan. The
programme aims to create milk chilling capacity of 2.8 million litres of milk per day and processing capacity of
3.01 million litres along with delivering breeding inputs to the farmers. Many cooperative and private players
are also contributing in strengthening of dairy infrastructure by setting up of model dairy farms, cattle feed
plant, procurement and cold chain infrastructure and capacity building through training.
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Better feed management practices help in achieving farm economies as well as increase in milk yield
per animal
Proper medical care and veterinary facilities help in reducing the risk of disease outbreak thus
improving the productivity and milk quality
Adoption of new breeding techniques helps in improving the genetic potential of the herd
Emerging Dairy Farming Models
Commercial dairy farming in India is gradually emerging with a mix of various models operating with different
herd sizes and configurations at the farm. A successful model which is replicable on a large scale has not yet
emerged however many players are entering into dairy farming with innovative models trying to achieve high
yields and economies of scale. Some of the key models emerging in dairy farming are listed below.
Large scale single location integrated dairy farms - Large scale integrated dairy farms with facility
for housing and milking of high yielding cross bred cows, milk processing and storage along with feed
production where the ownership and responsibility for the operation and maintenance of the farm
lies with a private player. The private player may enter into contract farming model with the farmers
for procurement of green fodder. The milk is either sold to other dairies or for processing into value
added milk products at its own plant.
Progressive dairy farming model - Mid size dairy farms with 300-500 cattle would be evolving in near
future as that would bring in size economics in the business by better management of labor, veterinary
services, feed etc. Industry players are also providing financial support through financial institutions
and technical assistance to farmers for scaling up of their current herd size, providing necessary
information related to farm management, modern breeding techniques and feed management.
Community dairy farms - The Chinese dairy model of setting up of community dairy farms or hostels
for milch animals owned by people in neighborhood to attain scale is also gaining acceptance in India.
This model envisages investment in farm infrastructure by a private player with the ownership of the
stall lying with the individual milk producer who is responsible for housing of cows and managing them
under guidance of the private player. The milk would be purchased under the buy-back arrangement
by the private player.
Hub and spoke model - Hub and spoke model of dairy farming includes the main farm (hub) having
all the integrated facilities including processing and other connected farms (spokes) having basic
infrastructure for milking and feeding. The connected/satellite farms will be owned by progressive
dairy farmers/rural entrepreneurs in relatively close proximity to the main farm. The main farm will
provide technical support to the satellite farms.
Some of the major integrated dairy farms currently operating in India are
Bhagyalaxmi Dairy Farm, Pune
Sahyadri Dairy Farm, Pune
ABIS Dairy Farm, Raipur
Macro Dairy Farm, Ludhiana
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The Value Chain Perspective
India is still far behind in milk yield as compared to EU-27, US and Israel with average milk yield per cow per
year at 6,692 litres, 9,865 litres and 11,706 litres respectively. The average milk yield of HF cows during initial
years in a large professionally managed farm in India is approximately 12-13 litres per day for a lactation cycle
of 300 days which could gradually increase to 15 litres per day. The average feed requirement is approximately
3% to 4% dry matter basis body weight. Feed is given depending on milk production and stage of cows.
Fragmentation of farms has made handling and managing logistics quite costly and complex in India.
Key Challenges in Dairy Farm Infrastructure
Lack of breeding infrastructure - The basic infrastructure for breeding is not of very high quality
and also there is inadequate availability of breeding bulls in India. The skills and veterinary care is not
widely available for advance breeding methods like artificial insemination (AI) and embryo transfer
and their proliferation is hampered by non-availability of wide spread infrastructure.
Small farm size -Due to small animal holding automation of milking, feeding and dung disposal is
not feasible which in turn affects the productivity and milk quality.
Poor healthcare infrastructure There is an inadequate establishment of infrastructure for veterinary
clinics, vaccine production units and semen production units and feed plant.
Dairy extension services - The institutional arrangement in the state departments of animal
husbandry primarily emphasize the clinical and diagnostic aspects of animal health rather than the
preventive and extension aspects.
In order to overcome these challenges greater emphasis needs to be on achieving economies of scale, and
continuous yield improvements with high quality milk production. This would need conceptualization and
implementation of new production models that would inculcate the following crucial requirements of high
tech dairying:
Mechanization and automation of dairy farms.
Sustainable measures to provide better quality feed and fodder.
Adoption of best quality breeding programs for increasing the average milk yield of indigenous as
well as cross bred cattle.
Provision of improved seed varieties for fodder cultivation and also encouraging seed replacement.
Maximization of environmental benefits through adoption of green energy measures such as
reutilization and effective disposal of manure.
Establishment of community based high herd size farms which would ensure investment in scaling
up, thus improving dairy management systems.
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The Value Chain Perspective
Unlike the three tier system followed by the cooperatives, the private dairies generally have a loose arrangement
for procurement of milk wherein the milk is procured from the agents/contractors who in turn procure milk
from the producers. The agents are responsible for guaranteeing the quality of milk given to the private
dairies. To enhance their milk procurement, private players have been focusing on increased investments in
preserving the quality of milk through installation of bulk milk coolers and chilling centers.
Key Challenges in Milk Procurement Infrastructure
Some of the key challenges in milk procurement infrastructure include:
Milk production by small and marginal farmers: The majority of dairy farmers being small and
marginal with an average animal holding of around 3-5 animals per farmer, there is a logistical issues
in daily collection of milk and chilling of milk at farm.
Involvement of intermediaries: Involvement of large number of intermediaries results in increased
microbial contamination and fluctuation in the volume of milk before reaching the collection centers
and processing plants.
Lack of cold chain infrastructure: There is a lack of required infrastructure of chilling plants and bulk
coolers to prevent contamination and spoilage at village level.
Power availability: Many chilling plants suffer due to shortage of electricity and do not run optimally
leading to poor quality of milk.
Lack of quality testing infrastructure and trained manpower: Adequate quality testing
infrastructure is not available at milk collection centers. The problem is compounded by the lack of
trained manpower to undertake quality testing.
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National Dairy Plan (NDP I) - Allocation for Milk Procurement Infrastructure Development of
Dairy Cooperatives
NDP I will focus on 14 major milk producing states namely Andhra Pradesh, Bihar, Gujarat, Haryana,
Karnataka, Kerala, MP, Maharashtra , Odisha, Punjab, Rajasthan, TamilNadu, Uttar Pradesh and West
Bengal. There is a need for village based milk procurement systems for weighing, testing quality of
milk received and making payment to milk producers. Under NDP I, an outlay of INR 747 crores is
allocated for the development of village based milk procurement systems. This component would
improve access to markets by developing village level milk collection and bulking facilities. Proposed
activities to be financed would include:
Mobilization and institution building of small holder milk producers through expansion of selected
existing milk unions who in turn will strengthen selected existing village DCSs and organize new
DCSs in the uncovered villages.
Training and capacity building of milk producers and other functionaries
Investments in village level infrastructure for milk collection and bulking such as milk cans, bulk
milk coolers for a cluster of villages, associated weighing and testing equipment, and related IT
equipment.
The project envisages the coverage of additional 11,900 villages under milk procurement systems, an
additional of about 0.6 million milk producers pouring milk to village based milk producers institutions,
an additional milk procurement of about 26.65 lakh kg per day and improvement in the quality of milk
received by achieving more than 90 minutes of Methylene Blue Reduction (MBR) time.
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AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Dairy cooperatives account for the major share of processed liquid milk marketed in India. Milk is processed
and marketed by 177 Milk Producers Cooperative Unions, which federate into 15 State Cooperative Milk
Marketing Federations. According to National Dairy Development Board (NDDB), the dairy cooperative
network in the country spans over 418 districts covering 1.48 lakh village level societies owned by around
15 million farmer members as on March 2012. At the end of March 2011, 1,065 units (including cooperatives,
private and Government) were registered under Milk and Milk Product Order (MMPO). Out of these, about 25
% were cooperatives with the total capacity of 432.51 lakh litres per day and 72 % were private players with
the total capacity of 732.52 lakh litres per day indicating the increased private sector participation in milk
processing.
Exhibit 31: State wise capacities of cooperatives and private dairy plants registered under MMPO as on March 2011.
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Distribution Infrastructure
Managing distribution network in dairy industry is quite challenging because of the varied product portfolio
which requires different storage and transportation conditions. Companies have to manage logistics depending
on products like transportation of milk powder and ghee will be done under ambient conditions, ice-cream
and frozen paneer under refrigerated conditions and fresh items like fresh milk, curd, yoghurt under chilled
conditions. The dynamics of distribution infrastructure vary in cooperatives and private dairies. Cooperatives
have adopted the conventional producer-wholesaler-distributor-retailer channel for distribution of milk and
milk products. Private companies are following mix of conventional and own distribution channel including
warehousing, refer trucks, tempos, vans etc to deliver products to the retail outlets.
Key Challenges in Distribution Infrastructure
Power unavailability hamper the storage of milk and milk products at retail level unless they have
back up arrangements thus greatly reducing the shelf life of the dairy products.
Lack of basic infrastructure like all weather roads act as a deterrent for dairy companies to reach rural
markets.
Conclusion
Milk demand is expected to reach about 200 million tonnes by 2021-22. To meet the growing demand it
is necessary to maintain the annual growth of over 4% in the next 15 years. However, the rate of growth
will depend greatly on the stability of milk supply chain as well as the expansion of necessary procurement,
processing and distribution infrastructure. Both private and cooperative players have to work in tandem for
upgradation of necessary infrastructure facilities by establishing bulk milk coolers, chilling centers, adoption
of modern processing techniques and providing farmers with necessary inputs and extension services related
to cattle breeding, management, feeding etc. It is imperative that required infrastructure should be developed
in order to meet the increasing domestic demand of milk and milk products and to maintain Indias leading
position in the dairy industry.
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6. Food Processing
The Indian Food Processing Industry
The food processing industry, correctly
regarded as the sunrise sector of the Indian
economy in view of its large potential
for growth, employment and income
generation is an important constituent of
the Indian economy. With an estimated
value of INR 5400 billion in FY 2012, Indias
Food Processing Industry (FPI) accounts for
almost 32% of total food market. The sector
contributes 9-10% to GDP in Agriculture
and manufacturing sector. It is among one
of the largest industries in India and ranks
fifth in terms of production, consumption
and exports. Being one of the largest
producers and consumers of food products,
the Indian food processing industry has all
the more importance. The industry being
in its nascent stage has a huge underlying
potential.
Source: MoFPI
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The Value Chain Perspective
As seen in the graph above the growth in contribution of FPI to GDP is higher in comparison to the contribution
of agriculture to GDP, thereby indicating that the level of processing in value terms has been increasing.
Levels of Processing
The three major categories of the Indian food industry-agri products, milk and milk products and meat, poultry
and marine products are consumed through 3 levels of processing, depending on their category.
Primary processed food are consumed in their original state with no value addition. Secondary processed
food undergoes basic level of processing like grading, sorting, cutting etc.
Exhibit 35: Tertiary level of processing leads to a change in the form and shape of the input provided
Segments
Fruits and vegetables
Grains and cereals
Oilseeds
Primary processed
Secondary processing
Tertiary processing
Cleaning, Cutting, Sorting Pulp, flakes, paste
Jams, Jellies, Juice, Chips
Sorting and Grading
Rice puff, flour
Cakes, biscuits
Sorting and Grading
Oil cakes
Soya oil, olive oil, mustard
oil, Fortified oil
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AGRI-INFRASTRUCTURE IN INDIA
Milk
Meat and poultry
Marine products
Exhibit 36: Levels of processing in various food products (In USD billions)
In India a major part of the fruits and vegetables and meat & marine products are consumed at primary levels
of processing, however products like grains and cereals are majorly consumed after the secondary processing.
Tertiary processing is most prevalent in oils and beverages and account for a negligible portion in the other
categories. Tertiary Processing is mostly prevalent in oils & beverages and accounts for a negligible portion in
the other categories.
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The Value Chain Perspective
Source: Annual Survey of Industries (ASI), MoFPI Vision Document 2015 and YES BANK Analysis
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AGRI-INFRASTRUCTURE IN INDIA
Though the organized sector contributes substantially towards processing of fruits and vegetables, most of
the processing units are managed by small and medium enterprises. While more than 5,000 industries are
registered under the Fruit Products Order (FPO), 1955, industry estimates indicate that the share of organized
sector in processing is about 48% approximately, with 85% of the units in small and medium sector. Individual
capacities of most of the processing units range from 250 tonnes per annum for very small scale industries to
30 tonnes per hour for bigger manufacturers. It is projected that F&V processing has the potential to reach a
value of INR 345 billion (USD 7.7 billion) by 2015(MoFPI)
Oilseed Processing: Oilseeds processing is another major segment in the food processing industry. According
to industry estimates, the size of the Indian Edible Oil market is about 19.5 million tonnes and expected to
increase at a CAGR of 6-7 to 23.6 million tonnes in 2014-15.
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AGRI-INFRASTRUCTURE IN INDIA
The Value Chain Perspective
Exhibit 39: Share in Food Processing Industry (in value terms) 2022
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AGRI-INFRASTRUCTURE IN INDIA
Exhibit 40: Exports of Processed Foods & related items (in USD million)
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The Value Chain Perspective
Exhibit 43: Comparison between Production & Processing (in value terms)
As visible FDI inflows into food processing has witnessed a robust growth accounting to almost 30% of overall
investments into food and agriculture sector. According to a recent release by DIPP, India has received a total
FDI equity inflow of INR 13,516 Cr. between April to October 2013, which is the highest amongst the different
sectors even toppling services and pharmaceutical sector.
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Govt. Policy in Food Processing Sector: Recognizing the importance of the food processing sector the
government has accorded the industry a high priority status and has taken up a number of initiatives to boost
the sector. This coupled with increased private participation, FDI, increasing domestic demand for high value
food products and improved governmental focus on rural infrastructure development has taken the food
processing industry into a fast growth trajectory. In addition other plethora of schemes has been initiated to
further boost the development as listed below:
Focus on Infrastructure Development
Govt. has envisaged setting up of 60 Agri Export Zones in the country. Through this concept some of
the states like Andhra Pradesh, Punjab, and Karnataka etc showed remarkable improvement in the
exports but other states have not been able to do equally well
Plan to establish 30 food parks in PPP mode across the country out of which 10 has already been
approved in the first phase
Incentives for Back-end Development: Investment linked tax incentives of 100 % deduction of capital
expenditure for setting up and operating cold chain & warehousing facilities
Focus of R&D and Modernization Launching of National Mission on Food Processing
National Mission on Food Processing
Ministry of Food Processing Industries (MoFPI) understanding the need to decentralize the
implementation of different schemes to stimulate food processing through involvement of the states/
UTs launched the National Mission on Food Processing (NMFP) as a centrally sponsored scheme on 1st
April, 2012. The schemes focus completely on the creation of infrastructure for the development to
food processing industries. NMFP is implemented as a new centrally sponsored scheme with financial
contribution of Government of India and States/UTs in the ratio of 75:25, except for North Eastern
States, where the ratio is 90:10. Further, in UTs administered by Government of India it is funded 100%
by Government of India. This funding pattern is applicable to all components of the scheme.
The NMFP contemplates establishment of a National Mission as well as corresponding Missions in
the State and District level. The proposed structure would be a three-tier structure at National, State
and District levels. However, States would be at freedom to have mission structure at District levels or
otherwise.
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Exhibit 45: 12th Five Year Plan (2012-17) Outlay Shares - Food Processing
Source - MoFPI
Investments
in
Infrastructure
Development Food Processing
With the increased focus of the Govt. to
provide excellent infrastructure facilities in
the food processing sector opens up various
opportunities for private investments.
Schemes providing capital grant (NMFP),
subsidy (back-end), duty free export sops
and tax incentives is expected to attract
interest of the private investors.
From 10th Five Year plan to 12th Five Year
Plan the fund allocation has grown at a CAGR
of almost equivalent to 27% thus indicating
Government increased importance to food
processing infrastructure development.
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Inefficiencies in supply chain: According to the study sponsored by Ministry of Agriculture and
carried out by CIPHET, estimated harvest and post-harvest losses at national level was of the order of
INR 44,143 crores per annum at 2009 prices.
Absence of economies of scale: Some of the processing units demand very low technology and
investment and this have led to the proliferation of unorganized players in the processed food segment.
As the processing activity is highly diffused in India, achieving economies of scale to increase output
has been constrained
Technology Up-gradation Challenges: The small scale of most food processors in India prevents any
timely up gradation of technology, which is vital to improve quality of product
Quality issues: While the quality norms and measures for the domestic and international trade
have been laid out for processed food, many small scale processors lack the necessary monitoring
mechanisms to implement these quality norms
Case Study: AEZ for Cumin and Coriander in Rajasthan
To boost the exports of these commodities, Rajasthan established AEZs with an investment of
INR 50,225 lakh. Out of this investment around INR 39,648 lakh (79%) was from government institutions,
while the remaining INR 9,757 lakh (21%) was from the private sector. Post the setup, there was
a significant increase in the exports observed. The exports have increased by around 79% since
2004-05 which is a remarkable growth. These AEZs were also successful in providing forward and
backward linkage to the production of the commodities.
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The Value Chain Perspective
Source: Agricultural & Processed Food Products Export Development Authority (APEDA)
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7. Development of Agriculture
Infrastructure in India: Way Forward
Agriculture sector in India has undergone notable changes since Independence, but is still constrained by a
number of roadblocks, of which Infrastructure is one of the most prominent ones. Need for adequate Supply
Chain infrastructure has been felt necessary to keep pace with the increased agriculture production and
overall changing pattern of consumer demand for food products.
Considerable need & opportunity exists in sprucing up infrastructure that supports on-farm production
(irrigation, soil and water management, transportation, pre- and post-harvest storage), ensures efficient
trading and exchange of goods (information and communication technology, wholesale and regulated
markets), adds value to the domestic economy (agro-processing and packaging facilities) and enables
produce to move rapidly and efficiently from farm-gate to processing facilities and onwards to all the supply
chain players (logistics, transportation and storage), till the point of consumption.
Some of the recommendations suggested to achieve sustainable development of Agri Infrastructure in India,
are elaborated below:
Policy
Expenditure on agriculture marketing sub-sector ranges between 4-5% of total public expenses on agriculture,
while expenditure on marketing infrastructure development has been less than 1%. Agriculture marketing
infrastructure needs to be given more thrust. Some of the recommendations would be:
Suitable restructuring & reclassification of Priority Sector guidelines for enabling larger credit flow
into Agri Infrastructure.
Viability Gap Funding (VGF) in marketing infrastructure development projects so as to attract
Investments.
Increased investment in R&D focused on various sub segments in Agri Infrastructure- including farm
level technologies, post harvest infrastructure, logistics & processing, in the Indian context.
The current multiplicity of Government Agencies in facilitating implementation of various projects
is an impediment to smooth set up of infrastructure projects, especially for the ones in PPP mode. A
mechanism to have integrated nodal/ single window agencies will be helpful here.
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Private Wholesale Markets: The provisions for setting up of Private Wholesale Markets and Terminal
Market Complexes must be specified in the amended APMC Acts of the respective states. These
private mandis should be treated at par with existing APMCs.
Provision of electronic trading in various local markets (Mandi) which should be at least at district
level to ensure farmers best better price discovery & freedom of choice for a larger market for their
produce.
Appropriate administration & facilitation for legal and institutional structure to ensure orderly
functioning of agricultural markets.
States to take initiatives for establishment of grading units & primary processing units
Adoption & acceptance by the Government of appropriate systems & technologies- for enhancing
bulk handling for grains.
Favorable government policy, customized farm equipments designed keeping in mind the Indian
agro-climatic conditions, increasing acceptance of custom hiring models, rising rural incomes and
awareness among farmer communities will contribute to the growth of the farm equipment industry
in the next decade.
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Innovative Models
For financing, Agriculture Infrastructure Projects are no different from general infrastructure projects
and are typically complex, capital intensive and have long term gestation periods that involve multiple
risks to project financers. Due to its non-recourse or limited recourse financing characteristics and the
sheer scale of complexity, infrastructure financing requires a varied mix of finance and contractual
arrangements amongst multiple parties including project sponsors, commercial banks, Govt. agencies
and financial institutions among others. This will aid in limiting the inherent bottlenecks in agriculture
infrastructure lending and thus stimulate more investments into the sector.
Commercial Dairy Farming initiatives of various configurations & forms for enhancing the milk yields,
improving the quality of end produce & increasing the efficiency of backend services administration.
Integrated end to end Cold Chain facilities will be enablers for providing infrastructure with greater
end to end efficiency for operations.
Larger R&D for development of appropriate technologies that are cost effective from the power
consumption operational perspective
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References
1. Rural Infrastructure and Growth in Agriculture M.S. Bhatia (Economics & Political Weekly Volume
34)
2. Report on State of Indian Agriculture 2012-13, Ministry of Agriculture, Govt. of India
3. Market Oriented Agriculture Infrastructure: Appraisal of Public Private Partnership - FOOD AND
AGRICULTURE ORGANIZATION OF THE UNITED NATIONS, Rome, 2008
4. Keynote paper on Rural Infrastructure and Growth presented during the 66 th Annual Conference of
the Indian Society of Agricultural Economics, 2006
5. Working Group Report , Ministry of Civil Aviation, Govt. of India Air Cargo Logistics in India -2012
6. Report of CAG India on Storage Management b& movement of Foodgrains in Food Corporation of India
2013
7. Ministry of Food Processing Industries (MoFPI)Annual Reports
8. Draft Report of Working Group, MoFPI FOOD PROCESSING INDUSTRIES For 12th Five Year Plan
9. Planning Commission, Govt. of India Report of the Working Group on Agriculture Marketing
Infrastructure, Secondary Agriculture & policy required for Internal & External Trade 12th Five Year Plan
2012-17
10. Planning Commission, Govt. of India Report of the Working Group on Warehousing Development &
Regulations 12th Five Year Plan 2012-17
11. CRISIL Research
12. pib.nic.in
13. M.S. Jairath Agriculture Marketing Infrastructure Facilities in India
14. CRISIL Research
15. Indiastats
16. Ministry of Agriculture, Govt. of India
17. Agriculture and Processed Food Products Exports Development Authority (APEDA)
18. Directorate of Marketing & Inspection (AGMARKNET)
19. Ministry of Food Processing Industries (MoFPI) Annual Report 2012-13
20. ASSOCHAM India Report on Second Green Revolution Agriculture to Agribusiness
21. European Commission milk and dairy production statistics-2011
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