Development of Agri

Infrastructure
Opportunities for Private Sector

A presentation by
S. K. Sharma
 Structure of Presentation
SECTION 1-The Need
Sector characteristics
Role of Public and Private sector

SECTION 2- Opportunities
Opportunities across value chain
The way forward

10/4/2006 2
The Indian Paradox
We are among the top few producers of many agricultural
commodities in the world…
Yet our share in world food trade is only 1.6 %
The post-harvest value loss of fruits and vegetables
estimated to be 25 to 40 %, amounting to more than Rs.
30,000 crores…
Yet less than 2 % is processed !
We have a middle class of 250-300 million people with
adequate purchasing power to buy manufactured goods…
Yet value addition to agricultural products is less
than 7%
More than 60 million tonnes of food grains are lying in
stock in the Central Pool…
Yet more than 130 million people go to bed hungry
every day !
10/4/2006 3
State of Indian Agriculture
Low productivity
Low level of technology
Poor infrastructure and logistics
Low investment / capital formation
Undeveloped and imperfect markets
High level of wastages / post harvest losses
High dependence on agriculture for livelihood
63% of the population depend on an activity which contributes only
24 % of the GDP

Agriculture has been ‘a way of life’

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Not a commercial activity !
 Value Addition
Agriculture
Comparison of value added in
agriculture and food processing* Food
processing
Per cent

India ~94 ~6

Brazil 79 21

Thailand ~70 ~30

New Zealand 58 42

33875
USA 47 53

10/4/2006 5

Source:Indiainfoline; Bloomberg
The Internal Challenge
To ensure the transition of Indian agriculture
from a “Low input-Low output” farming system
to a “High input – High output” system
Provide continued Food Security to the nation
Increase Value Addition
Cut costs by efficient Supply Chain
Management
Provide Consumer Satisfaction by giving him
value at a price he can afford
Be Internationally Competitive
10/4/2006 6
External Challenges
Globalization
Availability of choices
Threat of imports
Lack of level playing field
Rapid Advances in Science and Technology
Biotechnology / Genetic engineering
Mechanisation / New processing techniques
Changing consumer preferences and concerns
Variety, nutrition and convenience
Safety - tracing and tracking
Concern for the environment and ecology
Speed to Market - the Key to Success
Innovation to introduction
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Need for a Holistic Approach
Restructure the Supply Chain to remove
inefficiencies- enhanced income to the farmers,
reduced consumer prices
Reorganise the Agricultural Marketing System to
ensure transparent price setting and facilitate
value addition
Reform the Food Laws and clean up the regulatory
bottlenecks to provide a hassle- free environment
to processors
Rationalise the Taxes and Levies on processed
food products to make them affordable to
average man on the street

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Participatory Model
Government as facilitator
Government has to give initial push for modernizing the
sector
Play umpire role between the users (mostly small
growers and traders) and the service providers for fair
deal to all stakeholders (agriculture being the livelihood
of 65% of population)
Identify & showcase opportunities
Support through policy, incentives and financial
participation

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Participatory Model
Private sector
Brings in technology, management and financial
strengths
Marketing
Chain integration

10/4/2006 10
Opportunities in Agri Infrastructure
(other than wholesale market)

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 Opportunities Across Value Chain

Agricultural Agricultural
Inputs Procurement Processing Marketing
production

• Seed •Contract farming •Procurement •Post harvest •Wholesale &

production •R&D and centers / shelf life Terminal
and Demonstration farms •Consolidation enhancement markets
processing •Leasing state farms grading, packing treatments •Distribution
•Warehousing • Bulk storage •Product network
•Logistics & development • Retail outlets
Transportation, - Food chains
•Large scale
Cold chain processing
facilities

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Major Thrust Areas
Common facilities in the wholesale markets
Cold stores
Export facilitation centers
Grading & Packing facilities
Post harvest centers
Integrated pack houses
Ripening centre
Irradiation & VHT
Cold Chain
Perishable Cargo Centers at Airports
Quality testing labs

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Investment opportunities
Supply chains
Apple, Banana, Onion, Mango, Vegetables
Irradiation centers (potato, onion, spices,
wheat products etc)
VHT for export to Japan and Australia
CCM for chilled and frozen products
Silos and bulk handling systems for grains

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Investment opportunities
Perishable Cargo Centers at Airport
F&V availability, net of losses, to be 230-235
million MT
Domestic consumption 192 million MT (at 420 gm
per recommendation by NIN), Processing take
up 23-24 million MT
High surplus for exports
Will require more than 3-4 MMT handling
capacity as against less than 0.2 MMT
Potential locations, Amritsar, Ahmedabad,
Hyderabad, Bangalore, Cochin, Kolkatta,
Guwahati etc.

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Investment opportunities
Railways: Integrated system for movement of
perishables
Packhouses to be linked with nearest station
Handling and holding facilities at station
Movement by refer vans (can be attached with
major mail trains, full refer trains on trunk routes)
Handling and holding facilities at receiving
stations

For Example, Litchi from Bihar can be delivered in all

major metros in 2-3 days as against 5-6 days by truck

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 REDEFING THE SUPPLY CHAIN

Wholesale Market Local Market

Field (contract
farms)

Consolidation Center Pack House

Distant Market

Cash & Carry Outlet

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The Way Forward
Government role
Production enhancement (NHM implementation
for doubling production by 2012)
Enabling policy regime (interstate barriers,
essential commodities, food laws, Agriculture
Marketing Act
Identify & showcase opportunities for private
sector participation
Fiscal and financial incentives

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The Way Forward
Private sector
Entrance of corporates in Agri business (Project
feasibilities and DPRs)
Technology and management inputs
Chain integration & market led production
Branding and retailing

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 Public Private Partnership– Export of
grapes, a success story
India emerges among top ten producers in early 90’s
(perhaps only country to produce in tropical climate)
APEDA started intensive farmer training for export
oriented production in collaboration with growers
association
Over 125 modern packhouses fully equipped with
grading, pre-cooling and high humidity cold storage
set up by private sector
Farmers and exporters work in close co-operation with
importers and even supermarkets to meet strict quality
standards
Refrigerated containers stuffed at Packhouse and
directly shipped

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Success story ------- Contd
Most exporters have complete backward
linkages with farms to grow export quality fruit
National Research centre for grapes support
on R&D and technology
APEDA supports quality system with
assistance for EUREPGAP certification,
upgradation of testing Labs to international
level and subsidizing tesing costs
Already export of 40,000 MT established
Export now going to more than 25 countries
meeting all requirements of SPS and buyer
specification
10/4/2006 21
Reach us: globalagri@vsnl.com www.globalagri.com
K 13 A, Hauz Khas Enclave, Delhi 16; Ph 26527123