Agribusiness scenario in India

OVERVIEW Agriculture is the mainstay of the Indian economy. Agriculture and allied sectors contribute nearly 22 per cent of Gross Domestic Product (GDP of India), while about 65-70 per cent of the population is dependent on agriculture for their livelihood. The agricultural output, however, depends on monsoons as nearly 60 per cent of area sown is dependent on rainfall. India with a population of 1.13 billion, growing at about 1.6 percent per annum, is a large and growing market for agricultural and food products. Food is the single largest component of private consumption expenditure, accounting for as much as 53 percent of the total. Consumption of food products is increasing consistently at 7.8 percent. India is the world's third largest producer of food. Indian retail market for fresh fruit and vegetables is estimated at $35 billion. Organised retailing is $73 million and growing at a rate of 30 percent. Rapid growth of food retailing and increasing health consciousness with changing lifestyles is driving growth of agricultural produce which is hygienic and healthy. In fact, it will be in line with the next stage of development cycle for the agricultural and food processing industry. Food processing industry India's share in global food trade is expected to increase to 3 per cent over the next four years from the current 1.5 per cent, according to a document, Vision 2015', prepared by the Ministry of Food Processing. The country's food industry is valued at US$ 180 billion of which the food processing industry is estimated at US$ 67 billion, according to a report Food Processing and Agri Business', by KPMG. The industry accounts for 32 per cent share in the entire food industry and comprises of 2 per cent of fruits and vegetables and 15 per cent of processed milk. The industry's contribution towards GDP is around 6.3 per cent and about 13 per cent to export production. The sector is predicted to witness a growth of 10 per cent in the recent years. Further, the food processing sector attracted US$ 130 million of foreign direct investment (FDI) in the first eight months of the fiscal and a total of US$ 1.2 billion FDI during April 2000 to January 2011. Dairy sector

The Indian dairy market is largely unorganised in nature and is currently estimated at US$ 47.6 billion, growing at the rate of 7.5 per cent annually. It is predicted that due to growing increase in consumption pattern, rising income and growing consumer purchasing power, the sector would witness strong demand in the recent future. Spices India is the world's largest producer, consumer, exporter and importer in spices, with its market size also being the largest globally. The export of spices and spice-based value added products during April-February 2010-11 was US$ 1,323.28 compared to the US$ 1,063.44 in the same period last year. Agri-infrastructure In order to meet the increasing demand of food, it is imperative toinvest in the agri-infrastructure sector as well. Various known players are investing into supply chains, developing cold chain networks and establishing warehouses, for ensuring the preservation of the produce. Further, changes in consumer pattern towards processed foods also indicate towards the need to increase storage capacities. Moreover, the Government is also planning to create 30 mega food parks across the country. Farm mechanisation In the recent years, farm mechanisation has witnessed growing importance, which is steadily helping in increasing the land and labour productivity in the country. Mechanical equipments for various farm operations such as sowing, tillage, irrigation, threshing etc are being used by the farmers throughout the country. Even the small farmers are adopting modern technology for efficient farm management. Food packaging sector Food packaging in India is also witnessing significant changes, with companies increasingly using it as an important vehicle for product differentiation. With the changes in food consumption patterns and demographics, the consumers are increasingly turning towards ready-to-eat and packaged foods. The packaging sector is being driven by trends such as freshness and improved shelf life, convenience of usage, packing to position and promote the brands and sustainability. Marine products Marine products in the country have been growing continuously with improvement in productivity and utilisation of untapped resources. Marine exports increased 6.6 per cent in quantity during April-December 2010, crossing the US$ 2 billion mark. This is the first time that the marine exports have

crossed US$2 billion in the first nine months of the financial year. The planning commission has laid down a growth target of 4 percent for the sector, in the Eleventh Five Year Plan, 2007-2012, as against the achieved growth rate of 2 percent in the Tenth Plan. The Government of India is implementing various programmes such as Bharat Nirman, National Horticulture Mission (NHM), New National Food Security Mission and Accelerated Irrigation Benefit Programme (AIBP) to create infrastructure as well as an investment attractive environment for more private sector participation across the value chain in the agricultural sector.