INSIGHT
Agriculture based retailing—the future of Indian agriculture
Retailing is one of the traditional business operations, it has found its way in agriculture too, after a boost in this sector due to
economic reforms. The Indian rural market size which includes FMCG, agri inputs and farm machinery is estimated to be about 1, 25,000 crores 50% of which is contributed by agri inputs. It is expected to increase to two lakh crores by 2007 end. 28% of our GDP comes from agriculture, whereas 60% of the people depend on it. So, if we want to make a difference to this 60%, we will have to bring agriculture to its true potential.Issues and challenges facing agri-retailing :
India has an arable land of 184 million hectares which is largest in world , but Only 2 % of agricultural produce processed commercially. India is one of the largest producers of agricultural products in the world,The country produces annually following agri product:
•90 million tones of milk (highest in the world)
•150 million tones of fruits & vegetables (second largest)
•485 million livestock (largest)
•204 million tones food grain (third largest)
•489 million poultry
•45,200 million eggs.
(Source - Fertilizer News).
but country’s share in world trade in respect of processed food is only about 1.6%. which is miserable .
Indian Agri business sector has the potential to transform India into the leading agri economy of the world. We have gone from zero to 20 billion $ in exporting software , employing about I million people in 10 year , if this is possible in software market then why can`t in agri based market.
But there are certain initial challenges that the sector has to win over such as
· Lack of supply chain integration
· Wastage of agricultural produce is massive. Due to poor post-harvest techniques, inadequate transportation, cold chain and distribution systems 20–30 % annual crop never reaches consumers.
· Poor quality of the infrastructure (roads, railway, ports…) is the main cause for the 20–30 % loss of the crops between the farm and consumer.
· 6–8 % of the cereal crop is left to rot because of lack of storage facilities.
· Soil degradation is a serious threat to safety of agricultural produce.
· Efficient buy-back system (purchase of farm output)
· Efficient compensation delivery system in case of product failure
· fresh produce is perishability. So we need sufficient infrastructure to keep fresh produce for long time.
· Indian food processing industry needs to build up quality and ensure safety to adhere to acceptable national/global standards.
If we are able to win over such problem then no wonder India will be a super agri -economy power. Our main advantage is low cost processed product. Just take one example – wholesale price of potato in India is 4-5 rs/kg. but in Europe and American market it is about 100 rs/kg. This is the area where we have edge in competitive market.
How agri based retailing is useful – this sector has potential to generate 1.5 milion job in next three year. After having good supply –chain integration and higher output of arable land farmer income can go up 4 to 5 times from the base. The country produces 150 million tonnes of fresh produce today. We can go to 300-400 million tonnes fairly quickly over a few crop cycles. If we achieve this target then rural economy will play pivotal role in growth of Indian economy
What we need to do is to provide essential infrastructure for agri –economy. A solid strategy is also required to boost up the growth rate of this sector (which is near about 8.5% right now) and also win the favour of farmer.
In my next issue i shall discuss about the strategy part of this agri sector (how should they market their prouct)and e-agri business.
Dhirendra choudhary
MBA, IIITA
(source : Fertilizer News, web portal of Ministry of Food Processing (MFP), Ministry of Agriculture, Ministry of Rural Development, Central Food Technology Research Center…. Etc)