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  1. 1. Manthan: Boosting Agricultural Productivity Team Details Abhishek Kumar Priyank Kanade Shrijit Venkatesh Harmeet Singh Saroya Vikas Kumar
  2. 2. Boosting Agricultural Productivity Boosting Agricultural Productivity Growth in wages and remunerative prices Growth in per hectare output and productivity Access to credit for crafting agricultural growth Creation of infrastructure and cold storage facilities Problem Statement: Boosting Agricultural Productivity Our Approach: • Understand current agricultural sector • Identify the pain-points plaguing Indian agricultural sector • Cultivate solutions targeting the pain points • Overall, a 4 pronged final approach for better productivity
  3. 3. Indian Agricultural Industry – A Snapshot • Indian economy has grown steadily –7% in last 10 years • Low and inconsistent growth in agricultural sector – it is dependent on the monsoon • Agriculture contributes 18% to GDP but 60% population lives off agriculture • Mostly small marginal farms with low inputs • Yield levels are generally much lower than world averages • Total cropped area is 197 million hectares • Highest area under irrigation (40%) • Green revolution helped India gain self sufficiency in food production • Agricultural production increased from 50 million tons to 227 million tons; however, growth flat over last 10 years • Population, currently at 1.15 billion, is continuing to increase • Tremendous pressure to increase agricultural productivity • New technologies must be deployed • Seed industry will continue to play a key role
  4. 4. Sector Identification – Indian Agricultural Industry Ancillary Support to Produce • Agricultural machinery • Seed technology • Fertilizer technology • Irrigation technology • Supply chain-cold storages • Technology in Ancillary support-Manufacturing technique • Biotech-To increase output • Weather forecasting technology Processing of Produce • Packaged processed foods • Technology to increase value-add • Supply chain & logistics Animal husbandry • Dairy Industry • Meat • Poultry • Technology for high produce • Supply chain-cold storage • Leather goods Beverages • Non-alcoholic beverages • Beer • Other alcoholic beverages • Technology • Supply chain
  5. 5. Approach for Boosting Agricultural Productivity Boosting Agricultural Productivity Growth in wages and remunerative prices Growth in per hectare output and productivity Access to credit for crafting agricultural growth Creation of infrastructur e and cold storage facilities
  6. 6. Growth in Wages and Remunerative Prices Skill development Effective Diversification Market Linkage for Best Prices • Address underemployment: Under-employment rate of 20.9% primarily due to seasonal nature of agriculture (Jan 2013)# • Skill enhancement in food processing and cultivation techniques for crop diversification to overcome underemployment and to improve wages • Training: To enable the effective use of mobile and internet platforms #Source: • Extending Diversification through Demonstration: Support to farmers for crops , such as , sunflower, safflower, pulses and other field crops. Other farmers may opt to diversify to get better prices and reduce their dependence on low income yielding crops. • Microfinance to support seed purchase and financing farm equipments. • Contract farming: Providing grading and traceability features to enable contract farming and exports • Supply Chain Management: Improving cold storage facility and market connectivity to reduce waste (details in next slide) • Demand Forecasting: Better demand forecasting and making farmers aware of commodity price forecasts to enable them to make well-informed decisions
  7. 7. Boosting Output and Productivity Indian Seed Industry-Current Status PAIN POINTS PROPOSED SOLUTION •Indian seed market, estimated at US$1.1 billion, is the 6th largest in the world •It has grown @ 12% compared to <5% growth of global seed market •Private sector not investing in self pollinated crops to develop and promote new varieties •Seed replacement ratio continues to be low •Large acres of self pollinated crops – rice, wheat, legumes, etc. •Low hybrid adoption rates in most crops due to marginal growing conditions and/or subsistence farming •Medium and small sized companies should make investments in research and seed processing infrastructure •More than 40 seed companies have Govt. recognition for their R&D units and this number should grow over 100. •Indian companies should introduce increased GM trait in their germplasm •More investment in innovative biotechnology research
  8. 8. Boosting Output and Productivity Move away from Primitive Methods of Agriculture Fragmented Land Holding Lack of Knowhow Low level of Mechanization Low affordability to employ best practices Over-Dependence on Labor & Shortage of Labor Primitive Methods of Agriculture …Low level of Mechanization
  9. 9. Boosting Output and Productivity … due to extremely low land holdings ...along with other factors has resulted in very low mechanization  Affordability is low to begin with  Low education and skill levels results in negligible uptake in advanced, value generating, technologies Holding size (hectares) # holdings (M) <1 1 to 2 2 to 4 0 1 23 76 121 4 to 10 60 30 7 120 >10 150 14 90 Total Source: Central Institute of Agricultural Engineering (CIAE), Bhopal; CII: Wealth Creation in the Farm sector of India: Ten point agenda for Policy Intervention  Fragmentation - a result of various land holding acts  The average size of land holding has continued to decline (from 2.63 ha in 1996 to 1.06 ha in 2003–2004)  Situation further worsened by labor shortages: ‐ Alternate employment opportunities ‐ Guaranteed employment schemes (NREGA ) and subsidies Dominance of small holdings Prohibitively high cost per acre of technology application Farm mechanization continues to significantly lag behind global norms
  10. 10. Boosting Output and Productivity Full suite of advanced agricultural technologies combined... ...that will significantly impact a farmer's bottom line... • Radical improvement in productivity from application of modern technology • Lower/ eliminate capital expenditure required on mechanisation – Convert the farmers’ capex into opex Agronomy High Quality Crop Care Mechanisation Sensing and precision actuation create a “technology as a service" offering... ...effectively unlocking demand for mechanisation technology and its application • Creates the ability to aggregate demand for mechanisation • Allows low cost provision of services due to economies of scale Pay Per Use Service Offering Reasonable Prices Government Private Partnership Technology, as a Service, must reach the bottom of Pyramid
  11. 11. Enabling Access to Credit and Micro-finance • Need for an exclusive regulator body for MFIs. • Need for transparency of interest rates Unregulated MFIs • Launch training programs for clients. • Require more informed decision from MFIs before lending.Loan Defaults • Uniform distribution of MFIs in rural and urban areas. • More collaboration with foreign MFIs to bring in best practices in technology and process. Low Depth of Outreach • Introduce better savings and insurance services.Inflexible Products
  12. 12. Supporting Infrastructure and Cold-Storage Facilities Problems in Supply Chain Management for Agricultural products Inflation Low monetization opportunity for producers Higher cost of production PAIN POINTS PROPOSED SOLUTION • Improve rural infrastructure and cold storage facilities • Collection points from farmers for direct sale Better connectivity • Lesser intermediaries • Competition among buyers • More bargaining powers for farmers Reduce unwanted supply chain cost • Short-term production loans for farmers • Quick settlement mechanisms for contract (commodity or market) disputes Unrestricted cash flow during high inflation • Intermediaries inappropriately benefited during inflation, farmers left with minimal share of sale • Inflation → higher living cost → high cost of production → squeezing down profits
  13. 13. Challenges and Mitigation factors to proposed solutions • Resistance of the rural class to adapt to new changes • Transparency and Regulatory challenges in controlling MFI • Wholesalers and intermediaries will oppose these moves Challenges • Change Management – Adopting changes • Strong Regulatory body • Get buy-in from the stakeholders on the proposed solutions Mitigation Factors
  14. 14. Thank You