Deloitte - Round II Agriculture


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Deloitte Maverick Case Study on Indian Agriculture

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  • Share of marginal and small farmers in land holdings accounted for 84% of operational holdingsIncrease in access to irrigation has been highest for marginal farmers followed by small farmersThe average size of land holdings in India fell from 2.82 ha to 1.16 ha between 1970 and 2011rural population growth inheritance practices unfriendly land leasing systemsThe fertilizer per hectare is inversely related to farm size (both irrigated and unirrigated areas)Multiple cropping intensity is higher for marginal and small farmers than medium and large farmersSmall and marginal farmers grow high value crop for higher and quicker returnsThe contribution to output is higher for marginal and small farmers (diversification and food security)The cost of cultivation per hectare is high on small and marginal farms than medium and large farms86% of the land holdings are now less than 2ha and the average operated land is around 0.4ha for this group
  • Deloitte - Round II Agriculture

    1. 1. Deloitte Maverick The Raptors LIBA Chennai Tanmoy Porel Ritaban Sengupta Rohit Bhattacharya
    2. 2. Executive Summary Mahatma Gandhi said “India lives in villages and agriculture is the soul of economy”. Irrespective of development and industrialisation, India is still an agrarian economy with more than 50 % of Indian population depending directly on it for livelihood and agriculture contributes approximately 16% of the GDP. Due to vast expense of land, wild climate variations, inadequate coverage of orgainised credit institutions, lack of access to or knowledge of seed and farming technologies, poor infrastructure (electricity, irrigation, storage for perishables, processing capacity shortfall, etc), and an inefficient market there is high yield gap and low value generation in agriculture. The sector is still considered as a livelihood sector rather than a business sector and fails to draw investment towards it. The idea of embedding technology into agriculture is not a new one but an holistic approach has been missing in the sector and the initiatives taken has only reached till experimentation stage. Based on our primary and secondary research we have chosen the segment of marginal and small farm holders. We strive to create a smart and balanced eco-system for farming including all the stakeholders of agriculture industry fueled by Information Technology. Due to lack of infrastructure direct application of IT is not possible in agriculture but IT can be used as binding thread to bring together the members of the ecosystem who are scattered and unorganized now. We would introduce sustainable intensification using technology enabled services and technologically advanced inputs. We have introduced ‘Krishi consultant’ who will serve as an one-stop solution for farming needs. This will help to bridge the yield gap, increase productivity. The monetary benefits can be injected back into the eco-system to make it sustainable. Next we designed a resilient and effective supply chain to support the ecosystem. The supply chain has been divided into two stages: farm to market and market to fork. In farm to market we have introduced a specialised agency which will eliminate innumerable middlemen and will provide marketing and logistic services. In market to fork we have brought in standardization by converting commodities to products using technology. As India moves towards development and better infrastructure, these reforms are bound to happen. Better today than tomorrow. We strongly believe that laying a foundation for future sustainable growth supported by ICT (Information and Communication Technology) is the only way to improve the sector and make it profitable.
    3. 3. Market Overview Target Market Yield Gap and Low value creation1 Primary Research Marginal and Small land holding  Village Name : Khurigachi, W.B.  Contributes to 84% of operational holdings  Farmer’s Name : Kanhai Porel  Increase in access to irrigation  Crop : Rice  The average size of land holdings  Input Cost : Rs 17600 per Ha in India fell from 2.82 ha to 1.16  Revenue : Rs 23100 per Ha ha between 1970 and 2011  Imperfect markets for inputs/product – lower value realisation  The fertilizer per hectare is inversely related to farm size  Lack of formal education and skills  High multiple cropping index  Smaller access to suitable extension  High value crop for higher and services – restricted decision making in cultivation practices quicker returns  Contribution to output is higher Poorer access to ‘public goods’ e.g. public irrigation, command area  The cost of cultivation per development, electricity grids hectare is high 1:Small farmers in India : Challenges and  Greater negative externalities – poor opportunities, IGIDR 2012 quality land, poor water management 2:Can India be food basket for the World? – working paper series  Inefficient demand forecasting – farmers try to push what they produce2 Sustainable Intensification A form of production wherein “yields are increased without adverse environmental impact using same or less resources” Smart eco-system Technologically Advanced Inputs Technology Enabled Services Sustainable Intensification
    4. 4. Technology-enabled smart eco-system Value addition & Service enhancement Real time info & advice Financial Services Insurance Services Climate Risk Management Soil Fertility Management Crop Scheduling Risk mitigation services Water Management Training & Development Forecasting Services Krishi Consultant % of revenue Farmer Informed decision making Fertilisers Seeds Pesticides Irrigation  Krishi Consultant will act as a single point of contact (SPOC)  All technology enabled services are integrated and co-dependent  Consultancy charges are based on revenue generated rather than a fixed fees  Crop scheduling and Forecasting services – better demand planning, production according to the need of the market  Climate risk management and risk mitigation services – risk associated with investement and methods to reduce it (insurance services)  Soil fertility management and water management – Better allocation of resources and optimal usage  Training & development – Increase in awareness, making the farmers more equipped
    5. 5. IT enabled agriculture 1 IT as a strategic tool  Awareness Database : Unambiguous Interpretation with implications  Decision support system (DSS) : facilitate farmers to do SWOT analysis for appropriate decision making  Bricks and mortar to click and mortar : Appropriate alliance for collective benefit Kiosks, Telecentres and Smart services  Integrated approach to  Non linear development agriculture with collaborative  Lack of localisation and user friendliness demand forecasting  Lack of infrastructure for direct use :  Since IT is mostly private sector Precision agriculture so attracting private investment  Kiosks : Dissemination points, multiple usage  IT infrastructure improvement  Mass deployment required and deeper penetration  Service providing model to revenue generating  ICT (Information and model Communication Technology) will  Training and Distance education help to address the untapped  E-insurance and E-financing potential of rural India  Local sourcing  Remove geographical barriers  Generate cross border employment  Telecentres opportunities  Localised services and information  Monitoring : Advance warning  Attracting private investments from rural systems and periodic analytical entrepreneurs reports 1: Role of Information Technology in Agriculture and its scope in India, S.C. Mittal Benefits  Smart services  Still in experimentation stage (mKrishi, Reuters Market Light)  Mobile phone usage in rural India growing  High rural teledensity  Cost effective and eco friendly solution  Promoting a centralized system in an advisory role to coordinate among specialised institutions and evolve standards
    6. 6. Sustaining the eco-system Benefits Bridging the yield gap  If the eco-system is implemented the yield gap can be bridged/minimised  Present average yield (rice) : 2.9636  Present average yield (wheat) : 2.85  This in turn will increase the monetary  Yield potential rice : 5.6272  Yield potential wheat : 4.9375 benefits per hectare of land  Yield gap to be bridged : 2.6636  Yield gap to be bridged : 2.0875  The monetary benefits reaped can be  Monetary Benefits per hectare : Rs 111872.7273  Monetary benefits per hectare : Rs 31103.575 injected back into the eco-system  Rice (Mg/ha)  Wheat (Mg/ha) Farm to Fork (SCM) Farm to market – Stage I Farmer Harvesting Crops produced Farm Specialised Agency Payment in cheque Charge % of profit generated Storage Market • Logistic scheduling • Loading/Unloading facility • Marketing of goods • Cold Storage /warehouse facilities • Inventory planning
    7. 7. Farm to Fork contd.. Market to fork – Stage II Commodity to Product Implementation  Sorting & grading of the product at the start of supply chain  Assigning Unique Id (RFID/QR Code) Processing Benefits  Standardisation  Fosters transparency  Prevents supply chain stake holders from exorbitant price margin  Back tracking  Sales data collection Supply Chain resilience Process  Risk identification  Risk prioritization  Risk mitigation Packaging Sales Results  Transparency in supply chain  Efficiency in supply chain
    8. 8. Conclusion  54% population still dependent on  Push to market what is produced tendency agriculture (only 16% GDP contribution)  High yield gap due to inefficient supply  Still a mode of livelihood rather than a chain, lack of access to knowledge of seed profit making business and farming, poor infrastructure capacity planning Eco-system Resilient supply chain Specialised Agency Logistic Services Sustainable Intensification Profitable Farming Technology based smart eco-system Interdependent Marketing Services Value Generation Increase in productivity per hectare Thank you Result • Reduce yield gap • Transparency in supply chain • Prevent some stakeholders from gaining exorbitant margins
    9. 9. References Research Papers and Reports  Supply chain resilience : A risk intelligent approach to managing global supply chains, Deloitte  Challenges and opportunities for viability of marginal and small farmers in India, Mahendra Singh, June 2012  Agricultural productivity trends in India: Sustainability issues, Praduman Kumar and Surabhi Mittal  Can India be the food basket of the world, Working paper series, ISB  Pursuit and promotion of science, Agriculture, Ch 21  TCS mobile agro advisory system, mKrishi  Manual on cost cultivation surveys, Central Statistical Organisation (CSO)  Stratefies to increase Agricultural productivity and land degradation in Uganda : An econometric analysis, Pender, Jagger et al  Developing Indian grain supply chain cost model : a system dynamics approach, MDI Gurgaon  Utilizing Industry-led Capacity to enhance supply chain performance: An empirical study, Cooperative research centre for Beef Genetic Technologies, University of Queensland  The agricultural treasure – an undersold opportunity, Devangshu Dutta  A conceptual framework for supply chain collaboration: empirical evidence from the agri-food industry, Matopulos and Manthou  Incraeaing Africa’s Agricultural productivity, A report by Pan Africa Chemistry Network  Policies for raising agricultural growth and productivity in  India, S Mahendra Dev  Secret of Gujarat’s agrarian miracle after 2000, Tushaar shah, RC Jain, Hemant P   Sustainable Intensification in agriculture, Tara Garnett, H. Charles Godfrey, Oxford Martin Programme on future of food  Increasing agricultural productivity of farming systems in parts of central India through participatory research-cum-  demonstrations and knowledge sharing innovations, ICRISAT  The movement of sustainable agricultural in Japan, Seth A.Y.  Davis, Seton Hall University  Small farmers in India: Challenges and Opportunities, S.  Mahendra Dev, IGIDR  Use of mobile technologies for empowering small holder  farmers in India, K.D. Kokate and A.K. Singh  Opportunities and solutions for sustainable food production,  Sustainable Development Solutions Network, UN  Connected Agriculture, Cisco   Role of Information Technology in Agriculture and its scope in India, S.C. Mittal   The role of information and communication technology sector in expanding economic opportunity, William J. Kramer,  Beth Jenkins, and Robert S. Katz, Oxford University Links    supply-chain-from-the-top-and-bottom/         -are-we-doing-it.aspx -to-improve-agriculture.html d=228&Itemid=650