high value agri shashankk dc

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all the signs of diversion from subsistence to commercial farming

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high value agri shashankk dc

  1. 1. AN EMERGING ERA PREPARED BY SHASHANK JAIN REG. NO. 04-2062-2012 IABMI, AAU, ANAND GUIDED BY DR. M. R. PRAJAPATI ASST. PROFESSOR
  2. 2. • Objectives 1. Introduction • Pattern of cropping and comparison • Export and contribution of HVACs • Driving forces behind the growth of high-value agriculture • Supply chain coordination • Case of HVA and contract farming 2. Trends in high-value agriculture • Policy suggestion 3. Conclusion 4. References Contents of the presentation 9/2/2013 IABMI, AAU, ANAND 388110 2
  3. 3. What are High Value Agriculture commodities (HVACs) • Definition: Agricultural commodities that generate high returns per unit of labour, land, or capital. Examples: • Fruits • Vegetables • Dairy & eggs • Meat • Fish 9/2/2013 IABMI, AAU, ANAND 388110 3 Characteristics in common Perishability (and hence risk) High income elasticity (hence growing demand) Price is very sensitive to quality Food safety particularly important
  4. 4. INTRODUCTION Indian agriculture – decelerated growth Growth of 3.2% per annum during 1980/81 to average 2-2.5% currently. The question is “how to keep agriculture moving” ??? when the rice-wheat based Green Revolution has started showing signs of fatigue
  5. 5. Sign of change 9/2/2013 IABMI, AAU, ANAND 388110 5 In the last four decades several substantial changes in the patterns of; (a) Production, consumption and trade in agriculture From grains and other starchy staple crops to higher-value commodities such as meat, milk, eggs, fish, fruits, and vegetables. (b) Modern agricultural marketing channels Expansion of processing, large-scale retail outlets (e.g. supermarkets), and food services industries (e.g. restaurants)
  6. 6. •To analyze the trends in high-value agriculture and factors driving them. •To study the emerging patterns of supply chain coordination, with particular emphasis on contract farming and small farmers.
  7. 7. Trends in high-value agriculture 9/2/2013 IABMI, AAU, ANAND 388110 7
  8. 8. Source: Agricultural Statistics at a Glance 2011 and previous issues, Directorate of Economics and Statistics, Ministry of Agriculture, Govt. of India, New Delhi. Trends in area and production of major crops/crop groups: TE 1983-84 to TE 2009-10 9/2/2013 IABMI, AAU, ANAND 388110 8 Table 1
  9. 9. All India Share and Growth Rates of Major Crops/Crop Groups Share in total cropped area (%) Compound annual growth rate (%) Crops TE 1983- 84 TE 1993-94 TE 2007- 08 1980s 1990s 2000s Rice 22.81 22.94 22.62 0.6 0.78 -0.70 Wheat 13.24 13.20 14.24 0.36 1.40 1.30 Coarse cereals 23.68 18.48 14.84 -1.49 -1.61 -2.14 Total cereals 59.72 54.62 51.69 -0.29 -0.02 0.21 Fruits & vegetables 2.91 3.82 5.10 3.38 2.5 5.3 Pulses 13.36 12.56 12.08 0.09 -0.64 0.83 9/2/2013 IABMI, AAU, ANAND 388110 9 Table 2 Source- Directorate of Economics and Statistics, Ministry of Agriculture, Govt. of India, New Delhi.
  10. 10. Share in total cropped area (%) 22.81 13.24 23.68 59.72 2.91 13.36 22.94 13.2 18.48 54.62 3.82 12.5622.62 14.24 14.84 51.69 5.1 12.08 Rice Wheat Coarse cereals Total cereals Fruits & vegetables Pulses TE 1983-84 TE 1993-94 TE 2007-08 9/2/2013 IABMI, AAU, ANAND 388110 Source- Directorate of Economics and Statistics, Ministry of Agriculture, Govt. of India, New Delhi. 10 Fig. 1
  11. 11. Compound annual growth rate (area) -3 -2 -1 0 1 2 3 4 5 6 Rice Wheat Coarse cereals Total cereals Fruits & vegetables Pulses 0.6 0.36 -1.49 -0.29 3.38 0.09 0.78 1.4 -1.61 -0.02 2.5 -0.64-0.7 1.3 -2.14 0.21 5.3 0.83 1980s 1990s 2000s 9/2/2013 IABMI, AAU, ANAND 388110 11 Fig. 2 Source- Directorate of Economics and Statistics, Ministry of Agriculture, Govt. of India, New Delhi.
  12. 12. Share in value of output from agriculture(%) 0 10 20 30 40 50 60 70 80 90 TE 1983-84 TE 1993-94 TE 2003-04 TE 2007-08 9/2/2013 IABMI, AAU, ANAND 388110 12 Source: CSO (2010) Fig. 3
  13. 13. • In the TE 2007-08 Per hectare value of output of fruits and vegetables was the highest (Rs. 1,08,785), followed by condiments and spices (Rs. 65,561) and sugarcane (Rs. 43,362) at 1999-2000 prices. • Average productivity of fruits and vegetables was about eight times higher compared with cereals. Per hectare value of output from pulses was the lowest. • The share of livestock in total value of agricultural output has increased from 20.6 per cent in TE 1983-84to 23.9 percent in TE 1993-94 and 26.1 percent in TE 2007-08.(Vijay paul Sharma and Dinesh jain 2011) 9/2/2013 IABMI, AAU, ANAND 388110 13
  14. 14. Compound Annual Growth Rate of value of output (%) 3 3.2 1.7 5.6 2.2 4.6 5.2 5.2 6 2.6 4.7 2.5 3.9 1.8 2 0.5 0.4 6.3 3.7 4.3 2.6 4.7 0.4 5 3 4.62.4 2.5 2.2 6.4 3.5 3.8 3.6 3.9 2.9 17.2 3.5 3.5 3.6 1980s 1990s 2000s 9/2/2013 IABMI, AAU, ANAND 388110 14 Source: CSO (2010) Fig. 4
  15. 15. IMPORT EXPORT TREND • The share of agricultural exports in total export value declined from about 18.5 percent in 1990-91 to about 10.6 percent in 2009-10, while share of agricultural imports to total national imports increased from 2.8 percent in 1990-91 (pre-reforms period) and reached a high of 8.2 percent in 1998-99 and declined to about 4.4 percent in 2009-10 (GoI, 2010). 9/2/2013 IABMI, AAU, ANAND 388110 15
  16. 16. Trends in imports and exports of agricultural commodities and share of high value commodity exports in total agricultural exports 9/2/2013 IABMI, AAU, ANAND 388110Source: Economic Survey (2010-11 & earlier issues) 16 Fig. 5
  17. 17. Commodity composition of agricultural exports in India: TE 2003-04 and 2011-12 9/2/2013 IABMI, AAU, ANAND 388110 Source: Compiled from Economic Survey & APEDA 17 Fig. 5 other 19% marine product 19% rice non basmati 7% oilmeals 7% F&V 6% rice basmati 6% paper/wood 6% wheat 5% cashew 5% Livestock product 5% tea 5% spice 5% sugar 5% 2003-04
  18. 18. 9/2/2013 IABMI, AAU, ANAND 388110 18 marine product 13% guar gum 13% rice basmati 12% Livestock product 11%oilmeals 8% sugar 8% spice 8% tea 5% rice non basmati 4% F&V 4% groundnut 4% cashew 3% paper/wood 3% other 3% wheat 1% 2011-12 Source: Compiled from Economic Survey , MPEDA & APEDA Commodity composition of agricultural exports in India: TE 2003-04 and 2011-12
  19. 19. Commodity composition of agricultural Export & imports India: TE 2009-10 9/2/2013 IABMI, AAU, ANAND 388110 Source: Economic Survey (2010-11) 19 Fig. 6
  20. 20. Driving factors 9/2/2013 IABMI, AAU, ANAND 388110 20
  21. 21. Driving factors • Rising per capita income • Rapid urbanisation • Outward-looking trade policies • Foreign investment 9/2/2013 IABMI, AAU, ANAND 388110 11.7% 2012-13 23% in 1980 to 32% in 2012 21 Source- Population census 2011
  22. 22. Rising per capita income • The average monthly per capita consumer expenditure (MPCE) in 2007-08 stood at Rs. 1471.54 in urban and Rs. 772.36 in rural India. 9/2/2013 IABMI, AAU, ANAND 388110 22
  23. 23. Importance of food expenditure and high-value product expenditure, rural and urban households, by expenditure level, 2007-08 9/2/2013 IABMI, AAU, ANAND 388110 Source: NSS Report on: Household Consumer Expenditure in India, 2007-08 23 Fig. 7 share of food expenditure is decreasing with rise in MPCE. Share of high value product increases with rise in MPCE
  24. 24. 9/2/2013 IABMI, AAU, ANAND 388110 Source: NSS Report No. 530: Household Consumer Expenditure in India, 2007-08 24 Fig. 8
  25. 25. Expenditure shares and expenditure elasticity of food sub-categories in households 9/2/2013 IABMI, AAU, ANAND 388110 25 Table 3 Source: NSS Report on: Household Consumer Expenditure in India, 2007-08
  26. 26. Outward-looking trade policies Fig. 9 Source: IFPRI report 2007 9/2/2013 26IABMI, AAU, ANAND 388110 • `
  27. 27. Supply chain coordination 9/2/2013 IABMI, AAU, ANAND 388110 27
  28. 28. Supply chain coordination: Supermarkets Rapid growth in supermarkets and other modern retail formats International Food Policy Research Institute report 2007 9/2/2013 28IABMI, AAU, ANAND 388110 Causes: Income growth, urbanization, info & communication technology and FDI Consequences: decline of wholesalers, need for greater coordination, greater attention to quality & food safety
  29. 29. Growth in agricultural processing Causes: • Growing domestic demand • Liberalization of trade and FDI •Shift toward production of perishable foods. Consequences: •Greater need for specific crop varieties and production methods. •Greater need for vertical linkages i.e. farmer-processor relationship. •Allows farmers to access high- value markets, esp. fast-growing export markets 9/2/2013 29IABMI, AAU, ANAND 388110
  30. 30. Growing Export • Growth in high-value agricultural exports • Fruit & vegetable exports from India now larger than coffee, tea, cocoa, cotton, and tobacco combined • Fish exports from developing countries larger than F&V exports • Exporters need high volume, quality control, and food safety, as well as mechanisms for documenting quality & safety 9/2/2013 30IABMI, AAU, ANAND 388110
  31. 31. Contract farming with small farmers Case of HVA • Contract farming of dairy, poultry, and vegetables in India • 174 dairy farmers in Punjab, 152 of which contract to Nestles • 50 broiler farmers in Andhra Pradesh, 25 of which contract • 150 vegetable farmers near Delhi, 100 of which contract 9/2/2013 31IABMI, AAU, ANAND 388110
  32. 32. Other results • Prices & revenue for two groups similar, but contract farmers have lower costs, esp transaction costs • In poultry, contract farmers have more stable income • Small farmers gain more in percentage terms than large farmers • Scale of operations • 56% of contract dairy farms small (<=5 cows) • 32% of contract poultry growers small (< 5000 birds/cycle) • 37% of contract vegetable growers small 9/2/2013 32IABMI, AAU, ANAND 388110
  33. 33. Conclusion Although demand for HVCs has increased faster than food grains, The high-value agriculture-led-growth strategy also provides significant scope for achieving greater commercialization of smallholder agriculture, but small holders give prime place to the cereals, particularly rice and wheat, in the cropping system on the consideration of (a) food security, (b) low risk, and (c) easy market access. 9/2/2013 IABMI, AAU, ANAND 388110 33
  34. 34. Policy Recommendations • Desired level of diversification • Improved post-harvest management, Value addition • Credit and Pricing Policy (National Academy of Agricultural Sciences) • Capital formation by investment in technology development and dissemination, basic infrastructure, and active public-private partnerships, and provision of inputs, in particular planting materials for fruits and seeds for vegetables. (Prof. V. P. Sharma & Dinesh Jain) 9/2/2013 IABMI, AAU, ANAND 388110 34
  35. 35. References 1. Agritrade India; http://agritrade.iift.ac.in/html/Training/Product%20study/Fruits%20&% 20Vegetables APEDA, agriexchange.apeda.gov.in accessed on 14 Apr `13 2. Birthal, P.S., P.K. Joshi, Sonia Chauhan and Harvinder Singh (2008), “Can horticulture revitalize agricultural growth”, Indian Journal of Agriculture Economics, Vol. 63, No.3, July-September), pp. 310-21. 3. CSO, http://mospi.nic.in/Mospi_New/site/inner.aspx?status=2&menu_i d=92 4. Datasets ,Data Portal India; http//data.gov.in 5. IFPRI, http://www.ifpri.org/sites/default/files/publications/mtidp83 9/2/2013 IABMI, AAU, ANAND 388110 35
  36. 36. 7. MPEDA, www.mpeda.com, accessed on 14 Apr `13 8. National Academy of Agricultural Sciences 9. NSSO (2010), “Household consumer expenditure in India, 2007- 08, NSS 64th Round July 2007 to June 2008 and earlier issues)”, National Sample Survey Organization (NSSO), Ministry of Statistics and Programme Implementation, Govt. of India. 10. Policy paper, 40; National Academy of Agricultural Sciences 11. Sharma, Vijay Paul and Dinesh Jain; (2011); High-Value Agriculture in India: Past Trends and Future Prospects; W.P. No. 2011-07-029/2/2013 IABMI, AAU, ANAND 388110 36 References

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