Indian Agricultural Sector - could become hot?

As we had often come back to discussing economic benefits/impact of sports I thought it was about time for an economic discussion forum.
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jayakris
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Indian Agricultural Sector - could become hot?

Post by jayakris » Thu Nov 24, 2005 1:36 pm

Here is an article that I found rather interesting -

http://us.rediff.com/money/2005/nov/23g ... &file=.htm

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Jay



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Indian Agricultural Sector - could become hot??

Post by India1989 » Thu Nov 24, 2005 10:43 pm

Yeah agriculture can be pretty hot in India but still India needs to develop a lot in agriculture. The yield per hectare is too low and doesn't go more then 7000kg per ha. While in other countries in Europe and in China it is more then 20000 kg per ha.

So with 70% agricultural land India is still not the world's largest wheat or rice producer. While China has only 10% agricultural land. India has the most agricultural land in the world.



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Indian Agricultural Sector - could become hot??

Post by PKBasu » Fri Nov 25, 2005 5:37 am

That's an interesting article, Jay. In Malaysia (where I am working these days as the chief economist of the Malaysian government's holding company for all its government-linked companies), I am leading a project to do very similar things with the agriculture sector in Malaysia. It's a bit easier here, since agriculture is federal subject (although land and land-use are state subjects). In India, agriculture is a state subject -- which is what makes it so difficult to reform it from the centre. Sharad Pawar is adopting innovative ways of bringing about change nonetheless, using the experience he has gained from Baramati, where modern agriculture has seemingly transformed his constituency.



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Indian Agricultural Sector - could become hot??

Post by jayakris » Fri Nov 25, 2005 6:12 am

I have been a long-time believer that ultimately the agricultural sector had to pick up (with a large upgrading of the agro-industries, local markets etc), but had kinda given up on seeing anything happening in that sector in India. I was pleasantly surprised at the positive tone of that article, which may be based on a good dose of optimism too, I assume. On the other hand, if the supply chains get cleaner and the consumption of agriculture-based goods (not just grains/meat/egg/veg etc) pick up thanks to grocery chains etc and more westernized standards of living at least in some parts of the population, who knows how that sector might transform itself? ... Not something I have thought deeply about - so, that may be a naive analysis I guess.

Jay



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Indian Agricultural Sector - could become hot??

Post by Dhruv » Fri Nov 25, 2005 8:22 am

Well raw agricultural products are very low value added stuff. If you have industries such as the juice-making industry, candy bar industry, potato chip industry and other food related industries take root in India in a big way it is only then that we will see a lasting impact on the GDP.

One of the things with agriculture is that due to Mimimum support prices in India (and subsidies in most other countries) overproduction of a particular food product goes unpunished (actually rewarded) and so increasing productivity of staples is pretty much useless as it a poor form of money transfer. India already produces more than enough rice, wheat etc for itself and for the export market but as MSP's in some cases are higher than export prices if you export these goods you'd incur a loss and be slapped with duties for dumping etc. etc. Not all that simple. You need a better system as food industries really to move to the higher value added parts in the value chain.



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Re: Indian Agricultural Sector - could become hot??

Post by PKBasu » Sat Dec 09, 2006 3:16 am

Indian agriculture is almost certainly more healthy than the statistics are able to report. Punjab, in particular, is in the midst of a second green revolution -- but one that is really a horticultural revolution. Fruit and vegetable production is soaring as modern agricultural techniques are adopted. And the quality of this output is better, and will increasingly be exported. Some of my colleagues (from Malaysia) visited Field Fresh (Sunil Mittal's agribusiness company, which has been working quietly for the past two years building the supply-chain-management system for procuring fruits and vegetables in the most efficient manner from farmers to deliver seamlessly to the final retail outlet both in India and overseas) and were hugely impressed. Of course, while they were there, Sunil Mittal was negotiating with Wal-Mart and announced a joint venture that could help to transform Indian agriculture over the medium-term.



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Re: Indian Agricultural Sector - could become hot??

Post by puneets » Sat Dec 09, 2006 6:02 am

What are the ways in which giant foreign retailers like Walmart can benefit/harm the Indian agricultural industry (when compared to indigenous chains like Reliance, Apna Bazaar, Tata etc) ?



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Re: Indian Agricultural Sector - could become hot??

Post by jayakris » Sat Dec 09, 2006 10:34 am

Thanks for that info, PKB.  There is no doubt that India has the ability, land, resources, labor for better fruit and vegetable production - and for these produce prices to be much less than what they are in India (which certainly does affect the nutrition level and quality of life in India for sure).  Farm labor and land policies are partly to blame for this sector being stymied over the years, I have to guess - but I am not an expert on this topic.  Perhaps the changes now are a good thing.  I hav been waiting for quite a while for something to change on that front.  Way too much farm land being wasted in India, and way too high prices for some of the produces.  That all has got to change.

Jay



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Re: Indian Agricultural Sector - could become hot??

Post by Dhruv » Sat Dec 09, 2006 2:30 pm

Walmart isn't the best company to be dealing with as a supplier.  You have to always execute flawlessly and still do not get rewarded for it.  I have come across many suppliers that have suffered economically for it.



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Re: Indian Agricultural Sector - could become hot??

Post by PKBasu » Mon Dec 11, 2006 3:46 am

Wal-mart may be a tough customer to be supplying to, but if you can successfully supply to them you are likely to be achieving high levels of productivity and efficiency.

The problem with Indian agriculture (particularly fruits and vegetables) is that 30-50% of production goes waste. India is the world's second largest producer, but less than 5% of this output is processed. Post-harvest losses are immense. The interventions by Bharti/Fresh Foods, Mukesh Ambani and ITC are addressing these very issues. Instead of letting huge amounts of fruit/vegetable output rot (or be otherwise wasted because of inadequate post-harvest handling), they are seeking to procure output directly from farmers (cutting out the middlemen who currently corner the lion's share of the final value of the produce) and bring it straight to the final retail outlet through sophisticated supply-chain (including cold-chain) management. This has already had hugely positive results in Punjab, and should have similar productivity-enhancing results as it spreads across the country. With competition among the Mittals, Ambanis and ITC (and their respective partners) farmers will have choices and are unlikely to be exploited. More importantly, by cutting out the role of intermediaries, the supply-chain-management companies should be able to provide better values for farmers' output (while also significantly reducing post-harvest losses).

Olam International (owned by Kewalram Chanrai, and run by a terrific team -- of largely former Hindusthan Lever executives -- led by Sunny Verghese) has pioneered this supply-chain-management model for 14 "dry" commodities (mainly nuts), procuring them primarily from African farmers and getting them straight to final retail outlets around the world. Olam is growing rapidly, and is one of the companies that Singapore prides itself on. Of course, the entire management team is Indian (NRI), and the owner went to the same school in India that I went to! The business has been entirely outside India so far (operating mainly in Africa, headquartered in Singapore for the past few years, after initially being in Nigeria), but is beginning to look seriously at India too in recent times. 



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Re: Indian Agricultural Sector - could become hot??

Post by suresh » Mon Dec 11, 2006 6:42 am

Ex AP CM, Chandrababu Naidu's family run Heritage Foods has recently diversified into retailing. They are starting a chain of stores called @Fresh which sells vegetables (from his home district) and other agricultural output. They have been supplying milk for several years now. Here is a news item on this.

http://timesofindia.indiatimes.com/NEWS ... 763344.cms
Last edited by suresh on Mon Dec 11, 2006 7:00 am, edited 1 time in total.



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Re: Indian Agricultural Sector - could become hot??

Post by prasen9 » Fri May 24, 2019 4:41 pm

Since we have to put up with the BJP's religious pandering and increased incidents anyway for the next five years, I hope that they actually something for the economy. Get rid of the urea subsidies. Here is an article that talks about this. There are many more.

p.s. Would a kind moderator change the title by taking out the question at the end? -p.



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Re: Indian Agricultural Sector - could become hot??

Post by jayakris » Sat May 25, 2019 2:20 am

prasen9 wrote:
Fri May 24, 2019 4:41 pm
p.s. Would a kind moderator change the title by taking out the question at the end? -p.
Prasen, are you objecting to the double question marks (dropped one) or saying that it is not at all a question anymore, 14 years later? ... And how the heck did you find this topic, that I had apparently started in 2005? :) ... I had no memory of it.
prasen9 wrote:
Fri May 24, 2019 4:41 pm
Since we have to put up with the BJP's religious pandering and increased incidents anyway for the next five years, I hope that they actually something for the economy.
I agree with that too. Now that shock items like demonetization and GST and all that are done, and there is no startup delay like at the beginning of a government change, I am hoping to see some substantial changes. Things like swach bharat and all that have been good, and so have been some increased attention to electrification, significantly increased home bank accounts etc... Some ground work has been done, but now we need some across-the-board economic development of a fundamental nature, not just coasting with roughly similar growth rates like we have had for most of the last couple of decades or more.



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Re: Indian Agricultural Sector - could become hot?

Post by prasen9 » Sun May 26, 2019 2:27 pm

Growth rates depend upon a lot of factors. Some of the subsidies and stuff that Modi has not touched is left of left waste. Hoping he will now listen to expert economists etc. and do things based on evidence of the program working or not. Or if there is a program that is better. You may not be able to deliver a 8-10% growth rate because say the world economy does not cooperate and it takes time to fundamentally change things, but at least clean up the policy messes. My point #1 is the urea subsidy.

Oh, I searched if we have some thread on agriculture and this came up. Before dumping everything under "economy", I search to see if we have a more specific thread.

Actually, now that I think the extra question mark was maybe not wrong per se. We do things like additional exclamation marks to indicate our enthusiasm. But maybe now we are not as enthused by agriculture becoming super-hot. ;-)

For example, this article argues that direct benefit transfers can work better than fertilizer subsidies.

With respect to the petroleum subsidies, he has indeed removed a whole bunch of them, but in the last budget there was still a large sum of subsidy given. Now, one needs to be careful, but I would study that and see if we will upset anything majorly by taking some of that out too. Subsidizing petroleum is indirectly harming our renewable energy efforts.



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