high value agri shashankk dc

AN EMERGING ERA
PREPARED BY
SHASHANK JAIN
REG. NO. 04-2062-2012
IABMI, AAU, ANAND
GUIDED BY
DR. M. R. PRAJAPATI
ASST. PROFESSOR

• 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

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

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

Sign of change
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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)

•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.

Trends in high-value agriculture
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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
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Table 1

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.

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

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
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Fig. 2
Source- Directorate of Economics and Statistics, Ministry of Agriculture, Govt.
of India, New Delhi.

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

• 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)
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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
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Source: CSO (2010)
Fig. 4

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).
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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

Commodity composition of agricultural exports
in India: TE 2003-04 and 2011-12
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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

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

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

Driving factors
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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

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

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

9/2/2013 IABMI, AAU, ANAND 388110
Source: NSS Report No. 530: Household Consumer Expenditure in
India, 2007-08
24
Fig. 8

Expenditure shares and expenditure elasticity
of food sub-categories in households
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Table 3
Source: NSS Report on: Household Consumer Expenditure in India, 2007-08

Outward-looking trade policies
Fig. 9
Source: IFPRI report 2007
9/2/2013 26IABMI, AAU, ANAND 388110
• `

Supply chain coordination
9/2/2013 IABMI, AAU, ANAND 388110 27

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

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
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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

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
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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
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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

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

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

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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