global average of 4.3 tonnes. The average yield for apples grown in India (J&K) is about 11 MT/Acre compared to USA, New Zealand, Israel or China, where yields range between 30-70 MT/Acre.This pattern is typical of most of our agricultural commodities such as pulses and edible oilseeds whose demand has been rising faster than supply, adding to food inflation.

The substantial hikes in Minimum Support Price for rice and wheat in recent years have distorted production patterns, resulting in loss of benefits of crop diversification and inadequate focus on cash crops.Lack of crucial inputs such as infrastructure, post-harvest linkages and

technology further results in losses across the supply chain. For example, gross capital formation in agriculture and allied sectors has been below 3 percent for years.

Rejuvenating India’s agriculture sector, which provides livelihood to nearly 60 percent of the workforce, needs to be

made central to the inclusive growth endeavour of the government. India’s current policies for the agriculture sector are geared towards short-term solutions and revenue expenditure rather than long-term capital investment solutions. The dependence on subsidies squeezes government spends on critical infrastructure, technology and credit, in the absence of which farmers continue to use inefficient methods of cultivation. Given the recent pressures of a fast growing population with increasing food consumption levels, the need for increasing agricultural productivity through technology infusion and market-led interventions is gaining increasing urgency.

It is well-acknowledged that every rupee of contribution to GDP from farming is twice as effective as other interventions in alleviating rural poverty. Further, agriculture is an indirect growth driver, as a growth rate of 4percent in agriculture translates into robust demand for other sectors. High agriculture growth also helps mute food inflation, a key concern. For all these reasons, agricultural productivity should be at the centre of the policy matrix.

Yields per hectare of food grains, fruits and vegetables in India are far below global averages. Our rice yields are at one-third of China, and at about half the levels in Vietnam and Indonesia.Even India’s most productive states lag global averages. For example, Punjab’s yield of rice in 2010 was 3.8 tonnes per hectare as against the

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AGRICULTURAL PRODUCTIVITY:

TRANSITIONING FROM SUBSIDY REGIME TO TECHNOLOGY AND OPEN MARKETS

LEAD ARTICLE

Bimonthly Newsletter - January 2012, Vol. IV - No.11

The experience of other economies at similar stages of development is instructive. Brazil, China, and several south-east Asian countries have leveraged technology and instituted trade-friendly policies to bring in greater private sector investments into agriculture. In India, where 80 percent of landholdings are of less than 2 acres, it is essential to find economically viable solutions to improve farmer incomes.

India has the capability to leverage existing crop technology or develop new technologies for raising productivity and sustainable agricultural development. Technologies for energy saving, environment protection, and satellite mapping need to be also infused into the sector. All this would require high investments.

Such investments can be attracted from the private sector, which has largely remained outside the effort of agricultural capital expenditure. A number of legal and policy interventions could

help augment private investments. For example, the Agriculture Produce Market Committees Act has yet to be revisited in many states. Supply chain infrastructure creation such as

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warehousing, cold storage, and rural roads, would also bring in private funds. India’s storage capacity falls short by some 15 million tonnes, leading to wastage of hundreds of tonnes of food grain each year.

Private sector is capable of large-scale technology infusion. Precision farming, which leverages information technology for matching inputs and provides real-time information on soil, has been deployed to good use by the Argentine group Los Grobos in an outsourcing structure. No-till farming is used in place of ploughing in some countries, leaving residue of the last crop to enrich the soil. Such new-age farming methods, if extensively propagated, can transform production and yields.

It is, therefore, essential to raise public research in agriculture. Part of Brazil’s success in the sector owes to its high expenditure on agricultural research at 1.7 percent of its GDP, higher than in China. Investment in R&D and science-based technologies would greatly benefit India as well, which has 14 agri-climatic zones and potentially wide range of agri produce. Private investment into agriculture R&D must be encouraged through incentives such as tax breaks and availability of land and infrastructure.

Finally, trade-led agricultural development is something that must be considered. While self-sufficiency has been the primary objective for agriculture policy, export of agri-produce to other markets must be explored. For example,

countries such as Mexico and the Philippines have taken lead positions in export of mangoes, one of India’s trademark fruits. Agricultural tariffs need rethinking in this context.

As the Indian economy expands, better productivity through technology infusion and introduction of global best practices will ensure better quality and prices for consumers. Also, Indian agriculture will be able to meet to the changing needs of today’s consumer and this will give major fillip to farmers to diversify to high value cash crops. But most importantly, the true winner will be the farmer, in particular the small and marginal farmer, who will be able to improve his income through better productivity and be an equal partner in India’s growth.

Confederation of Indian Industry

SUPPLIER DEVELOPMENT INITIATIVE CII - FACE(FOOD AND AGRICULTURE CENTRE OF EXCELLENCE)

In India, multinational and other large food processing organizations generally have easy access to information on international technology, standards and best practices

and have implemented systems and standards keeping in mind both the domestic and international customers and consumers. However, these organizations have been struggling over the years to improve the quality, quantities and availability of supplies from their small suppliers. Consequently, some of these organizations have adopted various methods and strategies to develop their suppliers and products. They have formed Supplier development teams which are equipped with knowledge and latest updates from the industry. The cost to the company for sustaining these teams are significantly high as these organizations have to maintain a large base of supplier development managers. Coupled with this, as the organization grows, the number of products & their suppliers grow and so does the supplier development team of the organization. Multiple Food Safety and Quality audits faced by a single supplier supplying to many different buyer organizations is another pressing problem faced by the concerned suppliers.

CII – FACE (Food and Agriculture Centre of Excellence) has now initiated the Supplier Development Initiative as a comprehensive package with an aim to support the supplier development strategies of different Large & Medium Indian Food organization & address the concern of multiple audits by:

Ensuring compliance of the small & medium Indian food

processing organizations to the requirements of FSSA, 2006

Providing support in up-gradation and development of food safety and quality system in small & medium food producers/ suppliers through HACCP/GFSI based system standards

Developing common assessment tool for suppliers which are providing ingredients and raw materials to many organizations, to avoid multiplicity of assessments by different buyer organizations.

Facilitate implementation of CII Food Safety Award Model for SMEs and apply for the CII National Award for Food Safety

This initiative may facilitate large organizations to focus more on their product specific parameters rather than addressing day to day rework and rejects on food safety, quality and regulatory issues of their Suppliers.

This initiative would require some of the Large and Medium scale organizations to form a collaborative group by participation of their key managers and identify their key suppliers which could form clusters to undergo an initial preliminary Gap assessment, (using CII Food safety and Quality Assessment Tool). CII may then develop customised training programs and also provide consultation over a stipulated duration to these organizations (through the cluster approach if required) based on the outcome of the assessment report . The progress would be monitored through a monthly review mechanism with focus on shared learning and implementation of quality tools and techniques in a cost effective manner to develop sustainable systems for each supplier.

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As per the estimates from Central Statistics Office (CSO), the share of agriculture and allied sector in GDP of the country has declined from 47.6% in 1960-61 to 14.4% in 2010-11 at 2004-05 prices. This is due to structural changes in the economy and more employment opportunities coming up in new areas. The details of the share of agriculture sector in Gross Domestic Product (GDP) of the country from the decade of sixties till the present decade is in the table below:

SHARE OF AGRICULTURE SECTOR IN GDP

DATA

Prices of fruits and vegetables, which are mostly perishable commodities, by and large depend on market forces, prevailing weather conditions, cost of storage, transportation and rising demand due to increasing income and urbanization. Good post harvest management and market infrastructure is essential to stabilize prices of horticulture products, for which assistance is provided by the government under various schemes for setting up of cold storages, terminal markets, wholesale markets and rural primary markets/apni mandies.

2nd Advanced Estimate - Department of Agriculture & Cooperation.

The wholesale price index for fruits and vegetables has shown some increase during the last three years as under:

The production of fruits and vegetables has increased during the last three years, as below:

PRODUCTION OF FRUITS AND VEGETABLES

FOOD GRAINS

The per capita net availability of foodgrains in the country has increased from 416.2 grams/day in 2001 to 438.6 grams/day in 2010. As indicated in the table below, there has been no steady decline in the productivity of foodgrains and cash crops in the country during the last few years. The decline in productivity during 2009-10 has been due to drought in most parts of the country.

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Year 2008-09 2009-10 2010-11*

Fruits 68465.5 71515.5 75825.6

Vegetables 129076.8 133737.6 137686.6

Total 197542.3 205253.1 213512.2

Year 2008 2009 2010

Fruits Vegetables 131.93 143.61 163.02

Source: Ministry of Commerce and Industry

Year GDP SHARE OF AGRICULTURE & ALLIE SECTORS TO TOTAL ECONOMY – at 2004-05 prices (%)

1960-61 47.6

1970-71 41.7

1980-81 35.7

1990-91 29.5

2000-01 22.3

2010-11 14.4

Confederation of Indian Industry

151 LAKH TONNES ADDITIONAL FOODGRAIN STORAGE TO BE CREATED IN 19 STATES

The Food Corporation of India would now give a guarantee of ten years for assured hiring to the private entrepreneurs. A capacity of about 151 lakh tonnes is to be created under the scheme in 19 states. Out of this as on 15.10.2011 tenders have been finalized for creation of storage capacity of 69 lakh tonnes by the private entrepreneurs.

Details of import of major foodgrains during the last three years i.e. 2008-09 to 2010-11 are as under:

6.6% Growth in Agriculture Sector in 2010-11

The growth rate of agriculture and allied sectors reached the level of 6.6% for 2010-11 which is the highest achieved growth rate during the last six years, as per the revised estimates of Central Statistics Office, Ministry of Statistics and Programme Implementation.

Investment in Agriculture and Allied Sector on Constant Rise

As per the latest estimates, the public and private investment (Gross Capital Formation - GCF) in Agriculture and Allied

Sectors (Agriculture including livestock, forestry & logging and fishing) has been growing steadily during the recent years.

The total investment in the Agriculture and Allied Sectors has increased from Rs.90710

crore in 2006-07 to Rs.133377 crore in 2009-10. Similarly, public investment has increased from Rs. 22987 crore in 2006-07 to Rs.23635 crore in 2009-10 and private investment has increased from Rs.67723 crore in 2006-07 to Rs.109742 crore in 2009-10.

Priority lending for agro sector mooted

A parliamentary panel has suggested that banks extend loans

to food processing industry under priority sector lending.

“Financial support through low cost interest rates, high leverage and centralised policy will help in export boost,” Parliamentary Standing Committee on Commerce said in its latest report.

The committee was also of the view that there was a need to revisit the policy guiding agro-processing sector in the country.

“Government needs to draft policy in terms of availability of adequate finance, development of efficacious local market with right policies and inputs and clear division of products in terms of domestic consumption and exports,” it said.

Regretting that reforms in agricultural marketing has not yet taken place in India, the committee suggested mandis or wholesale markets must be evolved in a manner where the processor and the farmers can meet directly, without the interference of middle-men.

Mega Food Parks

The Ministry of Food Processing Industries has approved 10 Mega Food Parks in Andhra Pradesh, Punjab, Jharkhand, Assam, West Bengal, Uttarakhand, Tamil Nadu, Karnataka, Bihar and Tripura. In-principle approval has been accorded to 5 projects and Expression of Interest (EoI) issued for another 15 projects.

New ‘Mission on Food Processing’ on the anvil

The Working Group on Food Processing for the XII Plan has recommended a new centrally sponsored scheme in the form of National Mission on Food Processing proposed with seven components. Four components, namely, (i) Technology up-gradation / setting up / modernization of food processing industries, (ii) HRD, (iii) Modernization of Abattoirs and (iv) Promotional Activities are being implemented in 11th Plan as Central Sector Schemes which will form part of the National Mission on Food Processing. Three new activities, namely, (i) Modernization of Meat Shops, (ii) Cold Chain, Value Addition IN

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Crops Import ('000 Tonnes)

2008-09 2009-10 2010-11

Rice 0.09 0.07 0.22

Wheat 0.02 164.38 183.52

Other 20.60 33.69 30.68

Cereals

Pulses 2481.10 3509.58 2604.94

Confederation of Indian Industry

Even in respect of vegetables, it is the conspicuous downward drift in onion and potatoes on a sustained basis and during the week ended December 24, there was a massive decline of almost 74% in the wholesale index for onions and a hefty 34% in the potato index.

Essentially, the negative rate of inflation now is due to seasonal factors. Once these work themselves out, inflation may raise its ugly head again. Moreover, the high base of the year ago has also slowed down the inflation rate of late, climaxing in the absolute decline in the food index during the week ended December 24 over the year ago level. Therefore, the fall in the food inflation may also be statistical.

Apart from vegetables, notably onion and potato, as well cereals where some moderation is evident, for the rest of the primary food articles, the point-to-point increase in prices has been rather high - pulses ( 13.85%) during the week ended December 24, fruits (10.87%), milk (9.49%) and eggs, meat & fish (13.82%).

In other words, the fall in the inflation rate has yet to acquire a generalised character.

Also, it is wrong to go overboard about the negative inflation rate now. This pertains to only primary articles where little processing is involved.

Other staples like edible oils and sugar are not included in this computation as they come under manufactures under the group ‘food products’. For November 2011, the index for edible oils had become dearer by 11.57% and sugar by 5.82%.

If these are factored in, food inflation, per se, may be quite high even now, although the primary food inflation had dropped 3.36% in the fourth week of December 2011.

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& Preservation Infrastructure for non-horticulture produce, and (iii) Creation of on-farm PPC/CCs are proposed as new components. Planning Commission has given in-principle approval.

Launching of National Mission on Food Processing is likely to have greater involvement of State Governments and all stakeholders resulting fast growth of the food processing sector.

India Elected Chairman of International Sugar Council

India has been elected Chairman of International Sugar Council, an apex organisation of 88 countries dealing with development of sugar sector in the world. During its 40th meeting held in London, the Council unanimously elected Dr. B.C. Gupta, Union Food Secretary as its next Chairman.

Of fall season in inflation and statistics

Primary food inflation entered negative territory during the penultimate week of 2011, down from a double-digit 10.63% during the first week of November to (-) 3.36% as of December 24.

The fall in the latest week stems from a precipitous fall of as much as 50.22% in vegetable prices and the wheat index easing by 3.34%, besides a decline in condiments and spices to the tune of 17%.

EVENTS

Indo-US Dialogue on Cold Chain Development held on 8th November, 2011 (Tuesday): New Delhi

Coinciding with US Under Secretary for Commerce Mr. Francisco Sanchez’s visit to India, the CII National Task Force on Cold Chain Development and the Global Cold Chain Alliance (GCCA) jointly organizied the Indo-US Dialogue on Cold Chain Development on 8th November 2011 at CII Headquarters, New Delhi.

The Dialogue was attended by prominent speakers from Emabassy of the United States of America, Emerson Climate Technologies (I) Ltd., Global Cold Chain Alliance, Ingersoll Rand Interntational (I) Ltd. Blue Star Ltd., Danfoss Industries Limited

The Dialogue was joined by Mr. Francisco Sanchez, US Under Secretary for Commerce & Dr. Rahul Khullar, Commerce Secretary, Government of India.

Mr. Atul Khanna, India Representative, Global Cold Chain Alliance, Mr. Francisco Sanchez, US Under Secretary for Commerce, Mr. Shrikant Bapat, Managing Director, Emerson Climate Technologies (I) Limited, Dr. Rahul Khullar, Commerce Secretary, Government of India, Mr. B. Thiagarajan, Chairman, CII National Task Force on Cold Chain Dev & President, Blue Star Limited, Ms. Meetu Kapur, Head (Agri & Food), CII.

CII AGRICULTURE & FOOD: A RETROSPECT

Source: PIB releases/ newspapers

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Working Group Dialogue for promoting Inclusive Growth in Agriculture, jointly organized by the Confederation of Indian Industry (CII) and the USAID in New Delhi today, Dr. Rajiv Shah, Administrator, USAID said US has had profound collaboration with India in all sectors, especially in agriculture, which started in 1960s with the establishment of different Agricultural institutes across India, creating the foundation for the Green Revolution. Now the time has come to revive the same to create a partnership for an Evergreen Revolution in view of existing challenges of changing climate, limited resources and growing demand.

Dr. Shah emphasized that new business models are to be developed which require private sector involvement for strategic investments in infrastructure. He said this is the beginning of new partnership wherein there is a shift from donor and recipient roles to one of equal partnership and shared responsibilities.

Dr. Shah announced that USAID in partnership with Confederation of Indian Industry’s Food and Agriculture Centre of Excellence will set up 30 Rural Business Hubs in Eastern India that would be exclusively focusing on farmers for disseminating best practices and technologies. He complimented CII for having been instrumental for bringing private sector closer for such engagements.

The Dialogue was addressed by eminent speakers like Mr. T. Nandakumar, Former Secretary (Agriculture); Mr. P. Chengal Reddy, Secretary General, Consortium of Indian Farmers Alliance (CIFA); Mr. Ajay Shriram, Chairman, DCM Shriram Consolidated Ltd.; Mr. Vivek Bharati, Executive Director, Pepsico Holdings India Limited; Dr. Gyanendra Shukla, Director, Monsanto Holdings India Ltd; Ms. Aruna Bhinge, Head (Food Security), Syngenta India Limited to name a few and the Sessions were focused on Food Security; Production Systems; Post Harvest Technologies and Allied Agro Industry.

India is going to be the Global Innovation Hub for Agriculture USAID & CII to set up 30 Rural Business Hubs in Eastern India: Rajiv Shah

Dr. Rajiv Shah, Administrator, USAID releasing the Brochure of CII-Jubliant Bhartia Food and Agriculture Centre of Excellence, Mr. Rakesh Bharti Mittal, Chairman, CII National Council on Agriculture, Mr. Hari S. Bhartia, Chairman, CII-Jubliant Bhartia Centre of Excellence, Mr. Chandrajit Banerjee, Director General, CII

Dr. Rajiv Shah, Administrator, USAID lighting the lamp at the soft launch of CII-Jubilant Bhartia Food and Agriculture Centre of Excellence, Mr. Rakesh Bharti Mittal, Chairman, CII National Council on Agriculture, Mr. Hari S. Bhartia, Chairman, CII-Jubliant Bhartia Centre of Excellence, Mr. Chandrajit Banerjee, Director General, CII.

Mr. T.Nandakumar, Former Secretary (Agriculture) & Member, National Disaster Management Authority (NDMA chairing the Session on “Post Harvest Technologies”, (L-R) Mr. Sanjay Aggarwal, CMD, Dev Bhumi Cold Chain Ltd., Mr. P.Chengal Reddy, Secretary General, Consortium of Indian Farmers Alliance (CIFA), Mr. B.B.Pattanaik, CMD, CWC Limited.

Potential Areas of Cooperation identified at the Dialogue were:

The total cold chain market in India is worth Rs. 21,375 million, which is equivalent to US $ 475 million. (taking 1US$= Rs 45). However, Indian Industry looks forward to coordinate with the counter parts for the following potential areas:

US Cold Chain Industry to share the Best practices application on Integrated Cold Chain Development and evolution of the industry.

Set up a Pilot Project on an Integrated Cold Chain in India – between US and India to demonstrate the experiences of the USA which will benefit all stakeholders in India.

US Cold Chain Industry to support research and development in adapting technologies to Indian condition.

Indo-US Cold Chain Skill Development Centre to be formed to promote knowledge transfer & enable Indian entrepreneurs in skill development and upgradation.

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This is a Publication of Confederation of Indian Industry (CII)Agriculture & Food Processing Division

Ms. Meetu KapurHead Agriculture & Food ProcessingIndia Habitat Centre, Core 4A, 4th Floor, New Delhi - 110 003.Ph: 91-11-24982230-35, Fax: 91-11-24682226E-mail: meetukapur@cii.inWebsite: www.cii.in

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EVENTS

CII National Task Force on Cold Chain Development–Interactive Session with Mr. v Bijay Kumar, Managing Director, National Horticulture Board, Government of India (L-R) Ms. Meetu Kapur, Head (Agriculture & Food Processing), CII, Mr. Bijay Kumar, Managing Director, National Horticulture Board, Government of India, Mr. B. Thiagarajan, Chairman, CII National Task Force on Cold Chain Development and President, Blue Star Limited.

Mr. Bijay Kumar, Managing Director, National Horticulture Board, Government of India in an Interactive Session with CII National Task Force on Cold Chain Development

The CII National Task Force on Cold Chain Development, led by Mr. B. Thiagarajan, President, Blue Star Limited organized an Interactive Session with Mr. Bijay Kumar, Managing Director, National Horticulture Board, Government of India in New Delhi recently.

In his address, Mr. Bijay Kumar, MD, NHB mentioned that CII had played a vital role in ensuring that higher level of technology is introduced in cold chain infrastructure for fresh horticulture produce in the Country. He further said that accordingly, Ministry of Agriculture had increased

Awareness Program on Food Safety and Standards Regulations (FSSR) 2011: Hyderabad

CII-FACE organised a One Day Awareness Program on Food Safety and Standards Regulations 2011 in Hyderabad on 11-12 January 2012.

In view of the recently mandated Food Regulations, the program saw representatives from different food sector organisations covering Manufacturing, Retail & Certification Bodies like Global Greens, Tata Global Beverages, Srestha Naturals, Metro Cash and Carry, Ravi Food, AP Dairy Development, IRQS, IQF Food and others taking part in the program. While the participants felt that FSSR implementation was indeed a challenge, they welcomed the move by FSSAI indicating that sooner or later the food industry needed to gear up on implementation of Food Safety and Quality systems by extensively training their in house resources and addressing their infrastructure requirements in a planned manner. While India’s vast population and its potential as a popular tourist destination made the FSSR imperative, some of the states were yet to overcome the constraints like administrative resource crunch and infrastructure hurdles. The participants pointed out that dearth of NABL accredited laboratories & reliability of laboratory reports were some of the other constraints they were facing. Besides these hurdles, Industry looks forward to the materialisation of FSSAI’s plan for setting up laboratories in rural areas & approval of drafts on functional foods, labelling, claims and additives.

the quantum of financial assistance for PHM related projects in general and cold storage projects in particular. As per revised scheme, scale of assistance had been raised from Rs. 1000 /MT to three levels of Rs. 2400 /MT, 2800/ MT and 3200 /MT depending on commodity stored, stacking system and level of mechanization in handling of stock. Thus, the level of assistance for a cold storage of 5000 MT has been raised from Rs. 50 lakh to Rs. 120 lakh - Rs. 160 lakh.

Mr. Bijay Kumar mentioned that the cold storages should be set up as per prescribed technical standards and manufacturers of critical components like compressors, air-cooling units, thermal insulation and also the experts and service providers will work in tandem towards promoting technology regime in cold chain sector.

To further accelerate this, the CII Task Force on Cold Chain Development will have series of sessions with NHB on the issue of energy efficiency in the cold chain sector and their advice and guidance would be sought from to time.

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