RANA KAPOOR
April 17, 2011:
The Hindu Business Line – YES Bank ‘Food and Agribusiness Conclave' discussed the opportunities and bottlenecks faced by the agriculture sector.
Amongst many key issues that were discussed by leaders in the Food and Agribusiness domain, the deliberations on the role of private sector in enhancing food security and the need for building an efficient agri-supply chain provided considerable food-for-thought for all stakeholders.
India has witnessed a paradigm shift in food security, moving from a food deficit to a food surplus nation. The country has seen foodgrain production growth from 51 million tonnes (mt) on 97 million hectares (1947-48) to 232 mt on 120 mha (2010-11), a growth of 355 per cent in production with 24 per cent increase in area.
As of March 1, 2011, Food Corporation of India (FCI) was holding 45.8 million tonnes of rice and wheat — more than twice the prescribed buffer stock norm, which includes a food security reserve of five million tonnes. Still nutritional “food” is out of reach for many Indians, and is getting unaffordable largely due to the ineffective handling. With restrictions on food grain exports and large stocks being pooled with FCI, Government is left with huge stocks of food grains without adequate infrastructure facilities. Instances of rotting food grains in FCI warehouses have even prompted the Supreme Court to instruct the Government to distribute it free-of-cost if they cannot maintain its quality. This is further aggravated by a weak public distribution system (PDS). While we have been focusing on strengthening the procurement side of the agri-food value chain, there is little progress towards efficient release of produce at affordable prices. On the other side, a lot of PDS stock is sold in the open market aided by an inefficient system. In the coming years, managing the impact of climate change will also determine our preparedness to handle food security.
CHANGES IN WEATHER PATTERN
Changes in rainfall pattern/distribution, timing/duration of winter and summer seasons etc. have been observed. India needs to spend a lot on its R&D for better seeds and cultivation techniques to ensure successfully meeting the changing trends. India ranks 64th out of the 85 countries in the Global Hunger Index, and shelters approximately 210 million starving people. The Food and Agriculture Organisation (FAO) estimates that global food production needs to increase more than 40 per cent by 2030 and 70 per cent by 2050 compared to average 2005-07 levels.
CULTIVABLE LAND
Clearly, a large part of the consumption will happen in India and China. This would require an additional 1.6 billion hectares of land to be brought into cultivation compared to the current 1.4 billion hectares being cultivated now. This increase in cultivable land looks improbable. In India, increasing population, land distribution and demographic changes are driving demand on the one hand, while low farm productivity, in-efficient pre and post-harvest infrastructure and climatic vagaries are resulting in a stagnant supply scenario on the other hand. Therefore, the nations' need to recognise this increasing demand and to proactively ensure adequate availability of food for its citizens. The larger solution theme is to reduce the demand-supply gap through increased productivity and reduced post-harvest wastage. A well developed pre-harvest and post-harvest infrastructure would be a key driver to plug this gap. The onus of providing food to the citizens is believed to vest with the Government, which through its policies, attempts to influence, and control the food supply scenario in the country. Given that agriculture is recognised as central to India's inclusive growth strategy, it is critical to review measures planned to boost agricultural development in the Union Budget, and look for game changers that would allow us to set ourselves a target of 10 per cent agricultural growth in the future Budgets and planning.
FOOD AND NUTRITION
The Government of India has undertaken multiple initiatives to help improve access to food and nutrition for a massive target group. These initiatives include public distribution system (PDS), mid-day meal (MDM) scheme, national food for work program (NFWP), antyodaya anna yojana (AAY), integrated child development scheme (ICDS), essential commodities act (ECA), National Food Security Mission (NFSM), Targeted PDS and National Rural Employment Guarantee Act (NREGA). However, the private sector has also played a pivotal role in securing the nation's need for food.
These include:
• Development and marketing of high yielding seed varietals, thereby, increasing productivity.
• Development and marketing of pest, weed, disease and crop-specific pesticides, thereby, reducing crop loss.
•Development and marketing of soil and nutrient specific fertilisers and micro-nutrients, thereby, ensuring crop nutrition.
•Development of warehousing and collateral management services, thereby, ensuring crop security.
•Development of better farm equipments, thereby, reducing crop wastage.
Despite 60 plus years since independence, we find that the farming constituency today is grappling with numerous challenges.
Some of these include:
•Use of traditional and outdated methods of production hence resulting in low productivity.
•Inadequate research and outdated extension systems and methods.
•Inefficient agri-supply chain management and aggregation of produce.
•Inadequate post harvest infrastructural facilities
•Lack of adequate market information and access
•Insufficient and high rate of credit
Clearly, well co-coordinated action on multiple fronts by the Government as well as the private sector on development of the pre and post-harvest infrastructure is the key solution theme to increase productivity and reduce post harvest wastage. A well coordinated action will lead to adequately addressing the nation's need for food in years to come. Some of these actions should include: Developing linkages between research extension and training facilities to ensure a speedy delivery of yield enhancing and crop protecting products, concepts and actions.
Developing terrain and crop-specific farm equipments which are available at modest prices, so as to enhance the level of mechanisation.
Investment in providing well demonstrated, water conserving and yield enhancing drip irrigation facilities.
Early adaptation of well proven and ably demonstrated agricultural inputs, which have led to better economic returns in western geographies.
Encouraging entrepreneurs and businessmen to set up integrated dairy plants. Milk is considered as a perfect food in many aspects given its fair blend of nutritional components. A growing and more affluent population will have a growing demand for more nutrition.
Investment in infrastructure for storing, aggregating, cleaning, sorting, grading and packaging of crops.
Speeding up the APMC reform process to enable private companies to participate in the farm economy, will result in better returns to the farmers due to a better price discovery mechanism. It will also help in establishing farmer's direct linkage with retailers through development of terminal markets and direct access to wholesale markets, and bring in efficiencies in the agri-supply chain.
Development of large scale and modern logistics facilities and better quality of rural roads for timely movement of produce from point of production to markets and processors without value erosion and weight loss.
Development of innovative models such as agro food parks to directly link farmers to processors, reduce wastage and increase processing capacity.
(The writer is Founder, Managing Director and CEO, YES Bank.)
(This article was published on April 17, 2011)
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