Agriculture industry of India

Understanding Agriculture Industry

One can understand the agriculture or agro industry as the offshoot of agriculture. Development in the agricultural industry is crucial to make agriculture more profitable and generate more employment opportunities both in the levels of production and sales. The comprehensive development realized in the agriculture industry will help enhance both the physical and social infrastructure in the subcontinent. Commercialization and diversification of agriculture will further add up to the income of the farmers and give way to food surpluses.

One can see the agro-industry mainly consisting of the post-harvest activities including processing and preserving of agricultural products for the purpose of midway or final consumption. Around the world, it is well understood especially in the segment of industrial expansion that the whole essence of agro-industries is connected to agriculture production as economies are seen developing. It needs to be stressed that food is not only that grows in the fields, it also refers to a variety of products that are processed from the harvest. Over and above, in developing countries like India, agriculture industry is a very important arm of the manufacturing industry to build on the industrial capabilities.

Agriculture Industry can be widely grouped under the following kinds. Village industries comprise those that are run with minimal industries with very little machinery and a maximum of manual labor manufacturing products like papad, pickle etc. Small scale industries refer to those that are managed with a medium level of investment and machinery like oil mills and rice mills for instance. Large scale industries involve huge investments and extreme levels of automation producing commodities like jute, sugar and cotton products.

Agriculture industry of India

From the time of its Independence, agriculture has been the most important deciding factor of India’s economy. backbone of India’s economy. Agriculture segment in India alone was responsible for not less than 18% of India’s GDP in addition to offering jobs to about 60% of India’s entire population. Services related to the agriculture industry in India could make up a bulk of 62% to the country’s GDP. However, irrespective of its immense contribution to the GDP, it only employed 28% of the total population of the nation. The volume of exports has been increasing between 2001 to 2009, making up a 200% increase during this time. On the other hand, for the past three years, imports have not changed much. The enormous growth in the agriculture products segment has helped India significantly increase the production of food.

Despite the commendable growth in agriculture and agriculture products mentioned above, there has been a fall in the total volume of exports of agriculture products from India since 2004 to 2009 from 12.7% to 10.23%.

Statistics also reveal that the average daily food consumption in India per head is blow 2,500 kilocalorie per day which implies that there is a sizeable room available for growth. In addition, it is also noted that the population of India will be on a steady growth over the next thirty years at the rate of 1 percent per year. However, there are no chances for India to take over China’s position as a major engine growth in the global agricultural demand owing to the fact that the cultural traditions in the nation advocate and promote vegetarianism, which will hold back the nation’s demand for animal feeds and meet much below what is noticed in China.

Experts in the arena reveal that the Indian Agriculture Industry is poised towards a great revolution that will modernize the whole food chain since the total volume of food production in the sub continent is most likely to double over the next ten years period.

Recent studies show that the value of the total food market in India at present is about Rs.250000 crore (US $ 69.4 billion). In this figure, the size of value-added food products alone makes up Rs.80000 crore (US $ 22.2 billion). Most importantly, the Indian government has sanctioned approval for a number of joint ventures and collaborations with foreign firms besides licensing several industries and fully export units anticipating an investment of about Rs.19100 crore (US $ 4.80 billion) in the segment. Out of this figure, the foreign investments alone are expected to be more than Rs. 9100 crore (US $ 18.2 Billion). The agricultural food industry also is gaining more significance on account of India’s substantial agrarian economy, which is responsible for the country’s 35% of GDP while the sector has also given employment to more than 65 per cent of India’s population. With respect to foreign investments and also a number of joint- ventures and collaborations with foreign firms, the consumer food segment in India has always remained the top priority. Over and above, there are also several other attractive features in the Indian agriculture industry that are capable of luring foreigners with promising benefits like deep sea fishing, aqua culturing, milk and dairy products manufacturing, poultry segments and meat.

The notable feature of the Indian agriculture industry can be listed as export prospects, competitive pricing and international standards. These features are responsible for generating enormous trade opportunities in the Indian agriculture industry. In addition, this portal has also served as the gateway for all the exporters and importers in and out of the country to satisfy their requirements and make use of the benefits of buy sell business leads and other trade opportunities connected to the agriculture products industry.

With a country of more than a billion people, entrepreneurs can choose from a wide variety of areas in the agriculture products segment in the country ranging across food grains, canned, dairy, processed, fisheries, frozen food, meat, poultry, alcoholic beverages and soft drinks.

Agriculture is the backbone of India’s rural economy around which both the socio-economic privileges and deprivations surround. Any small change in the structure of this segment in India will invariably pronounce its impact on the nation’s present pattern of social equality. During the 50 years period following the independence of the nation, the growth of India’s agriculture was recorded at an impressive rate of 2.7 % per annum of which not less than two-third is brought about by the gains in crop productivity. Since the country attained independence, the nation has been applying a thoroughly need based strategy in the agriculture sector eventually intensifying the same after mid sixties with a chief focus on meeting the nutrition needs of the country’s exploding population so as to make the nation self reliant with respect to food production.

In India, agriculture has been able to demonstrate a growth of more than four times during the planned area of development raising the figure from just 51 million tonnes in 1950-51 to 199.1 million tonnes in 1997-98. Starting from sixties, the growth witnessed in the sector is phenomenal aptly aided by several factors like extensive usage of high yielding varieties of seed, fertilizers and pesticides, especially in well irrigated areas.

History and present day status of Agriculture industry of India

In the Indian sub continent, agriculture has a long history of more than 10,000 years with majority of the population solely dependent on the industry. Consequently this sector has played a significant role in the overall socio economic development of the nation. The Annual Report 2009-2010 pertaining to this sector released by the Ministry of Agriculture has revealed that the total geographical area of India is 328.7 million hectares and about 140.3 million hectares of this is net sown area with 193.7 million hectares found to be the gross cropped area.

Among all the nations of the world, India is the largest producer of fresh fruits with some of the top ones in the list including sesame seeds, ginger, turmeric, fennel, badian, jute, cashew nuts, pulses, mangoes, chillies and peppers. India has claimed the second largest population of cattle with about 281million cattle. The country also has reserved the second position in the production of commodities like cashew, garlic, cardamom, onions, tomatoes, coconut, cabbage, cotton seed, fresh vegetables, ground nut, wheat, rice sugarcane, tea, green peas, cauliflower, potato and inland fish.

India has been producing tobacco, coconut, rapeseed and tomatoes in huge amount entitling itself to be called as the third largest producer of these products. The Indian Agriculture Research Institute (INRI) established in 1905 has a commendable achievement of bringing about the Indian Green Revolution of the 1970s. The Indian Council of Agricultural Research (ICAR) is today the apex body in agriculture and the connected arena in the country responsible for looking after all the researches and education in the segment. The union minister of Agriculture is also the president of ICAR. The Indian Agriculture Statistics Research Institute supervises and evolves new techniques, and designs the various experiments in addition to analyzing data in agriculture. The organization functions with the chief objective of maximizing the produce from animal and plant breed. Though the Government of India has set up Farmers Commission to evaluate the agriculture program, the farmers in the nation are facing some problems.

The World Bank has brought out that the allocation of water for agriculture is insufficient besides being unsustainable. Also, the irrigation infrastructure in the nation is found deteriorating. At some places in the country, the overuse of water is at present being compensated by pumping facility. However, since these are falling on account of underground water every year, this is again a limited resource. Also, most farmers in India are illiterate, socially economically backward or not capable of developing new ideas. They are poorly equipped to implement quick and progressive actions. Farmers confront the problems of finance. They lack adequate marketing services for selling their farm produce. However, since agriculture has been the Indian business handed over by the tradition, the future of agriculture in the nation is bright.

The Indian Government has been demonstrating a very active interest in the agriculture sector by giving the highest priority to it. The allocation made by the Tenth Plan was considerably lower than the 11th Plan with the Ministry of Agriculture allotting an amount of US$19 billion during the Eleventh Five Year Plan. Agriculture is one of the strongholds of the country accounting for about 14.6 percent of the nation’s gross domestic product (GDP) during the period 2009-2010, and a provisional percent of the complete volume of export which was 10.23 percent. Moreover, the agriculture sector has been offering an employment opportunity to not less than 52 to 55 percent of the work force in India.

The Centre for Monitoring Indian Economy (CMIE) has revealed that the farm output In India is bound to increase by 10 percent to 114 million ton (MT) over the Kharif season, while during the winter ( Rabbi season), it will increase by 2 percent making it around 116.6 MT. The Agricultural and processed Food Products Export Development Authority (APEDA) has stated that India’s exports of fruits, vegetables, cereals and processed food products was worth US$ 1.14billion during April May 2010-11 period. About 70 percent of the India’s agriculture and processed food is being exported to countries including Middle East, Asia, Africa, and South America. This data has revealed that the Indian Economy is governed by the Agriculture Industry to a large extent, which is dependent on the uncertainties of rainfall and a set of other natural forces.

Remarkable developments of the agro-based industries in India started during the pre-independence days. The corporate sector fosters cotton mills, sugar mills and jute mills. During the post-Independence period, an impetus was given to the small scale and village industries in order to generate more employment opportunity and to make the optimum use of the available local resources.

It is estimated that the rising concerns over the environment around the globe will stimulate the agro based industries. In view of replacing plastic bags, jute and cotton bags have made a comeback. This is considered the appropriate time to start the large scale commercial production of low cost jute and cotton bags to replace plastic bags.

The agro industry in the country helps in processing the agricultural products including field crops, tree crops, fisheries and livestock thereby converting them to consumable and other usable forms. However, the private sector is yet to unleash the full potential of the agro industry. The global market is actively open for commodities like sugar, coffee, tea and processed foods like honey, sauce and jelly. The market in the country for processed meat, fruits and spices is equally huge. The domestic and the export market in the nation can be exploited to its fullest extent only by bringing together mass production, modern technology and intensive marketing strategies. It is an imperative that the food manufacturers in India are made fully aware of the changing consumer preferences. Modernization, innovation and incorporation of the latest technologies in the agriculture industry over the next decade is bound to revolutionize the entire food chain and the agro-production thereby doubling the capacity of manufacturing agro products in India.

On the whole, India is the second largest producer of food on the globe. Indian agriculture industry enjoys a huge potential with respect to canned food, frozen food, processed food, food grains, dairy products, fish, meat and poultry, the growth of which will never cease over all times to come. Also, areas like sea fishing, milk and milk products, meat, aqua culture and poultry are some of the agro based sectors that have demonstrated a significant growth over the past few years. Strong links between the members of the food supply chains, existing policies and the prevailing business environment are sure to take advantage of the potential opportunity available in the global market today.

Agriculture industry: Exports from India

The list of major destinations to which Indian agricultural products are exported includes the following. The floriculture products from the nation are exported to USA, Japan, UK, Netherlands and Germany. Fruits and Vegetable Seeds are exported in a sizeable quantity to Pakistan, Bangladesh, USA, Japan & Netherlands. Bangladesh, Malaysia, Sri Lanka, UAE, Pakistan & Nepal import fresh onions from India. A long list of other fresh vegetables is exported from India to UAE, Bangladesh, Pakistan, Nepal and Sri Lanka. While the nation exports walnuts to Spain, Egypt, Germany, UK and Netherlands, fresh Mangoes are sent to UAE, Bangladesh, UK, Saudi Arabia & Nepal. The country sends fresh Grapes to Netherlands, UK, UAE, Bangladesh and Belgium, while other range of fresh fruits is exported to Bangladesh, UAE, Netherlands, Nepal and Saudi Arabia.

Dried & Preserved Vegetables grown in the country are consumed by Russia, France, USA, Germany and Spain, while India exports a good amount of mango Pulp to countries including Saudi Arabia, Netherlands, UAE, Yemen, Arab Republic and Kuwait. Pickles and Chutneys made in the country are highly sought by Russia, USA, Belgium, Netherlands and France, while processed fruits from India are in great demand in countries including USA, Netherlands, UK, UAE & Saudi Arabia. Buffalo Meat is exported by India to Malaysia, Philippines, Saudi Arabia, Jordan and Angola, while sheep and Goat Meat is exported to Saudi Arabia, UAE, Qatar, Oman & Kuwait. India’s poultry Products are in great demand in UAE, Kuwait, Oman, Germany and Japan. Dairy Products are exported from India to Bangladesh, Algeria, UAE, Yamen, Arab Republic and Egypt.

Animal Casings from the nation are sent to Germany, Portugal, France, Spain & Italy. India exports processed meat to countries like Seychelles, UAE, Hong Kong, Germany and USA. Groundnuts are imported from India by Indonesia, Malaysia, Philippines, UK and Singapore. Guar Gum of India is highly sought after in USA, China, Germany, Italy and Netherlands. Jaggery and Confectionery  from India are exported to Portugal, USA, Bangladesh, Pakistan and Nepal. Cocoa Products are imported from India by Nepal, Netherlands, Malaysia, Yamen Arab Republic & UAE, while the country sends its cereal preparations to USA, UK, Nepal, Sri Lanka & UAE. India’s alcoholic beverages are in great demand in countries like Jamaica, Thailand, UAE, Angola and Bhutan, while the milled products of the country enjoy a great market in USA, UK, Indonesia, Maldives and UAE.

Some of the countries that import rice in large quantities from India include Saudi Arabia, Kuwait, UK, UAE and Yamen Arab Rep in addition to Nigeria, Bangladesh, South Africa, UAE and Ivory Coast. Wheat is exported from India to Bangladesh, Philippines, UAE, Sudan and Myanmar, while countries including Bangladesh, Sri Lanka, Sudan, Benin and Thailand import the range of other cereals from the country. Natural Honey is exported from India to USA, Germany, Saudi Arabia, UK & UAE, while pulses are imported by countries like Bangladesh, Sri Lanka, Pakistan, UAE & Nepal.

Indian Agriculture Products Industry: Overview

Across a number of sectors in agriculture, India enjoys the credit of being one of the largest producers including milk and dairy products. Indian agriculture is renowned for its enormous product diversity. A great deal of export prospects for Indian agricultural products ensues from the fact that the agrarian commodities produced in the country are complementary in nature as against the western countries. India is at present at the brink of making a revolution that will eventually modernize the food chain since the country is bound to see the doubling of the total agricultural production over the next ten years.

Recent studies show that the total volume of turnover in the Indian food industry amounts to over Rs.250000 crore (US $ 69.4 billion), of which, the contribution made by value-added food products is not less than Rs.80000 crore (US $ 22.2 billion). Over and above, the Indian government has also sanctioned a number of proposals featuring joint ventures, collaborations with foreign firms, industrial licenses and fully export oriented units requiring an investment of Rs.19100 crore (US $ 4.80 billion. Out of this, the value of foreign investment will be more than Rs. 9100 crore (US $ 18.2 Billion).

The agricultural food industry in India is highly significant in terms of accounting for the country’s 35% of GDP and generating an employment opportunity to about 65 % of the population. The consumer food segment has a top priority in terms of featuring several joint- ventures and foreign collaborations in addition to inviting foreign investment. Some of the attractive benefits in the Indian food industry that have allured foreign investors include aqua culture, deep sea fishing and milk and dairy products besides meat and poultry segments.

In the processed food segment, India exports a good volume of hides and skins. Though the country exports semi-processed items to a large extent, it also exports fully processed bulk shipments of coffee and tea without branding or packing.

A few years back a number of firms were struggling to market their packaged food products. But, these days, it has become very easy to establish a firm footing in the Indian market owing to a younger population, enhanced incomes, evolving technologies and a fast developing middle class, estimated to be more than 50 million households. On an average, an Indian citizen spends about 53 per cent of his income on food. There is a huge domestic market for processed foods in the country which is growing rapidly in tandem with the economy, which is at present worth about $90 billion. Experts state that the processed food manufacturers in India need to demonstrate a persistent stand besides adapting their products to the preferences of Indian culture.

A number of large companies including ITC, HLL and Nestle stepped into the Indian market long ago and deeply penetrated into the domestic market. There are a few observations to be learnt from these success stories that will help in capturing the higher end of the domestic market besides grabbing a fair share of the export market. The model proposed by experts based on these observations include the strategies including large scale investment and adoption of the latest technologies, Intensive marketing efforts combined with tie-ups with foreign firms and creating a brand name.

Dairy products make up a very important arena in the Indian agricultural industry endowed with a huge potential. Though the nation has made enormous progress in the production and processing of milk and dairy products over the past twenty years, the fact needs to be acknowledged that not more than 15 per cent of all the total milk produced in the country is processed. Today, a sizeable Indian population suffers from diabetic or cardiac ailments. Availability of fat free milk, fat free curd and sugar free food products is not adequate. For instance, the country needs to increase the production of soya milk.

There is a huge potential for the export of fish and shrimp from the nation however, this segment suffers for want of facilities with respect to cold storage and modern processing. In a year, the country produces more than six million tonnes of fish, while the frozen storage capacity is for only about one lakh tonnes.

Another potential area with regard to exports in India is herbal medicine. Worldwide, there is a growing awareness regarding the herbal products that they do not have any side effects. The country has a vast experience in the arena having tried and tested a vast range of herbal products over its long tradition. What is however lacking in this arena are rigorous quality control procedures, proper packaging methods and a unique brand name.

An encouraging fact remains that the Indian government and a number of modern retailers have started addressing these critical issues by bringing about new laws on packaging and labeling procedures as well as pooling out greater investments in the supply chain.

Scope of Indian Agriculture Products Industry

Experts in the agricultural industry arena have assured that India is all set to play a huge role in the global markets especially in terms of agriculture products in the near future. Shortly, the nation is expected to establish its strong position among the world nations as the largest producers and exporters of rice. At present, the country is the The country is expected to strengthen its position among the world’s leading exporters of rice. Presently India is the 2nd largest producer of rice following China and the 3rd largest exporter of rice following Thailand and Vietnam.

However, recent reports have revealed that agriculture while playing an important role in the Indian economy is actually declining as visible from the fact that the overall GDP dropped from 30 % in the early nineties, to below 17.5 % in 2006. India is the global leader in a range of specialist products including buffalo milk, spices and bananas in addition to mangoes, chickpeas etc.. These are in fact viewed with great importance in the Indian diet, at the same time exported. Ahead of China, India is the 5th largest cultivator of biotech crops in the world. In the year 2006 alone, not less than 2.3 million farmers in the country cultivated genetically modified crops in about 3.8 million hectares of land. The primary GM crop in India is Bt Cotton which was introduced in the country in the year 2002.

The future growth in the agriculture sector in India must ensue from advanced technologies that are cost effective and in conformity with the natural climatic regime of the country. The nation needs to evolve appropriate technologies to meet the needs of rain fed areas. Sustained efforts are also essential in the fields of improving seeds and yields. Improvements are also needs in data for improvised research, results, and sustainable activities in planning in order to bridge the gap between knowledge and practice. The nation must conduct surveys for Judicious land use and evolve effective management practices besides ensuring sustainable use of all the available natural resources.

The progress ahead of the nation in the agriculture industry include modernization and innovation besides taking steps to incorporate the latest trends and technology into the whole food chain and also agro-production. With these efforts, the total production capacity of agriculture products in India is bound to double over the next decade. India needs to bank on its abundant natural resources and a vast experience in the field of agriculture over the nation’s long past to enhance the prospects of its agriculture industry that shall play a vital role in revolutionizing the country’s economy.