 "Farm output can rise 130% in 20 years: CII-McKinsey report")
The assurance is based, it says, on various steps to be taken on policy, with the active involvement of the private sector. Termed the third Food and Agriculture Integrated Development Action Report (Faida), it has been jointly prepared by the Confederation of Indian Industry (CII) and consultants McKinsey & Company.
The report says India has the potential to increase its value of agricultural output by 130 per cent (at farmgate prices), from Rs 12.7 lakh crore in 2011 to Rs 29.3 lakh crore in 2030, if it follows a 12-point plan to improve yields across all crops, augmenting processing capability and strengthening the quality of farm produce. It wants a mix of business participation, technology-oriented productivity growth, food processing and exports, over the next 20 years.
"Agriculture needs to get into a mission mode and our analysis shows that instead of focusing on grains and cereals, the first step should be for perishables. Both Centre and states need to move fast in this sector, to create an enabling policy environment by keeping perishable commodities out of the ambit of the Agriculture Produce Marketing Committee Act," said Adil Zainulbhai, chairman-India of McKinsey.
‘A high-value powerhouse’
Titled ‘India as an agriculture and high value food powerhouse: A new vision for 2030’, the report said processing of farm items have the potential to grow by 414 per cent to Rs 5.7 lakh crore in 2030 from Rs 1.1 lakh crore in 2011. And, food exports to rise 452 per cent, from Rs 1.4 lakh crore in 2011 to Rs 7.7 lakh crore in 2030. "All these are conservative estimates and Indian agriculture has much more potential," said Rakesh B Mittal, past chairman of the CII National Council on Agriculture and chairman of Faida-3.
“As an outcome (of all this), the sector could grow by 5.2-5.7 per cent (in real terms, annually) over the next 20 years,” the 100-plus page report said.
It identified mango, banana, potato, soybean and poultry as five items to drive the next wave of growth in Indian agriculture.
The report says India presently achieves just 50-60 per cent of the potential yield for most crops. The reasons include poor technology adoption, weak links between farmers and industry, unexplored opportunities in branding, marketing and exports, lack of infrastructure support and dearth of extension support.
As a direct correlation of the high growth it promises, it says farmer income will rise by over four times in real terms, while consumers will also benefit from the increase in supplies, which in turn will help match India’s estimated per capita consumption of food items in 2030. It estimates the latter figure to increase from Rs 9,360 to Rs 15,390 (an annual increase of three per cent at 2010 prices) in the next 20 years.
"The ratio tof cereals and pulses in the overall food budget of the average Indian consumer has dropped by more than 25 per cent in the last one decade," the report said. In 2000, basic foodgrains formed 60 per cent of the total agricultural produce by weight, with high-value produce constituting 38 per cent. By 2010, high-value food formed 45 per cent of total production and this proportion will increase.
How
To achieve its target, the report has a list of 12 key points. It wants, for instance, a National Farm Gate to Market Infrastructure Authority, on the lines of the National Highways Authority of India, to integrate the working of multiple authorities in the logistics segments.
“There are many bodies like the National Centre for Cold Chain Development Authority, National Horticulture Board, APEDA, Ministry of Food Processing, etc, involved in building and managing the farm gate infrastructure in terms of sorting, packaging, storage and transportation. Due to multiple players, there is fragmentation and insufficient accountability for an integrated solution,” the report said.
"This all encompassing authority will clearly define what each of the above mentioned bodies needs to do so, as to provide a seamless cold chain infrastructure in the country," said Zainulbhai.
It also advocated a favourable policy regime for agriculture marketing, through removal of caps on subsidies for essential agriculture investments, review of taxation structures and stock limits and a unified regulatory mechanism for organised input retail, which would provide farmers with a one-stop shop for all farm inputs and amendments to the land ceiling Aact, to promote corporate farming and aggregation of land through long-tenure leases, say for a period of 10 years.
The report also called for starting two separate missions, one on agricultural technology and the other on sustainable farming, to promote high-quality seeds, scientific farming and yield improvement mechanisms. The sustainability mission, the report said, should create a national map of soil type and water availability, to identify areas that need to replenish specific nutrients.
For ensuring consumers and farmers develop a taste for branded food products, the report has advocated creation of a new segment called ‘branded food’, which would be led by the industry, be voluntary and on the lines of the ‘Woolmark’ brand for wool items.
Brands, flows
“The development of branded food would assure consumers of its freshness, healthiness, quality and traceability,” the report said. To promote export of select items, the government should set up a National Agriculture and Food Export Mission, with the help of private players that would identify the right products and markets, invest in market creation, ensure adherence to international quality benchmarks. "The first Faida report said India's food processing sector would become a Rs 215,000-225,000 crore industry by 2005 but till 2010, it has become only a Rs 66,000 crore industry, thus realising only 10 per cent of its potential," the report said.
India should learn from countries who have successfully marketed their farm produce worldwide, like ‘Florida Oranges’, the report said.
On extension services, the report asked for participation of private entities. “The Agricultural Technology Management Agency has only 100,000 extension workers, which is 10 per cent of the requirement. The Krishi Vigyan Kendras (KVKs) have a similar story to tell, with only one KVK per district, each with about 20 scientific staff members.”
It also called for setting up an Indian Institute of Agriculture Technology, on the lines of IITs and IIMs, and a network of four or five world-class food and agriculture institutes across the country. “There is a need to create a new generation of agri-entrepreneurs who will lead this next wave of growth,” it recommends. It also advocated more industry-farmer partnerships, through established models like farmer-producer organisations and farmer-producer companies.
| Chart 1 | ||||
| Change in consumption basket | ||||
| Items | 2010 | 2030 | CAGR % | |
| Cereals & Pulses | 2 4% | 16% | 2 | |
| Milk & Meat | 27% | 28% | 4 | |
| Fruits & Vegetables | 21% | 25% | 4 | |
| Oils | 6% | 4% | 2 | |
| Others | 22% | 26% | 5 | |
| Source: MGI, NSS, CSO and Mckinsey Analysis | ||||
| Chart 2 | ||
| Per capita fruit consumption (in kilograms) | ||
| 2010 | 2030 | Annual change in percentage |
| 62 | 90 | 1.9 |
| Source: Mckinsey Report | ||
| Chart 3 | |||
| Aspirations of Indian agriculture in 2030 (in Rs lakh crore) | |||
| Items | |||
| Processed Food | 1.10 | 5.18 - 5.65 | 8.5 - 9.0 |
| Agri produce | 12.69 | 26.73 - 29.28 | 4.0 - 4.5 |
| Exports | 1.40 | 6.48 - 7.72 | 4.0 - 4.5 |
| Source: Mckinsey Report | |||
| Chart 4 | |||
| India's average farm yield much below global standards, potential yield (in tonnes/ hectares) | |||
| Items | Global Best Yield | Potential Indian Yield | Actual Indian yield |
| Wheat | 12 | 6 | 3 |
| Rice | 10 | 8 | 4 |
| Soybean | 2.9 | 2.0 | 1.2 |
| Potato | 45 | 25 | 22 |
| Onion | 66 | 22 | 15 |
| Corn | 10 | 04 | |