Agri-Business

The share of agricultural production (farming) in the economy is going down due to structural transformation of
the economy. Further, with the increase in backward and forward linkages, the distinction between agriculture
and agro-industry is getting blurred. Farm production, processing, and trade are getting increasingly coupled. In
developing countries like India, the agribusiness encompasses four distinct sub-sectors: agricultural inputs,
agricultural production, agro-processing, marketing and trade. In this report, Food Processing and Farm
Production are covered separately.

Food Processing

The basic philosophy of promoting agribusiness through food processing lies in the statement: Eat what you can
and CAN what you can not. Dun & Bradstreet estimated in 2008 that India wastes roughly $ 13 billion worth of
farm products, including dairy items, annually because of inadequate pro-cessing and cold-storage facilities. A
FICCI study in 2009 says that despite being the second-biggest food producer in the world after China, India's
share in the $ 6.2-billion global processed food market stands at less than 2%, leaving a huge scope for growth.

Market Size

The size of food processing industry in India was valued at Rs. 3,74,000 crore in 2006-07 adn is projected to
reach Rs. 6,60,000 croes by 2014-15. The share of food processing industry in total food industry was 43% in
2006-07 and is projected to reach 50% by 2014-15. It is the fifth largest industry in India and accounts for 19% of
the country’s industrial workforce. Though India is among the top producers of Milk, Fruits & Vegetables,
Livestock, Grains and Fish in the world, food processing in these areas is considerably low.

Growth

The food processing industry in India is growing at 7%. At present, 10% of the total food produce is processed
and the country aims to enhance it to 20% by 2015. At 2.4%, it has the highest multiplier effect of any industry
and tripling the size of the industry would generate direct employment of 28 lakhs and indirect employment of 74
lakhs.

Top Players

Some of the prominent domestic and foreign players in the food ITC , Parle, Agro Tech Foods, Amul,
Perfetti, processing industry in India are: Cadbury, Pepsi, Nestle, Britannia, Milkfood, MTR Foods, Godrej, Gits,
Dabur, Haldiram’s, Hindustan Unilever.

Farm Production

Farm production and allied activities in India contributes nearly 35% of country’s GDP and employs around 65%
of the population.
Market Size

According to the Centre for Monitoring Indian Economy (CMIE), crop production is expected to rise by 1.7%
during FY 10 and food grain production is expected to increase by 1.1% and wheat production is projected to
remain at the same level of 80 million tonnes as estimated for FY 09 while rice production is projected to increase
by 1.1 per cent to 98.8 million tonnes. Wheat acreage has gone up marginally to 27.75 million hectares by
February 4, 2010, compared to 27.58 million hectares in the same period last year. The acreage under pulses
(gram, lentil, urad, moong) has gone up to 13.74 million hectares, compared to 12.95 million hectares in the
same period last year.

Cotton production in India, the world's second-largest producer, may rise 10 per cent to about 32 million bales
(one bale is equal to 170 kg) in the 2009-10 season (October-September), on the back high support price and
more sowing of high-yielding Bt seeds.

India's coffee output is pegged at 310,000 tonnes in 2009-2010, 4.4 per cent higher compared to 2008-09,
according to the post-blossom estimates released by the Coffee Board. If the actual output in 2009-10 matches
estimates, India is likely to climb up in the ranking list of top 10 coffee-producing countries in the world. According
to the International Coffee Organization (ICO), India has a bright chance of becoming the fifth largest coffee
producer in the world, replacing Mexico. Currently, it is placed in the sixth position.

Major Players

Some of the major agricultural companies in India are: Monsato (seed), Rallis (Seed), H.J.Heinz (food and Dairy),
Advanta (Seed), Phalado Agro research ( Organic agriculture), Poabs Organic Estate ( Organic Farming), Du-
pont (Food & Crop), Rasi seeds (Seeds & cotton).

Global Scene

The global food product industry grew by 3.1% to reach a value of $ 2,675.7 billion in 2006 and is projected to
grow to $ 3,137.2 billion by 2011. Europe is the highest contributing region in the global industry with a share of
38.2% followed by Asia-Pacific region at 31.2%.

(Contributed by Prof Dhananjay Singh)