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OPPORTUNITIES IN AGRIBUSINESSOctober 2009
Athena ServicesA 404, Golden Rays, Chandivali Farm Road, Chandivali, Andheri(E), Mumbai - 400072
Tel: +91-98203 76918 Website: www.athenaservices.in
CONTENT
Opportunities in Commodities
Agriculture Scenario – India and the World
Opportunities in Horticulture
Opportunities in Animal Husbandry
CONTENT
Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports
Horticulture Scenario– India and the World
Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain
Case StudyCase Study
Production (million MT)
64 5624
5 3
149
7635
6 5
502
127
448 7
0
100
200
300
400
500
600
China India Brazil SouthAfrica
Chile
1980
1990
2004
Source: UN COMTRADE, 2005
Horticulture Scenario – India and the World
Indian is amongst the largest producer of Horticulture Products
Source: UN COMTRADE, 2005
0.5%
0.2%
0.2%
0.5%
10.8%
0.2%
0.1%
0.9%
11.1%
2%
2%
7%
8%
10%
12%
21%
22%
38%
Grapes
Apple
Tomato
Potato
Onion
Lime/lemon
Banana
Peas
Mango
India's share in global production and exports
Production
Exports
Horticulture Scenario – India and the World
India has an insignificant share in global trade
1,188
669
805
455 455 463
911
227189
863
630
444
316 288222
175 15591
-
200
400
600
800
1,000
1,200
1,400
Fresh grapes Peas, freshor chilled
Guavas,mangoes andmangosteens
Bananas,includingplantains,
fresh
Lemons andlimes, fresh
or dried
Apples, fresh Tomatoes,fresh orchilled
Onions andshallots,
fresh or chill
Otherpotatoes,fresh orchilled
World
India
Average Price in $/MT (2001-03): India vs. World(Price prevailing at the originating ports)
Source: UN COMTRADE, 2005
Horticulture Scenario – India and the World
India is a relatively low cost producer / exporter
Source: UN COMTRADE, 2005
63%
53%
0% 20% 40% 60% 80% 100%
Fruits
Vegetables
Indian prices as a % of world prices (2001-03)
15%
11%
0% 5% 10% 15% 20%
Fruits
Vegetables
India's share in global production (2001-03)
0.5%
1.7%
0.4%
2.1%
0% 2% 4% 6% 8% 10%
Fruits
Vegetables
India's share in global exports
(2001-03)
(1991-93)
Horticulture Scenario – India and the World
The Indian farmer is globally competitive but Indian agriculture is not
United State's Imports
0%
5%
10%
15%
20%
25%
30%
35%
0 2000 4000 6000 8000 10000 12000 14000
Distance in Kms.
Sha
re o
f US
impo
rts
(in %
)
Mexico
Chile
EcuadorCanada
NZ
Costa Rica
Guatemala
ColombiaHonduras
Peru
Tw o neighborsaccount for almost
45% its imports
Another 50% is accounted byselect Cairns
group countries
Source: UN COMTRADE, 2005; CEPII
Horticulture Scenario – Global Trade
Horticulture Trade is a proximity led business
EU's Imports
0%
3%
6%
9%
12%
15%
0 2000 4000 6000 8000 10000 12000 14000
Distance in Kms.
Sha
re o
f EU
impo
rts
(in %
)
Spain
Chile
Ecuador
Belgium
NZ
Costa Rica
Germany
Colombia
Cameroon
Exports by 6 membercountries account for50% of total importsNetherlands
France
Italy
South Africa
Brazil
Panama
Another 25% is accounted byselect Cairns group countries
Source: UN COMTRADE, 2005; CEPII
Horticulture Scenario – Global Trade
Horticulture Trade is a proximity led business
Source: UN COMTRADE, 2005; CEPII
10%
29%
17%
34%
7%
1% 1%
y = -0.1478Ln(x) + 1.3872R2 = 0.8235
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0 2000 4000 6000 8000 10000 12000 14000
Distance in Kms.
South Asia
Middle East
East Asia
Western Europe
Rest of the World
Africa US and Canada
India
Source: UN COMTRADE, 2005; CEPII
Horticulture Scenario – Indian Exports
India exports mostly to proximate markets
28%
9%
14%
18%
6%
24%
1%
y = -0.0141Ln(x) + 0.2697R2 = 0.0126
0%
10%
20%
30%
40%
0 4500 9000 13500 18000
Distance in Kms.
Latin America
Middle East
East Asia
Western Europe
Rest of the World
Africa
US and Canada
Chile
Source: UN COMTRADE, 2005; CEPII
Horticulture Scenario
But successful exporters like Chile have broken the ‘distance’ barrier
Sh
are
in
Ch
ile
an
ex
po
rts
CONTENT
Role of Farm Level Innovations in Horticulture Exports
Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World
Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain
Case StudyCase Study
Ref: FAO
India is the largest producer of banana with a share of 27% of the world’s total banana production
World Banana Production
Ref: FAO
India does not appear in the list of top banana exporting countries
World Banana Trade
Ref: FAO
India exports/production ratio is extremely low
World – Production vs Exports
Banana Project - SWOT Analysis
Strength Weakness
Scalability of Production through Contract Farming Model
Lower Production Cost and Better Soil/Climate Conditions
Proximity to ME and EU compared to other Asian exporting countries
Gap between Export Quality Requirements and Available Quality
Lack of Infrastructure
Lack of Pre/Post-harvest Technology
Lack of Certifications
Opportunity Threat
World wide Supply Crunch and Increase in Prices in Recent Years
Social Impact on Farmers with Job Creation Opportunities
Put India on World Banana Map
Currency Fluctuations
Increasing Oil Prices
Inflation
Stringent Norms of Europe Market
Recent Global Meltdown
If the critical steps are taken right, there is a big potential in banana exports business
Banana Project – Critical Steps to Implementation
Farm Level Innovations and Improvements
Production
Pricing Model
Tec
hn
olo
gy
Farm Level Innovations and Improvements – Pricing Model
We replaced the market supply-demand driven model with base + incentive model
Farm Level Innovations and Improvements – Pricing Model
We replaced the market supply-demand driven model with base + incentive model
Base PriceBase Price
1
Base PriceBase PriceBase PriceBase Price
Farm Level Innovations and Improvements – Pricing Model
We replaced the market supply-demand driven model with base + incentive model
1
Base PriceBase Price
IncentiveIncentive
Farm Level Innovations and Improvements - Production
Pre Harvest Harvest Post Harvest
• Input Management
• Tissue Culture
• Irrigation
• Plant and Fruit Care
• Pest and Disease Management
• Bulk Procurement
• Innovative inbound-logistics system development
• Cut to Cool
• Crates
• Proximate packhouses
• Washing and Processing
• Precooling and Cold Storage
Farm Level Innovations and Improvements - Production
Pre Harvest HarvestHarvest Post HarvestPost Harvest
• Input Management
• Tissue Culture
• Irrigation
• Plant and Fruit Care
• Pest and Disease Management
• Bulk Procurement
• Innovative Innovative inbound-logistics inbound-logistics system system developmentdevelopment
• Cut to CoolCut to Cool
• CratesCrates
• Proximate packhousesProximate packhouses
• Washing and Washing and ProcessingProcessing
• Precooling and Cold Precooling and Cold StorageStorage
Farm Level Innovations and Improvements - Production
Pre HarvestPre Harvest Harvest Post HarvestPost Harvest
• Input ManagementInput Management
• Tissue CultureTissue Culture
• IrrigationIrrigation
• Plant and Fruit Plant and Fruit CareCare
• Pest and Disease Pest and Disease ManagementManagement
• Bulk ProcurementBulk Procurement
• Innovative inbound-logistics system development
• Cut to Cool
• Crates
• Proximate packhousesProximate packhouses
• Washing and Washing and ProcessingProcessing
• Precooling and Cold Precooling and Cold StorageStorage
Farm Level Innovations and Improvements - Production
Pre HarvestPre Harvest HarvestHarvest Post Harvest
• Input ManagementInput Management
• Tissue CultureTissue Culture
• IrrigationIrrigation
• Plant and Fruit Plant and Fruit CareCare
• Pest and Disease Pest and Disease ManagementManagement
• Bulk ProcurementBulk Procurement
• Innovative Innovative inbound-logistics inbound-logistics system system developmentdevelopment
• Cut to CoolCut to Cool
• CratesCrates
• Proximate packhouses
• Washing and Processing
• Precooling and Cold Storage
Farm Level Innovations and Improvements - Technology
•Introduction of new pesticides
•Introduction of new fertilizers
•Introduction of innovative nutrient management system
CONTENT
Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports
Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World
Challenges in Horticulture Exports Supply Chain
Case StudyCase Study
Source: Value Chain Survey, The World Bank
Farmer, 13.5Intermediary, 5.4
Exporter, 24.2
International freight & insurance, 53.6
Importer, 23.5
0
20
40
60
80
100
120
1Different stages of the supply chain
Rs
per
Kilo
gram
Farmgate price=Rs.13.5
Retail price=Rs.120.3
CIF price=Rs.96.8
FOB=Rs.43.2
Wholesale price=Rs.18.9
Horticulture Exports Value Chain
Horticulture Exports Supply Chain
Production Procrmnt Inbound Logstcs
Ops Outbnd Logstcs
Sales &
Mktg
Quality Finance Human Resource
•R&D Investment
•Improvement of Farming Practices
•Business Model
Production ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs
OpsOps OutbndOutbnd LogstcsLogstcs
Sales Sales & &
MktgMktg
QualityQuality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
•Alignment with Market Requirements
•Certifications – GLOBALGAP
•Critical Control Point
ProductionProduction Procrmnt Inbound Inbound LogstcsLogstcs
OpsOps OutbndOutbnd LogstcsLogstcs
Sales Sales & &
MktgMktg
QualityQuality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
•Crates Usage
•Bruising Control
ProductionProduction ProcrmntProcrmnt Inbound Logstcs
OpsOps OutbndOutbnd LogstcsLogstcs
Sales Sales & &
MktgMktg
QualityQuality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
•Cold Storage Operations
•Labour Management
•Processing and Sorting
•Critical Control Point
•Certifications – ISO22000
ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs
Ops OutbndOutbnd LogstcsLogstcs
Sales Sales & &
MktgMktg
QualityQuality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
•Stuffing Management
•Temperature Control
•Role of Shipping Line/TPL
ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs
OpsOps Outbnd Logstcs
Sales Sales & &
MktgMktg
QualityQuality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
•Standard Certifications – ISO, GlobalGAP
•Internal Quality Systems
•Customer Oriented Quality Systems – IQMO
ProductionProduction ProcrmntProcrmnt Inbound Inbound LogstcsLogstcs
OpsOps OutbndOutbnd LogstcsLogstcs
Sales Sales & &
MktgMktg
Quality FinanceFinance Human ResourceHuman Resource
Horticulture Exports Supply Chain
Exporter
Wholesaler/Importer
Service Provider
Supermarket
Open Market
Consumer
Country/Trade Barrier
Horticulture Exports Supply Chain
CONTENT
Role of Farm Level Innovations in Horticulture ExportsRole of Farm Level Innovations in Horticulture Exports
Horticulture Scenario– India and the WorldHorticulture Scenario– India and the World
Challenges in Horticulture Exports Supply ChainChallenges in Horticulture Exports Supply Chain
Case Study
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