New Delhi22-2-2006 Marketing Reforms & Enhancing competitiveness

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An overview of Indian Agriculture(Production side)

Comparative advantages: Second largest arable land in the world Diverse agro-climatic zones across the country, Round the year sunshinePotential to cultivate a vast range of agricultural productsLarge marketable surpluses and abundant raw material for processing Vast pool of skilled manpower in research and extension

These advantages being leveraged, for India to be a leading food supplier to the world.

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Area and production of Agricultural products (Production in million tonnes)

IndiaIndias Rank in World ProductionArable Land (Million ha)1512Irrigated Land (Million ha)551Wheat722Rice, Paddy1242Coarse grains (including maize)293Milk911Fruits472Vegetables822Edible Oilseeds253Pulses151Sugarcane2452Tea0.851Cattle (million)1862

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India is the front ranking producer of many perishable commodities

India produces 41% of worlds mango, 23% of Banana, 24 % of cashew nut, 10% of onion, 30% of cauliflower, 36% of Green Peas.

China : $195 bn; USA : $150 bn; India - $105 bn.

India has 53% of worlds buffalo and 17% of goat

And a 8000 km of coastline

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India rising high on food demand curve Evolution of global food demand Source: Rabobank InternationalAfrica (Sub-Saharan) India, China, Latin America Eastern Europe Nortth America, Japan, Western Europe, Australia Surviving Mass Market Convenience Food Service Snacking Quality Hygiene High Technology Diet / functional / organic foods Convenience foods Snacks / prepared meals Dairy, meat, fresh fruitsfruit juices, beveragesCarbohydrate staples

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15%11%0%5%10%15%20%FruitsVegetablesIndia's share in global production (2001-03)63%53%0%20%40%60%80%100%FruitsVegetablesIndian prices as a % of world prices (2001-03)0.5%1.7%0.4%2.1%0%2%4%6%8%10%FruitsVegetablesIndia's share in global exports (2001-03)(1991-93)Source: UN COMTRADE Statistics, World Bank Staff EstimatesIndias competitiveness in global markets (Low cost producer)What is wrong?(Large producer)(Nominal)

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Food processing still at a nascent stageLevel of processing(Fruits & Vegetables)

USA-80 %

France -70 %

Malaysia-80 %

Thailand-30 %

India -1.3 %

Level of Processing (Perishable products)

Organized Unorganized Total

Fruits / Vegetables 1.3% 0.8% 2.2%

Milk /milk products 13% 22% 35%

Buffalo Meat 21% - 21%

Poultry 6% - 6%

Marine Products 8% 15% 21%

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Present Scenario in Value Chain Cost Build Up For One Kg. Basket Of Fruit

FARMERTRADERWHOLESALERRETAILERCONSUMER PRICE3.34.11.72.511.6Retail MarkupsFARM GATE PRICESMILKFISHFRUITS &VEGETABLES350220160100

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Domestic markets scenarioInfrastructure for marketing of perishables Primary grading/ collection centers - non existent Warehousing and cold storage - inadequateCold chain - non existent Quality certification system - non existentTransportation for perishables - non existentRural markets - complete lack of infrastructureWholesale markets - in government control, lack modern facilitiesPrivate / direct markets - not permitted Post harvest losses: 25 to 30 % in perishables

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APMC Reforms - Status

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AGMARKNETMarket nodes connected - 2408Markets reporting data 1295Good performing States AP, Maharashtra, Karnataka, GujaratStates requiring Improvement HP, Assam, Kerala, Uttaranchal, Bihar Jharkhand, Things to do:Posting data on daily basis Creating awareness on the information portalSuggest user-friendly formats for data disseminationUtilization of funds for market led extension

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Rural Godown SchemeStorage capacity created 158.68 lakh MTs

Excellent performance Punjab, Andhra Pradesh, Madhya Pradesh, Maharashtra, Haryana

Poor off-take in Bihar, Gujarat, West Bengal, Uttaranchal, etc

Scope exists for more storage space near to farmers

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Infrastructure Scheme

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Venture Capital Scheme

SFAC provides up to 26% of the project equity as Venture capital + PDF for detailed project reports

Progress since July, 200538 projects funded involving 11.62 crores venture capitalinvestment of 125.42 crores, direct employment for 3221 people and assured market to 26,650 families

All States should make use of the scheme

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Terminal market

Hub-and-Spoke Format: Terminal Market (the hub) to be linked to number of collection centres (the spokes).

Collection centres (Spokes) to be conveniently located at key production centres to allow easy access to farmers

Provide state of art facilities for Electronic auction,Grading, washing and packing lines, Processing and exports,Banking Transport including reefer vans etc. Advisory on input, price and quality

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Thanks

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