Agricorp2017theme PAPER

th 11 Biennial Conference - Agricorp 2017 Theme Paper “Transforming Agriculture through Investments in Agriculture Value Chain” November 16 - 17, 2017, The Gateway Hotel, Ambad, Nashik, Maharashtra Submitted By Vaikunth Mehta National Institute of Cooperative Management, University Road, Pune - 411007 Transforming Agriculture through Investments in Agriculture Value Chain (Theme Paper) 1. An Introduction 1.1 About Bombay Chamber Of Commerce and Industry (BCCI) Bombay Chamber Of Commerce and Industry is the oldest operating chamber of commerce in India serving Indian commercial organizations for the past 181 years. The Chamber has several thousand members from large, medium and small companies. Members of the Chamber contribute very significantly to the Gross Domestic Product (GDP) of the country. The Managing Committee of the Chamber includes top professionals from industry, banking, and finance. It has its headquarters in Mumbai, the commercial capital of India and home to many, if not most, multinationals, banks and financial institutions in the country, the majority of whom are its members. 1.2 About AGRICROP-2017 The agriculture system in India has undergone rapid transformations over the past few decades particularly after the economic reforms of the 1990s’. The emergence of integrated agriculture and food supply value chains are one of the most visible market phenomena in India. The agri supply chains in India and their management are now evolving to respond to the new marketing realities thrown by the wave of globalization and other internal changes like the rise in the level of disposable income of consumers, change in the food basket of the consumers towards high value products like fruits, vegetables, and animal protein. The new challenges of the agricultural economy of the country have now spurred the government agencies to go in for different legal reforms for enabling and inviting private investment in agricultural marketing infrastructure segment and for removing different entry barriers to promote coordinated supply chain, ensuring better traceability. 2.0 Status of Post Harvest Technology In agriculture, post harvest handling is the stage of crop production immediately following harvest, including cooling, cleaning, sorting and packing. Post harvest treatment largely determines final quality, whether a crop is sold for fresh consumption, or used as an ingredient in a processed food product. India stands in second place in fruits vegetables production but when it comes to post harvest technology we are far behind others countries. The detail of the post harvest loss is given below: Post-Harvest Loss – More than Rs10,000 Cr each year Post-Harvest wastage of fruits & vegetables – Rs 50 Cr each year Losses as above in India is more than consumption of same in UK Low processing 2.20 % in fruits • 35 % in milk • 6 % in poultry • Very Low Value Addition – 20% (only changing hands) Low share in world trade of processed foods – India only 1.60 % 3.0 Conference Aims & Objectives: In the context of emerging era of advanced economy the conference aims & objectives are: 1. To create a robust agriculture value chain with inclusive growth of all actors including producers. 2. To suggest ways for Increasing Investments in the agriculture value chain 3. To provide a single window for Product Display, Knowledge Sharing & Networking with all stake holders including Farmers, FPOs', SMEs’, Corporate Companies, Banks & Financial Institutions and Policy makers-Central & State Govt. 4.0 Agricultural Value Chain The series of steps and participants involved in the process from production to delivery of a product to market is called a value chain. A value chain is not identical to a supply chain. It is a set of linked activities that work to add value to a product; it consists of actors and actions that improve a product while linking commodity producers to processors and markets. A major subset of value chain development work is concerned with ways of linking producers to companies, and hence into the value chains. The main aim of a value chain is to produce value added products or services for a market, by transforming resources and by the use of infrastructures – within the opportunities and constraints of its institutional environment. Fig 1.1: Value Chain Actors, Supporters and Chain Context The fig 1.1 describes the value chain actors, supporters and chain Context of agricultural value chain. It encompasses the flow of products, knowledge and information between small land holder farmers and consumers. They offer the opportunity to capture added value at each stage of the production, marketing and consumption process. Small land holder farmers need to better engage with value chains in order to gain added value for improving their livelihoods, whilst reducing their risks and increasing their resilience. 4.1 Value Chain Level A systemic view integrates three important levels within a value chain network and allows discovering potentials and bottlenecks within these levels and in the dynamic interactions between them. Thereby traditional value chain analysis approaches should be enriched by other concepts and methodologies such as sub-sector analysis, enabling business environment, cluster development, and local economic development approaches. 4.2 Actors: Producers, Processors, Wholesalers and Retailers. A farmer plays an important role in Agri value chain in creation of source for processors to add value to their produce. When it comes to main actors in agri value chain the initial role is played by Producers (Farmers). The land holdings in India are highly fragmented, scattered and heterogeneous. The pressure on limited arable land is increasing with increase in population. This is reflected with increase in number of land holdings by 83.31% in 35 years from 1970-71 to 2005-06 and decrease in size of holdings by 46.52% from 2.3 ha to 1.23 ha for the same period. This is clearly reflected in the shrink of average size of holdings from 1.69 ha in 1985-86 to 1.1 ha in 2010-11 (ICAR, 2011). As per the predicted estimates of ICAR, (2011) estimated drop in farm holding will be 0.24 ha and more than 95 % of the holdings will be under the category of small and marginal holders in 2050. If this is the case in coming years it’s highly difficult for value addition to agricultural produce. So here comes Collectives, Cooperatives and Farmers producer organizations (FPO’s) to play an important role as value adders. Cooperatives and producers’ organizations open a new avenue for the smallholder producers by bridging the gap between productivity and market accessibility through a guaranteed market for produce and access to machinery and modern technologies equipments. They facilitate various multiple linkages with institution/organization to spread awareness and strengthen the policies and procedures to boost productivity and help farmers to adapt changing organizational conditions. Offering of crop agricultural extension services by cooperatives have positive impact on performance. Beyond that they often offer social services and building of physical infrastructure in rural areas. Collectives often out-compete the middlemen on one important dimension, offering more consistent, reliable and generally higher price to their farmer suppliers than local middlemen through signing forward purchase contract several months in advance of the harvest to supply products to buyers. But the major advantage of middleman over the collectives is that they are able to offer cash at the time of harvest whereas on the other hand, most of collectives lack sufficient working capital and they pay their suppliers after they ship the product and are paid months later by their buyers. Solution to this problem is adopting value-chain financing, where Cooperatives can pay their farmer members or suppliers competitive prices at the time of the harvest strengthening the long-term viability and fulfilling their contracts with international buyers. The value chain is an innovative and proven approach for agriculture system which goes beyond the yield productivity and addressing the issues of harvest, post-harvest, marketing and commercialization. Value chain supports the system by tailoring and improving efficiency along the harvesting, storage, processing, packaging and shipping phases as well as in the final uses of food. Now a day’s FPO’s plays major role in Agri value addition. FPO’s are the important initiatives taken by the Department of Agriculture and Cooperation of the Ministry of Agriculture to mainstream the idea of promoting and strengthening member-based institutions of farmers. Farmers Producers Organization is becoming popular concept among farming community because of its importance. Farmers Producer Organizations (FPOs), most of which are Farmer Producer Companies (FPCs). For example, in April 2013, the Government of India issued a National Policy and Process Guidelines document on formation of FPOs. This set of Guidelines encouraged State Governments to provide incentives, including credits for and support of the formation and ongoing operation of FPOs in various States. Those FPOs which are set up as FPCs enable their members to access financial and other inputs and services, including appropriate technologies for farming. The FPCs also organize collection, processing, storage and marketing of their members’ produce in high- value markets at an optimal price. Here is a case on Maharashtra based FPO Sahyadri Farms, Sahyadri Farmers Producer Co.

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