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F Capturing the $1 Obn Indian ecommerce market.

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SEP-OCT 12 ( VOL 11

ISSUE 5
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SUBSCRIBER'S

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MIRCHANOANI
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agriculture
According to the Department of Agricldture,from

1951 to 2001, the percentage of 'cultivators' in the agrarian workforce of India fell from 71.9 to 54.4, while that of 'agricultural laborers' has increased from 28.1 to 45.6. To derisk household incomes, many

farm owners employ labor (perhaps the scarcest resource today) to do the farming, while they work in towns and cities on alternative occupations (as accountants, clerks, etc depending on their skills). Equate 'cultivators' with 'managers' and 'laborers' with 'unskilled workers', and you will easily see the quandary that Indian agriculture finds itself in. Notwithstanding its legendary stature as India's largest employer, the agriculture sector has apparently become alarmingly bottom-heavy, bringing with it all the predictable maladies: lack of awareness about modern techniques of farming, lack of strategic thinking and lack of role models. 'What should the sector, and the numerous entities who have a stake in it, do to make it future-ready?
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The

www.thesmartmanager.com

Smart Manager)

Sep-Oct 2012

vertical focus: agriculture

Mirchandani

Taking control area allocation

on of

a balanced

meal for every indian

Rethinking the farm sector Indian agriculture needs priority

our vast agricultural land that is capable of growing possibly

interventions.

And subsidies, dole-outs, loan must target structural

Do India's farmers know what to grow in order to do this in a sustainable manner? The problem begins here. Our farmers grow what their neighbors grow or what their forefathers did. Very little direction is provided to them to encourage crop specialization. Area allocation for each crop is discretionary. The farm sector therefore has virtually no control on the supply of output, routinely causing gluts and shortages and consequently random price shocks. Taking control on area allocation of our vast agricultural land that is capable of growing possibly every conceivable crop (whether alpine, temperate or tropical) would be a major policy intervention. This will need new regulations but will take care of price uncertainty that results due to sudden supply shifts. With more stable output prices, farm incomes will become less volatile, and this will build stakeholder trust in the sustainability of the sector. The India@75 foundation of the Confederation ofIndian Industry (Cn) that works toward advocacy and action programs to build a developed, inclusive India by 2022 has developed a Theory of Change for Agriculture, which has at its core the goal of making India capable of providing a balanced meal on the food plate of every citizen.
productivity gains the next imperative

waivers, interest subventions are not the entire answer. Interventions change that will make agriculture productive and cost-effective while simultaneously working to change mindsets. People must 'want' to be part of the agriculture sector, a sector that engages two out of every three Indians. The weaknesses ofIndian agriculture make

every conceivable crop (whether alpine, temperate or tropical) would

be a major policy intervention,

it way too risky. India still looks toward the sky starting each June and waits helplessly for the rain gods to shower their blessings. Despite steady progress, irrigation and water management are far from widespread and leave the country at the mercy of the monsoons. With weather patterns changing rapidly, rains have become a certain uncertainty. Though droughts would rarely cause famine in today's India, there is constant worry. Derisking would require the adoption of technology and innovative crop management practices, many of which, quite ironically, are already known but remain within the lofty confines of our universities and research institutions. Seasonality of farm incomes determines rural purchasing power. Access to farm credit comes at a high price since lenders consider crop loans a high-risk asset. With stringent priority-sector targets that mandate allocation ofloan portfolios to cover agriculture, lenders will e>..1:end etter terms if the sector works b towards lowering its risk profile. But this will need structural solutions.

The potential to improve the harvests from the existing land area under cultivation is immense. We must face the fact that with India becoming more urban each day, land area under cultivation is not going to rise, but the consumption demands of our population

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Given the heavy subsidies, farmers Indian buy urea of the

are increasing with each passing day India has more people to feed, and each of us are earning more and demanding more and different kinds of food every day So the sector has a captive market with the requisite habits and incomes to sustain demand.

fertilizer overdose, \yruch is a shameful national waste that also ruins our namral soil resources. The use of hybrid eeds is a positive Gaining yield is once trend. However, even the best seeds are only a 'promise' of production. impossible if the seed is under-nourished, nutrient management. Instead of focusing

at a fraction

real cost of this essential fertilizer

Urea usage is so high that halving it has been proven in field trials to have no impact farm output on

again pointing toward the need for integrated

improving land use efficiency and crop management

With changing lifestyles and food habits, farmers are moving to new-generation crops that fetch more income per unit of land area. The shift to fruits, vegetables, oilseeds and spices makes the same land more remunerative and influences timing and quantum of cash flows. It also changes the dynamics of agricultural inputs required to feed these new crops, which have much more specialized needs than traditional cereals and pulses. Integrated nutrient management becomes imperative so that undernourished health consequence
embracing

on nutrition to build crop resistance, farmers increase the use of poisonous pesticides. Little do they realize that medicines are always more e},.'Pensivethan food, and if they feed the crops in a balanced manner, the need for harmful pest management will reduce and costs of production will certainly fall. Advocating balanced nutrition using secondary and micronutrients a national imperative. Environmental sustainability is crucial. Organic farming, though ideal, is largely utopian in the context of severely depleted Indian soils. Using safe chemicals, inert or biodegradable sources of agricultural inputs are alternatives that have created pockets of excellence and can be replicable models for sustainable agriculture across the country.
creating and celebrating role models

must become

crops do not cause

deficiencies in human beings, an inevitable of poor crop nutrition.

modern practices

Farmers have the tendency to increase their costs without needing to. A glaring example is the rampant overuse of urea and other fertilizers. Given the heavy subsidies, Indian farmers buy urea at a fraction of the real cost of this essential fertilizer. Urea usage is so high that halving it has been proven in field trials to have no impact on farm output. Scientific usage of fertilizers and more efficient market-based pricing will not only improve soil health but reduce the subsidy burden significantly India is paying for fertilizers that its farmers don't need. And subsidies incentivize the inefficiency of

India has world record holders for paddy and sugarcane. Several states such as Andhra Pradesh and Maharashtra have farmers who have met successive US presidents and been part of global roundtables on farming practices. But they remain unsung heroes, except in their own geographies. The e successes need to be celebrated and progressiye farmers recognized as 'force multipliers'-the more we talk about

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Sep-Oct 20

vertical focus: agriculture

Mirchandanl

Archaic control

movement restrictions

record-breaking

farmers and their practices, the

in agriculture is a complex process that must address post-harvest management, storage, warehousing and transparent price discovery. Archaic movement control restrictions have no place in a free market and must also be abolished, so that states with excess production do not sit on mountains of grain while neighboring states starve. Food processing, especially basic farm gate processing that can enhance the shelflife of the perishable farm output, can lead to incremental prices several times over the actual cost of processing. Enhancing shelflife changes the dynamics of an otherwise 'buyers market' and increases the negotiating leverage and value-addition for the producer.
tilling away

more respect and much needed "I must be like him" inspiration we will generate. With the government extension machinery in urgent need of being overhauled, publicprivate partnerships to train the trainers must be on the agenda of every responsible corporate. Several successful examples exist where leading agribusiness companies have played a crucial role in spreading knowledge as a key catalyst to build farm productivity. My own organization, India's largest specialty plant nutrients company, has a strategic partnership with the ell's Young Indians to create a Young Indian Farmer Network that currently engages close to 15,000 farmers, all aged less than 40, and over 100 rural schools in knowledge-sharing activities and university connect programs. The awareness-advocacyaction network brings together all stakeholders (industry, government, universities, students and farmers) to spread knowledge in rural communities agro-economic about 'next practices' and their advantages. These young

have no place in a free market and must also be abolished so that

states with excess production not sit on mountains of grain do

while neighboring states starve,

gains

Finally, it is worth reiterating that enhancing skills and spreading knowledge are most critical. The agriculture industry has begun to use fresh, young talent drawn from specialized agribusiness management courses. Extension services, farm output branding and streamlining supply chain logistics are also a core part of the operational plans of companies in the sector. However local language proficiency, patience, field work and the ability to gain trust are essential talents that young professionals must master in order to secure lifelong careers in this priority sector that needs urgent revival. Delivering on the goal of an agriculturally progressive and self-sufficient nation needs the agriculture sector to be transformed with and by youth, skills, knowledge and endless persistence. _

farmers with their passion and exposure will be ideal torchbearers and the future, dynamic and new face of the farm sector.

enhancing

market

access

Market access is important to ensure that farmers get the right buyers for their output. In the absence of fair prices (not minimum support prices which are artificially-set and inefficient market drivers) and adequate market access, bumper harvests that result due to good agricultural practices will cause oversupply, and this will reduce output prices. Market access

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