AGRICULTURE SITUATION

IN INDIA
Trim 2
PGDM-Rural Management
Batch 2013-15

Prof Vineel Bhurke
Learning objective





To impart knowledge to students about current
position of Agro production and agribusiness in
India vis-a-vis global markets.

Assurance of Learning (AOL)
and Evaluation
Lectures and Group discussions
Quiz 10
Assignment 10
Presentation 10
Written exam 20

Learning Resources
Lecture 1
Current status of agriculture sector in Indian
economy Article (Capital Market)
Agriculture situation Which are the aspects?
Past Where we come from
Importance of Agriculture
Land issues farm size, crops, productivity



Reading assignment
Current status of agriculture sector in Indian
economy Article (Capital Market)

Top 3 observations


Phases in Indian Agriculture
PHASES:
1) Self sufficient & balanced economy (before British)
2) Food imbalance in British raj, poor productivity& production, famine hit, ill-
administration, clutches of Zamindars & land lords.

FOOD STAGES (After independence):
SHIP TO PLATE.
PLOUGH TO PLATE (FOOD SUFFICIENCY)
PLATE TO PLOUGH (MODERN FOOD HABITS)

Agriculture
Large dependency; state subject; largest employment provider.
Control: state and central govt.
State: water storage, irrigation, distribution
Central: policy matters.

AGRICULTURAL SITUATION IN INDIA
LAND USE, PRODUCTION, CROPS

ERA WISE EFFECT
BEFORE BRITISH REGIME:
Self sufficient villages,
trade only village restricted,
3- distinct classes: agriculturists, non agriculturists & officials.
balanced food system. (n.a.: village artisans& manuals),
payments in kind.
BRITISH REGIME:
Forced adoption of commercial crops (indigo, jute, lac etc),
food imbalance, poor suffered,
control through zamindars,
imbalanced social structure.
FAMINES
12 famines (1765-1858) ; 20 famines (1886-1908)
Reasons:
food imbalance
monsoon failures
administration failures
Localized movements of food grains
Types:
1) Food famines
2) Purchasing power famines
Agriculture sector:
Space in Indian economy
65% agro dependent; 1/4
th
natl. income; largest
employment provider.
Development plans from 1
st
five year plan till today
Green revolution led to food sufficiency (1960-1970)
Export earnings from tea, coffee, cashew, spices, tobacco,
rice, cotton , raw sugar etc
Raw material supply: textile, jute, cigarettes, paper
industry.
Stress on horticulture: sustainability
Capital market: tractors, machinery, input industry,
pumps & spray equipments
Dependency on core industries, power, petroleum input
industry

SIGNIFICANT ACHIEVEMENTS
of Indian Agriculture sector
1. Largest producer:
Fruits, Cashew, coconut, spices-black pepper, ginger, raw sugar &
total cattle population and milk production.
2. Second:
Vegetables, wheat, rice, ground nut, sugarcane, inland fisheries.

SIGNIFICANT ACHIEVEMENTS
3. Fishery exploitation initiated (7,500 kms)
4. Organic farming, contract farming, PPP involvements
5. Organized poultry
6. Exploitation in meat & meat products
7. ICT & meteorological support increasing
8. Crop insurance extended
9. Progress in PHT & FPI and exports of processed products
10. FDI in FPI (100%), soon in multi-brand retail (51%)
11. Farmer friendly market reforms: direct marketing, PPP,
ICT support, contract farming
12. MSP: Minimum Support Price
Lecture 2

Indian Agriculture
Contributes 17% of GDP
Provides food to 1 Billion people
Sustains 65% of the population
Produces 51 major Crops
Provides Raw Material to Industries
Contributes to 1/6th of the export earnings
One of the 12 Bio-diversity centers in the
world with over 46,000 species of plants and
86,000 species of animals recorded
Indian Agriculture: Global Contribution
India is worlds third largest producer of agricultural
commodities after China and USA.
India produces:
16 percent of the worlds milk,
41 percent of mangoes,
30 percent of cauliflowers,
28 percent of tea,
23 percent of bananas,
24 percent of cashew nuts,
36 percent of green peas,
10 percent of onions
Crop classification:
Food crops, oilseeds, fiber,
horticultural, plantation crops.

Horticultural crops
bring sustainability,
more & regular income

National horticulture mission;
farming system approach module

Cropping pattern in India
Of the total 329 million hectares, 124.58
million hectares are devoted to raising food
crops to provide food security for the country.

Rice, wheat, sorghum, maize, pearl millet,
finger millet, minor millets, pulses are the
major staple crops.
Cropping pattern in India..
The country produces about 240 million
tonnes of food grains.
Groundnut (peanut), sesame, sunflower,
rapeseed, safflower, soybean and linseed are
the important oilseeds.
Important commercial crops are sugarcane,
cotton, jute, tobacco and potato and major
plantation crops are tea, coffee, cocoa, rubber,
coconut, arecanut.
Cropping pattern in India
The country also produces spices such as
pepper, cardamom, ginger, chillies, coriander,
garlic, cloves and nutmeg.
Horticultural crops include tropical to
temperate fruits, vegetables, flowers,
cashewnut, many root and tuber crops and
medicinal and aromatic plants.
Fruits and vegetables including onion and
potato contribute 20% of the total agricultural
output of the country.
Agriculture situation in India

LAND
India: Land Use Pattern
Seventh Largest Country in the World.
Total Geographical Area - 328 million hectares.
56% of the land is arable and can be used for
agriculture.
Second Largest Country with arable land after
USA.
India has a land frontier of 15,200 km (9,445
mi) and a coastline of 7,517 km (4,671 mi).
India: Land Use Pattern
Although India occupies only 2.4% of the
world's land area, it supports over 15% of the
world's population.
Population Density: 349 people/sq. km. or 904
people /sq. mi.
Net Area sown - 142 million hectares.
Gross Cropped Area 190.8 million hectares
LAND USE PATTERN
TOTAL: 329 MN HA (100%)
Net Sown: 143 (43.50%)
Forests 75 (22.80%)
Fallows: 100 (30.40%)- usable
Others: --- 11.33%
Cropping pattern is governed by- 1) physical & 2) economic factors.

Physical: soil condition& type, rain fall pattern, climate etc.
Economical: size of farm, input availability and financial condition.
*Seasons: kharif, rabi, summer
Crops: kharif- rice, jowar, maize, bajra, cotton, sugarcane, vegetables,
groundnut
Rabi- wheat, barley, gram, mustard, vegetables, potato
Summer: mung, vegetables,
Seasonals: vegetables; annual
Perennial: fruit crops

SUBSISTENCE IN FARMING
Farming system approach
Commercialization
PPP involvement
Community approach
Legislations against fragmentation
Av. Land holding:
1951: 0.92 ha/ capita
1981: 0.48
2000 0.33
2007 0.30

7 / 12 extract
7 / 12 extract
FARM SIZE AND PRODUCTIVITY
An ideal farm size (economic holding) is that which
permits optimal use of inputs & resources: land, labor,
& capital, inputs, market control
Production & productivity: production is total volume
of output; productivity is production/ unit area (acre/
hectare).
Our total production meets domestic demand and
surplus for export.
Productivity is much below than international figures.
GDP share:
44% (1973-74) ------ 26% (2000) Between 3-4% today
SUBSISTENCE IN FARMING
Reasons for small holdings
Generation wise fragmentation
Decline in joint family system
Rural indebtedness (forced land sale)
Practice of multi tenant leasing
disadvantages: land wastage, litigations, input
under-utilization, water management difficult
efforts for consolidation: laws, limits on land
sale-size

Farm size and productivity
Reasons of low productivity:
Low holding,
Insufficiency in input distribution & utilization,
Corruption,
Monsoon dependency,
Insufficient irrigation,
Loose linkages,
Indebtedness,
Exploitations in market price,
Inadequate laws.
Farm size and productivity
Positive changes are occurring:
Globalization,
Simplified Laws,
WTO Pressure,
Corporate & MNC Support,
Commercialization,
Credit, Market Support, GOI Initiatives,
PHT and FPI, PPP Participation,
Optimal Input And Resource Utilization,
Strengthening R& D Programs,
Effective T & V and ToT,
Credit Promotion, Awareness of Vital Programs on Irrigation,
Increased PPP, Market reforms & direct markets,
ITC support,
Contract farming, opportunity of global open markets.
Farm size and productivity
Positive changes are occurring

Lecture 3
Agricultural inputs
Role of agricultural inputs
Current status
Agri inputs - Business aspects



The challenge
The worlds human population is projected to increase to 9.2 billion by 2050
Demand for cereals will increase by almost 50% towards 2050
Indian scenario Agriculture and Food
Food grain production increased from a
mere 50 million tonnes to over 227 million
tones in the last six decades.
Production increased by 11 times in Wheat,
4 times in Rice.
Cotton production increased by 11 times.
Oil seed production increased by 5 times.


Indian scenario Agriculture and Food

Though production index has risen considerably,
the food index has not increased proportionately.

Production index = Total food produced per land area

Food index = Food produced per person



INDIAN AGRICULTURE Trends and challenges
Arable land, likely to reduce to 100 mill by 2020 (afforestation and
environment concerns)
Per capita availability of arable land to decline
Number of farmers would reduce
Inputs, particularly water, may either be in short supply or expensive
Focus on productivity
Yield levels plateauing
Manage biotic (pests, pathogens, weeds) and abiotic (drought and
salinity) losses
Post harvest losses (10-30%)
Produce more to feed rising population, estimated 1.4 bn by 2025

INDIAN AGRICULTURE Trends and challenges
Increase productivity and at least double food production
with declining land and water availability and limited farmers
Technologies in the areas of seed development that would
ensure good yield even under constraints of water and land
Matching of seed with fertilizer, water management and
evolving pre- harvesting techniques under different soil
conditions
Nutritional deficiencies: Average intake of vitamins, proteins
and other micro nutrients grossly inadequate
For Food and Nutritional security, Newer production
techniques and technologies suited to Indian agriculture to
be explored including biotechnology
How to bridge the demand-supply gap ?
Increasing the yield - ?
Yields have nearly stabilized for cereals

Expansion of farm lands - ?
In Asia, nearly 95% of the potential cropland has
already been utilized.
In Africa, there are socio-economic, political
constraints and environmental concerns.
In Latin America, through conversion of rain-forests
How to bridge the demand-supply gap ?
Optimizing conversion efficiency - ?
Supply of Quality inputs
Efficient use of inputs
Effective research & extension
AGRICULTURAL INPUTS
AGRICULTURAL INPUTS
CONSUMABLES
Seeds
Fertilizers
Agro-chemicals

DURABLES
Equipment & Machinery
Agri-input business in India
Seeds(Rs.8000 cr) +
Fertilizers(Rs.65000 cr) +
Pesticides(Rs.10000 cr) +
Farm implements including tractors, seed
drills, harvesters and others (Rs.400 cr)
Micro irrigation systems (Rs.3000 cr)
Activity
Collect and observe brochures of agri inputs

List agri input companies

Seeds, Fertilizers, Agrochem, Machinery

Role of Agri-Inputs
To enhance Productivity

To increase profitability of operations

To ensure Sustainable Food security
FEATURES OF AGRICULTURAL INPUTS
Derived demand:
Purchased for production of crops and are used
as per demand based on multiple factors.

Similar to consumer and industrial goods:
Promotion and distribution is similar to consumer
goods.
Derived demand similar to industrial goods.
Bulky and high cost items.
Personal selling is important.

FEATURES OF AGRICULTURAL INPUTS
Technical selling:
The farmer needs solutions to problems such as low yields,
nutritional deficiencies, pests and diseases.
The sales person has to visit the field, identify the problems
and offer solutions.
He as to play the role of a Plant Doctor
Heterogeneous customers:
Farm Size
Crops grown
Irrigation facilities
Income
Education
Traditional belief/ Progressive practices
Life style

FEATURES OF AGRICULTURAL INPUTS
Demand forecasting is a challenge
Uncontrollable factors:
Rainfall
Output prices
Govt schemes
Incidence of pests and diseases

Distribution
The product has to be made available with retailers at village or
Mandi at short notice, based on demand

Handling the stock and receivables is a challenge
Activity
Estimate cost of cultivation of an agricultural crop

What are the major input and their costs ?

What are their proportions ?

What it means ?
Agri inputs costs - Typical distribution
5
10
20
25
40
Agri Input costs %
Seed
Plant
protection
Labour
Fertilizer
Seed as an input
Seed is a living material and has finite life span
Seed is the most important input
Seed is the Carrier of technology - Seed is the
only vehicle to carry superior genetics with high
yield potential and biotech traits to the farmer.
Seed offers low cost - easy to deliver solutions
for raising the crop productivity.
It is a high involvement purchase
Seasonal and narrow demand window
Seed as an input is irreversible
AGROCHEMICAL Vs SEED
AG-CHEM

PRODUCT - CHEMICAL
SHELF LIFE - 2 YEARS
PLACEMENT - MOSTLY AFTER KNOWING
CROP ACERAGE
FORECASTING - ONE YEAR IS SUFFICENT
PRICE SENSITIVITY HIGH
PRODUCT CHARACTER GENERIC
PRODUCT PERFORMANCE UNIFORM
PRODUCTION FACTORY
COMPLAINTS - JUST AFTER APPLICATION
SHOWING PERFORMANCE - IMMEDIATE
DEMAND - MOSTLY UNIFORM
SEED

BIOLOGICAL
MAXIMUM 9 MONTHS
BEFORE THE START OF THE SEASON

NEED TO FORECAST ATLEAST FOR 3 YEARS
LOW
UNIQUE
VARIES DEPENDING ON AGRONOMY
FARMER FIELD
CAN COME AT ANY TIME
AT THE END SEASON
SEASONAL
Activity
Collect and observe brochures of Seed companies

Collect and observe packets of seeds

What are the specifications mentioned ?

What are their implications ?

World seed market
Market value USD 42 Billion
Top players USA, China, France, Brazil,
Germany
India ranks 6
th
with USD 1500 Million value
The World's Top 10 Seed Companies - 2007 seed sales
(US$ millions) - % of global proprietary seed market
1. Monsanto (US) - $4,964m - 23%
2. DuPont (US) - $3,300m - 15%
3. Syngenta (Switzerland) - $2,018m - 9%
4. Groupe Limagrain (France) - $1,226m - 6%
5. Land O' Lakes (US) - $917m - 4%
6. KWS AG (Germany) - $702m - 3%
7. Bayer Crop Science (Germany) - $524m - 2%
8. Sakata (Japan) - $396m - <2%
9. DLF-Trifolium (Denmark) - $391m - <2%
10. Takii (Japan) - $347m - <2%

Top 10 Total - $14,785m - 67% [of global proprietary seed market]

Source: ETC Group
INDIAN SEEDS MARKET(2009-10)
Crop seed

Cereals
Vegetables
Cotton
Sunflower
Others
Total
Value (Rs crores)

2000
1300
1600
300
300
5500
INDIAN SEED MARKET COMPOSITION
Farm saved seeds: 75%
Commercial seeds: 25%
Of the commercial sector:
Private 76% and public 24% ( by volume)
Of the private sector:
organized is 57 % (with research capabilities)
small sector / largely unorganized is 43% (no
research)

Video Indian Seed Industry
What is the market size?
What are phases of Indian Seed industry?
Public and Private sector
Salient features of regulatory framework