Earlier today, I spoke on the subject at a Conference in Delhi. In essence, this is what I said:
India has
successfully transitioned out of an era of food shortages, with the help of
giant strides taken by Indian agriculture over years.
With the
increasing per capita incomes and growing awareness, today’s consumers are
seeking better quality and more variety in their food products. They prefer
products that offer convenience while buying and using. Food safety is another
area of concern. Much like the agricultural production system responded to the
growing demand in the past, there is an opportunity for the agri-business
system to respond and deliver these requirements to the consumer.
Besides
adding value through conventional processing and packaging, today’s agri-businesses
can also explore a number of additional sources of value creation. For example,
Supply Chain Management:
Through supply chains that preserve product identity from farm gates to the
retail shelves, or even better, supply chains that trace products to farm
practices, product integrity can be maintained and safety can be assured.
Backward Integration:
Through tighter integration of production systems into their value chains, agri-businesses
can transmit demand signals to the farmers, transfer modern crop management
technologies, coordinate delivery of farm inputs, and share production &
market risk with the farmers; this will help produce crops and varieties more
sharply aligned with the market demands.
Risk
Management: Through new market based risk management institutions such as
Commodity Derivative Markets (Futures & Options) and Weather Based Crop
Insurance Products, the production and market risk inherent in agriculture can
be transferred into the broader marketplace for more effective management.
These steps
will deliver value to the consumers, improve farm profitability and create
sustainable opportunities for the enterprises that connect the consumers with
farmers.
On its
part, the Government must facilitate this transition by reforming the currently
restrictive agricultural laws such as Agricultural Produce Marketing Act,
Essential Commodities Act and Forward Contracts Regulation Act.
