Agri business in India is at a transition point. Having sailed through the shortage economy to an economy with surplus in grains, it is important that governments at the Centre and state recognise the need for inclusive growth to take agriculture forward, said Sivakumar, chairman agri business sub-committee, Confederation of Indian Industry "" southern region and chief executive, agribusiness, ITC Ltd. | |
| Despite employing about 57 per cent of the population of the country, agriculture contributes only 27 per cent to the GDP of India, he told CII's meet on 'Reforms in the APMC (Agricultural Produce Market Committee) Act and its impact in the Southern States'. |
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| This imbalance prevents agriculture from becoming a key employment generator. Hence,in keeping with the global view, India needs to carve out opportunities in agri-exports sector, he added. |
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| Contract farming and direct marketing to retail chains and processing units are the need of the hour. Regulations to keep pace with these needs are required to create alternative marketing mechanisms. |
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| Delivering his keynote address, Shankarlal Guru, Chairman-International Society for Agricultural Marketing, said the APMC Act in each state imposes substantial taxes on buyers, in addition to commissions and fees taken by middlemen, but typically provide little service in areas such as price discovery, grading or inspection. |
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| A key result of the present regulation is the inability of private sector processors and retailers to integrate their enterprises directly with farmers or other sellers, eliminating middlemen in the process, he added. |
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| Farmers also are unable to legally enter into contracts with buyers. This leaves no incentives for farmers to upgrade, and inhibits private and foreign investments in the food process sector. |
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| Making a presentation on 'Aligning State Policies with emerging new marketing models,' Prof S Raghunath from the Indian Institute of Management-Bangalore (IIM-B), emphasised the need for an effective and efficient distribution system for agri-produce and provision for supply-demand transparency. |
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| Since the main objective of the APMC Act was to prevent exploitation of farmers by various intermediaries, reforms were required in the Act, with changing face of agriculture and the agricultural supply chain, said Prof Raghunath. |
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| India is the largest producer of vegetables in the world, with a 15 per cent share of global produce. Also, 8 per cent of world's fruits are produced in India, ranking it second in the world market. According to Raghunath, in spite of this, there is a high cumulative wastage of 40 per cent in India. |
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| Inadequate infrastructure and lack of organised supply chains were the main culprits. |
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| "Thus, reforms in this sector needs to catch up with the pace of development in the economy and dis-intermediation and participation of organised players in the sector will remove the lacunae," he added. |
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