Department of Agriculture Research & Education (DARE) and the Department of Animal Husbandry, Dairying & Fisheries (DAHD&F) under the Ministry of Agriculture have signed MoUs/agreements with a few other countries, taking the number of partnerships with other countries to be 63Indian Prime Minister Narendra Modi’s ‘Make in India’ is about transforming India into one of the most promising and economically developed countries of the world. It has been paving the way for numerous developments. The reality of India is that the bulk of its population live in its villages and till ‘Make in India’ doesn’t include ‘Make in Rural India’, the aspirational goal of being the most economically developed country in the world will remain unrealized.
Rural India has become a major destination for major foreign companies. For example, Mondelez International, the US-based confectionery, food, and beverage major, inaugurated its new `1265 crore ($190 million) manufacturing plant in Andhra Pradesh with an annual production capacity of 250,000 tonnes. Similarly ‘Amul’ plans to invest `5,000 crore ($ 733.6 million) to establish ten new processing plants as well as expand the current capacity to touch 32 million litres per day (MLPD) capacity by 2020. Rural areas are the centres of production now.
While talking to BE, Ajay Mimani, Director of Ganesh Products Limited, said, “Ganesh Sharbat procures the raw materials directly from farms and the farmers in villages. Strawberries are taken from Panchgani. We procure the mangoes from Vijaywada or Malda, pineapples from Siliguri.”
Since the demography of India is tilted towards its rural belt and 72.2% of Indians live in around 638,000 villages and about 27.8% in about 5,480 towns and cities, this year’s Budget focused on the farmers. Development of farms will enable one to procure the raw materials at a cheaper rate. Stronger infrastructure will help in establishing more factories with much advanced machinery. This will lower the product’s cost and benefit the high-end consumers paving way for ‘Make in Rural India’ where agro-products can be manufactured in factories in rural India for both domestic and international consumption.
India being the largest producer, consumer, and exporter of spices and spice products, will boost ‘Make in Rural India’ and drive the growth further. India’s fruit production has grown faster than vegetables, making it the second largest fruit producer in the world. India’s horticulture output, comprising fruits, vegetables, and spices, has reached a record high of 283.5 million tonnes (MT) in 2014-15. India ranks third in farm and agriculture outputs. Agricultural export constitutes 10% of the country’s exports and is the fourth-largest exported principal commodity. The huge potential of the sector for ‘Make in Rural India’ is evident.
The Department of Agriculture and Cooperation under the Ministry of Agriculture has inked MoUs/agreements with 52 countries including the United States. In addition, the Department of Agriculture Research & Education (DARE) and the Department of Animal Husbandry, Dairying & Fisheries (DAHD&F) under the Ministry of Agriculture have signed MoUs/agreements with a few other countries, taking the number of partnerships with other countries to be 63. These agreements would provide better agricultural facilities and boost research and development, capacity building, post-harvest management, value addition/food processing, plant protection, animal husbandry, dairy and fisheries. The agreements could help enhance bilateral trade as well.
The Government of India plans to allow two Indian dairy companies, Parag Milk Foods and Schreiber Dynamix Dairies, to export milk products to Russia for six months after these companies got approval for their products by Russian inspection authorities.
Policies and schemes to boost rural India
‘Make in Rural India’ has the potential to turn the rural space into developed hubs where people will not need to migrate to urban areas for better life opportunities. Enthusiastic policy drives by the government like the Skill India and Make in India are likely to develop the rural space. The Ministry of Rural Development has come out with National Rural Livelihood Mission or Deen Dayal Upadhyay Grameen Kaushal Yojana (DDU-GKY), which skills unemployed youths from Below Poverty Line (BPL) category to gain employment.
PM Modi has also come up with the Pradhan Mantri Fasal Bima Yojana with an aim to provide farmers crop insurance. The Cabinet Committee on Economic Affairs (CCEA) has also given the go-ahead for the ‘Blue Revolution’, aimed at a holistic development with total financial outlay of `3,000 crore for the next five years. The new crop insurance scheme for farmers ‘Bhartiya Krishi Bima Yojana’ will also cover 50% of the farmers for the next two-three years. An energy-efficient irrigation scheme has also been launched for the next three to four years by the central government with an investment of `75,000 crore. Sectors like food and dairy processing has also been improvised under the government initiatives.
Apart from the central government, state governments have also initiated several projects aimed at the development of the sector. While the Gujarat government has planned to connect 26 Agricultural Produce Market Committees (APMCs) via electronic market platform under the National Agriculture Market (NAM) initiative, the Government of Telangana is likely to spend `81,000 crore over the next three years to complete ongoing irrigation projects and also undertake two new projects for lifting water from the Godavari and Krishna rivers. The National Dairy Development Board (NDDB) will also boost milk output and increase per animal production of milk. All this is necessary for creating the right infrastructure and environment for rural industries.
The central government has also set up an inter-ministerial committee to look into ways to examine the potential of Indian agriculture, identify segments with potential for growth and work towards doubling farm incomes by 2022.
IBEF reports that, “The Government of India recognises the importance of micro irrigation, watershed development and ‘Pradhan Mantri Krishi Sinchai Yojana’ and has allocated a sum of `5,300 crore for it. It urged the states to focus on this key sector. The state governments are compelled to allocate adequate funds to develop the agriculture sector, take measures to achieve the targeted agricultural growth rate and address the problems of farmers.”
Solution to a wider problem
Since the rural region possesses huge natural resources, umpteen numbers of small, medium and large industries can be built for efficient utilization. Apart from the farm and farm products, small scale industries and home-grown products like handicrafts, handloom and textiles, orchids, etc. which hold a higher value in the global market, can propel the ‘Make in Rural India’ mssion, resulting in high productivity and exports. The rural youth should also be empowered through capacity building skill development programmes. The Indian farmer receives just 10% to 23% of the price the Indian consumer pays for the same produce, the difference going to losses, inefficiencies and middlemen. Farmers in developed economies of Europe and the United States receive 64% to 81%.
According to the World Bank, India’s large agricultural subsidies are hampering productivity-enhancing investment. Over-regulation of agriculture has increased costs, price risks and uncertainty. Government intervenes in labour, land, and credit markets. India has inadequate infrastructure and services. These need to be dealt with.
The Indian market is growing with a growing number of foreign companies keen to invest in it. This will enable rapid industrialization and there will be a huge demand of skilled labour in future. The Modi government has come up with several measures to facilitate the growth in the agricultural sector in India. There has been growth in household income and consumption. The government has taken initiatives to expand the food processing sector and increase agricultural exports. Due to the rise of private participation in the agricultural sector, there has been growth in organic farming and the use of information technology has also increased. According to the 3rd Advance Estimates, India’s food grain production has increased to 252.23 MT in 2015-16 crop year. The production of pulses is expected to be at 17.06 MT. The National Institution for Transforming India Aayog (NITI Aayog) claims that, India’s agriculture sector is expected to grow 6% in FY 2016-17 in case of normal monsoon during the June-September period. The 12th Five-Year Plan estimates the foodgrains storage capacity to expand to 35 MT.
Start-ups in agriculture
Will Poole, the Managing Partner at Unitus Seed Fund, said that, “Agriculture start-ups are an emerging area, which can unleash umpteen opportunities strengthen the supply chain in India agriculture.” Several start-ups have been introduced to help the farmers. The agriculture sector in India is around $370 billion but the sector is not yet technologically advanced. Enabling the sector technologically will lead to better productivity.
Flybird Agri Innovations, a Bengaluru-based start-up places, sensors in the soil to detect moisture content and control irrigation. These sensors have been installed in 45 villages in Karnataka to help farmers in the drought-hit state optimize irrigation.
Another start-up called Agroman is an integrated agriculture portal providing agro-services to farmers and acts as a product and price discovery platform.
Though there are many innovations happening in this sector but there is a lack of fund inflow in the sector. According to Tracxn, a start-up activity tracking platform, the funding for start-ups in Indian agriculture declined to $56 million in 2015 from $123 billion in 2014. The year 2015 being a drought year, only 20 agriculture- related startups could raise money. The money invested in tech startups in 2015 was $6 billion, but agriculture startups attracted less than 1% of the total investment. Along with investment inflation seems to be another problem for the agriculture sector.