Thursday 12 March 2015

Major Trends and Challenges of Sustainable Food and Agriculture


Our population trajectory says that by 2030, the world would create the equivalent of a small city of nearly one million people in developing countries, every five days! This reaffirms that the farmers must produce more grains and food products per unit of land, water, and other resources to meet the growing demand of food in the coming years.

There are some growing trends and important priorities in this aspect influencing the food and agriculture industry.

Challenges and Trends

Gross Wastage of Food

We are witnessing great level of waste that amounts to nearly 30–40 percent of all food types and in every step of food chain. Very high percentage of food produced, never see the market and reach consumers very country. 

Aiming Wrong Target

The world has two kinds, the overweight people and the undernourished as a results of emerging dietary habits that seem extremely wrong for human health and for the entire ecosystem. But our agriculture policy focuses on production and trading irrespective of serious issues of good nutrition. We need to shift our focus to more nutritious food now.

Changing Governance

The shifting governance is not heading in quite the same direction. Agribusiness companies are increasingly oriented towards ecological system that recognizes the restrictions imposed by natural resources and for better social outcomes. There are several governments, agencies, multilateral and institutions that are initiating to actively invest in agriculture; whereas a few food bodies and NGOs are leading the show. Powerful corporates have developed enough means to rival the influence of the state, shifting the approaches of local and global food systems.

It’s time now for public policy and private sector investment to lead toward a common and shared goal.

Diminishing Environmental Resources

Agriculture is using major part of available fresh water and potentially productive lands are lost every year through soil erosion and degradation.

Solutions

Private enterprise is a strong aspect due to increased concentration all along the supply chain.

The public sector should provide a thoughtful and well defined guidance for longer-term public needs and the private sector must play a major role to finding solutions to the new challenges of our food and agriculture systems. Although the solutions are available they need to be adapted and implemented widely to witness sustainability in good and agriculture industry.

Friday 12 September 2014

Challenges Before Investors to Invest in Agriculture of India

Nonetheless India is emerging as a burgeoning superpower with loads of natural resources and second largest population across the world, yet it is incapable to properly feed and nourish their citizens. How these different images of India can be related? Probably by right investment plans and support by Indian government.

Agribusiness Companies


Challenges Before Investors
The most basic challenges in agricultural improvements are to deal with the gigantic number of small and startup farms, and to overcome obstacles caused due to improper infrastructure.
  1. Small Farms are Not Productive

           Majority of farms are small in size and does not have right infrastructure and are contributing to extremely low farm yields. This limits the farmers’ investment into their farm’s future to enhance their productivity and cut down the risks factor like seeds, crop insurance, fertilizer, market info etc. Investors find it risky betting their money on these small farms.
  1. Extremely Poor Infrastructure

                More than half of the Indian agriculture spoils are wasted prior to reaching consumers because of poor repository, infrastructure and supply chain integration. 
  1. Politics Influences Investment

               Inconsistent government policies and unnecessary intervention has developed a challenging environment for domestic and global investors. These subsidies and investments are usually invested in politics as campaign tools. 
  1. Supply Chain is in Poor Condition

         Once food is cultivated, lack of right infrastructure and inefficiencies within the supply chain becomes the reason behind the loss of nearly a third of food produced.  Increased investment is the only solution to improve the farmer productivity and financial condition.

Several Companies Are Looking to Solve the Issues

The good news is that for every challenge there are solutions, positive intervention and right investment. There are several agribusiness companies getting agricultural funds in India invested by many venture capital firms with a hope to streamline the agribusiness sector and hopefully the situation will change.

Wednesday 16 April 2014

Indian Agribusiness Scenario – A Lucrative Breeding Ground for Agribusiness Companies

India constitutes second largest arable land in the world, and has diverse agro-climatic zones all over the country. It has immense production benefits in agriculture and the capacity to cultivate a huge stretch of agricultural products. The catapulting pressure on land availability often results in shortfall in food supply in several crops, intimidating India’s food security. This scenario can be surmounted by increasing farm yields, decreasing wastage in the supply chain by introducing improved storage, agriculture funds in India, post harvest architecture and better and automated logistics. 

Agribusiness Companies in India


Scope for Agribusiness in India

Being one of the yielding and naturally blessed countries, agriculture companies in India have a bright scope of performing and offering improved returns. Let’s have a closer look at the prevailing business scope for agribusiness companies in India:  
  • India is graced with varied agriculture climate, promoting production of temperate, tropical and sub-tropical agricultural commodities. It gives new hope to agribusiness growth in India.
  • There is vast demand for agricultural 1st stage input requirements like feed and fodder, bio-fertilizers, inorganic fertilizers etc. inviting ample scope for such primary agriculture inputs suppliers.
  • Introduction of biotechnology applications in agribusiness has opened up new gateways in production of seed, industrial harnessing of microbes for bio-control agents and bakery products.
  • Export is yet another aspect to harness as a source of economic growth. Being a signatory of World Trade Organization, India brings great potential to improve its present position in the agricultural commodities of World trade.
  • Currently the food processing is performed at conventional level and the increasing living standard offers opportunities for secondary and tertiary food processing of agricultural commodities.
  • The large coastal line and internal water reservoirs offers great opportunity for production of inland and marine fish culture, which is gaining popularity due to increase in aesthetic value within the populace of India.
  • The forest resources can be leveraged for production of by-products of forestry.
  • Organic farming has introduced great potential in India due to least pesticide and inorganic fertilizer application vis-à-vis other industrial countries of the world. Farmer of India can be educated and encouraged to switch over to organic farming.
  • Seeds, genetically modified crops, and hybrid have the biggest potential in the future, as the productivity of high yielding varieties has touched a plateau.
Synopsis
There are several other opportunities waiting to take the center stage, like micro-irrigation systems, labor saving agriculture equipments, production of vegetables and flowers leveraging  green house conditions, trained human resources in agriculture and allied sciences, etc. Given the above scenario it is quite obvious that agriculture companies in India are reeling under overwhelming upheaval and there is ample scope to grow and flourish.

Monday 24 February 2014

The Future of Agribusiness Companies

Of late a promising and impressive growth has been observed in majority of companies in agribusiness sector. Although it has faced challenges in the supply chain of the global food network, but the increasing demand means that the growth will continue in the future too. Nonetheless, it should also be considered that the market is identically lucrative to generic manufacturers. 

Agribusiness Companies, Agriculture Funds in India


Agriculture Industry Have to Act Prudently

The growing demand and inability to satisfy the demand, given the restricted availability of water and land, is placing pressure on all stakeholders, political decision makers, retailers, growers, agribusiness companies or consumers to take action. The industry now needs to act with responsibly to best utilize the agriculture funds in India and fulfill the demands of one and all.

Key Drivers Influencing Agribusiness Industry

Nevertheless, the agribusiness industry is capable enough to handle the uncertainties like weather conditions and economic downturns, the dynamics are seeming more complex. This complexity is supposed to be geared up by the impact of legislation in specific geographies, the dynamic and varied public perception regarding agrichemicals and GMOs, the expected shift from pure product to service driven offerings and level of product differentiation required by the market.

Synopsis

Finally the above said complexities would require enhanced organizational flexibility. This can be done only by robust and improved strategic planning for allowing and anticipating multiple results in core dimensions of change, and expeditious execution of these outcomes. The coming few years are going to be the interesting period for the industry. The agribusiness companies can find solution to handle these complexities can become highly lucrative!

Monday 27 January 2014

Limitations and Solutions for Agriculture Funds in India

The food processing industry of India mostly encompasses SME with restricted potential to invest in further growing their resources, which lack advantages of scale.

As per Dr. K.G Karmakar, MD of Nabard - majority of such units are engaged in primary and secondary food processing. The startup units engaged in tertiary processing usually generate unbranded products that attract the lower sector of the food market and are not likely to compete with branded products. 

Agriculture Funds in India


Constraints Faced by Agribusiness Companies
For this sector, agriculture fund is an area of concern. Keeping in view the small scales of such units, seasonality of food products and stand-alone nature, a much greater risk is associated with this sector.
Agri-business companies face constraints in the absence of well-established risk management system, lack of business intelligence, poor economic viability, lack of resources, general apathy, negligence from bankers, and cyclical nature of the business.

The major constraints faced by finance companies in offering loans to food processing business include:
  • The small scale of operations because of fragmented structure of the sector
  • Insufficient assets to be utilized as loan security
  • Inexperienced sponsors in food business
  • Limited availability of risk mitigation tools
  • Lack of basic competitiveness of some agri-business operations that only exist on subsidies or tariff protection.
Solutions to These Constraints
As per Mr. Karmakar – Necessity of high investment in food processing industry coupled with factors resulting in high production cost makes the investment risky and the investors indifferent. This restriction needs to be cleared at the initial stage to increase credit flow to the agri-business sector. This industry needs to be projected and promoted as bankable, economically-viable and commercially-feasible to earn cash credit flow for development.

It is believed that microfinance is the potential tool to promote the value chain in the SME agri-business ventures. The efforts for promoting the food processing sector should be focused on expediting the pace of capital formation; ensuring lucrative costs for the farm produce; marketing and post-harvest management, erecting infrastructure with focus on transportation, and exports.

Synopsis
Prasad Gopalan, head of International Finance Corporation (IFC) and Agri-business (Asia) puts it precisely - Financial institutions are capable of playing a crucial role in promoting the development in food and agriculture sector by offering customized agriculture funds in India to these SMEs.