Indian Agriculture & Agri-Business Management

ABOUT THE AUTHOR

Dr. Smita S. Diwase M.Sc (Agriculture), MMS, Ph.D

Smita Diwase has done her Masters in Agricultural Meteorology and her Ph.D in Management. She is the recipient of several scholarships and awards including the Indian Council of Agricultural Research (ICAR) Fellowship She has over twenty years of work experience in the field of teaching, training and research at various institutes. She has published two books on Agribusiness Management and several research papers have been accepted for discussion at various national and international forums. She is currently involved in

Agricultural exports: Developing effective backward and forward linkages in the fresh produce market for grapes and pomegranates under the brand name SUNPIKT www.sunpikt.org;

Training and consultancy: This includes organization of events in the field of agriculture on behalf of embassies, trade associations and organisations from different countries such as ADEPTA, France and their Indian counterparts to facilitate sharing of ideas, transfer of technology and promotion of trade.

Outbound agricultural tours & events: International crop specific educational tours are organized to countries that have developed a competitive advantage in terms of production, processing and marketing of specific crops or commodities.

Indian Agriculture & Agri-Business Management

Dr. Smita S. Diwase M.Sc (Agriculture), MMS, Ph.D

Published by:

Scientific Publishers (India) 5 A, New Pali Road, P.O. Box 91 Jodhpur 342 001 (India) E-mail: info@scientificpub.com Website: www.scientificpub.com

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© Author, 2014

All rights reserved. No part of this publication or the information contained herein may be reproduced, adapted, abridged, translated, stored in a retrieval system, computer system, photo-graphic or other systems or transmitted in any form or by any means, electronic, mechanical, by photocopying, recording or otherwise, without written prior permission from the authors/editors and the publishers.

Disclaimer: Whereas every effort has been made to avoid errors and omissions, this publication is being sold on the understanding that neither the editors (or authors of chapters in edited volumes) nor the publishers nor the printers would be liable in any manner to any person either for an error or for an omission in this publication, or for any action to be taken on the basis of this work. Any inadvertent discrepancy noted may be brought to the attention of the publishers, for rectifying it in future editions, if published.

ISBN: 978-81-7233-870-1 eISBN: 978-93-86347-62-6

Printed in India

PREFACE

Agribusiness management has always been challenging in terms of its dependence on climatic factors, seasonality, perishability of produce, localized production, bulky nature and price fluctuations amongst others. It has now become more challenging than ever, in the context of climatic change, natural resource constraints, soaring food prices, food security concerns and globalizat ion. This book aims at providing students of agribusiness, teachers, researchers, professionals and all those interested in the field of agriculture with a broader understanding of agribusiness as a system and the key concepts needed to successfully manage an agribusiness enterprise. It serves as a basis to gain a comprehensive understanding of how the agribusiness system operates and the challenges faced in the movement of food and fiber from the producer to the ultimate consumer.

The first part of the book helps in understanding the context within which agribusinesses operate in India. It focuses on the breadth and scope of agribusiness in India, policy initiatives undertaken by the Indian Government and the legal framework within which they function. The book does not aim at a critical analysis, but at providing the agribusiness entrepreneur with inform-ation on the various programs in place which could be used to his advantage.

The second half deals with the complex network of inter related activities performed on the farm and past the farm gate such as natural resource manage-ment, input management, marketing management, supply chain management and risk management, as well as the institutional linkages needed for the same. It addresses issues relevant to decision making in a rapidly changing, highly competitive market environment led by technological advancement in areas such as information technology and biotechnology. It provides an insight into mana-gement challenges related to rising input costs and shifting consumer preferen-ces. Cases pertaining to the best practices and potential strategies adopted by a few innovative, successful organizations have also been incorporated.

It is hoped that this book succeeds in generating and sustaining interest in this extremely interesting and challenging field of agribusiness.

Dr Smita Diwase

CONTENTS

Chapter 1 Agriculture in India 1-43

Role of Agriculture in the Indian Economy 1

Product Contribution 2

Factor Contribution 8

Market Contribution 9

Land Use and Distribution in India 10

Agricultural Production in India 10

Production of Food Grains and Commercial Crops 11

Agricultural Production of Principal Crops in India (2000-2012)

15

Food Consumption 18

Commercial Crops Production in India 19

Animal Husbandry 20

Agro- Industrial Complexes 27

Food Processing Sector 36

Government Initiatives 38

Quality Assurance, Codex Standards, Research & Promotional Activities

39

Components of Food Safety Schemes 39

Challenges in Indian Agriculture 40

Chapter 2 Indian Agriculture Policy 44-98

National Agriculture Policy, 2000 46

National Seeds Policy, 2002 57

Agricultural Price Policy 63

National Food Processing Policy 66

The Foreign Trade Policy 69

viii Indian Agriculture & Agri-Business Management

Marine Fishing Policy 87

National Food and Biotechnology Policy 89

National Policy on Handling, Storage and Transportation of Foodgrains

91

National Policy for Farmers, 2007 94

The Nutrient Based Subsidy (NBS) Policy, 2010 95

The National Food Security Bill, 2011 95

New Investment Policy 2012 (NIP-2012) in the Urea Sector 96

Direct Cash Transfer Policy, 2012 96

Policy Shift in Agriculture 97

Chapter 3 Programmes and Schemes 99-162

Schemes related to Natural Resources Management 100

Schemes related to Crops 104

Schemes related to Horticulture 114

Schemes related to Seeds 120

Schemes related to Fertilisers 125

Schemes related to Plant Protection 126

Schemes related to Machinery 128

Credit Schemes 129

Insurance Schemes 131

Agriculture Marketing Schemes 133

Cooperative Sector Schemes 141

Extension Schemes 143

Food Management Schemes 146

Trade Related Schemes 150

Policy and Plan Schemes 150

Animal Husbandry Schemes 151

Sheep Development Schemes 156

Poultry Development Schemes 157

Piggery Development Schemes 159

Fodder Development Schemes 159

Fisheries Development Schemes 160

Chapter 4 Agribusiness Management 163-184

Agribusiness 163

Contents ix

Agribusiness Network 164

Distinguishing Features of Agribusiness 165

Challenges in Agribusiness 167

Scope of Agribusiness 168

Forms of Organization 169

Agribusiness Management 171

Agribusiness Activities 173

Functional Management in Agribusiness 174

Agribusiness Economics 175

Setting up of an Agribusiness Enterprise 177

Case of Setting up a Corn Wet Milling Project in India 181

Change in Approach 184

Chapter 5 Production Management 185-237

Production Systems 185

Specialization 186

Diversification 186

Natural Resource Management 193

Intensive Agriculture 194

Conservation of Biodiversity 196

Land 196

Water Resources 205

Case of Jain Irrigation Systems Ltd 208

Labour and Agricultural Wages 212

Sustainable Agriculture 213

Cropping Patterns based on Regional Agro-Climatic Planning (RACP)

214

Watershed Management 217

Watershed Management at Ralegan Siddhi 225

Effective Input Usage 227

Organic Farming 227

Global Positioning Systems (GPS) 231

Precision Farming 233

National Mission for Sustainable Agriculture 237

Agricultural Outsourcing 237

x Indian Agriculture & Agri-Business Management

Chapter 6 Input Management 238-336

Agricultural Inputs 238

Fertilisers 241

Changes in Fertilizer (Control) Order, 1985 244

Net Return From Fertilizers 245

Fertilizer Marketing 246

Effective Nutrient Usage 250

Government Intervention 252

Water 253

Integrated Water Resources Management 256

Water Management Principles 257

Agricultural Water Strategy (AWS) 258

Agricultural Water Use Efficiency 260

Irrigation Water-Use Efficiency 262

Integrated Irrigation Management 263

National Watershed Development Project for Rainfed Areas (NWDPRA)

266

Role of Government 270

Seed 273

Seed System 274

Institutional Role 275

The Seeds Act, 1966 276

Seeds (Control) Order, 1983 277

New Policy on Seed Development (NPSD), 1988 277

Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FR), 2001

278

National Seeds Policy, 2002 278

Seeds Bill, 2004 278

National Mission on Seeds 279

OECD Seed Scheme, 2008 280

Amendment to NPSD, 2011 280

Seed Marketing 281

Agro-Chemicals 287

Methods of Pest Management 287

Contents xi

Pest Management Techniques 289

Pesticides Marketing 292

Regulatory Environment 293

Insecticides Act, 1968 293

Strict Regulatory Regime 293

Computerized Online Pesticide Registration System, 2008 294

Quality Testing 295

Accreditation of Pesticide Analysis Laboratories 295

Intensive Pest Surveillance and Management 295

Capacity Building - National Institute of Plant Health Management

296

Plant Quarantine 296

Credit 297

Classification of Credit 298

Institutional Network 301

Flow of Institutional Credit to Agriculture 302

Government Initiatives in Credit Disbursement 303

Kisan Credit Cards 304

Micro Finance Innovations 306

Rural Infrastructure Development Fund (RIDF) 306

Warehouse Receipt Financing 307

Central Financial Assistance 307

Role of Financial Institutions 308

Infrastructure Management 309

Storage Infrastructure 310

Warehousing Infrastructure 311

Storage Capacity in India 312

Central Warehousing Corporation (CWC) 313

State Warehousing Corporations (SWCS) 313

Food Corporation of India 313

National Grid of Godowns 313

Government Intervention 315

Agricultural Machinery 316

Government Intervention 319

National Mission on Agricultural Mechanization (NMAM) 321

xii Indian Agriculture & Agri-Business Management

Constraints in Mechanization 322

Mahindra and Mahindra Ltd: A Case in Mechanization 323

Information 331

Marketing Information 331

Sources of Information 333

Efficient Input Marketing System 334

Input Profitability Analysis 335

Chapter 7 Marketing Management 337-380

Agricultural Marketing in India 337

Government Intervention 338

Model Act’ 2003 340

Direct Marketing 341

Private Markets 342

Special Commodity Markets 344

Farmer’s Markets 345

Contract Farming 346

Land and Credit Markets 346

Agricultural Marketing Management 347

Classification of Agricultural Markets 348

Approaches to Agricultural Marketing 350

Functional Approach 350

Institutional Approach 351

Behavioral Systems Approach 353

Agricultural Marketing System 354

Physical Functions 354

Facilitative Functions 358

Pricing and Exchange Functions 359

Marketing Organization 370

Marketing Strategies 371

Role of Cooperatives in Agribusiness Management: Case of AMUL

372

Market Information System 377

Challenges and Government Intervention 378

Community Agricultural Enterprise 379

Contents xiii

Chapter 8 Supply Chain Management 381-413

Supply Chains 381

Vertical Cooperation 382

Horizontal Relationship 382

Nature of Association 382

Business Processes in the Agribusiness Supply Chain 383

Production 383

Processing/ Manufacturing 383

Wholesaling 384

Retailing 384

Logistics Service Providers 385

Logistics Outsourcing 385

Supply Chains Categories 386

Integrated Supply Chains 387

Supply Networks 388

Temperature Controlled Supply Chains (TCSCS) 388

Contract Farming 388

Factors Determining the nature of Supply Chains 397

Agribusiness Supply Chains in India 399

Meat Supply Chain in India 400

Transnational Meat Supply Chains 403

International Meat Supply Chains 404

Developing the Supply Chain 404

Advantages of Integration 405

Case of Venkateshwara Hatcheries Ltd 406

Success of Supply Chains 412

Chapter 9 Information Management 414-450

Information and Communication Technology (ICT) 415

Agricultural Information Management Through ICT 415

Networking through ICT 415

ICT Applications in Agriculture 416

ICT Application in Agricultural Electronic Commerce (E-Commerce)

418

xiv Indian Agriculture & Agri-Business Management

ICT Application in Agricultural Research, Education and Extension

420

ICT Implementation in Agriculture 423

Market Research Information Network (MRIN) 425

Government Initiatives for ICT Implementation 425

Farmers’ Portal 427

Agmarknet 427

Agrisnet 429

National E-Governance Plan in Agriculture 430

Computerized Online Pesticide Registration System 430

Project Gyandoot 430

Kisan Call Centers 432

Village Knowledge Centers (VKCS) 433

Bhoomi Project 433

Akshaya Project 433

Drishtee 434

Eid Parry 434

Tata Kisan Kendras 435

Akashganga 435

Sustainable Access in Rural India Project (SARI) 436

I-Kisan Agri Portals and Kiosks 436

Integrated Information System for Foodgrains Management 437

Integrated Agro-Met Advisory Service 437

Indian Tobacco Company: A Case 442

Issues to be Addressed 449

Chapter 10 Agriculture Technology 451-467

Varietal Development 451

Remote Sensing 452

Post-Harvest Technology 454

Plant Tissue Culture Technology 455

Biotechnology 455

Biotechnology in Crop Improvement 456

GM Crops 458

Photosynthesis through C3/C4 Systems 458

Contents xv

Bioinformatics 458

National Agricultural Bioinformatics Grid (NABG) 458

Biotechnology in Horticulture 458

Bioactive Components 459

Technology Adoption 460

Monsanto: A Case 460

Applications of Geospatial Techniques in Agriculture 465

Agri Innovate India 467

Chapter 11 Risk Management 468-526

Types of Risk 469

Management of Risk 470

Agriculture Insurance Company of India (AIC) 474

Forward Contracts 481

Futures Markets 482

Futures Trading in India 492

Forward Contracts (Regulation) Act, 1952 494

Organization of Futures Trading 496

Forward Markets Commission 497

Recent Policy Initiatives 499

Commodities in which future trading is being conducted 500

Futures Trading Terminology 503

National Multi Commodity Exchange 509

Commodity Futures Market in India 520

Grain Marketing Strategy: A Case 522

Chapter 12 Institutional Linkages to Agriculture in India 527-

Ministry of Agriculture, GOI 529

Financial Institutions 537

National Bank for Agriculture and Rural Development 544

National Cooperative Development Corporation (NCDC) 559

National Dairy Development Board (NDDB) 561

National Cooperative Union of India (NCUI) 563

Agricultural & Processed Food Products Export Development Authority (APEDA)

567

xvi Indian Agriculture & Agri-Business Management

Indian Council of Agricultural Research (ICAR) 570

National Agricultural Cooperative Marketing Federation of India Ltd (NAFED)

589

Food Corporation of India 594

Central Warehousing Corporation 602

National Horticulture Board 605

Central Food Technological Research Institute (CFTRI) 606

Export Promotion Organisations 611