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International Conference on Sharing Innovative Agribusiness Solutions

Integrated Agro Food Park (IAFP)

November 27, 2008

Scope of the Presentation

IAFP Complementarities to South-South Cooperation

Indian Economy & Agribusiness


IAFP India

India is the 4th largest and 2nd fastest growing economy of the world

Source: Industry Data and Yes Bank Analysis

Indian Economy & Agribusiness

GDP Growth for 10 years (CAGR %)

8.66.2

5.05.0

4.84.6

4.23.5

3.12.8

ChinaIndia

MalaysiaKorea

SingaporeTaiwan

PhillipinesHong Kong

ThailandIndonesia

Cou

ntry

The population in the age group 15-64 years is expected to contribute approx 68% by 2025 (optimistic scenario) whereas % share of 65 + age group is going to reduce to 25%. As a consequence of these age structural changes, the age-dependency ratio (ratio of non-working to working population) is going to reduce.

Source: NSSO and Yes Bank Analysis

Indian Economy & Agribusiness Contd..

35.7

59.8

4.5

33.3

62

4.8

29.9

65

5.1

26.7

67.7

5.6

25

68.7

6.3

24.5

68.3

6.7

0%

20%

40%

60%

80%

100%

% o

f poo

pula

tion

2000 2005 2010 2015 2020 2025

Demographic Distribution for different Age Groups

0-14 years 15-64 years 65+ years

Household Income Distribution trends clearly indicates greater % of households with higher incomes to increase substantially by 2014-15


Distribution of Household by Income Group for India

46

95

7 7

127

24 33

2

768273

20

0

50

100

150

< 1900 1900 – 2600 2600 – 5200 5200 – 25000 > 25000

Income in USD/year

No. o

f hou

seho

lds

2001-02 2006-07 2009-10* 2014-15*

Rural Urban Population Growth Trend

53

135

69

153

0 50 100 150 200 250 300 350

Urban

Rural

No. of households

2001-02 2009-10

No. of household in urban areas will grow by 30% from 2001 to 2010


Dairy, Meat, Fish, Fresh Fruit Juices, Beverages

Convenience Foods

Diet/Functional/Organic Foods

Snacks/ Prepared Meals

Carbohydrate Staples

Surviving Mass Market

Convenience Food Service

Snacking

Quality Hygiene

High Technology

Africa (Sub-Sahara)

India, China, Latin America

Eastern Europe

N. America, Japan, W. Europe, Australia


Consumer purchase basket changing in favour of perishables and non-food staples and processed foods.


Purchase Trend for Various Food Categories (2001-2015)

0%5%

10%15%20%25%30%35%

Cereal

Pulses

& their

prod

ucts

Milk &

milk

produ

ctsEdib

le oil

Meat, f

ish an

d egg

sVeg

etable

sFrui

ts (fr

esh)

Fruits

(dry)

Sugar

Spices

Bevera

ges a

nd S

nack

...

% P

urch

ase

Mad

e

20012015


Significant supply side strengths in agriculture, horticulture, dairy, poultry etc

Varied Agro-climatic conditions and agro-climatic diversity

Low cost of productionGrowth in Organized food retail

11

15

0 5 10 15 20

Vegetbales

Fruits

%

53

63

40 50 60 70

Vegetables

Fruits

%

India’s share in global production

India’s prices as % of world prices


* Only upto 31st Dec, 2006

Government is according priority status to Agriculture.The flow of institutional credit in Agriculture has almost doubled from FY 2002 to FY 2006


Home Slide


Rationale

Concept

Benefits

IAFP INDIA

Mushroom

PoultryGreenhouse

Juices

Pigs Waste Mgmt.

CPU

Home Slide

Challenges in Agricultural Value ChainsHigh cost of imported processing / packaging equipments and technologies Uncertain / high cost / poor quality of power supplyRestricted import regulations on seeds, planting and generic materialLack of State-of-the-art of food testing laboratoriesProper system and procedure to address Quality assurance and food safety issuesNo alignment with changing consumption trendsInefficiencies in distributionMoving from mass market to convenience and snack foods

Integrated Agro Food Park (IAFP) Rationale

Rural Community

Health Care

Farm Advisory

Primary Education

Housing

Food/ Grocery

Farm Inputs

Micro Finance

Agricultural

Social/Family

Financial

Farm Credit

Employment

Integrated Agro Food Park (IAFP) Rationale Contd..

Sustainable Food Chain: Combination of High quality food production system and non agro components such as waste management and water and logistic management

Energy Harvesting: Clean energy production mechanism through use of bio-waste

Unitary Consolidated Grid:Integration of Agro Food parks at different locations for meeting the food demand


Metropolitan Agriculture: Addresses the issues of modern day metropolitan agriculture

Primary processing facilities will enhance the effective flow of products to secondary processing facility & finally up to consumer

Food Quality and Safety: Fulfils the need of safe and healthy food for modern day urban consumer


Rural Community

Health Care

Pr. Education

Housing

Food/ Grocery

Agricultural

Social/Family

Financial

Farm Advisory

Farm Inputs

Farm Credit

Micro Finance

Employment

Collection Centre

Rural Mart

Agri Clinic

Food / Grocery

Education

Housing

Micro Finance

Rural Transformatio

n Centre (RTC)

Integrated Agro Food Park (IAFP) Concept

RTC

Agri Clinic

Collection Centre

Rural Mart

Education

Food / Grocery

Housing

Micro Finance

RTC

RTC

RTC“RTCs are collection centers for food parks and also provide services to farmers”

RTC’s are located within 50-150 Kms of the AFP covering major production centersThe primary function is collection or procurement of agricultural and horticultural produceThe merchandise collected in RTC to reach food park within 5-6 hours of grading and pre-cooling

Integrated Agro Food Park (IAFP) Concept Contd..

RTC

RTC

RTC

Bio-energy production (including manure processing)The merchandise collected in RTC to reach food park within 5-6 hours of grading and pre-cooling

RTC

RTC

RTC

RTC

Ani

mal

Fat

, Bio

Was

te

Bio Waste

Leaves, Waste

Heat, Electricity

Heat

, Elec

tricit

y

Mushroom

PoultryGreenhouse

Juices

Pigs Waste Mgmt.

CPU

Intensive exchange of remainders and byproductsCentral processing of heat, water electricity and CO2


Structural and Design AspectsIntegration of various agribusiness value chain components

Spatial clustering of different agro-production chains

Scale of operation to aid in industrial processing

Cluster approach to attract leading foreign retail chains

Integrated township model approach to attract good players

Tremendous scope for rural transformation and rural employment generation

Unique range of products according to competitive advantage of each AFP


Mushroom

PoultryGreenhouse

Juices

Pigs Waste

CPU

Social Infrastructure: Agro-turism, Utilities and Services, Common Infrastructure

Production Facility: Greenhouses, PoultryMushroom Nurseries etc

R&D Facility

Trade: Commissaries &Packaging, Commercial Complex, Terminal Market Logistics, Cold Storage, Ripening Chamber etc


Sustainability & Environment friendly


CONSUMERS•Healthier & Safer food ( Reduced allergens & natural toxins)

•Extended freshness & increased shelf life

FARMERS•Value chain will be more transparent

•Exchange of knowledge will occur

•Access to latest technology will be easy

•Timely information transfer will take place

•Wastage gets reduced and better prices can be realised

EMPLOYMENT GENERATION POTENTIAL/ PARKAtleast 10,000 Direct jobs Atleast 10,000 Indirect jobs get created

KEY BENEFECIARIES: Farmers and End Consumers

Integrated Agro Food Park (IAFP) Benefits

CORE DEVELOPER•Source of rental income from the services provided

•Flexible and can integrate changes

•First movers advantage

INVESTOR•Low fixed cost

•All services available under one roof

•Excellent backward integration

SERVICE PROVIDERSHuge opportunity to provide services such as logistics, IT, Smart Cards etc

KEY BENEFECIARIES: Farmers and End Consumers

Integrated Agro Food Park (IAFP) Benefits Contd..

IFFCO IFFCO KisanKisan SEZSEZThe first AFP in India The first AFP in India

Integrated Agro Food Park Nellore

Inspite of …positive demographics & consumption trendsSupply side advantages

Indian Agriculture still lags behind due to….Inefficiencies in the value chainLack of scaleInability to meet the quality standards

Realizing the opportunity Alterra of Wageningen University and Research, Netherlands and M/s Yes Bank Ltd intends to create

world class Agribusiness Infrastructure that would enable India become the Food Factory to the World!

Integrated Agro Food Park Nellore Contd..


India’s 1st Agricultural Special Economic Zone

Developer & Co-Developer

Project Advisors – Strategic & Financial

Proposed Layout Plan at Nellore, Andhra Pradesh


SEZ is spread over approx 2000 acres and situated in Nellore District of Andhra Pradesh on the basin of Pennar river

Mumbai Hyderabad

Chennai

New Delhi

Kolkata

Bangalore Nellore


Mumbai Hyderabad

Chennai

New Delhi

Kolkata

Bangalore Nellore

Locational Advantage: Krishnapatnam Port is 45 km from the IAFPAirport: Chennai Airport is about 170 kms from the IAFP

Special Economic Zone (SEZ):Income-tax Holiday for up to 15 yearsNo Capital Gains Tax on relocation to SEZIndirect-tax exemptions Customs duty, Excise Duty, Service Tax, Central / Local Sales TaxNo duty will be levied on import procurementExemption from CENVAT, Local Sales Tax and Central Sales Tax for Intra-state and Inter-state procurement


Mumbai Hyderabad

Chennai

New Delhi

Kolkata

Bangalore Nellore

Agricultural Advantages: Paddy- Paddy based products, raw rice exportsSugarcane- Natural Jaggery productionPulses and other cereals

Horticulture Advantage: The IAFP can act as point for processing

Citrus (Gudur), Mango- Fresh fruit exportsSapota- Fresh and processed fruit exportsPapaya- Fruit pulp, papain exportsBanana- Raw and processed fruit exports

Phases of Development:The business planning for which entrepreneurs are primarily responsibleThe process of development policy, that ensures the ongoing formal legislation and planning procedures for which the government is primary responsible.Knowledge development managed by the knowledge institutesCommunication, internal and external, to non-governmental organizations and to the public


Phase I: Proposed AFP Locations

Phase II: Proposed AFP Locations

Phase II: Cons. centre Locations

Phase I: Cons. centre Locations

Focus initially in South & Western India ( 8 AFP’s)

Andhra PradeshKarnatakaTamilNaduMaharashtraGujarat

Phase II RajasthanWest BengalPunjabHaryanaUttar PradeshMadhya PradeshKerala

About 30 Consolidation Centres on pan India basis


Home Slide

AFP Complementarities to South-South Cooperation

Land productivity (almost 50% of that of the Asian and Latin American countries)

Labor productivity (about 60% of that of Asian and Latin American countries)

Yields of agricultural crops than world averages

Constant climate change is resulting in falling precipitation, desertification and increased climate variability

Insufficient investment, Weak local private sector and infrastructure

Weak linkage between farmers and processors/ markets, high wastages across the supply chain


The nearness to the European and Middle East market’s are added features for Indian Entrepreneurs to look at investing in African Countries apart from the resource availability and cost advantages offered

Benefits offered through AFPSustainable Agro Production system

Utilization of resources such as water, power

High income generation for farmers

Foreign investment in agriculture

Sufficient job opportunities

Socio-economic development of concerned geographies

Improvement in Food Quality and Food Safety standards


Implementation Process: Bilateral trade tie-ups in the field of Agriculture and Agribusiness between governments of India and interested African economies

Favorable Agro-Industry policy Preparation of investment profile for each country Conducting a feasibility study for identification of suitable locations Conducting road shows for key investors Involvement of state agencies for arranging land and human resourcesOrganizing local Small and Medium Enterprises for participating in the AFP’s

Home Slide

Contact: [email protected]

[email protected]

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