SM KaruppanchettyChief Operating Officer,Agri-Business Incubation (ABI) Programkaruppanchetty@cgiar.org17.03.2015

Strategy to Enhance Export Opportunities of Sorghum from India

VisionA prosperous, food-secure and resilient dryland tropicsMissionTo reduce poverty, hunger, malnutrition and environmental degradation in the dryland tropics

INNOVATION AND PARTNERSHIP (INP) programDeveloping collaborative research partnerships with public, private and allied sectors to benefit the small holding farmers of dry land tropics across the Agricultural and Agribusiness Value Chain.

AGRI-BUSINESS INCUBATION (ABI) programImproving well-being of poor farmers through the creation of competitive agribusiness enterprises by technology development and commercialization.

NUTRIPLUS KNOWLEDGE(NPK) programValue addition and post harvest management in agri food sector through ‑innovative processing and product development enabling achievement of ICRISAT‘s vision.

To partner with Institutes /organizations globally on Business Incubation to promote these ventures and enhance technology commercialization 22 BPD Units in India 6 Value-chain based Agri-Business Incubators in Africa 5 Food Processing Business Incubation Centres (FPBICs) in Africa IIAM, AREU- Mauritius, STEP- Thapar and others

ABI will promote ventures directly through its service strategy. The identified new strategic services of ABI are in the areas of:

SERVICE STRATEGY

OUTREACH STRATEGY

ABI DEVELOPMENTAL STRATEGY

Consultative Meeting on Enhancing Exports of Sorghum & Sorghum

Products From India

OBJECTIVE•To develop the strategy and proposal on PPP mode to enhance the export marketability of sorghum and sorghum products from India.

EXPECTED OUTCOME•Mapping the challenges and opportunities of all stakeholders on improving export of sorghum (Food, Feed and Industrial products).•Draft a strategic plan to enhance export of sorghum and sorghum products from India through PPP mode.

Key Stakeholders

NABARD

Sorghum IndustrySorghum has a variety of uses including food for human consumption, feed grain for livestock and industrial applications such as ethanol production.

In the world 50% of the sorghum produced is for livestock and 50% consumed by humans/other applications

Food usage on the rise thanks to the gluten-free benefits of sorghum

Most human consumption occurs in low-income countries, while high-income countries use sorghum as a component in livestock feed or to produce ethanol

Sorghum is the leading cereal grain in Africa. Currently grown in over 66 countries. The area planted to sorghum worldwide has increased by 66 percent over the past 50 years, while yield has increased by 244 percent.

Among the other cereals, feed use of sorghum is anticipated to increase by 10.5 percent (2.7 million tonnes), with much of the rise concentrated in China, where it is seen growing by 1.8 million tonnes (43 percent) from the previous season(FAO)

Total trade of sorghum (2014/15) is projected at 10 million tonnes, some 53 percent (3.5 million tonnes) higher than last season (FAO)

Sorghum: Global StatusExport (Green), Import (Red) and balanced (Yellow) Countries

Source: Toepfer International Asia Pte. Ltd.

Sorghum in India

Traditional marketing chain for sorghum

grain in India

Increased demand for sorghum grains in the international trade for alternative uses like feed, starch and fuel.

The health-, the environment- and animal welfare-conscious consumers are increasing and sorghum is being preferred

Increasing demand for gluten-free products

Well established research centers on sorghum and increased application of new technologies for the development of new cultivars, Products and Technologies.

Conducive policy frame work and institutional supports for promotion of exports.

Opportunities / Drivers: India

Sorghum Market Size 2050

Whole Grain (821) Flour (37)

Food (890) Other Markets (510) Poultry (650)

Ravva (7)Edible Cutlery (25.30)

Branded Sale (6)

Loose Sale (815)

Branded Sale (13.50)

Loose Sale (23.50)

1. Fresh @ (2.75)2. Balaji Grand Bazar

(0.95)3. ‘More’ (2.25)

1. Fresh @ (3.75)2. Balaji Grand Bazar

(4.50)3. ‘More’ (1.60)4. Suzane (2.60T)5. VSR (1.15)

1. Monan Lal (285.25)2. Ramdayal (203.25)3. Srikrishna

&Company (81.5)4. Others (244.5)

Branded Sale (2.5)

Loose Sale (4.50)

1. Balaji Grand Bazar2. More (1.50)3. VSR (0.25)

BK environment Innovations

Source: Field Survey by ITC & DSRAll grain in TermsAll Unites in Tons

Increased Demand Case : Sorghum Volumes handled by Trade in Hyderabad

SupplySorghum has huge potential acreage increase mainly in Argentina/US if prices continues supported as today.

If China/Argentina sign agreement on Sorghum local prices will jump and farmers would increase acreage.

US also shows some increase of acreages because of higher local prices.Australia acreage increase is limited. DemandChinese demand changed the Supply &Demand dramatically and will drive the market for 3 reasons:

1)Huge difference between sorghum import price vs local crop

2) Sorghum is NO-GMO stem (corn MIR162 issue).

3) China has NO IMPORT QUOTA on sorghum.

Due to high prices others destinations switched sorghum demand to others products such as corn (Mexico/Colombia/Japan).

Question is if Chinese demand increase will compensate the drop on usage from others destinations.

Ethanol demand is also increasing in US and also China is considering to import more sorghum for Ethanol.

Don’t see any impact for countries that use Sorghum for food as they are self-sufficient (African Countries).

Opportunities / Drivers: Global

Cereal Preparations

Present level of exports -$ 471 mnProjected exports in the next 3 years- $ 800 mn Potential markets -USA, Bangladesh, UK, Nepal, UAE, Angola

Grain China , Japan , Mexico, Chile, Africa, European Union and others

Potential Sorghum Export Countries

Requisites for Enhancement of Sorghum Exports•Educate farmers and producers about markets, products and improved production technologies•Storing the grain to suit export demand•Identify up-scalable products which has international demand. •Identify niche markets for specified products •Develop value added products based on domestic & International market surveys•Develop and use low cost and appropriate processing technologies•Entrepreneurship development is another key component for enhancement of demand.

EXPORT CHALLENGES

Production & Supply1. Lack of consistent, uniform quality of grain supplies 2. Logistics and marketing costs are high due to scattered

production3. Heavy subsidy to competing crops like paddy and wheat 4. Acceptability of seed variety 5. High cost of production6. Product modification

Marketing1. Lack of demand for Indian Sorghum Products 2. Lack of Internationally accepted products and Variants 3. Poor Export Market information & Channels4. Branding and Quality 5. Cultural barriers 6. Bi-lateral and multilateral free trade agreements

Policies1. Information on Import- export policies of country 2. Liberalized government agricultural and trade policies 3. The adoption and enforcement of intellectual property rights4. Elimination of phytosanitary constraints

Technology 1.Suitable processing technologies unavailable2.Lack of long-term storability of flour made from grain3.Poor image of sorghum and millets among consumers4.Nutritional myths –high content of tannins, poor digestibility5.Grain molds

Key Institutional Players For Enhancing Export Of Sorghum

Industrial Processers

Feed Manufactur

er

Commodity Exporters

Food Processors

GoIAPEDA,

MoFPI, MSME

 

GoIAPEDA,

MoFPI, MSME

 

Funding Agencies

MoFi (NABARD),

EXIM

 

Funding Agencies

MoFi (NABARD),

EXIM

 

Promoting R&D

Institutes ICRISAT,

IIMR, PJTSAU

Promoting R&D

Institutes ICRISAT,

IIMR, PJTSAU

Farmers/

FPOs

Farmers/

FPOs

Sorghum Export

Development Platform

Sorghum Export

Development Platform

Regulatory

Authorities/service providers

Regulatory

Authorities/service providers

Sorghum Export Development Platform (SEDP)

• Product Development

• Access to new food technologies

• International Food safety standards

• Nutritional Profiling • Establishing

market linkages • Contract Farming

• Identification of Technologies

• Standardization of technology

• Market Studies • Establishing

market linkages

• Contract Farming

• Access to feed technologies,

• Identification of export quality Cultivars

• Connecting with Farmer Groups

• Contract Farming & Buy Back arrangements

• Establishing market linkages

• Conducting Trails with sorghum as principal ingredient

• Supporting research on cultivars development for specific end-uses

• Providing technical guidance on consumption & quality of Sorghum

• Identification of International Standards for exports

• Contract Farming

Sorghum Export Development Platform- Competitive Operating Environment for Enhancing Exports

Together, these

incentives and

services create

Competitive

Operating Environme

nt for Enhancing

Exports

Sorghum Export Development Platform- Competitive Operating Environment for Enhancing Exports

Land, Infrastructure, and Real Estate Security of investment for the life of the investment Affordable lease of prepared, bare land and standard buildings in the SEDP Government facilitation to access land for production Affordable access to on- and off- site infrastructure (roads, energy, water, gas)

1

Financial subsidies to address key start-up costs (e.g., one-off training costs for local employees) Fiscal incentives (e.g., tax holidays, duty exemptions) Affordable financing and subsidies (APEDA/ MSME / SFAC/ NABARD)

Subsidies, Fiscal Incentives, and Affordable Financing2

Supply Security Facilitation Contract farming support in the SEDP, including subsidized & improved inputs Raw material aggregation and linkage to storage infrastructure Facilitation of commercial farming Incentives for agro-supplies traders Preferential terms on imported inputs to cover supply shortages (where necessary)

3

Export Market Development & Facilitation Market Intelligence (Provision of Export –Import data, Opportunities, Tenders, New Technologies etc) Export Promotion (e.g., Advertisement , E-Marketing Participation in international Trade fairs etc) Export Business services (e.g., Facilitating orders through agents , networking and Co-BI’s, Export Quality and Regulatory Services (e.g., Facilitating quality services, Training Programs on Export

certifications)

4

Shared Services and Administrative Incentives One- stop shop providing administrative services for increased ease of doing business Operating services (e.g., facilities management, transport, housing, banking) Business services (e.g., recruitment support, customs services, business center) Agro- specific services (e.g., health controls and certification, trading center)

5

Low Public Sector Investment

Technology and Farming TechniquesInput Costs

Unreliable Infrastructure

SED

P So

lutio

nsCh

alle

nges

Decision making and planning becomes highly uncertain when investments are put at risk by unstable or rapidly changing policies

Insufficient certification and food safety standards, in addition to a lack of consistent best practice techniques, has led to a sub-optimal quality of sorghum

High input costs are significant barriers to the competitiveness of the sorghum industry

A low technology base and level of mechanization puts sorghum farmers at a disadvantage when competing against high quality domestic importers

Drivers of Costs

Drivers of Quality

Access to adequate and reliable infrastructure, access to sufficient and affordable finance

Guaranteed access to quality inputs for sorghum producers and processors. These may include cost of credit, imported equipment, appropriate seeds etc

Adequate know-how and skill set of workforce. Access to improved seeds and inputs facilitates mechanization

Existence of enabling policies for domestic market development. High level of investment from public sector. Effective value chain linkages

SEDP bring down costs of production and improve quality of products to make domestically produced sorghum competitive

CHALLENGES SCHEME LINKAGE AGENCY

Production & Supply1. Lack of consistent, uniform quality of grain

supplies 2. Logistics and marketing costs are high due

to scattered production3. Heavy subsidy to competing crops like

paddy and wheat 4. Acceptability of seed variety 5. High cost of production6. Product modification

Initiative for Nutritional Security through Intensive Millets Promotion (INSIMP) – a partof Rashtriya Krishi Vikas Yojana” (RKVY);

Rainfed Area Development Programme (RADP) – again a part of Rashtriya Krishi VikasYojana” (RKVY); and

Integrated Cereals Development Programmes in Coarse Cereals based CroppingSystems Areas (ICDP-CC) under Macro Management of Agriculture (MMA).

INSIMP is the only comprehensive initiative to support millet production

Department of Agriculture & Co-operation

Technology 1.Suitable processing technologies unavailable2.Lack of long-term storability of flour made from grain3.Poor image of sorghum and millets among consumers4.Nutritional myths –high content of tannins, poor digestibility5.Meeting the international quality standards6.Grain molds7.Technical skills

Technology and Quality Up gradation Support To Micro, Small And Medium Enterprises

MSME

Support For Entrepreneurial AndManagerial Development OF SME’s Through Incubators

MSME

Micro and Small Enterprises-Cluster Development Programme

MSME

Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation

MSME

Technical & Managerial Consultancy Services MSME

National Awards for Quality Products MSME

Quality DevelopmentA.Promotion of Quality and Quality ControlB.Capacity Building and Organization Management

APEDA

Infrastructure Development APEDA

Connecting the dots….

CHALLENGES SCHEME LINKAGE AGENCY

Marketing1. Lack of demand for Indian Sorghum Products 2. Lack of Internationally accepted products and

Variants 3. Poor Export Market information & Channels4. Branding and Quality 5. Cultural barriers 6. Bi-lateral and multilateral free trade agreements

Enabling Manufacturing Sector To Be Competitive Through Quality ManagementStandards And Quality Technology Tools (QMS/QTT)

MSME

Scheme For Marketing Assistance And Technology Upgradation In Micro, Small And Medium Enterprises (MSMEs)

MSME

Financial Assistance On Bar Code MSME

Marketing Assistance and Export Promotion Scheme

MSME

Packaging for Exports MSME

Market DevelopmentA. Packaging DevelopmentB. Feasibility Studies, Surveys, Consultancy and Database Up-gradationC. Export Promotion and Market Development

APEDA

Policies1. Information on Import- export policies of country 2. Liberalized government agricultural and trade

policies 3. The adoption and enforcement of intellectual

property rights4. Elimination of phytosanitary constraints

MoAMoFPIMoC&IMoF

Connecting the dots….

Connecting the dots….

AgencyPolicyFormulation

RegulationDomesticTrading

Post-HarvestManagement

Agro-Processing

Agro-Exports

Grades,Standards,SPS

Training/Capacitybuilding

MarketInformation

DirectMarketingActivities

Production Enhancement

Ministry of Agriculture Dept of Agriculture and Cooperation X X

Directorate of Marketing andInspection X X X X

Directorate of Plant Protection,Quarantine and Storage X X

National Insecticides Board X X X Nat'l Institute of Agricultural Marketing X X X X

Nat'l Institute of Post-HarvestTechnology X X X

Small Farmers AgribusinessConsortium X X X X X X

Ministry of Food Processing Industries

Dept of Food Processing Industries X X X X X

Ministry of Small Scale Industries X X X X

Ministry of Commerce and Industry

Dept of Commerce X X

APEDA X X Department of Industrial Policy and Promotion X X X

Export Inspection Council X X X Ministry of Finance National Bank for Agriculture and Rural Development X X X X Source: Ministry of Food Processing Industries, Annual Report 2004/05; Ministry of Commerce Annual Report 2004/05, Patnaik, G. ,2005, “Review of Government of India Agricultural Marketing/Processing Policies and Programs”, Global Agri-System, Pvt.Ltd

Banks and Funding Agencies X X XResearch Centers X X X X X XSorghum Export Development Platform

Policy Implementation, Coordination & Facilitation of Services and Funding with institutional partners, Technology resource center , Training & Capacity Building and Facilitation of Exports in coordination .

GROUP DISCUSSION POINTERSI. Divide into four groups for discussions

Food 1 Feed& Fodder

2 Fuel3 Other Industrial

4

II. Pointers for discussion

Challenges (5)

1

Opportunities (5)

2

Way forward to address challenges

3

Suggestions on enhancing strategic framework

4

II. Presentations by group leader

DO-ABLESCALE-ABLE

SUSTAIN-ABLE

Thank you!

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