Projecting high value agriculture and processed food as the catalysts for the next wave of growth in the farm sector, McKinsey and CII in their latest report have pushed for a shift to “mission mode” from the current outlay of ministerial programmes and schemes.
The report recommended setting up of an Agri Renewal Mission that will create an enabling environment for greater private and public partnerships.
They want four to five world class food and agricultural universities and research laboratories to be set up by the government. For an integrated approach the government should establish a national agriculture technology mission, a national agricultural sustainability mission, a national agriculture and food export mission, a national farm gate to market infrastructure authority, mega demand servicing and export hubs and private participation in agriculture extension services. There should be agri-business focused venture capital funds as public-private partnership initiative between the Central and State governments and private capital providers “to lead the next wave of growth.”
‘Enhance farmer-industry partnership’
The farmer-industry partnership should be scaled up to encourage emerging models such as Farmers Producer Organisations, Farmers Producer Companies, the report says while adding that food processing growth should be through an emphasis on “branding.” Five key produce — mango, banana, potato, soya bean and poultry — are likely to drive the next wave of growth in the industry. India’s food exports are projected to grow from Rs. 1.4 lakh crore in 2011 to Rs. 7.72 lakh crore by 2030.
Jointly releasing the Food and Agriculture Integrated Development Action (FAIDA) report, McKinsey-India chairman Adil Zainulbhai and CII’s Rakesh Bharati Mittal said India could become a “food hub in Asia,” but for this the government will have to change its policies and farmers will have to change their habitual farming methods.
Legislation on stock limits
They suggested that the government should revisit some of its current legislation related to stock limits, differential taxation across States and of course facilitate direct purchase by the private sector from farmers.
When reminded about Food Minister K.V. Thomas’ lament that the private players in the foodgrains market normally pay farmers below the minimum support price, Mr. Mittal said if procurement, distribution and marketing of the Public Distribution System were to be handed over to private parties it would become efficient. Although industry has not come forward to construct storage godowns, Mr. Mittal claimed that left to them the industry would take care of the foodgrains for the government.
According to the report — which looks like it is laying the road map for the advent of FDI in multibrand retail — Indians are now spending more on high value foods as is evident from the 25 per cent drop in the ratio of cereals and pulses in the overall food budget of average consumer. Consumption is shifting from plant-based proteins such as pulses to animal-based protein such as milk and meat.
Between 2000 to 2010, the contribution of cereals and pulses in the overall per capita food expenditure reduced from 40 to 28 per cent, while that of animal-based products, fruits and vegetables rose from 36 per cent to 42 per cent.
“Driven by changing consumption pattern, the future of agriculture and food sector will lie in crop diversification to high value crops and higher value addition. Added to that the increase in agriculture sector’s share in the export pie will bring about a compelling business case for private participation,” Mr. Mittal said.