This presentation comes from a seminar titled “An Integrated Approach for Enhancing the Productivity, Quality & Safety of Indian Food Products” by the National Productivity Council of India

1. Food Processing- Immense Growth
Potential Provided……..
Abhiram Seth
Managing Director
Aquagri Processing Private Ltd

2. Market Opportunity
• Double income families looking for convenience
• Declining availability of domestic help
• Media exposure induces the need for variety - preference for both for regional
and international foods.
• Health consciousness adds a new dimension to consumption trend
• Occasional demand can become regular only when the consumer gets the
right price quality equation
• Food processing industry growth a must for maintaining high GDP growth rate
• High employment multiplier for this sector makes it a focus area for inclusive
growth
• Need to move beyond primary processing to secondary and tertiary processing
• Sector can be bridge for moving people from agriculture to industry

3. Food Processing Sector’s Unique Characteristic
• Quality at a reasonable price expectation can not be met by just improving the
process efficiency and quality parameters in the factory
• Need to go in for improvements at primary production stage-Farmer’s field
• Need to create a balance between the aspirations of the grower and the consumer
• Need to grow produce focused on processing needs and the changing demand pattern
of the consumer
• Ensure sustainability of the agricultural production system given rising demand and
static arable land while declining water resources

4. Historical Perspective
of the Agricultural Production System
• Post independence, single minded focus on removing shortages and self reliance
for basic cereal crops
• Research system served this purpose by delivering dramatic productivity
increases by introduction of new varieties and use of chemicals for nutrition and
protection
• Knowledge dissemination through Training & Visit (T&V) Extension system
successfully managed technology transfer to the farmers
• Given limited choices consumer demand was considered of little relevance
• It was believed that “Market Forces” could not adequately address the needs of
both farmers and consumers. Regulatory framework was designed to circumvent
the market

5. Historical Technology Dissemination Model
Information Flow
ICAR R&D system & Create Extension
Farmer
Agricultural Universities Knowledge Teams
Product Flow
Processors
Brand Marketers
Farmer Mandis Aggregators Distributor/ Consumer
Retailers
State Procurement
System
• No market risk for the farmer – Support price system
• Firm contract with the government
• Neither the research system nor the farmer required any connect with the consumer
and its demands.
Burdened with this baggage of historical success - search for the new paradigm

6. Why the need for the new paradigm?
• Falling trend growth rate of agriculture. Productivity increases are not keeping
pace with the rising population trends.
• Falling water tables & rising soil salinity. Soil degradation due to intensive
chemical usage.
• Piling food grain stocks and increased dependence on oil seed & oil imports.
• System has to deliver on the "increased income aspirations” of the farmers and
changing needs of the consumer.
• India’s factor price advantage & diverse agro-climatic conditions, not leveraged
to become a player in the international market.

7. Ploughing ahead …..times have changed
Domestic International Market
Consumer Consumer
Distributor/Retailer Exporters
Processors
Imports
Brand Marketers
Aggregators
Mandis
Farmers
- Inadequate information with farmers to plan production– Little or no linkages
with the market
- Research system with limited connect with the market
- Public actions focused on crisis resolution, not at systemic solution
- Private sector focus on articulating problem only a few initiatives to show for.

8. Higher sustainable income for the farmers and
value creation for the consumer
Company Farmer
Reliable Supply at Higher Income
Predictable Prices
Value Addition
Sharing
Surplus Value Creation
Improved Technology Dis-aggregation
Improved High Yielding Better Reduced Intermediary
Sustainability Varieties Productivity costs

9. One Of The Ways To Create Surplus Value In
Agriculture Is Through CONTRACT FARMING

10. What is Contract Farming ?
ESSENTIALLY
• The farmer is contracted to plant the contractor’s crop on his land
• Harvest and deliver to the contractor a quantum of produce, based upon
anticipated yield and contracted acreage
• This could be at a pre agreed price
• Towards these ends, the contractor can supply the farmer with selected
inputs
IS THIS REALLY ANTHING NEW ?

11. Building Blocks For Contract Farming To Work
Farmer payment system
Processing & Packing
Harvesting & Transportation Commercialisation
Crop monitoring
Land preparation & Planting
Farmer education program
Field trials
Technology transfer
- multi location & crop timing
The extension services team
- selection & training
Demonstration farming
Evaluation of farmer economics model
Trials & short-listing - selection R & D Activities
Blue print for agricultural practices
Identification of varieties & hybrids
Need to create partnerships to make it work

12. There is no shortcut to bridging the price quality
equation for the consumers