Thursday, December 6, 2012


Leveraging Effectiveness & Efficiency in Food Value Chain

As India’s economy transcends its USD 1 trillion benchmark, agriculture is moving towards agribusiness.  India, with the second largest arable land in the world, and with diverse agro-climatic zones across the country, has tremendous production advantages in agriculture, with the potential to cultivate a vast range of agricultural products. This strong base in agriculture provides a large and varied raw material base for food processing. These advantages if leveraged optimally, can lead to India becoming a leading food supplier to the world. However, the increasing pressure on land availability is often leading to shortfall in food supply in many crops, thereby threatening India’s food security. This can only be bridged through increasing farm yields, reducing wastage along the supply chain through better storage and post-harvest infrastructure and improved logistics.

The commercialization of agriculture into agribusiness is supported by both the fast growing domestic market and the increasing acceptability of Indian food products in the international market. With a population of over 1.2 billion and growing at about 1.6 % per annum, India is a large and growing market for food products. Food products are the single largest component of private consumption expenditure. With a significant shift in India’s demographic profile in favor of younger population, increasing surplus incomes, rising urbanization and changing lifestyles, food consumption patterns are steadily changing in favor of packaged /branded food products, convenient kitchen solutions as well as health foods. This has also led to growth in both organized food retail as well as organized food service with consumers seeking a better shopping experience and showing a willingness to try out cuisines from across the world.

However, the Indian F&A sector still remains largely unorganized and requires a significant amount of patience and expertise in educating the promoters, analyzing the unusual circumstances and also structuring complex investments. The evolving Indian F&A landscape therefore presents significant investment opportunities along with several industry-specific risks.

In nutshell, India must strive to:
  •  Leverage on the efficiency within existing food chain
  • Use modern technology to improve the safety and quality of its outputs and enhance administrative and logistical efficiency
  • Develop better integrated supply chains
  • Improve its infrastructural support base including cold chain facilities to reduce losses in horticultural crop
  •  Upgrade the technical capacity of its labour force with emphasis on food safety
  • Keep monitoring and learning from models of success

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