BIG BOOM FOR THE AG-FOOD SECTOR IN INDIA- USD 100 B exports by 2025

5 mega initiatives of Govt of India:

1. CENTRAL SECTOR SCHEME of financing facility under ‘Agriculture Infrastructure Fund’

2. ‘The Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020’,

3. ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020’ along with supporting legislations by states and other bodies.

4. "Formation and Promotion of Farmer Producer Organizations (FPOs) " to form and promote 10,000 new FPOs” budgetary support of nearly Rs 4,500 crore as part of its efforts to cut production cost and boost income of farming community.

5. Govt of India has released a Model Agriculture Land Leasing Act 2016 which is implemented by multiple states now including Tamil Nadu, Gujarat, Uttar Pradesh, Uttarkhand etc

Minor reforms:

Amending the stringent Essential Commodities Act (ESA) to remove cereals, edible oil, oil seeds, pulses, onions and potato from its purview.

Likely Impact:

1. Mitigating post-harvest losses and wastage by @10 percent at a national level through scientific storage facilities. Savings of the order of USD 25 to 30 billion USD per annum. This will be money in the pockets of farmers every year.

2. The FPO scheme would lead to creation of 15,000 Farmer Owned Companies under the central jurisdiction and support. This would mean around 15 million members and around 75 million people including their family members . They would lead to disintermediation of trade channels and efficiency and savings at consumer end and enhanced incomes at the farmers end.

3. The Act no 3 along with the creation of the massive number of FPOs would lead to a contract farming boom in India over next 5 years as players (B2b, b2c, large ag corporate) would like to link up with the FPOs to source inputs as their costs would be lower as their factories or warehouses would be now designated as market places under reform no 2 with all the concomitant savings on market cess and other taxes which cause friction.

4. The enabling leasing regulations would lead to emergence of very large farm sizes through the leasing route in India for high value produce and also would be integrated with processing units for value added products which can be produced with scale. This will lead to large scale farming for some niche high value commodities and huge increase in exports of value added produce from India. In FY19, export of agricultural and processed food products totalled US$ 38.49 billion. I think India would be looking at export revenues from Agriculture/Allied sector/Processed food of the order of USD 100 billion USD by FY 25 if the execution is rolled out on all the fronts.

5. The agriculture space will see tremendous action in terms of startups, integration and interrelationships among all ecosystem players, huge inflows of PE/VC funds, corporate/HNI investments and in short a BIG BOOM FOR THE AG-FOOD SECTOR IN INDIA.

I have been in this sector for 27 years. All these years we kept doing the rounds of conferences, seminars, workshops and policy roundtables. People changed at events but demands remained same. The entire wish list or bucket list has been fulfilled in a tsunami of decisions. I think folks in the sector are befuddled by these rapid developments. It will take some time for everyone to digest and get on with planning and execution.

100 % OF THE WISE FOLKS I KNOW ARE NOW BULLISH ABOUT THE AGFOOD SECTOR.

I AM HAPPY I WILL SEE ALL THESE CHANGES IN MY LIFETIME!!!

Regards,

Sunil Khairnar