Introduction
Agriculture is being done in India since ancient time which is considered as the backbone of our economy. Today, agriculture has achieved commercial importance and changed from subsistence farming to commercial farming, import oriented to export oriented sector, supply driven technology to demand driven technology etc. New inputs and new technologies are hitting market everyday. Output marketing has switched over to value added rather than selling raw. Many agri-businesses started building-up in and around agriculture. This resulted in the real birth and growth of agri-business. There is need to develop to agri-business managers, who can fill the management requirements of the changing agriculture system. Agri-business education is one of the promising qualifications helps to mould the personnel into potent managers having managerial expertise. To realize the real potential in Indian agriculture and to grow it to the points of a prospective sector, it is necessity to manage the sector like–a professional enterprise. However, the concept of Indian farmer is based on P S P -3 points of formula viz., P- Production/Productivity, S- Storage and P- Processing.
Concept of Agri-business
The term agri-business is the combination of two words namely; agriculture and business. But, both agriculture and business are conceptually different from each other. The word agriculture indicates ploughing a field, planting seed, harvesting a crop, and cattle-breeding, feeding heating and weeding work. But, today’s agriculture is radically different. Thus, agriculture is an economic activity refers to all those activities aiming to fulfil the basic needs of life, primary food, fodder, fiber and other associated goods. In developing country like–India, the primary concern is to make these goods accessible to the consumers at affordable prices.
A shift from `agriculture’ to `agri-business’ is being viewed as an essential pathway to revitalize Indian agriculture. While, the share of agriculture in total GDP is declining, the share of agri-business will not and is bound to go up with the demand for value addition continuously increasing. In this context, agriculture redefined as `the science and practice of activities relating to production, processing, marketing, distribution and trade of food, feed and fibre (Acharya, 2006).
Literally speaking business means bushes. In simple words `business means the state of being busy’. Broadly, business involves activities connected with the production of wealth. Business concerns with buying and selling goods, manufacturing goods or providing services in order to earn profit. The Oxford dictionary defines the word `business’ as buying and selling or trade or commercial work.
Agri-business can be defined as to include all business enterprises that buy from or sale to farmers. The transaction may involve either a product, a commodity or a service and encompasses items such as :
(1) Productive resources e.g., feed, seed, fertilizers, equipments energy, machinery etc.
(2) Agricultural commodities e.g., food, feed, and fibre etc.
(3) Facilitative services e.g., credit, insurance, marketing, storage, processing, transportation, packing, distribution etc.
Agri-business is emerging as a specialized branch of knowledge in the field of management science. Thus, Agri-business can be defined as science and practice of activities with backward and forward linkage related to production, processing, marketing and trade, and distribution of raw and processed food, feed, fibre including supply of inputs and service for these activities.
Sectors of Agri-business System (ABS)
In developing country like: India, Agri-business system with forward and backward linkages consists of following four sectors (also shown by chart) :
(i) Agricultural input sector– This sector deals with manufacturing and supplying the farm inputs such as, feed, seed, fertilizers, agricultural chemicals, farm equipments, credit, insurance, farm machinery, pharmaceuticals, veterinary services, repair services, technological services, agri-clinic services, etc. used by the production sector of agri-business. Many traditional agri-business firms have been functioning in this sector such as Monsanto, John Deere, Jain irrigation etc.
(ii) Agricultural production sector–This sector deals with the growing of crops and rearing of animals. Farmers are buying yield increasing farm inputs from the market, agriculture is growing fast and agriculture production is getting increasingly transferred to manufacturing-processing sector. This sector includes the actual production of various agricultural commodities of food, feed and fibres like, cereals, pulses, oilseeds, vegetables, fruits, spices, condiments, milk, meat, egg, wool, and fish so on. It must focus on natural resources management and improvement in productivity
(iii) Agricultural processing- manufacturing (agro processing) sector–This sector includes the entire individual and firms that process raw agricultural commodities (e.g., convert wheat into flour, maida, suji; raw milk into milk products etc.) and manufacture food products (e.g., bread, ice-cream, breakfast etc.) for making these available to the final consumer. This sector is attracting Indian and overseas companies like; ITC, PepsiCo, HLL, Coca-Cola, Nestle, Britannia, Godrej etc.
(iv) Agricultural marketing- distribution sector–This sector includes the millions of people and thousands of firms that handle agricultural products from farm to final consumer. On one side, the sector made available farm inputs to the production sector, on the other side, the sector made available processed products to the ultimate consumers. It includes different activities like; packaging, transport, storage, ware- houses, advertising, insurance etc. wholesale firms and retailer outlets services etc. Some of the well-known firms are engaged in this sector such as; Hershey Foods, AMUL, Pillsbury, Kellogg’s etc.
Agri-business which links input supply, farm production, agro- processing and distribution network emerges as a viable option to resolve the problems of unemployment in rural sector. Thus, the prospects of agri-business rely more on off-farm sector of agriculture viz., agricultural input supply, agricultural processing and agricultural marketing-distribution sectors.
Need for Agri-business Education
Commercialization of agriculture calls for specialized production, post- harvest management, expansion of processing, transportation, packaging activities and positioning of products both in the domestic as well as international markets. Every year about 20-30 per cent of crop produce/ foodgrains is wasted at farm level in India due to improper handling, storage spoilage, floods, droughts, pests and diseases attack and lack of knowledge of post-harvest technologies. To reduce this heavy damage/ loss of foodgrain in storage ITK (Indigenous / Inherited Technical Knowledge) techniques have been developed by the ICAR (Indian Council of Agriculture) as well as three publications of Ex-Agronomist Dr. O.P. Rajput, CSR Project (ICAR) Agra (U.P.) have also been released. In foodgrains, use of (i) Neem leaves @ 5 kg/q, (ii) Lime powder @ 250g/q; (iii) Maize-Cob (without grain) ash @ 300 g/q and (iv) Heeng @ 4-5 g/q–for cereals / wheat-barley / coarse grains pearl millet, maize; in pulses coating of mustard oil on dal and use 4-5 g/q Heeng and in rice use of common salt @ 15-20 pieces/q., are quite useful ITK.
In the case of fruits and vegetables, this wastage is around 30 per cent. Certain sectors in India such as; floriculture, aquaculture, poultry, processing of fruits and vegetables are reaping the benefits of advanced technology. The agri-business sector encompasses the many activities of agricultural sector under one umbrella like; integration of agricultural inputs, agricultural productions, agro-processing and agricultural marketing and trade which add value to the agriculture produce. Nowadays, agri-business has become one of the most important fields in the developing country like, India to boost-up their economy and meeting globalization opportunities and challenges.
The organizations are looking for professionally competent and trained agri-business managers. The State Agricultural Universities (SAUs) can take a lead in this direction to provide them the desired manpower. There is greater need of agri-business education, research and capacity buildings. This is the right time for SAUs to start post-graduate programmes in agri-business management, so that managerial skills of meritorious agricultural graduates can be developed and can prove as effective agri-business managers. Now, most of the State Agricultural Universities (SAUs) are offering post-graduate programmes in agri-business management.
Distinguish Features of Agri-business in India
1. The various stakeholders involved in the agri-business sector includes such as farmer-producers, agri-input dealers and companies, Govt. agencies, certification agencies, extension agencies, financing institutions, agricultural and food, R&D institutions, cold storage and warehouse operators, storage firms, restaurants, foodchains, graders, packagers, porters, weighmen, transporters, village merchants, preharvest contractors, traders, wholesalers, brokers or commission agents, shipping agents, processors, cooperative societies, manufacturers, food retailers, etc.
2. The sheer numbers of agri-businesses are literally millions from producer to the retail marketer.
3. Most of Indian agriculture is in the hands of small and marginal farmers. Thus, agri-business is built around several millions of farmer producers; these farmers produce hundreds of different food and fibre products. Most agri-businesses deal with farmers both directly and indirectly. Other industry is not built principally around the basic producer of the raw product.
4. Agri-business of several million farm units and several thousand business units. Agri-business is the sum total of hundreds of trade associations, commodity, organisations, farm organisa- tions, quasi-research bodies, conference bodies and committee. Government is also part of agri-business. Agricultural Universities with their teaching, experiments and extension function form another sector of agri-business.
5. Agri-businesses are small and compete in a relatively free market where there are many sellers and buyers. The numbers and size of agri-business do not allow monopoly like in other enterprises.
6. The traditional philosophy of life exhibited by many agri-business workers and producers tends to make agri-business more conservative than some other businesses.
7. Husband and wives are often involved heavily in both the operational and decision-making phases of agri-business.
8. Agri-businesses tend to be community oriented that too in small town’s rural areas.
9. Agri-businesses are highly seasonal in nature. Agricultural products cannot be produced throughout the year; their productions are limited by a particular season (Kharif, Rabi and Zaid). Seasonality in production affects market price to a greater extent, if no storage facility.
10. Agri-business deals with vagaries of biological nature of production such as erratic rainfall, temperature, sunshine, drought, storm, floods, humidity, insect- pests and diseases etc. Therefore, farmers have no control over the output of production. Agricultural output comes from many small units. The production is to a largely extent dependent on weather and biological pattern of production. It is not possible to quickly shut-off or switch on agricultural production.
11. Agri-business is characterized by the small production from comparatively small land holdings and thus, provides little scope for division of labour. Assembling of agro-products from such a large number of small production units is a huge task.
12. Agri-business is distinguished by the perishability of products. Most agricultural products are extremely perishable in nature. The storage period of farm products range from few hours to few days in the case of fruits and vegetables and few years for cereals, pulses and oilseeds. The Perishability influences the marketing of produce. It also results in a wide price variation. Perishable product requires speedy handling and cold chain infrastructure.
13. Agri-business is also distinguished by bulkiness of products. Bulkiness of agricultural pro- ducts makes difficulties for transportation and storage. The bulkiness of product requires large storage capacities.
14. The producers-farmers and consumers of agricultural products are far and wide scattered throughout the length and breadth of the India. Most of the producers have small size of land holdings. This creates difficulty in marketing and estimation of demand and supply.
15. Processing has got special significance in the marketing of farm products. Therefore, processing of agricultural products in agri-business is necessary, because very few farm products are consumed directly in the form as such they obtained by producers- farmers. Thus most of the agricultural products have to be converted into consumable form before their consumption by the ultimate consumers. Processing is important both for the agri-business producers and consumers. For example, wheat converted into flour, maida, suji, sugarcane converted into gur, khandsari, sugar etc.
16. There is a large variation in the agricultural products regarding size, shape, colour, flavour, appearance and quality due to different varieties of crops. This variation in quality of products occurs from year to year and from season to season. This causes problems in grading and standardization in different quality products. Therefore, grading and standardization of agricultural products become difficult and costly.
17. Financing in the agricultural sector is a problem because high risk and uncertainty involved in agricultural production, productivity and prices.
18. Agriculture is mainly concerned with the production of food and raw material. As income increases, the demand for pro- ducts will increase less rapidly. Agricultural products generally being necessaries of life, the demand (especially food) is relatively inelastic.
19. Like demand, the supply of farm products is also inelastic because of the following reasons: (a) Agriculture has little control over the volume of production in the short run owing to the dependence on natural conditions resulting in uncertain and irregular supply. (b) The farmer has hardly any control over cost, and (c) The resources available with the farm producers are limited and cannot change in short run.
20. Farmers possess low holding- back capacity and generally sell their produce immediately after the harvest at low prices to meet their pressing demands. About 60-80 per cent of the foodgrains are still sold in the first quarter of the harvest season.
Scope for Agri-business in India
Agri-business is a complex system of input sector, production sector, processing, manufacturing sector, transport and marketing sector. Therefore, it is directly related to industry and domestic market.
1. India has a vast geographic spread, varied agro-climatic conditions, soils, which facilitates and promoting the production of variety of food and non-food crops. India is the seventh-largest country in the world, with the total land area of 3,287,263 km2 and also blessed with varied agro-climatic zones. There are 20 agro-climatic zones (ACZ) and nearly 46 out of 60 soil types in the country.
2. The domestic market for processed foods is not only huge, but is growing at a fast pace. The domestic demand for processed food products is very high and ever increasing, the scope for export earning is also a major factor to push up agricultural sector for enhanced income and increased employment options.
3. There is huge scope for processing in the food sector for increasing the income, exports and employment. At present, processing is done at primary level only and the rising standard of living expands opportunities for secondary and tertiary processing of agricultural commodities. Most of the food processing units are in the unorganized sector and Indian food market continues to be dominated by the fresh food segment. According to one estimate, Indian food market comprises 10% processed segment, 15% semi-processed segment and 75% as fresh food segment. Processing in organized as well as un-organized sector is reported to be around 2% in fruits and vegetables, 37% in milk, 21% in meat, 6% in poultry and 11% in marine fish. The highest share of the processed food is in the dairy sector, where 37% of the total produce is processed, of this only 15% is processed by the organized sector. The overall value addition in food products, which is currently 8%, is likely to increase to 35% by 2025. India has 35000 modern rice mills, 91000 rice hullers, 4500 shellers, 8300 hullers-cum-shellers, 20000 pulse mills, 400 fish processing units and 5198 processing units of fruits and vegetables.
4. There is a growing demand for agricultural inputs like; seed, feed and fodder, inorganic fertilizers, bio-fertilizers etc.
5. Applications of Biotechnology in agriculture have an immense scope in production of quality seed, bio-control agents, microbes for bakery products.
6. The vast coastal line (7517 km) and internal water courses provide enormous opportunity for production of inland, marine and ornamental fish culture. With an annual fish production of 6 million metric tonnes. India occupies the third position in fish production and Second in fresh water fish production in the world.
7. India has largest population of livestock in the world. In live- stock sector, India has 16% of cattle, 57% of buffaloes, 17% of goats and 5% of sheep population of the world. The livestock wealth gives enormous scope for production of meat, milk and milk products etc.
8. The forest area (21%) and resources can be utilized for production of byproducts of forestry.
9. The worldwide market is enormous for sugar, coffee, tea and processed foods such as; sauce, jelly and honey. The market for processed meat, spices and fruits is equally large. Only with mass production aided by modern technology and intensive marketing can the domestic market as well as the export market be exploited to the fullest extent.
10. Mushroom production can be taken-up on large scale in country for domestic consumption and its export can be enhanced with upgrading in the state of art of their production.
11. Organic farming has excellent prospective in India, because the application of pesticides and inorganic fertilizers is less in country, as compared to industrial countries. Therefore, the farmers can be encouraged and educated to switch over for organic farming.
12. There is a wide scope for production and promotion of bio- pesticides and bio-control agents for protection of crops.
13. Hybrid seeds and genetically modified crops have good potential in India in the future.
14. Micro-irrigation systems viz., drip, sprinkler, pipe and labour saving farm equipments have good potential in the coming years due to declining ground- water level and labour scarcity for agricultural operations, especially at peak harvesting time like; weeding, transplanting and harvesting and it helps in 25- 40% water saving. Newly developed agro-techniques like; SRI (System of Rice Intensification) in rice cultivation for saving 4 things i.e., (i) 20-25% water saving, (ii) 14% labour saving, (iii) enhancing land and (iv) increasing 20-45% crop productivity, with 70-80% seed saving and FIRB (Furrow Irrigation Ridge Bed) method in wheat to save 25-40% irrigation water, be adopted in agri-business field.
15. India accounts for about 8% of the world’s fruits and 15% of the world’s production of vegetables. Production of vegetables and flowers under polyhouse and greenhouse conditions can be taken-up to harness the export market.
16. The improved agricultural production provides open opportunities for employment in marketing, transport, cold storage and warehousing, credit and insurance services.
17. As a signatory of WTO, India has vast potential to improve its present position in the world trade of agricultural commodities both in raw and processed forms. The products line includes cereals, pulses, oilseeds, and oils, oil meal, spices and condiments, fruits and vegetables, flowers, medicinal plants and essential oils, agricultural advisory ser- vices, agricultural tools and implements, meat, milk and milk products, fish, forest by products etc. Export can be harnessed as a source of economic growth.
18. Agri-business management has wide scope in developing the trained manpower in different area of operations viz., management personnel to cater co- operatives and agriculture industry, policy makers for overall financial sectors, trained teaching staff to cater academic field, technically sound team to serve research area etc. Apart from this agriculture consultancy, journalism, agri-banking, hi-tech farming, agriculture conservation, agriculture engineering are also some potential areas of the career. Careers in Agri-business are varied from farming to commodity broker, food broker, loan officer, marketing researcher/specialist, product analyst, purchasing agent, statistician, and wholesaler.
19. There is a good scope of agri-business in medicinal and aromatic plants cultivation viz., Cinchona, Isabgol, Opium Poppy, Mulhati, Lemongrass, Japanese mint, Henna etc.
Summary
Based on the above, it can very well be summarized in a nutshell that the scope of agri-business sector in India is quite good. Not only can the agri-business sector meet the food and related demands of India’s large population, it can also contribute significantly to exports. There is vast potential still unexploited. Similarly, agriculture and its allied sector in India are highly under-developed. We shall have to make agriculture much more of a commercial nature. The irrigation of potential areas will have to be better utilized through drip/sprinkler/plastic pipe system to save 20-25% water, besides adoption of newly developed agro-techniques like; SRI in rice and FIRB is wheat. Agriculture with the use of better seeds, improved agronomic practices, better mechanized operations and more developed markets can really make the yield go up at a much faster pace. India can be agriculture giant. Similarly, agro-processing industries will have to be more efficient and need to be modernized with efficient technology for better output yield and to generate employment. The fact that lot of good companies in the private sector are going into seed production and agro-processing indicates a new scope of agri-business in India. One can be quite optimistic about it.
*This article is taken from Pratiyogita Darpan, September 2010 issue, Page PD/September/2001/454
Indian Agriculture 