Emerging Environment for Agribusiness and Agro-industry Development in India: Key Issues in the Way Forward

by Meeta Punjabi. FAO, New Delhi. November, 2007

Executive Summary

Economic development of a country is accompanied by transformation of agricultural sector from a subsistence primary product oriented system to commercialized agriculture producing high value and processed products. With economic growth rate at 8-9% per annum Indian economy is moving ahead on the path to development. Socio-economic environment is also undergoing a major change with higher incomes, increasing urbanization and increasing number of working women leading to high demand for processed foods. With high potential demand in domestic and export market this sector can contribute significantly to enhanced farm incomes and employment generation. On the supply side, as leading producer of many agricultural commodities, vast arable land and agro climatic diversity India has the potential to be the "food basket" of the world.

From the development perspective, three critical issues for inclusive and equitable growth are: i) involvement of small and marginal farmers in modern value chains. Work of NGOs, donor groups and government agencies in linking farmers to markets is an important step in this direction. Other initiatives such as "Rural Business Hub", formation of "producer companies" will contribute to linking farmers to markets. ii) As most of the processing is in the unorganized sector, enabling this sector to meet the requirements of the new food safety laws is critical to link them to the modern system. iii) Finally, balanced regional growth is important so that far flung regions of North-east and other lagging states do not get left out of the modern value chains.

Available for downlaod at http://www.fao.org/world/regional/rap/agro-industries/Agribusiness%20India%20Paper.pdf