IBEF印度农业产业分析英文20181038页1mb

Summary of India's Agricultural and Food Processing Sector

Core Content

India's agricultural and food processing sectors are experiencing significant growth and transformation, driven by a combination of natural advantages, policy support, and market dynamics. The country is a global leader in the production of several agricultural commodities, including spices, pulses, milk, tea, and jute, and is the second-largest producer of wheat and rice. With a large population and rising incomes, the demand for processed food is increasing, especially in urban areas and among younger, more health-conscious consumers.

The food processing industry contributes substantially to India's economy, accounting for 32% of the food market and 13% of total exports. The sector is supported by a range of infrastructure developments, including cold storage facilities, mega food parks, and agri-export zones. The government has also introduced various schemes and policies aimed at improving agricultural productivity, ensuring fair prices for farmers, and promoting the use of modern technology in farming.

Main Points

Market Overview

• Agriculture:

  • The agriculture sector is the primary source of livelihood for 58% of India's population.
  • In FY18, the Gross Value Added (GVA) by agriculture and allied sectors was estimated at Rs 17.67 trillion (US$ 274.23 billion).
  • The sector has a diverse range of agro-climatic conditions, supporting the cultivation of various crops.
  • India has the largest livestock population in the world, around 512 million.
  • Food grain production reached a record 284.83 million tonnes in 2017-18 and is expected to grow further.

• Food Processing:

  • The food and grocery market in India is the sixth largest globally, with the food processing industry contributing significantly.
  • In FY18, the food processing industry's output was estimated at US$ 258 billion, and exports at US$ 39.4 billion.
  • The food processing industry is expected to grow rapidly, with the packaged food industry projected to exceed US$ 65 billion by 2020.

Recent Trends and Strategies

• Changing Consumer Tastes:

  • Consumers are shifting towards healthier and more convenient food options.
  • There is a growing preference for organic and low-carb products.
  • Companies like ITC and Ruchi Soya are innovating to meet these changing preferences.

• International Company Expansion:

  • Global firms such as Danone, Nestle, and Coca-Cola are increasing their presence in India.
  • These companies are leveraging India's cost competitiveness and agricultural resources to expand their operations.

• Product Innovation:

  • The sector is focusing on innovation to cater to both domestic and international markets.
  • Initiatives like the Mega Food Parks and the 'fruit circular economy' are being used to enhance product development and sustainability.

• Contract Farming and Farmer-Firm Linkages:

  • Contract farming is being promoted to ensure better market access and technology for farmers.
  • The Model Contract Farming & Services Act 2018 aims to protect farmers' rights and improve the agricultural value chain.

Growth Drivers

• Increased Irrigation:

  • The gross irrigated area under food grains has grown to 68.4 million hectares in FY18.
  • The Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) is aimed at improving irrigation infrastructure and reducing dependency on monsoons.

• Institutional Credit:

  • Agricultural credit disbursement in 2017-18 reached Rs 10 trillion (US$ 155.16 billion).
  • The target for 2018-19 is Rs 11 trillion (US$ 170.67 billion).

• R&D and Modernisation:

  • The government has launched initiatives to modernise the food processing industry, including the 'SAMPADA' programme and the Food Safety and Standards Authority of India (FSSAI) upgrading food testing labs.

• Policy Support:

  • Schemes like the Paramparagat Krishi Vikas Yojana (PKVY) and the National Mission on Food Processing are promoting organic farming and food processing infrastructure.
  • The government has allocated significant funds for agri-market infrastructure and fisheries and aquaculture development.

Opportunities

• Farm Management Services:

  • New agri-business models are emerging, providing farmers with inputs and advice on modern practices.
  • Startups like Bhoomee are using technology to connect farmers with traders, improving market access and efficiency.

• Global Outsourcing Hub:

  • India's vast agricultural resources and cost competitiveness position it as a potential outsourcing hub for global food companies.
  • There is a growing demand for branded and quality seeds, fertilizers, and other agri-inputs.

• Export Growth:

  • India's agricultural exports have grown at a CAGR of 16.45% between FY10-18, reaching US$ 38.21 billion in FY18.
  • The government aims to increase agricultural exports to US$ 60 billion by 2022.

• Infrastructure Development:

  • The government has allocated substantial funds for infrastructure development, including cold storage facilities, agri-export zones, and food processing parks.
  • These investments are expected to enhance the efficiency and competitiveness of the agricultural and food processing sectors.

Key Information

• Agricultural Exports:

  • In FY18, exports of processed vegetables, fruits, and meat reached significant levels, with the USA, EU, and Middle East as the main destinations.
  • The government is targeting US$ 60 billion in agricultural exports by 2022.

• Food Processing Exports:

  • Food processing exports reached US$ 39.4 billion in FY18, with a focus on processed vegetables, fruits, and meat.

• FDI Inflows:

  • Cumulative FDI inflows into the food processing industry reached US$ 8.45 billion between April 2000 and June 2018.

• Government Initiatives:

  • The Union Budget 2018-19 allocated significant funds for agricultural and food processing infrastructure, including the Agri-Market Infrastructure Fund, Fisheries and Aquaculture Infrastructure Development Fund (FAIDF), and Animal Husbandry Infrastructure Development Fund (AHIDF).

• Sector Projections:

  • The packaged food industry is expected to cross US$ 65 billion by 2020.
  • The per capita GDP of India is projected to reach US$ 3,274 by 2023, driving demand for processed food.

These factors collectively indicate a robust and growing agricultural and food processing sector in India, with a strong foundation for future expansion and international competitiveness.