agri sept 2010 - afc indiaafcindia.org.in/pdf/financing agri sep10.pdf · 2018-05-03 · in this,...

Shri Y.C. NandaChairmanAFC Ltd.

Shri A.K. GargManaging DirectorAFC Ltd.

Shri L.N. Vasudev RaoGeneral ManagerUnion Bank of India

Shri G.C. SharmaGeneral ManagerBank of Baroda

Shri Gobinda BanerjeeGeneral ManagerPunjab National Bank

Shri E. ShivalingamGeneral ManagerUCO Bank

Shri P.C. SrivastavGeneral ManagerCentral Bank of India

Shri N. Narasa ReddyGeneral ManagerCanara Bank

Shri P.M. KshirsagarGeneral ManagerAFC Ltd.

HonoraryAdvisory Board

Views expressed by the authors do notnecessarily reflect those of the AgriculturalFinance Corporation Ltd. No permission isnecessary to reproduce contents except

for the copyright text.

EDITORIAL

A.K. GargEditor-in-Chief

Welcome to the September edition of FINANCING AGRICULTURE.In this, our focus area is Dairy Sector where the current scenarioin milk production, capacity of primary producers, role of farmer

producer organisations and other relevant stakeholders are discussed. Dairyfarming has always been an income multiplier for the Indian farmer. And Iam sure the articles will add to your information. The other articles in thisissue, touch upon India’s fertiliser policies; Rural Entrepreneurshipopportunities in processing industries and on niche farming areas.

It will be prudent to reflect on the observations made by President PratibhaPatil on the agriculture sector. The President made these remarks whileinaugurating the National Management convention in Kolkata. Calling for afresh approach to enhance productivity and profitability in the farm sector,the President advocated more economies of scale in terms of productionmodels in the farming sector; more effective distribution systems; reducedgap between the farmer and the end customer; and ultimately enhancedfood security. The President also noted that industry partnering withagriculture, particularly in rain-fed areas can be a win-win option. She alsoappealed to the credit institutions and regulatory authorities for a synergisedeffort in this direction.

Good monsoon has kindled the hope for enhanced food grain production inthe country. The reservoirs are full. The Union Agriculture Minister SharadPawar is already on record that India will witness a bumper food production.Even those left out of the bounty of monsoon has the Central governmentlending a helping hand. The Centre has announced a diesel subsidy packagefor farmers in drought-affected states of Bihar, Jharkhand and West Bengalto salvage the kharif crop by giving a subsidy of Rs 500 per hectare. This willbe to meet for the additional cost they may incur in arranging irrigation.

Clearly there is more to look forward in agriculture and it is going to beaction-packed in terms of new investments, technologies, innovations andother developments. And this publication will be bringing you the latest inall these developments. So, read on…

I N S

Annual Subscription

India, Nepal andBangladesh Rs. 600/-

Other Countries(By Air Mail) US$70

Single Copy Rs. 50/-

Agricultural FinanceCorporation Limited

Dhanraj Mahal, ChhatrapatiShivaji Maharaj Marg,Mumbai 400 001

Tel: 91-022-22028924Fax: 91-022-22028966Email: [email protected]: www.afcindia.org.in

Need for Reforms in the Functioning ofDairy Cooperatives .................................... 6By Rattan Sagar Khanna

Fair Price to Farmers: Still a Long Wayto Go........................................................ 10By G. Kalyan Kumar

Livestock Rearing as a Strategy forInclusive Economic Growth ....................... 13By Gavin Wall and Tinni Sawhney

Challenge of Doubling Milk Productionin India ..................................................... 16By A.V. Tak and V.B. Tak

India’s Fertiliser Policy and Scope for Reforms .. 19By Satish Chander

I D E

Editorial Board

Published byAgricultural FinanceCorporation Ltd.Dhanraj Mahal, ChhatrapatiShivaji Maharaj Marg,Mumbai 400 001

Produced byL.B. Associates Pvt Ltd.H-108, Sector 63, Noida - 201301Tel: 91-120-2427280/82,Fax: 91-120-2427108Email: [email protected]: www.lbassociates.com

Editor-in-ChiefShri A.K. Garg

EditorG. Kalyan Kumar

Event/AdvertisingRanjit [email protected]

DesignAtul KumarPrakash Chand Arya

India Mulls Agri Cooperation withUS, Argentina ........................................... 26

Pulse Processing Industries asOpportunity in Rural Entrepreneurshipand Employment ...................................... 27By Suchita V. Gupta and Dr P.B.Kale

Groundnut Production in India ................. 32By Pathan. A.L., Sananse S.L. and Bhonde S.R.

Economic Potential of DrumstickFarming .................................................... 37By D. Muthamizh Vendan Murugavel

Agri News................................................. 40

6Financing Agriculture

Co-operative legislation has beena subject of intense discussion,debate and scrutiny from the day

co-operatives were started in India. Thefirst such law, the Co-operative CreditSocieties Act, was passed in 1904. Thiswas in response to a hostile reaction bya large number of farmers in Pune andAhmednagar in Maharashtra against theunscrupulous moneylenders whocharged exorbitant rate of interest onloans taken by the poor farmers topurchase inputs for cropping activities.

Since the Co-operative Credit SocietiesAct allowed registration of only credit co-operatives, a separate Co-operativeSocieties Act was enacted in 1912 toallow registration of other co-operatives.In 1919, co-operation became a statesubject and since then, each province/

state enacted a separate Co-operativeSocieties Act. After independence, theco-operative movement became aninstrument for socio-economicdevelopment through democraticgovernance. The government adoptedthe co-operative movement as a policyfor economic development and abalancing factor between the private andpublic sectors of the economy.

It is believed that the co-operatives setup during the 1950s came up purelyvoluntarily and continued to functionwith full autonomy. Those set up duringthe 1960s faced marginal governmentinterference. During the sixties thegovernments provided financialassistance in setting up and promotionof co-operatives. Consequently, thegovernments perceived the co-

operatives as their agent and assumedtheir control through legislation. Even thecourts have been consistently consideringthe co-operatives, with honourableexceptions, as state or an organ of thestate. The decisions of the courts thuslegitimised the state control andinterference.

Gradually, the registrar of co-operativesocieties became all pervasive. He couldrefuse registration of new co-operativeson the grounds that another alreadyexisted and the new one would be athreat to the already existing co-operative. He could register a co-operative even if there were novolunteers interested in that activity. Co-operatives were forced to get theiraccounts audited from the registrar’sarmy of ‘qualified auditors’ appointed in

Need for Reforms in the Functioningof Dairy CooperativesTime to hasten their transition into Successful Business Enterprises

By Rattan Sagar Khanna*

COVER STORY



the department of co-operatives. Co-operatives could not wind up theirbusiness. They could only recommend tothe registrar a need to liquidate.

The co-operatives promoted by peopleto fulfil their needs lost their voluntarynature. Those promoted by thegovernment had members with nocommon business interest or sense ofbelonging. Such co-operatives becamechannels for the government to distributecredit, cheap and scarce resources. Theybecame instruments for the politicalparties in power to promote theirinterests, objectives and perhaps acaptive vote bank.

Co-operative Law

Reformation of co-operatives has beenin tandem with socio-economic changeshappening in the country and severalcommittees have been set up to assist inrestructuring of the co-operatives withtime. Recommendations are available inthe A. D. Gorawala Report 1954, Co-operative Policy 1959, Committee onCo-operative Administration 1963,Mirdha Committee 1965,Ardhanareeshwaran Committee 1985,Committee on Co-operative Law 1987,Brahm Prakash Committee 1991,Advisory Committee on Co-operation1996 and the Alagh committee haverecommended incorporation of co-operatives as companies and conversionof existing co-operatives into companies.The Government has also beenrequested to define their policy andencourage the role of autonomous, self

reliant co-operatives, by fully exemptingthem from income tax, reducingincidence of double taxation whentransactions take place between amember and its federal co-operative.

The government draws the powers forinterfering in the functioning of co-operatives through the State Co-operative Act, rules and regulations. In1991 the Brahm Prakash Committee hadenlightened that “the essence of co-operative organisation is the principle ofdemocratic management, signifyinginstitutional regulation by members andtheir elected representatives inaccordance with the bye-laws. Itprecludes control and interference by anyagency including Government…” TheCommittee had identified the followingrestrictive provision in the State Co-operative Societies Act that empoweredthe Government/ Registrar to:

• Notify compulsory amendment ofbye-laws

• Nominate directors on theManagement Committee/Board ofDirectors

• Veto, annul, rescind resolutions of theBoard/General Body

• Give any directives

• Supersede/suspend the ManagementCommittee/Board of Directors

• Restrict the terms of office of officebearers

• Compulsorily amalgamate/divide theco-operative societies.

Clearly all the problems that hamper theefficient functioning of the co-operativesemerge from one common factor – theGovernment support. The support canbe in the form of financial and/ormanagement. It is a matter of perceptionas to how this support helps.

Let us take the case of financialassistance. If any person, leave alone thegovernment, gives an assurance to thechief executive that the losses incurredby the business enterprise, he is heading,would be made up, notwithstanding thereasons of loss, the chief executive wouldhave no reason to manage thatenterprise efficiently and according tostrict business ethics and principles. Onthe other hand when the governmentassures that the loss of the enterprisewould be made from state resources, itgains legitimate right to give directivesfor unsuccessful working of theenterprise. Either way a foundation hasbeen laid for inefficiency. There would aconflict when under such conditions theexpectation is that the enterprise shouldmake profit or at least pay for its ownmanagerial expenses. By then it is toolate.

The other is the managementintervention. The assistance is generallyin the form of appointment of chiefexecutive from the civil services. Thereis a merit to it. Invariably, the executivesfrom civil services have experience ofmanaging large organizations as ageneralist and it has advantages. It ispossible to highlight many cases where

The co-operativespromoted by people to

fulfil their needs lost theirvoluntary nature. Those

promoted by thegovernment hadmembers with no

common business interestor sense of belonging.

Such co-operativesbecame channels for thegovernment to distributecredit, cheap and scarce

resources

COVER STORY


the executives deputed from civil serviceshave managed the business enterprisewith success. The conflict arises whencompared to other enterprises the dairyenterprise is considered as backward orof a secondary importance in the stateand is generally the last preference forworking.

Other is that the appointment to suchposition is for indeterminately briefperiods. Priorities of the government inpersonnel placement invariablysupersede the business needs of the co-operative as an enterprise. From frequentchanges the organisation invariablysuffers from continuous discontinuity ofthe chief executive. There is consequentbreach in the policy statement,implementation of policy, style offunctioning, reporting andcommunication. In fact the entireorganizational behaviour undergoeschanges so often that it suffers fromsevere schizophrenia. Such adiscontinuation in top managementnegates an expression of the dairy co-operative being a business organization.

Dairy Co-operatives

Because the bye laws of the dairy co-operatives were modelled on those of

‘Anand Pattern’ at least the persons whowere not in milk business could not makedirect entry as members of the villagedairy co-operatives. But the co-operatives at the district level and thestate level were in no situation than theircounterparts in other fields. Before thedistrict and state co-operatives wereincorporated the NDDB had insisted oneducating the state co-operative officersand registrars so as to ease theregistration of co-operatives. It turnedout the other way. In many cases theregistrars and the top level politiciansfound that if the district and state dairyco-operatives were registered inaccordance with the model bye lawsproposed by the NDDB, they wouldbecome far too autonomous for theircomfort and out of bounds of theircontrol. Commenting on such autonomya chief minister told Amul fame Kurien,“Do you really expect me to let you setup a parallel government in my state tochallenge my power and influence?”1

Continued lobbying by the well-meaningco-operators and politicians brought outsome positive result for promoting ‘trueco-operatives’. In 1995 the AndhraPradesh government decided to replacethe existing co-operative societies actwith a model co-operative act on thelines proposed in the Brahm PrakashCommittee and by the Co-operativeDevelopment Foundation. It was realisedthat replacing the existing act wouldcreate difficulties for the very existenceof the government-controlled co-operatives. The government thereforeadopted a parallel act – the AndhraPradesh Mutually Aided Co-operativeSocieties Act 1995 (MACS Act). Thesuccess of true co-operatives registeredunder the MACS Act encouraged otherstates to follow the path shown byAndhra Pradesh. Similar acts were passed

in the states of Bihar, Chhattisgarh,Jammu and Kashmir, Jharkhand,Karnataka, and Madhya Pradesh.

The autonomy granted by the MACS Actdid not remain a fallacy. The advantagesbecame clear in the performance of theGuntur District Co-operative MilkProducers’ Union popularly called as the‘Sangam Dairy’ after its registrationunder the MACS Act. The Sangam Unionand its affiliated village co-operativeswere originally constituted on AnandPattern. The Sangam Union did sufferfrom the bureaucratic controls andpolitical interference and graduallyturned into a co-operative with poorperformance that was losing the supportand the confidence of its member milkproducers. In 1997 the Union switchedits registration from the old co-operativesocieties act to the MACS Act. The NDDBfacilitated the conversion to the MACSAct by waiving the requirement of agovernment guarantee for repayment ofloan given under Operation Flood. Thenew found autonomy, accountability toits members, policy directives from thedemocratically elected board of directorsand the freedom to its professionalmanagers to perform made the SangamDairy improve its achievements andfinancial results (Table 1)2 and continuedto perform better.

The adoption of the mutually aided co-operative societies act by the AndhraPradesh government, and similar actspassed by many other states, was arevolutionary step and opened vistas fora new generation of co-operatives to beformed and to function on the principlesof co-operation pronounced by the ICA.

The bye laws of thedairy co-operativeswere modelled on

those of ‘AnandPattern’ at least the

persons who were notin milk business couldnot make direct entry

as members of thevillage dairy co-

operatives

Table 1: Performance of Sangam Dairy Pre- & Post-Registration underMACS Act

Performance Indicator 1996-97 1999-2000(Under Old CS Act) (Under MACS Act)

Milk procurement 46,900 tonnes 62,600 tonnes

Amount paid to producers Rs. 46 crore Rs. 72 crore

Price paid to producers for milk Rs. 9.83 per kg Rs. 11.54 per kg

Net profit Rs. 2.5 lakh Rs. 11.2 lakh

Price difference paid to producers Rs. 0.20 per kg Rs. 0.35 per kg

COVER STORY


Dairy Co-operatives as BusinessEnterprises

To any solution, underlies the recognitionof the problem. First, there is need toadmit the problems that have beenidentified by the experts. In his keynoteaddress that Dr Kurien delivered at the‘Symposium on Socio-Economic Impactof the Operation Flood’ organised by theIndian Dairy Association at Bombay in1983, he stated, “The Federation hasamply proved that co-operatives assistedby competent professional managers canattain levels of achievement farsurpassing that of many an establishedenterprise in the Indian corporate sector.The competence displayed by theFederation should demolish all toofrequent criticism of co-operatives thattheir divided and shared managementprevents the attainment of the highestachievements in production andmarketing.” This sums up the principlesof management for the dairy co-operatives.

In his keynote address the Federationreferred to is obviously the Gujarat Co-operative Milk Marketing Federationwhich in 2007-08 had crossed a turnoverof Rs. 5,247 crore. It has secured bestexport award nine times in a row. It ownsthe best food brand in the country. It isgiving sleepless nights to multinationalsin the field of marketing milk productsand ice cream. It has helped many a co-

operatives within and outside Gujarat infinancial performance and managementpractices. And it has never received any‘financial or management assistance fromthe government’. If at all any financialassistance has come from thegovernment it has proved that thestructure of the GCMMF is moreresponsive. Assistance was grantedbecause the government trusted that theutilisation of those funds would be forthe identified purpose and would godirectly to the identified beneficiaries.

There could be an argument that successin this case was because the GCMMF hadthe desired autonomy and the financialsupport from birth. Reviving a sick dairyco-operative would be if not impossible,a very daunting task. Agreed, dauntingit is. But a day has to be called a zero dayto make a good beginning. There areexamples of the sick co-operatives ofPunjab, Rajasthan and Karnataka thathave been brought out of almostmoribund condition.

Policy Shifts

There is need to reconsider such policychanges as may help the co-operativesbehave as true business enterprise. Grantthem the autonomy to recruit at all levelsincluding the chief executive; decentralisethe staff to each legally independent unitand sever their linkage to the governmentstructure of salary, personnel rules andregulations, let them pay and be

governed in accordance with theircapacity to pay; gradually withdraw thefinancial support given to offset losses,let those units close that find it difficultto survive for want of procurement ofmilk; withdraw any financial supportunless the government considers the co-operative as an agency better suited thanany other in delivering the objective ofthe financial grant; let inter-uniontransfer of milk and products begoverned by business requirement andnot based on directives; emphasise thatprocurement, processing and marketingof milk and milk products is a businessand not charity; create avenues of valueaddition to milk rather than follow apassive and soft approach of procure andsell as pasteurised milk; improve thequality of products to meet withinternational competition; encourage co-operative to co-operative exchange ofbusiness, transfer of technology, andprocesses of learning, training andupgradation of its business systems.

1 Ruth Heredia 1997 Amul India Story2 Rama Reddy (2001) BackgroundPapers 14th Indian Co-operativeCongress

The Gujarat Co-operative Milk

Marketing Federationwhich in 2007-08 hadcrossed a turnover ofRs. 5,247 crore. It hassecured best export

award nine times in arow. It owns the best

food brand in thecountry. It is givingsleepless nights to

multinationals in thefield of marketing milkproducts and ice cream

* The Writer is a former consultant withthe Department of Animal Husbandry,Dairying and Fisheries, Government ofIndia

COVER STORY


OVERVIEW OF INDIAN DAIRY FARMING

Fair Price to Farmers: Still aLong Way to GoBy G. Kalyan Kumar *

The Indian Dairy Industry has comea long way since Independencewith a huge capacity in terms of

number of modern milk plants andproduct factories. India’s dairy industryis considered as one of the mostsuccessful development industry in thepost-Independence period with the totalmilk production in the country crossing110 million tonnes in 2010.

In 1965, National Dairy DevelopmentBoard (NDDB) was set up with the objectof meeting the demand for milk, especiallyin urban areas. In terms of global share,India contributes only five percent of thetotal milk produced in the world.

Strengths

India has the highest livestock populationin the world and accounts 50 percent ofthe buffaloes and 20 percent of theworld’s cattle population, most of whichare milch cows and milch buffaloes. Thetotal milk processing in India is around35 percent of which the organised dairyindustry accounts for 13 percent whilethe rest is either consumed at farm level,or sold as fresh, non-pasteurised milkthrough unorganised channels.

The organised dairies are in commercialproduction of pasteurised bottled milkand western and Indian dairy products.With the arrival of technology thataffords protection of milk duringtransportation, it became possible tolocate dairies where land was less

expensive and crops could be grownmore economically. In India, the marketmilk technology commenced in 1950,with the functioning of the Central Dairyof Aarey Milk Colony, and milk producttechnology took roots in 1956 with theestablishment of Amul Dairy, Anand.

Organised milk handling started in Indiawith the establishment of Military DairyFarms. Long distance refrigerated rail-transport of milk from Anand toMumbai started in 1945. Pasteurisationand bottling of milk on a large scale forthe organised distribution started atAarey (1950), Calcutta (Haringhata1959), Delhi (1959), Worli (1961) andMadras (1963). More Milk Plants gotestablished under the Five-Year Plans allover India.

These were taken up with the dual objectof increasing milk consumption nationallyand ensuring better returns to theprimary milk producer. The aim was toproduce more, better and cheaper milk.

Dairy Co-operatives

During the pre-independence period,cooperative movement was confined toa few pockets of Kolkata, Madras,Bangalore and Gujarat. The most notablein this venture was Kaira District Co-operative Milk Producers’ Union Limitedof Anand, Gujarat. After independence,the Government took initiative in settingup new Dairy Co-operatives in manyparts of the country.

The dairy cooperatives account for themajor share of processed liquid milkmarketed in India. Milk is processed andmarketed by Milk Producers’Cooperative Unions, which federate intoState Cooperative Milk MarketingFederations. Over the years, severalbrands have been created bycooperatives like Amul (GCMMF), Vijaya(AP), Verka (Punjab), Saras (Rajasthan),Nandini (Karnataka), Milma (Kerala) andGokul (Kolhapur).

The milk surplus states in India are UttarPradesh, Punjab, Haryana, Rajasthan,Gujarat, Maharashtra, Andhra Pradesh,Karnataka and Tamil Nadu. Themanufacturing of milk products isconcentrated in these states due to theavailability of milk in huge quantity.

Procurement, Processing, andMarketing

In the cooperatives, the primary milkproducers govern the entire federalcooperative structure and ensure that thehigher-tier serves the purpose of thelower levels and that the gains at all levelsflow back to the milk producers in asignificant measure. The core feature ofthe Anand Pattern model is farmercontrol of the three stages followingproduction, that is, Procurement,Processing, and Marketing of milk andmilk products.

The value added at the procurement andprocessing stages can be realised by the

OVERVIEW



cooperatives only through control overmarketing, which is therefore anessential requirement for success. Bycutting out the need for middlemenin procuring and selling milk, theAnand pattern cooperatives helped toreduce seasonal price variations andenabled the farmers to enjoy the fruitsof their labour instead of surrenderingmost of the profit to exploitativemiddlemen.

The dairy cooperative network is ownedby nearly 12 million farmer members.These producers are grouped in nearly1, 08, 574 village-level dairy cooperativesocieties.

The societies are grouped in 170 district-level unions spanning 338 districts. Theunions make up 22 state-level marketingfederations.

Anand Pattern

The Anand Pattern emphasised keepingcattle in the hinterland and transporting

milk to cities by farmer cooperatives,rather than transporting cattle as wellas fodder to cities. Thus the system hadstrong comparative advantage. The

early dairy unions in Gujarat – such asKaira, Mehsana, Sabarkantha,Banaskantha, and others rapidlyemerged as large and successful farmer

The total milk processing in India is around 35percent of which the organised dairy industryaccounts for 13 percent while the rest is eitherconsumed at farm level, or sold as fresh, non-

pasteurised milk through unorganised channels

The total milk processing in India is around 35percent of which the organised dairy industryaccounts for 13 percent while the rest is eitherconsumed at farm level, or sold as fresh, non-

pasteurised milk through unorganised channels

OVERVIEW



Sector Highlights• Bulk vending saves money and

conserves the environment.

• Milk travels as far as 2,200kilometres to areas of shortage,carried by rail and road milk tankers.

• India produces 95 per cent of itsown dairy equipment, savingvaluable foreign exchange.

• The annual value of India’s milkproduction amounts to aboutRs.880 billion.

• Dairy cooperatives generateemployment opportunities forabout 12 million farm families.

organisations, with hundreds ofthousands of members dominating theeconomies of their domains.

However, Cooperatives today handle just8 per cent of India’s total milk, with theiraverage procurement of 247.18 lakh kgper day (LKPD) in 2008-09. It is almosthalf of the 488 LKPD target under theNDDB’s ‘Perspective 2010’ plan.

The limited success of the cooperativesin the North and the East has, further,not been counterbalanced by a robustprivate sector, for which the prevailingmodel of milk procurement is largelyresponsible. The milk that private dairiessource typically comes through threelevels, starting with the village agentwho buys from farmers and handles200-300 litres a day. This milk goes toa bulk vendor, who collects 3,000-oddlitres from many agents. At the thirdstage is the contractor, who, afteraggregating and chilling up to 40,000-50,000 litres, transports it to the dairy.Milk with 6.5 per cent fat delivered atthe gates of dairies for about Rs 23 alitre would not cost more than Rs 17 atthe farmers’ end.

Amul Advantage

Players like Amul, Nandini or privateconcerns such as Hatsun Agro follow avertically integrated model of direct,round-the-year procurement. For them,the cost of collection, chilling andtransport from the farm-gate to thedairy-gate does not exceed Rs 1.50 a

litre, allowing farmers a greater share ofthe cake.

For Example Amul, would be paying itsfarmers roughly Rs 350 for every kg offat this year, after adding Rs 30-40 ofbonus from distributed profits. At Rs 350,the farm-gate price for full-cream milk(containing six per cent fat) would cometo Rs 21 a kg or Rs 21.6 a litre. But evenafter paying this price and incurring atransport expense of Rs 1.70-1.80 all theway from Mehsana in Gujarat, Amul isable to sell the same milk in Delhi at Rs28 a litre.

Direct Procurement

Direct procurement is the way out forfarmers to get a fair price overoutsourcing model that may deprivefarmers of a fair price and the endconsumer good quality milk too. It ishoped that intervention of more dairyfarming producers’ organisation willultimately help the farming communitya better price and effective sustenance.

*The Writer is Editor of FinancingAgriculture

Achievements of Operation Flood, 1970–2002

Indicator OF phases Post-OF phase

Phase I Phase II Phase III

Date started July 1970 October 1979 April 1985 April 1996

Date concluded March 1981 March 1985 March 1996 March 2002

Investments (Rs. million) 1,165 2,772 13,031

No. of federations/apex milk unions

operating 10 18 22 22

No. of milk sheds covered 39 136 170 170

No. of dairy cooperative societies set up(thousands) 13.3 34.5 72.5 74.3

No. of members (millions) 1.75 3.63 9.26 11.06

Average milk procurement (million kg/day) 2.56 5.78 10.99 17.60

Liquid milk marketing (million litres/day) 2.79 5.01 10.02 12.67

Processing capacity

Rural dairies (million litres/day) 3.59 8.78 18.09 26.47

Metro dairies (million litres/day) 2.9 3.5 3.88 NA

Milk drying capacity (mt/day) 261.0 507.5 842.0 990.0

Technical inputs

No. of Artificial Insemination centres(thousands) 4.9 7.5 16.8 22.0

No. of AIs done (million/year) 0.82 1.33 3.94 6.00

Cattle feed capacity (thousand mt/day) 1.7 3.3 4.9 5.2

OVERVIEW


IRRIGATION

A review of the implementation ofmany livelihood improvementprojects in India highlight two

facts: firstly, a large number ofhouseholds in rural India depend onlivestock rearing as an important sourceof secondary income. Secondly,investments in dairying, small ruminantand poultry rearing have tended to yieldthe best returns for small and marginalfarmers. This is further evident in the rateof growth of the livestock sector as it hascomfortably outstripped the growth ofmany other agricultural sectors.

When we think of the goal of inclusivegrowth, we should not forget that fromequity and livelihood perspectives,livestock rearing must be at the centrestage in poverty alleviation programmes.Concepts such as inclusive growth and

poverty reduction are alluring andcaptivating; the need to strive to achievehigh growth and at the same time ensurethe poor and marginalised segments ofsociety benefit and participate in thiseconomic growth is an easy idea toaccept, but it is one that is clearly provingto be very difficult to achieve.

New InitiativeIf raising livestock can be a pathway outof poverty, what are the impediments toinclusive growth through the livestocksector? Towards addressing this and otherrelated questions, FAO is pleased tocollaborate with the National DairyDevelopment Board (NDDB) in a jointinitiative called the South Asia Pro PoorLivestock Policy Programme with theobjective of facilitating and contributingto the development of pro-poor livestock

policies and programme implementation.

Priority activities include theidentification, documentation anddissemination of approaches andpractices that benefit small-holderlivestock rearers detailing lessons learntfrom these practices, and presentingissues for policy dialogue. Theprogramme focuses on three core sectors– the development and management ofcommon grazing lands; small-holderpoultry rearing and small ruminantrearing. Based on emerging lessons fromthe documentation of approachesimpacting small-holder livestock rearingsome of the critical impediments toinclusive growth in livestock sector are:

• Access to common grazing lands bylivestock dependent communities,particularly the poorest who often do

By Gavin Wall and Tinni Sawhney*

Livestock Rearing as a Strategyfor Inclusive Economic GrowthLivestock Rearing as a Strategyfor Inclusive Economic Growth

PERSPECTIVE


Livestock rearing is a key livelihood andrisk mitigation strategy for small andmarginal farmers, particularly acrossthe rain-fed regions of India. Livestockproducts comprised 32 percent of thetotal value of agriculture and alliedactivities in 2006-07 which was anoticeable increase from 27 percent in1999-2000 and from 1980-81 whenit represented 14 per cent of theagricultural gross domestic product.The livestock sector has therefore beengrowing faster than many other sectorsof agriculture and if this trend continuesthen the sector will be the engine ofgrowth for Indian agriculture that manyhave predicted.

Most often we see livestock asproviders of essential food products,draught power, manure, employment,household income and export earnings.However, it is a very important fact thatlivestock wealth is much moreequitably distributed than wealthassociated with land. Thus, when wethink of inclusive growth, we shouldnot forget that from equity andlivelihood perspectives, livestockrearing must be at the centre of thestage in poverty alleviationprogrammes.

There are two important aspects: firstly,livestock rearing at the household levelis largely a women-led activity, andtherefore income from livestock rearingand decisions related to management

of livestock within the household areprimarily taken by women. Interventionsin India have demonstrated that supportfor livestock rearing has contributedsignificantly to the empowerment ofwomen and an increasing role in decisionmaking at both the household and villagelevel. Secondly, livestock rearing,particularly in the rain-fed regions of thecountry, is also emerging as a key riskmitigation strategy for the poorest. Theyface increasingly uncertain and erraticweather conditions which negativelyimpact crop productivity and wagelabour in the agriculture sector.

Three Messages

A global analysis of the livestock sectorby the U.N. Food and AgricultureOrganisation (FAO) was contained in therecently released State of Food andAgriculture Report and it highlightedthree overarching messages that meritdiscussion in the context of India.

Although livestock products makeimportant contributions to food securityand poverty reduction for low-incomerural families, the policy and institutionalframework in many countries has failedto serve the needs of these pooresthouseholds and to get them onto theconveyor belt of development. The lackof public services in animal health toreach out to the poorest in rural areasand a failure to link small holder livestockkeepers to better paying markets are twoexamples of common failings. The

institutional and policy frameworkstend to support intensive andcommercial livestock rearing, both inthe provision of services and also infacilitating access to markets.

Second, livestock producers, includingtraditional pastoralists andsmallholders, are both victims ofnatural resource degradation andcontributors to it. Corrective actionmost likely lies in a mix of public goodsrelated to environmental protection,ecosystem services and throughincentives for private investment toimprove animal productivity,particularly in remote regions. In thecase of India, there are numerousexamples of community-ledinterventions where communitymanagement and sustainable use ofnatural resources has positivelyimpacted small holder livestock rearing.

Third, animal health services not onlycombat animal diseases that causemortality and reduce animal productivity,they also protect human health becauseof the risk of animal to human diseasetransmission. Animal health systems havebeen neglected in many parts of theworld and this has led to institutionalweaknesses that in turn lead to poordelivery of animal health services andhigher risks to livelihoods and humanhealth. In correcting this situation it mustbe recognised that the poor face differentrisks and have different incentives andcapacities to respond than do intensivecommercial farmers. Therefore, animalhealth service providers have theadditional challenge of recognising thedifferences between their stakeholdersand developing mechanisms to reachthem all.

Moving forward on these key findingsis not possible by relying either onindividuals alone or a single string ofactions. Progress requires attentionfrom all actors in the social,environmental, animal health, humanhealth and agriculture sectors; thatmeans public, private and communityorganisations being actively engagedtogether. The livestock sector is far tooimportant to accept anything less.

Courtesy: UN Information Centre forIndia and Bhutan.

Engine of Agricultural Growth

PERSPECTIVE


not own land to cultivate fodderlinked with the management andsustainable use of these lands bythese communities. For rainfedregions of the country, where small-holder livestock rearing is a keylivelihood activity there is almost totaldependence on these lands.

• It is axiomatic that further growth ofthe livestock sector will rely onimproving the productivity of theselands, and on facilitating communityled initiatives for management toprioritise the needs of small-holderlivestock rearers. In the currentscenario of rapid economic growth,common grazing lands are often thefirst to be allocated for theestablishment of SEZs and otherdevelopment and infrastructurepriorities, without adequateunderstanding of the criticalimportance of these lands to thelivelihoods of the poor.

Healthcare for Livestock

If the poor have to participate and benefitfrom the opportunities provided by arapidly expanding market for livestockproducts, there is need for theestablishment of effective and efficientanimal healthcare systems that reach outto small-holder and marginal farmers.Such systems need not be driven bysubsidies and grants. Experience hasdemonstrated that even the poorest arewilling to pay for efficient health services

for their livestock, provided these areavailable when needed. The South Asianregion, including India, demonstrates anumber of approaches of decentralisedhealth care systems for livestock, that areworthy of replication on a larger scale.

Further, small-holder livestock keepersface barriers that limit their access to theexpanding market for livestock products.It is obviously easier for largercommercial farmers to meet the volumeand quality expectations of the valuechains that connect to consumers with

the ability to pay for livestock products.Many commentators point to the needfor organisation and the collectivisationof small-holders to aggregate quantitiesand act as a vehicle through which smalland marginal livestock keepers can linkto these rapidly expanding markets.However, there is also a need foralternative marketing channels ascompetition will drive the creation ofefficiencies which will increase thereturns to all farmers.

Removing these impediments to inclusivegrowth through the livestock sectorrequires more than just additionalinvestment. It requires first therecognition that the contribution ofsmall-holders is critical to economicdevelopment. Eliminating the barriersmentioned above requires a mix ofalternative institutions, improvedproduction technologies and enhancedsocial capital. These barriers will not beovercome unless there is a genuinewillingness to ‘walk the extra mile’ toachieve inclusive growth.

*Mr. Gavin Wall is the Representative ofFood and Agricultural Organisation(FAO) in India and Bhutan*Tinni Sawhney, is the Regional TeamLeader, South Asia Pro Poor LivestockPolicy Programme (a joint initiative of theNational Dairy Development Board andFAO); www.sapplpp.org

PERSPECTIVE


IRRIGATION

The big strides in milk productionmade in the last four decades havecatapulted India to a leadership

role in global milk production. India’sWhite Revolution was associated with asharp increase in milk production. During1964-65, Intensive Cattle Developmentprogramme (ICDP) was introduced in thecountry in which a package of improvedanimal husbandry was given to cattleowners for promoting white revolutionin the country. India stands first in theworld in milk production with USAoccupying the second place in the world.

Later on, to accelerate the pace of WhiteRevolution a new programme named‘Operation Flood’ was introduced in thecountry. The latter is the world’s largestintegrated dairy developmentprogramme that made considerableprogress in achieving its outlined

objectives. During 2006-07, 100.9million tonnes of milk were produced inthe country.

Dr. Varghese Kurien is the pioneer ofOperation Flood in India. All credit forits implementation and successfuloperation goes to him only. It was startedin 1970 by National Dairy DevelopmentBoard (NDDB). The programmecompleted its third phase in April 1996.

Main Issues

Despite reasonable achievements, thereare many areas of concern that constrainrealisation of full potential of this sector.The structure of population is one suchissue. Despite significant advances inlivestock breeding, the populationstructure continues to be dominated bylocal breeds. According to the 1992Livestock Census, crossbred comprise

only 7.5, 4.8 and 14.5 percent of cattle,sheep and pig populations respectively(Table 2). Only one-third of the poultrypopulation represents improved breeds.

Second issue relates to the organisation ofproduction system. In general the systemof production is extensive in nature despitetechnological dualism (Table 2). The systemof dairying in and around the urban areasis based on improved breeds and intensiveinput use. The rural system of productionis characterised by low input and lowtechnology. It is apprehended thattechnological change and commercialisationwill further accentuate this divide.

Meat production is constrained by lackof productivity augmenting technologiesand socio-religious taboos. Breedingefforts are yet to capitalise on the geneticstock of the indigenous breeds. Theyawning gap between the existing

Challenge of Doubling MilkProduction in IndiaBy A.V. Tak and V.B. Tak *

OUTLOOK



• Animal husbandry and Dairyingplay an important role in nationaleconomy and in socio-economicdevelopment of the country.

• Animal husbandry outpourconstitutes about 30 percent of thecountry’s agricultural output.

• Animal Husbandry sectorcontributes 5.3 percent to the totalGDP and about of quarter of theGDP from agriculture and alliedactivities.

• Livestock sector provides regularemployment to 11 million inprincipal status and 9 million insubsidiary status.

• Women constitute 69 percent ofthe labour force in livestock sectoras against 35 percent in cropfarming.

• According to the All India SummaryReports of 17th Livestock Census(released in July 2006), Indiapossesses the largest livestockpopulation in the world after Brazil.It accounts for 14 percent of thecattle population and 57 percentof buffalo population.

• The 18th livestock census has beenconducted throughout the countrywith reference date of 15 October2007, results of which are awaited.

• India has become the largestproducer of milk in the world.

• Livestock contributed 104.8 milliontonnes of milk, 53.5 billion eggs,44 million kgs of wool, 2.6 milliontonnes of meat and 7.3 mulliontones of fish during 2007-08.

• Livestock Insurance Scheme wasapproved in February 2006 for itsimplementation during theremaining part of 2005-06, and in2006-07 on a pilot basis in 100selected districts across the countrywith a total outlay of Rs. 120 crore.The scheme aims at protecting thefarmers against losses due tountimely death of animals. TheCentral Government is providingsubsidy to the tune of 50 per centof the premium under the scheme.

• About 6 million people areemployed in the fisheries sector.

• Poultry development in India hasmade impressive progress duringthe last three decades. At presentIndia ranks among the top 5 nationsin egg production in the world.

• India has become the largest globalproducer of milk.

• India is the sixth largest producerof fish and second largest producerof inland fish in the world.

slaughter rates and potential of-take forcertain species merits urgent attention.Premature slaughtering of animals formeat is a national waste. A case in pointis that of goat and buffalo. Improvementsin poultry breeds must concentrate onincreasing feed efficiency and tropicaladaptation. Non-compliance of photo-sanitary and quality standards in exportsof livestock products is another grey area.Ineffective quarantine regime leads toimportation of contaminated biologicaland infected livestock species.

Reforms

Till 1990, the policy thrust in this sectorwas rather moderate. In 1991, dairysector was delicensed in order to attractprivate investment and newtechnologies. The policy remainsrestrictive in the sense that the newentrants are required to develop newmilk-sheds. Restriction on processing ofmilk into high value products during leanseason of production also acts as adisincentive for private investment.

The co-operative sector is a major playerin the organised marketing of milk andits products. In 1991, dairying processingwas de-licensed with the objective ofpromoting competition and augmentingtechnology. This resulted in weakeningof the co-operative sector by theonslaught of new entrants. In order tocontain this problem, the Milk and MilkProducts Order (MMPO) waspromulgated in 1992. The MMPO is an

example of the policy dilemma that thegovernment faces. The intention ofpromoting viable and vibrant co-operative is a national priority. However,blanket protection to the entire sectormay encourage inefficiency in the guiseof national interests. Therefore there isroom for reforming the MMPO byrendering it more flexible.

Rural Urban India

Cattle 7.0 20.2 7.4

Sheep 4.7 7.0 4.8

Pig 14.2 16.4 14.5

Poultry 31.8 44.2 32.7

Table 2: Species-wise Percentageof Crossbred in Total Population,1992

Items Growth rate (%) Average yield (kg/animal annum)1981-96 1992-93

India World

Indigenous cattle - 572 1993*

Crossbred cattle - 2051 -

Buffalo - 1263 -

Egg 6.7 - -

Desi layers - 108 -

Improved layers - 237 -

Beef and veal 11.9 10.3 203

Buffalo meat 6.7 138 137

Mutton and lamb 2.0 12 15

Goat meat 3.9 10 12

Pig meat 8.0 35 76

Poultry meat 9.6 - -

Table 1: Yield Levels and Growth in Outputs of Livestock

*average for cattle

Sector Highlights

OUTLOOK


Such restrictions curb competition andmarket efficiency, which are essential forstimulating investment in productivityaugmenting technologies both at macroand micro levels. The onset of economicreforms programme helped boostexports of livestock products. Buffalomeat export recorded substantialincrease in recent years mainly becauseof its price competitiveness. The scopefor exports of sheep, goat and poultrymeat is constrained by high domesticdemand and prices.

Exports

On the export front, India has acompetitive advantage in the worldmarket for many livestock products.However, its share in world tradecontinues to be meagre. Dairy productsexport has not been encouraging in thepast due to high domestic demand andlack of competitiveness in the worldmarket. With the reduction in subsidiesunder WTO agreement by the Europeancountries, India’s export of dairy productsis likely to expand on account of pricecompetitiveness. Member states of theWTO have to reduce export subsides andvolumes of export by 36 and 21 percentrespectively.

Health, nutrition and extension supportmerits special consideration in theprocess of technological transformationof livestock sector. The current extensionsystem is largely crop oriented. Based ona SWOT analysis of the extension systemfor crop production, a flexible system forlivestock should be evolved. This may

involve many actors viz government,private processing industries and non-governmental organisations. In the areaof health, smaller animals need greaterattention, and so would an appropriateinstitutional framework.

Technological change must beaccompanied by policies aimed atpopulation optimisation and enhancedfeed fodder supply. In rural areas thepotential benefits of technologicalchange are likely to be greater formedium and large farmers ‘due toskewed distribution of land’ which is acrucial determinant of the size oflivestock holding. Strong measures in theform of institutional arrangements andpolicy intervention would be needed tocounter these tendencies.

Priorities in Research

Reorientation of research priorities is theneed of the hour. In the past, researchefforts have been cattle –centered. Thishas yielded some results, but at the costof other promising livestock species likethe buffalo, sheep and goats.Henceforth, livestock research needs tointernalise certain crucial technicalparameters. Regarding cattle, a shift indirection is required. The emphasis mustbe on ecological adaptability and diseaseresistance of crossbred species. Buffaloholds the promise of raising milkproduction. Its feed conversion efficiencyis remarkable and a breakthrough inbuffalo breeding will provide a big pushto the livestock economy. Small ruminantmeat production is likely to come underpressure unless there is a breakthroughin the genetics of sheep and goat.

Genetic evaluation of 75-80 percent ofgoats is yet to be attempted. Therefore,buffalo and small ruminants deserve agreater share in research resources.Research focusing on heat stress invarious agro-ecological regions warrantspriority. Simultaneously, cropimprovement efforts must focus on theforage quality aspects. A farming systemperspective needs to be adopted acrossthe board. Research paradigm must beclient oriented. Future research agendatherefore, should have an explicit focuson these issues.

(The Writers are Academics at theMarathwada Agricultural University,Parbhani)

High Power Panel Moots Doubling of MilkProductionThe High Powered Committee on Animal Husbandry and Dairying in a reportsubmitted to the Planning Commission in January called for redoubling efforts toincrease milk production. “We should also be aware that if large shortages arelikely to come up in the short run, then management has to be forward looking,”commented Planning Commission member Abhijit Sen who received the report.

The 10-member committee constituted by the Planning Commission was aimedto give a boost to the Animal Husbandry and Dairying sectors under thechairmanship of the President of Indian Dairy Association. The report noted thattoo many schemes being implemented by the Department of Animal Husbandryand Dairying (DAHD) are difficult to monitor and be replaced by a focused andwell developed approach.

“There are over 24 schemes being implemented by the DAHD, which make themdifficult to monitor and should be replaced,” the report said. It also suggestedthat the major emphasis of most of these schemes were on improving the geneticmake up and providing animal health facilities without regard to development offeed and fodder resources.

“In future the approach should be on improving the fodder resources along withimprovement in productivity,” the committee said, adding that it feels thattechnology transfer and extension should receive high priority in Animal husbandryand Dairying sector to ensure high growth. The committee also suggested thatcentral sector and centrally sponsored scheme in future should be taken up inthree distinct streams. The first stream should comprise of five schemes of nationalimportance like cattle and buffalo breeding or development project, nationallivestock extension programme and national project on control of animal diseases.

The second stream could comprise of schemes of regional importance on speciesspecific or state specific projects like development of Dairy Sector, Sheep andGoats.

OUTLOOK


Fertiliser is the vital input needed forincreasing agricultural production.It has been the endeavour of the

government to ensure availability ofadequate quantity of fertiliser atreasonable prices to the farmers acrossthe country over the years. Variouscommittees were formed to suggestmeasures for promoting higher andbalanced use of fertilisers to ensurequality fertiliser and encourageindigenous production. During the earlyphase of development in the fertilisersector, the emphasis was more onpromotion and popularisation of fertiliser,encouraging indigenous production andequitable distribution.

However, during the later stage, due tointensification of agriculture resulting inmulti-nutrient deficiencies, the focus ofthe government shifted more towardsbalanced fertilisation, besides addressingthe issues relating to pricing and subsidyarising out of rising subsidy bill. Nutrientbased subsidy (NBS) was introduced bythe Govt. of India from 1April, 2010. NBSis expected to promote balancedfertilisation through higher use of

secondary and micro nutrients along withprimary nutrients. Under NBS, farmerswill have access to new efficientproducts.

Essential Commodity

Fertiliser is the essential input needed forincreasing agricultural production.Keeping in view the importance of thisvital input, Government of India declaredfertiliser as an essential commodity andnotified the Fertiliser Control Order(FCO) in 1957. FCO was notified toregulate the sale, price, and the qualityof fertilisers. Over the years, it has beenthe endeavour of the government toensure availability of adequate quantityof fertiliser at reasonable prices to thefarmers across the country over theyears.

Various committees were formed fromtime to time to suggest measures forpromoting the increasing and balanceduse of fertiliser, encourage indigenousproduction, ensure quality products andenable equitable distribution of fertiliserto the farmers across the country. Duringthe early phase of development in the

fertiliser sector, the emphasis was laidmore on promotion and popularisationof fertiliser, stepping up its indigenousproduction and equitable distribution.During the later stage, due tointensification of agriculture resulting inmulti nutrient deficiencies, the focus ofthe government shifted more towardsbalanced fertilisation besides addressingthe issues relating to pricing and subsidyarising out of rising subsidy bill. Thearticle looks at the importantdevelopments of fertiliser policy in Indiaand suggests measures forcomprehensive reform of the fertilisersector in future.

Policies

Among the various committees formedin the past, the recommendations of theCommittee on Fertilisers (SivaramanCommittee: 1965-66) laid the foundationregarding indigenous production,promotion, distribution, and consumptionof fertilisers in the country. Table 1 showsthe sizeable growth in production andconsumption of fertiliser nutrientsbetween 1951-52 and 1971-72.

India’s Fertiliser Policyand Scope for ReformsBy Satish Chander *

SPOTLIGHT



Regulation of Distribution

In the early 1970s, shortages of fertiliserswere experienced in the country.Consequently, the government startedregulating the distribution of fertilisersunder the Essential Commodities Act(ECA) and the concept of Half-yearlyZonal Conferences was introduced in1972. All the fertilisers were distributedby the manufacturers according to theirECA allocation during the two cropping(Kharif and Rabi) seasons, as per thesupply plan fixed at the Zonalconferences. Fertiliser shortages in theearly 70’s led the government to passthe Fertiliser Movement Control Orderin 1973, which brought fertiliserdistribution and its inter-state movementunder government control.

Retention Pricing Scheme

In the wake of oil crisis in mid 70s, pricesof fertilisers and raw materials increasedastronomically high in the internationalmarket. As a result, retail prices offertilisers increased significantly. This ledto reduction in fertiliser consumption andimbalance in NPK use ratio. As animmediate measure, Government startedgiving a subsidy of Rs.1250 per tonne ofP2O5 on phosphatic fertilisers effectivefrom March 1976. Meanwhile, to resolvethe dilemma of how to keep farm gateprices of fertilisers at an affordable levelin the face of rising production / importcosts, the Government of Indiaintroduced Retention Pricing Scheme

(RPS) based on the recommendations of“Fertilizer Prices Committee,” headedShri S. S. Marathe. RPS was introducedfor urea in November 1977, complexfertilisers in February 1979 and for SSPin 1982.

Impact

The introduction of RPS led to aspectacular increase in fertiliserconsumption as well as domesticproduction of fertilisers. Consumption offertiliser nutrients (N+P+K) increasedclose to 3 times from 4.29 million tonnesin 1977-78 to 12.73 million tonnes in1991-92. Likewise indigenousproduction of fertilisers (N+P) increased3.7 times from a level of 2.67 milliontonnes to 9.86 million tonnes during thesame period (Table 2).

Joint Committee on FertiliserPricing (JPC)

During RPS regime, there wasphenomenal increase in fertiliserconsumption and domestic production.But increase in the cost of production andimports without suitable adjustment inMRP led to significant increase in subsidybill. Central subsidy on fertilisersincreased from Rs.266 crore in 1977-78to Rs. 4800 crore in 1991-92. Concernedwith the increasing subsidy burden,caused by rising cost of import anddomestic production, a jointparliamentary committee was set up bythe Government in the name of JointCommittee on Fertiliser Pricing (JPC)

under the Chairmanship of Shri PratapRao B. Bhosale, M.P in December 1991.

The recommendations of the committeeled to a series of changes in fertiliserpolicy as stated below:

(i) The prices, movement anddistribution of all phosphatic andpotassic fertilisers were decontrolledw.e.f. 25th August’1992.

(ii) Retail price of Urea reduced by 10per cent w.e.f. 25th August’92.

(iii) Import of rock phosphate andsulphur was decanalised w.e.f 1st

March’92.

(iv) Import of ammonia and phosphoricacid was decanalised w.e.f 1st

April’92.

(v) Import of DAP was decanalised w. e.f 17th September’92.

(vi) Import of MOP was decanalised w.e. f 17th June,’93

Decontrol of P & K Fertilisers

Decontrol of phosphatic and potassicfertilisers led to reduction in theconsumption of these fertilisers and NPKuse ratio was seriously disturbed. NPKuse ratio widened from 5.9: 2.4:1 during1991-92 to 9.5:3.2:1 during 1992-93and 9.7:2.9:1 during 1993-94 (Table 3).

Government of India introducedconcession scheme to mitigate the risingcost of production and imports.Nevertheless, it took several years torestore the NPK use ratio to the level of1991-92.

Committees

The Government appointed various othercommittees during the decade of 2000to suggest alternatives to the RPS. Theseinclude Fertilisers Pricing Policy ReviewCommittee, headed by Dr. C. H.Hanumantha Rao in March 1998 andExpenditure Reforms Commission (ERC)in the year 2000. The ERC recommendedreplacement of unit specific RPS by groupbased concession scheme. Therecommendations of the ERC werefurther modified based on which theNew Pricing Scheme (NPS) was broughtin effect from 1.4.2003 wherein UnitSpecific Subsidy in the latter has beenreplaced by a Group Based Concessionin the former. NPS is still continuing onurea.

Table 2: Progress in Domestic Production and Consumption

Year Production (Million tonnes) Consumption (Million tonnes)

N P Total N P K Total

1977-78 2.00 0 .67 2.67 2.91 0.87 0.51 4.29

1981-82 3.14 0.95 4.09 4.07 1.32 0.68 6.07

1985-86 4.32 1.43 5.75 5.66 2.01 0.81 8.47

1991-92 7.30 2.56 9.86 8.05 3.32 1.36 12.73

Table 1: Progress in Domestic Production and Consumption

Year Production (Million tonnes) Consumption (Million tonnes)

N P Total N P K Total

1951-52 0.029 0.010 0.039 0.059 0.007 - 0.066

1961-62 0.154 0.065 0.220 0.250 0.060 0.028 0.338

1965-66 0.238 0.119 0.357 0.575 0.133 0.077 0.785

1971-72 0.949 0.290 1.239 1.798 0.558 0.301 2.657

SPOTLIGHT


Steps were also taken by the governmentto undertake studies to reduce costs andconcessions on phosphatic fertilisers.Notable among these were Cost PriceStudy of Complex Fertilisers by TariffCommission in May 2001 and that ofDAP and MOP in February 2003, CostPrice Study of Single Superphosphate byCost Account Branch (CAB) underDepartment of Expenditure in April2004, Expert Group on PhosphaticFertilizer Policy headed by Prof. AbhijitSen in the year 2005.

Rising Subsidy

Most of the committees maderecommendations relating to pricing andsubsidy. Nevertheless, amount of subsidykept on increasing as a result of risingcost of inputs for domestic productionbesides increase in cost of importswithout commensurate increase in retailprices of fertilisers. Fertiliser industryremained highly controlled whereasreforms took place in other sectors. Costof inputs was decontrolled resulting inabnormal increase in the prices. ‘Costplus approach’ with stringent regulationsand procedures did not encourage anyinvestment in the sector. The health ofthe fertiliser industry was adverselyaffected and no new investment tookplace in the decade of 2000. Theconstraint in the availability of feed stockalso added to the misery. Table 4 showsthe stagnation in domestic capacity andproduction during the current decade.

Against the backdrop of stagnation inindigenous capacity and production offertilisers, the country experienced surgein demand for fertilisers in the recentyears. Successive good monsoon andattractive procurement prices of crops forall major crops, led to surge in demandfor fertilisers. The growth in fertiliserconsumption was 10-11 percent perannum during 2004-05, 2005-06 and2008-09.

In order to meet increasing demand, theGovernment resorted to high importsdespite steep increase in internationalprices. In Urea, while India achieved self-sufficiency during 2000-01, the importwent up to 6.9 million tonnes in 2007-08 and 5.7 million tonnes in 2008-09.Similarly, imports of DAP/ MAP touched6.5 million tonnes and MOP 5.7 milliontonnes during 2008-09. The cost of rawmaterials and intermediates for

manufacture of phosphatic fertilisersincreased manifold. The country paidheavy price on import of fertilisersparticularly when there has beenabnormal increase in the prices offertilisers and fertiliser raw-material andintermediates during this period. Table5 shows increasing dependence onimports in the recent years.

High cost of imported fertilisers,

feedstock, raw materials/ intermediates ledto substantial increase in subsidy bill. Whilecost of inputs increased substantially, MRPsof fertilisers remained unchanged sinceFebruary 2002. In case of NP/NPKfertilisers, the MRP rather reduced w.e.f18th June, 2008. The total amount offertiliser subsidy which used to be aboutRs. 11847 crore in 2003-04 increased toRs. 96,603 crore in 2008-09. Fertiliser

Table 5: Import of fertilisers(Million tonnes)

Year Urea DAP MAP MOP

2000-01 - 0.861 0.078 2.646

2001-02 0.220 0.933 0.125 2.810

2002-03 0.119 0.383 0.100 2.603

2003-04 0.143 0.734 0.065 2.579

2004-05 0.641 0.644 0.022 3.410

2005-06 2.057 2.438 0.045 4.578

2006-07 4.719 2.875 0.097 3.448

2007-08 6.928 2.724 0.266 4.421

2008-09 5.667 6.192 0.267 5.672

Table 4: Capacity and production of fertilizer nutrients(Milliontonnes)

Year Capacity Production

N P2O5 Total N P2O5 Total

2000-01 11.987 4.988 16.975 10.943 3.734 14.677

2001-02 12.166 5.112 17.278 10.690 3.835 14.525

2002-03 12.238 5.333 17.571 10.508 3.908 14.416

2003-04 12.166 5.402 17.568 10.557 3.627 14.184

2004-05 12.208 5.480 17.688 11.305 4.038 15.343

2005-06 12.288 5.460 17,748 11.333 4.203 15.536

2006-07 12.290 5.736 18.026 11.525 4.440 15.965

2007-08 12.290 5.875 18.165 10.903 3.714 14.617

2008-09 12.290 5.892 18.182 10.900 3.417 14.317

SPOTLIGHT

Table 3: Impact of decontrol on P & K fertilisers

Year Consumption (Million tonnes) NPK use

N P K Total ratio

1991-92 8.05 3.32 1.36 12.73 5.9:2.4:1

1992-93 8.43 2.84 0.88 12.15 9.5:3.2:1

1993-94 8.79 2.67 0.91 12.37 9.7:2.9:1

1994-95 9.51 2.93 1.12 13.56 8.5:2.6:1

1995-96 9.82 2.90 1.16 13.88 8.5:2.5:1

1996-97 10.30 2.98 1.03 14.31 10.0:2.9:1

1997-98 10.90 3.91 1.37 16.19 7.9:2.9:1

1998-99 11.35 4.11 1.33 16.80 8.5:3.1:1

1999-2000 11.59 4.80 1.68 18.07 6.9:2.9:1


industry continued to suffer on accountof various factors, such as, inadequateprovision in the budget, delay in paymentof subsidy, part of the subsidy paid inbonds during 2007-08 and 2008-09. Theamount of subsidy in 2009-10 wasRs.52980 crore.

Apart from fiscal concerns, decliningresponse on fertiliser use particularly onfoodgrains has been noticed in thedecade of 2000. The average responseto fertiliser application used to be around10:1 during 1960s and 1970s. Theresponse ratio obtained by researchscientists which had been adopted byDepartment of Agriculture andCooperation, GOI, for calculatingdemand projections was 1:7.5 for the 8th

Plan, 1:7 for 9th Plan, 1:6.5 for 10th Planand 1:6 for 11th Plan. However, IARSI,ICAR has made a study in the recentyears to work out the response ratio offertilisers for foodgrains based on thefarmers field data and has concluded theresponse ratio of NPK as 1:7.8, but theresponse ratio varied for different cropsfrom 1:4.9 for oilseeds to 1:7.1 for pulsesand 1:8.6 for cereals.

Skewed Usage

The fertiliser use is also skewed in thecountry. While per hectare use offertiliser nutrient is 240 kg in AndhraPradesh and 221 kg in Punjab, it is only2 kg in Nagaland and 2 kg in ArunachalPradesh. About 85 percent of the totalconsumption of fertiliser nutrients is

consumed by 268 districts (about twothird) only.

The imbalanced use of chemical fertilisersand neglect of organic manure causedmany problems, like stagnation inproductivity, soil sickness, widespreaddeficiency of secondary and micronutrients, spread in salinity and alkalinity,etc. On an All-India basis, the deficiencyof Sulphur has been found to be 41percent, Zinc 48 percent, Boron 33percent, Iron 12 percent and Manganese5 percent.

Soil Testing

Fertiliser applications are mostly notbased on soil-test values. There are about650 soil testing laboratories in thecountry with an analysing capacity of6.86 million samples per annum. Thesefacilities are far from adequate comparedto large cultivated area and number offarm holdings.

FCO contains a long list of fertilisers ofmore than 80 products. However a fewproducts are marketed on whichsubsidies are allowed. These includeUrea, DAP, SSP, MOP and 13 grades ofcomplex fertilisers. Out of these, bulk ofthe share is comprised of Urea, DAP andMOP. Urea accounts for 91 percent shareof N consumption and the share of DAPin total P is about 61 percent. Asmentioned earlier, increasing use of highanalysis fertilisers has resulted in multi-nutrient deficiencies in the soil.

Recent Initiatives

Stagnation in indigenous capacity due tono investment in fertiliser sector in thecurrent decade, surge in demand forfertilisers, increasing imports atexorbitant prices to meet the demand-supply gap and the consequent increasein subsidy have been the concerns in therecent past. Concerns are also there ondiminishing response to fertiliser use dueto deteriorating soil health, arising outof multi-nutrient deficiency in the soil.All these concerns compelled theGovernment to bring necessary changesin the policy.

During 2007-08 and 2008-09, GOI hadtaken a series of policy measures whichaim at encouraging the growth of thefertiliser industry besides promotingbalanced nutrition of the soil andinducement of new fertilisers.

Policy on Phosphatic, PotassicFertilisers

In the policy for Phosphatic and Potassicfertilisers a departure was made fromcost plus approach. The subsidy wasbenchmarked to Import Parity Price (IPP)of DAP. Subsidy for imported andindigenous DAP was made uniformbased on IPP concept. In case of NP/ NPKComplex Fertilisers, the price of P2O5 wasdetermined on the basis of imported DAPand imported Ammonia. The price of ‘K’was determined on the basis of imported

Subsidy forimported and

indigenous DAP wasmade uniform based

on IPP concept. Incase of NP/ NPK

Complex Fertilisers,the price of P

2O

5 was

determined on thebasis of imported

DAP and importedAmmonia

SPOTLIGHT


MOP. The price of ‘N’ continued to bedetermined on unit wise basis. Cost of‘S’ in sulphur containing complexfertilisers was to be recognised based onthe price of imported sulphur.

With regard to SSP, the new policy madeprovision for fixation of uniform MRPthroughout the country by the CentralGovernment unlike the earlier practiceof MRP being fixed by the StateGovernments. The policy also providedfor monthly revision in the concessionrates to reflect the variation in prices ofraw-materials vis-à-vis indigenous andimported rock phosphate and importedSulphur. The policy recognised Sulphurcontent in SSP while fixing MRP. Thepolicy continued from 1st May 2008 to30th September, 2009. With effect from1st October, 2009, the policy once againchanged. The government had set a fixedconcession of Rs. 2000 per tonne of SSPwith open MRP w.e.f 1st October, 2010.

Imported MAP (11-52-0), and MAPgranulated out of imported powderedMAP was brought under concessionscheme w.e.f 1.4.2007. TSP was broughtunder the concession scheme w.e.f1.4.2008.

Nitrogenous Fertilisers

The Govt. of India notified Policy for Newinvestments in urea sector and long termofftake of urea from joint venturesabroad’ w.e.f 4th September, 2008.Although for the existing production andimports, urea is under price control and50 percent movement control andsubsidy is administered by NPS III, UreaInvestment Policy has been in put in placeto attract investment into this sector.

In this policy, a departure has been madefrom cost based approach andbenchmarking has been made to imports.

Some salient features of the policy areas under:-

1. The additional urea from (i) Revampof existing units (within four years ofNotification) will be recognised at 85percent of Import Parity Price (IPP),(ii) Expansion of existing units (withinfive years of Notification) at 90percent of IPP, (iii) Revived units ofHFC and FCI (within five years ofNotification) at 95 percent of IPP,with the floor and ceiling prices ofUS$250 per tonne and US$ 425 per

tonne, respectively in each category.

2. The price of urea from the Greenfieldprojects will be derived through abidding route with a minimum floorprice and an appropriate ceiling pricewhich will be decided at the time ofbidding based on the domestic gasprices and the IPP. The bidder willhave to indicate the price as apercentage discount below theprevailing IPP for urea.

3. The coal gasification based ureaprojects will be treated at par withbrown field or Greenfield project asthe case may be. In addition, theseprojects will also get incentives or taxbenefits.

4. The joint venture projects abroad ingas rich countries will be encouragedthrough firm off take contracts withpricing decided on the basis ofprevailing market conditions and inmutual consultation with the jointventure partners. The principle fordeciding upon the maximum pricewill be the price achieved under thegreen field projects or 95 percent ofIPP subject to a floor of US$225/

tonne CIF India and a cap of US$405/tonne CIF India inclusive of handlingand bagging cost.

With a view make available adequatequantity of sulphur-carrying fertilisers,indigenous Ammonium Sulphate (20.6-0-0-23) of GSFC, Baroda and FACT-Udyogamandal has been brought underthe concession scheme.

Freight Reimbursement Policy

Prior to 1st April, 2008, there weredifferent freight policies for differentfertilisers. In the case of urea, the freightcost was being reimbursed separatelyand had the provision for escalation andde-escalation. In case of other fertilisers,like DAP and NP/ NPK complexfertilisers, the freight cost was part of theprice subsidy and had no provision forescalation/de-escalation. Under the newuniform freight policy inland freight fortransportation of fertilisers are to bereimbursed to the fertiliser companiesfrom plant/port upto the block level. Forthis, rates would be calculated based onactual railway freights and in case of roadtransport, it will be based on the averagelead distance of all the blocks in the

All subsidised fertilisers can be used formanufacturing of customised fertilisers. The

company shall fix reasonable MRP for itsapproved grades of customised fertilisers

SPOTLIGHT


district and the State level truck ratesfrom rake point to the block. The stategovernments will be responsible forconfirming the receipts of fertilisers asindicated in the movement plan in FMS.

Balanced Fertilisation

Keeping in view the objective of balancedfertilisation, the Government hasintroduced a couple of new policiesbetween 2007-08 and 2008-09. Theseincludes guidelines for production ofcustomised fertilisers, introduction ofnutrient-based pricing scheme and policyfor fortified/ coated fertilisers, asindicated below.

Customised Fertilisers

Keeping in view the focus of balancedfertilisation, Government of India (GOI)formulated guidelines for production anduse of customised fertilisers under Clause20B of FCO, 1985. The guidelines wereissued on 11 March, 2008 to enableinterested companies to initiate theprocess of developing different gradesof customised fertilisers. The guidelinesbroadly covered the definition, eligibilitycriteria, grades, quality requirement, andtolerance limit, labelling and pricing ofcustomised fertilisers.

As per the guidelines, permission formanufacture and sale of customizedfertilisers shall be granted to themanufacturing companies whose annualturnover is Rs.500 crores or above,having soil testing facility with annualcapacity of 10,000 samples per annumand should have analysing capacity forNPK, micronutrient and secondarynutrient. The proposed grades shall bebased on area specific and crop specificsoil testing results. All subsidisedfertilisers can be used for manufacturingof customised fertilisers. The companyshall fix reasonable MRP for its approvedgrades of customised fertilisers.

Fortified and Coated Fertilisers

To promote the use of secondary andmicro nutrients and to improve fertilizeruse efficiency, the Government of Indiahas allowed the fortification/coating offertilisers specified in Fertiliser ControlOrder (FCO), up to 20 percent of theirtotal production w.e.f 1st June 2008. Themanufacturers have also been allowedto charge additional cost involved inmanufacture of these fertilisers from the

consumers as per the Governmentguidelines. The manufacturers /producers of fertilisers are allowed to sellthe FCO approved fortified/ coatedsubsidized fertilisers, except for Zincatedurea and Boronated SSP at a price upto5 percent above the MRP. For Zincatedurea and Boronated SSP, themanufacturers are allowed to chargeupto 10 percent above MRP of urea andSSP, respectively.

Nutrient based pricing ofsubsidised fertilisers

The GOI introduced nutrient basedpricing of subsidised fertilisers to promotebalanced fertilisation. As per the scheme,the per unit price of nutrients N, P, K andS will be the same in all complex gradefertilisers. Consequently, MRPs ofcomplex fertilisers have been significantlyreduced w.e.f. 18th June 2008. Thenutrient prices of Urea, DAP and MOPare the benchmark for determining theprices for nutrient prices of N, P and K.For the first time, Sulphur has beenrecognised as a primary nutrient to becovered under the Concession Scheme.

2010-11 – 1st Stage of Reform inthe Fertiliser Sector

Nutrient based subsidy

Government of India introduced NutrientBased Subsidy on phosphatic and potassicfertilisers w.e.f. 1st April, 2010. NBS isapplicable on DAP, MOP, MAP, TSP and12 grades of complex fertilisers. Subsidyunder NBS is the same both for domesticand imported fertiliser products. NBS forSSP introduced w.e.f. 1st May, 2010.Primary nutrients, namely N, P and K andsecondary nutrient, namely Sulphur (S)contained in the fertilisers are eligible forsubsidy. The per kg NBS for nutrients N,P, K and S for 2010-11 are as follows:

Nutrient NBS (Rs. per kg of nutrient)

N 23.227

P 26.276

K 24.487

S 1.784

Additional subsidy on subsidisedfertilisers fortified with Boron is Rs. 300per tonne and zinc Rs.500 per tonne.Manufacturers of customised fertilisersand mixture fertilisers are eligible tosource subsidised fertilisers as raw

material for their products. Subsidy willbe released through the industry. MRPof urea has been raised by 10 percentfrom Rs.4830 per tonne to Rs.5310 pertonne w.e.f 1.4.2010. MRPs of P & Ksubsidised fertilisers will be determinedbased on the demand-supply balanceand fixed by the marketers. Marketerswill be required to print retail price alongwith applicable subsidy on the fertiliserbags.

Assessment of NBS

Initial reports after the introduction ofNBS are showing positive results due tocertainity in the policy environment.Some of the positive results of NBS arelisted below.

(i) Stability in the international prices offertilisers.

(ii) Industry has been able to tie up thesupply of raw materials for complex/phosphatic fertilisers which aremostly imported. This will lead tohigher production of these fertilisers.

(iii) Arrangements for major quantum ofimports of finished fertilisers havebeen finalised at the beginning of theyear.

(iv) NBS has not led to any significantincrease in retail price to the farmers.A marginal increase in MRP on someproducts noticed on expected lines.In fact, there has been decline in theMRP of SSP due to provision ofhigher subsidy per tonne thanprovided under the old dispensation.

(v) Arrangement of purchase of inputsand finished products at reasonableprices for the full year from theinternational market is expected tokeep subsidy bill within manageablelimits.

Suggested Reforms

While in the first phase, P and K fertilisershave been brought under the NBS, thereis need for further reform in the fertilisersector. The following measures areneeded to be taken for comprehensivereform in the fertiliser sector.

Urea needed to be broughtunder NBS

Urea, which constitutes more than halfof the total fertiliser products consumedin the country, needs to be brought

SPOTLIGHT


within NBS gradually. This will lead to afair balance in the market prices ofvarious fertilisers. There is also need fordecanalisation of import of urea on thelines of P & K fertilisers which weredecanalised way back in 1992.

Need for allocation of gas forfuture brown field/ green fieldplants

The issue of feed stock is extremelycritical particularly for brown field / greenfield plants. There should be firm off takeagreement of gas committing reasonableprice for at least 15 years fromproduction. The price of gas will alonedetermine the competitiveness of IndianFertiliser Industry in the internationalmarket.

(i) Need for extension of subsidy: Inaddition to the above steps, theamount of subsidy should beextended to a larger number ofproducts. More than 80 fertiliserproducts are included in FCO butsubsidy is provided on a few genericproducts, such as Urea, DAP, MOP.Balanced fertilisation process willbecome a reality only after the basketof fertilisers eligible for subsidy/concession is widened to includeother new products such ascustomised fertilisers, water solublefertilisers, etc.

(ii) Encouragement of production anduse of SSP: Single super phosphatecontains 16 percent phosphorous,11 percent sulphur and about 21percent calcium. It is useful forvarious crops besides oilseeds andpulses, in particular. Currently, thereare about 80 SSP plants with a totalcapacity over 7 million tonnes. Butcapacity uti l isation is only 40percent. There is enormous scope forimprovements in production of SSPwhich will reduce the dependenceon imported DAP.

(iii) Efficient use of fertiliser : Efficientuse of fertiliser needs four Rs, i.e,Right product, Right time, Rightdose, Right method. There is needfor proper mapping of soil fertility atthe micro level using GPS. Residualeffect of phosphorous, sulphur hasto be harnessed through change incropping system. Use of customizedfertilisers will improve balanced use

of fertiliser, Fertigation will improveefficiency in water and fertiliser use.

(iv)Need for Improvement inExtension Facilities: According tothe Survey conducted by NationalSample Survey Organisation underthe Ministry of Statistics andProgramme Implementation, Govt. ofIndia conducted in 2005, out of a listof 16 sources of information providedto the farmers accessing modernagricultural technology, only 5.7percent farm households accessed thetechnology through extension worker.Nearly 16.7 percent farmers accessedit through other progressive farmersand 13.1 percent had it through otherinput dealer and 13 percent throughradio. Extension system at the villagelevel has to be improved considerably.Yield gap has to be bridged by actualdemonstration of best farmer’s plotin a village. There are more than 600Krishi Vigyan Kendras (KVKs) spreadout in the districts. KVKs may begeared up for dissemination ofknowledge and training to thefarmers.

Conclusion

To conclude, it may be construed thatNBS is expected to promote balancedfertilisation through higher use ofsecondary and micro nutrients along withprimary nutrients. Farmers will haveaccess to new efficient products. NBS isexpected to project actual demand offertiliser nutrients in the country andfacilitate their imports withinmanageable limits. It will induceinvestments both in India and overseas.Reforms will address fiscal managementof subsidy bill. Global trade to India willbe more holistic including macro andmicro nutrients. In due course, NBS isintended to move to a system of directtransfer of subsidy to the farmers.Fertiliser industry will continue tocooperate with the government fortaking the reform process further to fulfillthe objective of sustaining higheragricultural productivity and enhance netfarm income.

* Writer is the Director General ofFertiliser Association of India, New Delhi

SPOTLIGHT


As part of US Government’spartnership with India onagricultural cooperation and

food security, the first meeting of theU.S.-India Agriculture Dialogue steeringcommittee took place in New Delhi on14 September 2010.

Under Secretary of State for Economic,Energy, and Business Affairs Robert D.Hormats, U.S. Department of AgricultureUnder Secretary for Farm and ForeignAgricultural Services Jim Miller, andDeputy Coordinator for Development,Office of the Coordinator of GlobalHunger and Food Security and U.SDepartment of State AmbassadorWilliam Garvelink held talks with adelegation led by Foreign SecretaryNirupama Rao.

The committee, comprised of officialsfrom relevant U.S. government andIndian agencies and ministries, met toidentify areas of cooperation for working

groups on strategic cooperation inagriculture and food security; foodprocessing, farm-to-market linkages andagricultural extension; and crop andweather forecasting.

India-US Agricultural Cooperationdates back to the early days of Indo-U.S. relations and the first greenrevolution.

Argentina

Meanwhile, India and Argentina signeda Memorandum of Understanding(MoU) on Cooperation in Agriculture andAllied Sectors during the recent visit ofUnion Agriculture Minister Sharad Pawarto that country. The MoU was signed byPawar and Argentine Agriculture MinisterJulian Andres Dominguez at BuenosAires.

The pact provides a framework forexchange of information on bestpractices and technologies, cooperation

India Mulls Agri Cooperationwith US, Argentina

in research and development andpromotion of trade, investment and jointventures. Pawar visited Argentina in thefirst week of September, in response tothe invitation extended by Dominguez,who came to India in August.

Argentina is the largest source of importof soya oil by India and largest exporterof soya and sunflower oils in the world.In the first seven months of 2010, Indiahas imported soya oil worth US$1.4billion. India is also importing Argentinasunflower oil and other agro-products.During the meetings with Pawar, someArgentine companies had shown interestin growing pulses for exports to India inthe future. There are 14 Indiancompanies which have invested aboutUS$1 Billion in IT, agrochemicals, steel,pharmaceuticals and cosmetics inArgentina. United Phosphorus andPunjab Chemicals & Crop Protection Ltdhave invested US$100 million inArgentina in the production and exportof agrochemicals and seeds.

Agricultural machinery is emerging as anew area of trade and collaboration.Indian Farmers Fertiliser CooperativeLimited (IFFCO) is exploring thepossibility of setting up a fertiliser plantin Argentina using natural gas as the rawmaterial.

A number of Indian companies haveshown interest in investment and jointventures in agribusiness in Argentina,which has one of the most advanced andcompetitive agriculture sectors in theworld.

Pawar was accompanied by PunjabDeputy Chief Minister Sukhbir SinghBadal, Minister for Energy and WaterResources Ajit Pawar, and Minister forRural Development in MaharashtraGovernment Jayant Patil, and Ministerof State for Agriculture in HaryanaSukhbir Singh Kataria.

Agriculture Minister Sharad Pawar Visits Argentina


Agro-processing is now regardedas the sunrise sector of the Indianeconomy in view of its large

potential for growth and likely socio-economic impact on employment andincome generation. Properly developedagro-processing sector can make India amajor player at the global level formarketing and supply of processing food,feed and a wide range of other plant andanimal products (Vitonde A. K. andGedam V. M. 2002).

Pulses and legumes play an importantrole in the food. Grain legumes such aschickpea (Cicer arientinum), pigeon pea(Cajanus cajan), green gram (Phaseolusaureous), black gram (Phaseolus mungo)and lentil (Lens escualanta) arecommonly referred as pulses. Pulses arerich in proteins and hence are moreimportant in day to day diet.

Largest Producer

India is the largest pulse producer and

Pulse Processing Industriesas Opportunity in RuralEntrepreneurship and EmploymentBy Suchita V. Gupta* and Dr P.B.Kale*

Particulars Maharashtra Vidarbha

Area Production Area Production(ha) (million tons) (ha) (million tons)

Pigeon pea 1074000 658200 523300 344300

Bengal gram 829900 466200 216000 95700

Total pulses 3385400 1668200 1247300 603600

Commercial dal mill in operation (Maiyya Agro Industries, Khamgaon)

Pulses and legumes playan important role in the

food. Grain legumes suchas chickpea (Cicer

arientinum), pigeon pea(Cajanus cajan), green

gram (Phaseolus aureous),black gram (Phaseolus

mungo) and lentil (Lensescualanta) are commonlyreferred as pulses. Pulses

are rich in proteins andhence are more important

in day to day diet.

RURAL DEVELOPMENT


Pulse processing industry is the largestfood processing industry in the country.The productivity of pulses in Vidarbharegion is 0.48 million tonness/hactrae. InIndia, 80 percent of pulses are consumedin the form of ‘dal’ and ‘besan’ andremaining 20 percent as whole seeds.

Buldana district of Vidarbha region isimportant according to pulse processingpoint of view. The tehsils/ talukas ofBuldana district are Buldana, JalgaonJamod, Sangrampur, Shegaon, Malkapur,Nandura, Motala, Khamgaon, Chikhali,Mehekar, Deulgaon Raja, Sindkhed Rajaand Lonar .

In the year 2007-08, the annual pulseproduction in Buldana district was1,08,400 million tonnes across 2,55,200hactare area. Hence, pulse processingindustry is one of the major agro-processing industries in Buldana district.As the production is increasing, it isnecessary to work out the potential ofpulse processing industries in Vidarbharegion. Keeping this in view, the studywas undertaken to find out the presentstatus and techno economic feasibility ofpulse processing industry in Buldanadistrict of Vidarbha region foraccelerating the growth of agroprocessing industries. This article willstudy the potential of pulse millingindustry in Buldana district as a case studyand look at the techno-economicfeasibility of pulse milling industry ingeneral.

consumer in the world. Among thedifferent pulse producing countries, Indiaranks first by contributing 24-26 percentof the global pulse production and 36-38 percent area of the global area. Theannual pulse production of India is 14.4million tons throughout 23 million haarea (Anon., Handbook of Agriculture,2006). It is an essential adjunct topredominantly cereal based meal andfulfils the protein requirement of thebody of majority of Indian population.In India, split of pulses are called ‘dal’ or‘dhal’ and are used as a food material.Commonly it is prepared at dal mills(processing units).

The production of pulses in Vidarbharegion of Maharashtra state is increasingday by day. The following table showsarea and production in Maharashtra andVidarbha region for area 2007-08(Anon., Krishisanvadini, 2009).

Mini dal mill in operation (Mahalaxmi Mini Dal Mill, Mehekar)

India is the largest pulse producer and consumer inthe world. Among the different pulse producingcountries, India ranks first by contributing 24-26

per cent of the global pulse production and 36-38per cent area of the global area

The following pulse processing units were selected for the study.

Sr. No. Name of processing unit Types of organization

1. Tulsi Agro Industries, Khamgaon Commercial dal mill

2. Maiyya Agro Industries, Khamgaon Commercial dal mill

3. Devki Agro Industries, Khamgaon Commercial dal mill

4. Shakambhari Dal Mill, Khamgaon Commercial dal mill

5. Akash Industries, Nandura Commercial dal mill

6. Suman Mini Dal Mill, Buldana Mini dal mill

7. Shree Sainath Dal Mill, Jalgaon Jamod Mini dal mill

8. Mahalaxmi Dal Mill, Mehekar Mini dal mill

9. Bhusari Mini Dal Mill, Chikhali Mini dal mill

RURAL DEVELOPMENT


The Project

The present study located in Buldanadistrict, where dal milling industries arelocated. Buldana district has area 9,600sq. km. and population is about22,32,000 according to 2001 census.The climate of Buldana district is dry andwarm having an average rainfall of 70.9 cm (Anon, 2010).

Table 1: Talukawise Area and Production of Pulses

Tehsil Pigeon pea Green gram Black gram Chick pea

Area, Production, Area, Production, Area, Production, Area, Production,ha/yr tons/yr ha/yr tons/yr ha/yr tons/yr ha/yr tons/yr

Buldana 528.5 3991 108.9 930 85.4 1152 780.2 312.1

Chikhali 465.4 8286 99.3 2100 93.8 2170 750.2 306.3

Deulgaon Raja 523.7 2635 98.1 2510 70.3 1360 588.9 235.6

Sindkhed Raja 497.7 3250 72.3 3922 87.1 3025 593.1 227.2

Lonar 530.1 3765 101.6 3730 92.3 4322 811.0 243.3

Mehakar 636.3 5814 95.4 6957 80.9 5279 808.8 323.5

Motala 492.4 6940 73.7 1650 206.7 1100 454.4 181.7

Malkapur 415.9 3200 109.2 900 112.8 640 452.8 161.3

Nandura 483.5 4930 108.9 3340 82.3 3460 365.3 164.4

Khamgaon 467.2 6500 117.2 5700 98.5 5400 899.4 383.3

Shegaon 508.7 3190 106.3 2735 117.9 2285 639.0 223.6

Sangrampur 472.2 2000 131.0 2200 97.4 2000 733.7 221.1

Jalgaon (Jamod) 528.7 3820 146.8 4370 101.6 4150 587.0 205.4

Total 6550.3 58321 1386.7 41044 1326.8 36943 8463.8 3187.6

A list of pulse processing industries ofMaharashtra state was obtained fromoffice of District Industrial Centre,Buldana. The dal mills located in Buldanadistrict were visited by conductingextensive surveys. During the visit, detailinformation regarding the present statuswas collected in prescribed proforma(appendix I) including machines,instruments and equipment types, kindof crop processed, staffing pattern,problems regarding working, suggestionsif any in order to improve the workingpattern etc.

Selection of Sample

Cost Analysis

In the study, the status of existing pulseprocessing industries in Buldana districtwas studied. Data were collected withrespect to capital investment, cost ofproduction per annum, net income andemployment generation in the dal mill.The cost analysis was conducted by

calculating the parameters like BEP, payback period, return on investment. Thereare 19 commercial dal mills and 33 minidal mills in Buldana district. For the study,five commercial dal mills and five minidal mills were selected.

It was observed that, the average Breakeven point (BEP), Pay back period (PBP)and Return on investment (RoI) forcommercial dal mills were 40.37 percent,0.50 years and 24.37 percentrespectively and that for mini dal millswere 37.35 percent, 0.46 years and 50.2percent respectively which implies thatthe pulse milling industries in Buldanadistrict were techno economicallyfeasible. The average employmentgeneration for selected commercial andmini dal mills was found 2,274 and 402man days per year respectively. There isa scope for installation of 126 new smalldal mill plants in rural areas as cottageindustries. It can improve theemployment generation in rural areas.

Table 2: No. of dal mills units inBuldana district

Sr. Tehsil No. of No. ofno. commercial mini dal

dal mills mills

1. Buldana 2 7

2. Chikhali 1 3

3. Deulgaon Raja - -

4. Sindkhed Raja - -

5. Lonar - 1

6. Mehakar - 3

7. Motala - 1

8. Malkapur 2 3

9. Nandura 2 4

10. Khamgaon 12 6

11. Shegaon - -

12. Sangrampur - 2

13. Jalgaon(Jamod) - 3

Total 19 33

Table 3: Coding of commercial dal mill

Sr. No. Name of commercial dal mill Coding Processingcapacity (q/day)

1. Tulsi Agro Industries A 400

2. Maiyya Agro Industries B 80

3. Devki Agro Industries C 150

4. Shakambhari Dal Mill D 140

5. Akash Industries E 60

RURAL DEVELOPMENT


Table 5. Cost analysis of commercial dal mill

Sr. No. Particular Sale purchase

A B C D E

1. Cost of machine, Rs. 70,55,000 15,40,000 30,50,000 25,40,000 10,35,000

2. Working capital/month 4,21,41,270 84,51,550 1,58,06,714 1,47,56,910 62,97,280

3. Annual net profit, Rs. 1,38,21,577 41,16,674 44,79,184 46,31,790 19,13,817

4. Break even point, % 35.11 32.10 45.37 42.38 47.10

5. Pay back period, yrs 0.48 0.36 0.63 0.52 0.51

6. Return on investment 26.08 32.44 21.10 23.22 19.03

7. Employment generation,mandays per year 5,040 1,440 1,920 1,920 1,050

Table 6. Cost analysis of mini dal mill

Sr. no. Particular Custom hire

F G H I J

1. Cost of machine, Rs. 40,500 78,500 74,500 49,500 73,500

2. Working capital/month 14,045 11,185 16,330 13,720 16080

3. Annual net profit, Rs. 1,49,150 1,26,493 1,46,410 97,290 1,36,940

4. Break even point, % 32.38 36.60 36.43 44.67 36.70

5. Pay back period, yrs 0.26 0.58 0.48 0.48 0.50

6. Return on investment 57 48 59 36 51

7. Employment generation,mandays per year 300 360 540 360 450

Table 7. Mini dal Mill Requirement in Buldana District

Sr. Tehsils Production Pulses convert Market potential, No. of dal mill unitsNo. tons/yr into dal, 15% 75% Required Available

(tons)

1. Buldana 9194.4 1331.9 7062.1 8 7

2. Chikhali 15619.6 2341.2 13278.1 15 3

3. Deulgaon Raja 9461.6 1429.1 8032.5 9 -

4. Sindkhed Raja 12469.1 1870.3 10598.8 12 -

5. Lonar 14180.4 2127.2 12053.2 14 1

6. Mehakar 19937.2 3002.4 16934.8 20 3

7. Motala 11510.7 1734.1 9776.6 11 1

8. Malkapur 6354.1 963.2 5390.9 6 3

9. Nandura 11374.7 1704.7 9670.3 11 4

10. Khamgaon 21423.1 3221.1 18202 21 6

11. Shegaon 10456.2 1573.4 8882.8 10 -

12. Sangrampur 8411.3 1262.1 7149.2 8 2

13. Jalgaon (Jamod) 14414.4 2167.3 12247.1 14 3

Total 165806.7 21928.7 139278.4 159 33

Fixed cost

The cost does not vary with the changein output and remains unchanged for alonger period is called as fixed cost. Thisincludes the cost of machinery, building,furniture, wages of permanently

employed persons, license fee and taxes.

Variable costThe cost changes with the change inoutput are called variable cost, whichincludes expenditure on wages of casuallabour, oil and lubricant charges.

Inferences

Processing of agricultural product is oneof the important means of adding valueto produce and boosting up the supplyof the food product. The study wasbased on sample of pulse processing mill

RURAL DEVELOPMENT


selected purposively from the vicinity ofBuldana district. Table1 shows talukawisearea under pulses (ha/yr) and productionof pulses in tones/yr. (District AgriculturalCentre, Buldana).

From table 1, area under pigeon pea is6550.3 ha and the production is 58321tons. For chickpea, 8463.8 ha and theproduction is 3187.6 tons. For greengram, 1386.7 ha and production is41044 tons and for black gram, 1326.8ha and production is 36943 tons.According to data obtained from DistrictIndustrial Centre (DIC), Buldana, thereare about 19 commercial dal mills and33 mini dal mills in Buldana in Buldanadistrict.

The five commercial dal mill units andfive small dal mill units in differentcategories for economic analysis wereselected and coded as shown in Table 3and Table 4.

It was observed during the survey thatout of total production of pulses, about75 per cent is processed by large scalepulse milling industry, about 10 per centproduction is used for seed and otherpurpose and the remaining 10-15 percent production is converted into dhalby small scale industries. The cost analysisof these dal mills are worked out andgiven in Table 12.4 and table 12.5. Fiveselected commercial dal mills wereworking on sale purchase basis whereasfive selected mini dal mills were workingon custom hire basis.

Big Profit

In case of sale purchase type commercial

dal mill, the annual net profit ranges fromRs. 19,13,817/- to Rs. 1,38,21,577/-depending on the capacity of dal mill.BEP of processing units ranges between32.00 to 47.10 which implies that all dalmills are techno economically feasible.The Employment generation rangedfrom 1,050 mandays/year to 5,040mandays/year depending on the relevantcapacity of the processing unit. Thereturn on investment was found to varybetween 19.03 to 32.44 percent whichdid not show any relationship with thecapacity of the dal mill. The detailed costanalysis is given in Appendix-III(A).

In the case of custom hire type small dalmill, the annual net profit ranges fromRs. 97,290/- to Rs.1 ,49, 150/-depending on the capacity of dal mill.BEP of processing units ranges from32.38 to 44.67, which imply that all dalmills are techno economically feasible.Their employment generation variedfrom 300 mandays/year to 540mandays/year and depended on thecapacity of the processing unit. Thereturn on investment was found to bebetween 36 to 59 percent which do notshow any relationship with capacity ofthe dal mill. The detail cost analysis isgiven in Appendix-III (B).

Assuming 15 percent pulses available forprocessing at small scale industries, 10per cent for seed purpose and 75 per centfor market potential, the number of minidal mills required in each taluka ofBuldana district were calculated.

*Suchita Gupta is Associate Professor andHead, CAET, Dr PDKV, Akolaand *Dr. PB Kale is Additional Directorof VANAMATI, Nagpur

Considering capacity of 150 tonnes/yearof mini dal mill, the number of mini dalmill required is shown in Table 12.6.

From table 7, it is revealed that the total159 mini dal mill units are required tofulfil the requirement where as only 33mini dal mills are running in Buldanadistrict. Hence, there is scope for 126more units in Buldana district.

Conclusion

Economic analysis of the selected dalmills revealed that the dal milling is aprofit making enterprise at all thecapacity under study and on both salepurchase and custom hire mode.

The following conclusions can be drawnfrom the study.

1) The production of pulses in Buldanadistrict is sufficient to fulfill therequirement of mini dal mill units.

2) The pulse processing industries aretechno-economically feasible.

3) There is scope for starting 126 newsmall dal mill units in Buldana districtif the present state of production ofpulses is considered since they canget the raw material at village leveland market the processed product.

Processing ofagricultural product isone of the important

means of adding valueto produce and

boosting up the supplyof the food product.

The study was based onsample of pulseprocessing mill

selected purposivelyfrom the vicinity of

Buldana district

RURAL DEVELOPMENT


India is the second largest producer ofgroundnuts after China. Groundnutis the largest oilseed in India in terms

of production. On an average itaccounted for 31.81 percent of theoilseeds production of the country. Itaccounts for around 25 percent of thetotal oilseed production of our country.The annual production of seed and oil is5-8 and 1.5 million tonnes, respectively.About 80 percent of the total groundnutproduced in India undergoes processingso that it can be utilised as oil or cake.Around 75 percent of the crop isproduced in kharif season (June-September) and remaining 25 percent inrabi season (November-March).

Origin

It has been reported that South Americawas the place from where cultivation ofgroundnut originated and spread toBrazil, Southern Bolivia and North-western Argentina. Groundnut wasintroduced by the Portuguese from Brazilto West Africa and then to south-western

India in the 16th century. Almost everypart of groundnut is of commercial value.The groundnut oil has several uses but itis mainly used in cooking. It is used inmany preparations, like soap making,

fuels, cosmetics, shaving cream, leatherdressings, furniture cream, lubricants,etc. In fact, it plays a pivotal role in theoilseed economy of India.

India is the second largest producer ofgroundnuts after China. Groundnut is thelargest oilseed in India in terms ofproduction. Gujarat is the largestproducer contributing 25 percent of thetotal production, followed by Tamil Nadu(22.48 %), Andhra Pradesh (18.81%),Karnataka (12.64 %) and Maharashtra(10.09%) during 2006-07.

The southwest monsoon is the mostimportant factor that determines the areasown, production and prices. The meanproduction of groundnut in theMaharashtra state was 3.94 lakh tonneswhile at all India level it was 70.73 lakhtonnes The variability for theMaharashtra State was comparativelylow (21.82 percent) and for the overallIndia level it was 20.51 percent. The perannum rate of growth was -4.70 percentfor Maharashtra State and it was

By Pathan. A. L. 1, Sananse S. L. 2 and Bhonde S. R.3

Groundnut Production in IndiaScope for Extended Cultivation

Groundnut wasintroduced by the

Portuguese from Brazilto West Africa and thento south-western India

in the 16th century.Almost every part of

groundnut is ofcommercial value. The

groundnut oil hasseveral uses but it is

mainly used in cooking

AGRI BUSINESS


significant at 1 percent level ofsignificance. This indicated significantdecrease in the production. Theproduction of groundnut is decreasing inMaharashtra as well as in India.Therefore the government has to takemeasures to increase area andproduction.

This study seeks to know the worldscenario of groundnut as compared toIndia and Maharashtra state. For thispurpose, the data was collected from thesecondary sources mainly from the stateand central government reports, websitesand also from published and unpublishedsources.

Analysis of data is to be made withreference to the purpose of the study andits possible bearing on scientificdiscovery. For this purpose the statisticalmethods like Frequency,

Mean, Standard Deviation, Coefficientof Variation, Skewness and Kurtosis have

been applied. Simple and compoundgrowth rates were also estimated bystandard statistical methods to know thesimple and compound growth rates inarea, production and productivity ofgroundnut.

In the result and discussion, an attemptis made to analyse the scenario ofgroundnut at global level in connectionwith the scenario at national level andMaharashtra state level. The collecteddata has been analysed statistically andthe results are presented in thesubsequent tables.

Area, production and average yield ofmajor groundnut producing countriesduring the years 2004-05 to 2006-07were collected. The analysis of dataconcluded that, the most importantgroundnut growing countries are India,China, Nigeria, Sudan and USA. It isgrown over an area of 24.7 millionhectares with a total production of 33million tonnes in the whole world.

India Tops

India occupies the first place in acreageand second in production. The tabledepicts that during 2006-07, groundnutoccupied an area of 26,462.86 thousand

hectares with production of 35,658.43thousand tonnes in the world. Groundnutis mainly produced in Asian countries.During the year 2006-07, China was thelargest producer of groundnutsaccounting for 37.71 percent of the totalworld production followed by India(21.03 percent). China and India,together accounted for about 58.74percent of world groundnut production.Nigeria (7.57 percent), USA (5.27percent), Indonesia (3.86 percent) andSudan (3.37 percent) were the othermajor groundnut producing countries.

In area, India ranked first with 30.23percent share in the world, followed byChina (19.37 percent), Nigeria (10.58percent) and Sudan (7.18 percent).

Being a rainy-seasoncrop, groundnut doesnot require irrigation.

Groundnut is essentiallya tropical plant. It

requires a long andwarm growing season.

The most favorableclimatic conditions forgroundnuts are a well-

distributed rainfall of atleast 50 centimeters

during growing season,abundance of sunshine

and relatively warmtemperature

AGRI BUSINESS



FACE TO FACE

However, in productivity, United Statesof America stood first with 3540 kg/hafollowed by China (2624 kg/ha),Argentina (2018 kg/ha) and Indonesia(2016kg/ha) during 2006-07.

Less Irrigation

Being a rainy-season crop, groundnutdoes not require irrigation. Groundnut isessentially a tropical plant. It requires along and warm growing season. Themost favorable climatic conditions forgroundnuts are a well-distributed rainfallof at least 50 centimeters during growingseason, abundance of sunshine andrelatively warm temperature.

However, if dry spell occurs, irrigationmay become necessary. Irrigation shouldbe given at the pod development stage.The field should be well drained. In thesouthern part of the country wheregroundnut is grown in rabi season too,three to four irrigations are necessary.The first irrigation is given at the start offlowering and the subsequent irrigationswhenever required during the fruitingperiod to encourage peg penetration and

pod development. The last irrigationbefore harvesting facilitates the fullrecovery of pods from the soil

It is revealed from the analysis of data(1993-94 and 2006-07) that, the totalgroundnut production recorded asignificant fluctuating trend between1993-94 and 2006-07. The averagegroundnut production in India during theperiod was 70.73 lakh tones with kharifat 56.32 lakh tonnes and rabi at 16.61lakh tonnes.

The highest production of 89.80 lakhtonnes was obtained during the year1998-99,. Groundnuts assumed asignificant position in India’s oilseedsproduction during the years 1993-94 to2006-07. In 1993-94, the total oilseedsproduction of India was 215 lakh tonnes,of which 36.42 percent was contributedby groundnuts.

In States

In India groundnut is grown over an areaof 6.9 million hectares with totalproduction of 5.3 million tonnes. Itscultivation is mostly confined to southIndian states, viz, Gujarat, AndhraPradesh, Karnataka, Tamil Nadu andMaharashtra. The other important stateswhere it is grown are Madhya Pradesh,Rajasthan, Uttar Pradesh and Punjab.The yield of major groundnut producingstates in India during the years 2004-05to 2006-07 were analysed and theresults showed that Gujarat was thelargest groundnut producer (25 percent)during 2006-07, followed by Tamil Nadu(22.48 percent), Andhra Pradesh (18.81percent), Karnataka (12.61 percent) andMaharashtra (10.09 percent).

In terms of area, Gujarat ranked first with34.12 percent of total area during 2006-07, followed by Andhra Pradesh (24.71percent), Karnataka (14.12percent),Tamil Nadu (9.24 percent) andMaharashtra (7.06 percent), whereas inproductivity, among major producingstates, Tamil Nadu stood first with 1784kg/ha during 2006-07, followed byMaharashtra (1041 kg/ha) and Orissa(870 kg/ha).

Export Analysis

The data related to export were collectedfrom web site of www.apeda.com. Thedata was collected for the three years2005-06 to 2006-07. The data wasmainly export of both types of

India exported bothtypes of groundnuts i.e.groundnuts in shell and

shelled groundnutsmainly to Indonesia,

Malaysia, Netherlands,Philippines, Singapore,Sri Lanka, UK, Ukraine,

USA etc.

AGRI BUSINESS


Table: 1 Mean, Standard Deviation (S.D), Coefficient of Variation (CV%), Skewness and Kurtosis of Production of Groundnut at VariousLevel.

(1993-94 to 2006-07)State/Country Mean S.D. of CV % Skewness Kurtosis

Production ProductionLakh toonns Lakh tonnes

Maharashtra 3.94 0.86 21.82 0.288 -0.295

India 70.73 14.51 20.51 -0.84 -0.159

groundnuts i.e. groundnuts in shell andshelled groundnuts. The analysisindicated that India exported both typesof groundnuts i.e. groundnuts in shell andshelled groundnuts mainly to Indonesia,Malaysia, Netherlands, Philippines,Singapore, Sri Lanka, UK, Ukraine, USAetc. India has been a traditional exporterof HPS groundnuts. It has importedmeagre quantity of shelled groundnutkernels and HPS from Norway and Japan,respectively. Indonesia, Malaysia, the UK,Ukraine, the USA, the Philippines, theNetherlands, Singapore and Sri Lanka aremajor groundnut importing countries. In2006-07, India exported a total of176,109.33 thousand kg groundnutsvalued at Rs 54,430.45 lakh. The shareof groundnuts in shell was 39,779.84thousand kg valued at Rs 11,039.43 lakh.

Maharashtra

To know the trends in area, productionand productivity of groundnut inMaharashtra, the time series data for theperiod from 1993-94 to 2006-07 werecollected from Government. reports andanalysed. The analysis indicated thatabout 60 percent of the groundnutgrown in Maharashtra was under SpanishBunch Varieties, which is mainly confinedto the northern part of the state in theregions of Khandesh, Vidharba and partsof Marathwada.

Evolution of Spanish Bunch Variety withearly maturity (because of the shortduration monsoon rains) and tolerant todrought and rust is specially suited forthese regions. In the Marathwada region,specially in the districts of Osmanabadand Beed districts, Virginia Runner type

varieties are grown, because these twodistricts get rains from both South Eastand North West monsoons.

The area, production and productivity ofgroundnut grown in Maharashtra Statewere analysed statistically and the resultsindicated that the area under groundnutin Maharashtra State has showncontinuous decreasing trend in theacreage under the crop, since 1993-94.The area under the crop was 5.105 lakhhectares during the year 1993-94 whichcame down to 3.416 lakh hectares during2006-07, showing more than 33 percentdecrease. The year 2005-06 recorded thelowest acreage (3.367 lakh hectares)under the crop due to drought conditionsthrough out the State. Similar trend hasalso been observed in production andproductivity of groundnut

It was observed that the production andproductivity of groundnut in the State hasshown continuous decreasing trendthroughout the period under study. Theproduction has been the lowest duringthe year 2006-07 which was 2.541 lakhtonnes, while it was 5.12 lakh tonnesduring 1993-94. . Similar trend was alsoobserved in productivity of groundnut in

the state. In mid-nineties the productivityof groundnut was observed to be morethan a tonne per hectare which camedown to 848 kg/ha during the year2001-02 with further reduction to 744kg/ha, during the year 2006-07. Thus,the Maharashtra State has been the poorperformer all the way from the year1980-81 without a significant increasein acreage and production of groundnut.These findings are in conformity withfindings of Talwar (2003), Ms. Sawantand others (1999).

Variability Analysis

The variability in the production givesyears to years fluctuations in theproduction . This gives us an idea aboutstability or instability in the production.Therefore, an attempt has been madeto analyse the production of groundnut.In Table 1, the values for the ArithmeticMean, Standard Deviation and Co-efficient of Variation have beenpresented at Maharashtra and overallIndia level. The mean production ofgroundnut in the Maharashtra state was3.94 lakh tonnes while at all India levelit was 70.73 lakh tonnes . The standarddeviation and coefficient of variation

Trends in Area, Production and Productivity of Groundnut in Maharashtra(1993-94 to 2006-07)

indicated more fluctuations in productionof groundnut at various levels. Thevariability for the Maharashtra State wascomparatively low (21.82 percent) andfor the overall India level it was 20.51percent.

This has indicated comparatively lowinstability in production of groundnut atall India level than the Maharashtra State.This has been only because of othergroundnut producing States like AndhraPradesh, Karnataka and Tamil Nadu haveperformed well in production ofgroundnut. The values of skewness andkurtosis indicated non normality in thedata of production.

AGRI BUSINESS


QUICK FACTS• Groundnut is the major oilseed of

India. It accounts for around 25percent of the total oilseedproduction of our country.

• The annual production of seed andoil is 5-8 and 1.5 million tonnes,respectively.

• About 80 per cent of the totalgroundnut produced in Indiaundergoes processing so that it canbe utilised as oil or cake.

• Around 75 per cent of the crop isproduced in kharif season (June-September) and remaining 25 percent in rabi season (November-March).

• The southwest monsoon is themost important factor thatdetermines the area sown,production and prices.

• The mean production ofgroundnut in the Maharashtrastate was 3.94 lakh tonnes whileat all India level it was 70.73 lakhtonnes

• The variability for the MaharashtraState was comparatively low(21.82 per cent) and for the overallIndia level it was 20.51%..

• The per annum rate of growth was-4.70 per cent for MaharashtraState and it was significant at 1%level of significance. Indicatedsignificant decrease in theproduction.

• The production of groundnut isdecreasing in Maharashtra as wellas in India. Therefore, Govt. hastake measures to increase area andproduction of the country.

Exponential Growth

Growth in the production of the cropgives us an idea about the increase ordecrease in the production of the crop.This helps the Government or theplanners about the availability of theproduct, and it further helps to estimatethe availability and demand orrequirement. Accordingly, Governmentor planners can take decisions aboutimport or export of the commodity.Considering the present growth thefuture availability can be forecasted.Thus, the growth analysis is veryimportant for this purpose. Therefore,linear and compound growth rates havebeen estimated and presented below.

Linear Growth Analysis

The linear growth gives change in valuesof production for unit change in the timeperiod years. The analysis was performedwith the help of SPSS software and theresults are presented in Table2.

Table 2 indicates that the regression co-efficient for production of groundnuthas been negative at State and nationallevel. This indicated the decreasingtrend in production. For India, theregression co-efficient was negative andstatistically non-significant whereas atstate level it was negatively significant.This indicated overall negative growthin production of groundnut. This is aproblem of concern. Therefore, effortsare to be made to increase theproduction otherwise we have to relyon import of the oil seed.

Exponential Analysis

The compound growth rate gives on anaverage year to year change inproduction in terms of percentages.Therefore, in almost all the Govt. andother reports, the growth rates areestimated. Therefore, by usingexponential model, the growth rateswere estimated with the help of SPSSsoftware. The results are presented thefollowing Table 3. It can be seen fromTable 3 that, the overall per annum rateof growth was -4.70 percent forMaharashtra State and it was significantat 1 percent level of significance. Further,at overall India level, the growth rate was-2.50 percent.

The growth rate for all India level hasbeen statistically non-significantindicating negative growth in productionof groundnut in the country. Thus, theproduction of groundnut is decreasing inMaharashtra as well as in India.

State/Country Intercept of Regression t value R2 ValueConstant (a) Coefficient (bi)

Maharashtra 5.27 -0.177** 5.886 0.743**

India 82.45 -1.563 NS 1.74 0.203 NS

Table 2: Linear Growth Analysis of Production of Groundnut (1993-94 to 2006-07)

**: Statistically significant at 1% level of probability NS: Non significant

State/Country Intercept Compound t value R2 Valuegrowth rates (%)

Maharashtra 5.463 -4.70** 6.34 0.77**

India 4.420 -2.50NS 1.72 0.198NS

Table 3: Exponential (Compound) growth rates of Production ofgroundnut

(1993-94 to 2006-07)

**Statistically significant at 1% level of probability NS: Non significant

Therefore, Govt. has take measures toincrease area and production of thecountry.

The writers are 1. Research Scholar 2.Associate Prof. of Statistics at Dr. B. A.Marathwada University, Aurangabad. 3Additional Director, National HorticultureResearch and Development Foundation(NHRDF) in Nashik

AGRI BUSINESS


The drumstick is the most widelycultivated species of the genusMoringa, which is the only genus

in the family Moringaceae. Its botanicalname is Moringa oleifera. It is anexceptionally nutritious vegetable treewith a variety of potential uses.

The tree itself is rather slender, withdrooping branches that grow toapproximately 10 m in height. Thedrumstick tree named for its long bean-like fruit produces fruit and leaves formore than nine months of the year. Itdoes not need artificial fertilisers orpesticides, and requires very little spaceto thrive. In cultivation, it is often cutback annually to 1 metre or less andallowed to re-grow so that pods andleaves remain within arm’s reach. It is an

extremely fast growing tree, droughttolerant and leaves and pods are of highnutritional value.

While it grows best in dry sandy soil, ittolerates poor soil, including coastalareas. It is a fast-growing, drought-resistant tree. The drumstick tree is nativeto India, Arabia and parts of Africa. Theearliest written evidence of its cultivationis from 2000 BC. Today it is widelycultivated in Africa, Central and SouthAmerica, Sri Lanka, India, Mexico,Malaysia, Indonesia and the Philippines.In the tropics, it is used as forage forlivestock.

Nutritional value of drumstickleaves

Drumstick leaves are full of essential

disease-preventing nutrients, theycontain:

• Seven times more Vitamin C thanoranges to fight many illnessesincluding colds and flu;

• Four times more Vitamin A thancarrots to protect against eye disease,skin disease, heart ailments anddiarrhoea;

• Four times more Calcium than milkto build strong bones and teeth;

• three times more Potassium thanbananas essential for the functioningof the brain and nerves; and,

• Nearly equal amount of Protein as ineggs which are basic building blocksof all our body cells.

Economic Potential ofDrumstick FarmingBy D. Muthamizh Vendan Murugavel *

Drumstick is one of the world’s most useful trees with potential toimprove nutrition, boost food security, foster rural development andsupport sustainable land care. From leaves and root to pods and seeds,all parts of the drumstick tree are highly edible.

HERBAL FARMING


Medicinal Uses

The drumstick is valued mainly for itstender pods, which are relished asvegetable but all its parts – bark, root,fruit, flowers, leaves, seeds and evengum – are of medicinal value. They areused in the treatment of ascites,rheumatism and venomous bites asantiseptic and as cardiac and circulatorystimulants.

Drumstick leaves are rich in vitamins Aand D, iron and calcium. It helps in thestable functioning of the digestive systemapart from strengthening the bones. Theleaves also contain two chemicals withpotential anti-cancer effects. The seedoil does not turn rancid, but it is nothealthful because it is full of saturatedfatty acids that are bad for the heart andblood vessels.

Fresh root of the young tree (as also theroot bark) is used as rubefacient andvesicant. Internally, it is a stimulant,diuretic and antilithic. Externally, it isapplied as a plaster or poultice toinflammatory swellings. The root barkcontains chemicals that stimulate theheart but also raise blood pressure. Theroot, in prescribed doses, is given inintermittent fevers, paralytic affections,epilepsy and hysteria and externally inpalsy, chronic rheumatism, enlargementof spleen, dyspepsia and also in bites byrabid animals.

A compound spirit made of the roots andorange peel with a little bruised nutmegis useful in fainting fits, giddiness,

nervous debility, spasmodic affections ofthe bowels, hysteria and flatulence. Adecoction or infusion of the root withthe addition of bruised mustard seeds isused in ascites caused by diseases of theliver and spleen. This decoction orinfusion is also useful as a gargle insoreness of mouth and throat, and painin the gums due to dental caries. Freshlyextracted juice of the root bark is usedto relieve otalgia by pouring it into theears and also into the hollow of the toothin cases of dental caries.

Its seeds are acrid and stimulant. The oilof the seeds is applied in gout andrheumatism. The leaves are rich invitamins A and C and are considereduseful in catarrhal affections. The juiceof the leaves is dropped into the eyes infainting fits caused by nervous debility,spasmodic affections of the bowel,hysteria and flatulence. The juice ismixed with honey and applied to theeyelids in cases of eye diseases. A pasteof the leaves is used as an externalapplication for wounds. Poultice of theleaves is useful in reducing glandularswellings.

Excellent oil is derived from the seeds,which is used for cooking and lubricationof delicate mechanisms. The leaves areextensively used as a vegetable in manyparts of the world, and the root can bemade into a condiment similar tohorseradish. Its flowers are used asstimulant, tonic, diuretic andcholagogue. They are useful in increasingthe flow of bile. Its gum, mixed withsesamum oil, is dropped into the ears inotalgia. The gum, rubbed with milk andmade into a paste, can also be appliedto the temples in headache.

It is also applied to buboes and to painfulbones in syphilis. The pods made into asoup are prescribed as a diet in sub-acutecases of enlarged liver and spleen,articular pains, tetanus, debility ofnerves, paralysis, pustules, patches andleprosy. The flowers, leaves and roots arepart of folk remedies for cancer. Theleaves are a poultice for sores andheadaches, and they are also used as adigestive in small doses. The root juicehas counter-irritant properties similar toproprietary pain balms. Theinflammation it evokes reddens the skinsufficiently to make it popular as abeauty aid.

Drumstick trees have been used tocombat malnutrition, especially amonginfants and nursing mothers. A currymade from the unripe pods acts as apreventive against intestinal worms.Drumsticks other miraculous quality-itsability to purify water-has been used byhouseholds for centuries. But it has onlyrecently been tested commercially.Powdered Moringa seeds, when addedto murky, bacteria-laden water, act as acoagulant, binding to the bacteria andsilt and falling to the bottom of the vessel.The clean water can then be poured out.

Research has shown the drumstick treeto be of exceptional nutritional value. Theleaves are 38 percent protein with allessential amino acids, which will be ofinterest to vegetarians, or people whowish to cut back on meat and dairyproducts, or regions where protein islacking. Seeds crushed to a powder areused to clarify turbid, dirty water. Thecleansing takes place by a process ofelectrical charges established betweenthe muddy particles suspended in thewater and the pulverised seeds, andgradually, after about an hour, the muddyparticles are pulled to the bottom of thewater by the force of gravity. Researchshows that the seed not only settles themud, but can carry with it over 90percent of bacteria and viruses. A reportpublished in New Scientist, December1983, said that the seeds have been usedin Sudan and Peru to purify muddy river

HERBAL FARMING


water. It was also reported that seedshave antimicrobial activity. The seeds alsohave potential for treating seweragewater.

The future looks very promising forMoringa especially in the formulation ofmedicine and in the manufacture ofperfumes and cosmetics.

Market for Drumsticks

There is ample market for drumsticks inmetro cities like Hyderabad, Mumbai,Pune, Nashik, Surat and others.Drumsticks also have demand in

Rajasthan. Drumsticks have highestdemand in Singapore. Since theDrumsticks has antibiotics such asPenicillin it has much more demand incountries like England, Japan, Canada,Bangkok, Doha, Dubai, Baharain,Muskat, Daman etc.

Drumstick is considered one of theworld’s most useful trees, as almost everypart of the Moringa tree can be used forfood or has some other beneficialproperty. According to Ayurveda, thereare at least 300 medicinal uses of thedrumstick plant. In spite of its uses, many

people even in rural areas are not awareof this wonderful plant. As with manyreports of the nutritional or medicinalvalue of a natural product, there are analarming number of purveyors ofhealthful food who are now promotingDrumstick as a panacea. Drumstick holdspromise as a sustainable crop which canbenefit humans nutritionally,economically and as an energy source.

*The Writer is Assistant Professor,Department of Commerce, Gobi Arts &Science College, Gobi, Tamil Nadu

For most people, the drumstick may bea mere vegetable and a tree (Moringaoleifera) with triangular, ribbed podsand winged seeds. But BalasahebMarale, a farmer from Shaha village inMaharashtra, discovered its commercialpotential in a big way by growing thisgreen-skinned, stick-like vegetable.Marale cultivated the drumstick withremarkable success in his drought-pronevillage and inspired many other farmersto follow suit.

This farmer in his mid 30s gave up hisjob as a machine operator in Pune totake up farming in his village. He wassoon forced to look beyondconventional crops because his landwas unfit to yield even a bag of grain.There the farmers were reluctant totry drumstick. Drumsticks first caughtMarale’s attention at a local market.Subsequently, he toured Maharashtraand met around 190 drumstickgrowers most of whom had failed intheir efforts due to inadequateknowledge about the crop. Over thenext few months, Marale travelled tosome southern Indian states wheredrumstick is grown. “I grew convincedthat drumstick was the ideal crop fordry regions,” he says.

This school dropout displayed hispassion for this crop through a book hepenned on drumstick cultivation and setup his own website on the subject. SaysMarale, “Little research has been doneon drumsticks and their commercialfarming”. Drumstick cultivation can bea way out for hundreds of desperate,debt-ridden farmers who may

unfortunately take their lives when cropsfail.

The crops and products of the drumsticktree have multiple uses. The tree’s bark,roots, fruit, flowers, leaves, seeds andgum also have medicinal uses includingas an antiseptic and in treatingrheumatism, venomous bites and otherconditions. Growing the drumstick makeseminent sense in India where irrigationis patchy and creaky.

The drumstick can be grown usingrainwater without expensive irrigationtechniques. The yield is good even if thewater supply is not there. While it takesonly Rs 5000 per acre to farm drumstick,the returns are high; it will range fromRs 25,000 to Rs 45,000. The tree can beeven grown on land covered with 10-90cm of mud.

Recalls Marale: “I returned to my villagewith 15 varieties of drumstick seeds anda wealth of information”. Marale appliedfor a bank loan to grow drumstick. Theloan took a while to arrive because thebank knew little about the tree’scommercial potential. Marale’s familyand fellow villagers thought he was madto give up a job to begin growingdrumsticks in a parched village. But thedrumstick man proved the scepticswrong. He cultivated drumstick on anacre of land, providing water once aweek. And when he earned nearly Rs36,000 after selling the crop in the first14 months, many farmers took notice.

Marale now grows drumstick on fouracres with the same amount of water heonce used for an acre. “As ours is a low-

rainfall area, I have devised my ownwater conservation techniques,” hesays. He also exports his produce to theUK, Singapore and France.

Anurag Kenge, another enthusiast andowner of a software firm was exploringthe option of growing drumstick on hisfarm at Lasalgaon, a town inMaharashtra. Farmers had avoideddrumstick as they thought it broughtbad luck. He had tried it out earlier, butwithout success. After reading Marale’sbook, Kenge met him for tips. He learntthat Marale wanted to share hisexperiences with more farmers and seekout export opportunities. “The internetwas the best way to do it,” says Kenge.

The two joined hands to create a portalwith information about drumsticks, theircharacteristics, farming techniques,recipes and medicinal usages. “Theresponse has been tremendous,” saysMarale. The website received over300,000 hits. Marale regularly respondsto emails from India and countries likeSri Lanka, China, Taiwan, Indonesia,Switzerland and Kenya. Now he guidesIndian farmers and delivers lectures onthe virtues of drumstick farming.Hundreds of farmers from various partsof the country flock to his village.Around 25 farmers in his village havebrought more than 40 acres of landunder drumstick cultivation and aretargeting another 100 acres in the nearfuture. Farmers in his district havestarted eight group farming initiativesand are exporting around 500 tonnesof drumstick.

-Courtesy BBC

Big Money from Drumstick: A Farmer’s Success Story

HERBAL FARMING


Agriculture Minister Sharad Pawar hasstated that India’s foodgrain output wasexpected at 220-230 million tonnes in2010-11, with rice production expectedto be significantly higher than thepreceding year. “Monsoon this year hasbeen good. The conditions for rice havebeen very favourable. I expect the overallfoodgrain production to reach between220-230 million tonnes because of thegood monsoon”.

“But because of deficient rainfall in majorrice producing states such as WestBengal, Bihar and Jharkhand, paddyproduction may not be as good as wehad initially expected,” the ministeradded. “Yet, the good southwestmonsoon will also be favourable for the

Grain Output to touch 230 MillionTonnes

wheat crop. Reservoirs are full. The levelof water in Bhakra Dam for instance isnot seen in last 30 years. My expectationafter talking to the states is 2010-11 willbe bumper crop year.”

India is estimated to have produced 218million tonnes of grain this year becauseof bad monsoon, against the target of239 million tonnes set at the beginning.In 2008-09, the grain output was at arecord 234.47 million tonnes.

Pawar said with ever increasing inputcosts, there was a need for optimumreturns on investments and inputs.Accordingly, wastage in storage neededto be reduced, the food supply chainimproved and incentives made attractiveto bring in private investment.

India’s total foodgrains production islikely to be 114.63 million tonnes (MT)in the Kharif season as compared to thefourth advance estimates of a productionof 103.84 MT in 2009-10. According tothe First Advance Estimates of majorcrops grown in the country in the Kharifseason released on 21 September, riceproduction in the country this season islikely to be 80.41 million tonnes ascompared to 75.91 million tonnes in2009-10 Kharif. Production of Kharifpulses is expected to be 6 million tonnesas against 4.30 million tonnes last Kharif.Oilseeds production in the Kharif seasonis likely to be 17.27 million tonnes asagainst 15.66 million tonnes last season.

Cotton production is estimated to be 335lakh bales, up 96 lakh bales from the lastyear’s estimates. Sugarcane productionis estimated to be 324.91 million tonnesas against 277.75 million tonnes in 2009-10. Production of jowar has beenestimated at 3.22 MT (as compared 2.82in 2009-10), maize 14.06 MT (12 MT),coarse cereals 28.23 MT (23.63 MT),cereals 108.64 MT (99.54 MT), tur 3.27MT (2.55 MT), urad 1.08 MT (0.85 MT),moong 0.88 MT (0.44 MT), groundnut5.64 MT (3.66 MT), castorseed 0.95 MT(0.99 MT), sesamum 0.62 (0.66 MT),sugarcane 324.91 MT (277 MT), juteand mesta 10.28 m bales (11.29 mbales).

India’s Food Grain Output inKharif Season to be 115 MT

Assam Tops inRice Yield inEastern IndiaAssam has been awarded the bestperforming State in rice production ineastern India.

Union Agriculture Minister SharadPawar presented awards at the two-dayNational Rabi Conference in New Delhion 18 September. The awards were inthe category of best performance inproduction and productivity in NationalFood Security Mission (NFSM) districts,to the States of Assam (Eastern) for rice,Punjab (western region) and Bihar(central eastern) for wheat; UttarPradesh (central western), AndhraPradesh (southern) and Maharashtra(central eastern), Tamil Nadu (southern)and Orissa (eastern) for pulses.

The two-day National Rabi Conferencein New Delhi on 18 September evolveda detailed region-wise strategy for thecoming Rabi season. The strategy wasto improve the productivity of crops tomake the best use of available moisturein the soil. The awards were given atthe conclusion of two-day NationalConference on Agriculture for RabiCampaign-2010.

The conference recommended that theStates would ensure timely availabilityof inputs to farmers. They would alsowork to bring more areas under bororice and encourage farmers to plantwheat early. States that have receivedless rainfall during the monsoon seasonhave been advised to implement thecontingency plan already prepared anduse the available soil moisture to sowcrops that require less water.

AGRI NEWS


The Indian Council of AgriculturalResearch (ICAR) has chalked out Rs2,300-crore programme on variousprojects, including research. Theseinitiatives include gearing up to meetnew challenges in climate change;public-private partnership projects andprogrammes to make more people taketo agriculture as a livelihood. “We areworking deeply in all aspects in thecountry on climate change,” ICARDirector-General, Dr S. Ayyappan saidin Chennai recently.

“Now every state is coming up well inthe agricultural sector, with many touchingclose to about 2.8 percent. However, our

ICAR Plans Rs 2300 Crore Programmefor Farm Sector Boost

Godrej AgrovetLimited settingup VC Fund forAgri start-upsOmnivore Capital is an early stage agri-tech venture capital fund that will investin India, US, and Canada. It focuses toinvest in innovative solutions thatimprove the agricultural productivityand sustainability. According to theOmnivore’s website, the focus area forinvesting includes agricultural financialservices, agriculture services, animalscience, aquaculture and marineculture, bio-fuel biotechnology, farmequipment, plant science, sustainableinputs, water management inagriculture.

Omnivore’s team consists of Atish Babuand Mark Kahn and will invest US$5million in each portfolio company overits lifecycle with the initial investmentof US$1million to US$3 million in aSeries A or Series B round of financing.

Godrej Agrovet is a strategic investorin the fund with US$ 5 million agribusiness of the Group; it deals withproducts and services that increase cropand livestock yields. It has interests inanimal feed, oil palm plantations, agri-inputs and poultry, and registered totalsales of Rs 1,576 crore in 2009-10.Godrej is a diversified conglomeratewith the interests in Real estate, FMCG,industrial engineering, appliances,furniture, security and agri care.

There are number of Venture Capitalfunds that invest in agriculture such asNexus Venture Partners, Nine RiverCapital, Helion ventures and MatrixPartners India.

AGRI NEWS

A three-week summer school foragricultural scientists on the topic FoodSafety and Quality for GlobalCompetitiveness of Traditional Foods ofIndia opened at the Banaras HinduUniversity (BHU) on 15 September.According to programme coordinatorAlok Jha, the summer school is a part ofmid-career training programme foragricultural scientists belonging tovarious agricultural institutes anduniversities, including the Indian Councilof Agricultural Research (ICAR), NewDelhi, where key issues of safety andquality of traditional Indian food wouldbe discussed. It would include differenttypes of cereal-based, milk-based and

Seminar on Safety of Indian Foodin BHU

annual agricultural growth rate target isabout four per cent,” he said.

The PPP initiative will benefit both thesectors, besides the farmers. “Moreemphasis on innovation and interactionbetween the two sectors may result inmore synergy among them,” he said. Tolure more people to take up agricultureas livelihood, various initiatives likefarmers’ training and capacity buildingfor more innovative agricultural practiceshave been chalked out. “We are alsotrying to bring them to higher stage byidentifying innovators in each district andgiving them awards at the nationallevel”, he said.

vegetable-based food items that weredemanded in foreign countries, headded.

Executive director, National Agri-FoodBiotechnology Institute (NABI), Mohali(Chandigarh), Rakesh Tuli inauguratedthe summer school. Assistant directorgeneral, ICAR, Kusumakar Sharma,senior faculty members includingDirector, Institute of Agriculture Science(IAS), BHU, SR Singh and Dean, KalyanSingh, were present.

ICAR, New Delhi, is sponsoring theprogramme in which 17 agriculturalscientists from different parts of thecountry are participating.

agri sept 2010 - afc indiaafcindia.org.in/pdf/financing agri sep10.pdf · 2018-05-03 · in this,...

Documents