GMH Infrastructure Private Limited

India's economy is the eleventh largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). The country began to develop a fast-paced economic growth when free market principles were initiated in 1990 for international competition and foreign investment. In recent years, India has continued to liberalize business regulations and by 2008, it had established itself as the world's second-fastest growing major economy. Economists predict that by 2020, India will be among the leading economies of the world.

Agriculture is the predominant occupation in India, accounting for about 52% of employment. The country ranks second worldwide in farm output and is the largest producer of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. It also had the world's second largest cattle population with 175 million heads in 2008. It is the second largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and vegetable production respectively. Elaborating further, India ranks fifth in the world in cropped area under cultivation and production of potatoes and produces 40% of world’s mangoes, 26% bananas, 18 % cashew nuts, 28 % green peas and 12% onion.

Agriculture and allied sectors like forestry, logging and fishing accounted for 15.7% of the GDP in 2009-10, employed 52.1% of the total workforce, and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of the country. Yields per unit area of all crops are improving and an overall development is taking place due to the special emphasis placed on agriculture by the government and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies. However, international comparisons still reveal that the average yield in India is generally 30% to 50% of the highest average yield in the World. Also government sources indicate that about 30% of the total fresh produce perishes in value due to poor post-harvest management and lack of seamless cold chain linkages and infrastructure. Produce value loss is estimated to around Rs. 50,000 Crore per annum. The present situation therefore demands significant investments and rapid development in the agriculture sector.

India’s domestic market for fresh fruits and vegetables is one of the largest in terms of volume, consumption and growth prospects. Over 90% of India’s exports in fresh produce are to West Asia and East European markets including products like fresh onions, walnuts, fresh mangos and fresh grapes among other fruits and vegetables. However as far as exports are concerned the volumes are still insignificant, less than 1% of the total production, despite the opportunities and the growing worldwide demand. This is mainly on account of the producer’s inability to maintain sustainable and internationally acceptable quality of fresh produce for export.

The domestic market is characterized by peak season gluts where the farmers have to make distress sale of perishable produce due to lack of cold-chain infrastructure, warehousing and an ineffective supply chain management system. Similarly, acute shortages during off-seasons result in prices almost 4 to 8 times higher for the consumers with no extra remuneration to the small farmers. Hence presently both the farmers and the consumers are subjected to financial losses, whereas a large number of middle man who are operating at different levels of the “make-shift” food supply chain further increase costs and wastage resulting is total unpredictably of produce prices throughout the year.

Evidently, the most critical problems facing the Indian agricultural industry is the farmer’s dependence on small and remotely scattered farm holdings, lack of awareness and initiative towards improving productivity and quality, unpredictable demand and supply situations generally always resulting to unsustainable farm incomes, coupled with huge unascertained agricultural and food losses through the existing supply chain systems.

On the other hand, global retail companies like Wal-Mart, PepsiCo, Carrefour, Unifrutti, McCain and likes are already focused on procuring fresh agricultural produce from producer states like Punjab, Gujarat, Uttar Pradesh, Madhya Pradesh, Maharashtra for their establishments in North India and are promoting systematic backward integration through contract farming for assured quality, traceability and competitive costs. Others retail chains like National Dairy Development Board, Field Fresh, Mother Dairy, ITC, Reliance Fresh, Mahindra Shubhlabh, Fresh & Healthy etc., also immensely rely on direct sourcing from farm gate collection centres for quality and competitiveness. All of them are looking for partners and infrastructure which would efficiently and reliably facilitate and sustain their existing and expansion plans. Unfortunately, the existing stand-alone cold store facilities and infrastructure do not exactly suffice their requirements.

It is an established fact that a thriving and sustainable agriculture sector requires “integrated actions” by policy makers and planners, private sector participation and engagement of farmers and communities at large. In this prospective, all initiatives towards a strategic growth in these sectors should begin at the grass root level, starting from identifying key variables and determining factors for a sustainable agriculture model, introduction of appropriate technology and integration of available resources while moving ahead towards achieving both national and international competitiveness.