India is crying out for foreign agricultural investment in order to achieve its export goal: to become a world-class horticultural centre.
That’s the view of food and agribusiness management consultant Sudarshan Rao, who believes India’s current production capacity is severely unmet. “The defining question is whether one sees in India a trading destination or a strategic partner for one’s own growth”, said Mr Rao, who has previously worked for Tata Agribusiness and its fresh produce joint venture with Total Produce of Ireland.
Investment opportunities in India are “phenomenal”, he told Fruitnet.com, and include production system technologies, post-harvest techniques, primary processing, storage and distribution, ripening chambers and export.
“Modernisation is opening opportunities in controlled atmosphere facilities, grading and packing machinery,” said Mr Rao. “In the state of Karnataka alone (capital Bangalore/Bengaluru), 16 agri-processing parks are planned for 2011.”
India urgently needs advanced technical expertise, modern infrastructure, and knowledge of the global market place to keep pace with change. India’s Prime Minister Dr Manmohan Singh recently appealed for foreign investment – both knowledge and money – into the agri-sector, Mr Rao said.
But he warned that agri-production in India is challenged, not uniquely, by such factors as fragmented landholdings, water scarcity and soil degradation.
“Production for export must accommodate such factors and work through aggregating land without disturbing the ownership patterns,” said Mr Rao. “There is no set formula for success. However, the problems are tractable given acknowledgement, accommodation and insightful local advice and counsel.”
Governmental promotion of agriculture is extensive, added Mr Rao, stating that a growth rate of 4 per cent per annum is targeted over the coming years.
“Horticulture has come to occupy pride of place because of its potential to lift farmer incomes,” he told Fruitnet.com. “Indian research has extensively developed new and improved varieties of fruits and vegetables. It has also revived and improved Indian exotics like Jamun or Java Apple, Rose Apple, Wood Apple and Figs. There is now an active and vast agricultural R&D infrastructure.”
Since regulations now permit overseas produce companies to establish themselves in India, they can source from India for export as well as for domestic trade at wholesale level. This implies a much-expanded opportunity, according to Mr Rao.
“The opportunity can be exploited in two ways. One way is to work with established producer/suppliers. In this model, much of the production risk is borne by them,” he explained. “The other way is to directly contract with farmers. This will involve multiple contracts and rural contexts. It is not recommended in the early stages of on-shore sourcing. However, this model, once made feasible, is a priceless virtue. It yields better profitability, confers greater flexibility and, above all, affords long-term competitive advantage.”
As well as agribusiness consultancy work, Mr Rao teaches MBA food and agribusiness programmes and lectures on horticulture issues. He has lived abroad extensively, in the US, the UK, Japan, Australia and Singapore. Mr Rao keeps up with global agribusiness issues through membership of IFAMA and Harvard Business School Agribusiness Group.
