September 2022

CONSILIUM ARTICLE

Unlocking The Potential of Agribusiness

Introduction
Agriculture has traditionally been the
main contribution to the Indian
economy, employing the majority of
the workers and accounting for over
35% of India's GDP. Despite global
prominence for its industrial and
service sectors, agriculture and allied
enterprises play an essential role in
the Indian economy's growth.
agribusiness is a broad phrase that
encompasses all of the enterprises
engaged in food production and
delivery. Farming, seed and agri-
chemical supplies, agricultural
India has failed to continue the growth momentum which was machinery and equipment, wholesale
generated during the Green Revolution. There is a pressing need and distribution, food storage and
to focus on Agriculture and develop Agribusiness. Agriculture processing, marketing, and agri-
output in India is hampered by small and fragmented land holdings, finance are all part of the industry.
uncertainty of monsoon and lack of irrigation facilities, poor quality
seeds and fertilizers, lack of mechanization and technology, and
inefficient supply chain and logistics facilities.

One of the biggest issues faced by the Indian agriculture sector is

low farm yield. Indian farm yields are 30-50% lower than the Agribusiness is expected to
developed nations, due to poor infrastructure, lack of Agri- contribute around 25% of India's
technology, decrease of soil fertility due to over fertilization and GDP and will play a considerably
lack of financial assistance. Another major issue faced by the Indian greater role in agricultural growth. A
agriculture sector is the harvest and post-harvest losses, due to stronger emphasis on Agribusiness
poorly structured and inefficient supply chains, inadequate cold will help to address current
storage facilities, shortage of food processing units, absence of agricultural difficulties by simplifying
supply-demand forecasting and market information to the farmers. the process and giving agricultural
technology and financial aid. It will not
Clearly, the time to act is now. Given the complexity of dealing with only aid with job creation, but also
multiple crops, sustainability issues, poor infrastructure and with the establishment of small
unavailability of financial resources, and complex supply chains, the businesses. Agribusiness innovation
challenges ahead are daunting. However, the potential to grow is will support sustainable agricultural
even more significant and is essential for the growth of Indian practises to address climate change
economy. challenges exacerbated by
traditional and inefficient agriculture
systems.
 Approach
Consult farmers and agri-business to
Agribusiness opportunities in India formulate new strategies, and

business models and follow practices
A] Farming: to respond to the emerging trends in
agribusiness.
1. Farmer aggregation: Producer cooperatives, producer 1. Feasibility study: A feasibility
companies, and private limited companies can tackle the issue of study should be carried out to
fragmented land holdings by combining small and fragmented lands evaluate the land and the type of soil
of farmers. It will help technology adoption, scale up production and based on various parameters to
improve the bargaining power of the farmers. ascertain the crop which can be
efficiently produced on a particular
land. AI, Big data, and Analytics can
be leveraged to carry out the
feasibility study efficiently.
2. Market research: Market
research helps to lower the level of
uncertainty by taking facts, figures,
and raw data and converting them
into insights that are useful in
decision-making. It answers WHAT?
WHERE? HOW? and WHEN? to
produce, so that farmers and agri-
businesses can formulate strategies
to yield maximum benefits.
3. Policy Analysis: There is
considerable uncertainty about agri-
2. Agri-Tech Startups: Right technological knowledge and food and business policies and how
equipment, mechanization, and automation can increase the they affect the farmers and the
farming output. business along the value chain.
a. Internet of Things (IoT): Startups can develop innovative IoT Better policy analysis will help the
services to monitor various parameters, collect data, and provide farmers and the agri-businesses to
accurate information via mobile applications to increase the asses their legal and political
accuracy and precision of farming processes. environment and take necessary
b. Artificial Intelligence (AI): Startups can exploit AI in several ways actions.
to offer predictive insights like forecasting weather data, crop yield, 4. Financial Assistance: Assists the
and prices, to aid farmers to make informed decisions. farmers and agri-businesses to know
c. Precision Agriculture: Startups are developing solutions in about the various financing facilities
precision agriculture to examine the farm on different parameters available and choose the optimal
and guide farmers to use exact amounts of input, such as water, financial assistance to grow their
pesticides, and fertilizers, to enhance the quality and productivity of business.
yield. 5. Sustainable Agri-business: Consult
d. Agricultural Biotechnology: Startups can leverage agri-biotech the farmers and agri-businesses and
advise them to adopt new technologies,
methods such as plant breeding, hybridization, genetic engineering,
and sustainable methods, and reformulate
and tissue culture to produce transgenic plants with desired qualities strategies to reduce the negative impact
like disease tolerance, drought tolerance, pest resistance, and high of farming and agribusiness on climate
yield capacity. change.
B] Post-harvest supply chain: Conclusion
1. Warehouse Business: The success of a warehousing business The extent of food shortages,
depends on factors such as having multiple revenue streams, mass social unrest, spiralling
developing a deep understanding of the local ecosystem, strategic tie- inflation and burgeoning
ups for better asset utilization, and leveraging assets to exploit adjacent imports pose a great threat to
synergies. the economy. However, with
We recommend a three-stage expansion strategy for new entrants: some changes, Agribusinesses
1. Stage 1: The player should build a strong presence in focused could become a strong growth
geographies to ensure better profitability. engine for the Indian economy.
2. Stage 2: The player should expand its offerings to 5-6 states and Through the adoption of new
start expanding its offerings. and emerging business models
3. Stage 3: The player must focus on pan-India integration and also in almost each element of the
target corporate customers. agribusiness sector, robust
partnerships across the value
2. Logistic Industry: A focused Agri-based logistics business model chain as well as use of modern
combined with the concept of Third-Party Logistics (3PL) can tackle technologies, the output from
the logistics and supply chain issues faced by Agri-industry. Vendors agribusinesses can be
with huge warehousing and logistic assets can enter into 3PL and increased rapidly.
acquire market space near agriculture-rich areas to improve margins
and better asset utilization.

3. Food Processing Industry: The food processing industry is a

promising industry with great opportunities ahead. Primary food
processing is necessary to reduce food wastage and enhance storage.
Secondary food processing can help in differentiating a product and
eventually help in value addition by charging a premium.

4. Public Private Partnership model: The government and the

private players can join hands to provide the much-needed growth to
the Indian Agriculture sector. While some of the above
solutions have been well talked
a. Agri-Parks: Agri-Parks should be established through Public Private about, the key is to create the
Partnership to stimulate agricultural productivity and address key right platforms to implement
inefficiencies. The government should focus on ensuring the availability them, while ensuring they are
of critical inputs and access to information and best practices in Agri- sustainable over the
Parks. The private players should make investments in storage, long term. We believe several
processing infrastructure, and logistics. innovations will be required to
make this work. Agribusinesses
b. Agri-Zones: Agri-Zones will be geographically demarcated zones represents a unique business
comprising key producers of a certain crop. Such zones will improve opportunity and should
production by providing infrastructure, technical knowledge, and become a priority focus area
focused R&D support. It will also address market failures by enabling over the next decade
private investments and improving the regulatory framework.