Changing food habits of India- Do we recognise this business opportunity ??
Engel’s law is one of the most established law of economics Engel’s law of economics states that ‘Economic development involves an increase in national and per capita income and the consequent changes in the consumption pattern. A notable change in the pattern of consumption expenditure is expected due to change in per capita income. As the economy develops, the level of income of its people increases and they begin consuming larger quantity and superior quality products. This process though quite gradual brings about changes in the pattern of consumption over time. With the increasing incomes, accelerating urbanisation and improving value chains, the food consumption patterns in India have been dramatically altered in accordance to the Engel’s law.
The Tenth Plan has emphasized the need for Nutrition Security with rapid increase in dietary diversification So with the increasing urbanisation in India, people would see more of vegetables and fruit consumption as compared to staple food of cereals. NSS 2002 has reported that cereal comsumption of an average Indian has declined from 17 kg per person per month to 13 kg per person per month. The annual consumption of vegetables has increased from 47 kg per capita in 1979-80 to 76 kg per capita in 2007-08. This gives a growth rate of 3 % in demand of vegetables in India. This demand must be met through increased production of these in the country.
Another important factor is that with the increasing population India is seeing a decrease in the size and increase in no. of land holdings. Finance minister P. Chidambaram in his mid review for year 2007-08 said that only 18 % of the total holdings in agriculture in our country are above 2 ha. Average size of land holding today lies somewhere between 1.0 to 1.1 ha(In 2005-06 it was 1.3 ha acc to FAO.
2008-2009 saw low farm gate prices in Potato, 2009-2010 saw rising retail prices of key kitchen ingredients like Onion, Garlic and Tomato, which also led to abolishment of import duty and ban on export of such commodities. Recently we observe an increase in consumption of vegetables in middle class diet but the retail prices remain a constraint. While uncertain climatic conditions is one of the major reasons, underdeveloped processing industry, lack of convenience for transport and hoarding by the traders are some of the others.
Indian government has identified vegetable crops as a means of diversification for making agriculture more profitable through efficient land use, optimum utilization of natural resources (soil, water and environment) and creating skilled employment for rural masses, especially women folk. Vast areas of India have tropical and temperate agro-climatic conditions are well suited for cultivation of vegetable crops. Moreover the farmer has to meet the daily requirement of the same ‘n’ no. of family members with decreased size of land holding, which further influences him to take high value low volume crops. While fruits generally come with longer cropping cycles, olericulture is more lucrative. Also Olericulture is an ideal crop for small and marginal cultivators.
The foreign trade policy in 2004- 09 emphasized the need to boost agricultural exports, growth and promotion of exports of horticultural products. Horticulture contributes nearly 28 per cent of GDP in agriculture and 54 per cent of export share in agriculture from only 8-10 % of the cultivated area. Adoption of high yielding cultivars and FI hybrids and suitable production technologies has largely contributed for higher production and productivity.
Transportation cost in India are about 20-30% higher than in other countries. According to a World Bank Report 2007, the average farm gate price of an horticulture produce in India is just 12-13 % of the retail price. According to the report, 20 % improvement in yield can translate only into 2.5-3.0 % reduction in final price but 20 % reduction in international transport costs can increase farm gate price by 8-9%. So, the biggest competitors of India’s horticulture sector lie outside the sector rather than inside it.
Transfer of technology as well as information is quite slow in our country. So it has been observed that while inputs applied in field with regards to nutrition, protection or varieties remain quite far from that recommended by the government departments, price realisation has always been uncertain for the farmers. So while the olericulture business has evolved slowly but there is much scope of improvement left.
Thus, efforts are needed in the direction to capitalize on our strengths and remove constraints to meet the goal of moving towards a formidable horticultural growth in India.
The Tenth Plan has emphasized the need for Nutrition Security with rapid increase in dietary diversification So with the increasing urbanisation in India, people would see more of vegetables and fruit consumption as compared to staple food of cereals. NSS 2002 has reported that cereal comsumption of an average Indian has declined from 17 kg per person per month to 13 kg per person per month. The annual consumption of vegetables has increased from 47 kg per capita in 1979-80 to 76 kg per capita in 2007-08. This gives a growth rate of 3 % in demand of vegetables in India. This demand must be met through increased production of these in the country.
Another important factor is that with the increasing population India is seeing a decrease in the size and increase in no. of land holdings. Finance minister P. Chidambaram in his mid review for year 2007-08 said that only 18 % of the total holdings in agriculture in our country are above 2 ha. Average size of land holding today lies somewhere between 1.0 to 1.1 ha(In 2005-06 it was 1.3 ha acc to FAO.
2008-2009 saw low farm gate prices in Potato, 2009-2010 saw rising retail prices of key kitchen ingredients like Onion, Garlic and Tomato, which also led to abolishment of import duty and ban on export of such commodities. Recently we observe an increase in consumption of vegetables in middle class diet but the retail prices remain a constraint. While uncertain climatic conditions is one of the major reasons, underdeveloped processing industry, lack of convenience for transport and hoarding by the traders are some of the others.
Indian government has identified vegetable crops as a means of diversification for making agriculture more profitable through efficient land use, optimum utilization of natural resources (soil, water and environment) and creating skilled employment for rural masses, especially women folk. Vast areas of India have tropical and temperate agro-climatic conditions are well suited for cultivation of vegetable crops. Moreover the farmer has to meet the daily requirement of the same ‘n’ no. of family members with decreased size of land holding, which further influences him to take high value low volume crops. While fruits generally come with longer cropping cycles, olericulture is more lucrative. Also Olericulture is an ideal crop for small and marginal cultivators.
The foreign trade policy in 2004- 09 emphasized the need to boost agricultural exports, growth and promotion of exports of horticultural products. Horticulture contributes nearly 28 per cent of GDP in agriculture and 54 per cent of export share in agriculture from only 8-10 % of the cultivated area. Adoption of high yielding cultivars and FI hybrids and suitable production technologies has largely contributed for higher production and productivity.
Transportation cost in India are about 20-30% higher than in other countries. According to a World Bank Report 2007, the average farm gate price of an horticulture produce in India is just 12-13 % of the retail price. According to the report, 20 % improvement in yield can translate only into 2.5-3.0 % reduction in final price but 20 % reduction in international transport costs can increase farm gate price by 8-9%. So, the biggest competitors of India’s horticulture sector lie outside the sector rather than inside it.
Transfer of technology as well as information is quite slow in our country. So it has been observed that while inputs applied in field with regards to nutrition, protection or varieties remain quite far from that recommended by the government departments, price realisation has always been uncertain for the farmers. So while the olericulture business has evolved slowly but there is much scope of improvement left.
Thus, efforts are needed in the direction to capitalize on our strengths and remove constraints to meet the goal of moving towards a formidable horticultural growth in India.
Good read !
ReplyDeleteWonderful data mining. where did you get those data from? My only concern is that as we move from a village near cities to a village away from city the demand for vegetables decreases substantially, there it becomes only limited to household consumption because it is highly impractical for a farmer to cultivate vegetable and market it to 70-80 Km away markets. I feel that in order to provide equal market opportunity to these remote area farmers the role of value added supply chain becomes very important. where controlling transportation cost is the major constraint.
Satyajit
Thank You..
ReplyDeletePimpalgaon is 500 kms from Nasik distt of Maharashtra. Pimpalgaon is one of the major vegetable mandis there. Its vegetables go to even MP, Chattisgarh and Delhi through Pune mandi or Mumbai (Wasi) mandi via Pimpalgaon mandi. Once the government realises vegetables as one of the major cash generating segments, farmer-trader-end consumer linkages can always be built up & by scaling up the production and area it wont remain just a kitchen garden crop..But are we ready to give vegetables segment it's due respect taking into account it's increasing importance in our country..Once that happens linkages can easilly happen as happened with soyabean in MP with the help of ITC.