I blogged here that supporting enterprising farmers is perhaps the highest value for money investments in agriculture and their activities have the highest local economic multipliers.
Harish Damodaran has another story of agriculture entrepreneurship involving processing potatoes to make french fries and exporting them. He points to a stunning transformation in the market for french fries.
As consumption of the crispy straight-cut deep-fried potatoes grew, so did imports – crossing 5,000 tonnes annually by the mid-2000s and peaking at 7,863 tonnes in 2010-11 (April-March). But cut to 2023-24, when not only have imports practically ceased, India actually exported 135,877 tonnes of FF valued at Rs 1,478.73 crore. During April-October 2024, exports were 106,506 tonnes and worth Rs 1,056.92 crore. This turnaround – from an importer to an exporter of a highly western fast-food product – has been thanks to opportunity-seizing domestic entrepreneurs, who also harnessed the potential of processing potato varieties suitable for making FF and cultivating them in India…
The Ahmedabad-headquartered HyFun Foods Pvt. Ltd. accounted for about 85,000 out of the 175,000 tonnes of FF – plus another 8,000 out of 12,000 tonnes of potato hash browns – exported from India in the last calendar year. Other major exporters are Iscon Balaji Foods, Funwave Foods and ChillFill Foods (all from Gujarat) and the US-based J.R. Simplot (it also has a plant in the state). India’s export of FF exceeds its estimated domestic consumption of 100,000 tonnes. Roughly 80% of that comprises sales to businesses (the likes of McDonald’s, KFC and Burger King, besides hotels, restaurants and caterers) at an average Rs 125/kg realisation and the rest to the retail segment at Rs 200/kg, adding to a total market size of Rs 1,400 crore…
In the 2023-24 season – potato is sown in October-November and harvested in February-March – HyFun procured 300,000 tonnes from 6,000 farmers in Banaskantha, Sabarkantha, Gandhinagar and Mehsana districts of Gujarat. For the current season, the company plans to buy 400,000 tonnes from 7,250 farmers growing in 30,000 acres of Gujarat, 1,500 acres of Madhya Pradesh and 500 acres of Uttar Pradesh… HyFun provides good quality disease-free seeds of Santana, Frysona and FryoM potato to its farmers. It sources their mini-tubers grown in tissue-culture labs by seed-potato companies: ITC Technico Agri Sciences, Mahindra HZPC and KF Biotech. These are multiplied first in 250-plus acres of HyFun’s corporate farms and then over two generations through contract seed growers in Punjab, Haryana and UP. The third-generation seed is what farmers like Patel plant for supplying back as commercial potato to HyFun.
The article informs how these firms contracted with farmers to grow potato varieties with higher dry matter (lower moisture content), high-reducing sugars, and large oblong-shaped that are best suited for fries by enabling the supply of seeds of Kufri variety developed by the Central Potato Research Institute, Shimla. It also highlights how HyFun collaborated with farmers to improve their productivity and bring down their cost of cultivation. This collaboration covered inter-cropping practices to improve soil fertility, demonstration plots to optimise planting space and depth, optimise fertiliser use, and adopt drip irrigation.
Agriculture sector interventions by the government have hitherto been to create public goods - irrigation infrastructure, post-harvest facilities including godowns and cold storages, public procurement, and extension services - and provide subsidised inputs - seeds, fertilisers, power, credit, etc. By their very nature, all these are targeted to benefit all farmers.
Instead, there’s a need for a complementary policy that looks at unlocking enterprise among farmers. The examples of HyFun, Sahayadri Farms in Nashik (grapes), shrimp farmers in the coastal districts of Andhra Pradesh, and Pomegranate farmers in Rajasthan show that successful examples arise from persistent problem-solving and seizing of emerging market opportunities by enterprising farmers.
Public policy should indulge in similar problem-solving in a focussed manner so as to catalyse at least hundreds, if not thousands, of such successes over a five-year period.
What do entrepreneurs in agriculture and agri-processing need? What are the specific facilities or facilitations that they need? What regulatory enablers and financial and other forms of support are required? What market access support can be provided?How can existing markets be leveraged to provide those? What are the market-making requirements? What financial instruments can achieve the objectives? In general, what coordination failures can be addressed by governments and how?
These are the kind of questions that must be explored in the design of this policy.
Public policy has focused on supporting entrepreneurs and their startups, and their successes, though mostly confined to those engaged in technology-based activities, have been celebrated. This salience should extend to the agriculture sector, and supporting agriculture entrepreneurs should occupy primacy in public policy.
As a cautionary note, this policy initiative should stay clear of infrastructure and other publicly provisioned support to avoid any mission creep and remain focused. It should also steer clear of the politically sensitive regulatory reforms. In fact, it should avoid macro-interventions unless otherwise essential to meet its objectives.
Instead, it should seek to support entrepreneurial farmers to access market facilities and incentivise the market to deliver services required by these farmers. Such support would involve facilitating market access to good quality seeds (including subsidies), affordable and timely credit, coordinating on accessing various post-harvest services, facilitating trade-related clearances and permissions, and generally supporting on market access interventions.
A low-hanging fruit would be to harness the services of the several non-profits and for-profit startups engaged with the agriculture sector. This can be done by creating platforms systems that perform the market access and matching role - expose entrepreneurial farmers to these entities and allow enterprising startups to engage with similarly enterprising farmers. It should designed to encourage problem-solving and iteration by entrepreneurs to develop business models and access markets and similarly encourage market service providers to engage with entrepreneurial farmers.
The central (or some state) government could consider a mission to unlock rural entrepreneurship by identifying and supporting enterprising farmers and rural startups in commercial agriculture production and agri-processing, which can localise value capture, increase farm-related incomes, and create productive jobs in rural areas. This would be expanding Startup India which is currently confined largely to technology-related sectors to cover agriculture, Startup India for Rural Entrepreneurs.
This initiative should avoid the pitfall of spreading the butter thin and trying to cover the entire country. Instead, it might have to be confined to a few prioritised geographies with potential for agricultural entrepreneurship.
No comments:
Post a Comment