Wallstreet Journal India report : major revolution brewing in Indian Agriculture ?
Keypoints in the report:
Contract farming — businesses signing contracts with farmers to grow a specific crop, even a specific seed variety, and guaranteeing buy-back of the produce at an agreed price or price range — holds the promise that the next generation of yield improvements could come through efforts from the private sector.
PepsiCo was one of the earliest promoters of the contract-farming model in India. In 1997, it set up a tomato processing plant in Punjab, not a traditional tomato growing area, and started tying up with local farmers to grow tomato varieties needed for ketchup.
Although PepsiCo has since exited tomato processing, it still works with 12,000 farmers, primarily to procure potatoes for potato chips.
SAB Miller India — an Indian subsidiary of the global beer group — required 75,000 tons of barley last year for its brewing operations. But, in India, barley is mainly grown as animal feed and the local variety is not suited for extracting malt, a key intermediate step in brewing beer.
While procuring from local mandis in the main barley producing regions — Rajasthan, Uttar Pradesh, Haryana and Uttarakhand — SAB Miller found that a lack of uniformity in grain size and mixing of different varieties of barley increased processing costs and resulted in lower quality beer.
In response, SAB Miller launched an initiative to provide higher-quality certified seeds, training and extension services to teach farmers best practices in growing barley.
However, it should not be thought of as a panacea to the web of problems facing the Indian agricultural sector. Private initiative cannot be expected to fix basic, widespread problems including groundwater depletion, excessive fertilizer use and farmer suicides due to indebtedness; those still require policy reforms and concerted public interventions. Perhaps most importantly, in the context of declining public investments, the government needs to speed up liberalization measures to attract greater private investment into the agricultural sector.
Keypoints in the report:
Contract farming — businesses signing contracts with farmers to grow a specific crop, even a specific seed variety, and guaranteeing buy-back of the produce at an agreed price or price range — holds the promise that the next generation of yield improvements could come through efforts from the private sector.
PepsiCo was one of the earliest promoters of the contract-farming model in India. In 1997, it set up a tomato processing plant in Punjab, not a traditional tomato growing area, and started tying up with local farmers to grow tomato varieties needed for ketchup.
Although PepsiCo has since exited tomato processing, it still works with 12,000 farmers, primarily to procure potatoes for potato chips.
SAB Miller India — an Indian subsidiary of the global beer group — required 75,000 tons of barley last year for its brewing operations. But, in India, barley is mainly grown as animal feed and the local variety is not suited for extracting malt, a key intermediate step in brewing beer.
While procuring from local mandis in the main barley producing regions — Rajasthan, Uttar Pradesh, Haryana and Uttarakhand — SAB Miller found that a lack of uniformity in grain size and mixing of different varieties of barley increased processing costs and resulted in lower quality beer.
In response, SAB Miller launched an initiative to provide higher-quality certified seeds, training and extension services to teach farmers best practices in growing barley.
However, it should not be thought of as a panacea to the web of problems facing the Indian agricultural sector. Private initiative cannot be expected to fix basic, widespread problems including groundwater depletion, excessive fertilizer use and farmer suicides due to indebtedness; those still require policy reforms and concerted public interventions. Perhaps most importantly, in the context of declining public investments, the government needs to speed up liberalization measures to attract greater private investment into the agricultural sector.
