HORTICULTURE
IN INDIA – OPPORTUNITIES FOR EUROPEAN COMPANIES
Manoj
Singh, Chandel Agritech Solutions Pvt. Ltd., New Delhi, chandelagro@gmail.com
Present Status of Horticulture in India
India's diverse climate ensures availability of all
varieties of fresh fruits & vegetables. It ranks second in fruits and
vegetables production in the world, after China. As per National Horticulture
Database 2011 published by National Horticulture Board, during 2010-11 India
produced 74.878 million metric tonnes of fruits and 146.554 million metric
tonnes of vegetables (Impressive 30 % rise during the last 5 years). The area
under cultivation of fruits stood at 6.383 million hectares while vegetables
were cultivated at 8.495 million hectares.
Growing of fruits, flowers and vegetables has
received an impetus in India under the programme of the National Horticulture
Mission. This has become a vital sector contributing 24% of India’s Agriculture
GDP. India produces almost 11% of global vegetable output and 15% of global
fruit production. It also ranks among the lowest cost producers of fruits and
vegetables, However, the country’s share in international trade remains low —
almost 1.7% in vegetables and 0.5% in fruits. Some of the major constraints
faced by the horticulture sector in India are as follows:
·
Low productivity of most of horticulture crops
·
Low availability of latest varieties of fruits
and vegetables
·
Dearth of good planting material
·
Outdated Agro practices / Lack of modern agro-technologies
(including mechanization)
·
A weak post harvest management infrastructure
for fruits & vegetables
Country
|
Horticulture products in
temperature-controlled conditions (%)
|
India
|
2
|
China
|
15
|
Europe & North
America
|
85
|
Source:
Yes Bank
·
Poor Processing Capabilities: The level of processing
perishable products is 6 % (China has got 30 %). The $70-billion Indian food
processing industry is dominated by small and medium enterprises, which do not
have the capacity to undertake large-scale processing of fruits and vegetables.
Advantage India from European
Agribusiness Companies Perspective
Despite various factors that affect the
horticulture sector in India, the country offers immense potential for various
agribusiness companies in this sector due to:
Robust
Demand
Rising urban and rural income has aided demand
growth. According to the Mckinsey Global Institute, India's aggregate consumer
spending will quadruple to $1.4 trillion by 2025 and the country is set to
become the world's fifth largest economy in terms of consumption, up from
twelfth place in 2010. India's per capita fruit consumption is one of the
lowest in the world, with health becoming a key driver for urban consumers,
there is a huge potential for growth of this sector.
Attractive
Opportunities
With a Increase in horticulture production, there
is a increase demand for agricultural inputs such as hybrid seeds/ quality
planting material, fertilizers etc
Promising opportunities in storage capacities as
adequate cold storage facilities are available for just about 10 per cent of
India’s horticulture production. There
is a potential storage capacity expansion of 35 million tonnes under 11th
five year plan.
Foreign
Direct Investment
FDI up to 100 per cent equity is
permitted under the automatic route in food and
infrastructure like food parks and cold chains. There are many areas for
investment in this sector which include mega food parks, agri-infrastructure,
supply chain aggregation, logistics and cold chain infrastructure, fruit and
vegetable products, animal products, meat and dairy, fisheries and seafood
cereals, consumer foods/ready to eat foods, wine and beer, machinery/packaging.
FDI
policy for agriculture was amended to allow 100 per cent FDI in agriculture
sector including seeds, plantation, horticulture and cultivation of vegetables.
Organized
Retail Space
The Indian retail industry has experienced high growth over the last decade with a noticeable shift towards organised retailing
formats. On an average 10-15%
of the total organized retail space is captured by imported food produce in
India. Since the margin is better, so is the acceptance; Washington apples,
Australian Kiwifruit, Swiss chocolates, French cheese, Italian wine &
pastas, are no more a niche for the Indian shopper. As per 2010-11 Indian
Import data (, Dairy (163 %), Wine (58 %), packaged food (45 %) and Fruits &
Nuts (11%) have shown good growth.
Horticulture Sector (especially fruit sector) Specific Opportunities
for European Companies
1. Imported Fresh Fruits
With a rising and changing consumer demand,
Imported fruit market is gathering steam. Imports of fruits and vegetables
soared 70 percent to $1.6 billion during the last fiscal year ended in March
2012, according to the Ministry of Commerce. Fruit imports have been growing at
25 percent for the last few years, according to industry estimates and are
expected to double to $464 million this year ending March 31, according to
government data. The demand for imported fruits is growing not just in metros
(15 % growth) but in tier two and three cities of India as well at faster
growth rate (25-30 %).
As per the data of the last 3 years, amongst
the imported edible fruit segment, apple, pear, frozen fruits, nuts, provisionally
preserved fruits and nuts have shown consistent growth rate (Own Analysis).
One of the report by the consulting firm Belrose Inc., mentioned that over the next
decade the markets of China and India could triple their international demand
for Apples. The study was carried out in 16 Asian cities and looks at the
potential consumption of apples, pears, kiwi and cherries, up to the year 2020.
The main conclusion is that China and India will have to resort to importing
considerably large numbers of products such as apples, pears and kiwis. This
surge in imports is despite the fact that India imposes a 50 percent duty on
apples and 33 percent for most other fruits with a view to protect local
producers. India imported 188,072 tonnes of apples in 2011-12 valued at Rs.
1,044 crore — a 44% rise in value-terms and 40% in terms of volume.
2. Farm Technologies
i) Planting Material
India is now focusing on improving the productivity of the Horticultural farms.
Seeds import w.r.t. vegetables and floriculture is already taking place. For
further improvement in the productivity of fruits, various farms have started
importing planting material from foreign companies especially for apples, pear,
peaches, plums, grapes etc. One of the Italian company “Griba” have started
their business operations in India recently for Import of Apple Varieties.
i) Organic Inputs for Organic
Farming
With
a steady annual growth of 40% on rising population, higher disposable incomes
and rising health consciousness, India's organic farming industry is set to
grow to Rs 10,000 cr, according to Associated Chambers of Commerce and Industry
of India (ASSOCHAM). As per the latest data of FiBL and IFOAM, India leads in the world in terms of number of producers (1.6 million) involved in organic
farming and the
leading countries by area are China (1.4 million hectares) and India (0.8
million hectares). This offers immense potential for certified organic
bio-fertilizers and bio-manures companies (like
CBF China Biofertilizers AG (Germany),
Novozyme (Denmark)) to expand their operations
in India
ii) Farm Mechanization
With an increase in commercialization of horticulture sector in India and
focus on improving the farm productivity, farm mechanization has picked up the
momentum.
The Govt. of India is giving a due importance to
this sector. In this regard a dedicated Sub-Mission on Agricultural
Mechanization has been proposed for the XIIth Plan which includes custom-hiring
facilities for agricultural machinery as one of its major components. Companies
like John Deere have initiated PPP partnerships in Gujarat as part of market
expansion program. European companies can make alliance with Indian machinery
manufacturers for mass production of farm automation systems. There is immense
scope for the following farm machineries in India:
·
Land Preparation systems – Tractors etc.
·
Harvesting machines
·
Germination Chambers
·
Sorting, Grading machines
·
Quality control equipment
·
Packaging for bulk and retail
·
Packaging
for export
·
Testing
and Measurement
·
Productivity enhancement through Climate
control systems
As per the
latest figure of ITC, 2013, there has been consistent growth for Imported
Machineries used in manufacturing of wine/ fruit juices and other horticultural
machineries for the last 3 years (2009-11).
iii) Cold
chain infrastructure
This
has occurred due to concurrent developments in the areas of state-of-the-art
cold chain infrastructure and quality assurance measures. Apart from large
investment pumped in by the private sector, public sector has also taken
initiatives and with APEDA's assistance several Centers for Perishable Cargoes
and integrated post harvest handling facilities have been set up in the country
some with the help of imported equipments. The Indian cold chain sector will expand at a faster rate in the near
future. The total value of India’s cold chain industry is currently estimated
at USD 3 billion and reportedly growing at an annual rate of 20-25 per cent.
The total value for the industry is expected to reach at USD 8 billion by 2015 through
increased investments, modernization of existing facilities, and establishment
of new ventures via private and government partnerships. The Indian Govt. has
accorded infrastructure status to post-harvest storage, including cold chain
industry in India. Some of the foreign companies have already started their
businesses in this sector in India in the areas of:
·
Pre-Cool Chambers
·
Reefer
Trucks
·
Cold
Storages
·
Controlled Atmosphere Storages (European
Companies like Isolcell)
·
Retailing
Systems
·
Food
Processing machinery
·
Food
Packaging machinery
3. Fruit and
vegetable extracts market
Indian fruit and vegetable
extracts market is set to touch $690.5 million in 2017 from $400.5 million in
2011, according to an analysis by Frost & Sullivan. Consumers’ health
consciousness and inclination towards health foods would drive the growth.
During the past four years, the food and vegetable extracts market has
witnessed robust growth and product types have changed rapidly based on
consumer preferences. Several companies, which were selling aerated beverages,
have been compelled to shift to fruit juice based products, or are selling the
both simultaneously, according to the analysis by Frost & Sullivan.The
report also pointed out that the booming retail sector has benefited the food
processing industry, including the fruit and vegetable extract market, in
India. Lack of variety and insufficient infrastructure for managing
agricultural waste would hit growth rate. Raw-material storage system in India
is inadequate for the projected growth in production. This offers the potential
for European Machine Companies to start searching for the markets in India.
4. Capacity Building
Though
India has got more than 40 Agril. Univerisities where large no. of
horticultural professionals are coming out every year but the practical aspects
of Post Harvest Management, Marketing and International Trading is generally
lacking. In this regard, European Institutions can build the capacities of the
Horticultural Professionals. Like a joint 2+2 and 3+1 cooperation programmes
4--‐year Bachelor’s programme in International Horticulture & Market
Specialization and International Agribusiness & Trade Specialization
between Baramati Agricultural College (India)
and Van Hall Larenstein, University of Applied Sciences (the
Netherlands). More such
Institutions and Companies can work together in the area of skill building.
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