Food and Agribusiness
As India’s economy transcends its USD 2 trillion benchmark, agriculture is moving towards agribusiness.
India, with the second largest arable land in the world, and with diverse agro-climatic zones across the country, has tremendous production advantages in agriculture, with the potential to cultivate a vast range of agricultural products. This strong base in agriculture provides a large and varied raw material base for food processing. These advantages if leveraged optimally, can lead to India becoming a leading food supplier to the world. However, the increasing pressure on land availability is often leading to shortfall in food supply in many crops, thereby threatening India’s food security. This can only be bridged through increasing farm yields, reducing wastage along the supply chain through better storage and post harvest infrastructure and improved logistics.
The commercialization of agriculture into agribusiness is supported by both the fast growing domestic market and the increasing acceptability of Indian food products in the international market. With a population of over 1.2 billion and growing at about 1.6 % per annum, India is a large and growing market for food products. Food products are the single largest component of private consumption expenditure. With a significant shift in India’s demographic profile in favor of younger population, increasing surplus incomes, rising urbanization and changing lifestyles, food consumption patterns are steadily changing in favor of packaged /branded food products, convenient kitchen solutions as well as health foods. This has also led to growth in both organized food retail as well as organized food service with consumers seeking a better shopping experience and showing a willingness to try out cuisines from across the world.
However, the Indian F&A sector still remains largely unorganized and requires a significant amount of patience and expertise in educating the promoters, analyzing the unusual circumstances and also structuring complex investments. The evolving Indian F&A landscape therefore presents significant investment opportunities along with several industry-specific risks.
India’s transition from an agrarian economy to the world’s food factory thus entails significant investments and knowledge support, both of which Rabo is well placed to contribute. Besides capital, realizing India’s potential in agribusiness would require an in-depth understanding of the international farming practices, technologies, application of food safety norms, global market linkages coupled with a through appreciation of local knowledge and practices. Rabobank Group with its knowledge based approach to agribusiness and with a successful presence in India for over a decade, is uniquely positioned to enable the Indian agribusiness companies fully realize their inherent potential.