Agriculture Marketing Reforms in Bihar, India:

A Paradigm Shift Needed

Dr.K.M.Singh,

Director, Bihar Agricultural Management & Extension Training Institute, Patna

6th June 2007

Presentation in Meeting of the Steering Group on Agriculture,

State Planning Board, Soochana Bhawan, Patna, Bihar, India

Changing Scenario: Agriculture vis-à-vis Market

Effects of globalization and liberalization changing the face of the market

Changing consumer interest & preferencesDiversification of food basketIncreased demand for good quality, value

added and processed food productsCompetitive market conditions Raising and stabilizing consumer incomes Food security improving Improving sustainable farming systems

Need for a new Approach to Marketing

Shift from staples to high value cropsFrom narrow agricultural focus to broader

policy context – including global impactsFrom focus on crop yields to market demands

and incomesFrom primary production to entire food chainFrom agriculture to overall rural spaceFrom purely public to public-private

partnerships, including community driven development

DomesticDomestic International MarketInternational Market

ConsumerConsumer

Distributor/RetailerDistributor/Retailer ExportersExporters

ImportsImports

AggregatorsAggregators

MandisMandis

FarmersFarmers

ProcessorsBrand Marketers

ProcessorsBrand Marketers

Inadequate information with farmers to plan production– Little or no linkages with the market Research system with limited connect with the market Public actions focused on crisis resolution, not at systemic solution Private sector focus on articulating problem only a few initiatives to show for.

ConsumerConsumer

Ploughing ahead …..times have changed

Recent trends include: Specialized & localized production

Market - led Production

Diversification

Use of improved inputs

Uniform quality

Contract and Organic farming

Trends in Agricultural Marketing

Marketing of Agricultural Products

Driven by market forces / consumers/ retailGlobalized through international tradeInfluenced by new technologiesSubject to stricter regulatory scrutinySubject to greater ethical scrutiny

But peoples’ ability to respond to this changing context differs greatly between regions, nations and communities

New Initiatives in Bihar Agriculture

Repeal of APMC Act providesopportunities for:

Establishment of Market Yards in private sector.

Establishment of specialty market.

Contract farming

Value addition and Processing

New Initiatives in Bihar Agriculture

Other initiatives include: National Horticulture Mission for Fruits,

Vegetables, Spices, Flowers & Medicinal & Aromatic plants

Macro Management for cereals ISOPOM for pulses, oilseeds & Maize Establishment of ATMA in all the districts to

bring all stakeholders on one platform and to promote PPP.

Rice, Wheat and MaizeSugarcaneFruits and vegetablesMakhanaLitchiHoneyDairy productsSelect spicesAromatic oils and Herbs

Bihar’s Strength in Agricultural Sector

Some success stories and opportunities to build in Bihar’s agriculture include:

Makhana processingOrganic riceLitchiExotic vegetables like snow peasLitchi HoneyTea in Eastern BiharAromatic oils- mentha & lemon grass

Constraints and challenges Low productivity, due to low level of technology; Poor infrastructure in the rural areas; Unstable production and generally with low quality standards

for export. Problems in the post-harvesting handling, storage, packaging

and high transaction costs. Lack of market information systems in the rural areas. Lack of previous experience in dealing with developed

markets and export procedures. Limited access to credit for farmers due to high interest rates

at commercial banks; and No attractive business for commercial banks due to high risk

in agriculture

Solution?Moving towards Action on Public-Private Partnerships in Agricultural Marketing

Key factors for partnerships

Each partner must bring something to the table

Common objective Value creation for both Complimentary roles

The way forward ……..

Stop depending too much on the government…

Stop thinking the private sector as greedy and unreasonable

Combine the efforts of the public, private sectors and community (civil society) together to get the best benefits

Opportunities for Partnership Exist

Partnerships can improve access to:New technologies, and toolsNew research expertise and infrastructurePrivate equity markets; donor fundingNew product markets and new customers New marketing and distribution networks

Synergies through knowledge sharing, Joint learning, Economies of Scale, Resource pooling, and Cost sharing

But there is a confusion on roles!

With changes in the global agri-food

system, the roles of the state, industry,

and society remain contested:Controversy over ownership of new knowledgeIssues over distribution of benefits and risksConcerns over lack of pro-poor emphasisUnease over environmental, social sustainability

Learning from other sectors e.g. the health and ICT sectors

Practical Options

Working together on “how to” Delivery mechanisms and marketing Management tools of research and

innovation Technology collaboration and related issues Collaboration which could impact rights on

knowledge in public domain

Government’s role: Policy environment Change in mindset

From Regulator to Facilitator Engage in Partnerships for Skills development &

complementation Legal Framework

Move to a single window dispensation in spirit & practice

New legislations be made facilitative rather than regulatory

Effective IP protection and enforcement across the board

Multiplicity between centre and states in regulation is discouraging

Partnerships are taking place Industry wants to focus on national goal of

increasing food production in a sustainable manner.

Enhanced private R & D investment is feasible under correct policy environment

An enabling environment is a must Several examples of partnership already exist

and can be built upon

Industry’s Perspective

Benefits of P-P-P to Private Sector

More competitive locally

Expand market for private sector

Allows exports in foreign markets

Benefits form public private consortia

Public sector strongerMore moneyResearch more relevant for industry and farmers

Private knowledge of marketPrivate germplasm and technology

Private sector benefits fromTechnology Access to knowledge

Concept of Corporate involvementThe Corporates should ensure forward and backward linkages with the farmers to co-ordinate and promote

production and marketing of agriculture produce

Farmer Corporate

Produce quantity and quality as per requirements of Corporate

Provide support in terms of extension services, agri-inputs, credits, farm practices, markets and fixed price

Quality seeds

Corporate involvement

Accessible market

Extension Services

Higher yields

Price support

Concept of Corporate involvement……The corporate extension agencies should ensure supply of quality seeds, extension services, better yields, market access and buy

back price support.

Typically contract farming will need corporate involvement to address...

Identificación of high yielding alternatives which give better returns than paddy-wheat rotation

Marketing security and technical assistance in a multi-crop programme

Removal of infrastructural bottle-necks and enabling regulatory framework

Warehouses / Cold storage chain DryersTransportation

Important Aspects Most Critical Missing Links Potential Consortium Partners

Consumption(Safety & Quality)

Marketing

Processing

Production

1. Identification and estimation of pesticide residues

2. Packaging of the products

1. Demand & supply (domestic & global) analysis

2. Market intelligence

1. Proper grading & Standardization

2. Lack of Uniform production Technology by growers

1. Research on plant protection2. Research on GAP

Central & State Institutes

Policy Research bodies like NCAP, NCAER

Private Sector, Research Institutes

SAU, Private Partners

Farmers Processors Traders/Exporters Consumers Government

EXAMPLE: VALUE CHAIN ON AGRICULTURAL PRODUCTS

KVKs, E-Chaupal, ATMAs, FOs, PRIs, KVKs, SHGs

Opportunities for Private Sector Investments

Crop Processing Cool Chain

Export Contract Farming

Ethanol/

Corn Oil

/Starch Industry

Modern Rice Mill

Litchi

Honey

Makhana

Banana

Mango

Maize

Vegetable

Aromatic Rice

Fish

Final WordsThere’s high potential for Partnerships here in Bihar due to:

Political stability

Favorable conditions to produce a variety range of products,

Access to preferential markets

Constraints are being appropriately addressed.

Public-Private Partnerships crucial for success.

Agriculture development, agro-industrialization, creation of a proper business environment to investment are priorities to the Governmental program.

THANKS