AGRIBUSINESS IN GUJARATUNLEASHING THE POTENTIAL

AGRIBUSINESS IN GUJARATUNLEASHING THE POTENTIAL

Title Agribusiness in Gujarat : Unleashing The Potential

Authors Kalyan Chakravarthy – Country Head- Food & Agribusiness Strategic Advisory &

Research (FASAR), YES BANK Ltd.

P.S.R.Raju – Assistant Vice-President, FASAR, YES BANK Ltd.

Gopikrishna Swarangi - Senior Manager, FASAR, YES BANK Ltd.

Suman Lata – Associate, FASAR, YES BANK Ltd

Date November, 2006

Copyright No part of this publication may be reproduced in any form by photo, photo print,

microfilm or any other means without the written permission of YES BANK Ltd

Disclaimer The information and opinions contained in this document have been compiled or

arrived at from sources believed to be reliable, but no representation or warranty

expressed is made to their accuracy, completeness or correctness. This document is

for information purposes only. The information contained in this document is

published for the assistance of the recipient but is not to be relied upon as

authoritative or taken in substitution for the exercise of judgment by any recipient.

This document is not intended to be a substitute for professional, technical or legal

advice. All opinions expressed in this document are subjected to change without

notice. Neither CII nor YES BANK Ltd., nor any other legal entities in the group to

which it belongs, accept any liability whatsoever for any direct or consequential loss

howsoever arising from any use of this document or its contents or otherwise arising

in connection herewith.

Confederation of Indian Industry (CII)

203 – 204, Sears TowersGulbai TekraNear PanchavatiAhmedabad – 380 006Gujarat, India

Tel : +91 – 79 – 2646 8872, 2646 9346Fax : +91 – 79 – 2646 2878Website : www.ciionline.org

Contact

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The post liberalization era has witnessed a high degree of correlation between India's GDP growth rate and developments in the agriculture sector. It has been estimated that for India to achieve a double digit GDP growth rate, agricultural growth of around 4 per cent is required. With nearly 67 per cent of our population and around 55 per cent of the total work force depending on agriculture and other allied activities, agriculture augmentation is the key to meet the basic needs of India's growing population.

thGujarat is the 7 largest state of the country in terms of area accounting for 6 per cent of the geographical area of the country and supports approx 5 per cent of the country's population. The state offers immense potential in Agribusiness due to its Competitive Advantage in crops such as Groundnut, Castor, Sesame, Cumin, Fennel, Isabgul, Cotton, Tobacco, Banana, Kesar Mango, Papaya, Chillies, Garlic etc. The state also has immense potential in processed marine produce due to its 1600 km long coast line. The People of Gujarat are known for their entrepreneurial skills and have proved the same in many areas.

As a leading industry association, Confederation of Indian Industries (CII) has taken a lead to create this initiative AgriFare 2006 and plans to have active participation from all synergetic stakeholders. CII believes that involvement of knowledge based banks and financial institutions is critical for a focused development of value enhancing Agribusiness that will assist in catalyzing economically viable sustainable development.

YES BANK, the new age private sector bank in India, given its extensive expertise in Food & Agribusiness sector and its commitment towards the holistic development of the sunrise sectors of the Indian economy is the Knowledge Partner to CII for this prestigious initiative.

This report “Agribusiness in Gujarat : Unleashing The Potential“ jointly developed by YES BANK and CII intends to showcase the potential of Agribusiness in the state of Gujarat and immense opportunities it has to offer for various stakeholders. It also identifies specific tasks in relation to developing value based Agribusiness partnerships between the state and the private sector. The report also presents some implementable strategies that will lead to sustained and continuous investments in this sector benefiting all the stakeholders involved with this highly vital sector.

We are confident that this publication will go a long way in harnessing the tremendous investment potential and financial attractiveness for Agribusiness sector in the state of Gujarat and help the state in becoming the most favourable Agribusiness destination in the country. Both CII and YES BANK remain committed to assist all stakeholders in developing this vital sector and are confident that all stakeholders, Government, Private Sector and the entrepreneurial farmers will benefit from this report.

Rajesh Gandhi Rana Kapoor

Chairman, AgriFare 2006 Managing Director & CEO

Managing Director-Vadilal Industries Ltd.. YES BANK Ltd.

Foreword

C O N T E N T SFOREWORD

1.1 OVERVIEW.......................................................................................................................1

1.2 INSTITUTIONAL FRAMEWORK & KEY PUBLIC AND PRIVATE SECTOR INITIATIVES.......................................................................2

1.3 INDIAN AGROPROCESSING SECTOR......................................................................5

2.1 INTRODUCTION ..........................................................................................................14

2.2 GUJARAT'S AGRICULTURE SCENARIO ...............................................................17

2.3 COMPETETIVENESS IN FOOD & AGRICULTURE ..............................................28

2.4 AGROPROCESSING SECTOR IN GUJARAT...........................................................30

3.1 INTEGRATED AGRO FOOD PARKS ........................................................................49

3.2 MODERN TERMINAL MARKETS.............................................................................55

3.3 PORT BASED AGRI INFRASTRUCTURE.................................................................67

POLICY SUPPORT & RECENT ANNOUNCEMENTS FOR FOOD PROCESSING..........................................................................................................................80

GUJARAT AGRO INDUSTRIAL POLICY 2003 .............................................................................81

MARKET POTENTIAL FOR VARIOUS PROCESSED FOODS...................................................90

FDI NORMS FOR VARIOUS SECTORS..........................................................................................91

AREA PRODUCTION & PRODUCTIVITY OF VARIOUS CROPS.............................................93

1.0 INDIAN FOOD & AGRICULTURE SECTOR 1

2.0 GUJARAT FOOD & AGRICULTURE SECTOR 14

3.0 HARNESSING THE POTENTIAL : THE WAY FORWARD 49

ANNEXURE 1

ANNEXURE 2

ANNEXURE 3

ANNEXURE 4

ANNEXURE 5

1

1.1. OVERVIEW

Position of Indian Agriculture in Global Food Basket

Indian agriculture contributes approximately 20 per cent to the country's GDP and provides

livelihood to almost 67 per cent of the population, thus evidencing the agrarian nature of the Indian

economy.

A vibrant agriculture sector will be the key for achieving sustainable higher rates of growth in the

country, as 55 per cent of total workforce depends directly or indirectly on agriculture. A one percent

incremental growth in agriculture sector leads to an additional income generation of INR 10,000

crores in the hands of the farmers, thereby increasing their disposable income and hence purchasing

power. The increase in demand gives a push to the industry as well, which in turns raises the overall

GDP growth.

The positive demographic trends driving increased consumer demand for high value food products,

recent government sponsored schemes and initiatives aimed at attracting private sector participation

have enabled the infusion of much-needed vibrancy and a positive perception of the sector.

the world's largest producer of wheat, accounting for nearly 15 per cent of global

wheat production and also the largest producer of pulses.

ndü India ranks 2 in rice production in the world and is the largest exporter of world's best rice -

Basmati

o Basmati exports in FY 2005 grew to USD 596 million from USD 432 million in previous

year.

o Non-Basmati rice exports grew to USD 880 million in FY 2005 from USD 483.8 million in

previous year.

thü India is among the largest Vegetable Oil economies and produces about 1/10 of the world oil

seeds.

ü India is the largest producer & exporter of spices and also the largest producer of cashew and

coconut

rdü India is the world's largest producer of tea and accounts for 1/3 of the global tea production

ü India is the second largest producer of fruits (50 million MT) Accounting for 10 per cent of the

food production & vegetables (100 million MT).

ü India is the largest producer of milk.

ü India is

CHAPTER 1INDIAN FOOD & AGRICULTURE SECTOR

1 Food Processing sector is expected to grow at a rate of 10% p.a. by 2010

Industry estimates indicate that the total turnover of the

food market is around INR 2,50,000 crores (USD 69.4

billion) out of which, value-added food products

comprise INR 80,000 crores (USD 22.2 billion). Among

the emerging business avenues and growth options in

the diverse agribusiness sector, the food processing

sector is noteworthy. The importance of the food

processing sector can be gauged from the fact that it

contributes nearly 6.3 per cent of the country's GDP,

directly employs approximately 13mn people and has

the propensity to generate 2.4 times more indirect

employment than the direct employment generated. The high growth rate (7 per cent per annum)

witnessed by the sector in the last decade and further improvement in growth rate expected in the 1years to come , present innumerable opportunities for investment across the entire agri-value chain.

There are various Ministries and departments (see Table 1) that govern and facilitate the growth of the

Indian food and agriculture sector.

1.2 INSTITUTIONAL FRAMEWORK AND KEY PUBLIC & PRIVATE SECTOR INITIATIVES

2

Governing Ministry

Bodies/Boards Institutions

Ministry of

AgricultureNH, TMOP, TMH (NE),SFAC, CDB, NDDB

Post harvest development, Cold storage capital investment subsidy, Technology development, MIS for horticulture etc

NDRI, IIPR, NRCM

Ministry of Food Processing Industries

Technology upgradation/ modernization, HR, Quality assurance (FPO) and Codex, Strengthening nodal agencies, Backward and forward integration, Infrastructure development (Food parks)

PPRC

Ministry of Commerce

APEDA, MPEDA, Spices Board, Tea Board, Coffee Board, EIC, CEPC

Export market development, Infrastructure, (AEZs) Quality, R & D, Transport assistance etc. IIP

Ministry of Science and Technology CFTRI

Ministry of ConsumerAffairs &PublicDistribution

Directorate of Vanaspati, Directorate of Sugar

Ministry of Health and Family Welfare

Food safety (PFA) FTLs, NIN

Ministry of HRD Food and Nutrition Board

National Nutrition Mission

Table 1: Ministries & Department governing F&A sector

Schemes

The Ministry of Food Processing Industries is the nodal

agency responsible for developing the Indian food

processing sector. Additionally, the Agricultural and

Processed Food Products Export Development

Authority (APEDA) under the Ministry of Commerce

and Industry is assigned the task of promoting domestic

and international food trade partnerships.

In the recent past, the Government of India has initiated

innumerable changes that are expected to pave the way

for the evolution of a globally competitive Indian 2agribusiness landscape. For instance, simplification of the existing food laws , amendment of the

Agriculture Produce Marketing Committee (APMC) Act by several state governments permitting the

farmers to sell their produce outside regulated market yards etc. These would not only attract

increased corporate interest in the sector but also lead to the rationalization of costs across the supply

chain by way of facilitating organized farmer-processor relationships.

The establishment of direct linkages for off take of raw farm produce by the private sector units is now

possible. The marketing of agricultural produce, previously the exclusive domain of state APMCs, is

now permitted to the private sector in certain states. The state government support extended in the

area has presented an opportunity to evolve innovative marketing models that enable efficient

integration of the agri-value chain.

2 A draft Integrated Food Law has been prepared by the Ministry of Food Processing and is expected to be cleared shortly

3

Table 2: Statewise Implementation of APMC Act

Status State

Changed the APMC Act Delhi, Haryana, Karnataka, Maharashtra, Rajasthan, Tamilnadu

Model draft circulated AP, Gujarat, HP, MP, Nagaland, Punjab, Sikkim,

Reforms initiated Arunachal Pradesh, Assam, Chandigarh, Chattisgarh, Goa, Meghalaya, Pondicherru, J&K, Mizoram, Orissa, Tripura, UP, Uttaranchal, West Bengal.

Reforms not yet initiated Jharkhand

No APMC Act Kerala, Bihar, Andaman & Nicobar, Daman & Diu, Lakshwadeep, Manipur, Dadra & Nagar Haveli

Source: Ministry of Agriculture

There is more corporate involvement in Indian

agriculture today than before with amendment in

regulations and the creation of a better investment

climate for private sector participation. For example,

some of the large FMCG companies like ITC Ltd. and

Hindustan Levers Ltd. work closely with farmers for

their tobacco and tea leaf requirements. This

involvement was led largely by a need to protect the

inputs for their industry. However, the nature of this

involvement is changing. Agriculture is now being

treated as an industry by corporates. The emergence of

organized retailing has resulted in the creation of

quality retail space, increased availability and demand for a variety of quality packaged fresh and

processed produce. Thus, the emergence and growth of retail chains such as Food World and Food

Bazaar is likely to yield a robust supply chain wherein elimination of middlemen and expansion of

direct farmer outreach is attained.

Bharti, one of the largest Telecom Company in India, has recently diversified into the agricultural

sector. It has started a new venture Field Fresh in a 50:50 joint venture with Rothschild. The vision of

Field Fresh management is to connect the Indian farms to the world markets. Field Fresh has over

2,000 acres under contract farming. Once the basic structure is in place, operations are likely to be

ramped up. Eventually, Field Fresh is likely to have a huge footprint in the rural economy across

India. This is expected to be commissioned in early 2006 and will showcase the modern techniques of

farming and agri-marketing in India. There are other entities like Global Green, which has already

reached a turnover of INR 250 crores. It markets pickled vegetables, peppers and spices across the

world. It is backward integrated into sourcing

through a captive base of farmers in south India.

Although most of the present investments seem to be

on the front end, corporate aspiration to match global

standards of quality, cost and productivity shall drive

qualitative changes across the supply chain and in the

adopted farming practices. For instance, a number of

investments in infrastructural support along the

value chain have been initiated. Companies like

Snowman Frozen Foods (a Joint Venture between the

Mitsubishi Group, Amalgam Foods and HLL) have

stepped up their investments in the cold chain

significantly. Snowman offers comprehensive transportation & storage facilities and handling &

retail distribution services of frozen & chilled foods. Its network covers 12 warehouses and 75 cities

within India.To summarize, corporate investment in the farming sector is rising rapidly. It has

reached the inflection point where several large corporates like ITC, the Tata Group and Godrej have

started to invest significantly. Further, entry of large business giants such as Reliance Industries is

likely to attract greater investments and interest in this sector.

4

1.3 INDIAN AGRO PROCESSING

Global Food Processing industry has been valued at USD 3,668.3 billion in the year 2005 and the Asia-

pacific accounts for 31.10 per cent of global market. India is the world's second largest producer of

food, next to China and has potential to be number one.

Cll has recently estimated that the Indian food processing sector has potential of attracting USD 33

billion (INR 150,000 crores) of investment in the next ten years. The food processing industry is one of

the largest industries in India. It is ranked fifth in terms of production, consumption, export and

expected growth. On the basis of strengths developed in basic resources, it is estimated that the total

food production in India is likely to double in the next ten years and India also has the potential to

become the “Global Food Factory"

The food processing sector is a key sector of the Indian economy, contributing to 6.3 per cent of the

country's GDP. The importance of the food processing industry is further underscored by the fact that

it contributes to direct employment of about 13 million people and has the propensity to generate 2.4

times indirect employment of the direct employment generated. The sector witnessed a high growth

rate of over 7 per cent in the last decade and is poised for higher growth (expected to reach 10 per cent

by 2010).

Industry Size & Structure

While the total processed food industry

(including primary processed foods such

as milled grains) is valued at INR 5,30,000

crores (approx. USD 120.5 billion), the high

value added food segment is estimated at

INR 2,00,000 crores (USD 45.5 billion).

Fruits and vegetable products, milk and

milk products, beverages (both alcoholic &

non-alcoholic), poultry and meat

5

Table 3 – Market Potential and Growth Rates of Key Segments in Food Processing

Sector Market potential in 2009-10 (in USD

billion*)

CAGR

Fruits and Vegetables

3.52 11%

Milk and milk products

39.32 > 5%

Poultry 0.56 16-20%

Meat and meat products

0.91 10%

Edible oil 15.73 5-6%

* USD 1 = INR 44

Source: Ministry of Food Processing Industries

Table 4 Key Statistics Food Processing Industry

Source: Ministry of Food Processing Industries

Sector

Total Processed foods 60

Primary Processed foods 40

Value-added foods 16

Organised processing sector 0.19

Unorganised processing sector 99.81

Percentage in Total food consumptionSector

products, marine and aqua products, edible oil, grain and cereal products are the key segments

within the processing industry (Table 3).

Although the industry continues to be dominated by the small & unorganized players (Table 4), it is

fast transforming into an organized sector with increased investments in processing technologies,

equipment and skill development being brought in by large corporates. Of late the sector has been

witnessing increased participation of reputed global as well as domestic players (Table 5).

Growth Drivers

Production & Supply Strength

Diverse agro-climatic zones, varying soil types and the

presence of major river systems has contributed towards

making India one of the largest producers of food

commodities in the world. India is presently the largest

producer of milk, tea & several spices and the second

largest producer of horticultural crops in the world.

Feedstock supplies to the food processing industry are

therefore assured. Also, India's comparatively low-cost

workforce can be effectively utilized to setup large low-

cost production base for domestic as well as export

markets.

Demographic Transition

The present social structure is characterised by a large and growing working population (2010

Estimate: 577 million), increasing disposable income, growing urbanisation, increased number of

nuclear families, greater participation of women in workforce and increased western influence which

6

Table 5- Major Players in the Food Processing Industries

Segment Key Players

Juices & Packaged convenience Foods (Fruit & Vegetable Products)

Pepsi Foods, Glaxo-SmithKline (GSK) MTR, Mapro, Hindustan Lever Ltd. (HLL), Dabur, Parle, Nestle

Milk and Milk Products Nestle, Mother Dairy, GCMMF, Dynamix Dairy

Eggs and Poultry Products Godrej Agrovet, Venkys, Suguna

Meat and Meat Products Allanasons Ltd., Hind Agro Industries Ltd., AlKabeer

Marine and Aqua Products ITC -IBD, Allanasons Ltd., Suvarna Rekha Exports Private Limited

Grain and Cereal Products ITC -Foods, Cargill, Shakti Bhog Foods Ltd.

Confectionary and Bakery ProductsCadbury, Nestle, Perfetti, Joyco, ITC-Foods, Parrys, Nutrine, Ravalgon, Britannia, Surya Foods, Bector foods

Snack Foods Frito-Lays, Haldirams, SM Foods, Monginis Food Ltd., ITC - Foods

Source: YES BANK Analysis

have led to the emergence of the global consumer who is

more willing to experiment with varied foods.

Changing consumer profile and aspirations have

impacted their preferences with respect to food habits

resulting in greater emphasis on nutritious and healthy

eating and convenience foods. A shift has been observed

in the food basket from cereals to a more varied diet of

fruits and vegetables, milk, fish, meat and poultry

products. In fact, the growth rate of the latter is higher

than that of grains and pulses.

Changing Face of Indian Retail and Food Service

The retail sector in India is rapidly transforming on the back of emergence of multiple retail formats

(hypermarkets, departmental stores, supermarkets, convenience stores), entry of leading corporates

in retail (RPG, Pantaloon and Mother Dairy have already established their presence and the Reliance

group's recent foray into food retail), pan India expansion of retail chains, emergence of sub-urban

retailing and an increasing preference for multi-brand outlets to single-brand stores. The emergence

of organised retailing has resulted in the creation of quality retail space, increased availability and

thereby increased demand for a variety of processed and fresh packaged produce of consistent

quality.

Favourable Regulatory Environment & Support Schemes

The liberalized policy regime with incentives for food

processing sector provides a very conducive

environment for investment in the sector. The

government is inviting private participants and also

encouraging public private partnerships to promote the

growth of the processing industry.

Simplification of the existing food laws (the draft

Integrated Food Law has been prepared by the Ministry

and is expected to be cleared shortly) will boost

corporate interest in the sector. Amendment of the

Agriculture Produce Marketing Committee (APMC) Act by several state governments permitting the

farmers to sell their produce outside regulated market yards has allowed private sector units to

establish direct linkages for offtake of raw farm produce. Organised farmer and processor

relationships have facilitated bulk purchases leading to a reduction in procurement costs. The

marketing of agricultural produce, previously the exclusive domain of State APMCs, is now

permitted in the private sector in certain states. The state government support extended in the area

has presented an opportunity to evolve innovative marketing models that enable efficient integration

of the agri-value chain. For instance, the proposed Modern Terminal Markets, for which INR 150

crore have been earmarked in 2006-07 under the National Horticulture Mission, is one such initiative.

7

These markets aim at providing

professionally managed competitive

alternate marketing structures in the

Public-Private-Partnership mode.

The aggregation of demand & supply

of produce and the availability of

sorted & graded material at these

centres would greatly facilitate the

procurement procedure of exporters,

processors etc. by meeting their

requirement of material quality and

volume.

A number of fiscal incentives have

been provided to encourage value

addition to agricultural produce

(Table 6).

While these schemes aim at infusing

increased investments and scale of

operations in the sector, the reduced

duty on packaging machines (15 per

cent to 5 per cent) and total exemption

from excise duty on condensed milk,

ice cream, preparations of meat, fish

and poultry, pectins, pasta and yeast

and reduction in excise duty (from 16

per cent to 8 per cent) on ready-to-eat

packaged foods and instant food

mixes, expect to increase affordability

and consumption of processed foods.

The Ministry of Food Processing Industries also plans to provide INR100 crore subsidy for setting-up

of over six Mega Food Processing Parks in the country.

Recognizing the potential and the need for investment in the Food Processing Industry, the

Government of India has also offered it the status of a priority sector for bank credit. In addition, the

setting up of a NABARD refinancing window for food processing (specially for agro-processing

infrastructure and market development) with a corpus of INR 1,000 crore and a Special Purpose Tea

Fund with an expected contribution of INR 100 crore, in the recent budget will further help in

providing the needed impetus for this sector.

In addition, the establishment of National Institute of Food Technology Entrepreneurship and

Management is proposed to harness the available human capital potential (food technologists) to

cater to the rising needs of the industry.

8

· No industrial license is required for almost all of the food & agro processing industries except for some items and items reserved for small scale industries

· Tax incentives for new manufacturing units have been given for certain years, except for a few industries

· Full excise exemption given to agriculture related industry

· Substantial reduction in custom duties on plant and equipment, as well as on raw materials and intermediates, especially for export production.

· Three more equipments added to the list of cold chain equipment that are exempt from excise duty, to promote the preservation of fruits and vegetables

· No restriction in the import and export except for items in the negative lists for imports and exports. Capital goods are also freely importable, including second hand ones in the food-processing sector.

· MRTP (Monopolies & Restrictive Trade Practices Act) rules and FEMA (Foreign Exchange Management Act) regulations have been relaxed to encourage investment and expansion by large corporates.

· Upto a maximum of 24 per cent foreign equity is allowed in SSI sector.

· Use of foreign brand names is now freely permitted.

Source: Ministry of Food Processing Industries

Table 6: Fiscal incentives provided to the Food Processing Industry

Regulation Governing Foreign Investment

The Indian government has adopted a liberal stance on foreign participation in the food processing

industries. Foreign Direct Investment has been encouraged and the approval process has been

streamlined to ensure convenience (Table 7).

Milk & Milk Products

Only 15 per cent of the milk produced in India (annual production of approx 96 million MT) is

processed through the organised sector. The per capita availability of milk (229 g per day) is much

lower than the world average (285 g per day) and its consumption is highly skewed towards the

urban consumer. Presently, over 46 per cent of the total milk is consumed in the form of liquid milk,

47 per cent as Indian dairy products and 7 per cent as western dairy products. Interestingly, while

the cost of milk production is amongst the lowest in the world, the prices of dairy products are

amongst the highest.

The dairy sector is expected to witness a growth rate of over 5 per cent per annum, largely on account

of the following factors

Emerging Trends, Opportunities & Challenges

9

Table 7 : FDI in Indian Food Processing Industry

Agriculture · No FDI is permitted in farming. Foreigners or OCBs cannot own farmland.

· FDI in seed industry is permitted without any limits

· FDI upto 100 per cent permitted in tea plantations, but prior government approval required. Compulsory divestment of 26 per cent equity in favour of Indian partner or Indian public within five years is mandatory.

Alcoholic Beverages · No FDI limit, prior government approval required

Food Processing · FDI limited to 51 per cent with automatic approval for most products (except in the case of malted foods and flour, alcoholic beverages and those reserved for small scale industries wherein foreign equity ownership up to 24 per cent is allowed).

· Higher FDI is allowed on a case-to-case basis on a prior approval basis

· 100 per cent FDI allowed with automatic approval to NRIs or OCBs

· FDI up to 74 per cent is allowed with automatic approval for cold storage facilities

ü High income elasticity of demand for dairy products in India

ü Changing dietary patterns of the Indian consumer which are expected to cause a dramatic

increase in the demand for packaged,

homogenised and pasteurised milk, flavoured

milk, cheese varieties and ethnic Indian dairy

products.

ü Reform of the EU Dairy Policy - in 2003 (in line

with the WTO) which has opened significant

trade opportunities for dairy producers. Low

farm gate prices and proximity to milk deficit

markets provide India with an edge over other

producers.

Increased organized private sector participation in

dairy production and processing is likely to occur due to the following reasons:

ü High profitability of the dairy products business (18-20 per cent per annum)

ü Prevalence of small-scale or cottage industries which bring out products which are usually of

inconsistent quality & hygiene standards and unable to cater to market needs. Entry of

organized players can help enhance product shelf life without compromising on food safety

and hygiene.

ü Poor management of most cooperative dairies - though cooperatives have played a major role in

the evolution of the Indian dairy sector, today most bodies (with the exception of a few in north

and west India) are poorly managed and financially ailing.

ü Lack of scale in small family run business.

Low cattle productivity and the absence of adequate

quality controls are major causes of concern in the

Indian dairy industry. The poor quality of Indian milk is

due to the lack of adequate temperature controlled

storage and transport infrastructure and contamination

through equipment. Thus, investment in both bulk

cooling equipment (to preserve and improve milk

quality) and high-end processing facilities for high

quality milk and value-added products is required.

Ethnic products are largely produced by the

unorganised sector (halwais) wherein product quality & hygiene standards and storage & packaging

norms are sub-standard. Increased penetration by large scale organised players in this highly

attractive segment would enable the much needed traceability and quality check. Whey and whey

products is an attractive option given the growing importance of whey products in high-end food and

non-food applications in the international markets. Increased imports of intermediate food products

such as cheese powder, casein and lactose are indicative of the market potential for these products

and investments for manufacturing the same domestically will be viable investment options.

10

Poultry & Meat Products

Egg & Egg Products - India ranks fifth in the world with

an annual egg production of almost 1.61 million MT

Presently there are only five egg powder plants in India.

These plants are not adequately equipped to scale up and

meet increased world demand. Modern production

facilities and technology tie-ups can be secured to meet

the increasing demand of the domestic as well as that of

key importing countries such as Japan and Europe.

Poultry Meat - Poultry meat is the fastest growing

animal protein segment in India (CAGR of 11 per cent

through 1991-2003). The sector is characterized by the following:

ü Prevalence of small and unorganised players with only a few organized players selling

branded, processed products (Eg. Godrej Real Good Chicken, Venky's Chicken).

ü High feed cost (which account for almost 60-70 per cent of the total production cost) Despite the

low labour cost adversely affects the competitiveness of the Indian poultry industry (price of

Indian poultry is almost 50 per cent higher than the world levels).

Indian poultry exports are made mainly to Middle East and the Maldives until the recent entry into

Japanese markets. Thailand's competitiveness in the international market has been adversely affected

of late due to increasing labour costs thereby providing an opportunity for India to tread into the

highly attractive Japanese market.

Investment in better poultry breeds, adoption of improved management practices and effective &

efficient feed formulations will help derive success in the domestic as well as international markets

and are therefore attractive investment options. Investments in modern abattoirs & processing,

packaging and distribution systems are also a need of the hour and merit investment.

Meat & Meat Products - India has the world's largest cattle population (50 per cent of buffalo thpopulation and 1/6 of the total goat population of the world). Most meat production is undertaken

by the unorganized sector. Increased emphasis on quality and changing consumer tastes require

greater investments in modern slaughter facilities and development of cold chains. Changing

consumer lifestyle has meant increased willingness to explore ready-to-eat and semi-processed meat

products, thus creating greater opportunities within the segment.

Marine and Aqua Products

With a 7500 km coastline, 3 million hectares of reservoirs

and 1.4 million hectares of brackish water, India offers a

huge potential for marine and aqua products. However,

though, it ranks second in terms of inland fisheries,

India's production is only 1/6 that of China (the world

leader). Almost, 60 per cent of the fish production is from

marine sources and shrimp is the major component of

marine exports.

11

The existing post-harvest, processing and packaging technologies in the Indian fishing industry are

grossly inadequate. While Individual Quick Freezing (IQF) plants have recently been established,

their capacity is still largely insufficient. Since, processed

IQF marine products fetch better prices than

conventional block frozen materials in the foreign

markets, investment in this segment is an attractive

option. Also, the deep sea fishing industry today stands

on a very weak footing. Investment in deep sea fishing

vessels for prawns, shrimp, squid, tuna, cuttlefish,

octopus, red snappers, ribbon fish, mackerel, lobster, cat

fish etc. is required. Other aspects requiring greater

attention are quality improvement, technology

upgradation, development of value added products,

development of infrastructure and improved methods

of handling and preservation.

Fruits, Vegetables & Packaged Convenience Foods

India accounts for almost 10 per cent of the global production of fruits and vegetables, yet less than 2

per cent of the production is processed. This in itself is indicative of the vast potential that the Indian

food processing industry holds. The scope for investment in Indian horticulture is vast and

encompasses the following key areas:

ü Identification and development of varieties that are amenable to specific processing

requirements

ü Technology tie-ups in areas of post harvest

technology, bulk storage (including temperature

controlled warehousing), bulk handling (including

packaging) and cold chain facilities. Availability of

sophist icated product ion protocols for

intermediate products is also largely inadequate.

ü Development of cost efficient packaging

equipment and materials

Large scale production by organised players would

result in reduced production costs (on account of

integrated backward linkages), efficient market development and introduction of superior as well as

standardized product offerings.

Alcoholic & Non-Alcoholic Beverages

Alcoholic Beverages

The deep routed social aversion to alcohol consumption in the Indian society is fast changing. The

mushrooming pubs and night clubs are evidence to the changing mindset of the urban consumer.

Increased overseas travel and media exposure has also led the change in consumer attitudes towards

12

alcohol. A number of foreign brands such as Bacardi, Seagrams and UDV are now bottled in India.

Presently, the production of alcoholic drinks from non-molasses sources is very small and offers a

huge opportunity for investment. The wine industry although in a nascent stage is poised for growth.

Non-Alcoholic Beverages

Inspite of a fast expanding market for alcohol, almost 65 per

cent of the Indian population still prefer non-alcoholic

beverages. The Indian consumer has traditionally had a high

preference for Cola, Orange and Lemon flavoured

beverages. However, with increased health consciousness,

consumers are now turning to other options such as fruit

juices and drinks. While a few well established companies

have forayed into this very attractive segment which is

growing at more than 30 per cent, the potential is largely

untapped and the consumer is largely starved for choice.

Tremendous scope exists for investments in packaged health

drinks, fresh fruit drinks, juices, smoothies, energy drinks,

flavoured tea and ethnic Indian drinks (such as thandai,

sharbat, nimbu-pani, aam panna etc).

Conclusion

The Indian food processing industry while still in its nascent

stage, presents attractive as well as diverse investment opportunities. The sector is witnessing an

increased growth rate and also a rapid shift from the low value primary processed products to high

value added products. The sector presents attractive investment opportunities in diverse areas to

cater to wide ranging consumer palates. While favorable regulatory environment incentivizes direct

investment technical, expertise of international players especially in the high growth segments of

dairy, poultry and meat processing can also be leveraged symbiotically through strategic

partnerships.

13

2.1. INTRODUCTION

Gujarat is situated on the west coast of India with Arabian Sea making up the western coast. It shares

the international boundary with Pakistan in North West and shares its borders with Rajasthan to the

North East, Madhya Pradesh to the East and Maharashtra to the South. It is the 7th largest state in

terms of area accounting for 6 per cent of the total geographical area of the country and supporting

approx 5 per cent of the country's population with a density of 258 persons per square km.

Demography

According to the latest available data

(Census 2001), the state has a population of

5.07 crores with 62.64 per cent of the

population residing in the rural areas. Out

of the total population, 42.2 per cent

comprises of working population and 33.6

per cent of the total population consists of

main workers. The literacy rate for the

state is reported to be a healthy 69.14 per

cent. The literacy rate for rural areas is

61.29 per cent whereas for urban areas it is 81.8 per cent.

Economy

The economy of Gujarat shows that it is one

of the most prosperous states of India,

having a per capita GDP 2.47 times the

national average. It is also one of the most

industrialized states of the country. The

industrial output of the state is 19.8 per cent

of that of the country which is enormous by

all standards.

The Gross Domestic Product of the state in

the year 2004-05 was Rs. 107,033 crore. The

shares of primary, secondary and territory

sectors in GSDP were 18.5 per cent, 39.1 per

cent and 42.4 per cent respectively. (See

Exhibit 2)

CHAPTER 2GUJARAT FOOD & AGRICULTURE SECTOR

14

Exhibit 1: Composition of Working Population

5

15

25

35

45

2000-01 2001-02 2002-03 2003-04 2004-05

Primary Sector Secondary Sector Territary Sector

Main

Workers34%

MarginalWorkers

8%

Non Workers58%

Exhibit 2: Sectorwise GSDP of Gujarat

Industries

Gujarat is the second most industrially developed state of the country after Maharashtra.

The Annual Survey of Industries 2003-04 indicates that the net value added by the manufacturing

sector in the state was INR 43,366 crore in 2003-04, showing an impressive increase of 89.5 per cent

over the previous year as compared to national average of 27.29 per cent. The value of output at

current prices is INR 207,316 crore in 2003-04 showing an increase of 13.47 per cent increase over the

previous year.

Land Usage

The state has 25 districts spread over an

area of 196 lakh hectares. About 55 per cent

of the total geographic area is cultivable. As

per Season and Crop Report (SCR) of 2001-

02, the gross cropped area of the state was

105 lakh hectares and net cropped area was

94.3 lakh hectares. At all India level,

Gujarat ranks ninth in terms of net sown

area as a percentage of total area. The Land

Usage pattern of the state depicted in

exhibit 3.

T h e a v e r a g e s i z e o f

landholding in Gujarat is 2.62

ha (1995-96) as compared to

national average of 1.41 ha.

55.33 per cent of total number

of landholdings is small and

marginal land holdings.

Exhibit 4 shows the land

holding pattern of the state.

15

Net Area Sown50%

Forests10%

Barren Land14%

Cultivable Waste11%

Non Agricultural

Uses6%

Current and other Fallow

4%

PermanantPastures

5%

Tabel 8 : Key Statistics of State Economy

Exhibit 3: Land Usage Pattern in Gujarat

Gross State Domestic

Product

USD 23.78

billion

Manufacturing Sector USD 5.17 billion Exports 14% of India

Fixed Capital InvestmentUSD 17.9

billion Average Growth Rate 9% per annum

Industrial ProductionUSD 44.4

billion

Industrial Growth

Rate

18 % per

annum

Source: Government of Gujarat

27.3

28

25.5

16.7

2.4

0 5 10 15 20 25 30

% of Total Land Holding

Marginal (Upto 1 ha)

Small (1-2 ha)

Semi Medium (2-4 ha)

Medium (4-10 ha)

Large (10 ha & above)

Exhibit 4: Land Holding Pattern in Gujarat

Climate

Gujarat is endowed with seven agro climatic zones

offering a wide variety of soil, temperature and rainfall

patterns. The state has a tropical climate and about two

third area of the state is under arid and semi arid tropics.

Gujarat receives rainfall through the South-West monsoon

which lasts from June to September. Wide variation in

rainfall received by various parts of the state has been the

distinct feature of the monsoon every year. The rainfall

varied from a maximum of 2,642 mm in Dang district of south Gujarat to a minimum of 283 mm in

Kutch district in the monsoon year of 2004. Usually the distribution of rainfall among the four

monsoon months of June, July, August and September is 15, 45, 25 and 15 per cent respectively.

Depending upon the soil characters and rainfall pattern, the state can be divided into three regions

viz.,

· Mainland

· Saurashtra region

· Kutch region

Irrigation

The state has a good network of rivers. Sabarmati, Mahi, Narmada and Tapi are the major rivers of the

state whereas Banas, Saraswati and Damanganga are the minor rivers. As the monsoons are

unpredictable and the amount and duration of rainfall is quite erratic and vary from year to year, the

irrigation facilities play a key role in stabilizing agricultural production. The low and uncertain

rainfall, combined with limited irrigation facilities has made Gujarat extremely susceptible to

draught and famine.

Wells and Tube wells are the major source

of irrigation in the state having a share of

more than 85 per cent of the total net

irrigated area ( see Exhibit 5) Rest of the

irrigation water requirement is met by

canal irrigation. Thus, the maximum thrust

is being placed on creation of irrigation

facilities through harvesting surface water

runoff. These projects are designed to

provide mainly protective irrigation to the

Kharif crop and are expected to reduce

regional imbalances, besides stabilizing the

agricultural production and productivity

of the frequent drought prone areas of the

state. Sardar Sarovar and Kalpsaar are the two major projects undertaken by the state.

16

Wells /

Tubewells87%

Tanks1%

Canals12%

Exhibit 5: Major Sources of Irrigation

Sardar Sarovar Project

The Sardar Sarovar Project is a multipurpose project. It

will provide an annual irrigation benefits in an area of

about 17.92 lakh hectares spread over 75 talukas of 15

districts in the state. It is also envisaged to provide water

for domestic and industrial uses in about 8215 villages

and 135 townships.

Kalpsaar Project

With an aim to harness maximum quantity of rainwater

by all amicable means, the Government of Gujarat has envisaged the Kalpsaar Project. This project

aims to tap the rainwater/freshwater/floodwater flowing into the sea during the rainy season. In this

context Kalpsaar is viewed as an important multipurpose project to store sweet water in huge

quantity. The dam is built across the Gulf of Khambhat connecting Ghogha in Bhavnagar district and

Hansot in Bharuch district. An area of 10.54 lakh ha of coastal land of southern Saurashtra, not

covered under Sardar Sarovar, will get the benefit of irrigation water from Kalpsaar Project. Around

1.19 lakh ha of barren and saline land will be reclaimed. It will also provide 900 million cubic meters of

water for domestic usages and 500 million cubic meters of water for the industrial development of

Saurashtra and Kutch regions. There will be reduction in distance between Dahej and Ghogha by 225

km and will provide sizeable relief to existing road network serving Saurashtra once this project is

completed.

Infrastructure

The state is well equipped with reasonably well developed infrastructure. Gujarat is very well

connected by road and rail network. The total length of roads in the state is 74,018 km, out of which

2,382 Km comprise of national highways and 19,163 Km comprise of state highways.

The total length of railway lines in the state as on 31st March, 2004 was 5,186 route km.

Gujarat has got six operational airports including one international airport at Ahmedabad.

The state has the longest coastline of 1,600 sq km representing one third of India's water front dotted

with 41 ports. Gujarat has 40 out of 142 intermediate and minor ports in the country, handling about

80 per cent of the tonnage handled by the intermediate and minor ports in the country.

Kandla is the major port of the state located in Kutch district in the north of Gujarat. It is ranked fourth

among all major ports of the country. Around 67 per cent of the total food grain port traffic of the

country passes through Kandla port. During the year 2005-06 (April- Oct, 2005) the total cargo

handled by Kandla port was 260.7 lakh MT (including trans-shipment). The intermediate and minor

ports handled a total cargo of 971.28 lakh MT during 2004-05, an increase of 8.71 per cent over the

previous year.

Though Gujarat is one of the most industrially developed states in India, it possibly also has even

2.2 GUJARAT'S AGRICULTURE SCENARIO

17

greater potential in agriculture because of its diverse agro climatic zones, trained manpower

availability, investment thrusts, government support

and entrepreneurial acumen.

Agriculture sector comprises 15.5 per cent share of the

total Gross Domestic Product of the state. Out of the total

aggregate annual plan outlay for the state, 5.4 per cent of

the share was allocated for agriculture and allied

activities and 4.5 per cent of the total share was allocated

for rural development. 62 per cent of the total state

population still resides in rural areas. Agriculture

provides employment to about two thirds of the

population of the state.

Gujarat is endowed with abundant natural resources in terms of fertile land, good river system,

varied soil and climatic conditions, good support in terms of industries and most important

enterprising people & technical talent. This

provides Gujarat an immense opportunity to

develop a vibrant agrarian economy.

Gujarat witnessed an impressive agricultural

growth during the past five years (2000-2005)

with an average growth rate of 24.11 per cent.

(see Table 9)

The major crops cultivated in the state are:

Food Crops: Wheat, Paddy, Maize, Jowar and Bajra

Oilseed Crops: Groundnut, Sesamum, Castor and Rapeseed & Mustard

Commercial Crops: Cotton, Sugarcane and Tobacco

Horticultural Crops: Mango, Banana, Guava, Tomato, Potato, Onion, Garlic, Cumin, Isabgul and Fennel

Food grains

Food grains are the major part of the Gujarat agriculture accounting for about more than 40 per cent of the total gross cropped area. The total food grains production of the state during the year 2004-05 is estimated at 5.15 million MT. The state accounts for 2.6 per cent of the total food grain production of the country. The area, production and yield of some of the major food crops of the state in the year 2005 has been summarized in the table below: ( Table 10)

2.2.1 Major Crops of the State

!

!

!

!

18

Source: Dept of Agriculture, Government of Gujarat

Table 9: Annual Average Growth Rate in Agriculture (2000-2005)

Agriculture 28.67%

Horticulture 14.57%

Total 24.11%

Sector % Growth Rate

CropArea

('000 ha)

Production

('000 tons)

Yield

(tons/ha)

Wheat 727 1806 2.5

Rice 679 1197 1.8

Bajra 915 1089 1.2

Jowar 122 134.0 1.1

Source: CMIE

Table 10: Key Production Statistics of Food grains

Oilseeds

Gujarat is one of the major oilseed producing states in the country. The total oilseed production of the state for the year 2004-05 was 2.89 million MT from an area of 2.97 million ha. The state contributes approx 12 per cent to the total oilseed basket of the country. Major oilseed crops of the state are Groundnut, Sesamum, Castor and Rapeseed & Mustard.

The area, production and yield of the major oilseed crops of the state for the year 2003-04 along with major producing districts are summarized in the table below:

Gujarat is the largest producer of groundnut in India. Groundnut production of the state in the year

2003-04 stood at 4.47 million MT from an area of two

million MT. Gujarat contributes approx 55 per cent of the

total groundnut production of India.

Horticultural Crops

During the year 2004-05, the production of fruits,

vegetables, spices and flowers was 4.02 million MT, 4.68

million MT, 0.42 million MT and 0.048 million MT

respectively.

th Gujarat stands at 8 position (5.29 per cent of total

production) in fruit production in India and ranks 11th

in area (2.31per cent of total area) and the productivity of

fruit crops is estimated at 15.69 MT/ha, which is the

highest in the country. The major fruits grown in the

state are Banana, Chikoo, Mango, Papaya and Guava.

The share of the major fruits production in total fruit

production is given in the exhibit 6.

19

Source: CMIE & YES BANK Analysis

Crop Area

('000 ha)

Production

('000 tons)

Yield

(tons/ha) Major Production Centers

Groundnut 2003 4478 2.24 Jamnagar, Rajkot, Junagadh,

Amreli and Bhavnagar

Sesamum 402 241 0.60

Surendranagar, Bhavnagar,

Rajkot, Jamnagar, Kutch and

Amreli

Castor 290 541 1.86 Mehsana and Banaskantha

Table 11: Key Production Statistics of Oilseeds

The total vegetable production of

Gujarat for the year 2004-05 is 4.68

million MT, cultivated over an area

of around 0.33 million ha. Among

the different states of India, Gujarat

ranks 12th in area and 9th in

production of vegetables. The

major vegetable producing

districts of the state accounting for

around 75 per cent of the total

Gujarat vegetable production are

Banaskantha, Bhavnagar, Kheda,

Junagadh, Rajkot, Sabarkantha, Vadodara and

Mehsana. The state occupies number one position

in the country with respect to productivity of

potato and onion.

The main vegetables grown in Gujarat are potato,

onion, brinjal and tomato which together account

for about 67 per cent of the total Gujarat vegetable

production as show in exhibit 7.

20

Banana

47%

Mango

17%

Lemon

8%

Chicoo

7%

Papaya

6%

Guava4%

Others

11%

Exhibit 6: Share of Major Fruit Crops in Total Fruit Production

Potato

22%

Onions

20%

Brinjal

15%

Tomato

9%

Others

34%

Exhibit 7: Share Major Vegetable in Total Vegetable Production

The area, production and yield of some of the major fruits and vegetables grown in India along with

their major production centers are summarized in the table below (Table 12)

Gujarat ranks third in Banana production and fourth in productivity in India. Gujarat individually

ranks 13th in the world production of banana and accounts for 1.88 per cent of banana production in

the world. Banana is grown mainly in twelve districts of the state but the production is mainly

concentrated in Kheda (31 per cent), Bharuch (23 per cent), Surat (20 per cent), Vadodara (18 per cent)

and Ahmedabad (2 per cent) districts. The production of banana is the highest, almost half of all fruits

produced in the state.

Currently world banana production is of the order of 69 million MT of which India's contribution is

around 16.8 million MT. India ranks first in banana production and acreage (11 per cent). Gujarat is

the third largest banana producing state of the country. The banana varieties mainly grown in India

are Dwarf, Cavendish, Bhusaval Keli, Basrai, Poovan, Harichhal, Nendran, Safed Velchi etc.

World banana imports are dominated by United States, Canada, Japan, Former USSR, Middle East

and the EU countries. World imports of banana are projected to rise to about 14.3 million MT by 2010.

Despite the fact that Indian banana accounts for 15 per cent of the total world output and occupies the

first place in production in the world, it has negligible share in world exports. Key reasons for

BANANA: EXPORT POTENTIAL

21

CropArea Production

('000 tons)

Yield

(tons/ha) Major Production Centers

Banana 35.2 1403.1 39.86 Kheda, Bharuch, Surat, Vadodara and

Ah medabad

Potato 35.8 780.0 21.79 Banaskantha, Kheda, Sabarkantha,

Mehsana and Ahmedabad

Onion 25 717.4 28.70Bhavnagar, Panchmahal, Junagadh,

Amreli and Rajkot

Brinjal 36.5 531.3

Tomato 18.8 321.4

Mango 69.9 495.1 7.10 Valsad, Junagarh, Surat, Amreli and

Bhavnagar

Chiku 20.1 195.2 9.71 Valsad, Junagadh, Surat, Amreli and

Bhavnagar

Papaya 4.9 191.3 39.04 Kheda, Jamnagar, Ahmedabad, Junagadh and Kutch

Guava 7.8 110.3 14.14 Bhavnagar, Kutch, Ahmedabad,

Sbarkantha and Bharuch

14.56Kheda, Junagadh, Surat, Vadodara and Rajkot

17.08Vadodara, Valsad, Ahmedabad, Kutch and Bharuch

Source: CMIE & YES BANK Analysis

Table 12: Key Production Statistics of Fruits & Vegetables

negligible exports are lack of commercially viable varieties of banana, non availability of on-farm

packing house, pre-cooling & cold storage facilities, improper market research, improper quarantine

measures followed and inefficient marketing. Maintenance of quality and appearance assumes

utmost importance in the export market of banana.

To make a mark in the banana export market, Gujarat has to give special emphasis on creation of

optimum on-farm & post harvest product supply chains, producing disease-free fruit, flow of

effective and timely market information, adoption of organic fruit production, implementation of

biotechnology, efficient market development and following effectively all quarantine issues.

Gujarat ranks sixth in Mango production and third in productivity in India. Mango is grown in

nineteen districts of Gujarat. The top five mango producing districts of the state are Valsad, Junagadh,

Surat, Amreli and Bhavnagar. Mango is a seasonal produce with April as the beginning of the season

and May being the peak.

Gujarat ranks second in Papaya production in India, and in terms of productivity it occupies the

fourth rank. The fruit is grown round the year. The top five papaya producing districts are Kheda,

Jamnagar, Ahmedabad, Junagadh and Kutch.

Papaya market in EU is having a great potential. Total apparent consumption of papaya in EU is

estimated at about 35,000 MT in 2003. Total import of fresh papaya by EU-15 member countries is

estimated at around 56 million Euro or around 33,000 MT in the year 2002. The increasing consumer

demand of papaya in EU can be attributed to greater inclination towards health foods.

Total Indian exports of papaya amounted to 3,550 MT in 2004, accounting for less than 1 per cent of

world exports. India is one of the leading suppliers of papaya in EU. Majority of papaya exports by

India to EU is to UK which accounts for around 20 per cent of the total EU papaya imports. India is the

second largest supplier in the UK market only next to Brazil.

Papaya is commonly consumed fresh in slices or chunks. It is also used to prepare juices, sauces and

other preserves. The predominant varieties imported into the EU are Solo, Sunrise and Amazon Red.

EU importers mostly prefer small and medium sized hermaphrodite (pear shaped) papayas with 50-

70 per cent coloration on arrival. High consumption levels have been observed during the Christmas

and Easter periods. During the summer months of July and August, consumption of papaya tends to

decline.

Papaya trade is still a niche market. The main constraints of papaya trade are its fragility, under-

developed sea transport technology, critical maturity, short storage life etc. Air transport is used for a

product of excellent eating quality, which increases the price of the product considerably. Apart from

other aspects, compliance with stringent quality standards of EU countries is an important aspect.

Maintaining quality standards, such as uniformity in size and color are also equally important. To

boost export volume there is a need for technology improvement in sea transport and other

promotional campaigns. Organic food products are becoming increasingly popular in EU markets.

PAPAYA MARKET IN EU: AN EXPORT OPPORTUNITY FOR GUJARAT

22

Therefore, with proper organic certification, organically produced papayas can create a boost in

exports.

Gujarat being one of the leading producers of papaya in India can leverage the large number of boats

available enhancing the infrastructure and the same to cater to EU markets.

Gujarat ranks second in world production of Chikoo and accounts for 21 per cent of chikoo

production in the world. Gujarat ranks second in terms of chikoo production and productivity in

India. Chikoo production is concentrated in the districts of Valsad, Junagadh, Surat, Amreli and

Bhavnagar.

Gujarat ranks fifth in terms of Guava production in India and ranks first in terms of productivity. The

season begins in November and January is the peak season. Top five guava producing districts are

Bhavnagar, Kutch, Ahmedabad, Sabarkantha and Bharuch.

In India, Gujarat ranks seventh in Potato production and ranks first in productivity. Potato

production is mainly concentrated in Banaskantha, Kheda, Sabarkantha, Mehsana and Ahmedabad.

Gujarat individually ranks 18th in the world in Onion production and accounts for 1.5 per cent of the

total world onion production. Gujarat ranks second in onion production in India, while in terms of

productivity it ranks first. Top five onion producing districts of Gujarat are Bhavnagar, Panchmahal,

Junagadh, Amreli and Rajkot. Pusa Red variety of onion is widely exported from the state.

Over the years, volume of exports of frozen fruits and vegetables from India have increased manifold.

Main importing countries are UK, USA, Canada, Australia, New Zealand and other Western

European countries. Consumers in these importing countries are very stringent about quality of the

products. Processing of foods should not affect the quality, taste or form of the fruit. Most of the

processing techniques being followed in India such as refrigeration, heat processing, processing

using chemical treatments, curing, fermentation, irradiation, etc result in some change in the form

and structure of the food items being stored. Refrigeration and freezing, though are being commonly

followed for the purpose, shelf life and the resultant product of such processing however, is always

under question.

Individual Quick Freezing (IQF), also known as Flash Freezing, is a commercial freezing technology

that allows fruits and vegetables to retain its quality and original nutritive value while preventing

large ice crystals from forming in the fruit cells. Since each whole fruit is individually frozen, particles

do not cohere, and the final product is not frozen into a solid block. IQF products eliminate

reprocessing and considerably reduce the drop loss during thawing refreezing. It also gives a longer

shelf life to the fruits and vegetables. Consumers in the importing countries prefer IQF products and it

fetches a better price in the international markets.

Though there is vast international market for the IQF products, the biggest bottleneck in expanding

the sector in India, in terms of both investment and exports, is lack of adequate infrastructure. With

focus on creation of infrastructure, Gujarat can become a major player in this market due to its

inherent production strengths in varied fruits and vegetables.

IQF TECHNOLOGY FOR FRUITS AND VEGETABLES: SCOPE FOR GUJARAT

23

Tobacco

In India, Gujarat ranks 2nd in production and 1st in area under tobacco cultivation. The total tobacco

production of Gujarat was around 0.2 million MT on an area of 111 million ha. The state is among the

leading tobacco growing states of India with a productivity of 1.75 MT /ha.

Spices

Gujarat mainly produces Chillies, Cumin, Fennel and Garlic which together contribute to approx 80

per cent of the total spice production of Gujarat (see Table 13).

Gujarat produced 10.5 thousand MT of Chillies in the year 2002-03. This represents about 2 per cent of

India's chilli production. Chilli is produced in almost all districts of Gujarat.

Gujarat produced 64.3 thousand MT of Cumin in 2002-03 on an area of 12.1 thousand ha (1.2 per cent

of Gujarat's cultivated area). Gujarat produces about 36 per cent of world's cumin production and 45

per cent of India's production.

Gujarat produces about 80 per cent of the total Fennel production of the country. Till the year 1993-94,

Gujarat was the only fennel producing state of India. Later on Rajasthan also took up the cultivation of

the spice. Gujarat is at the top position in terms of area, production and yield not only in India but also

in the world. The main fennel producing districts are Mehsana, Sabarkantha and Kheda which

account for 93 per cent of the total production.

The state produces 23 per cent of the country's total Garlic production. The garlic production was 15.4

thousand MT in the year 2003-04.

Herbs

In Gujarat, commercial cultivation of herbs is limited. Herbs are mostly grown in districts of Dangs,

Bharuch, Valsad, Kutch, Sabarkantha, Panchmahal, Junagadh and Gandhinagar.

Directorate of Indian System of Medicines (ISM) in Gujarat has set up a chain of nine herbal gardens

with the objective of setting up regional repository of medicinal plants in the state at Rajpipla,

Saputara, Antarsuba ashram, Mani Raladi, Varod, Rupvel, Sasangir, Jitnagar and Gandhinagar.

24

Crop Area

('000 ha)

Production

('000 tons)

Yield

(tons/ha) Major Production Centers

Cumin

Seed 200.05 64.3 0.321

Surendranagar, Rajkot, Mehsana,

Banaskantha and Ahmedabad

Garlic 8.5 46.4 5.459 Junagadh, Jamnagar and Rajkot

Chillies 12.1 10.5 0.868

Mehsana, Rajkot, Surat, Banaskantha,

Jamnagar, Surendranagar, Vadodra

and Gandhinagar

Table 13: Key Production Statistics of Spices

Source: CMIE & YES BANK Analysis

ORGANIC FARMING: AN IMMENSE OPPORTUNITY IN GUJARAT

2.2.2 Dairy

POTENTIAL FOR EXPORTS OF DAIRY PRODUCTS

Organic Farming is a system of farm design and management that seeks to create a healthy ecosystem

with sustained profitability. The growing consciousness of health hazards posed due to

contamination of farm produce from the use of chemical fertilizers and pesticides has given

momentum to this form of farming. Although organic agriculture and organic trade account for less

than one per cent of the total food industry, it has become the fastest growing segment in the food

sector.

Worldwide markets for organic foods are expanding, with annual growth rates of 15-30 per cent in

Europe, United States and Japan for the past five years. The world wide market for organic foods is

estimated at about USD17.5 billion, USD accounting for about USD 8 billion while the European

organic market is estimated at USD 5.25 billion and the Japanese organic market is estimated at USD

2.5 billion.

The major organic products sold in global markets include dried fruits and nuts, processed fruits and

vegetables, cocoa, spices, herbs, oil crops & derived products, sweeteners, dried leguminous plants,

meat, dairy products, alcoholic beverages, processed food and fruit preparations. Non- food items

include cotton, cut flowers and pot plants.

Gujarat represents a big potential for organic farming. It is estimated that about 20-25 per cent of total

net sown area is compulsively organic due to paucity of funds with farmer and rainfed agriculture.

Few enterprising farmers are producing groundnut in Saurashtra region of Gujarat (Junagadh).

Organic pulses can be supplied from Kutch and Banaskantha regions, large parts of which are

compulsively organic. A small step in this direction has already been taken by GIAN (Gujarat

Grassroots Innovation Augmentation Network) with the help of SEWA by marketing small amounts

of gram and arhar (Red gram) under the brand name Shaswat.

Dairy sector plays a vital role in the rural economy of the state by generating substantial income to

rural population where employment is scarce.

The dairy industry is well established in Gujarat state and is taken as a model for other states in the

country. Gujarat is one of the leading milk producing states of India. The state contributes 6 per cent

to the total milk production of the country. There are 12 co-operative dairy plants in the state with a

handling capacity of 70.10 lakh litres of milk per day.

India exports milk and milk based products of worth Rs 159.41 crore. Skimmed milk continues to be

the largest item of export. Milk for babies, whole milk and milk food for babies registered a

phenomenal growth in the recent years.

Germany emerged as the largest market for India's exports of milk and milk based products there by

replacing Bangladesh, which happened to be the largest market in the year 2002-03. The other

countries to which India's exports are increasing are Iran, China, Nepal, USA and Sri Lanka. Demand

25

forecasts for milk for the period up to 2020 indicate that demand for milk is likely to go up by nearly 45

million MT, that is, a jump of nearly 50 per cent in absolute terms from 2004 levels .Other than

projected domestic demand, increased demand in other parts of world also provides a great

opportunity for the Indian Dairy Industry and its exports. Good scope exists for value added

products like Cheese, desserts, puddings, custards etc.

Against this, the milk received in these co-operative dairy plants was 58.52 lakhs litres per day in

2004-05. There are also 11 private dairy plants and 11,557 co-operative dairy

societies in the state.

Gujarat is endowed with wide range of marine and inland aquatic resources. Gujarat has a long coast

line of 1600 Kms. Rivers and tributaries extend to 3,865 Kms. Apart from this, Gujarat has huge

resource of reservoirs, tanks and brackish water area. The area under different water resources is

given in the adjoining table 14.

According to livestock census 2003, there are

970 fishing landing centers. Important

commercial varieties of fish namely Pomfret,

Jew Fish, Bombay Duck, Shrimp, Lobster,

Squid, Cuttle, Silver Bar, Hilsa, Catfish,

Mullets, etc are caught in large numbers in

these areas. In addition, the Gulf of Kutch has

congenial conditions for growth and

sustenance of different types of Oysters,

Shell fish and Sea Weeds.

The total fish production of the state in the

year 2004-05 is 0.63 million MT worth Rs 559.29

crores (Exhibit 8). The state accounts for nearly 10

per cent of the total fish production in the country.

Marine fish production constitutes almost 92 per

cent of the total fish production of the state. Gujarat

is one of the highest contributors (21 per cent) to the

total marine fish production of the country.

Junagadh, Valsad, Porbandar and Kutch are the

major producing centers of the marine fish, together

accounting for almost 78 per cent of the total marine

fish production of the state. Out of the 970 fishing

landing centers in Gujarat, 217 are marine, 665 are

inland fishing landing centres and remaining 88 are

estuarines.

2.2.3 Fisheries and other Marine Products

26

Resource Area (million ha)

Continental Shelf Area 18

Exclusive Economic Zone 21.4

Reservoirs 0.286

Ponds & Tanks 0.071

Brackish Water Area 0.376

Source: Gujarat Fisheries Statistics, 2003-04

Table 14: Water Resources of Gujarat

0 0.2 0.4 0.6 0.8

2001-02

2002-03

2003-04

2004-05

Marine Inland

Exhibit 8: Fish Production in Gujarat

27

Value (Rs Crore)

Frozen Squid17%, 102.88

FrozenCuttle/Fillets16%, 99.12

Other Items12%, 75.73

FrozenShrimp, 58.81

10%

Dried Items1%, 9.18

Fresh FrozenFish, 268.42

44%

Exhibit 10: Value of Aqua & Marine Export Products

Out of the 217 marine fishing landing centres, Veraval is the major landing centre which alone

contributes to 25 per cent of the total marine fish production of the state. The total marine fish

production according to major landing centres is shown in the graph below (Exhhibit 9).

During the year 2004-05, the state has

exported 0.12 million MT of fish and fish

products worth Rs 704.59 crore. Fresh

frozen fish is the major item being

exported constituting about half of the

total fish and fish products exported from

the state. The share of export of various

marine & aqua product is given in exhibit

10.

As per the final results of livestock census

2003, total livestock population of Gujarat

was 228.46 lakh. The state has a total poultry population of 72 lakhs. This sector contributes approx 5

per cent to the state GDP. Of all the districts, Kheda accounts for the maximum number of poultry

farms in the state.

To facilitate the marketing of agri-produce, there are 609 mandis in the state which cater to 18,500

villages. There are state and private owned warehouses having a total capacity of 2.23 lakh MT. The

state has 550 cold storages with a storage capacity of 2.59 lakh MT.

2.2.4 Animal Husbandry and Poultry

2.2.5 Agricultural Markets

Exhibit 9: Marine Fish Production

10

50

90

130

Vera

val

Porbandar

Jakhao

Jaff

rabad

Nav

aandar

Rajpara

Mangro

l

PortO

kha

Um

arsa

di

Swar

ka

Marine Fish Production (MT)

2.3 GUJARAT'S COMPETITIVENESS IN FOOD & AGRICULTURE

SWOT Analysis of Gujarat Agriculture

Gujarat is a competitive producer of several agricultural and horticultural crops both at domestic

level and on a global scale. It stands fourth in the country in terms of per capita agricultural output.

28

WEAKNESSES

Ø Fragmented processing industry

Ø Unreliable weather

Ø More area under non food crops

Ø Dependence on groundwater

Ø Lack of R&D support and inadequate

trained human resource for modern

agricultural research

Ø Physical infrastructure bottlenecks

STRENGTHS

Ø Integrated Water Management and Assured Irrigation

o Total irrigation potential of 5.05 mn ha

o Total irrigated area of 3.64 mn ha

Ø Diversified crops and cropping systems

Ø Climatic diversity - 8 agro climatic zones

Ø Agro industrial policy with single window clearance

Ø Introduction of e-governance and usage of modern techniques to disseminate information to the farming community

Ø Strong agri marketing network

THREATS

Ø Tough competition from other

s t a t e s l i k e M a h a r a s h t r a

part icular ly with i ts wel l

developed fisheries industry

OPPORTUNITIES

Ø Investment in infrastructure

Ø Focus on agro industry

Ø Impact of Sardar Sarovar Project on the

state's agri-economy

Ø Shifting consumer preferences

GUJARAT'S COMPETITIVE POSITION IN INDIA

Based on the production trends and the productivity levels of various crops the competitiveness of

Gujarat has been depicted below,:

29

1st Rank

Highest Groundnut

SesamumCotton Onion

Castor

Fennel Seed

2nd/ 3rd

Rank

High Guar Seed

Cumin Seed

Banana

4th - 7th

Rank

Medium

Brinjal

Garlic

Tobacco

Papaya

Potato

Wheat

P

r

o

d

u

c

t

i

o

n

8th Rank

& below

Lowest

Guava

Tomato

8th Rank &

below

Lowest

4th - 7th Rank

Medium

2nd/ 3rd Rank

High

1st Rank

Highest

Source : YES BANK Analysis

P r o d u c t i v i t y

2.4 AGROPROCESSING SECTOR IN GUJARAT

Gujarat is one of the leading states in production of many

agri commodities not only in India but also at global

level. It is estimated that the total quantity of fruits and

vegetables processed in Gujarat is less than 2 per cent.

Dehydrated vegetables, canned vegetables, mango pulp,

juices, pickles and chutney are some of the important

processed products of the state. The onion dehydration

industry of the state is the biggest in the country. The

state accounts for nearly 80 per cent of the onion

dehydration nits in the country. Export destinations

include USA, Canada, UK and Gulf.

Gujarat is one of the fastest growing markets for consumption of food products in India. The per

capita expenditure on food products is higher than the national average. Food processing industry is

of enormous significance for the development of Gujarat because of the vital linkages and synergies

that it promotes between the two pillars of the economy, industry and agriculture. Fast growth in the

food processing sector and progressive improvement in the quantum of value addition are also

critical for achieving favorable terms of trade for agriculture both in the domestic and international

markets.

Food processing industries have a crucial role to play in reduction of post harvest losses. The most

important point in the food industry is that a substantial portion being rural based, it has a very high

employment potential with significantly lower investment. The fruits and vegetable farming for

processing is not only employment intensive, but also enhances the gross as well as net returns of the

farmers. Further, agro-industry generates new demand on the farm sector for more and different

agricultural output, which is more suitable for processing.

2.4.1 Food Processing Industry in Gujarat

The food processing industry in Gujarat is dominated by small scale industries. The medium and

large scale food processing industries in Gujarat are concentrated in the districts of Ahmedabad,

Junagadh, Kutch, Rajkot, Gandhinagar and Vadodara.

30

Processing

IndustryMajor Districts

Oil Processing Rajkot, Kutch, Ahmedabad, Junagadh &

Mehsana

Vegetable Bhavnagar & Valsad

Fish Junagadh, Porbander & Jamnagar

Dairy Anand, Gandhinagar, Sabarkantha &

Banaskantha

Table 15: Major Agro Processing Industries of Gujarat

Source: Industry Sources

31

Major industries in the state are oil, vegetable, fish and

dairy based processing industries (see Table 15).

Dehydrated vegetables, canned vegetables, mango pulp,

juices, pickles and chutney are some of the important

processed products of the state. The onion dehydration

industry of the state is the biggest in the country. Isabgol

husk is one product where the state has distinct

competitive advantage.

The following are the existing food processing

industries in Gujarat:

2.4.1.1 Fruits & Vegetable Processing Industry

It is estimated that the total quantity of fruits and vegetables processed in Gujarat is less than 2 per

cent. F&V processing industry in Gujarat is dominated by small scale industries. There are 23 units

of large and medium scale and 350 SSIs involved in fruit and vegetable processing in Gujarat.

These units are engaged in:

Ø Dehydration of F&V

Ø Pulp and Juice Making

Ø Ready to Eat Foods

Ø Tomato Processing

Ø Freezing and Refrigeration etc

Most of the small scale fruit processing industries are

concentrated in Ahmedabad & Sabarkantha and

vegetable processing industries are concentrated in

Rajkot, Ahmedabad & Vadodara districts of Gujarat.

Potential Investment Opportunities:

Despite the fact that Gujarat is a leading producer of

many fruits and vegetables, the processing of fruits

and vegetable is minimal in Gujarat. The demand of

processed food is increasing in the country as well as

globally. With surplus raw material available with the state which goes waste due to perishable

nature of fruits and vegetables, we can look at few of the potential but untapped areas of F&V

processing industry in the state. Some of the potential but untapped areas which can be developed

further are touched upon briefly (Exhibit 11 & Table 16) .

a) Freeze Dried Fruit Juice Powder/ Slices/ Dices

Freeze dried fruit juice powders/ slices / dices are used as convenience foods in lieu of fresh

ingredients and offer longer storage life than fresh fruits. Papaya, Banana, Sapota and Mango can be

processed for manufacturing freeze dried fruit juice powders/ slices and dices for domestic and

export markets.

The preferred location will be central and South Gujarat as major fruit production area and

consuming markets are present there and molasses, the basic raw material, is easily available. The

32

Instant Vegetables in Retort Pouches

Freeze Dried Fruit Juice Powder/

Slices/ Dices

Tomato Processing

Potato Processing

F&V Processing Industry

Banana Fiber

Extraction & Processing

Processing Unit Suggested Location

Freeze Dried Fruit Juice Powder

/Slice/Dices Unit

Surat, Vadodara, Valsad, Bharuch,

Ahmedabad and Anand

Tomato Processing UnitAhmedabad, Surat, Mehsana, Kheda,

Anand and Bhavnagar

Potato Processing UnitBanaskantha, Mehsana, Kheda,

Sabarkantha, and Anand

Banana Fiber Extraction & Processing UnitKaira, Vadodara, Bharuch, Narmada, Surat,

Valsad and Panchmahal

Instant Vegetables in Retort PouchesAhmedabad, Kheda, Anand, Vadodara,

Surat, Bharuch, Valsad and Sabarkantha

Exhibit 11: Potential Investment Opportunities in F&V Processing Industry

Table 16: Suggested Locations to Setup F&V Processing Units in Gujarat

suggested locations can be in the districts of Surat,

Vadodara, Valsad, Bharuch, Ahmedabad and Anand.

b) Tomato Processing

Presently very little quantity of tomatoes are processed

into value added products and processing of which is

mainly carried out in cottage/small scale industries.

Hence, there is a scope for medium sized integrated

tomato processing unit in the state.

Processed tomato products have wide applications in house-hold consumption, food processing

industry, hotels, restaurants and fast-food joints. Tomato products can be grouped into many end-use

categories like peeled, concentrated, partially dehydrated, strained & diced tomatoes, tomato pulp,

paste, powder, juice and ketchup.

The suggested locations for proposed tomato processing unit are Ahmedabad, Surat, Mehsana,

Kheda, Anand and Bhavnagar districts, based on raw material and market availability.

c) Potato Processing

Gujarat is one of the leading potato producing

states in western India. Potatoes produced in

Gujarat are suitable for value added processing

like manufacturing of potato powder and flakes,

potato chips etc.

Potato powder/ flakes have wide application in the

processed and snack food industries. It can be

used in any recipe which requires mashed

potatoes. Potato powder is used as a thickener or

base for preparation of ready to eat vegetable

gravies and soups. It is also used as an ingredient

for potato chips, texturised potato products,

snack pellets, etc.

Fabricated potato chips offer consistent quality, taste and find ready market against conventionally

prepared potato chips. They have wide application in the processed and snack food industries, with

the development of different flavours meeting regional and global taste preferences.

The suggested locations for proposed potato processing unit of powder and flakes are Banaskantha,

Mehsana, Kheda, Sabarkantha and Anand districts.

33

d) Banana Fiber Extraction and Processing Unit

The use of "Banana" fiber for textile and other purposes

as natural material is a new concept for India. It has

been found in the research that banana fiber can be a

very promising source of natural fiber in the coming

period. It may be noted that this fiber is already used

successfully in Philippines since decades and hence it is

also known popularly as "Manila Hemp". The other

name of this fiber is "Abaca". It belongs to Musa

sapientum species. Presently, waste banana stems pose problem of disposal and are available almost

free of cost in central and south Gujarat. So, setting up of a facility can be considered for banana fiber

extraction from waste banana stem, cleaning, grading and converting it up to finished ready-made

garment.

Banana fiber is a natural fiber with high strength, which can be blended easily with cotton fiber or

other synthetic fibers to produce blended fabric & textiles. It is mainly used by cottage industry in

southern India at present. Banana fiber also finds use in high quality security/ currency paper,

packing cloth for agricultural produce, ships towing ropes, wet drilling cables, etc.

The suggested locations are Kaira, Vadodara, Bharuch, Narmada, Surat, Valsad and Panchmahal.

e) Instant Vegetables in Retort Pouches

Ready-to-eat foods (RTE) are convenience foods,

enclosed in aluminum container or pouches that only

need to be cut and heated before being served. Instant

vegetables in retort pouches fall under this category

and find application not only as home meal

replacement in working class households but also in

fast-food restaurants and multi cuisine food joints.

These are handy meal for armed forces and

paramilitary forces deployed in remote places. RTE

food includes wide range of products viz. vegetarian /

non-vegetarian, basic food/delectable desserts, south

and north Indian items available from a specialty or multi cuisine restaurant & food joint only.

The global traded quantum of RTE food for the year 2004-2005 was 503,087 MT (approx valued at

around USD 814 million) while the global market for food processing industry is more than USD 69

billion. Domestic market for semi processed and RTE packaged food industry is estimated to be over

USD 1 billion with a growth rate of 20 per cent.

34

As per industry estimates by the year 2009, Indian market for frozen and processed food products will

be INR 6.67 billion, with west India leading the race buying 11.72 Lakh MT of processed foods valuing

around INR 2.31 billion followed by north india with

estimated sales of 11.30 Lakh MT valued at INR 2.27

billion.

The suggested locations for proposed instant vegetables

and retort pouch making unit are Ahmedabad, Kheda,

Anand, Vadodara, Surat, Bharuch, Valsad and

Sabarkantha districts.

2.4.1.2 Cereal and Oilseed based Processing Industry

Cereal based processed food industry includes pasta,

breads, cakes, pastries, rusks, buns, rotis, noodles, rice

flakes, corn flakes, biscuits, ready to eat products etc.

Breads and biscuits constitute the largest segments of processed cereals products. Their production is

about 3.7 million MT per year. Approx 16 per cent of the medium and large scale agro based

processing industries are cereal based in Gujarat. This includes bakery (6 per cent) and grain milling

(5 per cent). On the contrary, almost 64 per cent of the SSI units are cereal based. It can be deduced that

most of the cereal processing happens in the SSI sector as it does not require sophisticated technology.

Potential Investment Opportunities

Presently all cereal and oilseed based processing industries are into making traditional processed

foods. Key potential investment opportunities in this sector are shown in exhibit 12.

35

a) Peanut Butter Manufacturing Unit

Peanut Butter is a price competitive product, with low calories, high protein and balanced nutritive

values; it is an idyllic alternative for dairy butter as bread spread. It is consumed in large quantities in

western countries and is yet to pick up market in India, and has good potential for the untapped

market.

The world traded quantum of Peanut Butter reported in the year 2004-05 was around 109,973 MT

valued at USD 188 million. Peanut Butter is part of the staple break-fast food in US. Statistics say that

89 per cent of the entire US households consume this bread spread. This is further evident from the

fact that about one-third of the US peanut harvest is utilized for peanut butter making. This is

approximately 1.2 billion pound of peanuts every year. The consumption of peanut butter is also high

in the countries like Philippines, South Korea, Canada, etc. as they are influenced by US culture.

36

S No. Processing Unit Suggested Location

1. Peanut Butter Manufacturing Unit Amreli, Bhavnagar, Jamnagar, Jungadh

and Rajkot

2. De-hulled and Roasted Sesame Seed

Oil Processing Unit

Amreli, Bhavnagar, Rajkot, Surendranagar

and Banaskantha

3. Castor Oil Derivatives-Perfumery

Raw materials

Kutch and districts of North and Central

Gujarat

Cereal & Oil based Processing

Peanut Butter Manufacturing

De-hulled & Roasted Sesame

Seed Oil Processing

Castor Oil Derivatives– Perfumery

Raw Materials

Exhibit 12: Potential Opportunities in Cereal & Oil Based Processing

Table 17: Suggested Locations to Setup Cereal & Oil Based Processing Units in Gujarat

Considering India's stand as the world's second largest

producer of peanuts in the world, its share in the world

market is restricted to raw peanuts, with negligible

contribution in value added products like Peanut Butter,

roasted - blanched, and coated peanuts.

Though, the domestic market for Peanut Butter is small

at present, but its export potential is good and with

people becoming more health conscious the local market

is sure to develop.

Amreli, Bhavnagar, Jamnagar, Jungadh and Rajkot are the five main districts for groundnut

production and hence are suggested as proposed location for Peanut Butter project in Gujarat. These

districts also have availability of basic infrastructure like land, water and power.

b) De-hulled and Roasted Sesame Seed Oil Processing Unit

De-hulled sesame seed is mainly used to add texture, taste and aesthetic value to a variety of bakery

products like bread, bread sticks, cookies, sesame bars etc. It is also used as an additive to cereal mixes

and crackers and it is the most important ingredient while preparing confectionery tahini in the Gulf

countries. Roasted sesame oil is mostly used as traditional cooking oil in Chinese food items and in

Japan.

Global sesame seed production for the year 2004-05 was 32.83 million MT while the global import -

export trade was 1.705 million MT valued at USD 1495.51 million. Japan, Egypt, South Korea, USA,

Netherlands and Gulf countries are importing substantial quantity of de-hulled sesame seed. Japan is

the largest importer, accounting for 20 per cent of the world trade, importing nearly 0.16 million MT

per annum.

India and China are the two largest producers and exporters of de-hulled sesame seed, wherein India

accounts for around 25 per cent of the world trade. The Indian production has subsequently

registered sizeable growth from 587,100 MT in 2000 to 680,000 MT in 2005. Gujarat, West Bengal,

Tamilnadu, Andhra Pradesh, Madhya Pradesh, Maharashtra and Rajasthan are the main states

producing sesame seeds in India. India's export of sesame seeds is mainly to USA, Netherlands,

Turkey, Israel, Greece, Italy, China, Japan and Singapore.

Amreli, Bhavnagar, Rajkot, Surendranagar and Banaskantha are the districts suggested for location

of the proposed project.

c) Castor Oil Derivatives- Perfumery Raw materials

Gujarat, being the largest producer of castor seed, is an ideal place for setting up of a castor oil

derivatives unit to manufacture perfumery raw materials viz. Undecylenic acid and Heptaldehyde

by Pyrolytic decomposition of castor oil.

37

Castor Oil derivative has application in soap perfumery, and as perfumery raw material in the

perfume industry such as jasmine flavour, spicy orange odour, peach odour etc.

India is one of the leading manufacturers of flavours and fragrances in the world. These all are natural

products, but in developing synthetic flavours and fragrances from castor oil derivatives, India is

lagging behind.

Internationally Germany, France, Switzerland and Japan are leading producers of synthetic flavours

and fragrances from many natural ingredients, including castor oil derivatives like Undecylenic acid

and Heptaldehyde. Though, there is a large international market for perfumery chemicals, estimated

market in India is approx. 5000 MT. The global demand for flavours and fragrances is set to increase.

The suggested locations for the proposed project are Kutch and districts of north and central Gujarat.

2.4.1.3 Spices and Medicinal Plants

Gujarat is the largest producer of Isabgol husk in India.

Approximately 90 per cent of the total Indian Isabgol is

produced in Gujarat. There are 26 processing plants in

the state concentrated in Mehsana district (Unjha and

Sidhpor). Unjha is the biggest market yard for Isabgol.

Potential Investment Opportunities

Considering the availability of wide range of natural

herbs in Gujarat, Medicinal Herbs Extraction Unit can

be set up which will produce finished products in the

form of powder, oil, paste or aqueous solutions from extracted herbs.

The extract of natural herbs can be used in various formulations like ayurvedic medicines,

formulations, natural flavouring agents, cosmetic ingredients and as natural ingredients in allopathic

medicines.

The global herbal market is estimated at USD 60 billion. China enjoys the lead, contributing 30 per

cent to the world market. The growth rate for herbal market is estimated to be around 7 per cent -15

per cent annually. The market value of pharmaceuticals derived from plants used in traditional

medicines exceeds USD 20 billion.

The Indian annual production of herbal drugs is estimated at around INR 100 Crores, while the

medicinal plant value is about INR 5000 Crores and the anticipated export is around INR 550 Crores.

Considering the rich assorted and varied botanical resources available in the country, the exported

value is not impressive. The Indian market has 1650 herbal formulations involving 540 major plant

formulations.

The suggested districts for the location of the proposed project are Panchmahal, Dangs, Junagadh,

Sabarkantha, Valsad, Navsari and Kutch.

38

2.4.1.4 Dairy Industry

Dairy based units account for approximately 11 per cent of the Medium and Large units and around 7

per cent of the SSI units. Most of the dairy based industry is concentrated in the north and central

Gujarat in the districts of Anand, Ghandhinagar and Sabarkantha.

The dairy industry is particularly well developed in the

state of Gujarat because of the cooperative movement for

procurement of milk. Gujarat contributes around 6 per

cent of the total milk production in the country. Dairy

industry is well established in Gujarat and is taken as a

model for other states in the country. “AMUL” pattern is

well known and accepted by all states in the country and

some other countries as well. There are 11,557 milk

cooperative societies, 34 chilling centres and 12 dairy

processing units with a handling capacity of 70.10 lakh

liters of milk per day. Against this, the milk received in cooperative plants was 58.52 lakh liters per

day in 2004-05. The state government is giving full support to dairy development through the dairy

cooperative movement.

Potential Investment Opportunities: By looking at the global dairy market and futuristic trends,

key opportunities in the dairy sector are discussed below briefly

a) Organic Milk & Milk Products

Organic milk is a healthy and environment friendly product. It is free from any pesticide/ chemical

content and its derivatives are prepared using natural ingredients (natural food colours and chemical

free sweetener). The product range proposed in this project will include cream, paneer (cottage

cheese), curd, butter, ghee (butter oil), khoa (milk mawa), yoghurts, milk based desserts & sweets,

flavoured milk and lassi.

A unit that will adopt integrated methodology to

manufacture organic milk and milk products can be set

up in Gujarat. This includes animal husbandry project of

dairy farming integrated with modern milk processing

unit, to manufacture a range of organic milk products

under strict hygienic conditions to meet the organic

standards and specifications of domestic and global

markets.

World milk production for the year 2005 as estimated by

FAO (Food and Agriculture Organization) was 629.2

million MT. The major global organic milk markets are UK, USA, Germany, Netherlands, France and

Sweden. USA & U.K lead the world in consumption and production of organic milk. India exports

milk and milk products to U.A.E & other Gulf countries, Philippines, Bangladesh, Singapore, etc.

39

With the increasing health consciousness and awareness regarding harmful effects of pesticides and

chemical traces in milk, market for organic milk and milk products is likely to grow manifold in India

in the coming period. Gujarat is one of the leading states in milk and milk products manufacturing,

having approx. 20 per cent share of the total Indian dairy products market.

The suggested locations are districts of south Gujarat except Dangs, central Gujarat, north Gujarat,

Saurashtra and Kutch region.

2.4.1.5 Fishery Industry

Of the total fresh fish production in Gujarat, marine

sector contributes over 90 per cent of the catch. Gujarat's

share in the total fish production has been fluctuating in

volume terms and has come down in the value terms in

the last decade. The main reason could be the declining

fish catch and quality of catch. It is estimated that 35 per

cent of the catch in the marine sector is low value

miscellaneous fish. Junagadh district contributes the

bulk of the marine landings.

Out of the total 25 districts, 12 districts are on the coast. The district having the maximum number of

the fish related industries is Junagadh. Others districts are Porbandar, Jamnagar, Rajkot and Bharuch.

Potential Investment Opportunities

High value shrimp farming in coastal saline zone has vast potential as the local per capita

consumption of the state has gone upto 10.58 kg per year. Also high value shrimp exports can be

exploited to increase the export income. There is huge potential for exports of frozen shrimp and IQF

shrimp.

Shrimp Farming and Processing Unit in Kutch

Shrimp is a kind of seafood that is used as an input in a variety of processed food products. It can be

barbecued, boiled, broiled, baked and sauteed. Variety of shrimp products like pineapple, lemon,

coconut, pepper shrimp & shrimp soup, stew, salad, burger, sandwich, kebabs, gumbo, pan fried,

deep fried & stir fried are available and are largely consumed in USA and Japan. Thus, shrimp has

domestic and global market as an important sea food and as an input into variety of processed food

products.

The suggested locations for integrated shrimp farm and a processing unit are coastal areas of Gulf of

Kutch and Jamnagar districts.

40

2.4.1.6 Meat and Poultry Industry

There are 38 registered slaughter houses in the state.

Meat processing is limited because consumer prefers

fresh meat instead of processed meat.

Potential Investment Opportunities

The meat and poultry industry is unorganized in

Gujarat. Approx 95 per cent of the poultry sector in

Gujarat is controlled by private sector and that too by

small players. Presently there is no significant processing of the poultry products. Most of the

produce is sold through unorganized sector. So, processing of poultry produce is a potential

investment area for the industry.

Egg Powder - Value Added Poultry Product

Eggs are dried to preserve the surplus eggs to avoid spoilage. Drying of eggs is an economical method

of preservation. The dried egg powder can be stored and transported without refrigeration at room

temperature. The product is stable and has a long shelf life. In the drying process, the bulk and weight

of raw eggs are reduced. This results in less transportation cost and sufficient supplies to remote

places with convenience.

Egg powder is used in fast food preparations, ice-creams, cakes, cookies, noodles, doughnuts etc. In

fact it can replace the use of fresh eggs in these food items, which would offer convenience and ease of

handling as against shell eggs. Apart from whole egg powder, yolk powder and albumen flakes can

also be made. Albumen flakes are free from cholesterol and have also application in printing and

other natural protein applications.

The estimated domestic demand of egg powder is

around 1000 MT, which is largely consumed by Armed

Forces and bakery industry. However, with increased

availability of egg powder, the household demand is

expected to grow. Egg powder is a substitute for fresh

egg and consumed on a large scale in food processing

industries in Europe, USA and Japan.

The preferred locations will be central and south

Gujarat as major poultry farming activities are

conducted in these areas and also consuming industries

market is available in these areas. Proposed locations can be in the districts of Surat, Vadodara,

Valsad, Bharuch, Ahmedabad and Anand.

41

42

2.4.2 Food Processing Industry Investment Scenario

Since 1984, a total of Rs 1759.25 crores (USD 391 million) has been invested in food processing

industry in Gujarat. In the past five years, major investments in food processing industry are depicted

in the graph below (Exhibit 13).

A sum of Rs. 262.15 crore has been invested in the past five years in Food Processing Industry. Fruits

and Dairy are the upcoming sectors for investment in recent years. There is no new investment in

bakery industry.

2.4.3 Agro and Food Clusters in Gujarat

Districts in Gujarat which are geographically connected are represented as a Cluster. The following is

a crop-cluster matrix of Gujarat

0

10

20

30

40

50

60

70

80

Inv

est

me

nt

inR

sC

rore

Fruits Dairy Oil Cereal Vegetables Fishery Grain

Milling

Others Spices

Exhibit 13: Investment in Food Processing Industry

43

Crop Cluster 1 Cluster 2 Cluster 3

Fruit Crops

Banana

Anand, Vadodara,

Bharuch, Narmada,

Surat

Chikoo Bhavnagar, Amreli,

Junagadh

Surat, Navsari,

Valsad

Mango Bhavnagar, Amreli,

Junagadh

Vegetables

Onion Amreli, Bhavnagar,

Junagarh, Rajkot

Potato

Banaskantha, Mehsana,

Sabarkantha,

Gandhinagar

Anand, Kheda

Tomato Ahmedabad, Anand,

Vadodara, KhedaJamnagar, Rajkot

Mehsana,

Sabarkantha,

Banaskantha

Oilseeds

Castor Banaskantha, Kutch,

Mehsana, Sabarkantha

Sesame Seed

Bhavnagar,

Surendranagar, Rajkot,

Junagadh, Jamnagar,

Porbandar

Rapeseed &

Mustard

Sabarkantha,

Banaskantha, Mehsana,

Patan

Groundnut

Junagarh, Rajkot,

Amreli, Bhavnagar,

Jamnagar

Kutch,

Surendranagar

Spices

Cumin Jamnagar, Rajkot,

Surendranagar

Patan,

Banaskantha,

Mehsana,

Ahmedabad

Fennel Banaskantha, Mehsana,

Sabarkantha

Medicinal Herbs

Isabgol Kutch, Banaskantha

Floriculture &

Aromatic PlantsSurat, Navsari, Valsad

Anand,

Vadodara

Table 18: Suggested Agro & Food Clusters in Gujarat

44

2.4.4 Other Potential Investment Opportunities in Gujarat

The following are the potential investment opportunities in

Gujarat

2.4.4.1 Pack House Project for Bananas

With the rise in the production of bananas in Gujarat as well as

in India, post harvest facility of storage and handling has

become a matter of concern. The Banana Pack House Project

can serve as an important link in the complete Supply Chain

Management and provide necessary support for the

development of banana markets. The project will provide

required impetus in the form of physical infrastructure and

technological inputs to the banana growers and exporters,

which in turn will develop the banana exports from the region.

Market and Growth Drivers

The technological changes in the post harvest storage in the developed countries boosted growth in

the global banana trade in the last few years, which has reached INR 43,600 crores (USD 9.69 billion).

The major countries to which India exports the bananas are U.K., Saudi Arabia, Kuwait, UAE, Oman,

Qatar and Yemen Arab Republic.

There is a huge potential for export to EU countries and CIS countries. India already exports bananas

to Germany, France and U.K. but still needs to go a long way to meet strict quality standards.

Rationale for setting up Banana Pack House Project in Gujarat

Ø Gujarat is one of the leading states in the production of banana in India, with the highest

productivity of 40 MT/ ha. The state banana production in the year 2004-05 was 1.98 million MT

and is expected to grow with availability of canal irrigation & adoption of tissue culture plants as

planting material

Ø Huge export potential to Middle East and Europe

Ø Government of Gujarat offers 6 per cent back-end interest subsidy with a ceiling of INR 40 million

for Banana Pack House project

Ø Availability of technically trained man power for pack house operation at economical cost

Ø Well developed transport infrastructure facilities like rail & road network and availability of

world-class ports like Kandla, Mundra and Pipavav having container cargo handling facilities

Banana Pack House could be set up at various places in central and south Gujarat regions in the

districts of Kheda, Anand, parts of Panchmahal, Vadodara, Surat, Narmada, Bharuch and Valsad.

2.4.4.2 Onion Cold Storage

Onion, being high in water content, is a delicate

commodity to store and requires special procedure and

parameters, giving rise to the concept of onion cold

storage. Setting up of an onion cold storage unit will be

an essential infrastructure for onion exporters, both in

private and public sector.

Onion is an important vegetable crop grown in India

and forms a part of daily diet in almost all households

throughout the year. It is also used for medical purpose.

But due to non-availability of appropriate post-harvest storage facilities, 20-25 per cent of the total

onions produced are wasted which in value terms is approximately INR 30 to 35 crores every year.

Building up of the cold storage unit would minimize the wastage up to the level of 3 to 4 per cent that

would in turn help the onion growers, and stabilize onion prices in market for all types of consumers.

Market & Growth Drivers

India mainly exports onion to South East Asian countries, Middle East-Gulf countries and CIS

countries. The major importers of Indian produced onion are Malaysia, UAE, Sri Lanka, Bangladesh,

Singapore and Saudi Arabia.

The present storage capacity for onion is quite inadequate and inefficient in preventing post harvest

losses. Even if 30 per cent of the stocks are earmarked for scientific storage the potential for new cold

storage capacity is around 4.125 lakh MT at current level of onion production in Gujarat that is 165

cold storages of 2500 MT storage capacity each. Thus, a huge gap exists for onion cold storage facilities

in India in general and Gujarat in particular.

Rationale for setting up Onion Cold Storage in Gujarat

Ø Gujarat ranks second in Onion production in India

Ø Onion cold storage will ensure smooth supply of raw materials for dehydrated onion units that

are mainly export oriented units and this will make them competitive in their export, ensuring

continuous supply of good quality raw material

Ø Majority of onion growers are small and marginal farmers and onion cold storage will protect

them against making distress selling of their produce. This will also ensure stable onion prices

for all classes of consumers in Gujarat

Ø Well developed transport infrastructure like road, rail, port and air connectivity. Onion cold

storage will also help in boosting export of onion from Gujarat

45

Ø Power is important and main input in Onion cold storage operation. With the advent of gas in

most of the regions of Gujarat, and with the usage of NG for power generation, the cost of this

captive power would be highly competitive.

Suggested locations for the proposed project are Bhavnagar, Junagadh, Rajkot, Ahmedabad,

Jamnagar and Surendranagar districts.

2.4.4.3 Baker's Yeast

The principle use of Baker's yeast is, as an essential

bakery ingredient, for causing fermentation in dough

used in making bakery items. This process helps

making soft and fluffy bakery items like variety of

breads, bread rolls, pizza base, cracker biscuits, sweet

breads & burger buns etc.

To cater to the domestic and global markets of bakery

industry, a Baker's Yeast manufacturing unit for

compressed and dry yeast can be set up. The growth of baker's yeast market is directly linked to the

increasing trend of processed and fast food consumption, especially bakery items.

The European and Asian regions produced 51 million MT of bakery items, valued at USD 107 billion,

in the year 2004-05. As per the emerging global trend China is presently one of the most promising

markets for Baker's yeast. Baker's yeast market in developing countries is touching new highs with

increasing demand for processed foods and a consistent growth in bakery items production,

compensating for the slow growth averaging 1 per cent to 2 per cent in developed countries, where

market is saturated.

India's bakery production in the year 2004-05 registered a growth rate of around 20 per cent

producing approx. 50 lakh MT of bakery items, valued at INR 69 billion. As per Government of India

trade statistics, the export of Baker's yeast in the current fiscal year 2005-06 (April-December) is 503.38

MT, valued at INR 39.78 million, with major exports to Sri Lanka followed by Saudi Arabia, Lebanon,

Nepal, Egypt and Iran

The preferred location will be central and south Gujarat as molasses will be easily available from

sugar mills in this area. The market for Baker's yeast is also concentrated in these areas.

2.4.5 Summary of Investment Potential in Agro Processing Sector in Gujarat

The following table depicts a summary of the investment potential in Gujarat:

46

47

S. No Segment of Investment Approx. Per

Unit Cost

(Rs.

Million)

Potential no. of

units in the state

Total

Investment

Potential (Rs.

Million)

F&V Processing Sector

1 Freeze Dried Fruit Juice

Powder/ Slices/ Dices

Unit (900 TPA capacity)

60 6 360

2 Tomato Processing Unit

(4500 TPA capacity)

45 6 270

3 Potato Processing Unit

i) Powder & Flakes (2500

TPA capacity)

25 5 125

ii) Fabricated Chips (1500

TPA capacity)

50 5 250

4 Banana Fiber Extraction &

Processing Unit (9000 TPA

capacity)

90 7 630

5 Instant Vegetables in

Retort Pouches (1500 TPA

capacity)

45 8 360

Cereal and Oilseed based

Processing Industry

6 Peanut Butter

Manufacturing Unit (3000

TPA capacity)

30 5 150

7 De -hulled and Roasted

Sesame Seed Oil

Processing Unit (3000

TPA)

31 5 155

8 Castor Oil Derivatives -

Perfumery Raw materials

(1400 TPA capacity)

30 10 300

9 Bio -pesticides - Neem and

Tobacco Seed Oil Base (30

TPD capacity)

45 5 225

Spices and Medicinal

Plants

10 Medical herbs extraction

unit (5000 MT capacity)

90 7 630

11 Spices Cryo -Grinding Unit

- Cumin, Turmeric, Chilly

(1500 TPA capacity)

60 4 240

Table 19: Summary of Investment Potential in Agro Processing Sector in Gujarat

12 Guar Gum Powder for

Pharmaceutical, Cosmetics

and Food Industry (1500

TPA capacity)

75 5 375

Dairy Industry

13 Organic Milk & Milk

Products (30000 LPA

capacity)

30 15 450

Fishery Industry

14 Shrimp Farming and

Processing Unit (2500

TPA)

450 2 900

Meat and Poultry industry

15 Egg Powder - Value added

poultry product (1250 TPA

capacity)

90 6 540

Ancillary Industries

16 Baker's Yeast (3000 TPA

capacity)

60 2 120

17 Enzymes for Food

Processing Industry (360

TPA capacity)

50 10 50 0

18 Natural Food Colours for

Marigold and Annatto (300

TPA capacity)

100 4 400

Other Potential

Investments

19 Pack House for Bananas

(1000 MT capacity)

45 10 450

20 Onion Cold Storage (2500

MT storage capacity)

50 6 300

21 Refined Sugar Plant

(1 0,000 TPA)

100 4 400

22 Integrated Agro Food Park 2500 3 7500

23 Modern Terminal Market 500 3 1500

Total Estimated Investment Potential For Food Processing in Gujaratin the next three years

17130

48

Source : YES BANK

3.1. INTEGRATED AGRO FOOD PARKS

The momentum in the agricultural sector is changing for the better. Most of this change though at a

nascent stage is transcending various components and sub-sectors of the agri - value chain. However,

one of the key challenges faced by the sector today is the disorganized and fragmented land holding

pattern and thereby, limited corporate involvement and investment that is taking place. Lack of scale

has led to the decreased competitiveness of the farmers who are as a result under-investing in

technology (mechanization and scientific inputs). Further, the absence of an integrated channel to

link the 'farm gate to the food plate' has prevented the transfer of the desired agricultural practices,

materials, infrastructure and technology to the farmer thereby adversely affecting the availability of

required processing varieties of farm produce to the industry. Thus, the inability to tap the growing

market, both in the domestic as well the international markets, has led not only to lost opportunities in

the food processing sector but also to loss of value that could have otherwise accrued to the key

stakeholders, the farmers.

The above problem can be effectively addressed by

creating an appropriate platform such as an

“Integrated Agro Food Park” which would not only

serve to provide the appropriate raw material but

also integrate with the demand side of the food

chain in an efficient manner. Food parks also help in

lowering the costs by reducing post harvest losses,

transportation costs and energy costs. These food

parks also ensure higher returns due to high quality

output, off season availability, better traceability

and through enhanced productivity. Successful

replication of such models across strategic production hubs for key agricultural commodities can lead

to the transition of Indian agriculture and food processing industry from an unorganized, supply-

driven, low value business scenario to an organized, high-tech and safe, demand-led, and high-value

orientation.

This type of facility would integrate plant (fruits & vegetables, mushrooms etc) and animal (chicken,

dairy, fish etc) production chains. The Integrated Agro-Food Park aims at significant reduction of

production costs, maximizing environmental benefits, a dramatic improvement in product quality

and productivity and overall synergies through knowledge and site management. The Agro Park

CHAPTER 3HARNESSING THE POTENTIAL :THE WAY FORWARD

49

needs to be built on experiences and best practices

practiced elsewhere in the world. The prime

objective of the Integrated Agro-Food Park is to

showcase this as a world class demonstration facility

for high-tech integrated agrofood production so also

migrate the best practices across the world.

The idea of setting up an Integrated Agro-Food Park

is also to provide multi-user facilities and build-up

an integrated value chain in order to enhance the

efficiency or agricultural activities, to reduce the

hardships by the producers, processors and traders, and to reduce the wastage of perishable agri-

produce.

Rationale for Setting up Agro Park in Gujarat

• Showcase unique aspect of agriculture in Gujarat

• Migrate and showcase international best practices

• Provide an effective high end platform and environment to promote technological innovation

and application

• Educate various stakeholders

• Create a platform for direct interface between various stakeholders

Advantages of Setting up an Integrated Agro Food Park:

The major advantages of setting up of the Integrated Agro-Food Parks close to major cities like

Ahmedabad, Surat and Baroda in Gujarat are as follows :

• Logistical advantage

o Proximity to metropolitan areas will help in reduction of transport and logistics cost etc

across the agri-value chain

• Transfer of technology in agriculture and processing

o Due to migration of efficient international best practices in production and processing in

line with international requirements, farmers realize better quality produce and better

price realization.

o Develop entrepreneurship in the farmers and enable development of food processing

industry by securing raw material availability. It will also help in creating of new jobs for

rural communities.

50

• Enable creation of innovative business options

between various stakeholders in agribusiness

sectors

• Boost the image of our foods in international

markets and reduce imports

o It will put Gujarat on global food map as a

leading supplier of quality food stuff.

o Domestic retailers will find it more beneficial

to tie up with agro food parks for supplies of food stuff rather than depend on imports for

high quality foods.

The park can serve as an example to both domestic and international audience on the capability of

Gujarat in achieving exacting standards in food-processing from traceability in raw material to

ecological and environmental friendly leading to a better India image and can also create potential for

“Agro Tourism”.

Figure 1: Table Top Model of an Integrated Agro Food Park

Source: Wageningen University, Netherlands

51

Strengths and Weakness of Integrated Agro-Food Park : The major strengths and weaknesses of the

Integrated Agro-Food Parks are as follows :

Integrated Agro-Food Park vs. Existing Food Parks in the Country:

So far 54 Food Parks have been approved by GOI under the Food Park Scheme and most of them are

yet to be commissioned. Even those commissioned are facing issues of capacity utilization and low

levels of occupancy. The major reasons for lack of success of the Food Parks that have been

implemented are :

– Formulated like other industrial parks-supply driven

– Not pre-marketed

– Not location specific

– Absence of backward linkages

– Inadequate financial assistance - INR 4 crore financial support per park is not

commensurate with the investment

– Insistence of a minimum number of 20 units, there by not attracting medium and big

investors

– Modification during the Tenth Plan insisting on investors' share of 75 per cent made the

scheme more rigid

– Lack of a sustainable management arrangement from its inception to commissioning

– No arrangements to harness resources available else where for complementary activities

and channelise to the project to make it more viable

Considering the weakness in the existing food parks and to overcome the same the following factors

have been considered while suggesting the framework for the Integrated Agro-Food Parks;

� Integrated Agro-Food Parks are based on the concept of integration of various production chains

and this further leads to better utilization of the infrastructure created

52

? Increased economic margin through lower costs

? Lower veterinary and phytosanitary risk

? Environmental benefits

? Higher labour efficiency through automation

? Chain transparency

? Exchange of knowledge

STRENGTHS WEAKNESS

? High investment cost

� Comprehensive project appraisal ensuring

backward and forward linkages

� Enhanced stakeholder participation

� The integrated food parks would be set up in a

minimum area of about 250 acres - 350 acres

(need not be restricted by geographical

boundaries)

� The basic infrastructure cost, investment for

common facilities, infrastructure at collection points, etc will account for INR 45 to 100 crore

� Efforts would be directed for supply chain development involving farmers / farmer

organisations and this would help by benefiting a large number of farmers besides facilitating

creation of basic infrastructure in rural areas

� Offers critical mass for customization

� Economies of scale in the operations

� Better access to technology, information thereby enhancing greater access to customers, market

and better value realisation to the processor and other stake holders

� Cheaper access to inputs, raw materials

Market place:

Demonstration & Recreational Area

Production andProcessing area

Source: Wageningen University, Netherlands

53

Figure 2: Various Modules in Integrated Agro-Food Park

Suggested Framework

�Demand driven

�Pre-marketed

� Strong backward & forward integration and

sustainable supply chain management

�Project manager (to handhold from concept to

commission and hand holding upto pilot run)

� Financial closure

�May not restrict the number of units-

restriction can be on the quantity of material to

be handled

�Complementary activities can take place

outside the park

�To be implemented on a PPP format

– SPV to manage the park

– 51 per cent equity in the SPV to be with

private entrepreneurs

� Financial assistance to be 50 per cent subject to

maximum of INR 50 crores per park

Existing Food Parks

� Supply driven

�Post marketed

� Stand-alone (no backward and

forward linkages)

�No project development agency

�No financial closure

�Targeting small & medium

enterprises with a minimum of 20

units for a 30 acre park

�Activities confined to Park alone

�No stake holder participation

� Inadequate financial assistance-

25 per cent or INR 4 crores per

park

54

GOVERNMENT

Banks/ FIs

Govt. Institutions, Agribusiness

Corporates, Dutch Investors

Private Players & Hand Holding for a Specified period by

WUR

Specialized Knowledge Group

(YES BANK & Wageningen University)

KEY SHAREHOLDERS

Conceptualization , Business modeling & Implementation

FINANCIAL

ASSISTANCE

O&M

SUPPORT Structure

Integrated Agro Food Park

Dutch Investo s r

willing to i v st n e

u t i equ ty

p o 50% ni •Grant

•Subsidy•Fiscal

Source: YES BANK

PROPOSED STRUCTURE FOR SETTING UP AN INTEGRATED AGRO FOOD PARK

The following PPP framework for implementation is being suggested for the actualizing the

Integrated Agro-Food parks

The modern terminal markets are envisaged near the major urban centre for fruits, vegetables and

other perishables.

Rationale and Background for Setting up Modern Terminal Markets:

The present system of marketing of fresh produce in the country is constrained by the following:

ü High level of wastages due to lack of proper handling and storage infrastructure

ü Lack of grading based on the quality

ü Long and inefficient value chain with many intermediaries at each stage (these intermediaries

are redundant since they do not add commercial value which is commensurate to the actual

value addition which is incorporated to the produce through their intervention)

3.2. MODERN TERMINAL MARKETS

55

Figure 3: Proposed Structure for Integrated Agro-Food Park

ü Lack of accurate weighment and packaging of

the produce

ü Lack of accurate price - sharing mechanism

ü Lack of an efficient price discovery mechanism

ü Lack of a mechanism to link producers to the off

takers (retailers/institutional off takers/

consumers)

The above characteristics have had an adverse effect

on key stakeholders involved in the horticulture sector as detailed below:

ü Mismatch between demand and supply leading to frequent gluts or short supplies

ü Unrealistic prices in the consumer markets

ü Lack of adequate incentive to the producers to adopt good management practices (pre and post

harvest protocols)

ü Poor quality produce (reaching consumers) which adversely affects the image of Indian fresh

produce in the international markets

Problems in the Existing Markets:

ü Designing and planning of existing markets have not been efficiency linked and quality driven.

Inside the market the land use pattern is faulty. Spaces allocated to marketing activities are quite

enormous, while parking in circulation area either openly ignored or uncrossed open. Designs of

the shops and godowns are not functional utility oriented and cultural friendly. This results into

overall inadequacy of space in the market for handling. Facilities to handle the produce and

adding the value to the commodity as well as extending shelf-life are either inadequate or non-

existing.

As per existing APMC Act only notified commodities can be traded by licensed traders in notified

area with the payment of fees under regulatory framework of agriculture produce market committee

(APMC). No commodity can be traded and no transactions can take place without payment of market

fees to APMC by any means. As such, the markets don’t play a pro-active role in attracting produce or

in facilitating the farmers to organize logistics. Since most of the farmers are small and marginal, they

are in the hands of intermediaries as they get little information for price and are subjected to

exploitation. By restricting marketing to the notified market yards only, it has created an environment

of regulation and monopoly of existing traders and other traders are prohibited by artificial entry.

Therefore, it is necessary to create a market place, which works, in its natural form where large

number of buyers and large number of sellers participate in transactions and decide price without

monopoly of any single community with total transparency.

56

ü Present Mandis do not have sufficient space

to handle the existing arrival. All the

stakeholders of the mandi i.e. farmers, traders

and officials agree regarding this problem.

ü There is no facility of food certification and of

grading sorting. To export the produce, it

should be first of all graded and should be

certified. These facilities being absent in the

existing markets, thus keeping the farmers

away from availing the opportunity of

exporting their produce.

ü Some progressive farmers and few traders complain of the lack of cold storage facility.

ü Management of facilities and infrastructure within the market yard happens to be extremely

poor. Uncontrolled and wild way of utilization of space and size of the market by traders or

service providers create extreme congestion in fruits and vegetable markets. Chaos is a common

phenomenon at trading places in fruits and vegetables since there is no single centralized auction

system. Traders often organize auctions at various places in a haphazard manner and in a

unsequential order. This creates unnecessarily excessive user population pressure on market,

which creates unhygienic condition in the market. This discourages the civilized and educated

people to go to market and participate in the business. The scenario of congestion, chaos and

unhygienic condition is apparently reflected just on entry gate of the market. Also there is hardly

any facility/ infrastructure on post harvest handling, assembling, sorting, grading, packing,

transportation, quality certification, palatization, and labeling, pre-cooling, cold-store, ripening

chambers in the fruits and vegetables markets. This leads to post harvest losses and low price

realization to the farmer.

ü Another important problem existing in the system is of many intermediaries handling the

produce at different levels before it reaches the consumer. This results in reducing quality by

multiple handling, extends the ultimate period of consumption and decreases growers share in

consumer rupee. Therefore, reduction in the level of intermediaries and handling chain is

essential.

ü The present system does not cope up with cultural change, technological advancements and

professional expectation of different stakeholders. IT applications have opened various

dimensions for networking of backward and forward linkages, which will ensure transparency

and efficiency. With opening of service sector there are numerous opportunities for collaborative

arrangements with banking institutions, insurance, logistic providers etc., which presently not in

practice in any APMC market.

57

General Problems Faced by the Farmers in the

Existing Market :

ü Insufficient space

ü Transportation problem

Low price realization

ü Measurement not accurate

ü Lack of lodging facility / Rest houses

Lack of grading facilities

ü Narrow Roads

Auction system not transparent

General Problems Faced by the Traders in the Existing Market:

ü Insufficient space

ü No amenities for street light and water

ü No Bank facility in the premises of many APMCs

ü No facility for dumping and repacking

ü No facility for lodging for the traders

ü Parking facility not available

ü Cold storages not available

ü No sorting and grading facility

Need for Terminal Markets

With an increasing working population, rising disposable income and greater international

exposure, the fast growing Indian market is witnessing a paradigm shift in its aspirations and

lifestyle. While, food products capture almost 53 per cent of private consumption expenditure and

their demand rises consistently at almost 8 per cent, the consumer basket is continuously

undergoing change in favour of perishables (such as fruits, vegetables, animal protein, milk etc.) and

healthy, hygienic products. The consumer today stands at the threshold of a competitive world where

the organised food retailer awaits to utilise numerous opportunities to serve this diverse demand.

58

The present marketing system, characterised by a

long, fragmented supply chain, high wastages,

low share of producers in price, is inadequately

equipped to meet the growing needs of

consumers for quality and safe/ hygienic food.

Although, India produces almost 10 per cent of

the world's fruits and vegetables it accounts for a

mere 1 per cent of world trade. This small market

share can be attributed largely due to weak post-

harvest infrastructure, inadequate extension

support to the farmer and quality and hygiene

control mechanisms, the same applies to the agri-

value chain in the state of Gujarat.

Considering the above factors, there is thus an urgent need for a radical shift from the prevailing

marketing system towards an efficient as well as sophisticated marketing model to take shape so as to

maximize returns to the key stakeholders namely the growers as well as consumers, both in the

international as well as the domestic markets. Moreover, positive consumption and demographic

trends (see Figures 4 & 5 below) in the domestic markets are driving up demand for high quality

produce and lack of adequate mechanism which can deliver quality produce to the Indian palate can

only invite imports form other countries.

1.2

32.5

54.1

44

33

1.9

46.4

74.4

33.1

24.1

5.2

75.5

81.7

20.2

16.5

The Very Rich

The Consuming class

The Climbers

The Aspirant

1995-96

The Destitute

2001-02 2006-07(p)

Source: NCAER

Rich: (Above INR 215,000 or EUR 4,300 per annum)Benefit maximisers: Have own cars, PCsConsuming: (INR 41,500-215,000 or EUR 830-4,300)cost-benefit optimisers : Have bulk of branded consumer goods, 70 per cent own two- wheelers, refrigerator, washing machinesClimbers: (INR 22,000-45,000 or EUR 440-830Cash constrained benefit seekers : Have at least ane major durable (mixer, sewing machine, television)Aspirants: (INR 16,000-22,000 or EUR 320-440)New entrants into consumption: Have bicycles , radios, fansDestitute: (Less than INR 16,000 or EUR 320Hand-to-mouth existence : Not buying

Figures are in million households

59

Figure 4: Changing Demographic Trends

Creation of Modern Terminal Markets by

organizing growers at the backend and creating a

transparent and efficiency price discovery

mechanism and interface with off takers (with

state of the art infrastructure and managerial

competence) at the front end will go a long way in

transforming the horticulture landscape of the

state of Gujarat and help realize the true potential

of the sector.

To summarize, the following objectives will be

met by the creation of Modern Terminal Markets:

ü Produce is sorted before it is brought to the market

ü Produce is segregated based on quality before sale

ü Standard weighment and packaging is achieved

ü Accurate price information is shared

ü Adequate storage infrastructure is created

ü Improving returns of the farmers

ü Enhance marketing efficiency

ü Reduce wastage and post harvest losses

million

Age distribution of population

350300250

150

100

0

200

50

1996 2001 2006 2010

60 & above20-34 35-595-190-4

Source : NCAER

A large part of population is in the 20-34 years group - High willingnessand ability to spend

60

Figure 5: Changing Consumption Trends

ü Increase exports and foster competitiveness

ü Ensure transparency

ü Reduce intermediary chain and create competition

ü Assure quality of produce

ü Modernize operations with IT-Applications

Thus, in order to harness the potential of the emerging

consumer demand (domestic and international), a

professionally managed competitive alternate marketing

structure that provides multiple choices to farmers for sale of

produce along with a comprehensive solution to meet key

needs of the stakeholders is necessary. Such a system entails a

high investment cost and efficient management skills, each of

which can be infused by inviting private sector participation

in the sector. Thus, the Modern Terminal Markets were

conceptualised with the objective of fulfilling the above goals.

However, implementation and successful operation of this path-breaking initiative would

necessitate state government support. Thus, the creation of a conducive regulatory and legal

framework for entry & operation of the project and provision of a level playing field to the private

enterprise would be integral to realisation of this vision.

Features of the Modern Terminal Market

MTM would operate on a Hub-and-Spoke Format wherein the Terminal Market (the hub) would be

linked to a number of collection centres (the spokes). The spokes would be conveniently located at key

production centres to allow easy farmer access and the catchment area of each spoke would be based

on meeting the convenience needs of farmers, operational efficiency and effective capital utilisation

of the investment. The commodities to be covered by the markets include fruits, vegetables, flowers,

aromatics, herbs, meat and poultry. The infrastructure and services that are planned to be provided to

farmers, traders, consumers and other stakeholders, at the TM and the Collection Centres (CCs) are

presented in Figure 3 below:

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This infrastructure and services to be provided by the TM

and CC would be in conformity with any recognized

national/ international standards and can also be

outsourced.

Modern Infrastructure in the Market

Modern Terminal Markets have been conceptualized in a

manner that transparency and efficiency is ensured and

value addition is encouraged so that farmers get maximum

price. In order to reduce multiple handling and smooth

movement modern systems have been proposed. Apart from central electronic auction system, state

of art of electronic grading, quality evaluation station, etc would also be provided. Ripening

chambers, cold storages, pre-cooling units clubbed with underground conveyor based movement of

material and handling, IT enabled operations, one-stop shopping for input and out-put, transactional

banking and automation / networking, Electronic Display Boards with latest technological

application has been proposed.

Broadly following infrastructure and facilities would be available in the proposed terminal markets,

ü Ripening Chambers and Cold Storages

Collection Centre

Terminal Market

Producers/ Farmers and their Associations

Infrastructure: Washing, grading, sorting, weighment, transport to TM Services: Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport

Infrastructure: Packhouse, Quality Testing Facility, Palletisation Services: Transport (incl. cool chain), Settlement of Payments, Banking, Market information

Electronic Auction

Banking Institution

Storage: Cold Storage, Temperature controlled warehouse, Ripening Chamber

Processor Exporter Wholesaler/ Trader/ Retail chain operator

Direct Selling

Figure 6: Terminal Market for Fruits, Vegetables, Flowers, Aromatics, Herbs, Meat & Poultry

62

ü Electronic Grading Lines for Fruits and

Vegetables

ü Central electronic auction platform

ü Electronic Display Boards for auction

ü Quality Evaluation Station

ü Pre-cooling unit with underground

conveyor

ü Movements and mechanized material

handling system

ü Applications and Networking

ü Online spot commodity trading platform

ü Testing and Certification Laboratory

ü Total banking support

ü Spot payment through ATMs to the growers

ü One stop shopping for input

ü Agri-clinic and extension services

ü Information kiosks

ü Rest Rooms for farmers, traders and transporters

Auction Process : Enabling Transparency

These 3 auction systems each have their advantages and disadvantages and the three of them are :-

• Dutch Auction

• English Auction

• Combi-Auction

Dutch Auction

The Dutch auction is the most popular method of auctioning commodities such as flowers, fruits and

vegetables. The Dutch auction is also known as the ‘Reverse auction’. The auction begins at a high

price (higher than the market price). The current price is displayed in figures as also represented on a

giant circular dial with 100 segments.

63

The Auction commences and the price indicated starts to fall at a steady speed (determined by the

auction master). Buyers present in the hall can observe this falling price on the clock dial.

When an interested buyer observes that the clock has reached a price at which he is interested to buy,

he presses the ‘bid’ button on his bidding terminal (or table) to stop the clock. Immediately the

telephone hand set on the table is activated and the buyer may then speak to the auction master

informing him of the quantity he wishes to purchase.

Once the allotment is complete the current price on the clock dial is increased by a fixed amount

(usually 20-30 segments). The price of the clock dial then begins to drop once again until the next

buyer pushes the button or the end price is reached.

The Dutch auction is very quick and efficient for price discovery and multiple lot auctions. Dutch

auctions currently deployed in Holland are able to operate at speeds of up to 1500 auctions per hour.

English Auction

The English auction is a more traditional type of auction and is ideally suited for auctioning of non-

perishable commodities. English auctions generally generate higher prices for commodities but take

longer to run. Due to their slower nature of operations, English auctions are usually used to auction

larger lot sizes.

The English auction begins with the floor price being displayed on the clock. The auction begins and

the buyers are given a fixed time of 10 seconds (can be changed by auction master) to place their bids.

A two-digit count down display shows the time remaining before the auction closes.

Interested buyers place their bids by pressing the bid button on the bidding terminal (or table). Each

press of the bid button pushes up the current price displayed on the clock by a fixed amount. This

increment value is displayed on each users bidding terminal and is fixed by the auction master during

the lot preparation process.

Each time a bid is received the identity of the buyer is displayed on the clock and the count down

display resets to set value (e.g. 10 seconds). The auction ends when no more bids are received and the

count down reaches ‘00’. The successful bidder is the one who bid last and whose ID appears on the

clock. The successful bidder is required to purchase the entire lot put for auction.

Combi-Auction

The combination auction (Combi-Auction) is a recent innovation pioneered by M/s Techno-Magica,

Bangalore. It harnesses the strengths of the Dutch and English auction processes. The quick price

discovery technique of the Dutch auction along with the higher price realization achieved by the

English Auction results in a more efficient and profitable auction.

In the Combi-auction the process begins like a standard Dutch auction with a fall in price. Once an

interested buyer strikes the price, the auction changes to the English Auction Method. There upon a

count down clock keeps the auction open allowing any interested buyer to push up the price by

pressing his bid button.

64

Roles of Various Players:

—Role of the Private Enterprise

The Private Enterprise would have the following rights and obligations:

a. The enterprise would necessarily have to provide the infrastructure facilities and services as stated in Figure 6 at the TM and CC complex in the Hub-and Spoke Format

b. The enterprise would have the freedom to set-up additional facilities to provide complimentary services such as facility to trade on the Commodity Exchanges, supply of agri-inputs, processing etc.

c. The enterprise would have the freedom to buy directly from the farmer through the CC and/or a procurement cell within the TM premises.

d. The enterprise would promote Farmers' Associations and progressively involve them in the operation and management of the CCs

e. Obtain the necessary licenses, clearances and approvals for the establishment and operation of the market

f. The enterprise would be responsible for the acquisition of land for setting up of the TM and the CCs

g. The enterprise would be free to collect user charges (determined by commercial considerations) from market participants and producers, for the infrastructure and services provided by it

h. The Private Enterprise would be liable to pay the prevailing taxes, duties, fees (including market fees) etc., as applicable

- Role of the State Government

The state government would play a pro-active role in the establishment and operation of the Terminal Market and in ensuring the autonomy of the market. For the purpose, it would set up an empowered Committee and appoint a Nodal Officer to undertake, among others, the following:

a. To provide regulatory clearances and licenses for the establishment and operation of the TM and the CCs, supported by a Concession Agreement between the Private Enterprise and the State Government (or concerned State bodies)

b. Facilitation of the land acquisition process for TM and CC as undertaken by the Private enterprise

65

c. Provision of civic amenities (including drinking water, sewerage system etc) and suitable infrastructure near the Project site such as roads etc.

d. Requisite approvals for basic support infrastructure (such as electricity, power, water, communication etc.)

e. Assistance in organising farmer and trader support in kick-starting the collection centres

- Central Government Support

The Ministry of Agriculture (Department of Agriculture & Cooperation), Government of India will support the project through NHM Scheme. The terms for financing would be as follows:

a. Under the scheme, upto 49 per cent of the project equity would be contributed by NHM returnable at par on the successful operation of the project and the repayment of the Term

*Loan of the financing bank

b. The private enterprise would be selected through an open, transparent competitive bidding process. The project will be awarded to the bidder with the request for minimum Government equity participation.

c. The project appraisal would be undertaken by the Bank financing the term loan.

Sr.No

Risk Risk Details Mitigation

1 Performance Risk

Efficiency and management of the terminal market is the key to ensure its viability

Private Sector to undertake O&M under an O&M SPV. Selection of PSP on the basis of bidding

2 Throughput Risk

Arrival of quality F&V through CC in the terminal. Factor of efficient price discovery in terminal market and overall availability of F&V in the market

3 Market Risk Demand for the price Efficient price discovery in terminal markets is based on the market demand that is well understood by the traders.

4 Financing Risk

Equity and Debt for the Terminal Market SPV

Equity holding structures of O&M SPV and CC can have common PSP. Else a contractual obligation for CC to supply to Terminal market

Not an issue in case govt put in the entire financing through subsidy and equity (no debt). There appears some issues in case debt is required for the project set up and will require a detailed due diligence as mentioned earlier in this chapter.

Summary of Key Risks in the Terminal Market Project

66

3.3. PORT BASED INFRASTRUCTURE

3.3.1. Sea Port Based:

Gujarat with the longest coastline in the

country (1600 km) and best maritime

locations in the form of Gulf of Kutch

and Gulf of Cambay and also the state

with maximum number of ports in India

(41 ports) is strategically located on the

west trade route which links Europe and

middle east. The aggregate port

capacity was 140 MMTPA as against the

handled capacity of 90 MMTPA. Further

Gujarat being strategically located to the

hinterland of Central and North Indian

states (hinterland for Kandla, Mundra

and Bedi ports) for export of rice, wheat

and other food grains further increases

the need for development of port based

infrastructure.

YES BANK is of the view that the exports

component of agri-business is critically

dependent on the capacity and efficiency of ports

as most of international trade in agriculture

happens through the sea. In addition raw

materials for fertilizers and agrochemicals are

also imported thus increasing the importance of

this sector to agri-business. India being a recent

entrant in food trade and still a very marginal

player as compared to other international players

like USA, Canada, and Australia. However as the

second green revolution unfolds in India and as

dedicated Agri-Export Zones and Food

Processing zones are set up in large numbers

significant export opportunities would present

themselves. YES BANK believes that there is a need to develop a matching port infrastructure to

handle these agri products and commodities in larger volumes. Dedicated agri-produce handling

berths will be required to be constructed at the ports and the purpose would be to enable

• Bulk handling of agri-produce like grains, pulses etc.

• Handling of processed food

• Handling perishable agri-produce like fruits and vegetables

Koteswar

MandviMundra

Navlakhi

Bedi

SikkaOkha

Porbandar

Veraval

Muldwarka

Jafrabad

Pipavav

Bhavnagar

Dahej

Hazira

Magdalla

Koteswar

MandviMundra

Navlakhi

Bedi

SikkaOkha

Porbandar

Veraval

Muldwarka

Jafrabad

Pipavav

Bhavnagar

Dahej

Hazira

Magdalla

67

Figure 7: Ports of Gujarat

Figure 8: Potential Catchment Area for the Ports of Gujarat

3.3.1.1. Port-Based Grain Storage Silos With Mechanized Handling System

The is an urgent need for setting up of a Mechanised

grain storage silos and handling system, which can

cope with the problems of post harvest storage and

handling of surplus foodgrains. These silos can help

in minimizing the wastage of food grains and oil

seeds, and thus will ensure availability of additional

quantities of grains for domestic and export

markets. Mechanised grain handling system will be

advantageous as it will reduce loading and

unloading time for export operation.

Mechanised handling systems are almost not

present, even at newer ports like Kandla. Storage

and bulk handling system for Food grains and oilseeds, particularly at ports and bulk cargo handling

terminals is becoming the bottleneck in developing exports/imports of these products as manual

handling becomes more tedious and results in delay of loading/ unloading operations at ports and

causes heavy demurrages. Investment opportunities exist in Gujarat in the areas of Mechanised food

grain/ Oilseeds bulk handling systems and Bulk storage silos, with the proposal for essential port

based infrastructure development.

The above production will escalate in the coming years, as Gujarat is poised for second agriculture

revolution with the availability of Narmada canal irrigation in north Gujarat, Saurastra and Kutch

region. The increased food grain and oilseeds production will amplify the export of surplus material.

Storing the surplus production will need appropriate infrastructure to prevent post harvest and

storage loss, occurring presently at the time of exports.

Large size mechanised grain handling systems are part of Agri-infrastructure, that can be located at

bulk Cargo handling ports of Kandla, Mundra, Bedi-Jamnagar, and Pipavav.

Trade facilitation has been achieved by various countries by taking various steps ranging from general

reform measures that have an impact across product categories to specific solutions for fresh produce. Some

of these are as follows:

1. Rotterdam

In Rotterdam, some 30 million MT of food and raw materials are handled each year, 60 per cent of which is

destined for consumption in the European hinterland. In addition to agricultural raw materials, beverages,

meat, fish, preserves and grain products, fruit, vegetables and fruit juices are also handled in Rotterdam. The

handling of the last three products has been concentrated at Rotterdam Fruitport, located in the Vierhavens-

/Merwehaven area on the north bank.

International Experiences in Reforms at Seaports (with special focus on Fresh Produce Sector)

68

Rotterdam Fruitport - an Integrated Approach

The Merwehaven/Vierhaven area in the port of Rotterdam, ®also known as Rotterdam Fruitport , is completely geared

to the handling of vegetables, fruits and fruit juices.

Fruitport is one of the largest clusters in the world for

'perishables'. Within Europe, it has a highly dominant

position in the field of fruit. Since recently, bananas are once

again discharged in Rotterdam after an absence of twenty

years. Since bananas constitute the most sizeable cargo flow

in terms of fruit, this consequently offers Rotterdam many

major opportunities.

The location of Rotterdam Fruitport, which is centrally situated between the growing areas of the Westland, the

fruit importers in Barendrecht and the auctions in Bleiswijk (also know as 'the Golden Triangle') is an important

element of its success. In the Golden Triangle, there are:

2· temperature controlled and cold storage facilities with a capacity of almost 3 million m

· more than 200 specialized importers, exporters and distributors;

· more than 50 specialized transport companies.

The cargo is brought into the port in large numbers by hundreds of reefer vessels. In Rotterdam Fruitport,

activities such as handling, storage, distribution, repackaging and trade take place. Supplementary fruit-related

services are available from independent quality surveyors, inspection authorities, Customs etc.

Fruit & Vegetables

One area in Rotterdam Fruitport the Merwehaven area - is completely dedicated to the handling of fruit and

vegetables, large volumes of which are brought into the port by hundreds of reefer vessels. The terminals in

Rotterdam Fruitport are optimally equipped for quickly loading, discharging and storing fresh produce, both

in temperature-controlled warehouses and cold stores.

The terminal operators integrate their activities: successive links in the chain are brought together within one

company. Rotterdam Fruitport also increasingly accommodates activities geared to distribution, re-packaging

and trade. A growing number of fruit-related companies operate in or near Rotterdam Fruitport. There, these

companies can optimally benefit from the afore-mentioned advantages of scale and supplementary, fruit-

related services.

(Non) concentrated fruit juices

Another part of Rotterdam Fruitport the Vierhavens area - is fully geared to the handling, cold storage and

distribution of (non) concentrated fruit juices. Products enter and leave the port as bulk cargo and in containers,

tanks, drums and bins. Companies in this cluster offer highly sophisticated laboratory services for quality

control. They also have a high degree of expertise in terms of production processes such as blending,

(de)drumming and the crushing of frozen juice. The approach has been fully integrated.

69

In addition, the port is a well-known spot market for fruit juices and concentrates. Trade in Rotterdam is

flourishing. Many companies have already discovered its added value and many advantages.

2. Dubai(Dubai Ports Authority)

The largest Lloyd's approved cold store in West Asia is situated 30 m from the quayside. Manned 24 hours a day

by the Dubai Ports Authority trained staff and equipped with sophisticated temperature control systems, it

offers space for 10,000 MT of frozen foods and perishables. Both racked and open rooms are available with

temperature range of 29°C to +13°C. All inventory and delivery procedures are fully computerised.

3. Chile

In 1981, the Chilean Government created competition in cargo handling and stevedore operations. It

deregulated port labour, eliminating any differences between dockside workers and stevedores and authorized

the private sector to establish stevedoring companies. The resulting performance improvements eliminated the

need for USD 50 million in infrastructure investments through productivity and asset utilization

improvements.

Cargo handling of boxes of fruit increased from 2,060 per hour in 1978-79 to 6,500 in 1985-86. This in turn caused

a reduction in vessel stay times from 129 to 40 hours and reduced per box charges from USD 0.54 to USD 0.26.

Fruit box volumes grew from 572,479 MT in 1985 to 1,256,811 MT in 1995 without any new investment in berths.

4. Singapore

Singapore offers strong connectivity to the Asia-Pacific region. The port's location at the crossroads of the main

shipping routes has facilitated the Republic's development into a principal center for shipping activities in

Southeast Asia. It is a focal point for some 400 shipping lines linking Singapore to more than 700 ports in 130

countries worldwide. There are about 1,000 ships in the port at any one time.

There are six terminals at Tanjong Pagar, Keppel, Brani, Pasir Panjang, Sembawang and Jurong. These

terminals can accommodate all types of vessels - container ships, bulk carriers, cargo freighters, coasters and

lighters.

Depending on their cargo, these vessels will either call at the oil terminals run by the petroleum companies or

the terminals managed by the PSA Corporation Limited and the Jurong Port. PSA Corporation operates the

terminals at Brani, Keppel, Pasir Panjang, Sembawang and Tanjong Pagar, which deal in container and

conventional cargo. Jurong Port, which handles conventional and bulk cargo, and most recently container

cargo, is under the purview of the Jurong Town Corporation (JTC). The ports in Singapore are regulated by the

Maritime and Port Authority of Singapore (MPA), which has sole regulatory responsibilities over the

Republic's port and maritime affairs.

Singapore had been ranked by the American Association of Port Authorities as the world's busiest port, in terms

of shipping tonnage for the last few years. Though the total vessel calls at Singapore's ports dipped last year by

2.4 per cent to 142,745 from 2001, total gross tonnage of these vessels rose 1.2 per cent to a record level of 971.7

70

million gross tons (GT). Of the total tonnage, container vessels made up the largest share of 35.7 per cent while

tankers comprised 32.2 per cent and bulk carriers 17.8 per cent.

The total seaborne cargo handled by the Port of Singapore (including mineral oil-in-bulk) was 335.12 MT in

2002, an increase of 8.8 per cent from the previous year. The number of containers handled in the same year was

16.94 million TEUs (Twenty-Foot Equivalent Units). Singapore has also been the world's leading bunkering

port since 1988. In 2002, the port supplied 20.1 million tons of bunkers.

5. New Zealand

The New Zealand Government deregulated transport in 1984 but cost structures remained unaffected because

ports were still state owned and operated. In 1989 they were converted into limited liability companies.

Employment contracts for all labour, and management, were then introduced, together with work practice

reform, which yielded immediate improvements. For example, in 1990 the dairy industry, with an industry-

wide annual freight charge of USD 107 million, made savings of USD 5 million, or USD 3,500 per dairy farmer.

The Port of Tauronga handles 60 per cent more cargo per vessel per day; the productivity of log handling gangs

has increased by 150 per cent.

6. UK

Given the sensitive handling require for fresh produce, in UK, the Port of Sheerness has become the preferred

choice for fruit and vegetable traders. This is due to the port's proximity to the major shipping lanes making it an

attractive option for reefer vessels to use Sheerness as a European port of call, while state-of-the-art cool stores

and other facilities make it the ideal choice for storing, adding value and onward distribution. Volumes of fresh

produce (apples, pears, grapes, citrus fruit, bananas, melons, mangoes, avocados, potatoes) through Sheerness

reached in 2003 to 887,000 MT, a figure not recorded by any other port in UK.

To meet the requirements of the business and the increasing volumes of fresh produce arriving in boxes, the

port management invested in a new 4.5-acre container park with plug-in slots for reefer boxes besides other

equipments such as cranes for containers. Such investments in equipments and management made them the

provider of a dedicated park for containers, which gave them a quantum leap in the handling of deck-stowed

reefer boxes.

3.3.1.2. Gamma Irradiation Facility

The Gamma Irradiation plant proves to be a potential investment at the major ports from where

substantial exports take place. Gujarat has 1 major port and 40 out of 142 intermediate and minor

ports in the country, handling about 80 per cent of the tonnage handled by all the intermediate and

minor ports in the country. As food products form a major share of this, installing Gamma Irradiation

plants at the major ports of the state like Kandla and Mundra for food irradiation would be beneficial

for the food processing industry and the exporters of food grains and fresh produce apart from

Pharmaceutical industry.

71

Definition of Food Irradiation

Food irradiation is a process by which products are exposed

to ionizing radiation to sterilize or kill insects and microbial

pests by damaging their DNA.

Rationale to Set up Gamma Irradiation Facility

Given the increasing gap in the demand-supply ratio of food

and agricultural products and the high percentage of

wastages (estimated to be ~ 30 percent), there is an urgent

need to ensure food security. While, different preservation

techniques have been employed traditionally, irradiation

offers a much more convenient and safer method of

reducing wastages as it provides an effective alternative to fumigants, which are being phased out

owing to their adverse effects on the environment and human health.

Further, Fumigation of food products with chemicals such as ethylene dibromide (EDB), methyl

bromide (MB) and ethylene oxide (EtO) is being increasingly restricted. As per the Montreal Protocol,

by the end of this decade all the above fumigants will be phased out in the advanced countries.

Countries like India may bring 50 per cent reduction in the use of these fumigants by the same

period and may completely phase them out by middle of the next decade. The obvious alternative is,

therefore, radiation processing, which will have, lot more attractive business opportunities then.

Agreements on Sanitary and Phytosanitary (SPS) Practices and Technical Barriers to Trade (TBT)

under the World Trade Organization (WTO) have provided a distinct incentive to the adoption of

radiation processing. This process thus can be applied to overcome quarantine barriers, and to

hygienist products for international trade.

It can be concluded that radiation processing has already made its position in the field of sterilization

of medical products and is now slowly but steadily making progress in the food sector also. In the

years to come, we will hear much more about radiation processing and will find more radiation

processing plants doing good business in India.

Applications

Radiation technology can complement existing technologies to ensure food security and safety. Since

the beginning of radiation processing in food by England, the applications have been for anti-

infestation of food grains and pulses; inhibition of sprouting in onions, potatoes, garlic, yam and

ginger; preventing microbial contamination of spices; extending shelf-life under recommended

conditions of storage; and overcoming quarantine barriers in international trade. The technology can

be used for sterilizing food grains, oilseeds, marine produce, processed food, pet food, cattle feed,

aqua feed, ayurvedic herbs and medicines, cut-flowers, and packaging material.

The process of deployment of radiation technology involves the controlled application of energy of

ionizing radiation such as gamma rays, X-rays and accelerated electrons. Irradiation is a direct,

72

simple and efficient one-time process. Application of low 3doses of radiation (0.15 kilo Gray ) can arrest the

sprouting of potatoes and onions. As a result, storage

losses of tubers and bulbs due to sprouting, and their

dehydration can be reduced substantially.

Low-dose applications (less than one kGy) also lead to the

disinfestation of insects in stored grain, pulses and food

products, and the destruction of parasites in meat and

meat products. A medium dose (one to ten kGy)

eliminates microbes in fresh fruits, meat and poultry

products, destroys food pathogens in meat, and helps in

maintaining hygiene of spices and herbs. A high dose (above 10 kGy) produces shelf-stable foods

without resort to refrigeration, and the sterilization of food for special requirements.

Advantages

4Irradiation can provide considerable advantages as summarized below:

1. Preserves food to a varying extent as determined by the treatment. Food irradiation is

particularly effective in controlling food-borne spoilage microorganisms. All organisms present

in the food can be inactivated to secure long-term preservation, or a fraction of them can be

inactivated to secure limited extension of product life. Meats, seafood, fruits, vegetables, cereal

grains, and legumes are some of the foods than can be preserved.

2. Decontaminates food of pathogenic bacteria, yeast, molds, and insects. This decontamination

can improve the hygienic quality of the foods and prevent the potential health hazards. Meats

and seafood can be decontaminated of bacteria and parasites; cereal grains, legumes, fruits, and

dried fish of insects; spices and vegetable seasonings of bacteria and insects.

3. Controls maturation, senescence, and sprouting of fresh fruits and vegetables.

4. Alters chemical composition for quality improvement. The chemical composition of cereal

grains and legumes can be altered so as to improve their quality. This is regulated by the dose

(i.e., amount of radiation absorbed by the food).

5. Produces no toxic residues in foods. This is accomplished by limiting the energy level of the

radiation employed, and also be selecting the type of radiation. The lethal action of ionizing

radiation on living organisms was traced to alteration of the DNA molecule. Products formed in

foods by irradiation were identified and determined to be of no toxicological significance to the

consumer of irradiated foods.

6. Maintains full nutritive value of foods. Studies have shown no changes in macronutrients and

only insignificant ones in the micronutrients (vitamins). Irradiated foods were shown to be

wholesome.

3 Gray is the unit of absorbed radiation energy

4 Urbain (1989)

73

7. Maintains sensory quality. Knowledge of radiation

chemistry has guided the development of means to

prevent undesired sensory changes. An example of

this is the irradiation of meats in the frozen rather

than unfrozen state in order to avoid a flavor

change.

The World Health Organization (WHO) (1987)

summarizes advantages of the irradiation technique over

conventional food processing methods in this manner:

1. Foods can be treated after packaging.

2. Irradiation processing permits the conservation of foods in the fresh state.

3. Perishable foods can be kept longer without noticeable quality loss.

4. The cost of irradiation and the low energy requirements compare favorably with conventional

food processing methods. Irradiation treatment up to the prescribed dose leaves no residue;

changes in nutritional value (i.e., loss of some vitamins) are comparable with those produced by

other processes and during storage.

5. Foods processed under prescribed conditions for irradiation do not in any way become

radioactive, a fact that many people do not understand.

Investment

The approximate investment for a 10,000 TPA plant is Rs. 70 million.

3.3.2. Air Port Based:

3.3.2.1. Centre for Perishable Cargo: The center for perishable cargo is an extremely vital platform in

the supply chain of the horticulture product from the farms to the International Markets and

ultimately up to the hands of consumer. The major constraint the exporters of perishable products

face while transiting the produce is the breakage in the cool chain and this results in very poor quality

/ spoilt produce reaching the international markets thereby seriously hampering their economic

performance and also the image of our fresh produce in the International markets. To address this and

harness the immense potential that Gujarat has to cater to the middle east markets there is a need for a

world class centre for handling perishable produce in Ahmedabad airport.

Rationale for PPP in CPC:

1. The Center for Perishable Cargo at airports assumes great importance given the fact that:

a. Nearly 15 per cent of world cargo is now perishable and the market is growing at 7.1 per

cent annually, faster than any other sector in global air freight

b. It is the last point of storage of perishable produce before departure to the importing

country

74

75

2. The key to successful perishables logistics is an unbroken, high-quality cool chain.

Globally, airlines, in conjunction with many of the leading global retailers, are now

dedicating themselves to improving the integrity of their respective cold chains by

working with retailers, shippers, ground handlers and transportation companies to

develop and deliver advanced cool-chain handling in any weather through:

a. Refrigerated transit of cargo between cold rooms and passenger aircraft

b. Temperature-controlled storage close to cargo-aircraft docking areas

c. Unbroken cold-chain handling from dock receiving to loading airside

d. Segregated cold-storage facilities provided by ground handlers

e. Temperature logging of shipments

3. Given the fact that the utilization of CPC is dependent to a large extent on the confidence of the

exporters in the facility having the capability to maintain the desired temperature-humidity

conditions, it is pertinent to build requisite facilities and enabling conditions that would help in

not only building confidence amongst the target users

but also in increasing efficiencies of operations

4. The approach of PPP in this area is expected to not only

facilitate the creation and maintenance of this

infrastructure but also provide the following

advantages:

a. Cost of resources to be spent by the public sector is

reduced without compromising on the monitoring

aspect

b. Stakeholders are actively involved and there is an

increased ownership of the project

c. Most competent partners can be selected to

undertake project implementation and completion

d. Given that CPC is a highly technology intensive area,

a PPP approach is likely to lead to better technology

tools being adopted along with higher service levels being provided to the users

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Key Analogies and Examples in PPP in CPC:

1. Hong Kong

1.1. Hong Kong ranks among the busiest international cargo airports in the world, and its fast,

efficient handling of air cargo has played a key role in the region's vibrant economic growth. The

new air cargo terminal needed to meet the rapidly growing needs of the region today and

tomorrow. The goal was to set new standards for efficiency, service, and security.

1.2. In 2005, HKIA handled 3.4 million MT of freight. The international air cargo took up around 1 per

cent of Hong Kong's total cargo throughput, it accounted for 34.2 per cent of its external trade

value at HKD1, 570 billion in 2005 with 17 per cent increase over 2004.

1.3. Perishable goods account for some 25 per cent by tonnage of all air cargo imported into Hong

Kong. For this reason, SuperTerminal 1 has been designed to provide easier and faster handling

facilities for perishables than previous systems. A dedicated perishables handling center with its

own ramp interface area accesses 16 workstations and 24 truck docks on the ground floor and

through dedicated hoists 24 workstations and 31 truck docks on the first floor. Customs

examination areas occupy each level. The proximity of the perishables handling center to

freighter aircraft parking allows release of the first shipments within 30 minutes of discharge

from a freighter. The ULD Handling Center, another specialized cargo handling system, is

located at the south side of the Express Center: The facility can handle twenty-foot ULDs and

outsized cargo such as vehicles and aircraft engines. It is equipped with a Container Storage

System with storage positions for 140 twenty- foot ULDs.

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a) Key role played by the private sector in cargo handling at HKIA:

i) Hong Kong Air Cargo Terminals Ltd ("HACTL")

(1) Specifications:

(a) HK$8 billion investment

(b) SuperTerminal 1 the world's largest stand-alone air cargo handling facility

(c) Land area is approximately 170,000 sq.m.

(d) 330,000 sq.m. gross floor area comprising a main terminal and an express centre

(e) 2.6 million MT annual designed capacity of air cargo

(f) Technology Asset Protection Association Certification (TAPA)

(2) Equipped with a state-of-the-art automated cargo handling facilities, Hactl offers an

extensive range of cargo handling services at competitive prices, performing them at

industrial-targeted service standards. These include physical handling of general and

special cargo, documentation processing, ramp handling, as well as pre-arrival

clearance of import cargo.

ii) Asia Airfreight Terminal Ltd ("AAT")

(1) Specifications:

(a) HK$780 million investment

(b) Single-level warehouse equipped with mechanized cargo handling systems (c)

Land area of 43,000 sq.m. and gross floor area of 30,000 sq.m.

(d) 420,000 MT annual designed capacity of air cargo

(e) Technology Asset Protection Association Certification (TAPA)

(2) AAT offers reliable cargo handling and documentation services at competitive prices

iii) Express Cargo Terminal - DHL Central Asia Hub

(1) Specifications:

(a) USD100 million investment

(b) Shipment handling operations is supported by Material Handling System (MHS)

(c) 18,200 sq.m. phase 1 site site area

(d) Current throughput over 20,000 pieces per hour

(e) Technology Asset Protection Association Certification (TAPA)

The first dedicated express cargo terminal, DHL Central Asia Hub, commenced operations in June

2004 to meet the dynamic needs of the fast growing, time critical express market and to facilitate the

development of HKIA as an express cargo hub. The DHL Central Asia Hub is the largest facility of its

type in Asia, and operates as DHL's major hub and gateway in the Asia-Pacific region

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1) Frankfurt Airport

Frankfurt Cargo City has been singled out as the world's best cargo airport not just once but two years

in row. This distinction honors not just the cargo volume handled at this leading European airport,

but also its superior infrastructure, its unique range of service offerings, and its outstanding logistics

and distribution network. It's a model for success that has attracted many leading forwarders,

logistics companies and other major players in the air cargo business to set up shop here. Over 250

airlines, carriers and other service providers with more than 9,000 employees are now benefiting from

the perfect working conditions of Cargo City. The forwarders based here consolidate operations to

optimize air transport, take advantage of logistical service to add value to arriving and departing

goods, and integrate air transport into custom-tailored supply chains.

Serving as a European interim storage and trans-shipment facility, the specially equipped Perishables

Center is expanding to meet increasing demand from shippers around the globe. Plans call for adding

about 2,500 square meters of storage area and 400 square meters of office space. Approximately

160,000 MT of fresh and frozen produce were handled in 2005 at FRA's perishables port. This included

100,000 MT arriving by airfreight and 60,000 MT arriving by truck. Total handling volumes are

expected to jump by five percent this year with particularly strong growth in pharmaceuticals

shipments.

The Perishables Center is open round-the-clock and features excellent "airside" and "landside" access.

Inaugurated in mid-1995, the center is designated as an official European Union (EU) border

inspection post. Advantages of this facility include the concentration of all inspection authorities

under one roof: including the Animal Health Office, Plant Protection Office, and German Federal

Office for Agriculture and Food.

In terms of size and service quality, FRA's centralized perishables facility is unique in the EU.

Currently, the Perishables Center offers about 9,000 square meters for storage and 2,000 square

meters for offices. A wide range of products requiring special cold-temperature handling are expertly

received, checked, stored and repacked in some instances -- for distribution to customers throughout

Germany and Europe. Urgent cargo shipments arriving from around the world primarily include

fish, meat, fruit, vegetables, cut flowers, and pharmaceutical products such as vaccines. All goods are

stored at individually required temperatures around 24°C.

Private Sector Participation: Fraport AG holds a ten percent share in the Perishables Center

Frankfurt GmbH operating company, with 50 per cent owned by the Nagel Group and 40 per cent by

LUG Aircargo Handling GmbH.

Suggested Approach for Implementing CPC on PPP at Ahmedabad Airport:

1) Given the increasing importance of perishable cargo and the dynamic nature of both the

customer as well as the industry standards, the CPC ownership should be based on PPP

principles

52) The most suitable model appears to be the Concession model (a management service

agreement that is financed with a fixed concession fee or a percentage (of the Gross Revenue)

concession fee) in which the concessionaire would be allowed to investigate, study, design,

engineer, procure, finance, construct, operate and maintain the perishable cargo center and

exercise and enjoy the rights and privileges as set forth in the agreement between the public

partner and the successful Awardee for a well defined period(depending among others also

upon the length of lease period by the Airport Authority of India) after which it would have to

be renewed subject to the compliance and service record

3) As an additional measure, the public partner might like to contribute a portion of the outlay as

grant within the time frame of 3 years. It is also suggested that the Public partner might look at

a debt component in the equity structure from the point of view of risk mitigation

4) The private party's selection must be not limited to only domestic players but also include

global players in order to attract the best service providers in the industry

5) Fixation of service levels through international benchmarking must be adopted

5 The advantages of a Concession Agreement are that the service levels are fully defined and the operating expenses are fixed. Only changes in the levels of revenue will impact the client's financial return. This type of agreement is best suited to a client who knows the level of service they desire and who is confident that the revenue levels will remain steady.

79

ANNEXURE IPOLICY SUPPORT & RECENT ANNOUNCEMENTS FOR FOOD PROCESSING

Policy support

(i) Food Processing Industry sector delicensed except alcoholic beverages

(ii) Excise duty waived on F&V Processing (from 2000 - 01)

(iii) Income tax holiday for F&V Processing (from 2004 - 05)

(iv) Customs duty reduced on freezer van from 20 to 10 per cent (from 2005 - 06)

Budget 2006-07 Announcements

1. Food Processing identified as industry with employment potential

2. Food Processing to be a priority sector for bank credit : NABARD-a refinancing window

corpus of Rs 1,000 crore for agro processing infrastructure and market development

3. Paddy Processing Research Center Thanjavur a National level institute

4. Rs 150 Crore earmarked for NHM for terminal markets

5. Custom Duty on packaging machines to be reduced from 15 per cent to 5 per cent

6. Excise on condensed milk ,icecream, preparation of meat,fish & poultry ,pectins, pasta and

yeast to be fully exempt

7. Excise on ready-to-eat packaged foods and instant food mixes like dosa & idli mixes

reduced from 16 per cent to 8 per cent

8. Excise on aerated drinks has reduced from 24 per cent to 16 per cent

9. Excise on packaging paper reduced from 16 per cent to 12 per cent

10. Custom Duty on Vanaspati increased to 80 per cent

80

Annexure: IIGujarat Agro Industrial Policy 2003

Strategies

Ø Incentives:

In India most projects in the agro industrial sector have been too highly leveraged considering

the seasonal availability of raw material and their perishability, which contribute to considerable

variability in revenues and concomitant debt repayment capability of the business. This has

resulted in a reluctance of the financial sector to lend to this sector.

The Government of Gujarat will offer an attractive package of financial support and incentives

for agro industrial projects to reputed companies with proven technical capability and track

record to successfully conceive and implement agro industrial projects. Projects under the ambit

of infrastructure, marketing, research and development and facilitation will be eligible for these

incentives.

Incentive would be available to new Units as well as existing Units undertaking technology

upgradation, modernization, expansion or diversification. Incentives would be available in

entire State except areas covered under jurisdiction of Municipal Corporation of Ahmedabad,

Vadodara, Surat , Rajkot , Jamnagar and Bhavnagar . However, Cold Chain projects and Retail

outlets for perishables will be entitled for incentives in areas under jurisdiction of Municipal

Corporations also.

Ø Interest Subsidy to Agro Industrial Units :

The State Government will offer back ended interest subsidy to Tiny, Small, Medium and Large

agro industrial units, as under:

1. 6 per cent per annum back ended interest subsidy for first 5 years, from commencement of

operations,

2. The aggregate interest subsidy will not exceed INR 100 lacs,

3. The interest subsidy will be available on the funds borrowed from financial

institutions/banks for capital investments only. No interest subsidy will be available

towards working capital loan or any other loan, which is not in the nature of Term Loan

meant for acquiring capital assets,

The interest subsidy will be released so long as the eligible unit continues timely repayment of

the loan and remains in production.

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Ø Agri Infrastructure Development :

The experience world over has demonstrated that impeccable agri supply chain infrastructure is

key to a vibrant and competitive agriculture and agro industrial sector. The piecemeal attempts

so far of setting up infrastructure for agri produce in Gujarat will be replaced by an well-

orchestrated effort from the Government for coordinated and integrated infrastructure

development all across the State.

In order to spearhead the development of infrastructure facilities in an efficient manner, the

Government needs to plan the facilities that are required and pro-actively promote and support

the same. Government has therefore decided to accord the highest priority for creation of supply

chain infrastructure and support services for the agro industrial sector to create world class

infrastructure corridors integrated with appropriate surface transport connections, cold

storages, auction centres and retail chains.

The State Government will offer the following incentives for projects providing common

infrastructure facilities in the value chain of agri produce from farm to market as decided by

Single Window Clearance Committee:

1. Back ended interest subsidy as follows:

· 6 per cent per annum back ended interest subsidy for first 5 years, from

commencement of operations.

· The aggregate interest subsidy will not exceed INR 400 lacs.

· The interest subsidy will be available on the funds borrowed from financial

institutions/banks for capital investments only. No interest subsidy will be available

towards working capital loan or any other loan, which is not of the nature of term

loan meant for acquiring capital assets.

The interest subsidy will be released so long as the eligible unit continues timely

repayment of the loan.

2. The State Government will assist in preparing pre-feasibility studies through Gujarat

Infrastructure Development Board.

3. The State Government intends to provide Government land including agriculture farms on long

lease basis at reasonable rates.

An illustrative list of such agri infrastructure projects follows :

· Food / Agro Industrial Park

· Cold Chain (Value Addition Centre / Agro Service Centre) for Agricultural Produce

· Supply Chain (Value Addition Centre / Agro Service Centre) for Agricultural Produce

· Chain of Retail Outlets for Perishables Products

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· Agri Jetty/Port and Transportation Hub

· Technology Incubation and Demonstration Center

· Agriculture Bio-Technology Incubation

· Auction Centers, Transit / Terminal Markets

Ø Assistance for Preparation of Project Report :

Preparation of Project Report to set up Agro Industrial Unit is an intricate exercise, and requires

multi disciplinary expertise such as Marketing, Finance, Technical and knowledge of supply

chains, including involvement of foreign consultants, at times.

The State Government will reimburse 50 per cent cost of preparation of the project report to set

up new agro industrial units subject to ceiling of INR 5 lacs. Financial Assistance will be released

after the Unit is set up and commences its operations.

Ø Support For Setting up of Center of Excellence / Specific Crop Development Institute :

Gujarat has proven edge in production and productivity of certain agri produce like castor, guar,

psyllium husk, oil seeds, seed spices and some horticultural and herbal crops. These agri

produce are generally cultivated and processed in geographical clusters which make it feasible

for development of centre of excellence/specific crop development institute. Such institutes/

centres would take up demonstration of agronomic practices, R&D (varietal and derivatives)

developing, domestic and international market certification, quality assurance, standards,

logistics, patenting, brand promotion, upgradation of technology for processing and packaging,

improving and professionalising the term of trade in the whole chain and such other

promotional activities.

The State Government proposes to encourage private sector industries, apex co-operatives

institutions, APMCs, etc. to come forward and set up such centres/ institutes. The State

Government will support such projects by providing land at concessional rate and 50 per cent

initial seed capital matching the industry contribution within a ceiling of INR 5 crores. In case the

Centre for Excellence is incorporated as a Company under the Companies Act, Government

support will be treated as Equity. The centre/ institute will be managed professionally by the

industry and information will be made available to farmers, processors and planners.

Ø Land :

Research and Development, Demonstration farms and captive consumption for consistent

supply of material.

Bombay Tenancy and Agriculture Lands Act, 1948 permits holding and purchase of land only by

'Agriculturists' of the State. This restricts the overall development of agriculture/ Agro

Industries. Such laws have already been reformed by States like, Rajasthan, Karnataka and

Maharashtra .

83

The Act, however, permits a commercial/ industrial enterprise to acquire agriculture land on

lease u/s. 43 A (1) (a) read with Rules 25 G and 26, within agricultural land ceiling, subject to

obtaining prior permission of District Collectors. The State Government will issue guidelines for

simplification and expeditious clearance of such permissions by District Collectors for Agro

Industries.

The Government will also consider suitable provisions to enable Agro Industries to hold private

agriculture land on long term lease.

The Government also intends to provide government land including agriculture farms on long

lease basis at concessional rates to Agro Industries.

The Government has already declared a scheme for development of government wasteland. In

order to proactively invite investments in this sector, the Government will compile and make

available information regarding such government wastelands in the State.

Ø Contract Farming :

One of the crucial requirements of agro industry is to get the supply of consistent and quality raw

material as per their specifications. At present, raw material is procured by such industry from

market place, which often has variable quality and also at times required quantity is not

available. This situation has resulted in discouraging optimum size of processing units to come

up and have advantage of economy of scale. Besides, small units in food sector are unable to

create brand equity and therefore often suffer in market place.

The Industry has also represented from time to time that unless quality and consistent raw

material is available as in tea, rubber or sugarcane, large units in food processing sector,

particularly in fruits and vegetables sector are unlikely to be set up.

In consideration of above, agro processing industries will be encouraged to enter into contract

farming arrangements either directly or through group of farmers, value added centres, agro

service centres or cooperatives. To facilitate such arrangement, the State Government will accord

priority in sanction of agriculture subsidy under its various schemes to the concerned farmers

and will also permit the routing of such subsidy through such centres/groups/co-operatives,

subject to the consent of member farmers. This will also result in optimization of subsidy and

cluster development of agriculture. These organisations may provide necessary inputs to the

member farmers such as planting material, seeds and other inputs, may guide farmers in

agronomic practices and may also take crop insurance on behalf of the member farmers.

Legal Department will also examine the feasibility of a legal enactment to facilitate contract

farming arrangement.

Ø Irrigation :

Increased Irrigation through Narmada

Narmada project on completion will irrigate additional 18 lakh hectares of land. This will change

the crop profile of the State by encouraging farmers to cultivate high value crop with increased

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productivity. Consistent and ' abundant availability of raw material will attract substantial

investment in Agro Processing Industries.

Ø Micro Irrigation :

It is well known that use of drip not only results in saving in the use of water per crop and per

acre, but also increases the yield substantially by providing measured quantity of water,

fertilizer and pesticide at the targeted root zone. The saving in water can be used to cover

additional acreage. The Government will provide encouragement to the farmers to use drip

irrigation technology with proper agronomic practices. Already a project to cover 12000 hectares

of land under drip irrigation with integrated crop and water management practices is under

implementation.

Ø Power :

The State Government intends to encourage propogation of tissue culture in horticulture and

agriculture and also R&D in biotechnology. The State Government, therefore, may consider

levying power tariff on tissue culture and R&D in biotechnology at the same rates as applicable

for direct agriculture.

Ø Road :

The importance of rural road development for improving transportation and communication

cannot be over emphasized. Agriculture produce cultivated in the rural areas is transported

to distant places at consuming centres, processing units and for exports. Such road

development will be encouraged through co-operatives, private sectors and/or group of

farmers. The State Government shall channelise assistance for such road projects under RIDF

(Rural Infrastructure Development Fund) of NABARD.

Ø Human Resource Development :

HRD holds the key in all round improvement in technology innovations and productivity. Thus

HRD will have to cover the entire gamut from basic infrastructure, education, vocational and

technical guidance to professional qualifications. For this purpose Universities in the State will

be encouraged to commence courses in food packaging, processing, bio-technology,

information, technology in agriculture and such allied fields. The Government will create a chair

each in Indian Institute of Management Ahmedabad and Institute of Rural Management , Anand

for development of courses as identified by the State Government.

Ø Pollution Control & Environment Protection :

The State Government is conscious about pollution control and in order to comply with legal

provisions and standards, Gujarat Pollution Control Board has been set up to monitor effluent

treatment.

It is recognized that some of the agro industrial effluent is not only biodegradable, but also

nourishes the soil. The State Pollution Control Board will, frame new guidelines keeping in view

the nature of effluents, consistent within the frame work of Central Pollution Control Act.

85

Ø Marketing :

It is well recognised that proper marketing strategies will be key in determining the growth of the

sector. This is particularly true of agro produce, which is perishable, variable and seasonal in

nature. Domestic markets will need to be developed simultaneously with export markets, for

sustainable growth of the sector.

To promote competitiveness and efficiency in the marketing chain, the State Government will

encourage standardization, grading and setting up of world class testing facilities accredited by

internationally acceptable agencies, national/regional commodity exchanges, auction houses,

terminal market, retail chains, etc. Most of these facilities would be created as part of agri

infrastructure either by co-operative sector or through private initiative and government

facilitation.

Ø Agri Co-operatives:

The State has a wide network of co-op, societies in dairy, fruits & vegetables and other

agricultural commodities. These co-op, societies play a pivotal role in extension, financing and

marketing agricultural produce. The present arrangement, however, has proved inadequate in

the new market environment.

The Co-op. Societies Act will be suitably amended to enable co-operative societies to participate

in equity with limited companies/ private entrepreneurs to promote joint/ associate sector

projects as per the recommendations of Dr. Y. K. Alagh Committee appointed by Government of

India. It is also under consideration to introduce the element of competition in Agricultural

marketing by permitting direct marketing, auction center by NDDB and private markets.

Ø National Multi-Commodity Exchange:

Government of India has liberalized futures trading in almost all the agricultural commodities

with a view to provide opportunity for trading in multi commodities. The State Government has

supported in setting up of Online Multi Commodity Exchange in the State, with total investment

of INR 24 crores, wherein investment of the State Government would be 11 per cent from GAIC

and 5 per cent from Gujarat Agricultural Marketing Board. The commodity exchange has been

set up in the State in the name and style of National Multi Commodity Exchange of India Ltd.,

and has commenced functioning at Ahmedabad. This exchange will help the farmers to plan

their production, sales and realization of better prices by way of trading through warehouse

receipts.

Ø Quality Assurance:

Micro Agro Units, Tiny Units and Small Scale Units will be encouraged to produce to

internationally acceptable quality certification standards like HACCP or similar quality

certification recognised by importing countries to encourage exports of products from Gujarat .

The Government will provide financial assistance upto 50 per cent of the cost, subject to ceiling of

INR 5 lacs.

86

Ø Patent Registration Assistance:

The State Government will encourage individual organisation in government, private or co-

operative sector in patent registration by providing financial assistance of 50 per cent cost of

Patent Registration within a ceiling of INR 5 lacs.

Ø Standards and Grading :

With opening up of economy and globalisation under WTO regime, it has become imperative to

grade and standardise agri and horticulture products of the State on the basis of international

standards. The State would formulate such standards and grading and develop regulatory

mechanism for the same.

Ø Generic Promotion of Key Crops :

The State Government will pro-actively promote global positioning of crops in which it has

preeminent position in world market through generic promotion, participation in exhibition

abroad & creating brand for agro products of Gujarat special campaign shall be undertaken in

targeted international market in association with APEDA, progressive farmers, farmers co-

operatives, exporters & agri processors. The targeted crops are castor oil derivatives, isabgul

(Psyllium husk), banana, ground nut and sesame seed.

Ø Food Retailing :

World over food retailing chains have been key drivers in the food chain by agglomerating

demand and streamlining the supply chain with regard to quality, standard, packaging, and

pricing. Such chains exert considerable influence for producing what is in demand and reducing

losses and cutting costs all across the supply chain.

Gujarat Government will encourage setting up chain of retail outlets in Gujarat as a crucial link

between consumers and producers. The support will be in the form of speedy approvals for land

allocation, financial contributions to project costs, facilitation of infrastructure, for fresh produce

segment, in particular.

Ø Food Park:

Food Parks are the industrial estates specifically .for setting up of food processing industries.

Development of Food park intends to enable particularly small and medium scale food

enterprises to attain viability by defraying cost of major common facilities such as R&D,

Laboratory, Cold Storages, warehousing, pack houses, food testing and analysis lab, effluent

treatment plant, common processing facilities, power, water supply, etc.

The State Government has contemplated to set up first of its kind Food Park through private

entrepreneurs at Dahej and Hazira by innovative use of cold energy generated from

regassification of LNG so as to provide low cost refrigeration to the processing units, cold

storages and pack houses. A Food Park at Mundra is also proposed adjoining to SEZ.

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Ø High-Tech Agriculture :

High-Tech agriculture involves higher capital investments, improved agriculture techniques

and utmost care, which increases the risk in such high end projects. The State Government

would encourage private sector entities, apex co-operative institutions, etc. to set up these high

technology projects. It would consider permitting private entrepreneur to take up these

activities in agricultural sector. It is also under consideration to provide power at concessional

rate.

Ø Exports:

Gujarat contributes about 16 per cent of the total export from the country. Major agricultural

products exported from Gujarat are fresh and processed fruits & vegetables, castor seeds/ oil/

derivatives, sesame seeds, HPS, De-oiled Cakes, marine products etc. Agriculture exports from

Gujarat , however, are largely commodity based. The State Government intends to encourage

export of Agri products from the State by taking following measures :-

· Agri Export Zones : Under the Government of India EXIM policy product specific Agri

Export Zones viz. (1) Mango & Vegetables and (2) Value Added Onion - have been notified

by the Ministry of Commerce, Government of India. The Government of Gujarat is also

proposing to establish Agri Export Zones for Groundnut, Sesame seed, Castor, Isabgul,

Banana, Potatoes, Cumin & Fennel seeds. The main objective of AEZ is to provide higher

returns to the farmers by enhancing their accessibility to export and extending their capacity

to produce export specific quality products. The State would support AEZ through the

existing scheme.

· Setting up of Air Cargo Complex for perishable products at Ahmedabad International

Airport .

· Setting up of world class laboratory for quality and inspection of Agriculture and Processed

food products from the State.

· The following Assistance will be available to exporters of Gujarat Agriculture Produce.

(a) Air Freight Subsidy @ 25 per cent Subsidy on Air Freight on Mango, Sapota, Banana,

Lemon, Okra, Tomato and such other products as specified by the State Government from

time to time, subject to a ceiling of INR10 lacs per beneficiary/per annum.

(b) The State Government will provide subsidy (within a ceiling of INR 50,000/-per

beneficiary) for sending samples / test marketing abroad. The State and the Central

Government assistance should not exceed 50 per cent of the cost of sending samples and

the beneficiary can avail such grant only once for sending samples for one time to one

country and the product should be of Gujarat Origin only.

Ø Research & Development:

Agro Industrial units are required to compete in domestic and global markets with stringent

quality standards. Such units, therefore, are required to upgrade their technology and introduce

modernisation.

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The State Government will encourage research and development activities in the State. The

Government will provide assistance to agro industries for sponsored research work undertaken

by reputed research institutions, upto 50 per cent of the cost, within a ceiling of INR 20 lacs.

Ø Information Technology:

Farmers, processors and planners will be requiring latest information related to agri business.

The State is committed to develop suitable infrastructure for agri business to enable wide

dissemination of information. Agri IT. Kiosks will be set up in APMCs, Village Panchayat,

Consuming Centres and would have connectivity with related departments of agriculture,

universities, industries and international markets.

Government intends to prepare software for Agribusiness including availability and cost benefit

analysis of inputs, documentation of best agronomic practices for various crops and varieties,

weather forecast, market information, price projection, etc.

Ø Certification Agency For Organic Farming :

Organically produced products are gaining popularity amongst the health conscious consumers

worldwide. Such products attract premium. To encourage production of organic products and

make them acceptable in the international market, the State will facilitate setting up of

internationally recognised quality testing and certification laboratories in Gujarat .

Ø Venture Capital Fund :

A revolving venture capital fund can be a major contributor to jumpstart investments in the food

& agri business sector. As Gujarat is at the take off stage in the field of Agriculture and agro based

industries, such a fund could catalyse agro industrial development.

The Government has recognised the need for a venture fund to cater to the needs of prospective

entrepreneurs who have developed or acquired unique technologies in Agro & Food Processing,

Horticulture, Aquaculture, Sericulture, Hi-tech Agriculture and such other Agro related

projects. The State Government intends to create a venture funds for agro industries in

association with financial institutions/ banks, etc.

Ø Agriwaste:

Agri waste has a vital role in agri economy and need to be optimally utilised to provide adequate

return to the farmer and maintain competitiveness in global environment by full utilisation of all

resources. The State government, therefore, intends to support projects on agri waste, by treating

them at par with Agro Industrial Infrastructure projects for the purpose of incentives.

Ø Miscellaneous :

Government support for other facilities like pollution control, water, etc. and other parameters

not specifically provided herein above will be on lines of the Industrial Policy.

89

Annexure: IIIMARKET POTENTIAL FOR VARIOUS PROCESSED FOODS

Market potential for Processed Foods in India

Market (INR billion)

2003-04 2009-10 2014-15

Fruits and Vegetables 49 155 345

Organised 29 118 288

Unorganised 20 36 56

Dairy 1160 1730 2450

Organised 254 452 825

Unorganised 906 1274 1627

Edible Oil 500 692 925

Organised 50 88 156

Unorganised 450 603 769

Meat and Poultry 27 64 129

Meat 20 40 67

Poultry 7 24 62

Non-Alcoholic Beverages 101 151 198

Tea 78 122 157

Coffee 22 30 41

Grains 1802 2227 2668

Organised 609 889 1208

Unorganised 1193 1338 1460

Marine 18 30 51

Sugar and Sugar based

products 285 383 492

Sugar 265 349 424

Confectionery 12 18 30

Chocolates 8 16 37

Alcoholic Beverages 232 513 1106

Beer 41 73 117Spirits 190 420 930

Wine 3 20 60

Pulses 402 605 809

Aerated Beverages 80 21 43Malted Beverages 12 19 27

Total (Approx) 5,300 7,800 11,500

Source: Ministry of Food Processing Industries

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ANNEXURE IVFDI NORMS FOR VARIOUS SECTORS

FDI Policy in India for Various Sectors/ Activities (Equity Cap, Entry Route, Other Conditions)

I. Sectors where FDI is prohibited

i. Retail trading

ii. Atomic energy

iii. Lottery business

iv. Gambling and betting sector

v. Housing and real-estate business except development of integrated townships, housing, built-up infrastructure and construction development projects

vi. Agriculture (excluding Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisiculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantation (excluding Tea Plantations)

II. Sectors where FDI up to 26 per cent is allowed

i. FM Broadcasting FII investment up to 20 per cent with prior Government approval

ii. Print media: Publishing newspaper and periodicals dealing with news and current affairs - FDI up to 26 per cent with prior Government approval

iii. Defence industries - FDI up to 26 per cent with prior Government approval

iv. Insurance - Foreign equity up to 26 per cent under the automatic route

III. Sectors where FDI up to 49 per cent is allowed

i. Broadcasting

a. Setting up hardware facilities such as up-linking, HUB, etc.- FDI+FII equity up to 49 per cent with prior Government approval

b. Cable network- Foreign equity (FDI+FII) up to 49 per cent with prior Government approval

c. DTH - Foreign equity (FDI+FII) up to 49 per cent with prior Government approval. FDI can not exceed 20 per cent.

ii. Investing companies in infrastructure/service sector FDI up to 49 per cent with prior Government approval

iii. Domestic airlines - FDI up to 49 per cent under the automatic route with no direct or indirect participation of foreign airlines

91

IV. Sectors where FDI up to 74 per cent is allowed

i. ISP with gateways, radio-paging, end-to-end bandwidth FDI up to 74 per cent with FDI beyond 49 per cent requiring prior Government approval

ii. Establishment and operation of satellites - FDI up to 74 per cent with prior Government approval

iii. Atomic minerals - FDI up to 74 per cent with prior Government approval

iv. Exploration and mining of coal and lignite for captive consumption FDI up to 74 per cent with FDI above 50 per cent requiring prior Government approval

v. Mining of diamonds and precious stones- FDI up to 74 per cent under the automatic route

vi. Development of Airports- up to 74 per cent under the automatic route; prior Government approval beyond 74 per cent

vii. Private sector banks - Foreign equity (FDI + FII) up to 74 per cent under the automatic route

viii. Telecommunication services: basic and cellular Foreign equity up to 49 per cent.

V. Sectors where FDI up to 100 per cent is allowed subject to conditions

i. Development of Airports - FDI beyond 74 per cent requires Government approval

ii. Petroleum sector: NG/LPG pipelines with prior Government approval

iii. Petroleum sector: market study and formulation, investment /financing with prior Government approval. Minimum 26 per cent Indian equity within 5 years for actual trading and marketing.

iv. Trading: wholesale cash and carry; exports, trading of hi-tech items with prior Government approval. In Export trading - FDI up to 49 per cent permitted under the automatic route.

v. B2B e-commerce subject to divestment of 26 per cent equity within 5 years if the company is listed in other parts of the world

vi. Courier services- prior Government approval

vii. Tea Sector, including tea plantation prior Government approval subject to divestment of 26 per cent equity within five years

viii. ISP without gateway, infrastructure provider providing dark fibre, electronic mail and voice mail FDI up to 100 per cent allowed subject to divestment of 26 per cent equity in 5 years if the investing companies are listed in other parts of the world.

ix. Non Banking Finance Companies FDI up to 100 per cent under the automatic route subject to minimum capitalization norms

x. Domestic airlines NRI investment up to 100 per cent permitted under the automatic route with no direct or indirect participation of foreign airlines.

92

ANNEXURE VArea Production & Productivity of Various Crops

93

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: CM

IE

97

HORTICULTURE CROP AREA AND PRODUCTION STATISTICS

Area in million ha, Prod in million MT

Fruit Crop Vegetable Crop Spices And Flower Crop

Year Area Prod Area Prod Area Prod

1998-99 0.177 2.289 0.19 3.255 0.23 0.359

2001-02 0.198 2.559 0.241 3.253 0.291 0.288 2002-03 0.22 2.957 0.248 3.515 0.285 0.212 2003-04 0.252 3.551 0.325 4.58 0.371 0.413 2004-05 0.272

4.017

0.331

4.677

0.362

0.401

Source: Directorate of Horticulture, GoG

FRUIT PRODUCTION STATISTICS

2001-02 2002-03 2003-04

Sr

No Fruit

Area (ha) Prod (MT) Area (ha) Prod (MT) Area (ha) Prod (MT)

1 Aonla 2806 26533 4532 40872

2 Banana 33139 1154330 35187 1403864

3 Ber 11158 142004 13092 126781

4 Cashew Nut 0 0 0 0

5 Chiku 18784 161517 20093 195209

6 Citrus 20164 197780 22323 224731

7 Coconut 14232 102867 14881 105351

8 Custard Apple 1426 9223 1731 10765

9 Date Palm 9940 59596 10468 64833

10 Guava 7242 95014 7804 110266

11 Mango 65274 368534 69871 495086

12 Others 5861 51184 8376 57425

13 Papaya 4444 174691 4862 191289

14 Pomegranate 3390 29784 3856 37081

Total 197860 2573057 217076 3063553

Source: Directorate of Agriculture, GoG

7763

42909

12487

3570

22517

25893

15969

1902

12512

6969

79311

9477

6482

3787

251548

56428

1760901

131352

898

224007.5

263028.5

111721.7

15178.5

84468

92983

595206

53946

236854

34530

3661503

98

VEGETABLE PRODUCTION STATISTICS

2001 -02 2002 -03 2003 -04 Sr

No Vegetable

Area (ha) Prod (MT) Area (ha) Prod (MT) Area (ha) Prod (MT)

1 Brinjal 39774 544464

2 Cabbage 11782 189706

3 Cauliflower 9694 156585

4 Cluster Bean 18826 107745

5 Cowpea 4537 23899

6 Okra 30237 195037

7 Onion 24200 640200

8 Others 42982 354712

9 Potato 32300 802000

10 Tomato 20304 262504

Total 234636 3276852

35574

10381

9184

15643

3682

26147

24961

65668

35794

18225

245259

522112

179674

170475

78007

23193

180463

715895

521853

780001

311507

3483180

50369

14047

10787

18108

6937

34890

50797

81174

31211

22562

320882

725324

248351

195225

133615

42432

271329

1295753

498517.5

704099

413689

4528335

Source: Directorate of Agriculture, GoG

Gujarat State Office

Confederation of Indian Indusrty, 203-204,

Sears Towers, Gulbai Tekra

Near Panchvati,

Ahmedabad 380 006

Gujarat, India

Tel: +91 - 79 - 2646 8872, 2646 9346

Fax: +91 - 79 - 2646 287

Website: www.ciionline.org

Confederation of Indian Industry

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the

growth of industry in India, partnering industry and government alike through advisory and

consultative processes.

CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a

proactive role in India's development process. Founded over 111 years ago, it is India's premier business

association, with a direct membership of over 6000 organisations from the private as well as public

sectors, including SMEs and MNCs and indirect membership of over 98,000 companies from around 342

national and regional sectoral associations.

A facilitator, CII catalyses change by working closely with government on policy issues, enhancing

efficiency, competitiveness and expanding business opportunities for industry through a range of

specialised services and global linkages. It also provides a platform for sectoral consensus building and

networking. Major emphasis is laid on projecting a positive image of business, assisting industry identify

and execute corporate citizenship programmes.

With 56 offices in India, 8 overseas in Australia, Austria, China, France, Japan, Singapore, UK, USA and

institutional partnerships with 240 counterpart organisations in 101 countries, CII serves as a reference

point for Indian industry and the international business community.

Queries to CII regarding Agribusiness opportunities in Gujarat may be directed to:

99

Kalyan Chakravarthy G.K.DCountry Head- Food & Agri Strategic Advisory & ResearchEmail: kalyan.chakravarthy@yesbank.in

YES BANK Ltd.48, Nyaya Marg,Chanakya Puri,New Delhi 110 021, INDIATel: 91 11 6656 9072Fax: 91 11 5168 0144

Raju P.S.RAssistant Vice- President - Food & Agri Strategic Advisory & ResearchEmail: raju.poosapati@yesbank.in

YES BANK Ltd.12th Floor, Nehru Centre,Discovery of India, Dr.A.B.Road,Worli, Mumbai 400 018, INDIATel: 91 22 6669 9253Fax: 91 22 6669 9177

YES BANK Ltd.

YES BANK is an outcome of the professional commitment of its Indian promoters, Mr. Ashok Kapur and Mr. Rana Kapoor, (Previously partners in Rabo India Finance) to establish a high quality, technology driven, state-of-the art private Indian Bank catering to 'EMERGING INDIA'. The Bank is financially supported by Rabobank, Nederland, and three other high quality institutional private equity investors. CVC- Citigroup-New York, AIF Capital Hong Kong and ChrysCapital San Francisco.

YES BANK would, in a staggered manner, target wholesale banking, financial markets, corporate and transactional banking, retail and private banking business lines across the country. YES BANK aspires to be one of the leading financial players among the private Indian banks, with a focused approach to be a pivotal banking player in several knowledge-based industry segments namely Food and Agribusiness, Life Sciences, Telecommunications and Infrastructure Development in India, amongst others. In the initial stages, the Bank intends to focus on Corporate and Wholesale customers by leveraging its experience and domain knowledge in its target sectors, YES BANK will offer innovative sector-specific solutions to its target customers in addition to catering to various other growth and traditional sectors.

Queries to YES BANK regarding Agribusiness opportunities in Gujarat may be directed to:

The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty expressed is made to their accuracy, completeness or correctness. This document is for information purposes only. The information contained in this document is published for the assistance of the recipient but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. This document is not intended to be a substitute for professional, technical or legal advice. All opinions expressed in this document are subject to change without notice.

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CII – YES BANK KNOWLEDGE INITIATIVE