Sunday, January 10, 2010

>Agri Marketing Summit 2009 (MOTILAL OSWAL)

We attended Agri Marketing Summit ’09 to get an update on the evolving structure of agri marketing in India and the increasing role of private players in improving the efficiency of the agri marketing value chain.

Key takeaways from summit
We came back incrementally positive on the unfolding opportunity in agri marketing and its potential to prop up agri GDP growth. Our key takeaways are: (1) Model APMC Act needs to be more flexible to facilitate its implementation in true spirit, (2) Investment in agri marketing reforms will be evaluated on risk-return profile, (3) Information and communication technology will play a crucial role, and (4) Development of organized retail in food products has become a necessity for transforming the agri marketing network in India.

Challenges ailing agri marketing in India
Despite the realization on the difference that agri marketing can make, little headway has
been made over the last decade on account of inherent structural challenges in the Indian
agricultural system. These include: (1) lack of implementation of APMC Act, (2) lack of
a single unified market, (3) inadequate private investment, and (4) few risk mitigation
platforms in Indian agriculture.

Huge room for private investment; multiple avenues of growth
The conference highlighted the immense opportunity and increasing role of private players in improving efficiencies in the agri marketing value chain. Promoting private investments in marketing infrastructure will lead to increased efficiency in planning, management and operation of even the existing infrastructure. Avenues for involvement include contract farming, PPP in agri marketing, direct marketing, and terminal markets among others.

Food processors, organized retailers to benefit
We believe agri marketing reforms, when implemented, could have significant implications on food processors and retailers through cheaper inputs, stable supply of raw materials and customized produce in terms of quality. We see low level of organized food processing (~10%) and meager organized retail penetration in food and grocery opportunities, which could be tapped in the coming decade. This would benefit organized food and grocery retailers and processed food companies.

To read the full report: AGRICULTURE MARKETING

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