Sponsored by: ICAR, New Delhi. Organized by:

Transcription

1 Short Course on Agri-business Management in Reference to Hills: Problems and Prospects September 15-24, 2014 Sponsored by: ICAR, New Delhi Venue College of Post Graduate Studies Umaim , Meghalaya Organized by: College of Post Graduate Studies Central Agricultural University Umaim , Meghalaya

2 Compendium Short Course on Agri-business Management in Reference to Hills: Problems and Prospects th September 2014 Compiled and Edited by: Dr. Ram Singh, Associate Professor (Farm Management) Dr. S.M. Feroze, Assistant Professor (Economics) The views expressed in the articles are the personal opinions of the contributors Cover Designed by: Mr. Tanmoy Das, MSc Scholar Published by: College of Post Graduate Studies (CAU), Umiam , Meghalaya

3 Organizing Committee Chief Patron Prof. S.N. Puri, Hon ble V.C., CAU, Imphal Patrons Dr. A. Sarkar, Dean, College of Post Graduate Studies, Umiam Course Director Dr. Ram Singh, Associate Professor (Farm Management), CPGS Course Co-ordinator Dr. S.M. Feroze, Assistant Professor (Economics), CPGS Organizing Sub-Committee Conference Room arrangement Committee Reception and registration Committee Dr. R.J. Singh Chairman Mrs. P.M.N. Rani Chairman Mrs. P.M.N. Rani Member Mrs. Banricia Member Mrs. Banricia Member Mr. Tarning Member Ms. Suchiradipta Bhattacharjee Member Ms. Monika Aheibam Member Ms. K. Stina Member Accommodation, Transport & Food committee Purchase/Finance committee Dr. Lala I P Ray Chairman Dr. Ram Singh Chairman Dr. S. M. Feroze Member Mrs. P.M.N. Rani Member Mr. Tarning Member Mr. J. Sarkar Member Mr. Blessiful Member Ms. Adelyn Member Mr. Pallab Debnath, Member Ms. Dayohimi Rymbai Member Publication and Technical Committee Medical Emergency Committee Dr. S.M. Feroze Chairman Dr. P.M.N. Rani Chairman Ms. Monika Aheibam Member Dr. Wilburt C. Manners Member Mr. Blessiful Member Ms. E. Kalwing Member Ms. Dayohimi Rymbai Member Ms. B. Kharbihkhiew Member Mr. Pallab Debnath Member Ms. Suchiradipta Bhattacharjee Member

4 Opportunities for Organic Agriculture in North Eastern Hill Region Aditya Kumar Singh and Lala I.P. Ray Introduction Organic agriculture is a production system that sustains the health of soils, ecosystems and people. It relies on ecological processes, biodiversity and cycles adapted to local conditions, rather than the use of inputs with adverse effects. It combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved. Organic agriculture could contribute significantly to reduce the release of green house gases (GHG) and to sequester carbon in soils and biomass and to assist in building resilience and adaptation in farming systems thus, helping in reducing the adverse effect of changing climate on agriculture. It essentially believes in principle of conservation agriculture which means minimum disturbance to soil, diversified crop rotation along with a protective cover to ground during most part of the year. Many scientists at different levels have elaborated the concept of organic farming however, the definitions given by Lampkin (1990) has been found to be the most comprehensive one covering all essential features of Organic Farming. According to Lampkin, Organic Farming is a production system which avoids or largely excludes the use of synthetically compounded fertilizers, growth regulators and live stock feed additives. To the maximum extent, feasible organic production systems rely on crop rotations, crop residues, animal manures, legumes, green manures, off farm organic wastes and aspects of biological pest control to maintain soil productivity and tilth to supply plant nutrients and to control insect pests, diseases and weeds. The definition of organic agriculture as accepted by the US Department of Agriculture, is also comprehensive and holistic one which explains organic agriculture as, a system that is designed to produce the agricultural products by the use of methods, and substances that maintain the integrity of organic agricultural products until they reach the consumer. This is accomplished by using, where possible, cultural, biological and mechanical methods, as oppose to use substances to fulfil any specific fluctuations within the system so as to maintain long term biological activity, ensure effective management, recycle waste to return nutrients to the land, provides attentive cares for farm animals and handle the agricultural products without the use of extraneous synthetic additives or processing in accordance with the act and regulations in this part. Organic farming, when practiced properly, reduces the input costs for plant nutrients, pesticides and seeds, dramatically improves farmer health and enhances the fertility and resilience of their land. With the growing awareness about the safe and healthy food, the need for organic produce from agriculture is felt more and more over the world. A number of Indian states, including Mizoram, Uttarakhand and Sikkim intend to go 100% organic, with many more adopting policies to promote organic farming. There is a growing dialogue around the potential for India's organic market both within and outside India. The organic market is growing in India at higher rate and is estimated to grow by about 15% since last 3 years. However, for realizing premium price in international market, certification of the produce is must which is very costly, knowledge oriented and complicated process.

5 The north eastern hill region of India consists of eight states viz., Assam, Nagaland, Mizoram, Meghalaya, Tripura, Manipur, Sikkim and Arunachal Pradesh. Out of 21 agro-ecological zones of the country, four zones are covered exclusively by NEH region. These zones represent wide variations in climate ranging from warm to pre humid which is conducive for year round production of various agricultural and horticultural products. Soils of the north eastern hill region are moderately to strongly acidic with rich in organic matter. The external input based green revolution technology perused in the past did not prove appropriate to accelerate the growth in the region. Based on ground realities of this complex, diverse and risk prone agro-ecology, farmers opted to retain traditional practices with emphasis on stability, resilience long term sustainability over the attainment of higher productivity hence, could not harvest the dividend of green revolution. The advent of organic farming due to changed perspective of the consumerism towards healthy food has given new dimensions to the agriculture. The renewed interest in natural food has opened new vistas of development for this eco fragile region. The weakness of the past has become the strength for harnessing the potential of organic food production in the region for its sustainable economic development with less dependence on fossil fuels and environmental damaging chemicals. This process oriented and market driven agriculture is by default, very close to natural farming being followed in scattered and isolated niches. Opportunities of organic agriculture in India with special reference to North Eastern Hill Region Though very nascent, the Indian organic sector is growing rapidly and has already made inroads into the world organic sectors. The certified organic area in India was 0.33 million ha ( ) with production of about 585 thousand tone having export value of 3012 million rupees. India has now become a leading supplier of organic herbs, organic spices, organic rice (basmati, joha etc.). The organic produce includes all varieties of food products (cereals, pulses, honey, tea, spices, coffee, oilseeds, fruits, vegetables) and their value added products. India exported 35 items in , with the total volume of about 19,456 t. India has a great potential for export of organic products, if inspection and certification is streamlined and credibility in the international market is established. Since organic foods are free from chemical contaminants, the demand for these products will steadily increase in the coming years. Among the major organic foods produced in India tea and rice contributes around 24per cent each, fruits and vegetables together make 17per cent of organic produce (Garibayand and Jyoti, 2003). The market for organic products is growing. The biggest hurdle to India for export of organic produce is the lack of processing, packing, storing and transport facilities of International Standards. Once these infrastructural facilities are developed, the country can look forward for the prosperous future for organic produce export. Most of the countries are now planning to produce organically. Therefore, it may not be wise to think of converting all crops to organic production with a view to export purpose only. On the other hand, there are areas where there is less competition and greater demand, like spices, medicinal and aromatic plants. The NEH States were identified for promoting organic farming at the early stage when the organic, movement started to pick-up. These states were selected because the land was almost virgin and the crops were grown virtually organic. There is lot of scope for organic agriculture in the hills especially in the north eastern region of India. Firstly, the use of inorganic fertilizers and chemicals is meagre in the region. The farmers of the region, in general and hill farmers in particular are having 2

6 apathy towards use of agro-chemicals. Secondly, farming on the hills remained low input-low risklow yield technology based and the average yield of most of the crop remained far behind. It is assumed that the difference in production gap due to adoption of organic agriculture is expected to be negligible; rather there is scope for enhancing productivity with good organic management. Thirdly, it is an added advantage that all the households are maintaining livestock (pig, poultry, cattle, goats, etc.) producing sufficient quantity of on-farm manures, which could be efficiently used for organic agriculture. Moreover, the region receives very high rainfall (2000 mm to mm per annum) leads to profuse production of biomass including weeds, shrubs and herbs. Some of these species could be efficiently used in organic production. And finally the premium price of organic produce would boost earning of the hill farmers. The strength of north eastern hilly region for promoting organic farming can be summarized as under: a. North Eastern Region (NER) is home to some niche crops like Assam lemon, Joha rice, medicinal rice and passion fruits which has high market demands. b. NER accounts for 45per cent of total pineapple production in India and an Agri-Export Zone (AEZ) is already set up in Tripura. c. Sikkim is the largest producer of large cardamom (54per cent share) in the world. d. NER is the fourth largest producer of oranges in India. e. Best quality ginger (low fiber content) is produced in this region and an Agri-Export Zone (AEZ) for ginger is established in Sikkim. f. Extent of chemical consumption in farming is far less than the national average. g. Approximately 18 lakh ha of land in NER can be classified as Organic by Default. h. Thin population density per square kilometer ( compared to 324 at national level). i. Dependence of mid and high altitude farmers on within farm renewable resources. j. Time tested indigenous farming systems and use of indigenous technical knowledge in agriculture. For promoting organic agriculture, the framers should be helped by the state agencies through organizing trainings for better understanding of certification processes and subsidizing the cost of certification. The Agriculture Marketing Division or Mandi Board of the states should help them for selling the produce in local market by building the confidence between consumer and producer and removing the middleman chain. The state agencies should also help for providing cold storage References Basic Statistics of NER. (2002). A publication of Govt. of India, North East Council, Shillong. Bujarbaruah, K.M. (2004). Organic Farming: Opportunities and Challenges in North Eastern Region of India. In: Souvenir, International Conference on Organic Food February, 2004, ICAR Research Complex for NEH Region, Umiam, Meghalaya. pp Garibay, S. V. and Jyoti, K. (2003). Market Opportunities and Challenges for Indian Organic Products, Study funded by Swiss State Secretariat of Economic Affairs, February

7 Hazarika, U.K., Munda, G.C., Bujarbaruah, K.M., Das Anup., Patel, D.P., Prasad, Kamta, Rajesh Kumar., Panwar, A.S., Tomar, J.M.S., Bordoloi J., Sharma, Meghna and Gogoi, G. (2006). Nutrient management in organic farming. Technical Bulletin no.30. ICAR Research Complex for NEH Region, Umiam, Meghalaya. Jamir, A. (2004). Organic cultivation and government policies issues. Paper presented during workshop on Organic farming for rural development in Nagaland at SASRD, Nagaland University. Lampkin, N.H. (1990). Organic Farming. Farming Press, Ipswich (U.K.). Mahapatra, B S., Ramasubramanian, T and Chowdhury, H. (2009). Organic farming for sustainable agriculture: Global and Indian perspectives. Indian Journal of Agronomy, 54(2): Munda, G.C. (2006). Problems and prospects of Organic farming in NER. Paper presented in the Seminar on Organic farming Status and Road Map during the North East Agri. Expo on March 06 at Dimapur, Nagaland. Munda, G.C., Ghosh, P.K., Das, Anup., Ngachan, S.V. and Bujarbaruah, K.M. (2007). Advances in Organic Farming Technology in India. ICAR Research Complex for NEH Region, Umaim , Meghalaya. Sema, A. (2006). Paper presented in the seminar on Organic farming for sustainable development in Sept 2006 at Colombo, Sri Lanka. Pal, S. (2001). Organic farming sustainability put in practice. In: Extended summary, National symposium on farming system research in new millennium, held at Modipuram, U.P. October 15-17, pp Prasad, K and Gill, M.S. (2009). Developments and strategies perspective for organic farming in India. Indian Journal of Agronomy. 54 (2):

8 Cropping Systems and Agri-business Development in North Eastern Region of India A.S. Panwar, Jayanta Layek, Anup Das, Ramakrushana G.I. and B. Makdoh Introduction The North-Eastern region (NER) of India comprising of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura is generally considered to be a backward enclave of a dynamic and progressing economy. For long, the backwardness of the NER has been an area of concern and various measures had been taken to improve its status. Cropping system is an important component of a farming system. It represents cropping patterns used on a farm and their interaction with farm resources, other farm enterprises and available technology which determine their makeup. Cropping pattern means the proportion of area under various crops at a point of time in a unit area. It indicates the yearly sequence and spatial arrangement of crops and fallow in an area. Crop sequence and crop rotation are generally used synonymously. Crop rotation refers to recurrent succession of crops on the same piece of land either in a year or over a longer period of time. Component crops so chosen should be in improving the soil health. Amongst the nutrients in soil health, nitrogen is the most important element need to be managed judiciously through proper management of legume crops. The agricultural productivity is the lowest, irrigation facility almost non-existent in many of the areas and consumption of fertilizer is extremely low in the region. The adoption of high-yielding varieties is also sluggish. Rice is the major crop in the region. The compound growth rate of rice area is 1.68% and of production is 2.95 per cent. The demand and supply equation shows that demand for food out strips the production and the gap is increasing over time. Most disturbing fact is that if the present scenario of adoption of agricultural technology continue, it will be difficult to catch up with required rate of productivity to meet the demand of food arising from the growing population. The existing yield gap between potential yield and average yield is 72 per cent in autumn rice, 62 per cent in winter rice and 68 per cent in summer rice and about 43 per cent in case of oilseeds. Shifting cultivation popularly known as Jhuming is still practiced in an area of 0.88 m ha in the North Eastern Region of India. It is the only option for poor people living in the hills where forest lands are deforested or slashed and burnt to be used for sowing of seeds. Due to reduction of jhum cycle from years to 2 3 years, land degradation in the form of deforestation, soil erosion and soil fertility depletion is taking place at a massive scale in the region. Rice occupies majority of the area under jhum and entirely rainfed. Growing local varieties, no fertilizer or manure application, no proper crop establishment techniques (as seeds are mostly broadcasted), soil erosion due to cultivation in high slopes and lack of pest and disease management practices are the major constraints of jhum crop. However, there is lot of scope for organic agriculture and agro based business development in North Eastern Hill Region of India. The north eastern states being the one of the mega biodiversity receiving very high rainfall (2000 mm to mm per annum) leads to profuse production of biomass including weeds, shrubs and herbs. Some of these species could be efficiently used in organic 5

9 production. The organic carbon content of the soils of NEHR is also very high to support the organic farming system. The crops like aromatic rice, sticky rice, pine apple, french bean, strawberry, kiwi, passion fruits, ginger, turmeric, large cardamom, orange black pepper and aromatic and medicinal plants has the huge potential to grow in this region. The results of different experiments in this region indicated that the productivity of crops under improved agronomic management practices improved over the years, besides improving the soil fertility. The major challenges for promotion of agribusiness enterprises in the region are human resource development in commercial input production, assistance to farmers in post-harvest handling, processing and value addition, creation of infrastructure and marketing of agricultural produce. However, with the help of technology, Government initiatives and private partners, there is huge potential to make this region an agrobusiness hub of the country. Types of Cropping Systems Depending on the resources and technology available, different types of cropping systems are adopted on farms. Monocropping Monocropping is the agricultural practice of growing a single crop year after year on the same land, in the absence rotation through other crops. It is too common in North Eastern region where maize and rice are two important crops. While economically a very efficient system, allowing for specialization in equipment and crop production, monocropping is also controversial, as it can damage the soil ecology (including depletion or reduction in diversity of soil nutrients) and provide an un-buffered niche for parasitic species, increasing crop vulnerability to opportunistic insects, plants, and microorganisms. The result is a more fragile ecosystem with an increased dependency on pesticides and artificial fertilizers. It may be due to climatalogical and socio-economic conditions or due to specialization of a farmer in growing a particular crop. Under rainfed condition, groundnut or cotton or sorghum are grown year after year due to limitation of rainfall. Flue-cured tobacco is grown in Guntur district of Andhra Pradesh year after year due to specialization of the farmers in growing it. In canal-irrigated areas, under waterlogged condition, rice crop is grown, as it is not possible to grow any other crop. Multiple cropping Multiple cropping is the practice of growing two or more crops in the same space during a single growing season. It is a form of polyculture. It is the intensification of cropping in time and space dimensions, i.e., more number of crops within a year and more number of crops on the same piece of land at any given period. It includes intercropping, mixed cropping and sequence cropping. Multiple cropping is found in many agricultural traditions. In the jhum areas, sowing of more crops on the same plot are being done, including various types of beans, grams, and millets, and harvesting them at different times. Intercropping Intercropping is growing two or more crops simultaneously on the same piece of land with a definite row pattern. The most common goal of intercropping is to produce a greater yield on a given piece of 6

10 land by making use of resources that would otherwise not be utilized by a single crop. For example, growing soybean + maize in 2:1 ratio i.e., after every 2 rows of soybean, one row of maize is sown. Thus, cropping intensity in space dimension is achieved. Based on the percent of plant population used for each crop in intercropping system, it is divided into two series, additive and replacement series. Additive series mostly adopted in India, where one crop is sown with 100 per cent of its recommended population in pure stand, which is known as the base crop and another crop known as intercrop is introduced into the base crop by adjusting or changing crop geometry. The population of intercrop is less than its recommended population in pure stand. In replacement series, both the crops are called component crops. By scarifying certain proportion of population of one component, another component is introduced. This type of intercropping is in practice in western countries. Mixed cropping Mixed cropping is growing of two or more crops simultaneously intermingled without any row pattern. This type of cropping leads to an improvement in the fertility of the soil and increases in crop yield. The products and refuse from one crop plant help in the growth of the other crop plant and vice-versa. Mixed cropping is an insurance against crop failure in abnormal weather conditions. Seeds of different crops are mixed in certain proportion and are sown. The object is to meet the family requirement of cereals, pulses and vegetables. It is subsistence farming. Mixed cropping of legumes and non-legumes i.e., maize or bean or cowpea grown together in the same soil for atleast part of their growth cycle, is the predominant decline system in jhum area of North Eastern Hills Region (Stinner and Blair, 1990). Benefit include land equivalent ratio are usually more than one, minimization of risk and some insects and disease control. Since legumes are not competitive with cereals in soil N update, legumes grow in association with cereals usually derive a higher percentage of their N from symbiosis. Cropping system that include legumes such as pigeonpea (Cajanus cajan) also enhance P availability to the associated crop. Growth of legumes can results in P release exceeding the requirement of legume, with the remainder available to associated small grains or maize (Snapp et al., 1998). Sequential Cropping Sequential cropping refers to growing of two or more crops in sequence within a crop year, one crop being sown after the harvest of the other. Example: Rice followed by pigeonpea, pigeonpea followed by wheat. Depending on the number of crops grown in a year, it is called as double, triple and quadruple cropping involving two three and four crops, respectively. Crop intensification is only in the time dimension. There is no intercrop competition. In addition to these systems, relay cropping, ratoon cropping are also in vogue. Relay cropping refers to planting of the succeeding crop before harvesting the preceding crop. Ratoon cropping or ratooning refers to raising a crop with re-growth coming out of roots or stalks after harvest of the crop. The changes in organic matter following cultivation quickly lead to lower fertility and to diminished soil structure, water holding capacity and biological activity (Vlek et al., 1997). Even where NPK is applied, there are demands on the soil to supply other essential elements. Alternative approaches that integrate legumes and other green manures into the cropping system 7

11 are needed; with moral approaches necessary of some resemblance of balance between nutrients is to be maintained. Efficient Cropping Systems Efficient cropping systems for a particular farm depend on farm resources, farm enterprise and farm technology. The farm resources include land, labour, water, capital and infrastructure. When land is limited, intensive cropping is adopted to fully utilize available water and labour. When sufficient and cheap labour is available, vegetable crops are also included in the cropping system as they require more labour. Capital-intensive crops like sugarcane, banana, turmeric etc., find a place in the cropping system when capital is not a constraint. Change in cropping system takes place with the development of technology. Areas under cultivation and cropping intensity across the states in the North Eastern Hill Region are enlisted in Table 1. Highest copping intensity of 160.3% has been achieved by Tripura followed by Manipur (154.3%) while lowest of 106.4% cropping intensity was observed in the state of Mizoram. Table 1: Net and gross cropped area, cropping intensity and share of area under food grains to total cropped area in North Eastern Hill Region NEH States Net cultivated area ( 000 ha) Gross cultivated area ( 000 ha) Cropping Intensity (%) Share of area under food grains to total cropped area (%) Arunachal Manipur Meghalaya Nagaland Sikkim Tripura Mizoram NEH total All India Rice and maize based inter-cropping system In the NEH region rice-fallow, maize-fallow, rice-rice, rice-potato, maize frenchbean, maizepotato, are the promising cropping systems. Inter- cropping of legumes with main crop gave bonus 8

12 yield without affecting the yield of main crop. In summer, potato, soybean, maize could be inter cropped to get additional return. Under medium to low altitude, rice, maize, soybean and ragi could be grown in kharif followed by wheat, mustard, peas or linseed in upland terraces on residual moisture with timely planting. Inclusion of maize as fodder crop in maize groundnut Indian mustard was also promising but due to lack of fodder demand it could not be a promising sequence. Different rice based cropping systems for NEH Region 1. Rice-fallow 2. Rice-rapeseed/mustard 3. Rice-lentil 4. Rice-pea Different agro based industry can be developed in the region with accordance to cropping systems. Some of the prominent are enlisted below 1. Rice mill 2. Maize processing unit 3. Poultry feed plant 4. Pulse mill and Oil mill 5. Honey bee industry 6. Tea garden 7. Ginger processing unit 8. Turmeric processing unit 9. Pickle and jam/jelly production unit 10. Pineapple processing unit Organic farming: an important area for agribusiness development in North Eastern India The North-East comprises Assam, Arunachal Pradesh, Mizoram, Nagaland, Meghalaya, Manipur, Tripura and Sikkim and covers an area of 2.62 lakh sq. km. accounting for 7.9% of total geographical area of the country. With a total population of 45 million (2011), it accounts for 3.8% of total population of India. It is a region with strong natural and human resources. More than 64 per cent of the total geographical area is covered by thick and deciduous forest ( million hectares under forest). Except a small valley plain of about 30 per cent, the rest of about 70 per cent of the total area is hilly and mountainous track of very steep to moderate slope. Thirty per cent of valley plain consists of upland, lowland, deep water and very deep water ecological situation. The North- East India in totality is placed amongst the poorest regions of the country with per capita per annum NNP at Rs compared to the national average at Rs i.e. about 69% of the all India per capita NNP. The number of people dependent on agriculture is over 86 per cent. By and large production condition in agriculture is traditional. Rice is the major crop in the region. The agricultural 9

13 productivity is the lowest, irrigation facility almost non-existent in many of the areas and consumption of fertilizer is extremely low in the region. In North-eastern region of the country, the application of chemical fertilizer is very low viz., 2.9 kg /ha in Arunachal Pradesh, 3.8 kg/ha in Nagaland, against all India average kg/ha (Table 2). Most of the areas of North East Region especially the hilly upland areas and areas under shifting cultivation (jhum) are organic by default. The region wise average fertilizer consumption is around 33.3 kg/ha. Highest consumption is in Assam followed by Tripura and Manipur. However, most of chemical fertilizers are used in valley ecosystem but upland ecosystem is free from use of chemical fertilizers. Similarly, the use of pesticides in the region is very low because the farmers are practicing traditional methods for controlling of insect pests and diseases. Consumption of pesticides in Nagaland and Sikkim is nil. However, Mizoram and Meghalaya, consumption is only 13 tones. India s pesticides consumption is tonnes whereas, north-eastern region has only 141 tonnes (Anon 2003). Table 2: Hectare wise consumption of Nitrogen (N), phosphorous (P) and potassium (K) in North East India except Sikkim (Sikkim is an officially organic state) State Fertilizer consumption (kg/ha) N P 2 O 5 K 2 O Total Assam Tripura Manipur Meghalaya Nagaland Arunachal Pradesh North East India (Source: Department of Agriculture & Cooperation, year ) To increase India s area under organic farming from the present ha to 9.3 lakh ha, 8.75 lakh ha area under shifting cultivation of this region need to be recognized and certified. This region also has another opportunity to convert other mid hill area to organic zone. This region has 38% of total cropped area of 4.0 million ha. Under mid hill, there is another scope for converting lakh ha into organic category (Bujarbaruah, 2004). Initially, the North Eastern States were identified for promoting organic farming. These states were selected because the land is almost virgin and the crops are grown virtually organic. There is lot of scope for organic agriculture in the hills especially in the north eastern region of India. Firstly, the use of inorganic fertilizers and chemicals is meager in the region. The farmers of the region, in general and hill farmers in particular are having apathy 10

14 towards use of agro-chemicals. Secondly, the fruits of green revolution could not benefit the farmers of the hills as the system of production in the hills remained low input-low risk-low yield technology based and the average yield of most of the crop remained far behind. It is assumed that the difference in production gap due to adoption of organic agriculture is expected to be negligible; rather there is scope for enhancing productivity with good organic management, the that all the households are maintaining livestocks (pig, poultry, cattle, goats, etc.) producing sufficient quantity of on-farm manures, which could be efficiently used for organic agriculture. Moreover, the north eastern states being one of the mega biodiversity receiving very high rainfall (2000 mm to mm per annum) leads to profuse production of biomass including weeds, shrubs and herbs. Some of these species could be efficiently used in organic production. Bujarbaruah (2004) reported that the region has a potential of about 47mt of organic manure including 37mt from animal excreta and 9 million tons from crop residues. SWOT analysis of north eastern hill region for agri-business development Strength Abundant natural resources. It is one of the 8 mega biodiversity hot spot (indigenous crop germplasm 3000, Orchids 1600, Medicinal plants 9 genera and 119 species, Aromatic plants 5 genera, fish germplasm 347 species and gene center for economically important species of Rice, citrus, banana, cucumis, brinjal, tea and cotton,. Rich water resources ( rivers of 20,050 km & water bodies of 2.08 lakh ha) Comparative advantage in food production due to moderate climate, higher organic carbon content in soil and rich in biodiversity Lower population density per square kilometer (176 compared to 382 at national level). Dependence of mid and high altitude farmers on within farm renewable resources. Time tested indigenous farming systems and use of indigenous technical knowledge in agriculture. NER accounts for large share of producing pineapple (45%), large cardamom (54%), orange etc. One of the best quality gingers (low fibre content) produced in the North Eastern Hill Region. Assam tea is known for its quality world wide Weakness/ Challenges Benchmark survey of the region for identifying the potential areas for agro based business enterprises. Prevalence of shifting cultivation (jhuming) with associated deforestation resulting in large-scale soil erosion and land degradation. Difficult terrain with varying altitudes and slopes making crop management practices more difficult 11

15 Opportunities Threats Apathy of farmers towards the use of chemical fertilizers and other agro-chemicals causing reduction in yield of crops Farmers specific preference for local varieties restricts spread high yielding crop varieties. Low ph, Al toxicity in uplands, Fe toxicity in lowland and phosphorus deficiency in all situations Lack of established market Poor quality management in production and processing Large number of small and marginal farmers with very poor organizational building Hilly topography and inaccessible to good roads and other infrastructure facilities Problems in availability, transportation and application of input materials to meet the nutrient demand of the crop. Lack of processing, post-harvest and value addition facilities. Favourable environment for diseases and pest problems due to high rainfall & humidity. Development of location specific package of practices of agro based business enterprises for food, vegetable, fruits, spices etc. Growing purchase power of consumers Setting up of Agri-Export Zone (AEZ) in Tripura for organic cultivation of pineapple. Another Agri-Export Zone (AEZ) established for ginger in Sikkim. Promotional schemes for agriculture and related industrial investments for NER. Export potential for niche crops production under organic farming Lack of sufficient numbers of processors, distributors,marketing channels and certification bodies in the region Huge managerial costs for organic certification. A compact area approach is needed for organic production as the farmers holdings are small to marginal. If neighbouring farmers do not follow organic methods or co-operate with the organic farmers, there is a chance for drift and/or leaching of the chemicals in to the organic farms, vitiating the results. Inability to capture marketing economies Insufficient numbers of processors, distributors and marketing channels Steps required for successful development of Agribusiness enterprises in NEH Region Table 3. Potential crops for in different states of North Eastern Hill Region Tripura State Potential crop Pine apple, indigenous aromatic rice (Harinarana, Kali khasa, Binni), Cabbage, Cauliflower 12

16 Sikkim Meghalaya Arunchal Pradesh Mizorma Nagaland Manipur Maize, mandarin, caradamom, black pepper, ginger Ginger, turmeric, strawberry, khasi mandarin, frenchbean, Cabbage, Cauliflower, tomato, potato, carrot Kiwi Fruit, plum, vegetables Strawberry, Vegetables King chilli, Maize, rice, root crops Sticky rice, lentil, mustard-toria, pea Choice of crops and varieties Based on performance and demand of the region, particular crops should be selected. Rice, maize, mustard, groundnut, frenchbean, medicinal rice, pineapple, passion fruit, ginger, turmeric, large cardamom, medicinal plants, etc. are in demand in the region (Table 3). Location specific varieties need to be selected for large scale production. Healthy, clean and high percentage germination seeds from authentic source should be selected. Thrust to High-Value Agriculture In order to improve the contribution of the agricultural sector to the overall development of the North-East, there is a need to devise an appropriate, regionally differentiated strategy. Given its biodiversity and soil and climatic conditions, the NER is congenial for horticulture and growing highvalue crops. Full advantage must be taken of the relative strengths of the region in fruit production, plantation horticulture and floriculture, cultivation of medicinal and aromatic plants, forest-based products, etc., without impacting sustainability. The growth engine of the region can be high-value agriculture, fish farming and tourism, especially farm/eco-tourism (Karmakar, 2008). The share of the North-East in the country s fruit production is 5 per cent; in vegetable production, its share is 4.2 per cent. The NER share in total pineapple production is 45 per cent; and in honey, its share is 22 per cent. Fruits (banana, pineapple, orange, passion fruit, papaya) spices (ginger, garlic, black pepper, cardamom, chillies), plantations crops (tea, rubber and bamboo) and sericulture are capable of generating high returns per unit of land and provide good avenues for investment. In addition, state-specific strengths such as orchid cultivation in Arunachal Pradesh (more than half of the 1,000 Indian varieties are found in Arunachal Pradesh), mushroom cultivation in Manipur, spices in Nagaland need to be fully tapped. Thus, the region has very high potential for growth in horticultural production (Karmakar, 2008). Infrastructure Building A major lacuna of the region is its poor connectivity to main marketing centers. Road building in rural areas needs to be accorded high priority to facilitate easy and swift transportation of 13

17 agricultural inputs and produce. Initiatives taken by the Government of India to develop infrastructure across Infrastructure Building A major lacuna of the region is its poor connectivity to main marketing centers. Road building in rural areas needs to be accorded high priority to facilitate easy and swift transportation of agricultural inputs and produce. Initiatives have been taken by the Government of India to develop infrastructure (Karmakar, 2008). Post-Harvest Management In order to improve the profitability of farming operations, emphasis must also be placed on post-harvest management and marketing linkages. Since most states in the North-East produce tropical and subtropical fruits, spices and flowers, the marketing infrastructure for the value addition of such produce needs to be put in place. Developing cold storage facilities, establishing processing centers, applying quality control, using advanced packaging techniques and modern transportation methods, setting up ancillary units, attracting private corporations, encouraging contract farming all these measures are capable of minimizing economic losses. While such investments require adequate institutional financial support, they will fetch good returns for the farming community in the region (Karmakar, 2008). Future strategies The main strategies for organic farming should be on 1. Adhering to strict phyto-sanitary measures and upgradation of post-harvest technology 2. Promoting adoption of biofertilizers, bio control agents, cover crops and eco-friendly inputs 3. Incentives to the growers in the initial years of shifting to organic farming, 4. Strengthening research base on the economic viability of the system 6. Creating awareness among the farmers about benefits, market promotion and adequate publicity for increasing the demand for organic pepper even in the local market 7. Direct and indirect effects of organic farming to be quantified on long term basis 8. Popularization of National certification scheme & accreditation agencies 9. Foster/Nurture through self-sufficient juicing extraction at the grower s level in pineapple producing areas 10. Promote contract farming in the region through a tripartite agreement with state as one party and farmer groups and buying houses as other parties. The state government can be represented by departments like State Agriculture Marketing Boards 11. Facilitate branding of organic produce of North East to fetch better market value 12. Ensuring better connectivity through improved transportation for the bulky and perishable fruits and vegetables 13. Encouraging investment into the processing of fruits and vegetables by providing attractive incentives and bringing policy reforms 14

18 14. Training & Capacity Building of farmers Areas (Production, Market driven Production Planning, Aggregation, Primary Processing, Marketing etc) Sustainable agricultural activity, enhanced productivity and better realization to farming Community 1. Efficient, economic, eco-friendly and sustainable crop production and protection technologies 2. Development of improved crop varieties / hybrids suited to diverse agro-ecologies and micro conditions 3. Sustainable management of natural resources for achieving food, nutritional, environmental and livelihood security 4. Conservation and sustainable use of genetic resources of plant and agriculturally important microorganisms 5. Knowledge dissemination and technology for increasing the yield. This shall also include strategic planning for production of commercial crops, crops having export potential and high unit value realization 6. Promote high density plantations, shade net cultivation, poly house cultivation, green house cultivation, precision farming, etc. 7. Diversification from traditional crops to plantations, orchards, vineyards, flowers and vegetable gardens 8. Identification / collection, rapid multiplication & popularization of indigenous crops and other flora of importance with emphasis on domestic and export promotion 9. Ensuring the timely availability of agri inputs of right quality and quantity 10. Enhance access to capital, technology, effective management and supporting services such as credit, marketing, research and extension 11. Establish linkages amongst stakeholders such as farmers, industry, research, and extension mechanisms 12. Minimize post harvest losses, reduce wastages resulting in higher value realization to farmers Development of Agro based Industry including Food Processing Units 1. Better utilization and value addition of agricultural produce for enhancement of farmers income 2. Maximising utilization of agricultural residues and by-products of the primary agricultural produce as also of the processed industry 3. Value addition to agricultural produce, processing and utilization of by-products. Enhancing the shelf life of perishable fruits, vegetables, flowers animal, dairy products,product diversification and value addition for better profitability 4. Minimizing wastage at all stages in the food processing chain by the development of infrastructure for storage, transportation and processing of agro-food produce. 5. Adoption of state of the art modern technology for food processing industries in the field of fruits and vegetable processing, food grain milling, dairy products, poultry Research, skill development and employment generation 15

19 1. Promoting excellence in basic, strategic and anticipatory research in crop science, horticulture, natural resource management, food processing, food packaging technology 2. Develop a mechanism to re-allocate agriculture workforce involved in primary production into agri-service sector through entrepreneurship mode 3. Generate large scale employment opportunities through collaborative modes 4. Familiarization and exposure towards newer scientific concepts and research & development from hitherto unknown, unexplored and traditional status of farming and post harvest management to the modern lines 5. Arrange regular technology exchange programs, know-how and training programs to target groups like farmer societies, SHGs, women development groups, state agriculture officers, collaborations with renowned universities Boosting agro-exports of the region 1. Special emphasis shall be laid down to make small-scale agro based units in the state to remain competitive in global markets 2. Create brand image for unique agro food products of North Eastern Region and develop key products to gain market dominance 3. Create new markets and new product lines and develop alternate marketing channels Investments in agriculture and allied sectors 1. Attract investments both in infrastructure and industries, technology, research, skill development in agriculture and allied sector through a structured and transparent process 2. Develop well balanced agro-industrialization across the state and develop Small, Medium and Large scale industries 3. Encourage private sector participation on a transparent basis in development and operation and maintenance of agri-infrastructure Conclusion There is lot of scope for agribusiness development in North Eastern Region of India. Moreover, the north eastern states being the one of the mega biodiversity receiving very high rainfall (2000 mm to mm per annum) leads to profuse production of biomass including weeds, shrubs and herbs. Some of these species could be efficiently used for agro based enterprises. The organic carbon content of the soils of NEHR is also very high to support the organic farming system. The crops like aromatic rice, sticky rice, pine apple, frenchbean, strawberry, kiwi, passion fruits, ginger, turmeric, large cardamom, orange black pepper and aromatic and medicinal plants has the huge potential to grow successfully in this region and there is a chance to develop suitable agro based industry for those crops. The results of different experiments in this region indicated that the productivity of crops under organic farming either maintained or improved over the years, besides improving the soil fertility. The major challenges for promotion of agro-based industry in the region are lack of infrastructure, poor road and communication, human resource development, assistance to farmers in post-harvest handling, processing and value addition, creation markets and marketing channel of produce. However, with the help of technology and Government initiatives, there is huge potential to make this region an export oriented organic hub of the country. 16

20 References Anonymous. (2003). Basic Statistical Report, North Eastern Council, Shillong. Bujarbaruah, K. M. (2004). Organic Farming Opportunity and Challenges in North-East of India In: B. K. Sharma et al., (Eds.) Nature, International Conference on Organic food. ICAR Research Complex for NEH Region, Umiam, Meghalaya, th February, 8-13 pp. Karmakar K. G. ASCI Journal of Management 37(2): Copyright 2008 Administrative Staff College of India Snapp, S.S. Mafongoya, P.L. and Waddington, S., (1998). Organic matter technologies for integrated nutrient management in smallholder cropping systems of Southern Africa. Agricultural Ecosystem and Environment 71: Stinner, B.R., and Blair, J.M. (1990). Ecological and agronomic characteristic of innovative cropping systems. In Edwards, CA etal (Eds). Sustainable Agricultural Systems. St. Lucie Press, Florida PPRS 140. Vlek, P.L.G., Kuline, R.F., and Daniel, M. (1997). Nutrient resources for crop production. Trans; R. Soc Land. B. 352:

21 Opportunities of Entrepreneurship and Agribusiness in Animal Sector Suresh Kumar, Arundhati Purkayastha and Banita Devi Introduction Livestock sector plays a critical role in the welfare of India's rural population. It contributes nine percent to Gross Domestic Product and employs eight percent of the labour force. This sector is emerging as an important growth leverage of the Indian economy. As a component of agricultural sector, its share in gross domestic product has been rising gradually, while that of crop sector has been on the decline. In recent years, livestock output has grown at a rate of about 5 percent a year, higher than the growth in agricultural sector. This enterprise provides a flow of' essential food products, draught power, manure, employment, income, and export earnings. Distribution of livestock wealth is more egalitarian, compared to land. Hence, from the equity and livelihood perspective it is considered an important component in poverty alleviation programmes. Livestock scenario in India India s livestock sector is one of the largest in the world. It has 56.7% of world s buffaloes, 12.5% cattle, 20.4% small ruminants, 2.4% camel, 1.4% equine, 1.5% pigs and 3.1% poultry. Role of livestock in Indian economy Livestock sector did not receive the policy and financial attention it deserved. The sector received only about 12% of the total public expenditure on agriculture and allied sectors, which is disproportionately lesser than its contribution to agricultural GDP. The sector too has been neglected by the financial institutions. The share of livestock in the total agricultural credit has hardly ever exceeded 4% in the total (short-term, medium-term and long-term). The institutional mechanisms to protect animals against risk are not strong enough. Currently, only 6% of the animal heads (excluding poultry) are provided insurance cover. Livestock extension has remained grossly neglected in the past. Only about 5% of the farm households in India access information on livestock technology. These indicate an apathetic outreach of the financial and information delivery systems. Agriculture in India is considered as the mainstay of a majority of people. It contributes around 14 per cent to the gross domestic product (GDP) of the country. The livestock sector in India contributes to nearly 32% of total agricultural output. India with 2.3% share of global geographical area supports nearly 20% of the livestock population of the World. Animal husbandry is an integral component of Indian agriculture supporting livelihood of more than two-thirds of the rural population. Animals provide nutrient-rich food products, draught power, dung as organic manure and domestic fuel, hides & skin, and are a regular source of cash income for rural households. They are a natural capital, which can be easily reproduced to act as a living bank with offspring as interest, and an insurance against income shocks of crop failure and natural calamities. With an annual production of 74 million tonnes in , India is the largest producer of milk. Initiation of Operation Flood in early seventies provided a stimulus to milk production, which has never looked back since. The growth is on account of both improvements in 18

22 productivity and shift in priorities towards buffalo and crossbred cattle. Yet, the productivity is low compared to the potential and world average Meat output grew tremendously since eighties. This has resulted exclusively due to increase in number of animals slaughtered. Productivity of most meat producing species is low and shows no sign of growth. Similar is the case with eggs wherein population largely drives production. Livestock derive major part of their energy requirement from agricultural by-products and residues. Hardly 5% of the cropped area is utilized to grow fodder. India is deficit in dry fodder by 11%, green fodder by 35% and concentrates feed by 28%. The common grazing lands too have been deteriorating quantitatively and qualitatively. Veterinary and animal health services are largely in the public sector domain and remain poor. Dairy Sector Twenty first century is the century of entrepreneurship and every individual can be an agent for innovation and change. Entrepreneurship is regarded as one of the most crucial factors in the economic development of every region of the country. It widens the horizons of economic development even in the socially and industrially backward regions. Dynamic entrepreneurs are considered to be the agent of change in a society. Entrepreneurs play a very important role in generating new employment and setting up new business. The problem of poverty, inequality and regional imbalances can be tackled with the development of entrepreneurship. However, in all economic development activities more and more focus is being centered on entrepreneurship of the people. Entrepreneur has been now recognized as a concept, not only for starting industries but also in the development of dairy enterprise. India has one of the largest livestock populations in the world. Fifty percent of the buffaloes and twenty percent of the cattle in the world are found in India, most of which are milk cows and buffaloes. The growth in milk production accelerated from 4.4% during 1990s to 17% during 2012s. Dairy development in India has been acknowledged the world over as one of modern India s most successful developmental programme. Today, India is the largest milk producing country in the world. Milk and milk products is rated as one of the most promising sectors which deserves appreciation in a big way. When the world milk production registered a negative growth of 2 percent, India performed much better with 4 percent growth. The total milk production is over 72 million tonnes and the demand for milk is estimated at around 80 mt. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in these milk surplus States. Milk products Cheese The organised cheese market including its variants like processed cheese, cheese spreads, mozzarella, flavoured and spiced cheese, is placed at around Rs 3 bn. Processed cheese at 50% of the overall market is Rs. 1.5 bn strong. The next most popular variant is cheese spread claiming a share of around 30% of the total cheese market. The market is primarily an urban phenomenon and is know to be growing at around 15%. The market for cheese cubes slices and tins are growing. The 19

23 flavoured cheese segment has been declining. In India, Gujarat Cooperative Milk Marketing Federation (GCMMF) with the Amul brand continues to be the main. About 45% of milk production is consumed as fluid milk. About 35% is processed into butter or ghee; about 7% is processed into paneer (cottage cheese) and other cheeses, about 4% is converted into milk powder; and the balance is used for other products such as Dahi (yoghurt) and sweet meats. Technology Export Potential of Milk and Dairy Sector operator in the branded cheese market in India with about 60% market share in the branded market. It pioneered the market for processed, branded cheese. Ice Cream The ice cream market in India is estimated to have reached the level of Rs. 10 bn per annum, of which the organised sector is about Rs. 6 bn. The unorganised market has been shrinking. The per capita ice cream consumption in the country is extremely low at 250 ml per year compared with that of the US, which is about 22 litre. Chocolates The Chocolates market is estimated at 35,000 tonnes valued at approximately Rs. 8.0 bn. The chocolate counter market is worth nearly Rs. 2.5 to 3.5 bn and the rest is made up of chocolate bars. Chocolates in fact make up less than a fourth of the sweet-tooth products including sugar boiled confectionery mints and chewing gums. Sugar confectionery is by far the largest segment with a share exceeding 60%. Dairy Whiteners The organised dairy industry processes an estimated 15% of the total milk output in India. The industry has maintained a high growth profile, especially in the wake of the Operation Flood, colloquially also termed as White Revolution, initiated in early 1980s. Today India produces over mn tonnes of milk annually (2012). In terms of value, the total milk economy is estimated at Rs bn. Potential for value added products Ethnic Indian dairy products like Sweets Shreekhand, Rusgulla, Khoya and Ready-to-Eat-Kheer, Haluwa, etc. Have good demand in the countries where ethnic Indian population is settled. For promotion of these products, we require export worthy consumer packing, which also improves the shelf-life of the product. Meat and Meat Processing India has the world s largest livestock population, accounting for 50% of buffaloes and 1/6th of the goat population. Such a large population represents a challenge to retain existing productivity traits by application of modern science and technology. Rigorous efforts are being made to improve the condition of livestock by providing basic infrastructure and latest technology. FAO has estimated the existing production of meat and poultry products at 4.42 million tonnes. Only 11% of the buffalo population, 6% of cattle, 33% of sheep and 38% of the goat population is culled for meat. At present, only a small percentage of the meat produced is converted into value added products and most meat is purchased by consumers in the fresh/frozen form for 20

24 conversion into products at home, restaurants, etc. Maximum conversion takes place in pork products. Meat Processing Meat processing is the new thrust sector for Indian industry with many processing centres being set up with advanced technology. Animals render extremely useful service in out-transport system and agriculture. India needs technical cooperation to build up organised facilities for rearing meat producing animals, proper storage and refrigerated transport system. The present production of meat in India is estimated at 6.27 million tons in 2010 (FAO, 2012), which is 2.21% of the world's meat production. The contribution of meat from buffalo is about 23.33%, while cattle contributes about 17.34%, sheep 4.61%, goat 9.36%, pig 5.31%, poultry 36.68% and other species 3.37%. The meat production has increased from 764,000 tonnes in to 6.27 million tons in The compounded average growth rate (CAGR) during the last two decades works out to be 4.5%. Goatery The poor man s cow goat has tremendous potential to be projected as the Future Animal for rural prosperity under the changing agro geo climatic conditions and depleting resources. There are over 880 million goats around the world, out of which India has over 126 million goats (14.31%) of 23 defined and non descript breeds that are adapted efficiently in different agro climatic conditions all over the country. Goat husbandry in India is essentially an endeavor of millions of small holders who rear animals on Crop Residues and Common Property Resources. The small holders produce milk, meat, fiber, skin etc for the community with virtually no capital, resource and formal training. More often goats are reared for production of meat, but they also serve as ready source for milk to meet the family requirement. In India, considerable growth has been recorded in production of goat meat and milk during the last decade. The goat meat production has doubled (9.3% to 18.3%) and goat milk production has shown a growth rate of 31.53% during the last decade. The country stands first in goat milk production and is the second largest meat producer in the world sharing 26.31% goat milk and 10.41% goat meat production. Besides meat and milk, goats also produce good quality skin, valuable Pashmina fiber and manure. The goat sector contributes Rs 14,453 crores to the agricultural economy of the country through meat (Rs 6851 crores), milk (Rs 4588 crores), skin (Rs 648 crores), etc. which accounts for around 8 per cent of the Gross Domestic Product (GDP) from livestock sector. In addition, the goat sector generates about 4% rural employment and about 20 million small and marginal farmers and landless laborers families depend on goats for their livelihood partially or completely. Piggery Industry Pork production in India is limited, representing only 7% of the country s animal protein sources. Production is concentrated mainly in the north eastern corner of the country and consists primarily of backyard and informal sector producers. According to 18th Livestock Census of India (2007), the total swine population, while small, has grown consistently over the past 50 years. However, in the 21

25 most recent decade, the population has declined to approximately 12 million head from a high of 14 million in 2003, as indicated by the 17th Livestock Census of India. Poultry Industry India ranks fifth in the world in egg production with a yield of 1.61 million tonnes a year. Yet the per capita availability is low. Now, with changing food habits and increasing availability of eggs, the demand is increasing and growing at 10% a year. Egg production has grown during the last 30 years at an annual average of16%, while that of broilers, by 27%. During this period, Indian poultry industry made spectacular progress transforming itself from backyard farming to a dynamic and sophisticated agri-based industry. The increasing awareness about balanced nutrition has effected changes in eating habits with vegetarians accepting eggs as part of their diet. Simultaneously, purchasing power has increased and more money is allocated for food. Despite this, the egg industry experiences periodic slumps. There are five modern integrated poultry processing plants in the country, besides a good number of not very-modern small plants. These plants produce dressed frozen chicken and cut parts. While poultry industry is gradually taking shape, poultry dressing and processing is still in its infancy in the country. There are about 15 pure-line and grandparent franchise projects in India. There are 115 layer and 280 broiler hatcheries both in the private and public sector, producing 1.3 million layer parents and 2.6 million broiler parents, which, in turn, supply about 95 million hybrid layer and 275 million broiler, day-old chicks. In India, five egg powder plants have also been set up to produce whole egg, yolk and albumen powders. Demand for egg powder is increasing every year. Each project will process a million eggs daily. Only one egg powder plant has been in operation in Mumbai since the 1970 s. Other such plants will help boost egg production. The poultry industry is an important food sector that has become increasingly sophisticated as the level of economic development has increased. Poultry farming is the raising of domesticated birds such as chickens, turkeys, ducks, and geese, for the purpose of farming meat or eggs for food. Poultry are farmed in great numbers with chickens being the most numerous. More than 50 billion chickens are raised annually as a source of food, for both their meat and their eggs. Chickens raised for eggs are usually called layers while chickens raised for meat are often called broilers. The largest number of poultry population in India is found in Andhra Pradesh followed by Tamil Nadu, Maharashtra, West Bengal, Karnataka, Bihar, Orissa, Kerala, Assam, Uttar Pradesh and Punjab. Some important urban areas like Mumbai, Pune, Nagpur, Kolkata, Delhi, Chandigarh, Bangalore, Chennai, Hyderabad, Shimla, Bhubaneswar, Ajmer etc. are raising poultry through a developed poultry farming systems. West Bengal and some other regions like Assam, Tamil Nadu, Kerala, Andhra Pradesh, Bihar, Orissa etc. are the most suitable place for duck farming. Benefits of Poultry Farming in India There are many benefits of commercial poultry farming in India. The main benefits are listed below. Commercial poultry farming in India has created and still creating profitable business opportunity for the Entrepreneurs. Poultry farming business can provide a great employment source for the job seeking people. 22

26 This is such a business in India that can never dry up. All types of poultry product has a great demand in the market inside India and there are no religious taboo about consuming the poultry meat and eggs. Highly productive local and foreign breeds are available for commercial production. Required initial investment is not too high. You can start with small scale production and elaborate it gradually. Bank loans are available throughout the country. Numerous farms are available and you can easily learn about poultry farming from those established farmers. Starting Commercial Poultry Farming in India The main and most important thing for poultry farming in India is selecting a suitable land. Try to setup the farm in rural areas that is slightly far from the city. Because, land and labor are relatively cheaper in rural areas. Select a chaos and noise free calm and quiet place. The area of the land depends on the number of birds and farming system. Free range farming system requires more land than intensive system. The chosen area must have to have fresh and pollution free environment. Never setup the farm in rented land. Because, in rented land the land owner can force you to leave his land at anytime. So, it would be better if you are the owner of the land. While selecting land, ensure a great source of sufficient amount of fresh and clean water. The selected area must have to be free from all types of harmful animals and predators. Suitable transportation system is a must. Presence of a suitable market near the farm will be effective. You will be able to buy necessary commodities and sell your products easily in the market. Farming System: three systems are listed below. 1. Intensive System, 2. Semi-Intensive System and 3. Extensive System. Common and mostly raised poultry breeds in India are of three types. Broilers: The poultry breeds that is suitable for commercial meat production is known as broiler poultry. They are like meat producing machines. They consume foods and convert them to meat quickly. They grow fast and become suitable for slaughter purpose within very short time. 23

27 Cockerels: Cockerels are other types of meat producing poultry breeds. They also used for commercial meat production like broilers. But their growing rate is slower than broilers. They become hardy and can adopt themselves with the environment easily than the broilers. Cockerel meat is also very popular and has a great demand in India. Layers: Various types of layer poultry are very popular for commercial eggs production throughout the world. Some of them are very suitable for farming in India. Layers can be used for both commercial meat and egg production. There are some layer poultry breeds available which can lay upto 300 eggs per year. Marketing The main benefits of poultry farming in India is easy marketing. You can easily sell your products in your nearest local market. Poultry Feed industry: Poultry feed is divided into layer and broiler feed. In the case of layer feed, cost is the main constraint in using compound feed. An innovative, high-value compound feed can result in increased numbers of eggs, but the risks are too high because of the birds' long life cycle. Compound feed has, however, made a major contribution to broiler feeding. This is an example of excellent coordination among instrument technology, formulations and use of feed additives and supplements. Cost is a less important factor because the performance improvements are greater than the cost increases and the birds' life cycle is short. Poultry feed additives are also present in the form of industry. Some of the Poultry Feed Industries available in India namely Vee Excel Drugs and Pharmaceuticals Private Limited, Triveni Chemicals, Crown Herbals etc. Feed and Fodder Industry Feed and fodder scarcity is identified as the most limiting constraint accounting for half of the total loss, followed by problems in breeding and reproduction (21%) and in health (18%). India, with only 2.29% of the land area of the world, is maintaining about 10.71% of the world s livestock population. The area under fodder cultivation is estimated to be about 4% of the gross cropped area which has remained static for the last four decades. The grazing lands are also gradually diminishing because of other competing pressures on land. The shortage of fodder for livestock is primarily owing to the large population of livestock, and the limitations to increase the area under fodder cultivation due to the priority required to be given to food grains and other cash crops. Centrally Sponsored Scheme under which central assistance is provided to states to supplement their efforts in feed and fodder development. This scheme originally had nine different components, viz., establishment of fodder block making units, grassland development including grass reserves, fodder seed procurement and distribution, strengthening of feed testing laboratories, introduction of hand driven and power driven chaff cutters, establishment of silage making units, demonstration of azolla cultivation and production units, establishment of by-pass protein production units and establishment of area specific mineral mixture / feed pelleting / feed manufacturing unit. Establishment /Modernization of Rural Slaughter Houses The slaughterhouses are aimed to be established/ modernized in rural areas and smaller towns to produce wholesome and hygienic meat for supplying to the cities/towns. This way, the loss in the 24

28 meat sector due to transportation of live animals, shrinkage of meat and environmental pollution in the cities will be prevented. The employment opportunities for further use of fresh hides and skins in the tanneries in vicinity of the slaughterhouses will boost production of quality leather. This scheme is being implemented in three states: Uttar Pradesh, Andhra Pradesh and Meghalaya, initially on pilot basis. Utilization of Fallen Animals The meat importing countries insist for creating facilities for proper disposal of slaughter waste and fallen animals as a sanitary measure. The Central Leather Research Institute (CLRI), Chennai has reported annual mortality of 24 million large animals and 17 million small ruminants. The estimated colossal loss is `985 crore per annum due to non-recovery/partial recovery of hides/skins and other by-products from the fallen animals. This scheme proposes to establish carcass utilization centres in animals density matrix areas and is expected to provide employment to poorest of the poor Agri-Clinic and Agri-Business Centres: This is a central sector scheme which aims to promote the delivery of extension and other services in a self-employment mode. Graduates in agriculture and allied sectors are eligible under the scheme. The full cost of training in agri-business development is supported. NABARD monitors the credit support to agri-clinics through commercial banks. Semen Production and Breeding Centres Crossbreeding of indigenous species with exotic stocks to enhance genetic potential of different species has been successful only to a limited extent.limited AI services owing to deficiency in quality germ plasm, infrastructure and technical manpower coupled with poor conception rate following artificial insemination have been the major impediments. After more than three decades of crossbreeding, the crossbred population is only 16.6% in cattle, 21.5% in pigs and 5.2% in sheep. Frozen semen is becoming more widespread now due to the acceptance of this technology by most breed associations for registration purposes thus accelerating the production of cross breds. Shipping of the frozen semen from distant areas can be done at anytime throughout the year. 39 Semen stations are ISO certified. 7 Semen station located at Mattupatty, Dhoni, Kulathupuzha (Kerala), Haringhata (West Bengal), Salboni, Beldanga (West Bengal) and Bhadbhada (Madhya Pradesh) are also HACCP certified semen stations. Private semen production, processing and breeding centres particularly for Murrah Buffalo semen stations and pure indigenous and exotic cattle semen stations are coming up nowa days along with ISO certification are coming up very rapidly now a day in India. Private Veterinary Clinics Veterinary clinics provide veterinary service to the farmers at the door step to rear good quality animals and to control infectious animal diseases and thus reduce morbidity and mortality and they also cover large population of the breedable stock of genetic improvement. It provides additional income to the veterinarians through veterinary clinic it also address the problem of unemployment faced by the veterinarians. The clinic is to be established in those areas where livestock owners demand for quality services on payment basis such as milk shed areas, poultry pockets, irrigated 25

29 tracts etc. The area of operation may be 8-10 villages having 5000 to 6000 cattle units. The department of animal husbandry may assist for selection of potential areas. Components of veterinary clinics Infrastructure: Building (own or rented), Refrigerator, Telephone, Furniture, Motor cycle. (ii) Equipment: Surgical implements, laboratory equipment, A I Kit, Cryocans (big and small) (iii) Inputs: Medicines and vaccines. (iv) Others: Lab chemicals and Stationery Pet Shops/Pet Clinics Pet care remains untouched by the economic slowdown and is expected to record double-digit current value sales growth in The growing awareness of pets needs and the increased availability of pet food and products in modern retail stores and pet shops and superstores supported growth. Furthermore, pet owners continued to shift to branded pet food and many pet lovers traded-up to premium varieties. Pet shops remained the preferred retail channel in pet care, for pet food and pet products, over the review period. Such outlets are popular with pet owners due to the wide assortment of brands and products on offer. Pet care is set to continue to develop and grow due to new product launches focused on health and wellness and convenience. Health and wellness is more prominent in dog food, which is likely to see natural flavours and ingredients. Interestingly, other pet products is expected to witness innovative new product launches, such as touch-sensitive feeding bowls that load water or food from a canister when touched by the pet. 26

30 Early Responses to Exotic Animal Diseases: Strategies Revisited Sen Arnab, Shakuntala, I., Laha. R.G., Ghatak, S., Das, S., Puro, K., Sanjukta, R., Ahuja, A. and Ngachan, S.V. Preamble Early reaction contingency planning principles and strategies Early reaction is to carry out without delay the disease control activities needed to contain the outbreak and then to eliminate the disease and infection in the shortest possible time frame and in the most cost-effective way, or at least to return to the status quo that existed previously and to provide objective, scientific evidence that one of these objectives has been achieved. It is far too late to leave the planning of an emergency disease eradication or control programme to the time when a disease outbreak has actually occurred. There will then be intense political pressure and pressure from livestock farmer groups for immediate action. In such a climate mistakes will be made, resources misused, deficiencies rapidly highlighted, and there will be unavoidable delays resulting in further disease spread and higher costs-unless there has been adequate forward planning and preparation. Preventing the Entry of Exotic Animal Diseases The old maxim that prevention is better than cure is particularly relevant to exotic animal diseases. Quarantine should be regarded as one of the most important core functions of government veterinary services. Transboundary and other exotic animal diseases can be introduced to countries in many ways. These include entry of infected animals or germplasm (semen or ova), entry of contaminated animal products or biological products (e.g. vaccines), contaminated food waste from aircraft or ships, infected people (in the case of disease transmittable to animals), migrating animals and birds, or even by natural spread of insect vectors or by wind currents. While governments may be powerless to prevent some of the latter methods of disease introduction, the others can be considerably mitigated by efficient quarantine services. Quarantine programmes should include the following: International border controls to prevent the smuggling or uncontrolled entry of animals, animal products and other potentially dangerous goods. At the same time, border programmes should provide a legal method for entry of the above through sound animal health certification and pre- and post-quarantine. Licensing of traders may be considered. Sensitivity will be necessary when there are uncontrolled animal movements across borders because of nomadism, transhumance, influx of refugees, etc. as harsh quarantine restrictions may just encourage smuggling and be counterproductive. Import quarantine. Quarantine conditions should be negotiated with exporting countries for the safe importation of animals, germplasm and animal products. This will include pre-export testing and quarantine, animal health certification and any necessary post-arrival inspection, testing and 27

31 quarantine. The OIE International Animal Health Code for Mammals, Birds and Bees provides guidelines for such programmes. Quarantine inspection of people and goods arriving at international airports and seaports. Safe disposal of international aircraft and ship food waste through incineration or deep burial. Disease Infectious diseases have shaped human history. They are dynamic, and will continue to influence where and how humans live and human activities will alter the paths and expressions of infectious diseases. A broad range of societal, biological and physicochemical factors influence the distribution, incidence, and burden from infectious diseases. In recent years, patterns of infectious disease have changed. These changes include the description of diseases caused by pathogens long present but not previously identified, recognition of seemingly new microbes, changes in old pathogens (for example, changes in distribution, incidence, virulence, resistance to drugs), new disease disease interactions, and the spread to humans of organisms never previously known to be human pathogens. Although much media attention has focused on tropical, remote locations and on exotic viral infections such as Ebola, the changing pattern of infections involves all geographic regions and all classes of pathogen (such as viruses, bacteria, fungi, helminths [parasitic worms], and protozoa). Most of the major global causes of death from infectious disease are common, widely distributed infections, such as tuberculosis, measles, HIV, influenza, pneumococcus, and rotavirus. Infections: Chronic vs acute Infections kill and disable through many mechanisms. Many pathogens cause acute disease, but infectious diseases also impose a burden through chronic diseases, including cancer. Chronic diseases may be a consequence of persistent infection (for example, hepatitis B virus) or may result from tissue damage caused by past infection. Many cancers have been linked to infections. The World Health Organization (WHO) estimates that more than 1.5 million cancers each year, or about 15 percent of the total, are related to microbes. The three that lead the list are gastric (Helicobacter pylori), cervical (papillomaviruses), and liver (hepatitis B and C viruses) cancers. Microbes It is useful to take a broad view of microbial life before focusing on microbes that harm humans. Only a tiny fraction of microbes that exist on Earth have been identified and characterized. Of those identified, most do not infect humans; some are essential for shaping and sustaining life as we know it. Microbes are old, diverse, abundant, and resilient. They live in communities, send signals to communicate with each other, and change in response to changes in the environment. Microbial communities living deep in the Earth metabolize organic materials bound to rocks and sediments and shape the physical environment. Some microbes have short generation times (for example, twenty to thirty minutes for an organism like staphylococcus, compared with twenty to thirty years for a human), and hence can undergo rapid change. Such organisms change via mutation, but also by a variety of molecular maneuvers that involve acquisition and exchange of genetic information (for example, transfer, reassortment, recombination, conjugation, and so forth). These can alter microbial traits relevant to human health virulence, resistance to drugs, and even transmissibility. 28

32 Source of microbe The source of microbes causing infections in humans is typically another human, an animal or arthropod, or soil or water. Globally, about 65 percent of infections that lead to death are spread from person to person (such as respiratory tract infections, tuberculosis, HIV, and measles); almost a quarter are carried in food, water, or soil (for example, infections such as cholera and hookworm); and about 13 percent are vector-borne (namely, malaria and leishmaniasis) as per World Health Organization, To cause disease, a microbe must find a way to enter the human host and reach appropriate cells or tissues where it can attach and replicate. Microbes typically enter the body via ingestion, inhalation, or through the skin or mucous membranes. Many important pathogens, including the malaria parasite, are carried to the human host by a mosquito and inoculated through the skin. Some pathogens have complicated cycles that involve one or more intermediate hosts, typically animals that support one stage of development of the pathogen. Diseases in Pre-historic times Many infectious diseases of human and veterinary importance have pre-existed since pre-historic times i.e. early human colonization of the globe and have been of evolutionary significance. Human and wildlife animals have been responsible for dissemination of many diseases new areas. The Spanish conquistadors introduced smallpox and measles in the Americas and, similarly, movement of domestic and wild animals during colonization introduced their own suite of pathogens (Daszak et al., 2000). The first influenza pandemic for which more than one descriptive reports exist was that of Retrospective research has partially identified the virus responsible by testing for influenza antibodies in the serum of people who were alive at that time (Tumova, 1980). However, despite the importance of influenza as a disease of humans, the earliest recognition of influenza virus in animals related to infections of poultry. A disease capable of causing extremely high mortality in infected domestic fowl was first defined in 1878 and became known as fowl plague. As early as 1901, the causative organism of this disease was shown to be an ultra-filterable agent (i.e. a virus ) Alexander D.J (2000). Isolation of influenza virus as the causative organism of a disease of pigs with clinical signs similar to those in humans first described at the time of the 1918 human pandemic (Dorset et al., 1922). This swine influenza virus preceded isolation of human influenza virus. The African rinderpest panzootic of the late 1880s and 1890s is a paradigm for the introduction, spread, and impact of virulent exotic pathogens of wildlife populations. This highly pathogenic morbillivirus disease, enzootic to Asia, was introduced into Africa in The panzootic front travelled 5000 km in 10 years, reaching the Cape of Good Hope by 1897, extirpating more than 90% of Kenya s buffalo population and causing secondary effects on predator populations and local extinctions of tsetse fly. Populations of some species remain depleted and the persistence of rinderpest in eastern Africa continues to threaten biodiversity. Pandemics of cholera, influenza, plague and other diseases have also occurred in the past. 29

33 Influenza has been one of the notable viral affections in the past. The Spanish influenza of was responsible for death of more than 18 million humans world over (Fields, 2001). The causative agent, not characterized at molecular level earlier due to non-availability of sophisticated molecular techniques, has now been identified as H5N1 influenza virus. Now it is also known that waterfowls are the reservoir hosts while pigs act as mixing vessels. Changing patterns of infectious diseases Infectious diseases have shaped the evolution and history of animal kingdom especially human and animals. Infectious diseases are dynamic and will always continue to influence the overall activities of human being in all the spheres of their lifestyle. It is very obvious by now that human activity will alter the paths and lexis of infectious diseases. The distribution, incidence, and burden due to infectious diseases are influenced by a range of societal, biological, and physicochemical factors. The pattern of infectious disease has been changing continuously which has been responsible for sustained microbial evolution. These changes include the description of diseases caused by pathogens long present but not previously identified, recognition of apparently new microbes, changes in epidemiology (e.g., changes in distribution, disease incidence, virulence of microbial strains, microbial resistance to drugs) of old pathogens, new disease disease interactions, and the spread (to human/animals) of organisms never previously known to be human/animal pathogens. The understanding of how these factors influence the emergence, re-emergence and spread of infections is of paramount importance in control and eradication of infectious diseases. The changing pattern of infectious disease is typically affected by interaction of multiple factors. The emergence/re-emergence of a disease could be an unintended consequence of many developmental activities which is perceived as progress. Various developmental activities which can be attributed to many ecological changes include: (i) building of a dam; (ii) clearing of lands; (iii) change in landscape, (iv) mass processing and wide distribution of foods and water; (v) medical/veterinary interventions (transfusions of blood/blood products; vaccines; animal feed containing livestock/fish/poultry offal); (vi) mass immunization; (vii) use of drugs and chemotherapeutics; (viii) use of antimicrobial agents; (ix) inland/national/international travel and trade; (x) changing pattern due to land use (intensive cropping, animal husbandry); (xi) indiscriminate use of fertilizers, insecticides, pesticides, hormones in agricultural operations, (xii) use of probiotics and unconventional feed additives in animal feeds and use of hormone injections (oxytocin) for realizing over production; (xiii) extensive mechanization of agricultural operations; (xiv) practice of extensive undefined livestock husbandry systems inappropriate to a particular region, state or a nation; (xv) international/inter-continental movement of migratory birds. Factors contributing to change in disease pattern Many factors are contributing to the changing patterns of infectious disease. Those commonly identified are microbial adaptation and change, human demographics and behavior, environmental changes, technology and economic development, breakdown in public health measures and surveillance, and international travel and commerce (Lederberg et al., 1992). How these influence the appearance, reappearance, and spread of infections will become apparent in the discussion of specific disease examples. Typically, multiple factors interact, leading to changes in a disease. The 30

34 emergence of a disease may be an unintended consequence of what is viewed as progress: the building of a dam, clearing of lands, mass processing and wide distribution of foods and water, medical interventions (namely, transfusions of blood and blood products, tissue and organ transplantation, cancer chemotherapy), and use of antimicrobial agents. The burden of disease in humans can increase through (i) increased contact between a pathogen (disease-causing agent) and host, (ii) increase in virulence or resistance of the pathogen, (iii) increase in the vulnerability of the host, or (iv) limited access to effective prevention or therapy. A human or a population can be completely or relatively invulnerable to some infections because of (i) immunity (past infection or immunization), (ii) genetic factors, or (iii) a whole range of barriers (such as shoes, screens, good housing) or (iv) interventions (for example, provision of clean water and adequate waste disposal, control of organisms responsible for transferring pathogens between hosts) that prevent contact between human and pathogen. Good nutrition, including adequate intake of micronutrients, can lead to an improved outcome in at least some infections. Reservoir animals The source of microbes causing infections in humans is typically another human, an animal or arthropod, or soil or water. Similarly, the source of microbes causing infections in animals could be another animal, a human, or arthropod, or soil or water. Globally, about 65 percent of human infections that lead to death are spread from person-to-person (such as respiratory tract infections, tuberculosis, HIV, and measles); almost a quarter are carried in food, water, or soil (for example, infections such as cholera and hookworm); and about 13 percent are vector-borne (viz., malaria and leishmaniasis) as per World Health Organization (1997). Zoonotic pool Perusal of the emergence of viral diseases to date indicates that many of these viruses already existed in nature and they gained access to new host population due to change in ecological or environmental conditions. Many pathogens of human and animals, which may include agents currently in an isolated population, may make the best source for microbes causing future epidemics. Such pathogens need careful scrutiny if they are highly transmissible (Ewald, 1993; Mims, 1991), particularly through the respiratory route. However, many historical examples of infectious zoonoses (Fiennes, 1978; McNeil, 1976) suggest that the zoonotic Pool introductions of viruses from other species is an important and potentially rich source of emerging diseases and some of these pathogens might become successful in causing the disease in new host under conducive environments. The appearance of HIV, SIV, Hantavirus and co-evolution of some other primate lentiviruses, as described below, constitute the best examples of zoonotic introductions. The human immunodeficiency virus (HIV) is one of the many examples of zoonotic introductions. The origin of HIV-1 is still uncertain and hence no argument can be put forth regarding its zoonotic introduction. 31

35 However, (a) identification of an infected man in a rural are of Liberia whose HIV-2 strain resembled more closely to viruses from the sooty mangabey, a presumed reservoir of virus closely ancestral to HIV-2 than it did HIV-2 strains circulating in the city (Gao et al., 1992), and (b) recent identification of a new subtype of HIV-1 from Africa (represented by strain Ant70 and MVP-5180), which seems to have branched off fairly early in the HIV lineage and is closely related to a virus isolated from chimpanzees can be interpreted as separate, possibly, earlier zoonotic introduction (Meyers and Korber, 1994). Similarly, there is a large pool of simian immunodeficiency viruses (SIV) in African green monkey populations (Allan et al., 1991; Meyers et al., 1992), including the probable ancestor of sooty mangabey virus. Many of the primate lentiviruses may not have been identified yet. Which virus from the pool of SIVs and other primate lentiviruses may emerge in future cannot be predicted.identification of the virus responsible for the recent Four Corners disease (now called Hantavirus pulmonary syndrome; the original virus is known as Sin Nombre) in the western United States is another example for zoonotic introduction of emerging infectious disease. In the beginning of May 1993, patients with clinical symptoms like fever and acute respiratory distress were presented in hospitals and serology and detection of genetic sequences by PCR provided evidence for a previously unrecognized Hantavirus as the cause of the outbreak (Nichol et al., 1993). The isolation and identification of the virus with the same genetic sequences in local rodents, primarily the common species Peromyscus manuculatus (deer mouse), which were also the rodent mostly trapped near homes confirmed these rodents to be the reservoirs of hantavirus. Over 20% of the captured Peromyscus were positive for Hantavirus. It was probable that the virus had existed for long in mouse populations but that unusual climatic conditions led to increased adult survival over the winter and increased rodent population in the spring and summer providing greater opportunities for people especially agricultural workers to come closer with infected rodents (and hence with the virus). The realization of the potential threat due to wildlife EIDs for wildlife itself, for human and domesticated animals, and biodiversity conservation; is due to (i) the increased incidence of disease outbreaks in endangered species and in humans due to wildlife EIDs, (ii) advancements in veterinary diagnostics and care, (iii) advances in host-pathogen biology including host-pathogen interface, and (iv) the understanding of the important role of wildlife in biodiversity conservation. The adversity in agriculture has also helped in realization of the importance of wildlife EIDs in the evolution and sustenance of the ecosystem. Spill- Over and Spill-Back Spill-over is the transmission of infectious agents from reservoir animal populations (often domesticated species) to sympatric wildlife. Spill-over underpins the emergence of a range of wildlife EIDs and is a particular threat to endangered species since presence of infected reservoir hosts can lower the threshold density of pathogen and lead to local (population) extinction. African wild dog population has been continuously declining since 1960s and has now become endangered species with fragmented population of < 5000 animals. This population is now susceptible to various diseases. Wild dog became extinct in Serengeti in 1991 which coincided with epizootic canine distemper in sympatric domestic dog. Similarly, rabies has also resulted in heavy mortality of wild dogs and a viral variant common in sympatric dogs has been identified from one such incident. 32

36 The Hendra virus (HeV) affects horses and humans and the bats of genus Pteropus found in Australia act as reservoirs as they have sub-clinical infection naturally as well as experimentally. The HeV has been isolated from fetuses of experimentally infected pregnant bats. Similarly, specific immuno-staining was seen in the placenta. It is now believed that HeV does not induce disease in bats, at least experimentally, but is responsible for a sub-clinical infection, except perhaps in pregnant animals where the virus might induce congenital disease following transplacental transmission (Westbury, 2000). Isolation of HeV from uterine discharges of a bat that had miscarried twin fetuses, and from three other bats has been reported (Halpin et al., 1996). How the spill-over of HeV occurs is not yet clear, although it is sporadic and uncommon. Current data also suggest that additional natural hosts of HeV are unlikely to exist in Australia leading to believe that spillover of the virus must occur from bats to horses, although whether it is direct or through intermediates, requires further investigation (Westbury, 2000). The Spill-back can be defined as reverse spill-over i.e. transmission of diseases to sympatric populations of susceptible domesticated animals. Introduction of brucellosis in America was due to introduction of cattle and presence of brucellosis in elk and bison in Yellowstone National Park (USA) is a threat to animals grazing at the park boundary. Other examples of spill-over infection include sarcoptic mange in foxes (in Europe) and wombats (Australia) and bovine tuberculosis (global). Tuberculosis threatens to spill-back to domestic livestock and ultimately to humans. Bibliography Allan J. S., Short M., Taylor M. E., Su S., Hirsch V. M., Johnson P.R., Shaw G. M., Hahn B. H. Speciesspecific diversity among simian immunodeficiency viruses from African green monkeys. J. Virol. 1991; 65: Colwell, R. "Global Climate and Infectious Disease: The Cholera Paradigm." Science 274 (1996), Cedric Mims, Anthony Nash, John Stephens (1991) Mims Pathogenesis of Infectious Disease. Academic Press, USA. Cedric Mims, Anthony Nash, John Stephens (1991) Mims Pathogenesis of Infectious Disease. Academic Press, USA. Daszak Peter, 12* Andrew A. Cunningham, 3 Alex D. Hyatt 4 Emerging Infectious Diseases of Wildlife- - Threats to Biodiversity and Human Health Science 21 January 2000: Vol no. 5452, pp van den Driessche P., Watmough J., (2002). Reproduction numbers and sub-threshold endemic equilibria for compartmental models of disease transmission. Math. Biosci. 180, Ewald.W.Paul.(1993) Emerging Infectious Diseases. Oxford University Press, UK. Graat E.A.M., Frankena K., (1997). Introduction to theoretical epidemiology. In: Application of quantitative methods in veterinary epidemiology, Noordhuizen J.P.T.M., Frankena K., van der Hoofd C.M., Graat E.A.M. (Eds), Wageningen Pers Wageningen The Netherlands, pp

37 Halpin K, Young P and H Field Identification of likely natural hosts for equine morbillivirus. Comm Dis Intell 20(22):476. Lederberg, J. et al., eds. Emerging Infections: Microbial Threats to Health in the United States. Washington, D.C.: National Academy Press, Levy, S. B. "Multidrug Resistance: A Sign of the Times." New England Journal of Medicine 338 (1998), Lindberg A., Houe. Alenius S., (1999). Principles for eradication of bovine viral diarrhoea virus (BVDV) infections in cattle populations. Vet. Microbiol. 64, Myers G., MacInnes K., Korber B. The emergence of simian/human immunodeficiency viruses. AIDS Res. Hum. Retroviruses( 1992); 8: Reeves, W. C., et al. "Potential Effect of Global Warming on Mosquito-Borne Arboviruses." Journal of Medical Entomology 31 (1994), Scott, F. W., et al. "A Fitness Advantage for Aedes Aegypti and the Viruses it Transmits when Females Feed Only on Human Blood." American Journal of Tropical Medicine and Hygiene 57 (1997), Travis, J. "Africa s Latest Scourge." Science News (July 17, 1999), Valway, S. E., et al. "An Outbreak Involving Extensive Transmission of a Virulent Strain of Mycobacterium Tuberculosis." New England Journal of Medicine 338 (1998), Tumova B., Equine influenza a segment in influenza virus ecology. Comp. Immun. Microbiol. Infect. Dis 3 (1980), pp Thurmond M., Virus transmission. In: Bovine viral diarrhea virus. Diagnosis, management and control. Goyal S.M., Ridpath J.F. (Eds). Blackwell Publishing, Oxford UK., pp Watts, D. M., et al. "Effect of Temperature on the Vector Efficiency of Aedes Aegypti for Dengue 2 Virus." American Journal of Tropical Medicine and Hygiene 36 (1989), Whalen, C., et al. "Accelerated Course of Human Immunodeficiency Virus Infection after Tuberculosis." American Journal of Respiratory and Critical Care Medicine 151 (1995), Westbury HA Hendra virus disease in horses. Rev Sci Tech Off Int Epiz 19(1): Wilson, M. E. A World Guide to Infections: Diseases, Distribution, Diagnosis. New York and Oxford: Oxford University Press, Wilson, M. E. "Travel and the Emergence of Infectious Diseases." Emerging Infectious Diseases 1 (1995a), Wilson, M. E. "Infectious Diseases: An Ecological Perspective." British Medical Journal 311 (1995b), Wilson, M. E., et al., eds. Disease in Evolution: Global Changes and Emergence of Infectious Diseases. New York: New York Academy of Sciences,

38 Problems and Prospects of Mushroom Cultivation in North East India Introduction Dipali Majumder Use of mushrooms as food and neutra-ceutical has been known since time immemorial. It is considered to be a complete health food and suitable for all age groups. In India, mushroom is a unique non-traditional cash crop grown as seasonal under natural condition and round-the-year under the controlled environmental conditions. Cultivation of mushroom helps in recycling of the agro-wastes for the production of highly nutritious food and manure. More than 2000 species of fungi are used as food by tribes and various communities, however, only a few are cultivated. Mushrooms are regularly collected and used as food by the natives particularly those belonging to tribes in India. Out of almost two thousands identified edible mushroom species, only twenty species are cultivable. Extensively grown edible mushrooms of the region (Gogoi et al., 2006) are: (i) (ii) (iii) (iv) (v) Button mushroom (Agaricus spp.), also known as White Button, European button, Temperate mushroom; Paddy straw mushroom (Volvariella spp.), also as Chinese mushroom or Tropical mushroom Oyster Mushroom (Pleurotus spp.) Milky mushroom (Calocybe indica) Shiitake mushroom (Lentinus edodes). Other few species not grown extensively are: Black ear (Auricularia auricular), Giant fungus (Stropharia rugosa-annulata), Enokitake (Flammulina velutipes), mitake (Grifola frondosa), jelly fungus (Tremella fuciforims), nameko (Pholiota nameko) and truffle (Tuber melonosporum). North East (NE) India is endowed with a rich forest growth, where 50 per cent of the total geographical area is covered by thick and deciduous forest (Barua et al., 1998). The agro-climatic conditions in North East India are conducive for natural occurrence of mushrooms. Moreover availability of raw material is good for several species of mushroom to be grown artificially in a cost effective manner. Local tribal population of the area has been utilizing a few of the edible fungi for table purposes. On the basis of some identifying features and self experiences people use to collect various species of wild edible mushrooms from the grazing ranges, crop fields and forest lands. The tribal people are so fascinated to the wild mushrooms that none other common vegetables can be comparable. During mushroom season, they collect many wild edible species from the natural sites and hence come across occasional reports about deaths resulting from consumption of poisonous mushroom. Different varieties of local edible mushrooms are widely available in the markets of North Eastern states like Manipur, Meghalaya, Nagaland, Arunachal Pradesh, Sikkim. Shiitake (Lentinula edodes) is produced and collected only from the NE in India. Manipur has started 35

39 cultivation of Shiitake commercially with a view to establish as agro based business in the state for export market. Mushroom production is an indoor, labour intensive and high profit venture providing ample opportunities for gainful employment of small farmers, landless labourers, unemployed youth and women to pursue its cultivation at home. Apart from rice straw and stubbles, different crop wastes are known to be useful as the base material. Like Himachal Pradesh, where mushroom cultivation on large scale takes place, NE India also can be developed as mushroom bowl of the country (Rai, 2008). Economic development in the North-eastern region should be mainly based on land and vegetation. Certain advantages for NE states to grow mushroom year round: -35 C) suitable for all mushrooms Button, oyster, paddy straw and milky mushroom are the most popular with the growers and require different climate regimes specially the temperature, and therefore can be grown in various regions and seasons in the NE. Button mushroom should be grown during the winters or in the hilly regions when the temperature is between C which should be followed by the oyster mushroom when it is between o C, then paddy straw mushroom (28-35 o C). Milky mushroom grows in high temperature (30-40 o C). In this way a cropping calendar or crop rotation for the year for NE Region can be designed for different regions with a view to provide gainful employment throughout the year. Awareness and adoption of mushroom in the region of the country has also been increased due to the concerted efforts taken by State Department of Agriculture, State Department of Horticulture, State and Central Agricultural Universities, research laboratories as well as Non-Government Organizations (NGOs). Government of India is supporting and encouraging Krishi Vigyan Kendras (KVKs) of the country through various projects to make mushroom cultivation more popular as a source for income generation among the youth and to empower women. Growth and Prospects of Mushroom Cultivation in North Eastern States Perhaps mushroom cultivation was started at parallel in different NE states during the last decades of 20 th century. In Sikkim it was 1970 when the Department of Agriculture took the initiative for cultivation of button mushroom. In the year 2003 with the built up of a small Mushroom Unit at Marchak, Ranipool, Sikkim, button mushroom cultivation on commercial basis was started. Department of Horticulture and Cash Crop Development Department, Sikkim has been trying to produce Organic Button Mushroom on commercial basis and became successful in There is potential for mushroom industry to thrive in the state and provide lucrative job opportunities especially to the rural youths and farm women and generates an extra income for the farmers. The 36

40 climatic conditions along with the availability of the cheap raw materials make Sikkim one of the potential areas for cultivation of different types of mushroom and hence, the prospect of building up a thriving cottage industry is tremendous (Borah, 2007). However, the mushroom production is still in its infancy. The availability of quality spawn and marketing aspects are the major areas that need to be explored more. Sikkim being famous for its tourism industry creates a high demand for mushroom delicacies in the hotel business. Sikkim being an organic state, organic compost is one of the prime inputs in Agriculture. Spent mushroom beds, can be used for vermi-compost production along with other organic household wastes (Ahlawat, 2011; Ahlawat and Sagar, 2007). In Assam unemployed educated youths and farm women under the guidance and supervision of the scientists of North Eastern Institute of Science & technology (NEIST-CSIR) and Assam Agricultural University (AAU), Jorhat started mushroom cultivation during 90s (Gogoi and Majumder, 2011). Now oyster mushoorm is growing widely under natural condition by young educated youths and women self help groups (SHGs). Button mushroom cultivation in the state is in very infantile state as it requires controlled indoor environmental conditions, which is not affordable by small and marginal growers of the state. Mushroom Development Foundation (MDH), Ambari, Guwahati, Assam established in 1997 is presently working in various villages of Assam, Nagaland, Arunachal supports and encourages small-scale farmers to cultivate, produce and market mushrooms as a livelihood opportunity. Different species of mushrooms, including Oyster, Shiitake, Maitake and Lion's Mane are sold in the local market and in parts of Manipur. The youth of Manipur are keen to become financially independent, have found that mushroom cultivation can help them generate income not just for themselves but also for others. The "Hee Yai Mushroom Farm" in Manipur's Imphal East District started mushroom cultivation in the courtyard of a hut in 1995 and over a period of time he has expanded the business. Today, annual earning of one progressive mushroom grower is more than Rs 3.5 lakhs and he employs 8 people. All the raw materials are available within the state, so introduction of mushroom cultivation will help employment and income generation of people of Manipur as realize by young interested youths of the state. A wide variety of mushroom species, either it is commonly cultivated oyster or naturally grown species are available in Nagaland as the state is a distinctive hotspot of biodiversity. Availability of labour, plenty of raw materials (paddy straw) and climatic conditions favour mushroom cultivation throughout the year. However, the mushroom industry is not getting the momentum and still in its infancy. Only a fraction of the farming community has accepted small scale seasonal mushroom production as source of income generation. Oyster mushroom has been growing up commercially in Tripura as a result of efforts and initiatives taken by Krishi Vigyan Kendras (KVK) of the state under State Departments and ICAR. To boost up cultivation of mushroom specially the SHGs of farm women, rural youth, school drop-out and farmers have been trained up for capacity building and small scale income generation. Production has been increasing gradually in the state depending on the market demand. Wide varieties of local edible mushrooms are also available in the forests of Arunachal Pradesh. Like other NE states, oyster mushroom is getting importance for commercial cultivation for 37

41 lively hood as generation as a simple, indoor, labour intensive and high profit venture for gainful employment of small farmers, landless labourer, unemployed youth and women. Despite the congenial climatic as well as socio-economic conditions, mushroom cultivation in NE India has not gained momentum to establish mushroom cultivation as an agro based industry. The labour, is very cheap in the country, whereas it is a major component in determining the cost of cultivation in the European countries. There is a wide gap between demand and supply of mushroom within the country as well as at international level. The availability of mushroom in local market is very much limited and low. From the perspective of above facts, mushroom industry in the region may flourish in the coming years if the problems in this sector have been well identified and attended urgently at the earliest. The problems in the growth of mushroom business have been identified during the last decade. The rural and urban youths and women are showing much interest in mushroom cultivation and eager to adopt it as a source of income generation. Problems of Mushroom Cultivation in North Eastern States The problems of large mushroom growers are different from the small, marginal, seasonal growers/farmers. Also varies with the extent and type of mushroom growing. Major problems of mushroom growers could be listed as the following: i) Lack of good quality spawn The yield of mushroom to a great extent depends upon quality of spawn. Good quality of spawn should be free from diseases with high yield potential. Spawn gets spoiled by moulds like Trichoderma sp., Aspergillus sp., Penicillium sp. and Rhizopus stolonifer in the process of production in the region (Gogoi et al., 2006). Trichoderma spp., the common contaminant carried in the spawn bags creates problem in mushroom beds during cropping. Non- availability of quality spawn within easy reach is a common problem of large mushroom growers of the region. Generally, the private spawn producers are not equipped with the knowledge for producing high yielding mushroom spawn. Spawn producers procure the mother culture of mushroom from government organization for commercial spawn production. Sometimes, mushroom growers get immature spawn which results in delayed spawn run. Moreover spawns are not available in sufficient quantities in rural areas as demanded by local growers of the region. Central Agricultural University(CAU), State Agricultural Universities(SAU), ICAR centers in the region, KVKs and few private growers have been trying to bridge that gap in the region and encourage local educated youths through Capacity Building programme to establish Low Cost Spawn Production Unit to fulfill the demand of local farmers. Department of Biotechnology (DBT), Government of India encourages youths through different projects for development of tribal people of the region. The universities are already producing & providing seeds of cereals, vegetables and fruits to the farmer of their locality. Thus mushroom seed (spawn) can also be included in their existing system. The NGOs, Co-operative Societies, the State Department of Agriculture/ Horticulture or individuals with sound knowledge on mushrooms can take the initiative to procure quality spawn from reliable sources for the farmers. 38

42 ii) Lack of well organized marketing facilities Harvesting of large quantity of mushrooms per day, then its marketing becomes a major problem for the growers due to lack of any established and regulated market in the NE states and in the country as a whole. Growers nearby major cities only are capable to sale their fresh harvests with prior contact with local vendors or other regular consumers like restaurants etc. Moreover mushroom growers cannot dispose off large quantity of mushroom more than the daily demand in the local market and in nearby cities. In such a situation, he has to dispose off the remaining quantity of mushroom either at a very low price or he has to transport it to different places where demand of mushroom is high. But the problem is of delivering the fresh mushroom from producing area to nonproducing area beyond a distance ( km for the region), because of perishable nature of mushroom, as can t be stored at room temperature for more than 12 hours (oysters). Availability of refrigerated vans can solve the problem but such vans are not available in the region. As a result the mushroom deteriorates in quality and quantity and the grower is made to incur heavy losses. The collection therefore may be organized by farming co-operatives or by NGOs/Traders. iii) Lack of storage facilities for fresh mushroom During the peak production period, growers are unable to dispose off their fresh mushroom on the same day due to lack of any established and regulated markets even in the major cities and towns and are forced to keep it for the next day. In such circumstances, quality of fresh mushroom deteriorates and it also loses weight. In order to combat this problem, mushroom growers require a common facility of cold room where they can store their produce atleast for 2 to 3 days and also a pre-cooling unit for increasing the keeping quality of mushroom. Presently such facilities are not available for storing mushroom, even in areas where small mushroom growers are clustered in large numbers. iv) Lack of awareness about finance and complex process of finance/loans Other than local edible species, most demanded mushroom in the region is button mushroom and cultivation of which in commercial basis demands heavy investment in the initial stages. The small & marginal seasonal mushroom growers who want to expand their temporary mushroom farms require good amount of money but he or she can t effort from his own pocket. Therefore, they approach the financial organization to obtain loan for this purpose. But the formalities of financial organization are so complex that the seasonal mushroom growers & farmers can t get it easily. Moreover many common small scale growers of the region are ware about the sources wherefrom financial assistance can be taken. In addition, majority of the interested beneficiaries of the region are not competent enough to prepare a scheme on commercial cultivation of mushroom to obtain financial support. The financial institutions should make their loan sanctioning system flexible to suit the marginal & small farmers. These organizations and N.G.Os should also work to motivate farming community to form self help groups which will act as local body to assist financing organization as well as farming community to obtain & repay the loans in time. v) High transportation charges 39

43 Due to diversified topography of land in the hills of NE region, different kinds of crops are raised in different parts of the region. Paddy straw, the commonly used substrate is easily available at cheaper rates in the plains, while the same is a scarce commodity in the hilly regions. Therefore transportation of raw materials from plains to hills in huge quantity, growers have to pay heavy transportation charges resulting in unavoidable increase in cost of production and reduction in net profit. In spite of favourable climates for mushroom cultivation and cheap labours, many a times youths show least interest to adopt mushroom cultivation for income generation. vi) Lack of training facilities For successful adoption of the technology of mushroom farming hands on training is very much essential. Although CAU, SAUs, ICAR centres, KVKs, State Agriculture and Horticulture Departments of the region are instrumental in imparting knowledge or preliminary guidance on mushroom cultivation still it seems to be insufficient to touch each and every corner of the region, mainly the remote and up hills. Hence this is a major problem which discourages the farmers to take up the cultivation of this non-traditional crop for livelihood generation. It has been observed that no follow up actions are being initiated by the trainees after attending trainings due to several reasons. In addition to these above discussed major problems there are several other issues like uncontrolled price structure of mushroom, lack of processing facilities, lack of training on value added products of mushroom, lack of special health campaign to make common people aware about nutritional and medicinal properties of mushroom, news on mushroom poisoning are the constraints in the development mushroom cultivation as agro based industry in the NE states. A study conducted in Assam (Majumder et al., 2009) also listed non availability of spawn, lack of well organized markets, poor knowledge about financial assistance, news on mushroom poisoning, inadequate knowledge about mushroom preservation and value addition of mushroom products as the major constraints towards a sustainable mushroom industry in the NE and Easter part of the country (Pattanaik and Mishra, 2008). Conclusion The prospects of mushroom cultivation for entrepreneurship development in NE states will be much brighter in coming decades, provided the interest of people engaged in the process is sustained and the problems being faced by the mushroom growers are addressed. There is an ample scope to uplift the present state of mushroom cultivation in entire NE region. Integrated and concerted efforts by various institutions, departments and NGOs are of paramount importance to make the NE region as mushroom bowl of the country. An absurd notion on all the mushrooms as poisonous, that keeping the edible mushrooms far away from the common people. Massive production of oyster mushroom is possible with these available substrates provided good quality spawns are made available to the growers at their nearest places. Keeping this target as mandate spawn production and multiplication laboratory may be set up in the district headquarters, blocks of each states of the region. Other departments like Rural Development, Tribal Welfare, both in State and Central sector should join hands in this noble cause. NGOs having local base and acquainted with the socio-economic and cultural scenario of the region and its people should be involved to attain the height by the region. Wastage of fresh mushroom can be stopped by utilizing them as various forms viz. pickle, canned, 40

44 bakery. Mushroom can easily be dried after harvest and preserved for a maximum period of six months. Special attention must be paid to the postharvest care, processing and marketing of the mushrooms and their products. Departments concerned should to take care of the produce for the local, domestic and international market. A mission mode and a missionary zeal are of the utmost importance in the development of Mushroom production in the North-east. Overcoming the afore mentioned constraints and adopting economically feasible and sound strategies establishment of a sustainable mushroom industry could be possible that will lead our farmers status and economy to a newer height. References Ahlawat, O.P. and Sagar, M.P. (2007). Management of spent mushroom substrate. DMR technical Recycling of Spent Mushroom Substrate. Bulletin. Pp189. Ahlawat, O.P. (2011) Recycling of Spent Mushroom Substrate Mushrooms. In Cultivation, Marketing and Consumption Edt. Singh M., Vijay B. Kamal S. Shwet and Wakchaure G.C. Published by Directorate of Mushroom Research (Indian Council of Agricultural Research). Barua P., Adhikary, R. K., Kalita, P., Bordoloi, D., Gogoi, P., Singh R. S. and Ghosh A. C.(1998) Wild Edible Mushrooms of Meghalaya. Ancient Science of Life. 17(3), Pp , Chambaghat, Solan (HP) Gogoi, R. and Majumder, D. (2011) Mushroom Cultivation in Assam reaching a Cross Road Pp In the proceedings of DBT sponsored National Seminar on Biochemical and Boitechnological Research Approaches for Bio-resource Management of North East India Towards Sustainable Rural Development held at BN College of Agriculture, AAU, Biswanath Chariali,Assam from th November,2011. Gogoi R., Rathaiah, R. and Borah T.R. (2006) Mushroom Cultivation Technology. Scientific Publisher India. Majumder, D., Das, P.K. and Gogoi, R. (2009) Adoption of recommended mushroom production technology and strategies for developing mushroom industry in Assam. Mushroom Research 18(2): Pattanaik, T. and Mishra, S. (2008) A Case Study-Constraints in Adoption of Mushroom Cultivation. J. of Home Science. 3 (1): Rai R. D. (2008) Mushroom Production for the Development of NE. In Facets of the North-east. Web sites:

45 Role of Biotechnology in Driving Agriculture Based Economy: Prospects and Challenges for North Eastern India Wricha Tyagi Introduction Agriculture continues to be the main occupation to Indian large and growing population. However, the share of agriculture in the employment sector has reduced from nearly 72% to 52% during owing to expansion of industrial and service sectors. The Indian agriculture sector is dominated by small and marginal farmers having very small land holdings. The dynamics of share of crops in production is also changing, so there is a need to address the role of various stake holders to meet the challenge. One such way would involve role of molecular breeders and biotechnologists to provide technologies to meet location specific requirements. Most of the North Eastern (NE) region of India comes under rainfed hill ecosystem with poor soils. As with other rainfed areas, the resources base here is fragile, and production is vulnerable to climatic change. Therefore, use of appropriate technological solutions to address these situations is indispensible. Narrowing of genetic base and a parallel urgent need to raise yield levels or to meet yield gaps has made region-specific and anticipatory research a necessity. There are several wild relatives of crop plant like cereals and millets (4 genera, 6 species), legumes (5 genera, 4 species), oilseeds (1 genera, 1 species), fruits (10 genera, 28 species) and vegetables (10 genera, 17 species) found in NE region. These wild relatives have the potential to provide resources and opportunities for varietal improvement in crops by providing trait enhancing alleles/genes. By the approach of bio-prospecting and allele mining beneficial alleles/genes can be identified and then subsequently utilized for improving a) productivity, b) biotic stress resistance, c) abiotic stress tolerance, d) enhancing nitrogen use efficiency and e) improving nutritional quality. This indirectly impacts the economy by providing food security. Vulnerability of various crops to pests and insects is a problem that needs to be addressed to minimize yield losses. Success of Bt cotton in India as indicated by increase in production of transgenic cotton has already demonstrated (Figure 1) that transgenic technology can play a vital role in providing solutions to traits that are governed by one or two major genes. Data from a detailed study conducted in four states of central and southern India, namely Maharashtra, Karnataka, Andhra Pradesh, and Tamil Nadu encompassing a wide range of different cotton-growing situations over a period of 4yrs (Kathage and Qaim, 2012) is now available. This dataset generated over 10 different districts and 63 villages suggests that significant impact on household living standard (Table 1). Infact, there was an increase by 18% during the period. 42

46 Figure 1. Increase in Bt cotton adoption area since 2002 in India (adapted from Gilbert, 2013) Table 1. Net impact of Bt on household living standard (Adapted from Kathage and Qaim, 2012) The transgenic technology can also address several issues of global climate change by development of crops with better water, nitrogen and phosphorus use efficiency. Such crops with reduced emission levels of greenhouse gases will prove beneficial in long term sustainability of such crops and economies which leave lesser carbon footprint. Use of biotechnology in generating disease free and quality planting material has led to large-scale production in several crops of relevance to NE region like potato, banana, bamboo etc. Providing quality planting material in several citrus fruits including khasi mandarin and other fruits like strawberry will go a long way in helping farmers with small holdings and thereby, driving the economy in the right direction. Similarly, testing of the plant material at the appropriate stage for disease susceptibility using kits can also avoid huge losses incurred at later stages. This early detection can not only save the money involved in the entire cultivation process but give a chance to 43

47 farmers to switch to appropriate cultivars or crop to meet their monetary requirements during the crop growing season. In several spices like chilli, ginger, large cardamom and turmeric there is an immense potential to be scale the commercial production to target niche markets by using simple technologies to ensure higher quality for traits like colour and capsaicin content in chillies; oleoresin and fiber content in ginger to name a few. Molecular breeding for targeted improvement of specific traits in crops, livestock or fish can be achieved by marker-assisted breeding. One of the success stories in rice is Basmati. Through various breeding approaches this single rice genotype has contributed an export worth 4.6 billion US dollars for India. Similar approach for other specialty rices can be sought to increase the net worth of that particular genotype in the international market. Breeding approaches in other crops by targeting key traits using molecular markers is being aimed to drive the economy in right direction. One needs to identify the crops and the key traits of economic value for NE region so that an effective programme to sustain the agriculture sector of this region be devised and implemented. With the sequencing of first cereal genome i.e. rice, doors to another area of biotechnology viz. genomics opened. Genomics allows understanding of crops at the whole genome level and the utilization of genome sequence for marker development. Subsequently, several genomes of relevance to Indian agriculture like pigeon pea, wheat, buffalo, and camel have been sequenced. With the cost of sequencing decreasing and experts in the area of biotechnology available in India, several of the under-utilized crops, animals and fish species can be targeted for improvement without incurring substantial money input. This will drive the research and subsequently the economy in a direction that is beneficial to the people of this region. Conclusion: Biotechnology can play a crucial role in driving all the components of the agricultural sector i.e. the crops, livestock and fishes in a direction which will work not only in sustaining the livelihood but also supplementing and enhancing the income of the farmers of this NE region. What is desired is detailed and focused planning and research preparedness to implement the plan to fruitful gains. References Gilbert, N. (2013). Case Studies: A hard look at GM crops; Nature News, 2013 State of Indian Agriculture. NAAS Publication. Kathage, J. and Qaim, M. (2012). Economic impacts and impact dynamics of Bt (Bacillus thuringiensis) cotton in India. PNAS; 109 (29);

48 Entrepreneurship in Farm Mechanization in Hill Agriculture Pradip Kumar Bora Introduction Agricultural mechanization ensures timeliness of operations, reduction of human and animal drudgery, reduction of operational cost and increase the productivity of the farm. With little or no scope of horizontal expansion of farm land in India, increase in crop intensity and crop productivity are the only options for feeding the ever increasing population of India. To achieve these, farm mechanization with the adoption of other scientific crop management practices is the only option available in front of the farming community. This is more relevant for the farmers of North Eastern Hills Region of India. India is looking towards Eastern and North Eastern Region for second green revolution. The Prime Minister of India is also indicting about making North Eastern Hills Region as organic food hub. The North Eastern Region with fertile soils, high rainfall and suitable temperature regime for most of the crops is definitely a potential force to reckon with in the horizon of commercial agriculture. The area often earmarked as poor, under developed and primarily dependant on central assistance can become a hub of agricultural entrepreneurship in all the three production sectors. Leaving aside the post production operations, where we generally talk about ample opportunities of commercialisation like food processing, blending, fortifying, packaging, canning and marketing in both agricultural, horticultural, fisheries and animal husbandry; the pre production or input sector can be an important area for entrepreneurship development. Among the different input management areas like seed production and processing, bio-fertilizer production and marketing; farm machinery production marketing and custom hiring can be a viable sector in the Agriculture of North Eastern Hills Region. Achieving cropping intensity more than 200 percent is always a challenge in the energy starved region. In a traditional farm 1 kw/ha power availability may be sufficient for subsistence agriculture but in semi-mechanised farm the 2kw/ha is considered to be essential. In NE Region farm power availability is estimated to be about 0.67 kw/ha with a maximum of 1.07 kw/ha in Meghalaya and a minimum of 0.17 kw/ha in Arunachal Pradesh. For increasing cropping intensity availability of farm power for mobile and stationary farm operations should be increased from the present level of 0.17 kw/ha to 0.70 kw/ha in Arunachal Pradesh; from 1.04 kw/ha to 2.5 kw/ha in Manipur; from 1.07 kw/ha to 2.5 kw/ha in Meghalaya; from 0.58 kw/ha to 2.0 kw/ha in Mizoram; 0.33 kw/ha to 1.5 kw/ha in Nagaland and from 0.74 kw/ha to 2.5 kw/ha in Tripura by For the marginal and small farmers with little or no animal and mechanical power for farm operations, making the required energy to the farm sector is a distant dream. The government schemes like National Food Security Mission and Rashtriya Krishi Vikash Yojana are just an insignificant effort in this sector. Introduction of Tractors and Power tillers, or such automotive machines can increase the power availability. Due to hilly terrain and fragmented land holding, introduction of tractors in hilly region except some pockets of Manipur and Tripura, is out of question. Small power tillers, transplanter, mechanized weeders, small diesel operated water pumps, mechanised power operated 45

49 threshers can increase the power availability to a great extent. However, these machines being power operated are costly. The small and marginal farmers of NE Region can afford to buy these equipment. But a custom hiring centre in a cluster of villages or in a village can be a viable option. With sky rocketing price of the draft animals, every farmer will be happy to avail the sources of power at a reasonable cost for their farm operations instead of maintaining draft animals. Outsourcing of power also makes the farmers free from other related liabilities of management. At one hand he is outsourcing the power for farm operations on the other hand his own energy will be available for other operations which otherwise would have gone for maintaining his draft animals. Hiring power tillers and threshers is now a common phenomenon is Assam, Tripura and Manipur. Almost all the agricultural operation can come under custom hiring. The operations are: 1. Ploughing and seed bed preparation 2. Land levelling 3. Puddling the rice field 4. Transplanting 5. Sowing 6. Interculture including spraying and dusting 7. Harvesting 8. Threshing The farm machineries are power operated. These need regular maintenance and repairing. Availability of spare parts of these machines is another bottle neck. Farm machinery repairing centres, manufacturing and marketing of spare parts can be another area of business. Nevertheless, manufacturing spare parts is not a small scale industry, but it can always be an ancillary to big manufacturers. The Farm Machinery Training and Testing Centres of North Eastern Region can be a catalyst in the regard. Before taking up custom hiring enterprise following issues must be considered: a. Size of machineries and implements. Expected hours of operation per ha of each machine and implements b. A comprehensive survey of the demand and scope for meeting the demand with the selected machineries c. Fixation of charges for custom hiring for each machine and implements d. Economic analysis considering fixed cost and recurring cost These will be done considering the land holding of the individual farmers and the total agricultural area in the targeted locality, cropping system and crop sequences. Some of the machines and implements identified for custom hiring in North Eastern Region under the National Initiative on Climate Resilient Agriculture (NICRA) project is given below: 46

50 i. Power tiller ii. Duster iii. Power tiller operated seed cum fertilizer drill iv. Paddy thresher v. Paddy transplanter (small) vi. Chaff cutter vii. Cono weeder viii. Dryland weeder ix. Prun shear x. Mini oil extraction plant xi. Hedge trimmer xii. Chain saw xiii. Diesel operated centrifugal pump (3.5 hp) xiv. Pedal type paddy thresher xv. Foot sprayer xvi. Metallic dibbler xvii. Power sprayer The revenue generated per annum in the custom hiring centres is reported by the NICRA as from Rs.6,440/- to Rs.36,000/- in Assam, Rs.15,000/- in Sikkim, Rs.13,450/- in Manipur, Rs.12,150/- to Rs. 25,000/- in Nagaland, Rs. 8040/- in Meghalaya and Rs. 48,780/- in Tripura. However, the equipment and implements are different in each centre depending on the local needs. Conclusions: In hills agriculture, apart from power shortage, unavailability of suitable tools is also a major constraint. For every unit operations, improved farm tools are available. But we could not so far be able to replace the traditional farm tools with the improved tools. There are two reasons. Firstly, we have failed to introduce them to the farmers and convinced them about the efficacy of the improved tools or we could not make them available. One example can be cited here, the improved animal drawn Mould Board plough is very popular, but properly designed and manufactured animal drawn MB plough is always scarce in the market. Poor imitation of technically designed MB plough not only made the farmers to suffer but also forcing the farmers to go back to the original inefficient wooden plough. Animal drawn MB Plough, Disk Plough, puddler, harrow, weeders, threshers, water pump all can be made available if entrepreneurship is promoted for their production and marketing. Small scale industries based on realistic need assessment can definitely be viable. State owned farm implement production centres are practically defunct. The reason is not due to lack of demand but due to some other non-technical reasons. 47

51 Value Chain Analysis in Agribusiness: Methodological Issues R. N. Barman Why to use the term Value chain? Quite often the two terms Value chain and supply chain are interchangeably used. However distinctions could be drawn in between these two as follows. Value chain A value chain describes the full range of activities required to bring a product or service through the different phases of production, including physical transformation, the input of various producer services, and response to consumer demand. As such, value chains include the vertically linked interdependent processes that generate value for the consumer. Value chains focus more on value creation, innovation, product development, and marketing. The primary focus of supply chains is thus on cost and efficiencies in supply. Supply chain A supply chain is used to encompass every activity involved in producing and delivering a final product or service, from the supplier s supplier to the customer s customer. The primary focus of supply chains is thus on cost and efficiencies in supply.. Analyzing and Evaluating Value Chains Value Chain Analysis helps to map the value chain of a specific product involving various value chain actors, which may use qualitative or quantitative approach. While the produce moves from one chain actor to another chain actor, it gains value in the form of price mark-up. The chain actors, who actually transact a particular product as it moves through the value chain, include input dealers (e.g., seed suppliers), farmers, traders, processors, transporters, wholesalers, retailers and final consumer. The value chain framework has been used as a powerful analysis tool for strategic planning and is useful in identifying and understanding crucial aspects to achieve competitive strengths and core competencies in the marketplace. The main aim of a value chain is to produce value added products or services for a market, by transforming resources and by the use of infrastructures within the opportunities and constraints of its institutional environment. Therefore, constraints for value chain development are related to market access (local, regional, international) and market orientation. Three sub systems could be broadly seen in the agri-business value chain analysis. Figure 1 illustrates the key distinctions between three sub-systems. The A-system could be characterized as the local low-income chain. Producers are usually small with traditional production systems. These chains aim at local market outlets with staple products. Local value chains may deliver to local markets. However, these chains 48

52 may also connect to low-end markets further away. Because of many intermediary parties (traders), these A-system chains are relatively long, implying limited availability of (end-) market information, distribution of value added over a large number of actors, and longer transportation distances (both in distance and time). A-system delivers a high share of agricultural production volume, but generates relatively little value. Figure 1. Economic sub-systems associated with agribusinesses The B-system could be characterized as the local middle to high income chain. These producers aim at the emerging supermarket sector. Most of the volume in these chains is delivered by small/medium size producers, organized in cooperatives and/or linked in sub-contracting arrangements. Micro producers deliver inputs on demand to balance demand and supply in this system (buffer function). Although the production volume produced by B-systems is smaller than that of A-systems, the value generated is larger. B-systems increasingly produce according to national and sometimes international retail quality and safety standards. The C-system could be characterized as the export chain. It is completely focused on export, although low quality or rejected products are sold at the national, in many cases retail, market. The trend is towards increasing economies of scale and foreign direct investments. Export chains tend to become more integrated and with fewer actors. Although volumes are small compared to local markets, the value added is relatively high. Where the value chain actors work? 49

53 Production: Producers or farmers have to respond to market demand by diversifying their product offerings, improving quality and supply dependability, and increasing volumes sold, while simultaneously lowering unit production costs and boosting revenues through the introduction of improved, low-cost technologies and sustainable farming practices. Postharvest handling and distribution: Reducing product losses after harvest by establishing storage and collection centers to enable farmer groups to maintain the quality of their produce, and by implementing other best practice postharvest practices. Marketing and logistics: Facilitating marketing arrangements between smallholder groups and private partners such as wholesalers, processors and exporters, which lead to increases in volumes sold. Such arrangements often involve the provision by these partners of inputs, market information and technical assistance to their farmer suppliers, in return for their assurance of receiving consistent quality and supply. The result is the increased integration of smallholder suppliers into the farm-tomarket value chain. Agribusiness service providers: The value chain analysis includes a focus on availability of inputs and services in targeted production areas. Bringing agricultural service providers into the fold is a key element of providing extension and other information through embedded technology transfer mechanisms. Value chain analysis focuses on segmenting the different activities that add value in the production and sale of a product or service. Value chain analysis should focus on 1. Identifying dynamic linkages between productive activities, value chain analysis transcends traditional economic and industry sectors by showing where value is added in a production process. 2. Net value added instead of overall size and gross output. 3. The information flows among actors in the value chain unlike typical industry analysis. 4. Segmenting the value chain for better understanding of the constraints and opportunities within each segment, as well as the context in which the chain operates. There are different ways to analyze or evaluate a value chain. Analysis can stem from research of secondary information, such as government or industry data, to interviews with industry participants. It can also be derived from participatory market assessments and market observations. In general, an in-depth value chain analysis considers the following: What are the economic costs along the value chain? Where is the most value added to the value chain? Who are the most import actors within the value chain? What is the institutional framework of the value chain? Where are the bottlenecks in the value chain? Where is the market potential for growth? What is the size of the sector/chain? 50

54 What is the potential for upgrading? What possible synergies exist? While analyzing value chain we need to consider that a. Value chains are not fixed or static There is a competitive need to alter and improve the value chain in light of strategic choices that businesses can make regarding the markets in which they compete. Value chain analysis often focuses simply on improvements within the given value chain, rather than on how value chains can be shifted to target different, more attractive markets and business strategies. b. Market dynamics matter Value chains can be helpful instruments for serving the needs of a particular market sector, Businesses must choose which products and which markets could be served competitively based on their goals and strategy on good market analysis. c. Quality and service are equally important along with product delivery d. Environment in which a value chain operates Often, value chain analysts fail to properly consider the business environment in which the value chain operates. In doing so, the analysis can fail to identify potential interventions for improved business and value chain performance. Government regulations, international standards and agreements, and market forces typically shape the business environment. e. A simple cost analysis will not do Certain value chain analyses merely depict a cost build-up per activity in a value chain. But such analysis will not shed light on which activities generate more value, whether the product can be produced at a competitive price for other markets and also how well the chain is integrated. Value added is created at different stages and by different actors throughout the value chain, hence costs and returns on investment (ROI) shoots up at every stage. Value added may be related to quality, delivery times, delivery flexibility, innovativeness, costs etc. Finally the size of value added is decided by the end-customer s willingness to pay. The following diagram (Figure2) indicates the factors that determine a value chain s business environment. The business environment revolves around the input conditions and demand conditions and for fulfillment of these conditions, strategies required to be worked out. Getting access to market is not the sufficient condition of the value chain but to sell the product in the market for which strategies for demand creation could also be attempted. 51

55 Figure 2: Value chain s business environment In order to conduct the value chain analysis, the activities could be split into primary and support activities. Primary activities are those that are related with production, while support activities are those that provide the background necessary for the effectiveness and efficiency, such as human resource management. The primary and secondary activities are mentioned below: Primary activities: The primary activities include the following: Inbound logistics: The activities concerned with receiving the material and handling them. Operations: The activities related to quality checks, processing, packaging, labeling of products etc. Outbound logistics: All the activities concerned with distributing the final product to the consumers. Marketing and sales: This functional area essentially analyses the needs and wants of consumers and is responsible for creating awareness among the consumers about the products and attract consumers to their products. Support activities: The support activities include the following: Procurement: This function is responsible for purchasing the materials that are necessary for the operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices. Human Resource Management: This is a function concerned with recruiting, training, motivating and rewarding the workforce. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage. 52

56 Technology Development: This is an area that is concerned with technological innovation, training and knowledge that is crucial today in order to survive. Infrastructure: This includes planning and control systems, such as finance, accounting and corporate strategy etc. The value chain analysis of different agribusiness in the north eastern region of India has to keep in mind the following overall strength, weaknesses, opportunities and threats. Strengths *Agro climatic diversity ranging from tropical to alpine making it possible to grow a wide variety of crops *Rich biodiversity * Rich surface water resources through perennial rivers and its tributaries *Proximity to export destinations such as Bangladesh and Myanmar * Soil is rich in organic matter * Potential to commercialize products such Opportunities *Organic farming * Infrastructural facilities can be created with the participation of private sector * The number of government policies available for the NER can serve as a boosting factor for agricultural development * International markets could be targeted due to geographical location and availability of produce * Huge scope for value addition of surplus produce as kiwi, passion fruit and pine apple Weaknesses *Lack of infrastructural facilities along the food value chain *Lack of market access - domestic & International due to lack of air connectivity Threats * Slow growth of infrastructure links * Uncertainty in external trade scenario. * Insurgency problems,frequent bandhs, strikes etc. *Limited flow of men and material due to hilly terrain *Jhum cultivation and subsistence farming is leading to deterioration of available resources * Non-availability of skilled manpower * Lack of business acumen 53

57 Importance, Dimensions and Scope of Agribusiness Debashis Sarkar Introduction In January 1956 John H. Davis, director of the programme in agriculture and business at the Harvard Business School, published From Agriculture to Agribusiness in the Harvard Business Review. The following year Davis and Ray A. Goldberg published A Concept of Agribusiness. These two publications introduced and defined the term agribusiness as the sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing, and distribution of farm commodities and items made from them. Thus, agribusiness essentially encompasses today the functions which the term agriculture denoted 150 years ago. By the end of 1959, the term had appeared in at least forty published articles and book reviews in ten journals, ranging from the Journal of Farm Economics and the American Economic Review to Agricultural History and the Journal of Marketing. The key insight articulated by Davis and Goldberg was that the food system needs to be viewed as an integrated system. Management strategies and public policy initiatives designed to address problems in the food system would be doomed to failure if they focused on only one portion or segment of that integrated system. Their work stimulated new interest in the linkages between segments of the food system, in coordination across segments, in system wide performance, and in strategy formulation in a context of interdependence. Cook and Chaddad (2000) noted that agribusiness research evolved along two parallel levels of analysis i.e. the study of coordination between vertical and horizontal participants within the food chain, known as agribusiness economics, and the study of decision-making within the alternative food chain governance structures, known as agribusiness management. Though the term agribusiness had not been used prior to that time, agricultural economists had been making significant contributions on issues related to agribusiness for many years. As early as 1913, Brand (1913) noted that the farmer needed suitable and convenient arrangements for securing credit and assistance in the establishment of a marketing system which will return him the true value of the particular qualities of the various crops that he produces, minus reasonable charges for handling, transportation and the legitimate profits of middlemen. These concerns led to significant work on farm credit and cooperative marketing in the 1920s, as well as articles on vertical integration, the organization and operation of marketing firms, and the role of business economics in the teaching programmes. New concerns emerged during the 1930s, including the structure of the food distribution system and marketing margins. Other new issues related to agribusiness emerged during the 1940s and early 1950s. These included the rapid growth and concentration of food processing and retailing businesses, analysis of costs and efficiency in food processing plants, and the dynamics of food retailing. First time in Asian countries, agribusiness was introduced in Philippines in early 1966, when the University of the Philippines offered an Agri-business Management (ABM) programme at the under-graduate level. In 1969, the first Advanced Agribusiness Management seminar was held in Manila. 54

58 Importance, Dimensions and Scope of Agribusiness The importance of Agri-business are (1) it deals with agricultural sector and also with the portion of industrial sector, which is the major source of farm inputs like fertilizers, pesticides, machines, processing and post harvest technologies, (2) it suggests and directs the government and private sectors for development of sub sectors and (3) it contributes a good part of the national economy. The dimensions of Agri-business are (1) it deals with different components of both agricultural and industrial sector, their interdependence and influence of one sector on other. (2) it deals with decision making process of farm either private or government in relation to production and selling aspects, (3) it deals with strengths and weaknesses of a project and thereby their viability in competing enterprises, (4) agri-business is always market oriented, (5) structure of Agri-business is generally vertical and it comprises with (a) government policies and programmes regarding raising of crops or taking enterprises etc., (b) research and extension programmes of the government, (c) farm supplies or inputs, (d) agricultural production, (e) processing and (f) marketing of agricultural products. The scopes of agri-business are (1) our daily requirements of food and fiber products at desired place at required form and time come from efficient and hard working of many business personnel in input, farm and food production and also in marketing them. The entire system in brief is called Agribusiness, (2) Agribusiness, of late, is combining the diverse commercial enterprises, using heterogeneous combination of labour, materials, capital and technology, (3) it is a dynamic sector and continuously meets current demands of consumers in domestic and world markets, (4) agri-business establishment leads to strengthening of infrastructural facilities in that area, expansion of credit, raw materials supply agencies, adoption of modern technology in production and marketing of agricultural products, (5) Agri-business provides crucial forward and backward linkages (Backward linkage include supply of inputs, credit, production technologies, farm services etc., A forward linkage includes storage, processing, transportation and marketing aspects), (6) agri-business generates potential employment opportunities, (7) it adds value to products and thereby increases the net profits. Structure of Agribusiness Basically, agri-business involves three sectors. These are (1) input sector which deals with the supply of inputs required by the farmers for raising crops, livestock and other allied enterprises. These include seeds, fertilizers, chemicals, machinery and fuel, (2) farm sector which aims at producing crops, livestock and other products and (3) product sector which deals with various aspects like storage, processing and marketing the finished products so as to meet the dynamic needs of consumers. Therefore, Agribusiness is sum total of all operations or activities involved in the business of production and marketing of farm supplies and farm products for achieving the targeted objectives. As mentioned earlier agri-business sector provides crucial backward and forward linkages. It involves two important sectors. These are (1) farm input sector which deals with agro-based 55

59 industries providing seeds, fertilizers, feed, chemicals etc., The industries supplying machinery or equipment, implements and petroleum etc are also important in this regard, (2) farm product sector which deals with production and distribution of farm commodities. Large cooperative bodies also exist in agri-business, but they are few in number, whereas small scaled agro industries are large in number. The vertical integration of a farm is very common in poultry, fruit and vegetable farms. Horizontal integration is one when firm assumes the functions of other firm are called the horizontal integration e.g. Co-operative marketing societies, Co-operative farming societies. Vertical integration is one when firm assumes other functions which are having close relationship. If one firm assumes other functions (succeeding) related to consumption function is called forward integration, e.g. a wholesaler firm assuming the function of a retailer. If one firm assumes the other functions (proceeding) related to the production function is called backward integration, e.g. a wholesaler firm assumes the functions such as assembling, processing, packing etc. Conglomerate integration is one when firm assumes several functions which do not have any relationship e.g. Uni Lever Ltd. Opportunities and Challenges of Agribusiness for the Future Our first century was a period of unprecedented change in food production, distribution, and consumption. The following are forces for future change. The agricultural sector is increasingly a source of raw materials for sectors outside of the traditional food and fiber system. Agricultural products are being used to produce biofuels, industrial products such as polymers and bio-based synthetic chemicals and fibers, and pharmaceutical/health products such as functional foods, growth hormones, and organ transplants. This is blurring industry boundaries and creating new strategic and competitive challenges for agribusiness firms, and it will have profound implications for the structure and operations of the supply chains in the industry. Agribusiness organizations are becoming more flexible and complex, more decentralized and yet reliant on collective action and cohesiveness. This poses challenges for managers designing the incentive systems and internal institutions that are the foundation for intrafirm structure, strategy, and governance. At the same time, technological change and the emergence of new globalization localization tensions will stimulate changes in socioeconomic relationships, reshape scope and scale economies, increase risks, introduce new and novel interdependencies, give birth to new rivals and potential partners, and mould more hybrid organizational forms. This will complicate inter-firm coordination for agribusiness managers and food system policymakers. With the approach of peak world oil production, the prospect for international agreements to reduce greenhouse gas emissions, and the potential for significant geographic shifts in food production likely to be large shifts in relative prices over the next quarter century. This could trigger an unpredictable, radical restructuring of the food system and critical strategic positioning issues for agribusiness firms. Understanding and anticipating the dynamics of the global agribusiness environment will be increasingly critical. These challenges along with advances in theoretical frameworks, diagnostic 56

60 tools, and empirical techniques for addressing them will afford agribusiness scholars an ample supply of issues, approaches, and motives to expand and broaden inquiry into an ever-increasing complex and important global food system. They will also offer us new opportunities to help students, managers, and policymakers through agribusiness teaching and outreach programmes. While economics will continue to be the foundation for our work, concepts from other social science disciplines and sophisticated new computational tools also will be necessary. Reference Brand, C. H. (1913). Marketing. Record of the Proceedings of Annual Meeting. American Farm Management Association, Washington DC, November Chaddad, F., and M. L. Cook. (2004). Understanding New Cooperative Models: An Ownership-Control Rights Typology. Review of Agricultural Economics 26: Davis, J. H. (1956). From Agriculture to Agribusiness. Harvard Business Review 34: Davis, J. H., and R. A. Goldberg. (1957). A Concept of Agribusiness. Boston: Division of Research, Graduate School of Business Administration, Harvard University. 57

61 Capital Management in Agribusiness Debashis Sarkar Introduction Capital is not an original factor like land, but it is the result of man-made efforts. Man makes the capital goods to produce other goods and services, which provides income, e.g. machinery, raw material, transport equipment, dams etc. Karl Marx in his book Das Kapital defined capital is crystallized labour. All capital is necessarily wealth, but all wealth is not necessarily capital. Money if used for the purchase of capital goods, then only it becomes capital, e.g. residential buildings are the wealth of the individuals, but these are not considered as capital. But earning the rent from that building is capital. The characteristics of capital are (1) capital is not a free gift of nature. It is the resultant of the man-made efforts, (2) capital is productive, as it helps in enhancing the overall productivity of all the resources employed in the production process. Invested capital provides interest for its productive capacity. Farm machinery, when used with skilled labourers enhances the productivity of land. Irrigation dam, by providing water can bring out complementary effect on the productivity of other resources like fertilizers, seeds etc., (3) capital is prospective, as its accumulation reward income in future, e.g. savings and investment in the economy leads to growth and development of the economy due to accumulation of capital over time, (4) capital is highly mobile among factors of production e.g. tractor, (5) capital is supply elastic, as its supply can be altered according to the need. Based on demand, supply of the capital goods can be changed. Economists speak of capital as wealth which is used in the production of additional wealth. Business men frequently use the word capital in the sense of the total assets employed in a business. In law, capital usually means capital stock. A financial manager determines the proper capital structure for his firm. He determines the mix of debt and equity stock. The balancing of the capital expenditures against estimated savings in future requires careful analysis while dealing with the financial aspects of the company s operations. A careful balancing of facilities at each stage of the productive process is necessary to avoid higher operating costs and delay caused by facility bottlenecks and the freezing of capital in idle equipment. Long Range Planning for Capital Management Long range planning for the capital management/expenditures is essential due to (1) it helps in fitting yearly corporate expansion on orderly plan of growth by adopting capital expenditures to anticipated sales requirements, (2) it assists in testing the profitability of capital expenditure over a period of time as against in the next following year, (3) it facilitates in contracting for plant sites, construction, water or power requirements etc., in advance, (4) it aids to assess the necessary funds provided by internal or external sources, (5) it assists in examining the impact of capital expenditures on depreciation, insurance expenses and other fixed expenses in advance in order to make the necessary allowance for them. 58

62 Working Capital Working capital is regarded as the life blood of a business, because its efficient management will lead to success of business and its inefficient management will lead to failure of the business. Working capital can be defined as that portion of the assets in a business which is used to meet the day to day/current operations of the business. The assets formed due to the working capital are relatively temporary in nature. In accounting, working capital is defined as difference between inflow and out flow of funds. It is otherwise called as net cash flow per year (Net cash flow/yr = Cash in-flow Cash out-flow). Working capital is the excess of current assets over current liabilities of a business. It is otherwise called as net current assets or net working capital/year (Net working capital per year = Current assets Current liabilities). Working capital may also be defined as total current assets employed before operating the business. It is also called gross working capital. Working capital is also called as circulating capital. At the beginning cash is provided by owners and lenders. A part of capital is invested on the fixed assets and the remaining cash is used to meet the current requirements like purchase of services, raw material or merchandise. By selling the products from the enterprise, cash will be received, which is used for the expansion of the business. This process indicates the circular flow of working capital, so named as circulating capital. There are different types of working capital. These are (1) net working capital which is the difference between the current assets and current liabilities of a business. This concept enables a firm to determine how much is left for operational requirements (Net working capital per year = Current assets Current liabilities), (2) gross working capital is the total amount of the funds invested in the business or the total current assets employed in the business. It helps to plan and control the funds usage in the business and also helps in identifying the prioritized areas of investment, (3) permanent working capital is the minimum amount of current assets which is needed to conduct a business even during the dull/slack season of the year. It is the amount of the funds required to produce the goods and services which are necessary to satisfy demand at a particular point. It represents the current assets which are required on a continuous basis over the entire year. It is maintained as the medium to carry on operations at any time, (4) temporary working capital represents the additional assets which are required at different times during the operating year like additional inventory; extra cash etc., (5) balance sheet working capital is calculated from the items appears in the balance sheet is called balance sheet working capital, e.g. gross working capital and net working capital, (6) cash working capital is calculated from the items appear in profit & loss account. It shows the real flow of money at a particular point of time and hence it is considered as most realistic approach in working capital management. It forms the basis for operational cycle concept and gained more important in the financial management. The major reason is that cash working capital indicates the adequacy of the cash flow in the business, hence considered as prerequisite of the business, (7) negative working capital arises when current liabilities are more than current assets. Such situation arises when firm is nearing a crisis of some magnitude. Tests of Working Capital Policy There are four tests of working capital policy. These are (1) level of working capital is the test to be done in a careful manner by observing the movements of working capital in a firm in successive 59

63 periods of production activity. If a management can develop a pattern of flow of working capital in these movements, this pattern would serve as a guide to its changing requirements in relation to certain decisions which are made from time to time, (2) structural health which is the relative health of the various components of the working capital should be considered from the point of view of liquidity. It is necessary to draw structural relationships in respect of each component constituting the current assets, (3) circulation is one of the important features of the liquid position and involves the natural activity cycle of an enterprise. Ratios may be calculated to show the average period required for the conversion of raw materials into finished goods into sales, and sales into cash, (4) liquidity is more comprehensive test to measure liquidity which may be adopted by using the ratios by expressing them in the percentages of (a) working capital to current assets, (b) stocks to current assets, (c) liquid resources to current assets. 60

64 The Benefits of Agri-food Value Chains: A Case Study of Cassava Value Chains Introduction A. Roy and A. K. Tripathi A value chain is a series of sequential activities, where at each step in the process the product passing through this chain of activities gains value. Generally, the chain of activities gives the products more added value than the sum of the added values whereas a supply chain is a network of business enterprises through which products move from production through consumption, including pre-production and post consumption activities. Porter (1985) explained value chain is a chain of activities. Products pass through several stages of the chain in order and at each stage the product gains some value and gets increase in price. The chain of activities gives more added value than the total sum of added values of all activities by the products. Porter distinguishes between primary activities, which directly contribute to add value to the production of the product and supporting activities which have an indirect effect on the final value of the producer. Enterprises competitiveness can be analyzed by looking at the value chain which includes inbound logistics, operations, outbound logistics, marketing and sales, post sale service primarily. Firm infrastructure, human resource management, technology and development and procurement included in supporting activities also analyzed in value chain model. Porter s value chain analysis model is given in Figure 3.2. Value chain analysis model by Michael Porter 61

65 Support activities The value chain looks complex range of activities applied my various actors (primary producers, commission agents, service providers, wholesalers and retailers) to bring a raw tuber to final product (dry starch) through series of chains. The value chain starts with cultivation of the tapioca and move along with agents, processing, traders etc. In agricultural sector due to the high occurrence of the poor, the value chain framework can be used to draw conclusion on the participation of poor and potential impact of value chain development on poverty reduction. Hence the following seven tools were considered to analyze tapioca value chain. Value chain analysis general tools 1. Mapping the value chain Value chain analysis qualitative tools 1. Governance: coordination, regulation and control 2. Relationships, linkages and trust 3. Analyzing the demand driven: knowledge, skills and technology Value chain analysis quantitative tools Primary activities 1. Analyzing cost and margin 2. Analyzing income distribution 3. Analyzing employment distribution Cassava/Tapioca (Manihot esculenta Crantz) has its origin in Latin America where it has been grown by the indigenous Indian population for at least 4000 years. After the discovery of the Americas, European traders took the crop to Africa as a potentially useful food crop; later it was also taken to Asia to be grown as a food security crop and for the extraction of starch. Thus, in the 19 th century Tapioca became an important food crop in southern India. It is cultivated as an annual crop 62

66 in tropical and subtropical regions for its edible starchy, tuberous root, a major source of carbohydrates. Tapioca is the third-largest source of food carbohydrates in tropics. Tapioca is a major staple food in the developing world, providing a basic diet for around 500 million people. Tapioca is one of the important drought-tolerant crops, capable of growing on marginal soils. Nigeria is the world s largest producer of Tapioca. Indonesia is at second and India occupies ninth place in the Tapioca production throughout the world. Importance of Tapioca in Economic Development Important in the economy of poor households, Tapioca is one of the major sources of subsistence and cash income to farmers in climatically disadvantaged regions. It is the basic staple food for millions of people in the tropical and sub-tropical belt. The International Food Policy Research Institute (IFPRI) in 1999 projected that there will be an increase in the global demand for Tapioca up to 68 per cent by Asia stands second among the tapioca producing continents in the world. Approximately 13 per cent of Asian Tapioca production comes from India (Chennakrishnan, 2012). Tapioca chips and pellets are also in demand for animal feed in many countries. Thailand and Indonesia are the major countries exporting pellets to European countries on monthly contract basis. Global Scenario Africa contributes to more than half of global supply, with Nigeria on top. Nigeria contributes more than a third of African production alone (around 52 Mt) and it is also the largest world producer. The Democratic Republic of Congo (DRC) follows with around 15 Mt, then Angola and Ghana (about 14 Mt each) and Mozambique (6 Mt). A staple food, contributing greatly to food security, the continent consumes almost all its production. Asia encourages the development of tapioca crops for industrial and energy purposes. This continent contributes to around a third of world production, with 60% produced by Thailand (around 24 Mt) and Indonesia (21 Mt). Vietnam and China are growing in strength and both produce between nine and four million tonnes a year India is the fourth tapioca producer in Asia, is also experiencing continued growth in production with more than a 30% increase between 2006 and In Latin America and the Caribbean production is relatively stable, around 35 Mt in 2011, which represents almost 20% of world supply. Brazil dominates with some 70% of regional production and battles with Indonesia, over the years, for second place in world production; the country should increase production following the increase in cultivated land area. Tapioca productions in major countries are listed in annexure 1.1. The Asian continent is the biggest importer of tapioca roots with Mt of roots imported in 2010 out of a worldwide total of Mt. China alone represents more than 92% of Asian imports in year. Besides its imports, China has boosted its own production which has doubled in five years to reach the current level of around 4.5 Mt. Today China is the third producer of ethanol in the world behind the United States and Brazil. Currently, 50% of ethanol production comes from tapioca and sweet potato (UNCTAD 2012). 63

67 Although Thailand is the third biggest producer of tapioca, it is the number one exporter of tapioca products with a market share of more than 90% of the world tapioca trade. The production of tapioca is decreased from million tonnes in 2009 to million tonnes in 2010 and the change over percentage is decreased to 0.9%. The trade of world tapioca in the market is increased from 28.2 million tonnes in 2009 to 29.2 in 2010 and the change over percentage is increased to 3.8% (Market survey, 2012). Indian Scenario India is the world 9 th largest country in producing Tapioca. India produced about 8.08 MT in in 0.22 Million Ha as shown in annexure 1.2. India acquires significance in the global Tapioca scenario due to its highest productivity in the world (36.5 tonnes ha -1 ) (FAOSTAT, 2012). From , the growth rate of Tapioca is increased of about 4.8% in the production across India. State-wise production of Tapioca: In India, Tamil Nadu and Kerala plays an important role in Tapioca production with 5.53 MT (68 per cent) and 2.41 MT (30 per cent) of production respectively. Tamil Nadu prides itself in having the highest productivity of 38 tonnes ha -1 as shown in annexure 1.3. Also 70 per cent of the sago produced in India is from Tamil Nadu. Tamil Nadu stands first in respect of processing of tapioca into sago and starch throughout the country, meeting about 80% of country s demand. There are about 450 sago and starch industries in the small scale sector in the State. Tapioca spread over Tamil Nadu and Andhra Pradesh where serves is mostly as raw material for starch extraction. The phenomenal growth in the starch and sago trade over the years has also helped in creating rural employment in Tamil Nadu. About 90 per cent of the tapioca produced in the state is processed into sago and starch. Tapioca processing Companies in Tamil Nadu The tapioca industry is one of the profitable industries since the demand for the products were high and stable in India and the supply is seasonal. By processing and storing these products in the market value is enhanced. The tapioca based starch and sago industry has been thriving in Tamil Nadu for the past 60 years, forming the backbone of the rural economy in the dry tracts of Tamil Nadu. There are currently about 450 small scale manufacturing units of starch and sago operating in Tamil Nadu in the districts of Salem, Namakkal, Dharmapuri, Erode, Tiruchirappalli, Perambalur, Villupuram and Thiruvannamalai. About 1.2 lakh farmer and nearly twice this number of agricultural workers in these districts are dependent on the cultivation of tapioca, which is the raw material for starch and sago products. The major industrial sectors of tapioca are: 1. Sago industry 2. Textile industry 3. Processing industry 4. Food industry 5. Tapioca based products in Tamil Nadu 64

68 6. Power generation from Tapioca waste Collection of Data Primary data were collected through a well-structured and pre-tested interview schedule. The farmers and processors were interviewed personally in the study area. The purpose of the study was clearly explained to the respondents to help them understand and respond for better co-ordination. The interview schedule for Tapioca farmers covered aspects such as general characteristics, details on cultivation practices and cost, details on marketing of tapioca, problems in production, etc. The schedule for traders covered aspects such as general characteristics, quality preference, fixing price for tapioca, etc. The schedule for processing unit such as capacity of the unit, processing method, products and by-products and waste management were covered. The secondary data such as Tapioca area, demographic and other details were collected from the Director of Statistics. Details of distribution of sample across Different Blocks and Villages in Salem Actors Area Block Sample Village Producers Rainfed Pethanaickenpalayam Chinnakalrayanmalai (N) Kariyakkovil, Soolangurichi Kaikaan valaivu, Ulipuram Irrigated Gangavalli Kondayampalli Konerippatti Nagiyampatti Processors Attur Kaattukottai Eatchampatti Thalaivasal Nathakarai Paithur Tapioca value chains in the study area Tapioca is a valuable crop for producing starch and sago products. It reaches the customer from producer by passing through different intermediaries in different stages. In all the value chain, farm was considered as the starting point. Farmer purchased inputs from various suppliers. Different actor s roles and value addition activities of value chain were presented in the following table. Value chain actors and their role in Tapioca S.No Value chain actors Actors role in value chain Value addition activities 1 Producers Procurement of inputs, Cultivation of tapioca, No value addition 65

69 harvesting and loading. 2 Commission Agents Procuring tapioca from producers, Transportation, Cash purchase and sales and finally charge minimal commission for tapioca. No value addition 3 Processors Purchasing from farmers and Commission agents, processing, starch production and starch sales Producing starch, packing and selling 4 Service providers Reduction of VAT rate from 5% to 1% for sales, remove middleman and Quality checking of Starch. No value addition 4 Wholesaler 5 Retailers Purchasing large volumes, storing, repacking, transportation, cash purchase and cash sales. Purchasing quality products in limited quantity, transport cost and meeting customers demand. No value addition No value addition Thus each and every actor s roles and value addition activities identified to conduct value chain analysis through mapping of value chain tools. Findings Majority of the farmers in the rainfed (62 per cent) and irrigated (68 per cent) blocks were in the middle age group. In irrigated area, 24 per cent of farmers were old whereas in rainfed area, 28 per cent of farmers were young. Among rainfed farmers most of the members (40 per cent) had education at higher secondary level followed by 34 percent of farmers were illiterate. While in irrigated area 50 per cent were completed their higher secondary and only 16 per cent were illiterate. Hence Farmers have knowledge in understanding the new techniques came for increasing productivity. Majority of the farmers in rainfed area (90 per cent) and irrigated area (70 percent) was engaged in agriculture alone. Apart from agriculture, some farmers were engaged as commission agents in tapioca marketing and few had tapioca processing industries. Since majority of the farmers in both rainfed and irrigated areas depend upon agriculture only, they have enough time to make decisions and implement farming practices. Nearly 44 per cent of farmers having less than 10 years of experience in the field of tapioca cultivation in rainfed and 50 per cent in irrigated area respectively. Hence, the considerable share of sample farmers had less experience in tapioca cultivation in case of both rainfed and irrigated. Regarding the size of land holding of tapioca, 46 per cent of land holding by small farmers followed by 32 per cent of holding by medium farmers in rainfed area. In case of irrigated farmers, 54 percent were medium farmers and 24 per cent were small farmers. Majority of farmers were cultivating tapioca under small and marginal land size holdings. There was no marginal land holding sample farmer in both rainfed and irrigated area. Small farmers have less resource when compared to medium and large farmers. In case of annual income of sample farmers with earnings between 66

70 lakhs accounted for 42 per cent followed by 32 per cent of farmers with income between lakhs. Irrigated sample respondents with earnings between lakhs accounted for 44 per cent. Sample farmers earning between lakhs were about 30 per cent. Value chain analysis - mapping the value chain The core process of tapioca value chain started from input procurement and cultivation by farmers. Farmers used their own planting material or purchased from neighbour farmers. Other input suppliers were agricultural input retailers who supplied plant protection chemicals and fertilizers. The commission agents ensured the harvesting of tapioca and transport of tubers to processing unit. The processors converted raw tubers into starch and by-products. Starch was bagged and sold through SAGOSERVE to wholesalers, who were members of SAGOSERVE. Grading and quality checking of starch were done at SAGOSERVE. The power generated from the bio-gas plant was used by the processing unit for the purposes other than production of starch. Adopting information technology would improve communication of market information among actors, transparency and easy raw material receiving based on market requirement which would reduce the wastages of perishable tapioca in the value chain. In the rainfed area, all farmers sold their raw tuber to the processors through commission agent while 95 per cent of the irrigated farmers sold tubers to processors through commission agents and only five per cent sold tubers directly to the processors regarding the total volume of tapioca produce. Value chain analysis Qualitative analysis The members in the value chain were not interlinked and hence coordination of the different stakeholders in value chain could not be observed. Most of the starch producers sold their products to wholesaler through SAGOSERVE. Thus, SAGOSERVE played an important role in removing middlemen from the participation of trade and helped to provide better prices for the tapioca finished products. For the members there was a reduction of value added tax (VAT) rate from five to one percentage for the sales of starch and sago through SAGOSERVE. In the entire chain, regulation and control was executed only by SAGOSERVE that too after processing and until the produce sold to trader. The quality and sale of agricultural inputs were regulated by Agricultural Officers (Quality Control) based on the guidelines in respective Acts (Pesticide Act 1999, Fertilizer (Control) Order, 1985). In the entire chain, regulation and control was executed only by SAGOSERVE and that too after processing tapioca and until the produce was sold to wholesaler. Linkages were made oral only, because of familiarity of being in the same geographical area. The farmer had high trust with input suppliers and had less trust with extension agencies. Meanwhile, the processors had high level of trust towards SAGOSERVE and less trust with traders who were not members of SAGOSERVE. The level of knowledge, skills, technology and supporting services was less. The gap existed between the starch content of tubers expected by the processors (maximum 32 per cent necessary) and those supplied by farmers (27 per cent). Farmers have to improve the production by using high yielding varieties with pest resistance. 67

71 Value chain analysis Quantitative analysis In tapioca cultivation, the variety of tapioca setting played an important role in higher production of tubers. The sample farmers used the local varieties because of non-availability of planting materials of improved varieties. Farmers also used less quantity of farm yard manure (FYM) due to nonavailability of FYM. In rainfed area, the farmer applied more of N and less of P and K fertilizers as basal application they use only nitrogenous fertilizers. In irrigated area, potash was applied much higher than the recommended dosage. The yield gap was higher in irrigated areas than the rainfed area. Use of high yielding variety plant materials with recommended usage of inputs and timely weeding and irrigation would ensure high starch content in the tubers and high productivity. Cost and returns Total cost of cultivation of tapioca for rainfed farmers was Rs per acre. The total share of variable cost and fixed cost to the total cost of cultivation was per cent and per cent respectively. The total cost of cultivation of tapioca for irrigated farmers was Rs per acre. The share of variable cost and fixed cost to the total cost of cultivation was per cent and per cent respectively. The yield in rainfed area was 8.2 tonnes per acre and in irrigated area it was tonnes per acre. However, the tuber production in rainfed area had higher starch content than the tuber produced in irrigated area. Hence, the price received by rainfed farmers was marginally higher (Rs.10/kg) than irrigated farmer (Rs.9/kg). Net return from rainfed was Rs.5.77/kg and for irrigated it was Rs.5.33/kg. Value chain of tapioca The following four value chains were identified in the study area. Value chains I and II were predominantly used by rainfed farmers. Value chain III and IV were predominantly used by irrigated farmers. Value chain I: Input suppliers - Farmers - Procurement agents - Processors SAGOSERVE - Wholesalers -Customer Value chain II: Input suppliers - Farmers - Processors - SAGOSERVE - Wholesalers - Customer Value chain III: Input suppliers - Farmers - Procurement agents - Processors SAGOSERVE - Wholesalers - Customer Value chain IV: Input suppliers - Farmers - Processors - SAGOSERVE - Wholesalers - Customer Employment distribution The value chain needs non technical man power for doing work from production to harvest. After harvest of tapioca from the field, it helps in providing high employment opportunity throughout the value chain especially in the stage of processing. From unloading of tubers till drying and packing of starch, processing needs more employees when compared to other actors in the chain. It was clearly 68

72 depicted that in production of tapioca, women labours played a major role. After production, the role of men in processing unit was higher. It could be clearly inferred from the study that majority of the employees were engaged as casual labours for loading and unloading of starch and sago bags while some were working as permanent staff. The wage given at farm for men labour per day was Rs. 300 while it was Rs.200 per day for female labours. Efficient Value chains Price spread analysis referred to the difference between price paid by the consumer for the starch and the price received by the tapioca farmers for equivalent to the tapioca tuber produced. The price spread was worked for four value chains. The value chain I to IV were concluded that various cost involved in different chains from farmer to the consumer. The farmer s share and price spread percentage in consumer price were calculated and analysed the profitable value chain. The high profitable value chain was found in both rainfed and irrigated area was given: Input supplier - Farmers - Processors - SAGOSERVE Wholesalers Consumers The farmers share was high in the value chain II (27.85 per cent) in rainfed area and value chain IV (25.64 per cent) in irrigated area respectively. Since, the commission agents were not involved in the value chain hence; farmers share in consumers price was high. Production constraints faced by sample farmers Labour was needed for tapioca cultivation from land preparation till harvesting and loading of tubers in the truck. Recent days, there was huge shortage of labours since the agricultural labours were engaged under MGNREGA scheme. Second constraint for farmer was need of high yielding varieties for improvement of their production. Farmers repeatedly used same seed material for tapioca cultivation; hence the yield of tubers was less. Pest and disease attack on tapioca was the third problems faced by farmers. Mealy bug and white fly were the two major pests that affected the production of tapioca. The major disease affecting tapioca was Cassava mosaic virus and tuber rot. Constraints faced by sample farmers in tapioca marketing The most important constraint identified by the tapioca cultivators was higher price fluctuation followed by low prices lack of price information and less shelf life of tapioca. The price of tapioca varied from Rs.2050/bag Rs.3942/bag. Tapioca grown in limited area. So, the price information can t be got by the farmers at the perfect time. The processing time of tubers was essential from harvesting to the industry within two days from harvesting. Problems faced by processor The major problem faced by the processors was less starch quality, lack of raw material availability followed by higher cost. Lack of skilled labours and pollutions were the other constraints faced by processors. The low starch quality was due to local varieties and reuse of same planting material. The area under tapioca under has been declining in the study area due to various climatic reasons. Hence, there was problem in raw material availability. High labour cost for skilled labours and pollution measures reduced by adoption of bio-gas plant. Problem faced by wholesaler 69

73 High transportation cost, lack of storage facility, late payment and lack of quality of starch were the major constraints ranked by the wholesalers. Because of far distance, the transportation charge was high and also due to high fuel cost marked as major problem. Lack of quality of starch was due to improper production of starch in some medium scale processing industries. Conclusion The processors were the only actor involved in value addition process of tapioca in the value chain process. Farmers involved value addition by planting of tapioca and they were not involved in other process also. Commission agents were just transferred the produce from one chain actor to another chain actor. Commission agents, wholesalers were not involved in the value addition process. The tapioca cultivators were expecting more help from the extension and agricultural officers. For tapioca products (starch and sago), SAGOSERVE was acting as marketing service for the processors. Most of the starch and sago products were sold to traders through SAGOSERVE where grading and quality checking were done for the produce. The knowledge, technology and skills were increased by using high yielding varieties, drip irrigation with proper practise of cultivation. It could help to increase the yield and quality of tapioca. Almost all the sample farmers were literate with minimum experience of ten years in the farming of tapioca. Hence, they could easily adopt the new technology from the institutions. The tubers were sold to processors either by directly or through commission agents. Most of the farmers had strong linkage with input suppliers and commission agents. SAGOSERVE was provided with financial, warehousing and marketing facility to the starch manufacturers. SAGOSERVE was playing a vital role in removing middleman from the trade and helped in reduction of tax rate. Value chain actors were playing vital role in movement of tapioca to the final destination. Input procurement, cultivation, trading, processing, market service by SAGOSERVE and wholesalers were the actors in tapioca value chain. In the rainfed area, all the farmers sold their produce to processors through commission agents where as in irrigated are 95 per cent of farmers sold their produce to processors through commission agents anf five per cenr fam were sold directly to processors. Tapioca value chain provided employment to various actors. The share of women employment was high in the cultivation of tapioca and the significant role in processing industries. The value chain analysis of tapioca for starch in Salem district was found that producer commission agents processors SAGOSERVE wholesalers consumers was higher. The starch produce were move across the northern parts of the country, especially in Delhi, Maharashtra and Gujarat. Suggestions 1. The Government should promote the Tapioca authority board. 2. The farmers could get advice from the technical person for the improvement of quality and productivity of tapioca. 70

74 3. The farmers are not having frequent contacts with the staff of state agricultural department and this should be increased. 4. The farmers were getting fewer yields because of using the same variety for the past few years. Hence, the state agricultural institution provides high yielding variety with pest resistance. 5. There should be a regular meeting with the staff of tapioca research centre, staff of state agricultural department, tapioca officers, development officers of sago serve factory for the purpose of exchanging information on latest technology. 6. The Government should provide subsidies for the farmers who use new techniques in tapioca cultivation. 7. To overcome the less availability of labour, mechanization tools should provide to farmers for planting to harvesting of tapioca. 8. Efficient value chain was due to absence of commission agent in the value chain. It is not avoiding of an actor. The processing unit itself holds a procurement manager for procuring tubers from the farmers will help in higher profit for both tapioca cultivators and the processors. Direct marketing from farmers to processors provides higher margin. 71

75 Market Led Extension: Context and Concept A. Sarkar The Backgrounder In the process of laying major emphasis on production driven extension, even after 67 years of independence, a large majority of the Indian farmers are still not being able to sell their surplus produce remuneratively and there are even plenty of distress sales occurring among the farming gentry almost everywhere in the country. The situation is still worse in the backward regions like that of the North-Eastern states. Contextual to opening up of market under WTA regime, the current agricultural scenario has become far more challenging as the threats of international competition even in our local markets are noticeable. So, one of the greatest tasks of current extension system is how to effectively address the issues of shifting stance from productivity to profitability, subsistence to commercial agriculture, commodity orientation to farming systems orientation, local market to export market, mono cropping to crop diversity and so on. And here it is believed that market-led extension with multi-agency support might hold the key to the future. In earlier times, farmer who produced more was considered successful farmer. But now farmer has to develop the competencies of effective marketing, presentation and quality maintenance on lines of national and international standards. The farmers have to become agripreneurs where they would suppose to identify real business opportunities; draw holistic benefit from the support system and build the global competitiveness of their produce. Therefore, efforts are on to bring market-led extension at the center stage in the extension scenario from its mere peripheral existence earlier. Paradigm Shift from Production-led Extension to Market-led Extension Aspects Production-led Extension Market-led Extension Purpose/objective Transfer of production technologies Enabling farmers to get optimum returns out of the enterprise Expected end results Delivery of messages Adoption of package of practices by most of the farmers High returns Farmers seen as Progressive farmer/ High producer Farmer as an entrepreneur Agripreneur Focus Technology Production / yields Seed to seed Package approach for an agro-climatic zone irrespective of various farming / micro situations Whole process as an enterprise / High returns Rupee to Rupee Diverse baskets of package of practices suitable to local situations/ farming systems Extensionists Messages Joint analysis of the issues 72

76 Aspects Production-led Extension Market-led Extension interactions Training Varied choices for adoption Motivation Consultation Recommendation Linkages/Liaison Research-Extension-Farmer Research-Extension-Farmer-Market Extensionists role Contact with farmers Maintenance of records Information Technology support Limited to delivery mode and feedback to research system Individual Not much importance as the focus is on production and productivity Emphasis on production technologies Enriched with market intelligence besides the TOT function. Establishment of marketing and agro-processing linkages between farmer groups, markets and processors Farmers Interest Groups/SHGs Very important as agriculture is viewed as an enterprise to understand the cost benefit ratio and the profits generated Market intelligence including likely price trends, demand position, current prices, market practices, communication network, etc. besides production Market Led Extension: The Concerns The need for Market Led Extension can be better understood through the following explainers which are having reciprocal influence on both the producers and the market forces. Links between agriculture and the food industry As the link between food and agriculture continues to evolve, we see emergence of an agribusiness where agriculture and food become a continuum. Food manufactures have particular expectations from agriculture as a supplier of their raw materials to build a profitable business. They seek to establish a preference for their products by differentiating those in some way which are meaningful to consumers. Then, in order to enable consumers to recognize the differentiated product, manufacturers brand that product and then work on building consumers loyalty to these brands by consistently maintaining the quality. So, where agriculture would seek to serve a food industry, it has also to remain careful on quality aspects. With an increased capability to search the place for raw materials, the food industry can now find the lowest cost source for any given level of quality. Given radical improvement in 73

77 transportation and communications, now the food manufacturer need no longer to depend on the same country/place for the source of agricultural produce where it manufactures, or markets. The farming community and their extension support system need to be made aware of such significant change in the competitive environment of agriculture as they largely remain focused on their respective domestic markets. The capital-intensive food industry cannot afford to incur the high costs of under utilizing its capacity. A manufacturer invested heavily in building up his brand remains very keen to get reliable supplies in terms of quality, timing and cost. This means that farmers will have to compete in terms of reducing seasonality or fitting into a pattern of social competitiveness. Farmers doing part of the post harvest treatment of the crop will add another advantage. Crops that are specially bred or designed to facilitate processing are the other type of advantage that the food industry could expect from agriculture. In the more sophisticated food markets, healthy eating can become a priority among consumers. Therefore, farmers will have to consider the health connotations of what they choose to grow. There are two aspects of health to be taken into account. First, consumers may be interested in the nutrition aspect of the food itself. Thus, farmers have to be concerned about the nutritional value of the produce they grow. Second, the consumer and the food industry will expect the farmer to produce without potentially dangerous chemicals with little or no extra cost to them. This would be another challenge for agriculture. Challenges in agricultural marketing system Market size is large and continuously expanding, but marketing system not keeping pace. Farmer consumer direct marketing is negligible. In most of the rural periodic markets, facilities for efficient trade are still almost absent. Market yards/sub yards is inadequate, ill equipped and mismanaged. Lack of proper handling at farm gate lead to loss of 30% F&V, 7% grains, 10% spices even before reaching the market. Prevalence of market risks for both the production and marketing of produce. Among the less tangible costs is the risks attached to storage. These include shrinkage due to pilferage, pests, fungal growths and loss of quality due to ageing. Another risk is that demand could fall with adverse effects on prices. Very little attention on grading and primary processing leading to reduction in operational and pricing efficiency. Poor level of awareness regarding technology led manipulation in production methods for due address of the changing consumers preferences. Weak coordination and linkages between agricultural line departments and Marketing Department. Challenges to Market-Led Extension The public extension system in the country is already heavily burdened with multifarious responsibilities in the field. The new dimension of marketing may overburden the system. 74

78 The public extension system is already under severe criticism for its inability to deliver the services. In this light, the challenge is to motivate the extension personnel to learn the new knowledge and skills on marketing extension jobs. Lack of publicity of success stories of the farmers using information technology and inadequacy in rendering agricultural market related information and advisory including market intelligence like: what and how much to produce, when to produce, in what form to sell, at what price to sell, when to sell and where to sell etc. through web based press button technology using skilled personnel. New Role Expectations from Extension Personnel in Market Led Extension Strengths (demand, high market ability, good price etc.), Weaknesses (the reverse of the above), Opportunities (export to other places, appropriate time of selling etc.) and Threats (imports and perishability of the products etc.) need to be analyzed about the markets. Organization of Farmers Interest Groups (FIGs) on commodity basis and building their capabilities in terms of improved production technologies, post-harvest operations, storage and transport, and marketing. Sensitization of farmers on advantages of direct marketing as in vogue in the forms of Raytu Bazars in AP, Apni Mandis in Punjab and Haryana, Uzavar Santhaigal in Tamil Nadu etc. Establishing marketing and agro-processing linkages between farmers groups, markets and private processors. Advice on produce/product planning. Usage of internet facility through computers to get updated on market intelligence. Organization of study tours of FIGS: to the successful farmers/ FIGs for various operations with similar socio-economic and farming systems as the farmers learn more from each other. Enhanced publicity drive relating to success stories of commodity specific farmers. Stages in Promotion of Market-Led Extension Stage-I: Inventorization of Local Resources and Facilities It involves carrying out of participatory appraisal to familiarize with the problems and opportunities - Rely on farmers wisdom Listen & learn from them Act as a facilitator not as instructor Try to come across with a clear idea regarding break-even price of delivering produce to the markets At the end of this stage, the extension functionary can have a clear idea of the crops, the marketing system, market players, problems and opportunities of the area and, also, some idea of the possible solutions. Stage-II: Determining What the Market Wants in Terms of Product Now and in Future At this stage, one needs to know through process of information gathering. 75

79 - Who currently supplies the market? - At what times? - What volumes are sold? - How the produce is packed and presented? Opinions of knowledgeable/resourceful individuals who are commercially involved with trading may be pooled and so also valuable statistics like price data/information on the volumes of produce delivered to the market. Blending of self experience of the extension functionary also helps in documenting fruitful information. All these will help the Marketing Extension Functionary in better understand customers wants in terms of product, its form, seasonality and volume. Stage-III: The Marketing System From what the customer wants in terms of product in the previous stage to deal with determining what the customer wants in terms of service in this stage. Finding the best way to work within the existing marketing system involves building up an understanding of how produce is distributed and sold and binds up relationships between different sales points in the marketing chain. What the Extension Functionaries need to understand here are - Produce distribution system Most important is to understand the first link in the production/marketing chain i.e. between the farmer and the person to whom he sells. It is very useful to draw up a flow diagram showing different stages in the distribution chain. How the marketing system works Risk and profit are very closely linked. About 30% of the produce, normally that of the larger growers, are marketed direct to the wholesale markets. These wealthier farmers are in a better position to absorb the involved risk with marketing the produce themselves. Small and marginal farmers mostly depend on local commission agents for marketing their produce. Marketing margins at various levels Calculating marketing chains is a difficult task at it varies depending on retail price of the product, its perishability, marketing costs (for transport, packaging etc.). To do this, the extension functionary need to retrace each step in the marketing chain and establish from each middleman his buying and selling pace. Wholesalers and Middlemen Selection as Trade Partners Identify suitable and reputed middleman as trading partners 76

80 It involves finding out which agencies are best equipped and most prepared to trade in the produce from the locality Find out whether those agencies have reputation for integrity and honesty Information Services Ensure rapid feedback mechanism on the state of different markets on prices and demand in terms of quality & quantity so as to facilitate maximization of sales decision when the market is short and quality demands are not so stringent Stage-IV: Decision Making and Agreeing on an Action Plan Involves deciding on what to do by choosing the best course of action. Two chief functions of extension personnel here are : To reduce the learning time for an individual farmer for accepting a new idea/ technique To increase the number of farmers who understand the new ideas. Four suggested potential activities here are: - Giving advice to an individual farmer. - Providing market advice to farmer groups particularly through mass extension methods. - Providing advice/information to critical individuals, organizations or private-sector companies in the marketing chain. - Co-coordinating the activities of a number of different intermediaries in a marketing chain. Stage-V: Implementation of Action Plans Remember each individual situation is different to others for achieving goals of improving rural economy and profitability of the farmers. The Marketing Extension Functionary must advice the farmer at various stages of crop production besides on marketing aspects like pre-production advice (input supply, finance and credit) and production planning (individual crop selection, selection of range of crops, investment advice etc.). Stage-VI: Review Stage Deviations to be identified and analyzed. SOWT analysis would have to be done. Incorporation of additional activities to be made to fine tune the action plan. The End Note The focus of the extension functionaries need to be extended beyond production. Farmers should be sensitized on various aspects on quality, consumer s preference, market intelligence, processing and value addition and other marketing information to help the farmers to realize high returns for the produce, minimize production costs, and improve the product value and marketability. Always be flexible to accommodate shocks and uncertainties and incorporate changes as per situation demands for being a really worthy market extension functionary to deliver the much sought after services to the farmers and other client systems. 77

81 SMART Agricultural Marketing for Livelihood Security Prospects and Opportunities A.K. Mohanty, G.A.K. Kumar, A.K. Tripathi and A. Roy Introduction Agriculture remains as the main stray of Indian economy feeding more than one third of its population. The agriculture sector in India is by far the largest employer among all the three major sectors, employing over 55 per cent of the available workforce, but at the same time agriculture is the smallest sectoral component in the country national GDP showing a declining trend in contributing to national GDP i.e per cent ( ) to 13.9 percent ( ) and 13.7 per cent ( ). The export value of India s agricultural, horticultural & floricultural products, animal products and processed food products was surged from US$ 29.8 billion ( ) to US$ billion ( ) with 13 per cent increase over the preceding year. According to APEDA s projected figure, India s agri-export turnover is expected to be doubled in the next five years, to reach US$ 18 billion. At present, around 70% of the country s agricultural and processed foods are exported to developing countries in the Middle East, Asia, Africa and South America. During the last half century, Indian agriculture has made significant strides in the pace of development in agriculture production, marketing and R&D sector in spite of the hazardous consequences of presently ongoing climatic aberrations like irregular rainfall, sudden rise/fall in temperature, unexpected hailstorm, water stress leading to depletion of natural resources, imbalance in supply-demand chain in production and numerous marketing risks. Such a scenario has potential danger of weakening the capacity of small and marginal farmers to cope with these eventualities and to be able to meet the food requirement of burgeoning population, thereby jeopardizing country s food security. As per estimates three out of every four Indian rural dwellers is dependent on agriculture for their livelihood sustenance. So any return on investment in agriculture would be at least four times as effective in solving the poverty as compared to any other sector. As majority of small and marginal farmers in our country with low marketable surplus are exposed to weather uncertainties, yield fluctuations, price instabilities that put a question mark in their production-decision of crops which is mostly determined by the prevailing market price. Under these circumstances, a diverse crop portfolio triggered with climate resilient technology combined with effective agricultural insurance is a safety net that can act as a desirable cushion in the event of disasters. Insurance has to be comprehensive linking production risk of inputs and weathers as well as market risks. Indian agriculture under trade liberalization Since last two decades, India has accomplished a momentous development in agricultural production, but it has not established its position as a major player in global agricultural exports. The share of India in world agricultural trade is less than 1%. With around 11% of the total land area of the world, India accounts for more than 16% of the world s population and however it is in a position to leverage its natural endowments which surpass most nations in the world including China. So far as the productivity is concerned, India s performance is at a very dismal state as compared to even China which is able to 78

82 feed its population by producing around 40% more food than India on land which is 40% less than that of India. India has also failed to realize that in spite being one of the largest producer of fruits and vegetables in the world, it wastes fruits and vegetables every year equivalent to the annual consumption of United Kingdom i.e. Rs 23,000 crores. Moreover, India wastes food grains in excess of what Australia produces each year. Total wastage is Rs 50,000 crores which is over 6 times the annual food subsidy of the country. We are the second largest fruit producer next to China with a share of 8% of world fruit production. We produce 65 per cent and 11 per cent of world's mango and banana crops, respectively, ranking first in the production of both the crops. Of the total production of fruits and vegetables, only 20% are being processed in India as compared to 70% in Brazil and 78% in Philippines. Although India is the largest producer of milk in the world at 74.3 million tonnes, exports of milk and milk products are negligible. The poor level of food processing in India leads to larger wastage of agricultural produce. To reduce wastages and ensure higher returns to farmers, Indian agriculture has to be transformed by increasing the export of agricultural produce. Market development and promotion of quality aspects with an assurance of continuity in supply of produce will no doubt enhance the marketing opportunities for the majority of small and marginal farmers of the country which may lead to formulation of long-term strategy for increasing the exports of these commodities. In 21st century agriculture continues to be the key sector to provide foundation for sustainability of millions of Indian farm families. The agriculture supply chain has made a paradigm shift from the concept of marketing of the produce to producing for market which results in faster technology adoption through transfer of (need/time/localised/crop/ market based) knowledge/information that enables the farmer to take decision at every point. The tendency of farmers to produce and market, if there is excess has shown a radical change to produce for market which encourage farmers to translate him into an agri-entrepreneur. This value addition in farmers thought process surely enhances his income but that needs a modified public extension system approach favourable through ICT intervened advisory and knowledge services using innovative business models. Due to the new extension system, agriculture trade liberalization accounted for bulk of the market access by the farmers to meet emerging challenges. The situation now demanded inducting reforms process in agriculture to bring out changes in systems, processes, frameworks and policies. The new way of learning in terms of local context, operational process, need-based, user-centric, result oriented and in-time extension services system provided an innovation challenge to all the stakeholders in farming sector. Low exportable surplus, protective tariffs, stiff competition in the global market, poor market intelligence, lack of brand status to the local commodities, lack of publicity, poor quality, improper post harvest techniques and poor packaging are the major bottlenecks in agricultural marketing inhibiting exports value of Indian produce. Technical standards, environmental and social concerns and non- trade barriers like anti-dumping duties, countervailing duties, safe guard measures and sanitary and phytosanitary measures have affected the market access for the export of potential horticultural and floricultural produce. In case of marketing for agro products, there is need to be development of proper regulated market for the benefit of farmers with the policy support by the Government and Private sectors. If the Public and Private sector could join hands in partnership mode, growth potential in 79

83 agricultural marketing can be realized in actual and rural development will bring in socio-economic changes for better livelihood, in our villages, where India lives. India s exports of agricultural and floricultural products, fruits and vegetables, animal products, cereals and processed food products were of worth $9.2 billion during Agri-export turnover is expected to rise to nearly $18 billion by During this transition, India has jumped from conditions of export or perish to export and perish and now reached at the situation of export and flourish. From a food deficit country in the post-independence era, we have not only become a selfsufficient country feeding 120 crore population of our own, but also 27 crore people in the rest of the world through exports. However, there is still a lot to be done to turn the bread earners of the country into exporters. Presently agricultural marketing system in the country has undergone several changes owing to the increased marketed surplus, increase in urbanization and income level and consequent changes in the pattern of demand for marketing services; increasing in opportunities to link distant and overseas markets; and change in the form of and degree of government intervention. Some of the basic features of Indian marketing that influence the efficiency of agricultural marketing are: The market size and farmers market linkages (both backward and forward) are continuously expanding. Private traders those handle more than 80 per cent of the marketed surplus, have not invested in marketing infrastructure due to excessive regulatory framework. Direct marketing by farmers to consumers becomes difficult and more than 80 per cent farmers lack facilities for efficient trade. In the existing system lack of timely, quality and cost-effective delivery of adequate inputs, low absolute share of the producer in terms of remunerability, fluctuations in prices across seasons, large spatial price differences and lack of proper market outlets are the issues which have become increasingly crucial in the present context. Due to poor handling (cleaning, sorting, grading and packaging) at the farm level about 7 percent of food grains, 30 per cent of fruits and vegetables and 10 per cent of seed species are lost which is estimated to be around Rs. 50,000/- crores annual loss in the marketing chain. State government implemented Agricultural Produce Market Regulation (APMR) legislation hampers contact farming initiatives, which otherwise can be highly successful. Climate smart agriculture (CSA): What and Why? By the end of 2050, the world s population will increase by one-third and out of which most of the additional 2 billion people will live in developing countries. As per FAO estimate, if current income and consumption growth trends continue, then agricultural production will have to increase by 60 percent by 2050 to satisfy the expected demands for food and feed. Agriculture must therefore transform itself into a new direction to feed a growing global population and provide the basis for economic growth and poverty reduction. Moreover, the recent climate change makes this task more difficult due to its adverse impacts on agriculture. Climate change in India is expected to reduce its agriculture productivity by per cent by In recent years, India has witnessed considerable increase in the number of floods, 80

84 droughts and cyclones, and the water, soil and land resources continue to decline. The increased climatic variability results in increase production variability. Producing enough food for the increasing population in a background of decreasing resources and a changing climate scenario becomes a challenging task. To achieve food security and agricultural development goals, adaptation to climate change and lower emission intensities per output will be necessary. This transformation must be accomplished without depletion of the natural resource base. Climate change is already having an impact on agriculture and food security as a result of increased prevalence of extreme events and increased unpredictability of weather patterns. This can lead to reductions in production and lower incomes in vulnerable areas. These changes can also affect global food prices. Developing countries and smallholder farmers and pastoralists in particular are being especially hard hit by these changes. Many of these small-scale producers are already coping with a degraded natural resource base. They often lack knowledge about potential options for adapting their production systems and have limited risk-taking ability to access and use technologies and financial services. Enhancing food security while contributing to mitigate climate change and preserving the natural resource base and vital ecosystem services requires the transition to agricultural production systems that are more productive, use inputs more efficiently, have less variability and greater stability in their outputs, and are more resilient to risks, shocks and long-term climate variability. More productive and more resilient agriculture requires a major shift in the way land, water, soil nutrients and genetic resources are managed to ensure that these resources are used more efficiently. Making this shift requires considerable changes in national and local governance, legislation, policies and financial mechanisms. This transformation will also involve improving producers access to markets. By reducing greenhouse gas emissions per unit of land and/or agricultural product and increasing carbon sinks, these changes will contribute significantly to the mitigation of climate change. Faced with growing problems of food security and climate change, agriculture must become more productive, more resilient and more climate-friendly. Concept of Climate Smart Agriculture (CSA) Climate-smart agriculture (CSA), is defined as a farming system that contributes to the achievement of sustainable development goals. CSA is an approach that requires site-specific assessments to identify suitable agricultural production technologies and practices to achieve a productive, resilient and sustainable agricultural development for food security under climate change. It integrates the three dimensions of sustainable development viz,. economic, social and environmental; by jointly addressing food security and climate challenges. This approach also aims to strengthen livelihoods and food security, especially of small and marginal farmers, by improving the management and use of natural resources and adopting appropriate methods and technologies for the production, processing and marketing of agricultural goods. It is composed of three main pillars: 1. sustainably increasing agricultural productivity and incomes; 2. adapting and building resilience to climate change; 3. reducing and/or removing greenhouse gases emissions, wherever possible. 81

85 Some of the best options and practices of CSA like drought and flood tolerant varieties of crops, adapted livestock and fish, weather forecasts, information and communication technology (ICT)-based agro-advisories, weather based insurance, water management practices, conservation tillage, soil and agro-forestry for carbon sequestration, precision in the use of fertilizers, adapted mechanization, and seed and fodder banks are currently in use for climate change adaptation and mitigation. Enabling a smart market environment for Indian farmers Indian agriculture contribution to the national gross domestic product (GDP) is about 25 per cent. With food being the crowning need of mankind, much emphasis has been on commercializing agricultural production. For this reason, adequate production and even distribution of food has of late become a high priority global concern. Now-a-days, Indian agriculture has undergone a transition phase described as Agriculture to Agribusiness. This move is in a sense commoditization to commercialization/ industrialization of agriculture which is influenced by production-market linkage supported with suitable price signals. The share of agri-business is consistently rising over last couple of decades with a remarkable figure of more than Rs. 11,43,000 crores. The vertical growth in the food and agri-business sector will shift part of the marketing effort towards discovery of consumer preferences rather than manipulation of the same by the retailers. The emerging consumers ensure the product attributes like product quality, nutrition, food safety and environmental aspects in addition to price stability and value in tune with their expectations as a potential consumer of the produce. Agricultural Marketing in India is an area for the "second generation" of green revolution problems, has undergone a significant metamorphosis because of economic liberalization and globalisation. Infrastructure development is the critical factor for determining the success of marketoriented strategy and macro-economic policies in developing countries. Both national and global players are trying to capture the urban markets of India, which has already reached a saturation level, and it is extremely difficult to tap the urban markets with high profit margin. While urban market or export market is difficult to plough, rural market is relatively easy and feasible to cultivate, in India. Agricultural marketing can be defined as the commercial functions involved in transferring agricultural products consisting of farm, horticultural and other allied products from producer to consumer. Agricultural marketing also reflect another dimension from supply of produce from rural to rural and rural to urban and from rural to industrial consumers. Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are interwoven in doing this, such as planning and production, growing and harvesting, grading, packing, transport, storage, agro- and food processing, distribution and advertising, sales and pricing etc. Efficient backward and forward integration with agriculture has led to globally competitive production system in terms of cost and quality. Cooperatives seem to be well positioned to coordinate product differentiation at the farm level and to integrate forward into value added processing activities. The National Commission on Agriculture defined agricultural marketing as a process which starts with a decision to produce a saleable farm commodity and it involves all aspects of marketing system, both functional and institutional, based on technical and economic considerations and includes pre and post- harvest operations, assembling, grading, storage, transportation and distribution. 82

86 Similarly the Indian council of Agricultural Research (ICAR) defined agricultural marketing in which the agricultural produce has to undergo a series of transfer or exchanges from one hand to another before it finally reaches at the consumer and that is achieved through three important marketing functions, namely (a) assembling (concentration) (b) preparation for consumption (processing) and (c) distribution. Concentration pertains to the operations concerned with the assembly and transport from the field to a common assembly field or market. For the preparation for consumption, either the farm produce may be taken directly to the market or it may be stored on the farm or in the village for lean periods for better market price. If marketed, the job may be completed immediately as obtained from the field which fetch minimum price or the produce may be cleaned, graded, processed and packed either by the farmer or village merchant before it is taken to the market that gives better price. At the market the produce may be sold by the farmer direct to the consumer or more usually through a commission agent or a broker, traders, wholesalers or retailers. The transactions may be carried out by direct negotiation or through middlemen, by barter or cash, by open or under cover auction, on the spot or in future markets. The transactions take place at one or more levels in the primary, secondary or terminal markets or all three. Distribution (dispersion) involves the operations of wholesaling and retailing at various points through a series of indispensable adjustments and equalizing functions and it is the task of the distribution system to match the available supplies with the existing demand. Agricultural marketing in India: A SWOT analysis Agricultural marketing now-a-days is witnessing major challenges owing to liberalization and globalization of markets. In this context agriculture has to be market driven, more cost effective, competitive, innovative and responsive to hi-tech IT applications. Extension systems in agricultural marketing will have to be sensitized in a professional manner to create an ambiance of Good Marketing Practices and suitable modules needs to be developed to build the capacity of the marketing stakeholders to respond to these challenges. Knowledge has to be imparted at the grassroots level in areas such as market driven production program, post harvest management of marketable produce, availability of marketing finance, information on quality assurance and standards, grading, packaging, storage, transportation, contract farming, direct marketing, alternative markets including Forward and Futures markets, commodity exchanges, online market information system etc. In this context a SWOT analysis need to be undertaken in order to assess the strengths, weaknesses, opportunities, and threats in agricultural marketing. SWOT analysis is the tool for auditing the situation/ organization for making first stage of planning that helps the workers to focus on key issues. Strengths and weaknesses are internal SWOT factors. Opportunities and threats are external SWOT factors. Strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative external factor. One should aim to turn one s weaknesses into strengths, and one s threats into 83

87 opportunities. SWOT will give managers options to match the internal strengths with external opportunities which in this case help in increasing the value for customers and hopefully improve our competitive advantage. Problems in marketing of agricultural produce There are several problems farmers used to face in marketing of agricultural produce which needs to be looked into for strengthening the marketing network in agriculture sector. There are several inadequacies still existing in our agricultural marketing infrastructure system, as a consequence, the Indian farmer is deprived of a fair price for his produce. The farmers have to overcome several hurdles to get fair and just price for their sweat. The main defects Indian system of agricultural marketing are discussed here. Improper warehouses : There is absence of village level proper ware housing facilities as a result, the farmer is compelled to store his produce in unscientific methods like pits, mud-vessels, "Kutcha" storehouses, etc. which lead to considerable wastage. Approximately 1.5% of the produce gets rotten and becomes unfit for human consumption. Due to this reason the farmers are not able to get a fair price for their produce. Lack of grading and standardization: Different types of agricultural produce are not graded properly. The practice usually prevalent in the rural areas, known as "dara" sales wherein heap of all qualities of produce are sold in one common lot. Thus the farmer producing better qualities is not assured of a better price. Inadequate transport facilities: Transport facilities are highly inadequate in India. Only a small number of villages may be joined by railways and pucca roads to mandies. Village level transport like bullock carts cannot be used to carry produce to far-off places. So the farmer has to dump his produce in the nearby markets even if with a considerably low price. This becomes more difficult with perishable farm commodities. Presence of a large number of middlemen: The involvement of large-scale middlemen in the agricultural marketing affects the system. Study reveals that in case of rice farmers obtain only about 53% of the price whereas 31% being the share of middle men with the remaining 16% being the marketing cost. In the case of vegetables and fruits the farmers share is only 39% and 34% respectively whereas the share of middlemen is 29.5% and 46.5% respectively. Most of the intermediaries in the agricultural marketing system are -village traders, brokers, wholesalers, retailers, money lenders, etc. Malpractices in unregulated markets: Though there are substantial number of regulated markets has been established till date, but due to ignorance and illiteracy of the farmers, they are becoming the prey of a number of undefined and unspecified charges. Another malpractice in the mandies relates to the use of wrong weights and measures in the regulated markets. Wrong weights continue to be used in some unregulated markets with the object of cheating the farmers. Inadequate market information: It is often not possible for the farmers to obtain information on exact market prices in different markets. So, they accept whatever price the traders / middle men offer to them. With a view to tackle this problem the government is using the radio and media to broadcast market prices regularly. The news papers also keep the farmers posted with the latest changes in prices. 84

88 However the price quotations are sometimes not reliable and sometimes have a great time-lag, and sometimes also farmers have ignorance about the ruling market price due to lack of media exposures. The villagers have practically no contact with the outside world not are they in touch with the trend of market process and they mostly depend on hearsay reports received from the village bania who is always busy in earning profits from buyers by cheating the ignorant villagers. Inadequate credit facilities: Indian farmer, being poor, tries to sell off the produce immediately after the crop is harvested though prices at that time are very low. As a safeguard measure, the farmer should be prevented from "forced sales" by facilitating him credit provision so that he can wait for better times and better prices. Since such credit facilities are not available, the farmers are forced to take loans from money lenders, while agreeing to pledge their produce to them at less than market prices. The cooperative marketing societies have generally catered to the needs of the large farmers and the small farmers are left at the mercy of the money lenders. The government funding for farmers is still at nascent stage and most of the small farmers still depend on the local moneylenders who are leeches and charge high rate of interest. Lack of other miscellaneous facilities: Inadequacy of other miscellaneous facilities like Lack of crop insurance, Lack of adequate quality control and testing infrastructure, High inventory carrying cost, High taxation, High packaging cost, Affordability and cultural preference of fresh food still play an important role in smooth functioning of agricultural marketing network. Steps taken for smart marketing in Indian context Market infrastructure Efficient marketing infrastructure such as wholesale, retail, regulatory and assembly markets and storage facilities is essential for cost-effective marketing, to minimize post-harvest losses and to reduce health risks. Only thing we have to plan how to design markets that meet a community's social and economic needs and how to choose a suitable site for a new market, attention needs to be given to how that market will be managed, operated and maintained. Rural assembly markets are located in production areas and primarily serve as places where farmers can meet with traders to sell their products. These may be weekly markets, such as haat bazaars. Terminal wholesale markets are located in major metropolitan areas, where produce is finally channeled to consumers through trade between wholesalers and retailers. Effective regulation of markets is very much essential. Inside the market, both hygiene rules, revenue collection activities, maintenance of law and order even outside the market have to be enforced strictly. The changing trade environment in the wake of liberalization, privatization and globalization and increased agricultural production and marketable surplus, further emphasizes the pivotal role to be played by the infrastructural development in agricultural marketing. Market information Efficient market information is proved to have positive impact on farmers and traders. Up-to-date information on prices and other market factors enables farmers to negotiate with traders and also facilitates spatial distribution of products from rural areas to urban areas and between markets. Modern communications technologies open up the possibility for market information services to improve 85

89 information delivery through SMS on cell phones, announcement through FM radio and television and internet service (AGMARK-NET) that offers the possibility of faster dissemination of more localised market information. However, problems associated with the cost and accuracy of data collection still remain to be addressed. Even when they have access to market information, farmers often require assistance in interpreting that information. However various attempts have been made in most of the developing countries to introduce commercial market information services through scroll display board at important places. Marketing training Normally farmers perceive marketing as their major problem for making agriculture a profitable venture. However, due to lack of knowledge they are not able to identify such problems like poor prices, lack of transport and high post-harvest losses. Successful marketing requires learning new skills, new techniques and new ways of obtaining information. Hence extension officers working with ministries of agriculture of state government, Govt. of India MSME, NIAM, NABARD and NGOs have designed suitable training modules/ techniques to impart training to the farmers on various aspects of agricultural marketing of different crops from time to time. Agricultural advisory services and the market Promoting market orientation in agricultural advisory services aims to enhance the capabilities of the rural farmers to enable them to benefit from agricultural markets and help them to adapt to factors which impact upon these. This approach to advisory services indicates that the range of clients serviced should go beyond farmers to include input providers, producers, producer organizations and processors and traders. Marketing linkage developments Presently marketing linkages between agribusiness companies, large retailers and farmers are gradually being developed through contract farming, group marketing and other forms of collective action. Donors and NGOs are paying increasing attention to ways of promoting direct linkages between farmers and buyers. The concept and growth of supermarkets is having a significant impact on marketing channels for horticultural, dairy and livestock products. Besides that spot market plays important role since many years, necessitating attention to infrastructure improvement for retail and wholesale markets. The Way Forward in agricultural marketing The farming community requires facilities for efficient marketing including scientific storage so that wastage and produce deterioration are avoided. So due to pressure of the credit requirement, the farmers will not be compelled to sell the produce at a time when prices are low. The states need to implement market reforms to provide effective marketing channels to the producers. The markets and their related infrastructure need to be covered under Viability Gap Funding so that the private sector is encouraged to make investments in this sector. More awareness programmes need be organized to popularize the government schemes with a special focus on the North Eastern Region. Conclusions 86

90 Due to globalization of agricultural marketing the farming community requires to get benefit from the new global market access opportunities, hence accordingly the internal agricultural marketing system in the country needs to be integrated and strengthened. Agricultural marketing reforms and the creation of marketing infrastructure has therefore been a prime concern of the government. It is needless to mention that the subject of agriculture and agricultural marketing is dealt with both by the state as well as the central government in the country. Most of the agricultural commodity markets generally operate under the normal forces of demand and supply. The role of government is normally limited to protecting the interests of producers and consumers, only in respect of wage goods, mass consumption goods and essential goods. Presently, the increasing trend of agricultural production has brought in its wake, new challenges in terms of finding markets for the increased marketed surplus in addition to other challenges and opportunities that the global markets offer in the liberalized trade regime that need to be addressed. Thus the importance of marketing in agriculture is very well illustrated by saying, that a good farmer has one eye on the plough and the other on the market - this was true when agriculture is mainly for subsistence; and now, when Indian agriculture is becoming commercialized, it will be more fit to say, a good farmer has only his hands on the plough but the eyes on the market. References Anonymous. (2011). Agricultural prices and markets, In Chapter-5 in the Book State of Indian Agriculture. Published by Min. of Agril.,Govt. of India, Department of Agriculture and Cooperation and Directorate of Economics and Statistics, New Delhi. p Anonymous. (2011). Agriculture exports poised to boom, An article in FIEO News, July,2011. pp. 11. FAO (2013). Climate -Smart Agriculture- Source Book, ISBN , p Gummagolmath, K. C. (2008). Contract Farming in India, Problems and Prospects- A Case Study of Gherkin in Karnataka, p Khan, A. U. (2011). Trade liberalization and the agriculture sector in India, A report on Food processing Five sector s Project, India Development Foundation. Mohanty, A. K. (2011). Agricultural marketing infrastructure, An article published in the Training Manual of the Training programme on Agricultural marketing sponsored by IGNOU Agartala Regional Centre, Tripura held during June, Murray, E. V. and Rao, K. P. R. (2006). Export opportunities in Indian floriculture, Article published in CAB CALLING (Jan.- Mar., 2006), p Nogothu, U. S. (2012). Food security and India s development path. Paper presented at Rio +20 Summit held at Oslo on 12 June, Singh, S. (2011). Contract farming for agricultural development in India: A small holders perspective, IGIDR Proceedings in the Workshop on Policy options and investment priorities for accelerating agricultural productivity held during Nov , 2011 in New Delhi. Vadivelu and B. R. Kiran (2013). Problems and prospects of agricultural marketing in India: An overview. International Journal of Agricultural and Food Science 2013, 3(3): p

91 Agri-Clinics and its Role in Agri-Business Development: Problems and Prospects A.K. Singha Introduction Agri-clinic is emerging as an important area in the agricultural sector with the liberalization of World Trade in order to achieve objectives such as to orient the extension functionaries on entrepreneurship development among the farmers to improve their economic status. Agri-clinics are envisaged to provide expert services and advice to farmers on cropping practices, technology dissemination, crop protection from pests and diseases, market trends and prices of various crops in the market and also clinical services for animal health etc. which would enhance productivity of crops/animals. While Agribusiness centres are envisaged to provide input supply, farm equipments on hire and other farm services. The agriculture graduates are provided training in agri-business development for two months through institutions in public/private sector located throughout the country and coordinated by National Institute of Agricultural Extension Management (MANAGE), Hyderabad. These institutions also provide handholding support to the trained graduates for a period of one year in obtaining bank finance, setting up their business in the area, coordinating with different government authorities involved in giving licenses for undertaking the required business activities etc. The entire cost of training and handholding is being borne by the Government of India. The credit linked capital 25% of the capital cost of the project funded through bank loan is also eligible under the scheme. This subsidy is 33.33% in respect of candidates belonging to SC/ST, Women and other disadvantaged sections and those from North-Eastern and Hill States. Trained graduates are expected to set up Agri-Clinic and Agri-Business Centres. Through agri-clinic & agribusiness, the country will be able to fight with hunger, poverty, malnutrition and unemployment. T h e development of agri-clinic and agri-business centre will be very useful tools for agricultural and rural development. The scheme is open to Agriculture Graduates/Graduates in subjects allied to agriculture like horticulture, animal husbandry, forestry, dairy, veterinary, poultry farming pisciculture and other allied activities. Some of the project activities are- Soil and water quality cum inputs testing laboratories (with Atomic Absorption Spectrophotometers) Pest surveillance, diagnostic and control services Maintenance, repairs and custom hiring of agricultural implements and machinery including micro irrigation systems (sprinkler and drip) Agri -service Centres including the three activities mentioned above (Group Activity). Seed Processing Units 88

92 Micro-propagation through Plant Tissue Culture Labs and Hardening Units Setting up of vermiculture units, production of bio-fertilisers, bio-pesticides, bio-control agents. Setting up of Apiaries (bee-keeping) and honey & bee products' processing units Provision of Extension Consultancy Services Hatcheries and production of fish finger-lings for aquaculture Provision of livestock health cover, setting up veterinary dispensaries & services including frozen semen banks and liquid nitrogen supply Setting up of Information Technology Kiosks in rural areas for access to various agriculture related portals Feed Processing and testing units Value Addition Centres Setting up of Cool Chain for the farm level onwards (Group Activity) Retail marketing outlets for processed agri-products Rural marketing dealerships of farm inputs and outputs Any combination of two or more of the above viable activities along with any other economically viable activity selected by the Graduates, which is acceptable to the Bank. Salient Features of the project Selected trainees are provided agri-preneurship training for a period of two months in identified Nodal Training Institutes. Free handholding support is also provided for one year to trained agriculture graduates in obtaining bank finance, setting up their business in the area, etc. The training component is looked after by MANAGE, Hyderabad. The cost of training per candidate for 2 months is Rs. 24,750/-inclusive of cost of food, lodgings and study material, and it is being borne by the Government of India. NABARD monitors the credit support to Agri-Clinics through Commercial Banks/Cooperative Banks/ Regional Rural Banks. The credit linked capital 25% of the capital cost of the project funded through bank loan is also eligible under the scheme. This subsidy is 33.33% in respect of candidates belonging to SC, ST, Women and other disadvantaged sections and those from North-Eastern and Hill States. The capital subsidy is back-ended in nature. Full interest subsidy is eligible for the first two years of the project. The interest subsidy is concurrent in nature. The subsidy will not be admissible under this scheme if subsidy of whatever amount was availed of under any other scheme of Central or State Govt. 89

93 Establishment of Agri-Clinics and Agri-Business Centers by Agriculture Graduates The Scheme of Agri-Clinics and Agri-Business Centres were launched on 9 th April, 2002 as a follow-up of Finance Minister s Budget Speech The objective of the scheme is (i) to provide extension and other services to farmers on payment basis through economically viable self- employment ventures, (ii) to provide necessary support in supply of agricultural inputs and (iii) to support agri entrepreneurial development. The agriculture graduates are provided training in agri-business development for two months through institutions in public/ private sector located throughout the country and coordinated by MANAGE. These institutions also provide handholding support to the trained graduates for a period of one year. The entire cost of training and handholding is being borne by the Government of India. The credit linked capital 25% of the capital cost of the project funded through bank loan is also eligible under the scheme. This subsidy is 33.33% in respect of candidates belonging to SC, ST, Women and other disadvantaged sections and those from North-Eastern and Hill States. The capital subsidy is back-ended in nature. The subsidy is available only to those agriculture graduates who are trained under the scheme on or after Ist April, Full interest subsidy is eligible for the first two years of the project. The interest subsidy is concurrent in nature. The subsidy will not be admissible under this scheme, if subsidy of whatever amount was availed of under any other scheme of Central or State Govt. Trained graduates are expected to set up Agri-Clinic and Agri-Business Centres with the help of bank finance. The scheme is being implemented with the help of National Institute of Agricultural Extension Management (MANAGE) and National Bank for Agriculture and Rural Development (NABARD). Initiatives taken for promotion of the Scheme RBI has classified loans to agri-clinics and agribusiness centres as direct agricultural loans, even though input supply is normally classified as indirect loans to agriculture. Margin money/collateral requirement has been waived for loans up to Rs.5 lakh. Soft loan assistance for margin money may be availed irrespective of ailment of refinance from NABARD. Rate of interest on refinance from NABARD has been fixed at 5.5% irrespective of the size of the loan. Six months' expenses for setting up of units are allowed to be capitalized and included in the project cost. District level task force has since been constituted for selection of projects and recommending the same for bank loan assistance. Lead District Manager, DDM, NABARD, representative from the nodal training institution and other leading bankers are members of the district level task force. Emerging sectors in Agri-business IT in agriculture and rural development Horticulture and food products marketing NGOs in agriculture and rural development Agriculture Extension Services 90

94 Consulting and other knowledge based activities Biotechnology research and commercialization Corporate farming nd farm management Agri -supply chain management Rural and agri-foods retailing Agri-business: Shift in Focus From deficit management to surplus management From production oriented approach to market oriented approach Transformation from commoditization to commercialization of agriculture Market orientation of agriculture sector Moving from current supply driven production system to demand driven system (both quantity and quality) Dissemination of market information Linkage production with agro-processing sector Promoting competition and transparency of agri products Marketing Key Opportunity areas Inputs (seeds, nutrition products, fertilizers, agro-chemicals etc.) Farming Processing Services-value addition and customized Channel/ placement/retailing These opportunities can be evaluated based on- Time to start Investment required Return values Alignment with current business Requirement of government approval (licensing etc. if required) Problems in Agri-business Production and organizational problems Policy and taxation problems Marketing problems Present Scenario Problems Agriculture- the mainstay of global economy-more in developing countries like India Meeting nutritional requirement of the population with declining available land poses the real challenge 91

95 Declining growth rate of food production is a serious challenge as triple growth rate needed to feed the ever growing population of the country by Problems faced by Trained Agriculture Graduates in establishing their Agri-Clinic and Agri-Business Centres High rate of interest and lack of subsidy components in the scheme Lack of handholding support from the training institutes Bankers hesitate to finance NABARD and other commercialized banks do not give correct picture about the rate of interest, subsidy and collateral security Many banks do not know about the Agri-clinic and Agri-business Fear of collection of money from farmers. A lot of procedure involved in getting bank loans High risk involvement Heavy competition from well established and old dealers in business Farmers asking products on credit basis. Conclusion & suggestions Agri-clinic and agribusiness centres scheme have much potential towards development of economic status of the farmers and rural youth. It plays a vital role not only in the eradication of major challenges such as poverty, hunger, malnutrition and unemployment from the country but also in the development of living standards of people, income source and other economic resources etc. It is suggested that agro-based entrepreneurship mission and the agro based entrepreneurship education should go hand in hand while taking up agri -clinic and agri-business programmes. Mass employment generation is possible with agri-based industrialization with better industrial and entrepreneurial education discipline; entrepreneurs will naturally take advantage of the vast human resource availability. It is concluded that Agri-clinic and agribusiness centers scheme indicates towards the great scope for entrepreneurship in agricultural & allied sectors in India. Recommendations- Agriculture graduates engaged in agri-business need regular support and guidance from agriculture universities, research institutions and various support organizations. Concerned institutes/agencies should be aware of this and also encourage in this matter. Lack of database regarding various aspects of AC and ABCs by various players (MANAGE, NABARD, training institutes, bankers, and agripreneurs) need to be attended immediately. While allotting government schemes or implementing development progarmmes, priority should be given to trained agripreneurs. Efforts may be made to convince primary agricultural cooperative credit societies (PACs) to use the services of agripreneurs, so that farming community, PACS, as also agriprenerus would be benefited out of the symbiotic relationship. 92

96 Small Farm Development in North Eastern Region: Potential and Possibilities Introduction Sudipta Paul In the era of globalization, trade liberalization and open market policies, commercialization of farm business has become crucial. It has been increasingly felt since the last few decades that agriculture in India as like the other big industries has to be restructured into an organized business sector which will necessarily require medium to large size of landholdings. In contrary, small and marginal holdings account for 85% of total operational holdings in the country, covering 45% of the operational farm lands (GOI, 2014). Small and marginal farmers follow traditional farming practices and by and large cultivate low value crops. Majority of the modern technology intensive farming operations are not possible in such small and marginal land holdings. With the ever increasing population pressure, the land-man ratio in the country has drastically shrunk over the years and will further worsen. Therefore, the issue of enhancing food production to meet the ever growing demand of the exploding population has emerged anew with the challenges like large scale adoption of climate resilient farming strategies, environmental protection and natural resource management. The North Eastern region of India is comprised of Sikkim and seven sister states - Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. These eight North Eastern states have different development perspectives, opportunities and natural resources which can make sustainable contribution to the regional as well as national economy. Although, bestowed with vast natural resources in terms of forest cover, bio-diversity and hydro-electricity, the region is largely struck by poverty, under development, civil conflict and insurgency. The region is endowed with a varied topography and agro-climactic conditions which offer vast potential for agriculture, horticulture and forestry. However, the region lags behind in agricultural development as compared to the other parts of the country. Poor infrastructural facilities, low rate of adoption of improved agricultural technologies, lack of proper connectivity and lack of appropriate strategies for sustainable management of natural resources are some of the major causes. Fragmented land holdings possessed by small and marginal farmers which dominate the landholding pattern in the entire region is uneconomical and one of the vital drawbacks in increasing efficiency of farm resources. Economy of the region till date is heavily dependent on agriculture sector which needs a thorough revamp, adequately backed by financial institutions, marketing support alongside R&D. In spite of the efforts of a number of government agencies, KVKs, NGOs, private players and regional development organizations, challenges remain till date in harnessing the full potential of the region s agricultural resources. Small and marginal farms in North East region: the present status The topography of the North Eastern region, by and large is hilly only with a limited stretch of plains available in some parts of the vast region. Therefore, the land available for agricultural operations is mainly undulating which restricts a large number of mechanized farm operations and seeks special kinds of interventions in many of the cases. In the region, more than eighty percent of the operational holdings are small to marginal covering more than one third of the area under agricultural operations. 93

97 Table 1: Number of small and marginal operational holdings in North Eastern states (Number in 000) Sl. No. State No. of operational holding (total) No. of operational holding (small and marginal) Proportion (in %) 1. Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura North East All India Source: Agricultural Census, Table 2: Area of land holding possessed by small and marginal farmers in North Eastern states (Area in 000 ha) Sl. No. State Area of operational holding (total) Area of operational holding (small and marginal) 1. Arunachal Pradesh Proportion (in %) 2. Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura North East All India Source: Agricultural Census, Proportion both in terms of number and area under small and marginal holdings widely vary in the region, e.g., in Nagaland as low as percent of the operational holdings are small to marginal whereas in Tripura as high as percent fall in the same category (Table 1). Area wise, small and 94

98 marginal holdings in the state of Mizoram (64.76 percent) and Tripura (75.79 percent) stand far above the national figure (44.58 percent) (Table 2). Issues and challenges related to small farm development A large number of issues- social, infrastructural, psychological, ethnical and cultural pertaining to small farm development prevails in the region. Some of the most vital and pressing ones have been discussed below: Prevalence of marginality among socially deprived classes A number of studies have shown that the proportion of socially disadvantaged groups such as Scheduled Castes (SCs) and Scheduled Tribes (STs) is higher among marginal and small farmers than that of medium and large farmers. The North Eastern region is dominated by tribal peasants. The all India figure shows that around 9 percent of small and marginal farmers are tribal compared to percent belonging to the same category (GOI, 2014). In North Eastern states like Mizoram and Nagaland even 100 percent of the tribal farmers possess small to marginal operational holdings (Table 3). In the state of Tripura more than ninety percent of the area possessed by tribal farmers comprises of small and marginal holdings (Table 4). The tribal farmers not only have poor access to land but also to information and credit. The ICAR institutes, KVKs and voluntary organizations in the region have stepped forward in overall livelihood improvement of the tribal farmers by means of training, input, information, extension and other sorts of technical supports, although the ethnical, linguistic and cultural barriers act as a major hurdle in effectively reaching to the unreached. Table 3: Number of operational holdings in North Eastern states possessed by tribal farmers (Number in 000) Sl. No. State Total number of operational holdings No. of operational holdings possessed by tribal farmers Proportion (in %) 1. Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura North East All India Source: Agricultural Census,

99 Table 4: Number of small and marginal operational holdings in North Eastern states possessed by the tribal farmers (Number in 000) Sl. No. State No. of operational holdings possessed by tribal farmers No. of small and marginal operational holdings possessed by tribal farmers Proportion (in %) 1. Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura North East All India Source: Agricultural Census, Vulnerability of small holder farmers to climate change impacts In the recent period of time, climate change has been one of the most discussed issues in several national and international fora as long as food security and sustainability of farm based rural livelihood is concerned. The adverse impacts of climate change are definitely harsher for the small and marginal farmers. The North Eastern region although is rich in natural resources, suffers from fragility and vulnerability of its ecology. The tribal communities residing in fragile environments face an immediate and ever-growing risk of crop failure, loss of livestock and reduced availability of fish and forest products. Therefore, climate resilient farming strategies are to be adopted in large scale by those. Although there has been a number of efforts by the ICAR institutes and KVKs to popularize the climate resilient farming strategies, the small and marginal farmers have been found shy to adopt those as recommended due to a number of reasons. There is a need to intensify climate change research for chalking out coping strategies tailor made for the small and marginal farms in a participatory mode. Land and tenancy issues related to small farm development Land related issues are extremely complicated throughout the country, the North Eastern region being no exception to that. Past experiences have shown that small and marginal cultivators have faced a number of land and tenancy related problems, therefore tenancy security is highly important for small holder farmers. The National Commission on Enterprises for Unorganized Sector is in the opinion that even a modest package of land reforms and its relatively successful implementation dramatically improves the prospects of the poor. As part of the reforms, there is a 96

100 need to liberalize the land lease markets and ensure some sort of security for the tenants. The land right of the tribal farmers in the operational areas has to be protected as unregistered tribal cultivators face difficulties in accessing institutional credit and other sorts of facilities available to them but only with land titles. The wastelands may also be well utilized through redistribution to the small and marginal farmers. Small and marginal farms: potential and possibilities Majority of the population in the country till date are dependent on agriculture as the single source of income and majority of the farmers in India possess small to marginal land holdings. Marginality of land holding acts as an obstacle in resource use efficiency in the North Eastern region too. Apathy of the farmers in the region towards use of external farm inputs further aggravates the problem. Use of external farm inputs in general and fertilizers per hectare in particular shows an inverse relationship with farm size both in irrigated and unirrigated areas. Similarly, the share of area under high yielding varieties (HYV) is also inversely related to farm size (Chand et al., 2011). On the other hand, multiple cropping index is higher for marginal and small farmers when compared to the medium and large farmers. Small and marginal farmers generally allocate larger proportion of their cultivated land to rice, wheat, fruits and vegetables and lesser proportion to pulses and oilseeds (Birthal et al., 2011). The share of small and marginal farms in the country in cereal production is 52% and 69% in milk production. The share of farm output contributed by the small and marginal farms grosses more than 50 % of the total produced in the country. With regards to production of high value crops, small and marginal farmers make larger contribution- 70% of total vegetable production and 55% of total fruit production (Birthal, 2011). This indicates to the immense potential of small and marginal farms towards sustainable supply of raw materials to the fruit and vegetable based foodprocessing agro-industries. Integration of small and marginal farms to the local and global markets will brighten the possibilities of organized farm business in a far promising commercial mode and thereby attract investment. The prevailing resource-poorness, inefficiency of farm input use and resultant decreased ambition of small and marginal farmers due to non-remunerative farm business can successfully be overcome by properly addressing the pros and cons of small and marginal farms. Small farm diversification Diversification of agriculture is not new in India. In fact, diversification has become a common practice in many parts of the country but this is till date a major challenge as far as small farm development in the North Eastern region is concerned. Small farm diversification in the context of North Eastern region may profitably be done through undertaking crop farming along with fruits and vegetable cultivation, animal husbandry, fisheries and agro-forestry. Secondary agricultural activities, small scale income generating enterprises and even non-farm employment may also become a part of small farm diversification. The KVK experience in the North Eastern region has shown that a number of allied agricultural activities like beekeeping, mushroom production, vermicompost production, fisheries, piggery, goatery, rabbitery, duckery, extraction and utilization of organic dyes etc. have been successful in diversifying small farm operations. Subsistence farming is a characteristic feature in the region. Adoption of high yielding varieties is low. Majority of the peasants grow local non-descriptive cultivars of crops. Therefore, a shift from subsistence to commercial farming, low value to high value crops and from local to high yielding plant varieties is 97

101 important in small farm diversification in North Eastern region. However, some experts are in the opinion of undertaking a single enterprise at a particular point of time for achieving specialization, developing managerial capabilities and reducing per unit cost of production. Specialized enterprises (crop/livestock or others) definitely enable the farmers to accrue the said benefits but at the same time disable them to derive the potential benefits what a synergistic production system integrating a number of economic activities can provide (Taylor, 1994). A synergistic production system fosters complementary and supplementary effects of a production system, thereby facilitates realization of much higher net aggregate output. In case of small and marginal farmers, it becomes therefore important particularly to go for farm diversification as it enables the farmers to maximize resource use efficiency through multipurpose use of land, labour, capital including time and using part of the end product of one enterprise as the input of other. Livelihood enhancement of small and marginal farmers through plantation crops Coupled with the fact that globally India ranks third in the production and fourth in the consumption of rubber, it creates a huge market for investors. Rubber and bamboo are among the most important agricultural produces which can attract a lot of investment in North Eastern region. Tripura is the chief rubber producing state in North East and is the second rubber capital of India, Kerala being the first as designated by the Rubber Board of India. The other rubber producing states in the region are Assam and Mizoram. The North Eastern states also produce a substantial percentage of bamboo, accounting for 65 percent of India s production value and 20 percent of the global production value. Mizoram alone contributes to around 40 percent of the country s bamboo production. It shows the immense potential for the small and marginal farmers of the region to take up plantation based farming enterprises and integrating those to their mainstream cultivation practices to enhance the return to per unit investment. Horticulture based agro-processing industries The North Eastern region has immense potential in producing a wide variety of tropical, subtropical and temperate fruit crops. Due to poor connectivity of the region with the national markets, poor warehousing and insufficient storage facilities, a huge proportion of the fruits are wasted. The region s comparative advantages in producing fruits, vegetables and other horticulture crops can be tapped by setting up small-scale processing units for the local market which can also boost up rural employment. The KVKs in the region in assistance with the ICAR institutes, SAUs, CAU, Imphal and ATMA have endeavored into the process of popularizing small scale fruit processing, the end products being exhibited in the village, regional, even at national level fairs. Some of them are very popular and already made available in the local markets. This kind of set-up is economically viable and feasible to be initiated by the small and marginal farmers themselves at their level as a small processing unit requires little capital. The small and marginal farmers in the region produce quite a high volume of spices also, especially chili, ginger, large cardamom and mustard seeds. These can also be processed and marketed locally. In Arunachal Pradesh cultivation of horticulture produce may add to a new dimension of prosperity to its resource poor farmers as some of the high value, export quality temperate and sub-tropical fruit crops are highly suitable to be grown in the state. Mizoram accounts for around 12 percent of the total fruits produced in the North Eastern region, 98

102 therefore the possibilities of horticulture based agro processing industries are bright in the state. In Manipur, the state government has given special impetus to farming of pineapple, passion fruit and mushroom on larger scale. Structured initiatives throughout the region to grade, standardize and hygienic packaging of the horticultural produce will add to the export potential and thereby bring prosperity to the small and marginal farmers. Livestock based processing industries The tribal peasants in the region, being predominantly small to marginal generally go for livestock enterprises, the most common ones being piggery and poultry. But these enterprises hardly are maintained by them for commercial purposes. With proper processing, many of the livestock based enterprises look promising in the region and can be utmost profitable for the small and marginal farmers. In parts of Assam, Meghalaya and Tripura, there is ample scope for dairy processing industries. Fisheries being a highly adopted income generating enterprise in the region, may be taken care of for processing and value addition. Some of the processed fish products like fish pickle and dried fish are already produced in plenty in the region at household level, but organized production and marketing of the same, keeping in consideration the necessary hygiene is due till date. Imparting skills to the livestock owners in scientific management of their animals have already been initiated by the KVKs, ICAR institutes, ATMA, state department of animal husbandries in the region. Further exposure of them to the ICAR institutes like Indian Veterinary Research Institute, Izatnagar, Project Directorate on Poultry, Hyderabad, National Research Centre on Pig, Rani etc. in hygienic handling, processing and value addition to the livestock products will enhance their manageability, capacity and confidence to open up livestock based small scale processing industries. Conclusion In absence of a uniform land amalgamation policy throughout the country as well as the North Eastern region, contract farming may to be advocated under constant monitoring of a government deployed agency for resource use efficiency, secured income and employment generation for the small and marginal farmers. Public Private Partnership will play a significant role in this particular regard. However, the unresolved issue till date continues to be overcoming technological, infrastructural, institutional and policy constraints related to these. As alternative measures at individual level, switching over from low value to high value crops, diversification of enterprises and adoption of small scale income generating activities including processing units will help the small and marginal farmers to realize better profit from farm business. Another focus area may be large scale promotion of cut flower production and its marketing. Cut flower production is already popular in the state of Meghalaya. Its marketing requires special care and private initiatives. The marketing aspects are to be thoroughly addressed through setting up of cold storage and warehousing facilities throughout the region in adequate numbers, expert management of supply chains and value chains and this way linking the small and marginal farmers to the local and global markets. Some of the agro based industries like processing of spices, medicinal and herbal plants may also be taken care of given the vast potential of the region in producing those. It has to be remembered that small farm development is not only intended to liberate the small and marginal farmers from the poverty trap, but also to meet the country's growing demands for food. 99

103 References Anon. (2014). All India Report on Number and Area of Operation Holdings. Agricultural Census DAC, Ministry of Agriculture, GOI. Birthal, P.S., Jha, A.K., Tiongco, M.M. and Narrod, C. (2008). Improving farm to market linkages through contract farming: a case study of small holder dairying in India, IFPRI discussion paper Washington, D.C. Chand, R., Lakshmi Prasanna, P.A. and Singh, A. (2011). Farm size and productivity: understanding the strengths of smallholders and improving their livelihoods. Economic and Political Weekly, 46 (26 and 27). Taylor, Donald C. (1994). Agricultural diversification in South East Asia, paper presented at APO Meeting, January 18-23, Tokyo. 100

104 Entrepreneurship in Agriculture: Problems and prospects R. K. Talukdar Introduction The written history of agriculture in India dates back to the Rigveda, written about 1100 BC. The different hymns describes about ploughing, fallowing, irrigation, fruits, vegetables, animals etc. Cotton and Rice were cultivated in Indus valley-2500 years ago. About years ago, sesame, linseed, safflower, mustard, castor etc. were cultivated in India. Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and fisheries accounted for 13.7% of the GDP in 2013, about 50% of the total workforce. As Per the 2010 FAO world agriculture statistics, India is the world's largest producer of many fresh fruits and vegetables, milk, major spices, select fresh meats, select fibrous crops such as jute, several staples such as millets and castor oil seed. India is the second largest producer of wheat and rice, the world's major food staples. India ranked within the world's five largest producers of over 80% of agricultural produce items, including many cash crops such as coffee, tea and cotton, in India is also one of the world's five largest producers of livestock and poultry meat, with one of the fastest growth rates, as of Even then, the average income per acre per year is far behind USA as is seen from the table below. Agriculture economics comparison, Region Total farm land (acres) Annual rainfall, mm Average farm income (US$ per acre per year) India Grains, Horticulture, Cash Crops USA - San Joaquin, California Horticulture USA - Kansas Wheat, Corn, Oil Seeds 395 million million million It is not at all to say that India has not progressed as is clear from the table below- Agriculture productivity in India, growth in average yields from 1970 to 2010 Crop kilogram per hectare kilogram per hectare kilogram per hectare Rice

105 Wheat Pulses Oilseeds Sugarcane Tea Cotton Can we transform the huge demographical population (about 60 percent in agriculture in India) into efficient money spinner from Agriculture? Farmer as Entrepreneurs Time has come for the farmers to view their farm as a business- a means for earning profit rather than maintaining their belly. They need to take calculated risk to make their farm grow, so that money grows. This necessitates them to learn and study their own environment neighborhood farmers, suppliers of inputs, traders, transporters, processors, bankers, labour availability, the value chain etc. But above all, farmers need to be technically sound, innovative, hardworking, planner to overcome the various challenges of social and economic barriers, management capabilities, financial responsibility etc. Smallholder farmers usually farm for one of fourreasons: 1. Exclusively for home consumption with rarely anysurpluses produced 2. Mostly for home consumption, but with the intention ofselling surpluses on the market; 3. Partly for the market and partly for home consumption 4. Exclusively for the market This is a hard bargain, feed one s stomach and at the same time producing for the market. However, there is an increasing understanding that future of small scale farmers is bleak unless they become more entrepreneurial but this also poses challenge to them. They have to constantly look towards opportunities, better ways of doing things in more profitable ways. An individual farmer entrepreneur s environment consists of i. Input suppliers, ii. Government s policies etc., iii. Financial agencies, iv. Competitors v. Technology support vi. Extension workers vii. Market viii. Agents 102

106 ix. Commercial service providers And all these functions within the larger domain of Uncertainty, Weather, Economy, Social Environment and Political Environment. Group Entrepreneurs: Group entrepreneurship among farmers having similar goals, technology and opportunity can be a reality. They need to share risks and benefit together. The group is the risk taker, investor, employee and manager. Extension Support for Entrepreneurship Development Extension agencies can help a lot for converting the farmers into Entrepreneurs by providing necessary training, helping accessing finance and marketing, networking and by creating a culture. i. Training and Extension support The agency need to support the farmers before, during and after the training for development of entrepreneurship depending on individuals learning capacity, resource constraints, time availability, technical skills etc. ii. Access to finance and market Facilitating linkages with financial institutions, buyers, and suppliers should also be looked and guided. iii. Supporting partnership and networking Partnership of farmers with others in the value chain and net working with other agencies goes a long way in this effort. Many times, this aspect is overlooked by entrepreneurs and the extension agency need to inculcate in them that today s success depends on effective networking. iv. Creating a culture of entrepreneurship: Helping to develop a common vision amongst the stakeholders in the value chain can also be taken up by the extension agency for developing entrepreneurship. Entrepreneurs need to have: i. Skill in searching for market and development of market ii. Skill for setting price iii. Skill for searching for sources of money iv. Banking skill v. Skill for tracking money vi. Communication skill (dealing with customers, partners, financiers, suppliers, dealers etc.) vii. Time utilization skill viii. Observation of rules, regulations and maintaining ethics ix. Managing workplace 103

107 Challenges in Agribusiness x. A plan for business-dynamic There is a growing awareness and understanding amongst the consumers that food needs to improve health and protect one s life against all odds of nature for maintaining longevity. Land has become gold as the pressure on land for increased production is becoming more prominent. According to a FAO report production could be doubled by realizing 70% of this increase from the technology, 10% by increasing the intensity of agricultural cycles in the same area and the remaining 20%, from new agricultural areas. The population grows in proportion to of 4 new births per second. We will be 9 billion very soon, we already are 7 billion. The quality of raw materials- the farm produce are being perceived as most important by different stakeholders in the value chain. The fifth challenge, the innovation, the adoption and the management of technology with lot of alternatives. The population in agriculture decreasing day by day because of opportunities in other areas. It is difficult to comprehend which segment of the population will stick to agriculture in the next 10 years. Agribusiness without marketing is just agriculture, so need to keep market in first place amongst all the stakeholders. Few Opportunities India has the world s largest livestock population of 500 M heads representing about 17% of the global total. There are 204 M cattle, 84 million buffaloes and about 200 M sheep and goats. Among the livestock, development of cattle for milk production can be a sustainable economic activity in rural areas. The present annual production of 76 M tons to has to increase to 150 M tons in the next 20 years. The average milk yield of cattle in India is only 987 kg as compared to the world's average of 2380 kg/lactation. With breed improvement, better feeding and health care, it is possible to improve the production of the existing cattle and substitute with high yielding stocks. Fisheries, Vegetables, Fruits, Poultry and cereals equally provides ample opportunity for the farmers in North East region. 104

108 Entrepreneurial Venture and the Agri-Business Plan Rajkumar Josmee Singh Introduction Planning is essential to the success of any understanding. Planning entails the formulation of goals and directions for the future of a venture. A number of critical factors must be addressed when planning. 1. Realistic goals. These must be specific, measurable, and set within the time parameters. 2. Commitment. The venture must be supported by all involved-family, partners, employees, team members. 3. Milestones. Sub-goals must be sets for continual and timely evaluation of progress. 4. Flexibility. Obstacles must be anticipated, and alternative strategies must be formulated. The comprehensive business plan, which should be the result of meetings and reflection on the direction of the new venture, is the major tool for determining the essential operation of a venture. It also is the primary document for managing the venture. One of the major benefits of this plan is that it helps the enterprise avoid common pitfalls that often undo all previous efforts. The following section describes these pitfalls. PITFALLS TO AVOID IN PLANNING A number of pitfalls in the business plan process should be avoided. The five pitfalls presented in the section represent the most common errors committed by entrepreneurs. To make these danger areas more easily recognizable, certain indicators or warning signs are presented. Each pitfall then has a possible solution introduced that will help entrepreneurs avoid the particular trap that limits a new venture s opportunity to succeed. Pitfall 1. No Realistic Goals Although the pitfall may sound self-explanatory, the following indicators demonstrate how common and well disguised it can be: lack of any attainable goals, lack of a time frame to accomplish things, lack of priorities, and lack of action steps. One way to avoid pitfall is to set up a timetable with specific steps to be accomplished during a specific period. Pitfall 2. Failure to Anticipate Roadblocks One of the most common pitfalls occurs when the entrepreneur is so immersed in his or her idea that objectivity goes out the window. In other words, the person does not recognize the possible problems that may arise. Indicators are no recognition of future problems, no admission of possible flaws or weakness in the plan, and no contingency or alternative plans. The best way to avoid this pitfall is to list (1) the possible obstacles that may arise and (2) the alternatives that state what might have to be done to overcome the obstacles. Pitfall 3. No commitment or Dedication 105

109 Too many entrepreneurs appear to lack real commitment to their ventures. Although ventures may have started from a hobby or part-time endeavor, entrepreneurs must be careful to avoid the impression they do not take their ventures seriously. Indicators are excessive procrastination, missed appointments, no desire to invest personal money, and appearance of making a last buck from a hobby or whim. The easiest way to avoid this pitfall is to act quickly and to be sure to follow up all professional appointments. Also, be ready and willing to demonstrate a financial commitment to the venture. Pitfall 4: Lack of Demonstrated Experience (Business or Technical) Since many investors weigh very heavily the entrepreneur s actual experience in a venture, it is important that entrepreneurs demonstrate what background they possess. Because too many beginners attempt to promote ideas they really have no true knowledge of they are doomed to fail simply because they are perceived as ignorant of the specifics in the proposed business. Indicators are no experience in business, no experience in the specific area of the venture, lack of understanding of the industry in which the venture fits, and failure to convey a clear picture of how and why the venture will work and who will accept it. To avoid this pitfall, entrepreneurs need to give evidence of personal experience and background for this venture, if they lack specific knowledge or skills, they should obtain assistance from those who possess this knowledge or these skills. Demonstrating a team concept about those who will be helping out also may be useful. Pitfall 5: No market Niche (Segment) Many entrepreneurs propose an idea without establishing who the potential customers will be. Just because the entrepreneur like the product or service does not mean others will buy it. Numerous inventions at the U.S. Patent Office never reached the marketplace because no customers were targeted to buy them-no market was ever established. Indicators are uncertainty about who will buy the basic idea(s) behind the venture, no proof of a need or desire for the good or product proposed, and assumption that customers or clients will purchase just because the entrepreneur thinks so. The best possible way to avoid this pitfall is to have market segment specially targeted and to demonstrate why and how the specific product or service will meet the needs or desires of this target group. The five pitfalls detailed here present the most common points of failure entrepreneurs experience before their business plan ever gets reviewed. In other words, these critical areas must be carefully addressed before developing a business plan. If these pitfalls can be avoided, then the entire business plan will be written more carefully and thus will be reviewed more thoroughly. This preparation helps entrepreneurs establish a solid foundation on which to develop an effective business plan. What is a business plan? A business plan is the written document that details the proposed venture. It must describe current status expected needs, and projected results of the new business. Every aspect of the venture needs to be covered: the project, marketing, research and development, manufacturing, management, critical risks, financing, and milestones or a timetable. A description of all of these facets of the 106

110 proposed venture is necessary to demonstrate a clear picture of what that venture is, where it is projected to go, and how the entrepreneur proposes it will get there. The business plan is the entrepreneur s roadmap for a successful enterprise. In some professional areas the business plan is referred to as a volume plan, a loan proposal, or an investment prospectus. Whatever the name, the business plan is the minimum document required by any financial source. The business plan allows the entrepreneur entrance into the investment process. Although it should be used as a working document once the venture is established, the major thrust of the business plan is to encapsulate the strategic development of the project in a comprehensive document for outside investors to read and understand. The business plan describes to investors and financial sources all of the events that may affect the proposed venture. Details are needed for various projected actions of the ventures, with associated revenues and costs outlined. It is vital to explicitly state the assumption on which the plan is based. For example, increases/decreases in the market or upswings/downswings in the economy during the start-up period of the new venture should be stated. The emphasis of the business plan always should be the final implementation of the venture. In other words, it s not just the writing of an effective plan that is important but also the translation of that plan into a successful enterprise. Benefits of a business plan? The entire business planning process forces the entrepreneur to analyse all aspects of the venture and to prepare an effective strategy to deal with the uncertainties that arise. Thus a business plan may help an entrepreneur avoid a project doomed to failure. As one researcher state, If your proposed venture is marginal at best, the business plan will show why and may help you avoid playing the high tuition of business failure. If is far cheaper not to begin an ill-fated business than to learn by experience you re your business plan could have taught you at a cost of several hours of concentrated work. It is important that entrepreneurs prepare their own business plan. If an entrepreneurial team is involved, then all of the key members should be part of writing the plan; in this case it is important that the lead entrepreneur understand the contribution of each team member. If consultants are sought to help prepare a business plan, the entrepreneur must remain the driving force behind the plan. Seeking the advice and assistance of outside professionals is always wise, but entrepreneurs need to understand every aspect of the business plan, since it is they who come under the scrutiny of financial sources. Thus the business plan stands as the entrepreneur s description and prediction and prediction for his or her venture, and it must be defended by the entrepreneur-simply put, it is the entrepreneur s responsibility. Other benefits are derived from a business plan for both the entrepreneur and the financial sources that read it and evaluate the venture. Specifically for the entrepreneur, the following benefits are gained. The time, effort, research, and discipline needed to put together a formal business plan force the entrepreneur to view the venture critically and objectively. 107

111 The competitive, economic, and financial analyze included in the business plan subject to entrepreneur to close scrutiny of his or her assumptions about the venture s success. Since all aspects of the business venture must be addressed in the plan, the entrepreneur develops and examines operating strategies and expected results for outside evaluators. The business plan quantifies objectives, providing measurable benchmarks for comparing forecast with actual results. The completed business plan provides the entrepreneur with a communication tool for outside financial sources as well as an operational tool for guiding the venture toward success. The financial sources that read the plan derive the following benefits from the business plan: The business plan provides for financial sources the details of the market potential and plans for securing a share of that market. Through prospective financial statements, the business plan illustrates the venture s ability to service debt or provide an adequate return on equity. The plan indentifies critical risks and crucial events with a discussion of contingency plans that provide opportunity for the venture s success. By providing a comprehensive overview of the entire operation, the business plan gives financial sources a clear, concise document that contains the necessary information for a thorough business and financial evaluation. For a financial source with no prior knowledge of the entrepreneur or the venture, the business plan gives financial sources a clear, concise document that contains the necessary information for a thorough business and financial evolution. For a financial source with no prior knowledge of the entrepreneur or the venture, the business plan provides a useful guide for assessing the individual entrepreneur s planning and managerial ability. Developing A Well-Conceived Business Plan Most investors agree that only a well-conceived and well-developed business plan can gather the necessary support that will eventually lead to financing. The business plan must describe the new venture with excitement and yet with complete accuracy. # Who Reads the Plan? It is important to understand the audience for whom the business plan is written. Although numerous professionals may be involved with reading the business plan, such as venture capitalists, bankers, investors, potential large customers, lawyers, consultants, and suppliers, entrepreneurs need to clearly understand three main viewpoints with preparing the plan. The first viewpoint is, of course, the entrepreneur s, since he or she is the one developing the venture and clearly has the most in-depth knowledge of the technology or creativity involved. This is the most common viewpoint in business plans and it is essential. However, too many plans emphasize this viewpoint and neglect the viewpoints of potential customers and investors. 108

112 More important than high technology or creative flair is the marketability of a new venture. Referred to and market-driven, this type of enterprise convincingly demonstrates the benefits to users-the particular group of customers it is aiming for-and the existence of a substantial market. This viewpoint-that of the marketplace-is the second critical emphasis that an entrepreneur must incorporate into a business plan. Yet although the actual value of this information is considered high, too many entrepreneurs tend to deemphasize in-depth marketing information in their business plans. Establishing an actual market (determining who will buy the product or use the service) and documenting that the anticipated percentage of this market is appropriate for the venture s success are valuable criteria for the business plan. The third viewpoint is related to the marketing emphasis just discussed. The investor s point of view is concentrated on the financial forecast. Sound financial projections are necessary if investors are to evaluate the worth of their investment. This is not to say an entrepreneur should fill the business plan with spreadsheets of figures. In fact, many venture capital firms employ a projection discount factor, which merely represents the belief of venture capitalists that successful new ventures usually reach approximately 50 percent of their projected financial goals. However, a three-to five-year financial projection is essential for investors to use in making their judgment of a venture s future success. These three viewpoints have been presented in an order of decreasing significance to point out the emphasis needed in a well-conceived business plan. If they are addressed carefully in the plan, then the entrepreneur has prepared for what experts term the five-minute reading. The following six steps represent the typical business plan reading process many venture capitalists use (less than one minute is devoted to each step): Step 1: Determine the characteristics of the venture and its industry. Step 2: Determine the financial structure of the plan (amount of debt or equity investment required). Step 3: Read the latest balance sheet (to determine liquidity, net worth, and debt/equity). Step 4: Determine the quality of entrepreneurs in the venture (sometimes the most important step). Step 5: Establish the unique feature in this venture (find out what is different). Step 6: Read the entire plan over lightly (this is when the entire package is paged through for a causal look at graphs, charts, exhibits, and other plan components). These steps provide insights into how the average business plan is read. It appears somewhat unjust that so much of the entrepreneur s effort is put into a plan that is given only a five-minute reading. However, that s the nature of the process for many venture capitalists. Other financial or professional sources may devote more time to analyzing the plan. But keep in mind that venture capitalists read through numerous business plan; thus, knowing the steps in their reading process is valuable for developing any plan. Related to the process of venture capitalists is this updated version of an old quote that links entrepreneurs and venture capitalists: The people who manage people manage people who manage things, but the people who manage money manage the people who manage people. 109

113 # Putting the Package Together When presenting a business plan to potential investors, the entrepreneur must realize that the entire package is important. Presented next is a summary of key issues that the entrepreneur need to watch for if the plan is going to be viewed successfully. A business plan gives finances their first impression of a company and its principles. Potential investors expect the plan to look good, but not too good; to be the right length; to dearly and concisely explain early on all aspects of the company s business; and not to contain bad grammar and typographical or spelling errors. Investors are looking for evidence that the principles treat their own properly with care-and will likewise treat the investment carefully. In other words, from as well as content is important, and investors know that good form reflects good content and vice versa. Among the format issues we think most important are the following: Appearance The binding and printing must not be sloppy; neither should the presentation be too lavish. A stapled compilation of photocopied pages usually looks amateurish, while bookbinding with typeset pages may arouse concern about excessive and inappropriate spending. A plastic spiral binding holding together a pair of cover sheets of a single color provides both a neat appearance and sufficient strength to withstand the handling of a number of people without damage. Length A business plan should be no more than 50 pages long. The first draft will likely exceed that, but editing should produce a final version that fits within the 40-pages ideal. Adherence to this length forces entrepreneurs to sharpen their ideas and results in a document likely to hold investors attention. Background details can be included in an additional volume. Entrepreneurs can make this material available to investors during the investigative period after the initial expression of interest. The Cover and Title Page The cover should bear the name of the company, its address and phone number, and the month and year in which the plan is issued. Surprisingly, a large number of business plans are submitted to potential investors without return addresses or phone numbers. An interested investor wants to be able to contact easily and to request further information or express and interest, either in the company or in some aspect of the plan. Inside the front cover should be a well-designed title page on which the cover information is repeated and, in an upper or a lower corner, the legend Copy number provided. Besides helping entrepreneurs keep track of plans in circulation, holding down the number of copies outstandingusually to no more than 20-has a psychological advantage. After all, no investor likes to think that the prospective investment is shopworn. The Executive Summary The two to three pages immediately following the title page should concisely explain the company s current status, its products or services, the benefits to customers, the financial forecasts, the venture s objectives in three to seven years, the amount of financing needed, and how investors will benefit. 110

114 This is tall order for a two-page summary, but it will either sell investors on reading the rest of the plan or convince them to forget the whole thing. The table of Contents After the executive summary, include a well-designed table of contents, list each of the business plan s sections and mark the pages for each section. An attraction appearance, an effective length, an executive summary, a table of contents, proper grammar, correct typing and a cover page all are important factors when putting together a complete package. These points many times separate successful plans from unacceptable ones. # Guidelines to Remember The following points are a collection of recommendations by experts in venture capital and newventure development. These guidelines are presented as tips for successful business plan development. Entrepreneurs need to adhere to them in order to understand the importance of the various segments of a business plan they are creating, which will be discussed in the next section. Keep the Plan Respectably Short Readers of business plans are important people who refuse to waste time. Therefore entrepreneurs should explain the venture not only carefully and clearly but also concisely. Organize and Package the Plan Appropriately A table of contents, an executive summary, an appendix, exhibits, graphs, proper grammar, a logical arrangement of segments, and overall neatness are elements critical to the effective presentation of a business plan. Orient the Plan toward the Future Entrepreneurs should attempt to create an air of excitement in the plan by developing trends and forecasts that describe what the venture intends to do and what the opportunities are for the use of the product or service. Avoid Exaggeration Sales potentials, revenue estimates, and the venture s potential growth should not be inflated. Many times a best-case, and probable-case scenario should be developed for the plan. Documentation and research are vital to the plan s credibility. Highlight Critical Risks The critical-risks segment of the business plan is important in that it demonstrates the entrepreneur s ability to analyse potential problems and develop alternative course and action. Give evidence of an Effective Entrepreneurial Team The management segment of the business plan should clearly identify the skills of each key person as well as demonstrate how all such people can effectively work together as a team in managing the venture. Do not Overdiversify 111

115 Focus the attention of the plan on one main opportunity for the venture. A new business should not attempt to create multiple markets or pursue multiple ventures until it has successfully developed one main strength. Identify the Target Market Substantiate the marketability of the venture s product or service by identifying the particular customer niche being sought. This segment of the business plan is pivotal to the success of the other parts. Market research has to be included to demonstrate how this market segment has been identified. Keep the Plan written in Third Person Rather than continually stating I, we, or us, the entrepreneur should phrase everything as he, she, they, or them. In other words, avoid personalizing the plan, and keep the writing objective. Capture the Reader s Interest Because of the numerous business plans submitted to investors and the small percentage of business plans funded, entrepreneurs need to capture the reader s interest right away by stating the uniqueness of the venture. Use the title page and executive summary as key tools for capturing the reader s attention and creating a desire to read more. These guidelines are helpful to entrepreneurs preparing to write a business plan. The following section analyses the ten major segments of business plan. Elements of a Business Plan A detailed business plan usually has ten sections. The ideal length of a plan is 50 pages, although depending on the need for detail, the overall plan can range from 25 to more than 50 pages if an appendix is included. Table 1 provides an outline of a typical Agri-Business Plan. Table 1. Complete outline of an Agri-Business Plan. Section I Section II Executive Summary Business Description A. General description of the business B. Industry background C. Goals and potential of the business and milestone (if any) D. Uniqueness of product or service Section III Marketing A. Research and analysis 1. Target market (customers) identified 112

116 2. Market size and trends 3. Competition 4. Estimated market share B. Marketing plan 1. Market strategy-sales and distribution 2. Pricing 3. Advertising and promotions Section IV Operations A. Identify location 1. Advantages 2. Zoning 3. Taxes B. Proximity to supplies C. Access to transportation Section V Management A. Management team key personnel B. Legal structure stock agreements, employment agreements, ownership C. Board of directors, advisors, consultants. Section VI Financial A. Financial forecast 1. Profit and loss 2. Cash flow 3. Break-even analysis 4. Cost controls 5. Budgeting plans Section VII Critical Risks A. Potential problems B. Obstacles and risks C. Alternative courses of action Section VIII Harvest Strategy 113

117 A. Transfer of asset B. Continuity of business strategy C. Identify successor Section IX Milestone Schedule A. Timing and objectives B. Deadlines and milestones C. Relationship of events Section X Appendix or Bibliography # Executive summary Many people who read business plans (bankers, venture capitalists, investors) like to see a summary of the plan that features its most important parts. Such a summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than two to three pages. The summary should be written only after the entire business plan has been completed. In this way particular phrases or descriptions from each segment can be identified for inclusion in the summary. Since the summary is the first, and sometimes the only, part of a plan read, it must present the quality of the entire report. The summary must be a clever snapshot of the complete plan. The statements selected for a summary segment should briefly touch on the venture itself, the market opportunities, the financial needs and projections, and any special research or technology associated with the venture. And this should be done in such a way that the evaluator or investor will choose to read on. If this information is not presented in a concise, competent manner, the reader may put aside the plan or simply conclude the project does not warrant funding. # Business Description First, the name of the venture should be identified, with any special significance related (for example, family name, technical name). Second, the industry background should be presented in terms of current status and future trends. It is important to note any special industry developments that may affect the plan. If the company has an existing business or franchise, this is the appropriate place to discuss it. Third, the new venture should be thoroughly described along with its proposed potential. All key terms should be defined and make comprehensible. Functional specifications or descriptions should be provided. Drawings and photographs also may be included. Fourth, the potential advantages the new venture possesses over the competition should be discussed at length. This discussion may include patents, copyrights, and trademarks, as well as special technological or market advantages. # Marketing Segment In the marketing segment of the plan the entrepreneur must convince investors that a market exists, that sales projections can be achieved, and that the competition can be beaten. 114

118 This part of the plan is often one of the most difficult to prepare. It is also one of the most critical because almost all subsequent sections of the plan depend on the sales estimates developed here. The projected sales levels, based on the market research and analysis, directly influence the size of the manufacturing operation, the marketing plan, and the amount of debt and equity capital required. Most entrepreneurs have difficulty preparing and presenting market research and analyses that will convince investors the venture s sales estimates are accurate and attainable. The following are aspects of marketing that should be addressed when developing a comprehensive exposition of the market. Market Niche and Market Share A market niche is a homogenous group with common characteristics that is, all the people who have a need for the newly proposed product or service. In developing this niche, the writer should address the bases of customer purchase decisions: price, quality, service, personal contacts, or some combination of these factors. Next, a list of potential customers who have expressed interest in the product or service, together with an explanation for their interest, should be included. If it is an existing business, the current principal customers should be identified and the sales trend should be discussed. It is important to describe the overall potential of the market. Sales projections should be made for at least three years, and the major factors affecting market growth (industry trends, socioeconomic trends, governmental policy and population shifts) should be discussed. A review of previous market trends should be included, and any differences between past and projected annual growth rates should be explained. The sources of all data and methods used to make projections should be indicated. Then, if any major customers are willing to make purchase commitments, they should be identified, and the extent of those commitments should be indicated. On the basis of the product or service advantages, the market size and trends, the customers, and the sales trends in prior years, the writer should estimate market share and sales in units and dollars for each of the next three years. The growth of the company s sales and its estimated market share should be related to the growth of the industry and the customer base. Competitive Analysis The entrepreneur should make an attempt to assess the strengths and weaknesses of the competing products or services. Any sources used to evaluate the competition should be cited. This discussion should compare competing products or serviced on the basis of price, performance, service, warranties, and other pertinent features. It should include a short discussion of the current advantages and disadvantages of competing products and services and why they are not meeting customer needs. Any knowledge of competitors actions that could lead to new or improved products and an advantageous position also should be presented. Finally, a review of competing companies should be included. Each competitor s share of the market, sales, and distribution and production capabilities should be discussed. Attention should be focused on profitability and the profit trend of each competitor. Who is the pricing leader? Who is 115

119 the quality leader? Who is gaining? Who is losing? Have any companies entered or dropped out of the market in recent year? Marketing Strategy The general marketing philosophy and approach of the company should be outlined in the marketing strategy. These should be developed from market research and evaluation data and should include a discussion of (1) the kinds of customer groups to be targeted by the initial intensive selling effort; (2) the customer groups to be targeted for later selling efforts; (3) methods of identifying and contacting potential customers in these groups; (4) the features of the product or service (quality, price, delivery, warranty, and so on) to be emphasized to generate sales; and (5) any innovative or unusual marketing concepts that will enhance customer acceptance (for example, leasing where only sales were previously attempted). This section also should indicate whether the product or service will initially be introduced nationally or regionally. Consideration also should be given to any seasonal trends and what can be done to promote contra-seasonal sales. Pricing Policy The price must be right in order to penetrate the market, maintain a market position, and produce profits. In this discussion a number of pricing strategies should be examined, and then one should be convincingly presented. This pricing policy should be compared with the policies of the major competitors. The gross profit margin between manufacturing and final sales costs should be discussed, and consideration should be given as to whether this margin is large enough to allow for distribution, sales, warranty, and service expenses; for amortization of development and equipment costs; and for profit. Attention also should be given to justifying any price increases over competitive items on the basis of newness, quality, warranty, or service. Advertising Plan For manufactured products, the preparation of product sheets and promotional literature, the plans for trade show participation, trade magazine advertisements, and direct mailings; and the use of advertising agencies should be presented. For products and services in general, a discussion of the advertising and promotional campaign contemplated to introduce the product and the kind of sales aids to be provided to dealers should be included. Additionally, the schedule and cost of promotion and advertising should be presented and if advertising will be as significant part of the expenses, and exhibit showing how and when these costs will be incurred should be included. These five subsets of the marketing segment are needed to detail the overall marketing plan, which should describe what is to be done, how it will be done, and who will do it. Research, Design and Development Segment (Applicable only if R&D is involved) The extent of any research, design, and development in regard to cost, time, and special testing should be covered in this segment. Investors need to know the status of the project in terms of prototypes, lab tests, and schedule delays. 116

120 In order to have a comprehensive section, the entrepreneur should have (or seek out) technical assistance in preparing a detailed discussion. Blueprints, sketches, drawings, and models are often important. It is equally important to identify the design or development work that still needs to be done and to discuss possible difficulties or risks that may delay or alter the project. In this regard, a developmental budge that shows the costs associated with labour, materials consulting, research, design, and the like should be constructed and presented. # Operational Segment This segment always should begin by describing the location of the new venture. The chosen site should be appropriate in terms of labour availability, wage rate, proximity to supplier and customers, and community support. In addition, local taxes and zoning requirements should be out, and the support of area banks for new ventures should be touched on. Specific needs should be discussed in terms of the facilities required to handle the new venture (plant, warehouse storage, and offices) and the equipment that needs to be acquired (special tooling, machinery, computers and vehicles). Other factors that might b e considered are the suppliers (number and proximity) and the transportation costs involved in shipping materials. Also, the labour supply, wage rates, and needed skilled position should be presented. Finally, the cost data associated with any of the operation factors should be presented. The financial information used here can be applied later to the financial projections. # Management Segment This segment identifies the key personnel, their positions and responsibilities, and the career experiences that quality them for those particular roles. Complete resumes should e provided for each member of the management team. Also, this section is where the entrepreneur s role in the venture should be clearly outlined. Finally, any advisors, consultants, or members of the board should be identified and discussed. The structure of payment and ownership (stock agreements, consulting fees, and so on) should be described clearly in this section. In summary, the discussion should be sufficient so that investors can understand each of the following critical factors that have been presented: (1) organizational structure, (2) management team and critical personnel; (3) experience and technical capabilities of the personnel, (4) ownership structure and compensation agreements, and (5) board of directors and outside consultants and advisors. # Financial Segment The financial segment of a business plan must demonstrate the potential viability of the undertaking in this part of the plan, three basic financial statements must be presented; the pro forma balance sheet, the income statement, and the cash-flow statement. The Pro Forma Balance Sheet 117

121 Pro forma means projected, as opposed to actual. The pro forma balance sheet projects what the financial condition of the venture will be at a particular point in time. Pro forma balance sheets should be prepared at start-up, semiannually for the first years, and at the end of each of the first three years. The balance sheet details the assets required to support the projected level of operations and show how these assets are to be financed (liabilities and equity). Investors will want to look at the projected balance sheets to determine if debt/equity ratios, working capital, current ratios, inventory turnover, and so on are within the acceptable limits required to justify the future financings projected for the venture. The Income Statement The income statement illustrates the projected operating results based on profit and loss. The sales forecast, which was developed in the marketing segment, is essential to this document. Once the sales forecast (earning projection) is in place, production costs must be budgeted based on the level of activity needed to support the projected earnings. The materials, labour, service, and manufacturing overhead (fixed and variable) must be considered, in addition to such expenses as distribution, storage, advertising, discounts, and administrative and general expenses salaries, legal and accounting, rent, utilities and telephone. The Cash-Flow Statement In new-venture creation, the cash-flow statement may be the most important document because it sets forth the amount and timing of expected cash inflows and outflows. This section of the business plan should be carefully constructed. Given a level of projected sales and capital expenditures over a specific period, the cash-flow forecast will highlight the need for and the timing of additional financing and will indicate peak requirements for working capital. Management must decide how this additional financing is to be obtained, on what terms, and how it is to be repaid. The total amount of needed financing may be supplied from several sources: part by equity financing part by bank loans, and the balance by shortterm lines of credit from banks. This information becomes part of the final cash-flow forecast. A detailed cash flow, if understood properly, can direct the entrepreneur s attention to operating problems before serious cash crises arise. In the financial segment it is important to mention any assumptions used for preparing the figures. Nothing should be taken for granted. Also, it should include how the statements were prepared (by a professional CPA or by the entrepreneur) and who will be in charge of managing the business s finances. The final document that should be included in the financial segment is a break-even chart, which shows the level of sales (and production) needed to cover all costs. This includes costs that vary with the production level (manufacturing labour, materials, sales) and costs that do not change with production (rent, interest charge, executive salaries). # Critical-Risks Segment 118

122 In this segment potential risks such as the following should be identified: effect of unfavourable trends in the industry, design or manufacturing costs that have gone over estimates, difficulties of long lead times encountered when purchasing part so materials, and unplanned for new competition. # Harvest Strategy Segment Very business plan should provide insights into the future harvest strategy. It is important for the entrepreneur to plan the orderly transition of the venture as it grows and develops. This section needs to deal with such issues as management succession and investor exist strategies. In addition, some thought should be given to change management that is, the orderly transfer of the company assets if ownership of the business changes; continuity of the business strategy during the transition; and designation of key individuals to run the business if the current management team changes. With foresight, entrepreneurs can keep their dreams alive, ensure the security of their investors, and usually strengthen their businesses in the process. For this reason, a harvest strategy for this business is essential. # Milestone Schedule Segment The milestone schedule segment provides investors with a timetable for the various activities to be accomplished. It is important to show that realistic time frames have been planned and that the interrelationship of events within these time boundaries is understood. Milestone scheduling is a step-by-step approach to illustrating accomplishments in a piecemeal fashion. These milestones can be established within any appropriate time frame, such as quarterly, monthly, or weekly. It is important, however, to coordinate the time frame not only with such early activities as product design and development, sales projections, establishment of the management team, production and operations scheduling and market planning but with other activities as well: Incorporation of the venture Completion of design and development Completion of prototypes Hiring of sales representatives Product display at trade shows Signing up distributions and dealers Ordering production quantities of materials Receipt of first orders First sales and first deliveries (dates of maximum interest because they relate directly to the venture s credibility and need to capital) Payment of first accounts receivable (cash in) These items are the types of activities to be included in the milestones schedule segment. The more detailed the schedule, the more likely the entrepreneur will persuade potential investors that he or she has thought things out and is therefore a good risk. # Appendix and/or Bibliographical Segment 119

123 The final segment is not mandatory, but it allows for additional documentation that is not appropriate in the main parts of the plan. Diagrams, blueprints, financial data, vitae of management team members, and any bibliographical information that supports the other segments of the plan are all examples of material that can be included. It is up to the entrepreneur to decide which, if any, items to put into this segment. However, the material should be limited to relevant and supporting information. Presentation of the Business Plan Once a business plan is prepared, the next major challenge is presenting the plan to either a single financial person or, in some parts of the country, a forum where numerous financial investors have gathered. In any situation the oral presentation is a key step in selling the business plan to potential investors. The presentation should be organized, well prepared, interesting, and flexible. Entrepreneurs should develop an outline of the significant highlights that will capture the audience s interest. Although the outline should be followed, they also must feel free to add or remove certain bits of information as the presentation progresses-a memorized presentation lacks excitement, energy, and interest. # Suggestion for Preparation The following steps in preparing an oral presentation are suggested for entrepreneurs: 1. Know the outline thoroughly. 2. Use key words in the outline that help recall examples, visual aids, or other details. 3. Rehearse the presentation in order to get the feel of its length. 4. Be familiar with any equipment to be used in the presentation such as an overhead projectors etc. 5. The day before, practice the complete presentation using all visual aids and equipment. 6. The day of the presentation, arrive early in order to set up, test any equipment, and organize notes and visual aids. # What to Expect Entrepreneurs should realize that the audience reviewing their business plan is antagonistic. The venture capital sources pressure them in order to test their venture as well as the entrepreneurs. Thus, entrepreneurs must expect to prepare for a critical, sometimes skeptical audience of financial sources. References Donald f. Kuratko and Arnold Cirting, Developing a Business Plan for Your Clients, National Public Accountant (January 1990): Fred L Fry and Charles R. Stoner, Business Plans: Two Major Types, Journal of Small Business Management (January 1985): 1-6. Joseph R. Mancuso, How to Write a Winning Business Plan (Englewood Cliffs, NJ: Prentice-Hall, 1985),

124 Extension Strategies for Agri-Business Potential R. Bordoloi Introduction It is now a widely accepted fact that sustainable agricultural development is essential for overall economic progress. Agri Business includes all business enterprises that buy from or sell to farmers. The transaction may involve either a product, commodity or services. Given its range of agro-ecological setting with more than 120 million farmers, agriculture is faced with a great diversity of needs, opportunities and prospects. In the Current scenario of the North East we can see that most Agri Business farms are small. Probably, this characterization of the agribusiness industry is linked inseparably to the very atomistic nature of our total agricultural economy. Today, agriculture has become a commercial venture which is changed from subsistence level of farming to commercial farming, from supply driven to demand driven. The importance of secondary agriculture has also drawn attention to all nowadays. However, without appropriate Extension Strategies Agri-business Potential in this region cannot be harnessed to the optimal level. Nature of successful Agribusiness: Presently Agri-business has become not only competitive but complex as well. This is mainly due to changing taste and fashion of the consumers on the one hand, and introduction of substitute and cheaper and better competitive goods, on the other. The old dictum of produce and sells has changed overtime into produce only what customers want. In fact, knowing what customers want is never simple. Nevertheless, a farmer operator/farmer manager has to give proper thought to this consideration in order to make his business a successful one. The important requisites for success in a modern business are: i. Clean objectives: Fixing objectives is one of the most essential pre requisite for the success of business. The objectives set forth should be realistic and clearly defined. Objectives like short term, medium and long term should be well specified. All the business efforts should be directed to achieve the set objectives. In fact, objectives are destination points for an agribusiness. As a traveler must know his destination, similarly businessman also must be clear on objectives. ii. Planning: Planning is a pre-determined line of action. The accomplishment of objectives set, to a great extent, depends upon planning itself. It is said that it does not take time to do thing but it takes time to decide what and how to do. Planning is a proposal based on past experience and present trends for future actions. In other words, it is an analysis of a problem and finding out the solutions to solve them with reference to the objective of the farm. 121

125 iii. Sound organization : An organization is the art or science of building up systematical whole by a number of related parts. Just as human body is build up by various parts like heart, lever, brain, legs etc. similarly, organization of business is a harmonies combination of men, machine material, money management etc. so that all these could work jointly as one unit, i.e. business the agribusiness. Organization is, thus such a systematic combination of various related parts for achieving a defined objective in an effective manner. iv. Research : Today the agricultural production philosophy should be produce what the consumer want. Consumers behavior is influenced by variety of factors like cultural, social, personal and psychological factors. The businessman needs to know and appreciate these factors and then function accordingly. The knowledge of these factors is acquired through market research. Research is a systematic search for new knowledge. Market research enable a business in finding out new methods of production, improving the quality of product and developing new products as per the changing tastes and wants if the consumers. v. Finance: Finance is said to be the life-blood of business enterprise. It brings together the land, labour, machine and raw materials into production. Agribusiness should estimate its financial requirements adequately so that it may keep the business wheel on moving. Therefore, proper arrangements should be made for securing the required finance for the enterprise. vi. Adequate location, layout and size: The success of agribusiness depends to a great extent on the location. Where it is set up. Location of the business should be convenient from various points of view such as availability of required infrastructure facilities, availability of inputs like raw materials, skill labour, nearer to the market etc. Changing farms or changing farmers? Our academicians normally attempt to change the farm.it is often suggested to change the Plant Varieties, fertilizers, animal nutrition etc. In fact basic effort should be initiated to Change the farmers mindset first. Extension agents must know how to tell the farmers not simply what to tell. Agricultural Research/Agricultural Policy/Social Research---Extension Organization----- Extension Agent-----Farmer------Farm The above picture indicates a simplified picture of information flow in agricultural extension. There is also a flow of information from farmers to extension agents, the managers of extension organizations. Strategies and methods to reach different goals Nature of learning goal Strategy Preferred Methods Knowing(cognitive) Transfer of information(from outside) Publications and recommendations in mass 122

126 media, lectures, leaflet, directive dialogue) Attitudes(affective) Learning by experience(information from inside) Group discussions, nondirective dialogue, simulation, certain types of films Action/doing(psychomotoric) Exercises in skills Methods which encourages action: training, preparation by demonstration Challenges Ahead Produce more for increasing population To be competitive in open economy Balancing natural resources, equity and profitability Employment and livelihood Quality Standard Reducing nutritional malnutrition and under nourishment Harnessing the benefit of Plant-Animal and Fish Bio technology Options Diversification and optimum utilization of resources Knowledge based horticulture enterprise for technology led growth Creation of knowledge through relevant research Develop the pool of talented, motivated, creative, committed scientific manpower Convert weaknesses into opportunities Entrepreneaurship Development Efficient Business Management High Value crops/commodities Eco regional planning: Significant variations exist in the agro ecological as well as socio economic condition of the people in this area of the country. Ethnically people of this area emphasizes on food sovereignty rather than food security. Food sovereignty is the right of the people to define their own food and land policies which are socio economically and culturally found to be suitable in their unique environment. On the other hand food security ensures only physical availability of safe food So while planning for any agri-business, variations in agro ecological situations must be considered as well as farmers priorities and preferences should be given due importance in relation to their food habit. Convergence of Departments and agencies: Different ministries and Departments are involved in implementing their Entrepreneurship development programmes to fulfil the common objective of 123

127 efficient management of land, water, soil and other inputs for balanced development through community empowerment. Keeping in view the changing policies it is of paramount importance to bring about convergence, networking and harmonization in the planning and implementation of various projects related to Agri Business Development. Changing needs of farmers for support from Extension functionaries: Due to the rapid changes in technological innovations as well as at the advent of WTO farmers have to make different decisions than in the past. Some of the areas where they have to make decisions are- Which technology to use? Where is it available? How and when to change his farming system? How to mobilize the resources like land,labour and capital in a most profitable manner? Where and how to get credit and production inputs on time, place and at suitable rate? How to make collective decisions on optimal resource use through SHG and other farmers associations? Which product has a good demand in the market? How to cope up with risks and various uncertainties? Therefore the role of the Extension Agents is tremendous in fulfilling all the above information, in order to guide the farmers to reach their objectives. They should be regularly updated with all the required information. Creating awareness among the farmers: It is observed that there are a good number of potential farmers in the rural areas. However their ignorance about the latest agricultural development; market trend etc. hinders them to harness their potentialities. Awareness about the developed technology is one of the important strategies for technology adoption. Based on the analysis of the existing socio-economic situation of the farmers, awareness programmes need to be initiated in those areas where programmes are going to be implemented. This will lead to mental readiness of the target groups to accept the new technology. In the context of Agri Business Management awareness on issues like Plant health management, effect of climate change, water management, conservation of bio diversities,post harvest and value addition, marketing are very much important. While producing any crop/commodities both quality and demand are important aspects, which plays important role in market led extension. Some actions may be taken in this regard like awareness campaign, use of farm publication, individual contact with farmers etc. When farmers are aware about the Scope of Agriculture 124

128 as a noble profession than it becomes much easier for the developmental agencies to facilitate them. Efficient management: One of the reasons for failure of business often attributed to as their poor management or inefficient management. The same person, i.e. the proprietor may not be equally good in all areas of the business. Efficient businessman can make proper use of available resources for achieving the objectives set for the business. Management Skills must be inculcated to the agripreneaurs by means of training, exposure visits, interactive sessions etc. Cordial relations with the workers: Cordial relationship can ensure group dynamism. In an agribusiness organization, the farmer operator occupies a distinct place because he/she is the main living factor among all factors of production. In fact, it is the human factor who makes the use of other non-human factors like land, machine, money etc. Therefore, for successful operation of business, there should be cordial and harmonious relations maintained with the workers/labours to get their full cooperation in achieving business activities. Promotion of FIG, CIG,SHG : Emphasis should be given on formation and capacity building of various groups as it is proved that groups can act as strong vehicle. Small group meetings with Farmers Interest Groups (FIG), Self Help Groups (SHG) or other Farmers Organization (FO s) need to be conducted. This small group meetings help particularly in decision making of some members because group Psychology promotes behavioral change in favour of acceptance of desired change (new variety of crop, new breed of livestock, technological intervention etc.). Due to the involvement of like-minded farmers it helps in developing a favorable attitude and adoption of practices also become cost and time effective. Economic activities, marketing of products etc. becomes much easier through such approaches. Facilitating for financial and other assistance Farmers are mostly unaware about different schemes meant for them. On the other hand, those who are aware also may not approach to the concerned departments/agencies due to their hesitation for one or other reasons (fear psychosis, low education, risk factors, partial information etc.) So extension agents should facilitate their clients for spreading this information through farm and home visit, personal letter etc. At group level small group discussions may be organized. Information on various schemes/facilities like kisan credit card, crop insurance schemes, setting up of rural godowns, rain water harvesting, watershed management, soil and water testing etc. can also be disseminated through Radio and TV as in rural areas these mass media are widely spreaded nowadays. Other mass contact methods like farmer s fair, extension publication (in local languages) posters, local and national newspapers should also be properly used for dissemination of these information. Organizing Exposure visits: Exposure visits are helpful for motivating and convincing farmers towards the adoption of developed technology. This philosophy is based on the fact that by seeing farmers believe most and in this process more things are learned by self-experience and interaction with concerned persons or organizations. In exposure visit, a group of interested farmers are guided by an extension worker, 125

129 goes on tour to see and gain first hand knowledge about new farming enterprise/improved practices in their natural setting on research or demonstration farms of different institutions. Thus it helps in stimulating farmers towards action by convincing them on the particular technology and success factors. Krishi Vigyan Kendras should organise such visits towards various successful enterprises, so that potential entrepreneurs can have direct exposure and interaction with the achievers. Capacity building through small group training: Training plays a vital role in blending technical do-how and Know how. KVKs have been successfully doing these things as evident by several success stories from almost every KVK. Still it is a long way to go because as per Agricultural Research Data Book of ICAR (2001), out of 541 million who are now engaged in agriculture, only 256 million are in the economically active category leaving more than 52.6 percent without having engaged in economically viable activities (Samantha and Chandragowda, 2002). Overall what is needed is to increase the productivity per ha of rainfed agriculture, enhance labour absorbing capacity of the village economies and support the development of a variety of income earning sources (Nathan and Kelkar,1999). Small group trainings are effective method for transfer of technology. It enables the participants to acquire factual knowledge, skill and analytical framework for enhancing job performance. Extension agents should organize training based on actual need analysis of the farmers. Training on different aspects of entrepreneurship development, marketing and post harvest technology should be given proper emphasis. Establishing market linkages: In this era of liberalization and globalization, there are two major shifts in the world agricultural scenario in general and Indian agriculture in particular. First the shift from produce more at any cost to produce quality product at least cost. The second shift is the shift in the role of farmer as a mere receiver of the development package to the key player in the process of development. Indian agriculture has grown from family farming to market farming and as a result, farming has become dependent upon certain backward linkages like new technologies, technical services, production inputs etc. and forward linkages like remunerative prices, transportation, storage and processing facilities etc. It is one of the major aspects for which extension functionaries should give due attention. Marketing thinking starts well before production commences and ends only after rendering after sale satisfaction. Farmers should be guided properly for both forward and backward linkages associated with a production plan. Formation of farmers cooperative or SHG will be of immense help for the farmers to establish market linkages. Extension personnel should also help the farmers to establish new linkages with public or private processing industries. A contract is to be signed in such mechanism. Few important aspects need to be considered here (Kumar and Sharma, 2007). a)the Format: Signed confirmation is preferred than verbal agreement. b) Various Specifications: It implies details of the contract i.e. contract duration, quality and quantity standard to be followed, crop delivery arrangement (on farm collections or from other control 126

130 loading point.) Price arrangement such as fixed price, price calculated on spot market values, payment mode, interval etc. c) The Legal Framework: Legal implications of the contract must be well understood by the farmers before hand. Extension agent should educate them properly in this regard. Extension agents should also help the farmers for acquiring complete market intelligence regularly on various aspects of markets. Advice on product planning Farmers should be advised thoroughly while planning for their crop/livestock enterprises. They should be taught to consider consumer s need and preference, cost effectiveness, communication, promotion and placement of their product. Proper emphasis should be given in SWOT analysis of the market. Strengths (demand, high market ability, good price etc.), weakness (less demand, no storage facilities), opportunities (export to other places, appropriate time of selling) and threats (import and perish ability of the products etc.) need to be analyzed about the markets. Regular usage of Internet should be encouraged for it. Agricultural Engineering Interventions Agricultural Engineering interventions in sustainable farming relate to utilization of improved tools/equipments/machineries, structures and processes which help in conserving natural resources enhancing production and productivity, reducing losses and drudgery, value addition and profitability in agri-business. The possible augments in food production through improved soil and water management technologies, farm mechanization, post harvest management and value addition are reported to range between , 10-15, 5-10 and % respectively. Post Harvest Management, Protected Cultivation, Farm Mechanization and scientific value addition lead to direct employment opportunities: both on Farm and off farm in rural sectors. The level of mechanization in NEH region is presently at a low level due to small land holdings, poor investment capacities of the farmers and non availability of good quality farm machineries, equipments in the nearby areas. On the other side, labour availability has become a serious problem nowadays in the peak season, high wage rates also becomes an additional burden. Therefore farmers are inclined to use improved machineries and equipments which again demand for high number of equipment and their repair-maintenance and serving facilities, Custom Hiring, as already functioning in other parts of the country. This area is yet not given due importance in the North East which needs immediate attention by potential agripreneaurs. Research extension linkages A growing disparity in agriculture production and productivity calls for relooking at the research extension linkages adopted in the post independence era. In the Changing economic scenario in India the technology dissemination system, is faced with emerging demand to address the need for appropriate agricultural technologies and agro management practices to respond to food and nutritional security, poverty alleviation, diversifying market demands, export opportunities and environmental concerns. With rapid global changes in agricultural trade and emerging needs to radically reform the extension system to meet the above challenges, the National Agricultural 127

131 technology project was launched in November 1998 with World Bank Assistance. The innovations in ITD component of the project aims at addressing key constraints in technology generation and dissemination by introducing new institutional modes and processes and operationalizing them on pilot basis in selected districts. Information Technology The rapid development of information technology has spread its network in all aspects of agricultural development. Computers can be effectively used for rapid communication of information to the users. It is possible with the use of modems-mail and Internet or through the direct computer networking among state/blocks/village level agricultural extension agencies. Now many web portals are available, for e.g. e-choupal of ITC, Kisan Sansar of TATA, agribusiness of Godrej, web site of various Agricultural Universities, Krishi Vigyan Kendra, ICAR, NABARD etc. Farmers are benefited due to assured high quality farm inputs as well as selling of commodities. Community Service Centers also play an important role in fulfilling information need of farmers. Extension functionaries should try to make them aware about those sources of information. Community Participation: Participation means taking part i.e. involvement in an activity and greater involvement of persons in policy decision which effect them directly. Community participation refers to an active process whereby beneficiary influence the direction and execution of development projects rather than merely receiving a share of project benefits. In other words, participation involves active, collectively organized and continued efforts by the people themselves in setting goals, pooling resources together and taking actions which aim at improving their living condition. It is therefore very important to ensure that all the people concerned understand the goals and targets of benefits to be accrued from a particular project. Stress should be given to enhance the rights and access of landless, marginal farmers and other socially backward people of the area. Facilitating farmers group for acquiring communication skills: In today s changing agriculture scenario farmers group need to communicate with different allied agencies/organizations for different purposes. In the context of Agri Business management it is needless to mention about its importance. Appropriate communication skills help them profusely to fulfill their desired objectives. Extension agents should also try to enhance the basic communication skills of farmers. Some of them may be: Proper expressions (verbal/written) Use of body language Listening skills Analysis and interpretations of messages received Effective participation in group discussions, meetings Giving effective feedback Overcoming barriers to communication 128

132 Good command on language Empathetic feeling towards others Eye contact Facing audience confidently All these skills can be acquired /enhanced by proper training and interactions with other members of the group. Public- Private Partnership Concept: It is an arrangement by which the public sector and private sector(including NGO s and community groups) come together to deliver services which hitherto have traditionally been delivered by the government agencies. The objectives of PPP are three fold, viz. Increased efficiency of service delivery Reduction in the fiscal burden Empowerment of farming community Categorization of Partnership Public fund and private management Both sharing funding with private management Public facilitation and private funding and private management In this context, ATMA (Agricultural Technology Management Agency) can play an important role (Agarwal,2006). Some examples are cited here Role of ATMA in promoting PPP Recent initiatives State Role of ATMA Private sector partner H.P. Facilitating buy back of vegetables and fruits from figs Adani groups,reliance, Morarka, mother dairy and ITC Bihar Facilitating buy back of medicinal and aromatic plants from figs Vidyanath, S.V Healthy herbs and fragrance Punjab Soil testing, soybean production and buy back Dhanuka, Excel group care M.P. Soil testing, Soybean production and buyback Dhanuka and SOPA Goa Farmers Training,exposure visit,kisan mela(100% support from private sector) Godrej Agro Vet. and Goa Chambers of commerce 129

133 Conclusion The challenge of agricultural extension in the coming days is quite different from what it was few decades ago. UN Secretary General Ban Ki Moon on world food day 2009 mentioned that food and nutritional security are the foundations of a decent life, a sound education and indeed the achievement of all the millennium development goals. Present scenario demands for revitalizing the system from production revolution to quality revolution, mono disciplinary to multi disciplinary approach, general technology to precision technology, supply driven to demand driven and finally from farm employment to non- farm employment. Appropriate extension strategies can only lead to the fulfillment of the goals for agri-business development of our country. Reference Agarwal, A. K. (2006). Revamping Extension services for technology transfer in Agriculture and Horticulture - In Proceedings of second National Conference of KVKs held at ANGRAU, Hyderabad on Nov 26-27, 2006, pp Bhatia, A., Sen, C.K,Pandey, G and Judith. A (1998). capacity building in Participatory Upland Watershed Planning, Monitoring and Evaluation-edited book pp Hegde, M. R. (2006). Krishi Vigyan Kendra -An efficient institution for farmer Participatory Technology Development-In edited book KVK-The capacity builder of farmers by Samantha. R.K. and M.J.Chandra Gowda.pp Kumar, S. and, Sharma. G. (2007). Marked-led Extension Strategies for promoting vegetable cultivation in Uttarakhand. Agricultural Extension Review, 1. pp Nathan, D. and. Kelker. G. (1999). Agrarian involution, domestic economy and women Rural Dimensions of the Asian Crisis. Economic and Political Weekly, 34 (19): pp Samanta, R.K. and Chandra Gowda M.J. (2002). Krishi Vigyan Kendra The capacity builder of Farmers In edtd. Book. B. R. Publishing Corporation. Delhi pp.250. Srivastava,P.K. (2014). Agricultural Engineering Interventions for sustainable organic farming in NEH Region. Published in the souvenir during NE Agri Fair 2014 held at College of Agril Engineering,CAU,Ranipool Sikkim(25-27 Feb,2014)pp Van den Ban A.W. and Hawkins. (1994). Agricultural Extension published by Longman Scientific and Technical:pp

134 Leadership for Agribusiness Mobilization Amol K. Bhalerao Prologue The American scholar, organizational consultant and author, Warren Bennis, who is widely regarded as a pioneer of the contemporary field of Leadership studies defined leadership as Leadership is the capacity to translate vision into reality. This definition is very pertinent in today s context of Indian agriculture. Indian agriculture is mostly subsistence farming. The very less efforts are directed to transform subsistence farming into agribusiness industry. The rate of modernization and absorption of innovation is significantly slow in our country. On the other hand, constantly increasing populating is a serious concern for policy makers, researchers and administrators. Agricultural marketing Population Pressure Small and Fragmented Land Holdings Shortage of good quality Seeds Inadequate Irrigation Facilities Lack of Manures, Fertilizers and Biocides Issues and challenges faced by Indian Agriculture Depleted Soils Environmental imbalance Storage of food grains inadequate transport Farm Implements Scarcity of capital Fig. 1.1 Issues and challenges faced by Indian Agriculture About 17 per cent of world population residing in India is responsible for creating scarcity of resources. The population of 1.27 billion people coupled with significant challenges like democracy deficit due to poor governance, low educational penetration, traditional universities with meagre world rankings, uncontrollable inflation, ill framed fiscal policy, restricted trade, poor infrastructure, diminishing environment and stagnated agricultural production etc. critically asks for 131

135 leadership enhancement interventions. So, the outcome of prologue is India needs leaders who can transform the vision of tackling above mentioned challenges and find out solutions in reality. Further, our Indian agriculture is at stage of stagnation. Nation hasn t experienced any major breakthrough since last three to four decades. Many terminologies, technologies and buzzwords used in presentations - scientific papers are not reaching to stakeholders as expected. The words of hope like green revolution are seen from one angle only whereas the unintended, indirect and unwanted consequences are deliberately neglected. This trend is also responsible for triggering social imbalances and disparities. Under these circumstances, everyone needs to be empowered, everyone needs to be made responsible - accountable and every citizen must contribute by accepting voluntary roles. This voluntary participation of grass root peoples in decision making activities, self governance and national problem solving process will transform itself into an act of practical leadership. Now the question is Can farmer participate in the process of exercising leadership? and the answer is Yes. Farmer is the ultimate leader to whom entire world is following, one of the noblest leader. In the present situation, promotion of agribusiness by converting the farm into a business unit is the best feasible way to become a farm leader. This leadership instinct among farming community can be positively channelized to mobilise agribusiness across the nation. Definition: The leadership is an exercise to practice not a definition to define. As per the core of social science, everyone is leader. Some can lead themselves whereas some can lead others also. The world famous definition of leadership given by Chester I Bernard says that; Leadership is the ability of a superior to influence the behaviour of a subordinate or group and persuade them to follow a particular course of action. C. I. Barnard emphasises the ability of superior individual which he/ she may attain because of intellectual superiority, positional superiority, experiential superiority etc. or maybe all. This decision making act of superior directs and persuades the subordinates to follow the particular course of action in order to achieve organizational goals. Bill Gates, founder of Microsoft gives credence to the empowering notion and quotes that As we look ahead into the next century, leaders will be those who empower others." Now in the contemporary agricultural scenario, Schein s definition sounds relevant as he says Leadership is the ability to step outside the culture to start evolutionary change processes that are more adaptive. Here focus is on stepping out of traditional and routine activities towards evolutionary change processes. Furthermore, the sum total of above quoted leadership qualities are highly anticipated in the promotion of any business. Business is an organization or economic system where goods and services are exchanged for one another or for money. Every business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit. Therefore, agribusiness is, the business collectively associated with the production, processing, and distribution of agricultural products. Agribusiness is an empowering process where farm is converted into business unit which yields more profit by doing something more than routine job. The agricorner website has described Agri-business which includes all business enterprises that buy from or sell to farmers. The transaction may involve either a product, a 132

136 commodity or a service and encompasses items such as (a) productive resources e.g. feed, seed, fertilizers equipment, energy, machinery etc. (b) agricultural commodities e.g. food and fibre etc. (c) facilitative services e.g. credit, insurance marketing, storage, processing, transportation, packing, distribution etc. Agri-business can also be defined as science and practice of activities with backward and forward linkage related to production, processing, marketing and trade, distribution of raw and processed food, feed, fiber including supply of inputs and service for these activities is a self explanatory definition of agribusiness quoted by agri-corner. How Leadership can Mobilise Agribusiness? The question given above, needs a two dimensional answer; i.e. How an external leader can mobilize the Agribusiness system? and How an internal leader can mobilize the Agribusiness system? Agri. Input (sub system-1) Agri. Production (sub system-2) Agri. Marketing and Processing (sub system-3) AGRIBUSINESS SYSTEM Fig. 1.2 Agribusiness system along with its sub systems So before answering the any question we must know the qualities required by leader to mobilize the followers. Leaders need various set of qualities to perform under the critical situations towards the accomplishment of predetermined objectives. The following figure shows the top ten most desired traits to become a successful leader. Therefore, from the set of essential leadership qualities shown in fig. 1.3 it is obvious that the scientific leaders, change agents, professionals, administrators, government and private functionaries must inculcate the leadership qualities enlisted above while promoting agribusiness among farming communities. This will act as strong force to influence the thinking, decision making and actions of targeted farmers in order to promote agribusiness. The farmers are not empty pots, they have much more experience of farming and all allied activities. That s why simple interventions and hollow technologies won t work in field conditions. The external agency must win the confidence of farmer during the rapport building sessions and tailor made interventions should be delivered. The external leaders should go for scientific methods for the identification of respondents. The command over communication skills, positive attitude, commitment and sense of humor will certainly help for the identification and targeting of most possible individuals who can successfully venture into agribusiness. On the other hand, internal part of agribusiness system, successful agribusiness managers can also act as leaders for their locality. The fundamental principal of extension says seeing is 133

137 believing. Hence the successful farmers, who are successful in managing agribusiness, can be lighthouse for many followers. These role models have more capacity to communicate ideas and articulate vision. Subsequently the rate of dissemination of ideas and mobilization of follower increases if the successful farmer possesses qualities like Communication, Confidence, Positive Attitude, Creativity, Intuition, Ability to inspire other members etc. As the farmer to farmer extension is more rapid and authentic, this second leadership modality can bring sure success in terms of mobilizing agribusiness. Honesty Ability to Delegate Communication Sense of Humor Confidence Commitment Positive Attitude Creativity Intuition Ability to Inspire Fig: 1.3. Leadership Traits Various Leadership strategies for mobilizing Agribusiness: Ultimately, leadership is a process of mobilizing peoples for the attainment of certain objectives by directed actions. To influence people, to convince people and mobilize them in order to promote the agribusiness (entrepreneurial attitude) certain strategies of practical significance are given as below; Emphasize the need: Explain to people and show the gap between what is and what ought to be? How they can transform their farm unit into agribusiness centre. Trigger the respondents need for achievement which will motivate him throughout the process. Tell them WHY they matter: The basic philosophy is helping people to help themselves. Now it is the job of leader to tell them that how and why respondent matter? Introduce themselves with their own unseen unexplored potential. It will boost their self confidence. At this stage leader will succeed in influencing followers. John Maxwell rightly said that "Leadership is influence - nothing more, nothing less." 134

138 Participation of individuals in vision crafting process: This act of involvement of individual in framing vision, outlining objectives and formulating strategies for the mobilization of farm resource engages followers. At this stage people start visualizing future and work accordingly. Establishing backward and forward linkages: To sustain the agribusiness and ensure smooth operation of profit making activities, it is essential to establish backward and forward linkages. The dynamic leadership plays crucial role in establishing linkages, connecting people and fetching good market price. Give a call to rise up: Sometime followers feel uninspired or upset due to certain barriers. They may think to discontinue the business temporarily or even permanently. Moreover that s the time when leadership plays vital role in convincing followers, sustaining business and enhancing motivation by all of rise i.e. communication. This communication will sensitise people and energize them to perform during adverse condition also. These kinds of situations are a test of endurance for agribusiness. Respect dedication and endeavour: The act of dedicated effort needs felicitation by due honour and respect. The contribution of followers acknowledged by leaders gives retrospective effect among the all followers because the function of leadership is to produce more leaders, not more followers (Ralph Nadar). Celebration of triumph: The vital role of leadership is allowing people to enjoy sense of accomplishment. The leadership must offer visible results and reasons to celebrate. Such success stories are strong force of motivation for the others who are willing to walk on similar path. This leadership modality will certainly create healthy atmosphere to mobilise agribusiness opportunities and peoples potential in a right direction. References: potential/improve-environmental-quality/slideshow/ cms

139 Policy Issues for Sustainable Growth of Agriculture and Agri-business in the North Eastern States of India A. K. Tripathi, A. Roy, D. S. Dkhar, D. Kumar, S. P. Singh and N. U. Singh Introduction The North East of India comprising of the 8 states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim, is a reservoir of rich natural resources and a beautiful amalgamation of different people and cultures. The region shares borders with China in the north, Bangladesh in the South-West, Bhutan in the North-West and Myanmar in the East. This makes the North-East a prospective hub of international trade and commerce. Blessed with biodiversity, huge hydro-energy potential, oil and gas, coal, limestone, forest wealth, fruits and vegetables, flowers, herbs and aromatic plants, rare and rich flora and fauna, NE India has all the potential to transform into a commercial hub and tourist paradise. Unlike the rest of India, North East India has an added demographic advantage, that it occupies 7.9 per cent of the country s total land space but has a population of 3.8 crore, which makes it approximately 3.73 per cent of the country s population (Ram et al., 2012). The region is endowed with a varied topography and agroclimactic conditions which offer vast potential for agriculture, horticulture and forestry. However, the region is lagging in agricultural development contrary to the national ethos. Reasons include a lack of appropriate strategies for the development of natural resources, inadequate infrastructure facilities and low adoption of improved technology. The region, which is heavily dependent on the agriculture sector, needs a green revolution to eradicate poverty and boost its economy. Such a green revolution must be adequately backed by financial institutions, marketing functionaries and research and development (R&D). The NER has an agrarian economy. About 85 per cent of the region s population is rural and a majority of it depends on agriculture and allied activities, directly or indirectly in , the agricultural sector engaged 56 per cent of the region s total workforce. Agriculture in the region is dominated by small landholders-more than three fourths of the land holdings in the NER are less than or equal to 2 ha in size. However, compared to the total geographical area, the land available for agriculture is limited. The region has a forest cover of more than 67 per cent (ranging from 24.6 per cent in Assam to 93.7 per cent in Arunachal Pradesh) against the national average of 22.8 per cent. The North-East accounts for about 8 per cent of the total geographical area of the country but has only 3.4 per cent of the total land put under agricultural purposes (CMIE, 2007: 9 21). Further, the region contributes only 2.8 per cent to the total food grain production of the nation, pointing to its low level of productivity. The region is also characterized by a low proportion of irrigated area. Gross irrigated area (to gross cropped area) under all crops ranges between 5.5 per cent in Assam to 30.2 per cent in Meghalaya well below the national average of 41.5 per cent (Dutta and Bezbaruah, 2005). Investment in building irrigation capacity has been insufficient and ineffective, and the irrigation potential created has remained grossly underutilized down the years. 136

140 The use of agricultural inputs in the NER is also low compared to the rest of the country. Fertilizer used per hectare during was negligible in the region, especially in Nagaland (1.5 kg), Sikkim (2.8 kg), Arunachal Pradesh (2.9 kg); and ranged between 18 kg in Meghlaya and 60 kg in Manipur compared to the national average of kg per hectare (GOI, 2007: 175). The share of agriculture in total electricity used is just under 1 per cent in all the North-Eastern states, except Tripura (18.7 per cent), as against the national average of 25.3 per cent. Poor soil condition, short sunshine hours, excessive humidity and frequent floods are the natural constraints in these states. The undulating nature of the terrain surrounding the foothills and the high density of rainfall require proper water management and the prevention of soil erosion. The system of shifting cultivation (jhum) is widely practised in hilly regions, accounting for roughly 30 per cent of the total area under settled agriculture. The land available for agriculture was further reduced by 3.63 per cent during on account of agricultural land left under current and permanent fallows in the region (CMIE, 2007: 7 16). However, the agricultural backwardness of the region is clearly visible in the context of present day India. While other states of India like Punjab, Haryana, West Bengal are marked by food surplus in the production of rice, wheat, fish etc and they blamed the government of India for not having purchasing capacity and an adequate market facility to supply the surplus food grains, the people of NER are importing two million tonnes of food grains from other regions of the country at a higher prices. In view of the mention perspective we focus the strategies and means of development of agriculture in the NER. It is very customary in this region to blame the rise of terrorism as one of the major factors which impedes development of the region in general and the agricultural development in particular. However, during the period of insurgency, the studies show that states of Nagaland, Manipur and Mizoram made rapid progress in the production of food grains. Hence, we cannot generalize the problem of terrorism as the greatest hindrance in the development of agriculture and in the production of food grains of the region for which the security of life is always threatened. Increased population at an alarming rate in the region is due to immigration from outside the country as well as from within the country. The population explosion caused by immigration poses serious threat on the natural resources of the region and the availability of cultivable lands for the people of NER. As a result, the agricultural production could not cope with the growing population and socio economic changes of the region for which the food grain production is short by 2 million tonnes of demand in this region. The absolute number of the migrants was more than 91 thousand in Since then it has been steadily increasing and reached at nearly 745 thousand in the census year The share of migrants from Bangladesh was between slightly more than 87 per cent in pre-independence era. In post-independence era it reached at 94 per cent in the highest among the periods From 1961 onwards the share started to decline and became around 89 per cent in the census year of 1991.It is also clear from the statistical information that Bangladesh was followed by Nepal in sending migrants to the NER of India. Again, the number of migrants who came from other states of India varied between 0.5 million to around 0.8 million during the preindependence era. But it declined to around 0.4 million in 1951 and reaching slightly more than 0.5 million in In recent years the flow of immigration again shows an increasing trend. 137

141 In order to improve the contribution of the agricultural sector to the overall development of the North-East, there is a need to devise an appropriate, regionally differentiated strategy. Except for Assam, the region has a comparative disadvantage in food grain production. Given its biodiversity and soil and climatic conditions, the NER is congenial for horticulture and growing high-value crops. Full advantage must be taken of the relative strengths of the region in fruit production, plantation horticulture and floriculture, cultivation of medicinal and aromatic plants, forest-based products, etc., without impacting sustainability. The growth engine of the region can be high-value agriculture, fish farming and tourism, especially farm/eco-tourism. Agricultural goods with high economic value are generally covered under high value agriculture (HVA). Shifting agricultural resources to higher value options has been the new strategy for the agricultural development in the last decade or so, favouring crop diversification. The comparatively high labor endowments of the small farmers, as reflected in their greater family sizes, induce them to diversify towards vegetables. Although fruit cultivation is also labor intensive (as compared to cultivation of staples), fruits are relatively capital intensive, making them a less advantageous choice for smallholders who tend to have low capital endowments. Furthermore, both the probability of participation in fruit and vegetable cultivation as well as land allocation to horticulture decreases with the size of landholdings in India (Birthal et. al., 2007). The small and marginal farmers reported a number of constraints for crop diversification towards high value crops. Lack of proper irrigation facilities, lack of knowledge and information, and non-availability of timely credit were the major constraints faced by the farmers. In the livestock sector, most small and marginal farmers reported lack of access to veterinary service centres to be a problem. Diversification into fisheries sector was mostly constrained by lack of timely credit, inaccessibility to cold storages, poor road conditions and connectivity and transportation problems. Improving the small farmers access to irrigation, credit, technology and veterinary care services would hold the key in this respect (Haque et. al., 2010). Sharma and Jain (2011) in their study on high value agriculture in India suggested that a future road map for high-value agriculture development should focus on investment in technology development and dissemination, basic infrastructure, improvement of technical capacity of producers and other players in the value chain, institutional support in core functions of production, logistics and marketing through concerted public sector support and active public-private partnerships, and provision of quality inputs, in particular planting materials for fruits and seeds for vegetables. Agriculture and allied activities is an important sector in the economy of the NER with its share in GDP ranging from 14 per cent to 29 per cent in different states (Table 1). It accounted for over a quarter of region s GDP, and their share has been declining. Though, this is considered a sign of development, population dependent on agriculture remains very high. Among the north eastern states, the share of agriculture in GDP is lowest in Mizoram (14 per cent) and highest in Nagaland (29 per cent) for the year , except in Nagaland where it has declined considerably since the early 1990s. The performance of agricultural sector in the region had been quite impressive during the past one decade or so. At the region level, the sector grew at an annual rate of 3.12 per cent, which 138

142 was slightly higher than the national level of 2.8 per cent. The performance of states of Manipur, Meghalaya, Nagaland and Tripura was better than the national average. Table 1: Per cent Share of Agriculture in GDP and Annual Growth Rate in North-Eastern States ( to ) States Share of Agriculture in GDP Annual growth rate, to Agricultural GDP GDP Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura Northeast Source: National Accounts Statistics (various years) Table 2: Sectoral Distribution of Net State Domestic Product (NSDP) in NER of India: to Sl. No. Sectors Primary Sector Secondary sector Tertiary sector All sectors NSDP at prices (Rs. In crores) Per capita

143 NSDP (Rs.) Source: National Accounts Statistics (various years) Table 2 shows that the primary sector which include crops, animal husbandry, fisheries and forestry, mining and quarrying decreased from 27 per cent ( ) to 20 per cent ( ). However, the contribution of secondary and tertiary sectors increased from 22 per cent and 51 per cent in to 25 per cent and 59 per cent in respectively. During the period, Net State Domestic Product (NSDP) increased progressively and the per capita NSDP in the region in was Rs ( prices). Table 3 Percentage Share of Different Crops in Total Area and SID in Different Year Years Cereals Pulses Vegetables Spices Fruits Oilseeds Total SID Source: Calculated from- Basic Statistics of NER (2006), North East Data Bank, Indiastat The major crops grown in the North-East Region of India are cereals with a share of per cent of total cropped area of the region during the year which had declined from per cent during the year (Table 3). Oilseeds and vegetables occupy second highest share in total cropped area of the region next to cereals. The share of vegetables have increased from 6.38 per cent in the year to 8.45 per cent in but the share of oilseeds have almost remain constant over the years (9 per cent). Increasing trend can also be observed in the case of other crops i.e., pulses, spices and fruits but the increasing rate of pulses is almost negligible. Acreage under spices has increased during the year (5.26 per cent) in comparison to (4.18 per cent). The share of pulses in total cropped area has increased from 3.46 per cent ( ) to 3.89 per cent ( ). The acreage share of fruits has also increased from 5.57 per cent to 7.72 per cent 140

144 during the year to Over the years the values of Simpsons Index of Diversity (SID) have increased from 0.47 in to 0.54 in which implies the presence of diversification. The region has moved towards greater diversification during the past years as the value SID has increased over the years. Share of Livestock Sector in NER Livestock and vegetable cultivation provide significant complementary source of income with an ample market to tap into. In India, the livestock and fisheries sector is growing very fast. Owing to its diverse physical and climatic conditions, NER of India has a varied livestock population. Nearly twothirds of farm households in India have been associated with livestock production, and 80 per cent of them have been small landholders (less than 2 ha). In the NER about 96 per cent of livestock hold by the landless, small and marginal farm households along with their largest share in land holdings. It clearly reflected how livestock animals and land was integrated in the NER. It is also interesting to note that the distribution of livestock was far more uneven among the farm households than that of farm land suggesting that with efficient input and output support services, livestock can serve as a major economic activity for the landless, small and marginal farmers. Livestock are an important component of mixed farming system although cereals dominate the cropping pattern in this region and dependence on livestock as an alternative source of income is significant. The consumption of meat is relatively higher in this region because of social and religious acceptance whereas that of milk and milk products is lower. Coupled with the traditional meat-eating habit, increasing per capita income, urbanization and changes in life-style, the region is deficit in production of livestock products. Some states in the region depend on interstate trade in livestock to meet the domestic demand. However, responding to the burgeoning demand for livestock products in a sustainable manner is a big challenge. Table 4 shows that the growth of livestock and its products has been increasing over the period ( to ). The highest growth rate is found on meat (6.92 per cent), followed by fish (3.37 per cent), egg (2.49 per cent) and milk (1.51 per cent). Table 4: Compound Annual Growth Rates of Livestock and its Products Period Livestock Milk Meat Egg Fish to Source: Calculated from- Basic Statistics of NER (2006), North East Data Bank, Indiastat The share of NER annual milk production was per cent ( ) which declined to 71 per cent in (Table 5). The per capita milk availability had declined at the aggregate level in NER and it was well below the recommended level of per capita milk consumption of 220 g/day. But the reverse trend is found in case of meat and fish. The percentage share of meat and fish has been increasing over the period from 8.41 and per cent ( ) to and per cent ( ) respectively. 141

145 The NEH region is known for its immense potential for producing a variety of fruit, which accounts for 6 per cent (2.6 mt) of total fruit production from a 7 per cent (2.8 million ha) area of the country. However, the average yield of fruits in the region is substantially lower (7.5 t/ha) than in other parts of the country (10.7 t/ha), indicating the unexploited potential for the region. The most important challenge in the region is the improvement of yield per hectare of fruit production. It is low in all states and declining in Assam, Meghalaya, Mizoram and Sikkim. In general, the bulk of fruit is cultivated for domestic or local use and not commercially, so farmers fail to enjoy economies of scale. Low marketable surpluses on farms result in the lack of a steady supply of fruit throughout the year, and prevent planning and facilities for processing and value addition. Moreover, inadequate policy support from the state government and an unfavorable socio-political environment considerably increase the risk to investment in these states. Since most of the fruit is cultivated organically, public as well as private investment may be beneficial and could pay high dividends. Other crops with great potential to be grown organically are spices and condiments, including pepper, cardamom, ginger, etc., which enjoy very high demand in national and international markets. Off season vegetables are also in great demand and fetch good prices on the domestic market. Table 5: Percentage Share of Livestock Product during to Years Milk Meat Fish Total Source: Calculated from- Basic Statistics of NER (2006), North East Data Bank, Indiastat The farmer s participation in fruits and vegetables production is examined in terms of the proportion of the household growing these crops and their area share. Table 6 shows that on an average 71 per cent of the households in the NER grow vegetables and 5 per cent grow fruits. The 142

146 participation rate is found on semi-medium farms (76.1 per cent). However, the participation rate in the fruit production is the lowest among the large farmers, followed by small farmers. Table 6 also presents the share of fruits and vegetables in total cropped area by farm size for the growing households. In general, farmers allocate a relatively small proportion of their land to vegetables and fruits comparing to cereals. On an average, 24 per cent of the area is allocated to vegetables and 2.2 per cent to fruits. The pattern of area allocation to fruits does not differ much across farm categories, which ranges between 2 and 2.4 per cent. For vegetables, the relationship with farm size is distinctively negative. On marginal farms, vegetables occupy over 33 per cent of the area compared to 19.8 per cent on large farms. Table 6: Per cent Household and Area under Fruits and Vegetables in the Year (per cent) Crop Marginal Small Semi-medium Medium Large All categories Household growing fruits and vegetables Vegetables Fruits Area under fruits and vegetables Vegetables Fruits Cereals Pulses Others Total Source: GOI, 2012 These results clearly show that small holders do participate in high-value agriculture and allocate a larger proportion of area to high value crops especially vegetables. This is expected, as most vegetables have a short production cycle and generate quick returns. Besides, small holders have sufficient endowment of labour to cultivate labour-intensive crops like vegetables. The cultivation of fruits is also labour-intensive, but its initial capital requirement is higher, and gestation period is longer than discourage farmers to undertake cultivation of such crops. A question arises that how do owners of small holding make out their existence and survive under global completion? How can one do business with millions of small farms when other stakeholders, from input suppliers to logistic players, agro-processors and retailers, are trying to scale up? 143

147 China s holding size is almost half of ours (0.65 ha in 2010) but it produces double the farm output of India. Even within India, one has to look at Punjab and Kerela: Punjab has the largest holding size and Kerela the smallest among the states. In terms of farm productivity, Punjab ranks first for rice and wheat but not overall. It is Kerela with the smallest holding size, which has the highest value of farm output per hectare. This is because Kerela produces high value spices, rubber and other cash crops. Augmenting value by diversifying into high value products or boosting the productivity can work. Secondly, farm technology packages comprising high-yielding seeds, fertilisers and water can be perfectly divisible. There is no reason why small farms will be less efficient of they have access to these inputs. This can be taken care of by the financial inclusion of small farms and ability to get credit from formal institutions at a reasonable interest. But there could be the problem when farm labour becomes too expensive and existing models of farm machinery too large for small holdings, leading to over capitalization of small farms, raising capital costs and making them less competitive. To solve this, either small farm implements need to be developed or custom hiring of existing farm machinery needs to be developed and/or land lease markets need to be promoted to help evolve viable size of holdings. Third, small farmers face a challenge to sell their produce to large buyers; processors or modern retailers, exporters and so on. The bargaining capacity of small farmers is very limited unless they form clusters of farmer producer organisations (FPOs) or cooperatives. This clustering needs to be promoted not only by the government but also by the potential buyers as it would help reduce transaction costs and have uniformity in produce. Maintaining databanks on the status, utilization, magnitude of threat and rate of loss of plant genetic resources for food and agriculture is essential for evolving suitable institutional arrangements. Ecologically sound sustainable agriculture needs to be evaluated in terms of biodiversity conservation and improvement of farmer s income if it is to be established as the best option for attaining these twin objectives, particularly for this hilly region. In-depth analyses are required for ethno-botanical and socio-economic research to understand farmers knowledge and expertise, selection/ breeding and utilization and management of plant genetic resources. This will require the approval of the farmers involved, and their knowledge and technologies will have to be protected. Changes in the local species and varieties and those used by farmers need to be understood in detail and appropriate scientific expertise should be exploited together with traditional agricultural practices and natural resources, thereby ensuring synergy between biodiversity and organic agriculture in the NER region. Way forward Institutional credit flow to the North-East needs to be augmented by minimizing the constraints faced by the banking sector, and improving demand and the credit absorption capacity. The concept of micro-finance through self-help group bank linkage programmes has made promising inroads in the region. The recovery of loans under this programme has been good. The success of this initiative augurs well for both improved access to credit by the rural poor as well as the willingness of bankers to lend. In view of the poor banking infrastructure as also the low recovery rates in the NER, members of local community-based organizations, field management committees, village development boards and village councils can be used as banking correspondents and business 144

148 facilitators. Training should be imparted to NGOs to strengthen their capacity and enhance their skills so that they can more effectively partner with banks. Concerted efforts need to be made by both government as well as the banking sector to overcome the constraints posed by non-existent/inadequate land records in the North-East. This creates difficulties for lending to the farming community, especially long-term loans. While the government must take steps to improve the maintenance of land records, bankers should evolve innovative lending methods. Among these are: the use of joint liability groups, involvement of NGOs and community-based organizations as banking correspondents, and relaxation in the lending norms. The role of farmers clubs in inculcating repayment ethics among farmers and as knowledge dissemination centres has been well established elsewhere in the country. This initiative should be replicated in the NER as well. To increase the economic performance of the region, agriculture must go hand-in-hand with industry and the synergies between these two sectors must be achieved. Large proportion of agricultural labourers is shifting to unorganised sector which very often fails to give decent livelihood opportunities. These people need to be trained for organized sector for which industrialization is utmost important. Market economy has one unique attribute to pull the growth for those who are advantages position or who have better access to natural and financial capitals, but utterly excludes those who are in disadvantageous situation (like marginal farmers) or those who are not having adequate access to the resources/ inputs to produce larger quantity. The fact is that the marginal farmers operate under a host of difficult socio-economic condition in which they produce small quantity with high production efficiency but they are poor in marketing efficiency. On one hand corporate retailers are consolidating rapidly asking for bulk purchase of agri-commodities, and on the other hand producers are becoming more and more fragmented and producing small quantity of marketable surplus, so farmers must be organized to increase their volume of trading and bargaining power so that they can take advantage of these marketing systems. Sectoral transformation is under process and more and more people from among these disadvantageous groups are being excluded from the development process. Therefore inclusion of this excluded is being the prime challenge for sustaining the development process in the long run. The needs of the day are to integrate the small and marginal producers with the market. It is therefore essential that Government policies facilitate the transition to diversification in a manner that benefits the poor and does not simply replace subsistence-related production risks with new market and policy failure risks, which may be even more devastating to the poor. Importance policy should include avoidance of trade shocks and appropriate sequencing of input and output market reform. The more mobile the labour force, the more the benefits from diversification will spread across the economy and other regions. Interregional labour migration from unfavourable to favourable regions tended to equalize wages across regions, allowing landless labour and small farmers in unfavourable areas to benefit also. References Centre for Monitoring Indian Economy (CMIE). (2007). Economic Intelligence Service: Agriculture. Mumbai: CMIE. 145

149 Birthal, P. S., Joshi, P. K., Roy, D. and Thorat, A. (2007). Diversification in Indian Agriculture towards High-Value Crops: The Role of Smallholders. IFPRI Discussion Paper 00727, International Food Policy Research Institute (IFPRI), U.S.A. Datta, K. K. and Lalrinsangpuii. (2013). Policy Issues for Sustainable Growth of Agriculture and Agribusiness in the North Eastern States of India. Agri-business potentials in India, Experiences from Hill States. Dutta, M. K. and Bezbaruah, M. P. (2005). Utilization Efficiency Of Irrigation Projects In The Brahmaputra Valley: The Role Of Market And Non-Market Institutions. Paper presented at the Seventh North-Eastern Economic Association (NEEA) Conference. Dept. of Economics, Arunachal University, Itanagar. 8: GOI. (2007). Economic Survey, Ministry of Finance, Govt. of India, New Delhi: Economics Division. Haque, T., Bhattacharya, M., Sinha, G., Kalra, P. and Thomas, S. (2010). Constraints and Potentials of Diversified Agricultural Development in Eastern India. Project Report, Planning Commission, Government of India. Mandal, R. K. (2011). Changing Agricultural Scenario and its Impact On Food Habit In North East States Of India. Food Biology, 1(1): Ram, D., Singh, M. K. and Prasad, A. (2012). Prospects of Agriculture and Allied Entrepreneurship Development in North-East India. Indian Journal of Extension Education, Special Issue (II): Sharma, V. P. and Jain, D. (2011). High-Value Agriculture in India: Past Trends and Future Prospects. Working Paper Indian Institute of Management, Ahmedabad. 146

150 Introduction Formation and Management of Producer's Groups and Producer Company/federations for Harnessing the Benefit of Agribusiness A. Roy, A. K. Tripathi, D. Kumar and D. S. Dkhar Agriculture is the backbone of the Indian Economy as nearly 60% of the population of the country depends on agriculture and it contributes 18% to the GDP. Tenth Five Year Plan and National Agriculture Policy documents envisage a growth level of 4% in Agriculture as against the average growth of less than 2% in the last 50 years. The last decade commencing from 1990s was marked by post-green Revolution fatigue and plateauing yield levels in many parts of the country. For sustained 4% growth in agriculture there is a need to improve productivity and cut down on costs by improving efficiency. The north eastern region of India, comprising eight states, namely: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, is bordered by Bhutan, Tibet, Myanmar and Bangladesh. The total area of this region is about 0.26 million km2, which is about 8% of the total land area and 24% of the total forest cover of India, includes hills, valleys and plateaus. The area is ethically and culturally very distinct from the rest of the country, inhabited by various tribal groups, mainly of Tibetan-Mongoloid origin, speaking a variety of languages and having different lifestyles. Fifty to eighty-seven percent of the population lives in the rural areas. Nearly 70% of the total areas are hilly, and shifting cultivation is the chief land use practice in the hilly regions. The jhum practice is more diverse in this region than in any other part of the world, due to diverse socio-cultural, socioeconomic and socio-religious practices of over 100 tribes in the north-eastern region. There is, therefore, an urgent need to provide package of initiatives for transfer of technology, improving input use efficiency, promoting investments in agriculture both in private and in public sectors and creating a favourable and enabling economic environment. The emerging needs in agriculture sector now are adoption of location specific skill and knowledge based technologies, promote greater value addition to agriculture produce, forge new partnerships between public institutions, technology users and the corporate sector, harness IT more effectively to realise financial sustainability and compete in the international market. For transmitting the latest agriculture techniques to the Farmers field, orienting them to establish better relationship with banks, adoption of latest post-harvest handling technology, value addition, etc. and enjoy the benefits of collective bargaining power both for procuring inputs and select their produce the Farmers Club Programme is an appropriate and most suitable strategy. What are Farmers' Clubs Farmers Clubs are grassroot level informal forums of farmers. Such Clubs are organised by rural branches of banks with the support and financial assistance of NABARD for the mutual benefit of the banks concerned and the village farming community/rural people. With the enhancement of the 147

151 programme, other agencies like NGO, VAs, KVKs, SAUs etc. are also now included as agencies included in the formation and promotions of FCs. Concept of producer companies: Recently, the Companies Act, 1956 (the Act), recognised only three types of companies, namely, companies limited by shares (sub-divided into public limited and private limited companies), companies limited by guarantees and unlimited companies. With the coming into force of the Companies (Amendment) Act 2002, (1 of 2003) on February 6, a fourth category, producer companies, finds a place in the Act. Promotion of Farmers Interest Groups Group of farmers, who come together spontaneously or through their own efforts to answer their own felt needs, are more likely to be effective than groups that are brought together to suit the needs of an external agency. The groups/association of the latter category last only as long as the project period. Their cohesion and motivation often lie in material and financial considerations. Spontaneous and voluntary formations of social groups involve a high degree of trust, which cannot be manufactured. This is one reason why community groups are often formed around one strong personality, and due to some immediate issue. There is an important difference between farmers or communities that organize themselves to work together, and farmers being organized in groups by external actors, who see this as a vital step and entry point for community development. External agencies often view the creation of organizations as a positive intervention, a way of increasing impact and sustainability of activities. Farmers and communities often do benefit from participating in such projects through gaining access to trainings, information, resources and further link ages. However, groups formed in this way are typically more prone to difficulties at the start and there is a risk that they will not continue if or when the initiating institution withdraws from the project. Alternatively, where previously established local groups gain the support of external agencies, this arrangement can be very positive. A key challenge for facilitating agencies is to act as catalyst and bring out the self-organizing capacities of farmers in the most locally relevant and useful way. Effective support can facilitate or enable local groups to achieve more, or be heard by the right people. It can be especially constructive while community groups are establishing themselves, or in response to a stated need. However, as groups develop and find their own strength, the external agencies need to consider different types of support groups may need. 1. Stages of group formation: Broadly there are five stages in organization of group as indicated below: Forming Storming Conflicts Norming Developing When the group members enroll themselves and conduct 1-2 initial meetings When the group members start discussing and reacting to the various issues/ When the groups start framing norms to run it successfully Provide capacity building to the group members on different areas 148

152 Performing When the group starts performing by involving in planning the commodity Converge with developmental programmes, management of inputs and output. Value addition, packing grading, transportation, marketing etc. 1. Guidelines for formation of FIGs: a) The core functions of FIG are Acting as collateral through pressure Ensuring optimal production planning, meeting the market and household food Security needs Maintaining common infrastructure farm machinery, farm ponds, bore well tractors, storage godowns, drying platforms, primary processing units etc. And equipment which can be afforded by one farmer but can be owned by 20 farmers together Linking with the local government panchayat level to obtain access to governmental programmes like agriculture and allied sector development programmes/funds etc. b) Characteristics of the FIG Number of members in a FIG is 15 to 20. This is keeping in view the experiences of SHGS promotion in the country. Age above 18 years Practicing farmer of the village While promoting FIGs, different other community institutions promoted in the area under various government and non-government programmes have to be kept in view. The details of such institutions, lessons learnt etc. Have to be kept in view while promoting FIGs. Such institutions may include the following : o Self Help Groups ( SHGs) o Village Organisations (VOs) (Federation of SHGs at village level.) o User Groups-Groups of farmers in compact areas promoted to use the benefits of a common structure erected under watershed programme, such as Watershed Committee, or any other such livelihood groups, Groups of wage labour promoted under NREGS Groups of farmers formed on compact lands assigned to SC, ST farmers compact land block developed under programmes like NREGS, CLDP, NABARD etc., Commodity groups, cooperatives, Tank management committee, VSS/FPC/ Community networks etc. If such groups exist then it is advisable to select appropriate groups keeping in view the objective of the project and then treat them as FIGs. The advantage will be that you will get the benefit of an existing and organizationally stronger group. The following specific steps may be taken for organization Of FIGs : Organize informal meetings with prospective group members to discuss the purpose, methods of operation and benefits of groups as well as possible enterprises/activities. Farmers groups may be formed once the participants have identified viable income-raising activities 149

153 They decide on criteria for group membership: for example whether members should belong to a specific category on the basis of common needs, common problems, common interest, similarity in commodity, small holders, social affinity, homogeneity in socio-economic status and neighborhood etc. FIGs will get informal recognition from agriculture and horticulture departments. FIG is not a legal body. Only one member from one household may be considered for FIG and no person can be a member in more than one FIG for all financial matters. From the perspective of equity this is important. FIGs should choose their leaders and co-leaders. No designations like chairperson, treasurer, and secretary etc., need to be given to the leaders. Instead, the designation of Representative can be used. Thus, this does not take on significance of a hierarchy and they are perceived as Representatives. It is always better that the leadership is rotational. However, the periodicity of rotation etc., should be left to the group. It is also to be remembered that there should be sufficient time for the leadership to work before they are changed in order to give all members leadership experience. In a village, apart from compact area of group members of each FIG, the area under all FIGs also has to be compact. Keeping the functions of the FIG in view farmers will be covered in a contiguous land patch of 20 farmers and these 20 farmers will form a potential FIG. This is so that it becomes easy to access watershed funds and also plan for common infrastructures for a particular commodity. As far as possible, the village saturation (i.e. coverage of all farmers cultivating the entire cultivable area of village) approach has to be adopted. Due attention has to be given to farmers cultivating lands in ridge areas, rain fed lands,assigned lands etc. Confidence and clarity of key persons (Sarpanch, elders, opinion makers, key informants etc) has to be taken while mobilization and organization of farmers. Periodic meeting and consultations at the village level is a must is to keep the community informed about the interventions that the project is making. Often this is forgotten leading to isolation of the project in the villages. At least one meeting a month and minimum 12 meetings per year must be conducted at FIG level. Transparency and democratic functioning must be emphasized through example. Question must be encouraged and fully answered. Each farmer may have a common fund in the group. The FIGs must maintain a set of records relating to their financial transection, membership register, minutes book etc. This will vary in accordance to the nature of the groups. It is suggested that the Group promoters to be in touch with the organizations that have been promoting such primary groups and take their help in developing the record system at the groups. For different activities (like formation of FIGs, election of group leaders, group meetings etc), decisions/resolutions have to be recorded in Minutes Book with required signatures. 150

154 Members will seek primary membership in FIGs. Services to the members will primarily be provided savings, credit, insurance, procurement, marketing, trading, storage, processing, land, soil & water resource management, etc. Admission/Removal/Resignation of members can formally be done at FIG level; norms to be established for this component. Organize farmers group with the help of locally-available/ identified community organizers/ group promoter. Group promoters make a list of potential group members and leaders, possible group activities and required inputs. Assess their productive resources, including capital, skills and experience. During the initial period of 6-9 months, the members may be encouraged to take small amount of loan at a reasonable rate of interest as decided by the group. This shall them in developing a habit of repaying the borrowed amount in different installments. This type of modality shall help in developing solidarity in the group, planning for their commodity till it reaches markets. Ranking/ grading of the above FIGs may be done after 6-9 months. At that stage, only mature FIGs may be given external or project benefit, revolving fund, etc. The remaining FIGs may be further strengthened with the help of group promoter and may be given project benefits, revolving fund etc., as and when they get maturity of FIGs. Provide capacity building on each and every stage of the group. At this stage, special care may be taken not to break any of the existing group, just because of availability of certain small financial incentives to FIGs. The formation of viable and stable groups requires patience and, in most cases, a period of two to six months. Both overly rapid formation and overly long delays, which may dampen the interest of potential group members, are avoided. The process of group formation may face formidable obstacle. In most of the cases, the rural poor are economically dependent on landowners, traders and middlemen and may fear intimidation if they are involved in independent peasant organizations. Local leaders who may see the groups as a threat to patron-client relationships pose other constraints. At local level project staff can be help to overcome this antagonism by calling meetings to sensitize leaders to the objectives of the projects/ programmes and, above all, to illustrate the benefits of its activities to the area as a whole. c) Services FIG will provide 1. Trading 2. Insurance 3. Credit linkages 4. Storage/ware housing 5. ICT-Market Information, Price Information, Technology 6. Processing 7. Input Linkages-Fertilizers,Manure, Irrigation, Equipments and Pesticides 8. Watershed activities, water budgeting and water audit 9. Capacity building 10. Seed processing and seed bank 151

155 11. Technical support 12. Fund mobilization 13. Government linkages 14. Short, medium and long term credits 15. Seed banking and processing 16. Marketing, exporting, etc. d) Function of FIG: 1. Demand estimation 2. Distribution 3. Soil testing 4. Book keeping 5. Thrift and credit management 6. Crop plan group wise 7. Group management 8. Processing units 9. Grading 10. Farmer Field School (FFS) 11. Loan Guarantee 12. Knowledge sharing 13. Managing common infrastructure etc Group emphasizes income-generating or cost saving activities based on local experience and low-cost technology. These undertakings do not replace but are meant to supplement members normal production. Activities of this type are most likely to broaden the groups economic based, mobilize savings, strengthen group cohesion and develop their enterprise management skills. Groups are encouraged to undertake social or community improvement activities only at a later stage. It is important that as far as possible- each group identifies plans, carries out and evaluates its own activities. This is essential for group development and, eventually, self-reliance. While group promoters have an important role in encouraging group activities, especially in the initial stages, theirs is a facilitating role that will be reduced gradually as the group develops. e) Grading of FIGs: Based on the maturity criteria, the groups are graded into A, B, C and D categories - Regularity in meeting - Good attendance (> 80% ) - Good recovery (> 90% ) - Proper maintenance of records and accounts - Fine of absentee, late comers or those who delay in payment of dues - Involvement in development of agriculture, allied sector and rural development activities. 152

156 Once a group fulfils all the above criteria, it will be considered under group- A Grade and such matured groups, placed in - A grade, are eligible for involvement in development programmes. The B, C and D grade groups need capacity building to become A grade group. 2. Group promoters The group promoter (GP) is a key agent in the success of any participatory project. He or she works with the farmer, building up their confidence and promoting their self-reliance. As this work must be done without creating dependency, the GP s task is essentially that of an intermediary, with three basic roles: Group adviser, strengthening the groups leadership, organizational and planning capacity. Participatory trainer, teaching groups basic technical, literacy and problem-solving skills Link person, facilitating communication between the groups and government and NGO development services. Experience show that one group promoter can help to organize an average of groups. GPs must have experience in working with people and local organization in rural areas, and familiarity with the problems of the farmer. It is essential that candidates have a strong commitment to live with, work with an assist the farmer. Capable group promoters may be recruited from government agencies or local NGOs willing to work with farmer. I n some cases, preference has gone to government agencies to government agencies willing to second their staff to the project. GPs promote self- reliance by involving the group members in activities that allow them to develop leadership and record keeping skills. They encourage group-to-group exchanges, and ensure the presence of one or more group members whenever they deal with supporting institutions such as banks and delivery agencies. When and how should GPs withdraw from their groups? Past experiences in the project indicate that it takes three to five years for groups to achieve complete self-reliance The new concept of producer companies is based on the recommendations of an expert committee led by noted economist, Y. K. Alagh. The committee was asked (a) to frame a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies and (b) to ensure that the proposed legislation accommodated the unique elements of cooperative business with a regulatory framework similar to that of companies. The new type is termed as `Producer Company', to indicate that only certain categories of persons can participate in the ownership of such companies. The members have necessarily to be `primary producers,' that is, persons engaged in an activity connected with, or related to, primary produce. What is primary produce? In terms of the Act it is a producer of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in handloom, handicraft and other cottage industries: by - products of such products; and products arising out of ancillary industries. Formation 153

157 Any ten or more individuals, each of them being a producer, that is, any person engaged in any activity connected with primary produce, any two or more producer institutions, that is, producer companies or any other institution having only producers or producer companies as its members or a combination of ten or more individuals and producer institutions, can get a producer company incorporated under the Act. The companies shall be termed as limited and the liability of the members will be limited to the amount, if any, unpaid on the shares. On registration, the producer company shall become as if it is a private limited company with the significant difference that a minimum of two persons cannot get them registered, the provision relating to a minimum paid-up capital of Rs. 1 lakh will not apply and the maximum number of members can also exceed 50. Members' equity cannot be publicly traded but be only transferred. As such, "producer companies would not be vulnerable to takeover by other companies or by MNCs.'' Objects The objects of producer companies shall include one or more of the eleven items specified in the Act, the more important being: (i) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of members or import of goods or services for their benefit; (ii) Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members; and (iii) Manufacture, sale or supply of machinery, equipment or consumables mainly to its members. The other objects include rendering technical or consultancy services, insurance, generation, transmission and distribution of power and revitalisation of land and water resources; promoting techniques of mutuality and mutual assistance; welfare measures and providing education on mutual assistance principles. It is to be noted that private limited or public limited companies are not hamstrung by such restrictions as to their objectives, provided they are legal. Management (a) Every producer company is to have at least five and not more than 15 directors. Minimum prescribed for private limited is two and for public limited three, while the maximum will depend on the number mentioned in the respective Articles. Usually the maximum is pegged at twelve. (b) A full time chief executive, by whatever name called, is to be appointed by the board. He shall be an ex-officio director and will not be liable to retire by rotation. He shall be entrusted with substantial powers of management as the board may determine. This provision differs from that applicable to limited companies a private limited need not have any chief executive while public limited companies, only with paid-up capital exceeding Rs. 5 crores, have to have a managing director. 154

158 (c) A stipulation that could dismay company secretaries is that only producer companies having an average annual turnover exceeding Rs. 5 crores in each of three consecutive years need have a whole-time secretary. It is not mentioned what would happen to the incumbent, if the turnover falls below this minimum. This is in contrast to the mandate that private and public limited companies having a paid-up capital of Rs. 2 crores or more should have a whole-time secretary. Members' benefits Members will initially receive only such value for the produce or products pooled and supplied as the directors may determine. The withheld amount may be disbursed later either in cash or in kind or by allotment of equity shares. Members will be eligible to receive bonus shares. 155

159 Sanitary and Phyto-sanitary Measures for Improving Efficiency of Supply Chain Management NS Azad Thakur Introduction Insects, weeds, nematodes and disease pathogens damage more than 35 per cent of crop worldwide. There are several methods for the pest control and the most common methods the use of chemical pesticides. An estimated 4.5 million metric tons of pesticides are consumed in the world annually to protect crops and meet the demands of public health (Mukund Joshi, 2005). During the last four decades, the consumption of pesticides in India has increased several folds, from 154 MT in to MT in Wide spread use of pesticide in agriculture has led to a large scale environmental exposure to these chemicals. The overuse, abuse or misuse of pesticides can have serious consequences in food. Only a small amount of the pesticide (<1 %) applied to a crop reaches the target pests and remaining (>99%) enters different components of the environment to contaminate soil, water, air, food, feed, forage and other commodities. Almost all the pesticides are inherently poisonous. Misuse of pesticides has resulted in havoc either to human life or crops or to the ecosystem. It has been estimated that more than 1 million poisoning cases occur in the world annually with about 15,000 deaths. There may be long term health risks from small quantities of residues in' food-for example DDT in human breast milk and residues of endocrine-disrupting pesticides. Certain classes pesticides like organophosphates have a common mode of action and their effect may be cumulative. The prevalence of toxic products applied by untrained users in many developing countries gives rise III concern for consumer safety in those countries and in produce for export. WTO and SPS International trade and travel have expanded significantly in the past 50 years. This has increased the movement of products that may pose health risks. World Trade Organization (WTO) is the only international body that sets and oversees the global rules of trade between nations. At the heart of the WTO is a set of agreements, negotiated and signed by the bulk of the world's trading nations and ratified by their governments. These agreements are the legal ground rules for international commerce. They encourage governments to keep their trade policies within agreed limits to everybody's benefit. The Sanitary (human and animal safety) and Phytosanitary (plant safety) Agreement (SPS Agreement) is one such agreement forming part of the 1994 Accords that established the WTO, which replaced the General Agreement on Tariffs and Trade (GATT). Regulations under the purview of the WTO-SPS Agreement include: The protection of animal or plant life or health within a territory from risks arising from the entry, establishment, or spread of pest, disease, disease-carrying organisms, or disease-causing organisms. 156

160 The protection of human or animal life or health within a territory from risks arising from additives, contaminants, toxins, or disease-causing organisms in foods, beverages, or feedstuffs. The protection of human life or health within a territory from risk arising from diseases carried by animals, plants, or products thereof, or from entry, establishment, or spread of pests. The prevention or reduction of the risks of other damages within a territory from the entry, establishment, or spread of pests (Appendix A of WTO-SPS Agreement 1994, Annex A.) International residue standards Pesticides are used widely throughout the world to control insects, diseases & weeds of crops for human consumption. The use of pesticides in food production inevitably leaves residues. Residues can arise from: the use on a crop oflegally allowed pesticides according to good agricultural practice overuse of a pesticide, or use too close to harvest, of a legally permitted pesticide illegal use of a pesticide that is not approved for that crop incorrect use of pesticides after harvest, to reduce pest infestation in storage or in transit. Strict standards on pesticide residues in food need to be maintained to guarantee consumer safety. Governments need to monitor residues in food and publish the results. Chemically intensive production will continue to generate-concerns about the consequences of long term low doses of multiple pesticide residues. Food safety depends on strict standards prevent undesirable residues, and provide consumers with sound, wholesome products. The Codex Alimentarius Commission (Codex) is the international body of government representatives establishing standards, with a remit to: "guide and promote the elaboration and establishment of definitions and requirements for foods, to assist in their harmonization and, in doing so, to facilitate international trade. Codex Alimentarius Commission The Codex Alimentarius Commission (which means 'food code' in Latin) establishes a code of food standards for all nations. It was created in 1963 by two UN organizations, the FAO and the WHO and has committees covering many aspects. Pesticide residues in food are dealt with by the Codex Committee on Pesticide Residues, which bases it work on scientific approvals made by the independent expert panel, the Joint FAO/WHO Meeting on Pesticides Residues. Codex Committee on Pesticide Residues (CCPR) The Codex Committee on Pesticide Residues (CCPR) develops and maintains acceptable pesticide Codex maximum residue limits (MRLs) for food commodities in International trade. Via the so called "Codex Step Procedure" new MRLs are developed and agreed. Member State governments nominate compounds to be evaluated by the Joint Meeting on Pesticide Residues (JMPR), if these compounds meet specific agreed criteria. This is done in close co-operation with the manufacturer since they are the usual source of the necessary data. JMPR evaluates compounds, which have measurable residues in internationally traded commodities. Such residues are a legitimate matter of public health concern 157

161 and could create problems in International trade unless properly regulated. The compound/product evaluated must be registered in at least one Member State and be available for commercial use. Joint Meeting on Pesticide Residues (JMPR) The Joint FAO/WHO Meeting on Pesticide Residues (JMPR) is an international scientific expert group administered jointly by the Food and Agriculture Organization of the United Nations (FAO) and the World Health Organization (WHO). It serves as an independent scientific advisory body to FAO, WHO, and their member governments, as well as to the Codex Alimentarius Commission. Advice on pesticides is provided to the Commission via the Codex Committee on Pesticide Residues (CCPR). In order to comprehensively understand the process of dealing with the Codex Committee on Pesticides Residues and the Joint Meeting on Pesticides Residues (of FAO and WHO), we have developed the Manual for the Agrochemical Industry for working with the JMPR and CCPR. During the meetings, the FAO Panel of Experts reviews residue and analytical aspects of the pesticides under consideration, including data on their metabolism, fate in the environment, and use patterns. The Panel also estimates the maximum residue levels that might occur as a result of the use of the pesticides according to Good Agricultural Practices. The WHO Core Assessment Group is responsible for reviewing toxicological and related data and for estimating Acceptable Daily Intake (ADI) and the Acute Reference Dose (ARID) for humans. Standards under the World Trade Organisation Since the Uruguay round of the General Agreement on Tariffs and Trade (GATT), Codex has become the basis of international food standards for trade between member countries of the World Trade Organisation (WTO). National standards are based on a country's pesticide crop residue and toxicology data. Codex recommended residue levels may be used by developing countries which do not have their own. Codex meetings are dominated by industrialised countries, many of which include industry in their delegations, and it is vital that developing countries participate and are well briefed to represent their own interests. FAO and WHO have been evaluating the safety of residues in foods since 1962 and establishing Maximum Residue Limits (MRLs) to help ensure that pesticides are not overused and that any residue is safe for human consumption. Over 2,500 MRLs are currently approved covering 195 active ingredients. Standards do not exist for all crops, or for all pesticides, as some are not used on food and not all pesticides leave residues-for example theymay be used to clear weeds before planting. Permitted residues are small, being generally measurer in parts per million. Standards for residues Pesticide use is controlled by national regulation, generally a system of registering each pesticide formulation for a specific use and crop. Approvals are based on evaluations of efficacy, user and consumer safety, and environmental Impact. Most industrialised countries have also established laws setting the MRLs that are permitted in food, and which apply to produce domestically and imported. One objective of Codex MRLs is to facilitate internationals trade: standards are intended to ensure that importing countries will not prevent import of food commodities because of residues 158

162 that occur up to the level of the MRL. However there is often a variation between national standards and international recommendations. Residue limits are set relying on a number of related concepts: Maximum Residue Levels (MRLs) -the legal limit of pesticide allowed (expressed in mg/kg of produce) in food or animal feeds. Acceptable Daily Intake (ADI) -the amount of chemical that can be consumed (in mg/kg bodyweight) every day for an Individual's entire lifetime in the practical certainty, on the basis of all known facts, that no harm will result. Good Agricultural Practice (GAP)... Howa pesticide is used by the farmer. GAP represents nationally authorized safe pesticide (amount, method, time of application etc.) under actual conditions, so is to leave the smallest amount of residue that is toxicologically acceptable. Generally the use of a pesticide will lead to residues in food and provided the pesticide is used according to the manufacturer's label directions and GAP, regulators calculate the residue should be within the MRL and ADI. Although most countries aim to observe Codex MRLs so they can export produce, this does not necessarily mean that they have in place an effective system of national MRLs for domestically produced and consumed food. How standards are set The Codex Committee on Pesticide Residues meets annually, generally in the Hague, to establish and review MRLs for particular pesticides. Decisions are based on an expert technical committee of FAO and WHO, the Joint Expert Meeting on Pesticide Residues (JMPR), which reviews evidence on toxicology, residues data and use patterns. JMPR is made up of toxicologists and residue chemists who act in their own right. The recommendations of the Committee on Pesticide Residues are passed on to the Codex governing body, which generally adapts these as Codex standards. Problems and difficulties In practice there are difficulties in using a single standard. MRLs are based on the likely dietary intake of most people. However, diets differ considerably within and between regions Children's diets differ from adults. Many classes of pesticides such as organophosphates and carbamates exert similar effects on the body, and toxicology is only now beginning to assess how to take into account the possible cumulative effects. In addition, there are arguments about what constitutes 'good agricultural practice': one country's use of post-harvest chemicals may not be acceptable to another. The issue of pesticide residues from herbicide tolerant or insecticide-producing or otherwise genetically modified crops has yet to be debated. GAP is defined with reference to conventional pesticide applications. The Ad-Hoc Working Group on Problems Relative to Pesticide Residues in Food in Developing Countries has called for IPM as a preventive measure, and for consideration of IPM when developing GAP information. The Codex Committee on Pesticide Residues has endorsed this request. 159

163 Monitoring To monitor food safety and compliance with MRLs many governments in industrialised countries sample foodstuffs and test for pesticide residues - usually the dietary staples are ample on an annual basis, and targeted sampling is directed at different items of the diet each year. Major food retailers in industrialised countries increasingly contract grower directly. The safety of the food supply is not simply a government matter but an issue for commercial operators as well. Retailers will often test for residues but may not disclose the results. Sources for the protocols and methodology for sampling, analysis and reporting are set out in the resources section below. Acceptance of Codex MRLs Under the Sanitary and Phytosanitary (SPS) agreement, the World Trade Organization (WTO) proposed globally-recognised MRLs as worldwide trading standards. However, neither the USA nor the EU approve Codex MRLs or generally rely on MRLs. Instead, they independently set their own standards. However, this is not to say that MRLs are ignored. For example, the European MRL regulation 396/2005 states that MRLs set at the international level by the Codex Alimentarius Commission should also be considered when Community MRLs are being developed, In addition, in the absence of European MRLs for an active substance/ crop combination an existing Codex MRL might help the inspection services to decide whether imported agricultural products containing traces of residues are considered to be safe and can be further traded. In the USA, the law states clearly that food is considered adulterated if pesticide residues exceed established US standards. The existence of a different Codex level does not influence this acceptability decision at the time of importation. However, if a Codex level already exists when a US tolerance is being set, the Environmental Protection Agency (EPA) may choose to set the same level where possible. Codex MRLs are hardly ever used to solve trade disputes at the WTO level, probably because of the administrative hurdles and costs involved in filing a WTO complaint. Codex MRLs are acknowledged by countries which might not have an own legislation in place, nor capacity to set MRLs, or they might use them in addition to their own nationality established MRLs, especially as Import Tolerances. Developing country problems Many factors can contribute to high pesticide residues in developing countries. Users are generally untrained, have poor literacy and are not aware of the toxicity of the products they use. Instructions are complex, compounded by labels which are often in the wrong language. Containers may have labels missing or damaged. Consistent use of pesticides can lead to insect resistance, which encourages farmers to over-use products. Pesticides appropriate for one crop may be used on others, or pesticides for public health purposes to combat malaria or locusts may be used on crops. Governments and regulators lack the resources to conduct surveillance of health and safety practices in pesticide application, and to monitor the incidence of residues. Newer pesticides are often too expensive for farmers in developing countries, and cheaper pesticides are often older and more hazardous. 160

164 Impacts in developing countries Developing country exporters must meet importers MRL standards, or perhaps in future the international recommendations under WTO rules. Produce which does not meet these standards can be refused entry. This will mean ensuring that produce is grown according to GAP, and that residue limits are within Codex MRLs. Codex MRLs tend, however, to be based on temperate, northern data. Very often the only source of data which is used to generate GAP is the agrochemical manufacturer. The lack of resources in developing countries for monitoring residues could result in shipments being rejected by importing countries. Some developing countries have voiced concerns that Northern countries may use unrealistic MRLs as a means of trade discrimination to keep out their produce. Development aid for agriculture can assist countries in meeting residue standards, and improve the capacity to test nationally. This is not only important for exported produce food for domestic consumption must also be safe for consumers. Many developing countries cannot send delegations to Codex, or send small delegations. While OECD countries will send perhaps 12 in a delegation, many African countries can send only one. The agrochemical companies often form part of the delegations of industrialised countries, and the Global Crop Protection Federation sends a large group of observers (45 in 1997). As Codex is becoming the arbiter of residue standards in food under the WTO, it is essential that developing countries have the capacity to represent their own interest in this important forum. Training programmes are available to assist, and information IS available through the WHO and Codex Secretariat. Conclusion Developing countries need assistance in establishing national food residue standards. Many countries need to develop the capacity to represent their own interests at the annual Codex meetings. Developing countries also need help not only in putting in place the infrastructure to support residue compliance but also in reducing chemical inputs. A chemically intensive production system will continue to generate concerns about residue safety. Key points National standards set maximum residue limits on food: exported foods which exceed these limits can be rejected by importers It is vital for developing countries to attend Codex meetings which recommend international standards on residue-related issues Developing country producers need support in implementing good agricultural practice and pesticide residue data appropriate to local conditions. 161

165 Water Marketing- A Case Study of Meghalaya Lala I.P. Ray and Clarence G. Khonglah Introduction The global water resources are seriously strained. Worldwide, water resources are becoming increasingly scarce in relation to growing demands. The nature and severity of the problem varies from country to country, the factors driving it are wide. Population and economic growth are spurring the global demand for water used for various purposes, viz., drinking, miscellaneous domestic needs, agricultural irrigation, mining, manufacturing, electricity generation, public health, environmental protection, navigation, and recreation. This has major consequences for public policy at national and international levels. Water shortages have led to increases in water s economic value, growing competition, conflict among different water users and increasing environmental impacts of water use. Because these trends are interrelated and reinforced each other, they have led to a vicious cycle of worsening water problems. It is also important to keep in mind that water scarcity is often a problem of water quality as well as quantity. On several international forums the issues related to water scarcity is a major concern. International Conference on Water and the Environment (1992) in Dublin and the Earth Summit in Rio (1992) both endorsed viewing water as an economic good. World Commission on Water (2000) for the 21 st century concluded that we are on a path toward a water crisis and that business as usual is unsustainable. Modern water selling practices by farmers in India have been traced to 1020s, and have been systematically documented only since late 1060s. In general, water marketing involves transactions between willing buyers and willing sellers- a temporary or permanent transfer of water or water rights at an agreed price. In the past 60 years, India s urban population has increased twice as fast as the population as a whole. This rapid urbanization, accompanied by income growth, is placing immense pressure on water utilities in many Indian cities, where infrastructure lags behind. Very less number of Indian cities currently has a 24 7 water supply. Even in cities where most of the population is connected to the piped water system, households typically receive water for a few hours a day that too in insufficient quantities. Consumers typically supplement piped supply from the utility with water from private wells and tankers. Many Indian cities (even national capital New Delhi) have seen the emergence of informal tanker markets (Londhe, 2005; Shaban and Sharma, 2007) where tankers meet about 7% of the demand-supply gap. Water Marketing Practice in Meghalaya Meghalaya is a hilly strip situated in the north-eastern part of India and is about 300 km long (east to west) and 100 km wide, with a total area of about 22,720 Km 2 and is located between 24 o 45 and 26 o 15 North latitudes and 89 o 45 and 93 o East longitudes. It is a high rainfall zone with a subtropical type of climate. The wettest places in the world are also located here. As a result of global climate change, even high rainfall areas are facing drought-like situations in recent years and Meghalaya is no exception. The temperature varies from 2 o C to 35 o C depending upon the altitude which varies in hills that are 300-2,000 m high. The annual mean maximum temperature is also increasing at a rate of 162

166 0.04 o C per decade in the region. At mid-altitude of Meghalaya, the maximum temperature is increasing linearly over the years, whereas the minimum temperature has showed a gradual decreasing trend. Almost all the water sources, including the rivulets, dry up and women have to walk longer distances to fetch water for drinking and other purposes (Anonymous, 2013). Meghalaya is governed by 6 th schedule amendment, which means that most of the natural resources in the state either belong to private or community. It makes difficult to regulate over extraction of water or activities that damage water resources, while respecting customary rights. There is absence of centralised regulatory board for water management (both for surface and ground water). Status of Major Water Resources and Consumers The annual availability of surface water in Meghalaya is estimated to be 63.2 billion cubic meter (BCM) and the estimated replenishable ground water are 1.15 BCM. Around 1.04 BCM quantum of groundwater are potentially available for utilisation. The state has 8,400 ha of reservoirs and 3,734 ha of ponds and tanks and hardly, 45% of the households are covered with tap water connection. Under the scenario of climate change, Meghalaya is going to face the negative impacts. Since , there has been an observed trend of declining annual rainfalls, attributed to the combination of climate change and deforestation. Climate models predict that o C increase of temperature and mm increase in rainfall. Furthermore, the rainfall variability and occurrence of extreme events has increased and is expected to further increase with monsoon rain already having increased drastically since 2001 and shifted towards post-monsoon period. Occurrences of dryspells have increased in quite a number of patches across Meghalaya. The quarrying of stones and sand causes siltation of rivers and water bodies. A balanced industrial and mining water needs with other needs especially for potable and agricultural water requirements needs to be ensured that polluted effluents don t threaten public health and environment. Hydropower is a renewable and carbon neutral energy source which will reduce the cost of energy imports a potentially generate revenue from energy export. Tourism sectors also put pressure on the environment including water resources if not managed carefully. Water Market in Meghalaya Structured questionnaires have been prepared to ascertain the water marketing status of two districts, viz., of Ri-bhoi and East Khasi hills district of Meghalaya. There were twenty respondents to the questionnaires from each district. The educational qualifications, gender, average family size, number of dependant, monthly income and other sources of income of the respondents from each district are given in Table-1. Mostly this water marketing is done in this district in a fragmented way. None of the respondents are doing this job on full time basis, but this gives a better part time job, mostly dominated by male members of the family. The educational qualification of the water vendors (persons actively engaged in the water marketing) is mostly below 10 th standard. The percentage of graduates involved in this service is around 22.5%; (15% of Umsning and 30% of Shillong). The 163

167 percentage of dependant family members is less than 5 (around 55%), and the average family size members is also below five (60%). The monthly income from this part time job is around Rs 3,000 (75% of the respondents get around Rs 100 per day. As such there is no fixed time for this job, but it was found that the lean period (during the month of October to February is the peak season). Around 30% of the respondent (one third) have their own transportation facility (i.e., a small pick up van with a trolley for the water tank fixed with a mini 0.5 hp electric operated pump set). Perennial sources of water (mostly springs) act as the source from where the water vendors fill their tanks and they have to pay a nominal amount of (Rs 30 to 50) for one time fill. Depending on the transportation distant the vendors used to charge (for 500L water the price varies between (Rs 300 to 800) on case to case basis. Table-1 Information of the persons involved in water marketing in Meghalaya Particulars Category Block Umsning Shillong Overall Qualification (%) Below 10th Standard College going (up to graduate) Gender (%) Male Female Average family size (%) More than No. of dependant (%) > Monthly income (Rs) (%) < 3, ,000-5, > 5, Type of Income (%) Full time Part time There was no association of these water vendors and they used to run this business as and when required. It was also recorded that the water sold in the tank received from the perennial springs is mostly used for domestic purposes, in some cases, for construction also. Agricultural usage of this purchased water is very rare. Conclusion A consensus is growing for sustainable economic development depends on treating water as a scarce resource and using economic principles to guide its management and allocation. Global warming would likely add to the potential benefits of water transfers. A warming world would alter the hydrologic system and increase the demand for water. Under this scenario the magnitude, timing, even direction of climate-induced changes in a region s water supplies becomes uncertain. This water markets are mostly demand driven and there should be suitable channel for minimising the demand and supply gap arises due to water. Water markets are a means of introducing these principles and allocating supplies in response to changing supply-and-demand conditions. Under Meghalayan drafted water policy necessary measures may be taken to tackle this virtual market. 164

168 Reference Anonymous. (2013). Meghalaya state water policy (fifth draft). Londhe, A. J. (2005). Urban-hinterland water transactions: a scoping study of six classes Indian cites. IWMI Tata water policy programme working paper. Anand, India. Shaban, A., Sharma, R.N. (2007). Water consumption patterns in domestic households in major cities. Economic and political weekly 39 (48): Acknowledgement Collection of questionnaires data by Mr. Blessiful and Mr. Ricky Syiem is duly acknowledged. 165

169 Assessment of Alternative Marketing Strategies through Design of Experiments Rajdeep Chakraborti and Sibaji Chakrabarti Introduction New product development and marketing is an integral force in economic development of a country. When an industry decides to introduce a new product in the market a key managerial concern is obtaining forecast of demand for the new product, prior to their being launched in the market and also the appropriate marketing strategy. As new products introduced in the market across varied product categories and markets as disparate as major metros to little village hamlets, we often see the exit of a number of these new product introductions as they fail to reach the expected sales targets. Factors that generate efficient sales forecast are: 1. Influence of proposed marketing plan 2. Accuracy of demand forecast 3. Cost of the marketing research 4. Timely availability of demand estimates In sum, forecasting systems need to integrate forecasts with the marketing mix and is to be accurate, cost-effective and timely. Ability to accurately predict customer preferences and appropriate design of elements of the marketing mix are leading causes for new product success. To this end designing the marketing mix leading to generating multiple demand forecasts based on different marketing mix options and choosing the most promising marketing mix strategy is critical for all managerial decisions. About Marketing Research Strategy New product introductions vary in degree of newness inherent in product launch. These are: 1. New product is a variant of existing brands. 2. Entry of a new product in the existing product category. 3. The new product with its entry into the market, introduce a new product category. 4. Introduction of new-to-the world product into the market. Consumers involvement, nature of the purchase process, repeat buying behavior and role of different elements to the marketing mix vary across these product categories. To generate new marketing strategy in such of the above situations, different methodologies are required. Researchers have classified generating new product sales forecast broadly on two orientations: micro-level orientation and macro-level orientation. The micro-level orientation 166

170 approach focuses on the purchase process for the new product at individual customer s level and uses such data to generate forecasts at the aggregate market level. The macro-level orientation approach, on the other hand, uses aggregate data, such as sales data for related products to generate the sales forecast for the new product. For micro level study the basic structure of test models is to choose a particular field-setting in which the new product is released and study alternative marketing strategies for demand generation. The researchers then collect information such as on consumers initial trial and repeat purchase intensions for the new product and impact of new product entry on competing products. These data are analyzed statistically to generate sales forecasts. The results obtained from test market are combined with managerial judgment for decision making. About Agri-Business Indian Agriculture is rapidly changing from subsistence farming to commercial enterprise. As output marketing is switching over from raw selling to value added selling, size of Indian agri-business is increasing rapidly. This shift from agriculture to agri-business is the only pathway to revitalize Indian agriculture. The four sectors of Agri-business system with forward and backward linkages are: (1) Agricultural input, (2) Agricultural production, (3) Agro-processing, and (4) Agricultural marketing and distribution. Of these four sectors, (1), (2) and (4) are primarily off-farm sectors. Progress of agri-business, rely primarily on these off-farm sectors. In agricultural marketing and distribution sector marketing strategy of the value-added agri-products is as important as the product itself. If we want to concentrate on this marketing strategy issue, our objective reduces to identifying a strategy among various alternatives for the product launch so that the product is a success. A Hypothetical Case Study in Agri-Business under Micro-Level Orientation Let us suppose that a agro-processing industry wants to launch a processed product for consumers. Being satisfied about its quality in laboratory test, the company decides to undertake a pre-launch micro-level study for deciding about the strategy to be adopted in a field setting. The product is introduced to the consumers, for example, with 5(=t) alternative strategies A, B, C, D and E. Four locations (=r) of a city L 1, L 2, L 3 and L 4 are selected for initial trial for the introduction of the product. In each location the appropriate duration of application of a strategy is fixed. During this fixed period only one strategy is applied and the corresponding sales records are obtained. Sequence of applications of different strategies, in a particular location is determined through randomization. Randomization is done afresh in each location of the city. Hence, all the five strategies are applied in all the locations, though in independent sequences. The company wants to take a decision about the alternative strategies for adoption. Thus the data analysis exercise is a Randomized Block Design where five alternative strategies of product launch are tested for significance. Four different locations of the city where all the five strategies are employed at random, are really replications for the strategies. The sales volume for the new product introduced for the fixed period for different strategies may be tabled as follows: 167

171 Sales Volume for the Product in Pre-Fixed Period (000 Rs.) L 1 A C E D B L 2 C D E A B L 3 E B D C A L 4 D A C B E In general, with number of strategies (t) and number of locations (r), the ANOVA Table for such a trial is: ANOVA Table Source d.f Strategy 4= (t-1) Location 3= (r-1) (Replication) Error 12 = (r-1) (t-1) Total 19 = (rt-1) Combined ANOVA Table Source df Strategies Cities Strategy City Location Pooled Error Total 4 = (t-1) 9 = (p-1) 4 9=36=(t-1)(p-1) 10 3=30=p(r-1) =120=p(t-1)(r-1) =199=(prt-1) 168

172 Measures of variation for each source are expressed in terms of sum of squares. The mean square for each source is then compared with mean square of error through F-test, for drawing conclusion. The error forms the basis of comparison. This analysis leads us to find the best strategy / strategies. If the agro-processing industry wants to make the study in multiple numbers of cities simultaneously, it can do so and can have a combined analysis. If the same design is laid out in multiple numbers of cities, simultaneously the combined ANOVA Table will be of the form (assuming 10 (=p) cities are taken): For the combined analysis it is assumed that error variances over all the cities are homogeneous, so that pooled error sum of square can be calculated. Interpretation of Combined Data Analysis For the combined analysis, first of all (Strategy city) interaction is tested for significance against pooled error. If this interaction is significant, this implies that strategies can be divided into two or more groups each with certain common characters, difference between groups being significant. In this situation, the F-ratio appropriate to the testing of the mean square due to strategy is obtained by dividing the mean square due to strategy by the interaction mean square. When (Strategy City) interaction is insignificant, the interaction can be considered as an error component and added to the pooled error sum of square and then the test for strategies is done against this new pooled error for significance through F-test. This statistical analysis can help to identify best marketing strategy for the product under consideration. With this identified best marketing strategy the agro-processing industry can now look forward to making reasonably accurate demand forecast for the product it wants to bring into the market. 169

173 Basic Statistics and Exploratory Data Analysis in Business Enterprise Arup Kr. Sharma Introduction Marketing and Consumer Behaviour Research in public interest requires unbiased description of firsthand account of statistically processed information. Prior to undertaking an exploration in business, one should be familiar with what is statistics. It is fact finding in figures. It aims in principle of Reduction of data through Aggregation Pragmatic Description and Rationalisation Statistically Convincing Reasoning Inference The advantages of aggregation are usefulness, representative and easiness in explanation. In most cases statistics has to study of population which is a group of individuals or objects under consideration. Population constants are called parameter. Population is often infinitely large for which study of Population through parameter is normally impossible. In such cases, a finite subset of population is called Sample is the alternative. Advantage of sampling instead of population census includes saving of time and cost. A properly chosen random sampling is representative of population. It has precision e.g. studying characteristics of the cattle population in India, random sample with proper study protocol and sampling technique is the only alternative. Value computed from sample is called Statistic. The formula used for computation of statistic is called Estimator. Statistics are of two types 1. Descriptive Statistics 2. Inferential Statistics The values computed from a sample to portray the population characteristics are called descriptive statistics (Table 1). It consists in computation of measure of central tendency and dispersion. Measures of central location such as mean median mode geometric mean harmonic mean are the most important steps in statistical computing and finding the summery statistics. Measures of central location represent a condensed measure about central value of a data set. However, it is silent about the scatterness of the series. The degree of scatterness of data frequently known as variability or dispersion. Measure of dispersion quantify variability present in a data set and supplements the fact to examine whether the series is homogenous or heterogeneous. Table 1: Some commonly used descriptive statistics Data Study Type Statistic Continuous data Location Mean (Arithmetic, Geometric, Harmonic) Arithmetic Mean and SD are most 170

174 Median widely used Mode Dispersion Range Standard deviation(sd) Coefficient of variation Percentile Interquartile range Shape Variance Skewness Kurtosis Moments Count data Index of dispersion Summary tables Grouped data Frequency distribution Contingency table Dependence Pearson product-moment correlation Relation Rank correlation (Spearman's rho) Scatter plot In statistics, a character is often referred as variable because it can take varied observations If (X 1, X 2,.. X n ) are n observations on a characters say X. Some commonly used Descriptive statistics are tabulated in Table 2. Table 2: Common statistical formulae used in business enquiry Measure Statistic Estimator Central tendency Arithmetic mean (AM) X n i1 n X i 171

175 Dispersion Standard Deviation (SD) or root mean square deviation 1 n 1 n i1 (Xi X) 2 Relation Pearson productmoment correlation with Scatter plot Correlat ion(r) Cov (X,Y) -1 r 1 Cov(X,Y) SD(X)SD(Y) 1 XY n Rank correlation Let d i = X i -Y i = (X i - X ) -(Y i - Y ) n 6 d2 i n(n 2 1 i r 1 1) If data is grouped according to frequency distribution, then n i f Xi n i1 AM X ; N=f N i1 i SD is most widely used measure of dispersion. The computation formula for SD is n 2 ( X n i) i1 2 SD Xi ; SD is called variance. n 1 i1 n For a grouped frequency, SD is given by SD 2 1 N 1 n i1 f X i 2 i X 2 as The standard error (SE) is the SD of all possible sample distribution.se of mean is computed SE X SD n 172

176 For a normal data, X SE X contains 68.28% of total population The coefficient of variation (CV) is other measure of variability expressed in percentage is a unit free measure of variability is often used to narrate percentage variation in mean. It is computed as SD CV 100% X Box-and-Whisker Plot While computing descriptive statistics, it is desirable to examine whether there are differences between populations by box-and-whisker diagram. It is a suitable exploratory graphical data analysis technique drawn either horizontally or vertically to present data through a box indicating quartiles, and mean. Vertical Lines expanding from the boxes signifies variability outside the upper and lower quartiles while outliers (extreme observations) are plotted as individual points. The distance between the different components of the box point out the degree of variability (spread) and skewness (deviation from symmetry) in data, and identify outliers. Box-and-whisker plot does not presuppose that population have any statistical distribution. Once firsthand account of statistically processed unbiased description of statistical balance sheet is conveyed as information by descriptive statistics, it is desirable to infer through a statistical hypothesis (a statement about population) which is in turn tested by statistical tests. The tests are speculation or guess whether it is true or not by confidence level. Usually confidence level is more than 95% (risk less than 5%) or 99% (risk less than 1%). The risk is called significance level. Some of the commonly used statistical tests are:- Z (normal) test Student's t-test Variance Ratio F test Goodness of fit (Chi-squared) test Signed-rank (1-sample, 2-sample, 1-way anova) test 173

177 Shapiro Wilk test Kolmogorov Smirnov test etc. These Statistical tests are available in common text books. It is also important that graphical methods play an important role to convince others. Some of the graphical presentations are given below. They speak of themselves. Pictorial Presentation Example 1 Pareto Plot Pictorial Presentation Example 2 Bivariate Fit of ratio By age Linear Fit ratio = *age, R2= , N=72 Polynomial Fit Degree=2 ratio = *age e-5*(age-36)^2 ; R2=

178 Polynomial Fit Degree=3 ratio = *age e-5*(age-36)^ e-6*(age-36)^3 ; R2= Smoothing Spline Fit, lambda=1000 R-Square Sum of Squares Error Example of Bivariate Study in 2 Successive Survey about a Product First Survey Second Survey Count Approve Approve 794 Approve Disapprove 150 Disapprove Approve 86 Disapprove Disapprove 570 Solution: Contingency Analysis of Second Survey By First Survey Freq: Count Mosaic Plot Contingency Table First Survey by Second Survey Count Approve Disapprove Total Chi Sq. df P_Value Approve Count Total % Col % Row% Disapprove Count Total % Col % Row% Total ** Significant at P (< ) <.0001** 175

179 Forecasting Techniques in Business Management Arup Kr. Sharma Introduction What cannot be measured cannot be managed. Timely forecast prevents distress sale, investment and trade Reliable and timely forecasts of business output are needed for various strategic resolutions relating to storage, distribution, pricing, marketing, import-export, etc. However, these prior estimates are only subjective guess works and not the objective estimates. For this a statistically sound objective forecasts of business output is a paramount interest for any business organisation. Regression is a statistically sound descriptive relationship of a dependent variable that connects a set of explanatory variables of interest. It put together a set of formal expressions of these relationships to the point when the behaviour of the model adequately mimics the behaviour of the system. It may also be defined as conditional expectation of a dependent variable for given values of explanatory variables. British Biometrician, Sir Francis Galton ( ) first noticed that offspring of exceptionally tall or short parents regress or return to average population height and he introduced the word regression. Since then, regression has been used as statistical technique to estimate and test functional relationship in a set of interrelated variables. It is a powerful statistical technique. The purpose of regression analysis is To estimate functional relationship (conditional expectation between a dependent variable (character) and a set of inter-related variables.) To forecast the dependent variable from independent variables Linear regression models Y = ß0 + ß1X1 + ß2X e where Y and Xi are output and business characters respectively. These may be used in original scale or some suitably transformed variables of these can be used. ß0 and ßi are constants to be estimated and e is random error. Y: response/dependent/outcome/endogenous variable. X: predictor/independent/explanatory/exogenous/prognostic/pre disposing variable. X & Y: may be quantitative/qualitative, Quantitative variable may be either discrete/ continuous, Qualitative variable is also called categorical variable, All variables are represented numerically in regression analysis. Categorical variables should be converted into numerically by Dummy Variable Techniques These models may be improved by taking regressors as principal components of business inputs or growth. The growth indices may be any index that is used as economic or business barometers. Performance of regression models are judged by coefficient of determination (R 2 ). It 176

180 indicates percentage of variation in Y explained by the independent variables. Since it is the shared variance, it also sometimes interpreted as degree of association. Use of Dummy Variable A Dummy Variable is also called dichotomous/binary/ contrast variable. It takes on only two values, usually 0 & 1. E.g. A categorical variable with two categories can be represented by a single dummy variable. The variable, place of residence, Urban & Rural is an example. U: 1 if urban, 0 otherwise (rural). The category with assigned value 0 is called reference category. The choice of reference category is arbitrary. Why we assign 1 & 0 in defining dummy variable? It is simple and convenient for interpretation of a & b. e.g.: Y = a + b X Fundamental Assumption: where, F: fertility X: 1 if urban, 0 if otherwise If X= 0 Y = a. Now a is profit of reference category (i.e. rural), If X = 1, Y = a + b. Here b is the difference in profit between urban & rural The error terms i pay an important role investigating the adequacy of the fitted model & detecting departure from the fundamental assumption. The assumptions are - mean zero, E(e i ) = 0, linearity - constant variance, Var (e i ) = 2, homoscedasticity - uncorrelated, E (e i e j ) = 0, independence Managing a model While undertaking regression and prediction, one should be aware of - Outliers (shocking values) - Interaction - Muulticollinearity & - Autocorrelation & Overcome Hardles Outlier : Adultery ground of 349 days of delivery after Military Service abroad in Aug 1945 (Mr Hadlum vs Mrs Hadlum 1949) was an outlier was discordant and appeal failed. House of Lords later on fixed Credibility limit for gestation period 360 D (Preston Jones Vs Preston Jones 1952). Outlier may be mean shifted or variance shifted in the model. Cook Statistic, A P Statistic and Q i statistic are useful in identifying outliers. Outliers are far away from the others (they are often due to data error). It exerts strong influence on b 0 & b 1 Dealing with Outlier: These extreme data may be detected through computer routinely check 177

181 Interaction: (i) Scatter plot, (ii) Minimum & Maximum values of variable iii) Frequency distribution, (iv) Box plot, (v) Case wise diagnostics for outliers (through statistical package) It implies that the effect of X 1, say on Y depends on the level of the other variable X 2. e.g. 1. The effect of education X 1 on fertility Y is found larger in the higher income X 2.. The effect of age X 1 on no. of visit to doctor Y is found higher in women than in men (sex X 2 ) How to deal Interaction: - Model that include interaction effects Y = b 0 +b 1 X 1 + b 2 X 2 + b 12 X 1 X 2 = b 0 + b 1 X 1 + b 2 X 2 + b 3 X 3 ; where b 3 = 12, X 3 = X 1 X 2 The effect on Y of the increasing X 2 by 1 unit, then Y* = b 0 + b 1 X 1 + b 2 (X 2 + 1) + b 3 (X 2 + 1) X 1 = b 0 + b 1 X 1 + b 2 X 2 + b 3 X 1 X 2 + b 2 + b 3 X 1 = Y + (b 2 + b 3 X 1 ) The effect of 1 unit increase in X 2 is to increase Y by b 2 + b 3 X 1. It means the effect on Y of Increasing X 2 by 1 unit depends on the level of X 1 (which is interaction), where b 2 : main effect b 3 X 1 : interaction effect/sometimes b 3 is called interaction effect. Multicollinearity - Two predictor variables are said to be multicollinear if they are highly correlated (r > 0.8). Now, If X 1 and X 2 are perfectly correlated, then the model conforms exactly to a st. line( instead of a plane). Y= m + nx In this situation, b 0, b 1 and b 2 are not uniquely solvable. However X 1 and X 2 are not perfectly correlated, the co-efficients are solvable. How to deal - Collinearity statistic e.g. Variance Inflation Factor (VIF)= 1/(1 R 2 ). If VIF > 5 or 10, then there is a multicollinearity. In real-life observational data certain amount of multicollinearity is inevitable. When two predictor variables are correlated (both are important), is should not eliminate one of them to reduce multicollinearity unless r > 0.8. Through computer, calculate correlation matrix then scanned for correlation > 0.8 between pairs of predictor variables. Alternatively, Ridge regression and Regression of principal component scores may be used. Inserting higher polynomial (if predictor is not linear to response variable. e.g. Y = b 0 + b 1 X 1 + b 2 X 2 + b 3 X 2 2 ; if b 3 is significant, if not discard, introduce higher polynomial(b 3 X 2 2 ) So does, Y = b 0 + b 1 X 1 +b 2 X 2 + b 3 X b 4 X till respective b is significant 178

182 Autocorrelation: In time series data, assumption of uncorrelated /independent errors are often violated and exhibit serial correlatio. e.g., E (e i e i + j ) = 0, Then, the error terms are said to be auto correlated. Primary cause of autocorrelation involves failure to include one/more important predictor variable(s). e.g. Y : annual sale of a soft drink, X 1 : annual advertising expenditure. If X 2 : population size, which influences Y, is not included in the model, this causes autocorrelation. Dealing with Autocorrelation There are three approaches to deal autocorrelation. - if autocorrelation is present, identify the predicted variable(s) & include it in the model. - if the problem can t be resolved by including omitted factors, then turn to a model that specifically incorporate the autocorrelation structure (it needs special parameter estimation techniques) - weighted/generalised least square method can be used if there are sufficient knowledge of the autocorrelation structure. Example 1: Data for Linear Regression popcorn oil amt batch yield trial plain little large gourmet little large plain lots large gourmet lots large plain little small gourmet little small plain lots small gourmet lots small 18 1 plain little large gourmet little large plain lots large gourmet lots large plain little small gourmet little small plain lots small gourmet lots small 16 2 Parameter Estimates Response yield Term Estimate Std Error t Ratio Prob> t Intercept <.0001* popcorn[gourmet] * oil amt[little] popcorn[gourmet]*oil amt[little] batch[large] * popcorn[gourmet]*batch[large] * oil amt[little]*batch[large] popcorn[gourmet]*oil amt[little]*batch[large] R

183 Example 2: Data for multiple linear regression Profit Stock capacity Real Estate Capital Daily Sale Loan Year of Birth The table below depicts multiple linear regression. However, VIF suggests presence of multicolinearity except Unwanted Expenditure and auto correlation due to high Durbin-Watson are suspected. Model Multiple Linear Regression Coefficients(a) Unstandardized Coefficients Standardized Coefficients B Std. Error Beta t Sig. 1 (Constant) Collinearity Statistics Tolera nce VIF Stock capacity NPA Borrowed Capital Unwanted Expenditure Loan Year of Birth a Dependent Variable: Profit Model Summary(b) Adjusted R Std. Error of Model R R Square Square the Estimate Durbin-Watson 1.998(a) a Predictors: (Constant), Year of Birth, Unwanted Expenditure, Borrowed Capital, Stock capacity, Loan, NPA b Dependent Variable: Profit 180

184 Box Cox Plot to check found no outliers but one can t say of normality of data. Profit Stock capacity Normal(65317, ) NPA Normal( , ) Borrowed Capital Normal(387698, ) Unwanted Expenditure Normal( , ) Loan Normal( ,695.92) Normal(117424,6956.1) Year of Birth 181

185 Normal(1954.5, ) Example ANOVA and prediction Type brand speed Analysis of Variance Source DF Sum of Mean F Ratio Prob > F REGAL 70 Squares Square SPEEDYTYPE 87 brand * SPEEDYTYPE 79 Error REGAL 73 Total SPEEDYTYPE 77 REGAL 72 WORD-O-MATIC 62 REGAL 71 WORD-O-MATIC 77 SPEEDYTYPE 80 REGAL 72 WORD-O-MATIC 66 SPEEDYTYPE 81 REGAL 68 WORD-O-MATIC 61 REGAL 66 Connecting Letters Report Level Mean ±SE SPEEDYTYPE A REGAL B WORD-O-MATIC B Levels not connected by same letter are significantly different. REGAL 70 Example of Partial Least Square Plot for Wine Testing by 5 judges Judge Price Sugar Alcohol Acidity Hedonic Goes with meat Goes with dessert

186 Variable Importance Plot Price Sugar Alcohol Acidity 183