Commodities boom heralds green revolution

An unprecedented boom in agri commodities market, driven by the economic and retail book, is heralding a second Green Revolution in India.

Fourteen states that include Maharashtra, Punjab, Andhra Pradesh and Rajasthan have amended the Agricultural Produce Marketing Committee Act this year. This allows farmers to sell their produce directly to buyers offering them the best price.

Agriculture sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and services related to agro and allied sectors are open to 100 per cent foreign direct investment through the automatic route.

Already agriculture one of the most important sectors of the economy contributing 18.5 per cent of national income, about 15 per cent of total exports and supporting two-thirds of the work force. And with recent developments, it is going to play a more dynamic role in the economy.

Increasingly a number of players in the private sector have evinced a keen interest to tap the potential of Indian agriculture. A number of corporates have entered into a direct agreement with farmers to grow specific crops.

Cadbury India Ltd and the Tamil Nadu Horticulture Department have entered into an agreement to promote cocoa farming in 50,000 acres as an intercrop through a contract farming and buyback arrangement with coconut farmers, providing an additional income of US$ 19.77

million a year to farmers.

The US$ 4.5-billion Mahindra Group intends to tap Punjab's agriculture potential by taking up potato seed development in the state through contract farming. The company will provide technical know-how and extension services to the farmers for producing high quality potato seeds.

Himalaya Drugs plans to associate with small and marginal farmers across southern Indian states including Tamil Nadu, Andhra Pradesh and Karnataka for sourcing at least 70 per cent of its herbs (the core ingredients in herbal drugs) in the next three to four years. It has identified over 1,500 farmers in the south and currently, about 70 per cent is cultivated by the company and 30 per cent is through contract farming.

With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail is in the process of establishing links with farms on several thousand acres in Punjab, West Bengal and Maharashtra.

Wal-Mart is one of the top two retail companies that source Indian products. In 2006, Wal-Mart directly sourced approximately US$ 600 million in goods from suppliers in India.