V-thought- A Knowledge Initiative by Vertebrand

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Vol5 The Business of Agriculture

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The world of Service Branding

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Volume 5
A VERTEBRAND KNOWLEDGE INITIATIVE

The Business of Agriculture

Contents
From the Editors desk Emerging trends in Indian Agri Business Branding Agriculture - Creating brands from commodities Around the world - Stories of successful Agri Branding Challenges in Branding Agri Businesses Down to Earth - Young India turns to Agri Business Expert Speak - Interview with Mr. Prabhakar Rao, Chairman, NSL Group 04 06 09 12 14 16 18

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FROM THE EDITORS DESK

he very mention of Agri business invokes the memory of Farming; hard work, some poignant memories and some not so pleasant thoughts as well. Our thoughts have also been fashioned with the belief that India is an agrarian economy and yet at the same time the current state of affairs bears grim testimony of the fact that there is an urgent need for rapid transformation. Agriculture contributes to about 14.2% of our GDP and yet provides livelihood to close to 52% of the Indian working population. This possibly leads to agriculture being seen more as a social phenomenon rather that just an industry or a business. Agriculture in India is largely dependant on 2Gs.The first is God or more specifically monsoon God. With the monsoon playing truant this year, the buzzword is certainly about how India will cope. The cascading effect on other sectors cannot be discounted and hence every business entity in India is worried. The 2nd G is Government. Agriculture is perhaps one sector where every aspect is controlled and influenced by the Government. There is a social angle to this sector requiring government intervention. However, while reforms in

every other sector have taken some shape, agriculture has been lagging behind. Also the number of ministries involved in the entire chain, compounded with many legislations at both central and state level makes it difficult for changes to be brought about. Industry-friendly efforts of allowing private players to directly purchase from farmers is probably a right step in that direction. Yet, the APMC Act and the EC Act impose significant barriers and states are yet to make changes to them. A billion mouths to feed with overflowing warehouses, sharp rise in food inflation and more than 50% of domestic spending on food products does not bode well for an economy wanting to grow and become a super power. Agri business is an indirect growth driver and if India needs to propel itself to being an economic super power, several structural reforms are necessary in this sector. Government spend towards agriculture is 80% towards subsidies and 20% towards investment. Unless that situation changes to more share for investment and less for subsidy, problems will continue to plague this sector. However there is a silver lining. While mega changes have not taken place at expected levels, small innovations are sweeping the sector. These are driving this sector to become more efficient, more customer-centric and in all boosting local economies. We, at Vertebrand, have partnered many of our clients who are part of the agri business. Our experience in working with clients has been across the value chain. We are actively partnering a Seed company in their marketing initiatives and in the past have created and managed successful brands for clients in the agro processing

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business. The Vertebrand team has also been involved in providing expertise on the retail and logistics aspect of the agri value chain. Our collective experience of working with several clients in this sector has been the prime mover behind this issue of Vthought. This issue of Vthought traces certain key trends sweeping this sector. With Indian economy opening up, there have been marked changes in the consumption pattern, especially of urban India. This in turn has given rise to the marked changes in the way agri products are processed and consumed. This issue traces the emerging trends in agriculture and the challenges in branding of key sectors. There are some interesting stories of branding which have taken place in the agri business sector across the world. We are specially indebted to Mr. Prabhakar Rao, Chairman of NSL Group and Managing Director of NUZIVEEDU Seeds Ltd for his contribution to this issue. He talks about the future of this sector and how to bring back the past glory of agriculture. We do hope you enjoy what you read here. We look forward to hearing from you. Please write back with your feedback and comments to aparna@vertebrand.com. To read and download the online edition of this Vthought, visit www.vertebrand.com Happy reading! Aparna Lakshmi Chief Editor

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EMERGING TRENDS IN INDIAN AGRI BUSINESS

quick update on where India stands in the world agricultural production: Ranks number one in the production of commodities like - Mangoes, Papayas, Bananas, Spices, Millets like Bajra, Ragi etc Second in the production of - Silk Third in the production of - Tobacco, Coconut, Tomatoes Sixth in the production of - Coffee India houses the worlds largest livestock population and is number one in the production of Cow milk and Buffalo milk. The Green revolution has been the starting point for Indian agriculture in its quest for growth and automation. However, the biggest game changer for the sector happened in the 90s when cropping patterns which hitherto were determined by agronomic conditions, moved to being determined by market forces. This in turn, marked a shift from subsistence farming to that of cash cropping. This has led to several emerging trends which characterized the last decade of the 20th century and first decade of this century. The movement from being just food crops to cash crops and then cropping based out of market and consumer demand has brought interesting trends in this sector.

Movement from Agriculture to Agri business Agriculture for a long time has been associated only with farming. For a long time, a strange belief has existed, that farming is not a business and farmers can never be businessmen. However this mind set is changing. With the decline in cultivation and trade of traditional food crops and non food / horticulture gaining prominence, agriculture is no more about farming only. It has evolved to Farming, Processing and Preserving before it reaches the first level of intermediaries. The evolution of organized retail has not just spruced the supply chain but has made the entire chain agile and nimble. The increasing affluence has led to changes in the consumption pattern of people. This in turn adds enormous pressure on the sector to value-add their offering and adopt technology just like any other industry. The trend is encouraging, yet there is a significant distance to be covered on the processing and logistics front to truly become an efficient sector. Corporate involvement through Contract Farming Indian Inc has been in the forefront in acquiring lands for farming in African countries. The legal framework in India does not permit such direct participation. However corporates have been investing in the sector actively through contract farming. The changes brought to the APMC Act by several states have also provided an impetus for the adoption of contract farming. One of the pioneers in this area has been PepsiCo when it initiated contract farming for sourcing tomatoes in Punjab. Contract farming has enabled farmers to access better seeds, adopt better farming techniques, improve yield and also get an assured market and price. In turn companies have benefited by getting consistent quality of supplies. Contract farming today has grown leaps and bounds with many giants turning to contract farming across different crops ranging from potatoes, basmati rice, cotton, wheat, soyabean to name a few. The biggest challenge in Agri business was the access to capital and the absence of recourse to farmers when there was

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crop failure. Today the model has come of age. Financial institutions like ICICI have partnered with Unilever and other contractors in providing access to capital for contract farmers. Weather based insurance products have also come into play to prevent loss due to crop failure. There is a flip side to contract farming as farmers are dependent on contractors and produce only non local crops. Hence there is a danger of a lopsided crop pattern. However given the need for rapid improvement in productivity, contract farming is indeed a must for the growth of the sector as well as for the rest of the economy. Information technology enabling a smart farmer Information & communication technology has enabled the farmers on two fronts - Risk reduction and Price maximization. Weather updates and forecasts have enabled farmers to plan their sowing accordingly. The critical information on the correct market price enables farmers to get the right price and not be completely dependent on the intermediaries. Some solution providers have also been able to provide guidance on future pricing based on global trends. This has taken the farming community one step further to critical decision making on selling and thereby not falling victim to price fall. The pioneering and most prominent success story of harnessing information technology to build a farming community network at a large scale can be attributed to the ITC e-choupal initiative. Today, this initiative is spread across 15 states, touching the lives of over 4 million farmers. Much of the success of e-choupal can be attributed to the fact that it is not just a pure play IT solution but was backed by strong physical infrastructure. It cannot be denied that this initiative opened up the farming community to adopt information technology for a mutually benefiting relationship.

Mobile telephony now touches the lives of more than two thirds of India. With the advent of smart phones, the next generation of technology adoption has come of age and is in turn leading to smart farming. An initiative of Thomson Reuter Group - Reuters Market Light (RML), was first piloted in Vidharba in 2007, as a professional content service for farmers. For an annual subscription fee of ` 800, farmers receive daily weather updates as well as personalized content. RML equips the farmers with market intelligence and keeps them updated on prices of different markets to help them understand broader current trends and future projections. From a few thousand subscribers who received the service free of cost during a test-run in 2007, RML today reaches 250,000 farmers in 13 states, signalling a staggering growth driven by greater rural consumer interest. With the growth of value-added services, mobile phone companies have also dived in to provide value added services to the farming sector. Bharti Airtel, in June this year added a new value added service geared toward rural India. Called Behtar Zindagi; the interactive voice response service was rolled out first in Rajasthan. At INR 30 per month, the operators Behtar Zindagi service is focused on farming and allied communities. It allows customers to receive various data on their mobile phones, including weather updates, market rates, live stocks, agriculture, fisheries, health, education and finance. The service is powered by Handygo, an India based wireless services provider specializing in mobile entertainment. Handygo has worked with various private and government bodies to collate relevant information and disseminate the data to farmers. The service is available 24/7, supports several dialects and is available in Hindi and 17 other regional languages.

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Other corporate entities like TCS have piloted mkrishi - a personalized and integrated service in the local language to farmers on their mobile phones. Farmers in remote areas will be able to connect to their stakeholders, access good quality agricultural inputs, find advice on farming practices, and get information on market prices, weather, and other essentials for improving yields. While providing information on weather and market prices tops the chart, there have been other initiatives which are utilitarian. There has been a glut in services which allow farmers to use mobile phones to remotely monitor and switch on irrigation pumps used for watering crops in remote locations. Rise of Organic Farming The green revolution might have propelled India to move towards self sufficiency, but there have been several unfavorable consequences which are being experienced now. The emphasis on increasing productivity has resulted in deterioration of soil health. The mounting fertilizer subsidy itself is also a case in point that all is not well with that formula for increasing productivity. Organic farming has been an answer to getting back to a process of cultivation of agriculture naturally. It helps in the reduction of synthetic fertilizers, avoids building up of those substances in the soil and in turn creates a balanced ecological chain that ensures sustainable, eco friendly and pollution 08
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free environment. Awareness has been increasing about the ill effects of synthetic fertilizers and the bio amplification of it, which in turn has translated into increasing demand for the organic products. However, there are two essential derailers to the rapid adoption of organic products. Given that farmers in India have very small land holdings, their ability to adopt the usage of bio fertilizers and judicially use it to reap good results has so far been low. On the consumer front, urban consumers have high awareness of organic method of cultivation and do aspire to buy organic products. But are they willing to pay for that? Sadly, No. The demand side is still weak. Consumers like to have organic food but are not willing to pay a premium for it. It is hoped that in the near future there will be much more rapid adoption of organic farming. As agri retailing becomes more entrenched with organized players coming in, there is ample scope for improvement in the demand for organic products. This in turn will facilitate technology transfer and will boost adoption of organic farming at a much larger scale than what it is now. The road ahead As they say We live in interesting times. Indian agri business culture has been seeped in the middle ages, with lack of information and market being a key impediment to its development. There have been small steps taken to move to a transparent market mechanism. It is hoped that this effort will only go up in the days to come. However with monsoon vagaries continuing to haunt the Indian farmer, there is a paramount need to manage water. The next wave of innovation needs to address the issue of water management. Another area of interest will be that of adopting bio technology. Barring Bt. Cotton, India has not moved forward. While there are pros and cons to that debate, it will be interesting to see some concrete action on that front.

BRANDING AGRI BUSINESS

Creating brands from commodities

recent study has revealed that, there is a shift in the consumption pattern from cereals to value-added commodities owing to the change in dietary habits, socio economic and socio demographic factors. As consumers income rises, demand becomes more discriminating, i.e. wider variety and higher quality are sought. It is believed that the share of value-added products in food consumption would reach 50% by 2015. However, the majority of agri products in India are sold to the market as commodities with very little value addition. In the current situation, it is no longer sufficient for agri business to continue focussing on productivity improvement. It is important that agri businesses adopt strategic planning models that address the development of strong brands, a unique selling proposition, the formation of close relationships throughout the supply chain and the development of market orientation. Commodity Vs Brand Kotler and Keller (2006) define a commodity as a product that is presumably so basic that it cannot be physically differentiated in the minds of the consumer. However Theodore Levitt (1980) in his classic article titled, Marketing Success Through Differentiation - of Anything, states There is no such thing as a commodity. All goods and services are differentiable. At Vertebrand, we believe that A brand is defined as a bundle of functional benefits and added emotional values that some people value enough to buy into repeatedly. A brand gives an identity to a commodity and desirability to purchase. Not only does it help in quality assurance, but also product repurchases have been allied with good quality branded products thereby increasing loyalty among

the customers. In essence, a brand is the tool to create a sustainable competitive advantage. Why branding is important Proper branding of products ensures that the farmers/ producers receive prices of their products according to their quality. Branding is an incentive to improve quality. It also safeguards consumers against adulteration. Branding narrows the gap between the producer price and the consumer price. Branding creates a favourable position in the consumers mind and hence the willingness to pay a premium. Empirical studies indicate consumers willingness to pay at least a 10% premium on branded agri products over commodities. Branding is a means to create a loyal consumer following who is ready to buy your product repeatedly, thereby giving an edge over competition. Branding Agri business A brand is a mix of both functional and emotional attributes and hence it is necessary to look at the business not just from a pure product basis. Agri business is no different from other industries in the efforts required to build a brand. Brand creation needs to necessarily go through the ritual of Mapping consumer needs, Market segmentation, Product differentiation and Brand communication. However, there is a significant challenge in this business. The nature and size of farm holdings which are small and heterogeneous means that scale is not possible and hence individual farm owners will not have the wherewithal to create brands. Also productled innovation is difficult and again, will not achieve economies of scale easily. Creating an agri business is fraught with challenges, but there is a method to the madness.
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Core product packaged well In many agri products, the opportunity for real product differentiation is very low. However, consumers have a very strong need for safety given the threat of adulteration and poor consistency in the quality of produce. Brands typically start off with offering a packaged product which safe-guards consumers from adulteration and also meeting a certain basic product quality. Typically, staples like rice and pulses start off with this route, promising customers a certain minimum assured quality. However, the opportunity to charge price premium is minimal over unbranded commodities. In most situations, the brand owner isnt the agri product producer but an intermediary. Augmented product offering Evolution of food processing technologies along with Farm to Fork concept has now given the opportunity to provide added value to the core product, which can be used as a significant differentiator. A brand needs to give assurance of certain quality and consistent product innovations which new technologies in food processing enable. For example, long grain rice or unpolished dal with long shelf life are examples of offerings which have found significant consumer acceptance.

Value added products for discerning consumer need Organic farming and Specialty agri produce are some of the ways to create a differentiated product offering and in turn create brands which command much higher premium pricing. Typically, there is a partnership between the farmer and brand owner to create such differentiated products which are high up on the value chain. In such cases, the first mover has the biggest advantage as they create a need for a certain category of products in the consumers mind. Along with product innovation, investment on brand building is essential to sustain the branding effort. Otherwise, the advantage of a differentiated product is lost with competition crowding in. For example, special rice for diabetics, fortified milk, oil etc. fall into this category. Over time, every agri brand needs to find a real differentiator to stay in this space, or else the advantage of pricing will be lost. Retail Brands Organized retail has been at the fore front in adding value to agri products. While branding the source (farm) is not easy, branding at the point of sale has been a way of creating brands. While store brands in many manufacturing categories are considered inferior to producer brands, in agri business store brands are seen as that of superior quality. Almost 60% of organized retail chain businesses are from food and related items. With changes in the APMC Act & FDI in retail, the future will see a more direct relationship between farm and store. Retail branding is then expected to pick up. GI as a brand building tool Geographical Indicator is an indication; it originates from a definite geographical territory, and it is used to identify agricultural, natural or manufactured goods. GI is similar

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to trademarks except that they point to the place of origin and not to the owner of the goods. World over, GI has been effectively used for agri products especially with relevance to export markets. GI is applicable for Agricultural/Horticulture products that have qualities derived from their place of production and are influenced by specific local factors, such as climate, type of soil, altitude, etc. Some criteria which are essential to meet GI registration are Produce are distinct eco-types with many appreciable features. Produce have been under cultivation for a long time. Produce with strong local reorganization and commercial impact in the zone of their cultivation. No individual or organization has claimed ownership of these crops. The local communities have recognized such crops as heritage crops. While much of the evidence surrounding the dollar benefits derived from GI branding is anecdotal, some empirical research has shown that geographic origin plays a key role in consumer decisions, including willingness to pay a higher price for regionally branded food products. For example, researchers have found that geographic location is an important component of wine pricing as well as food products, such as beef and fresh produce. While GI can be an effective tool for differentiation, an effective marketing program is a must to take the message across to the consumer. This is challenging, especially for developing countries which have an inherent imagery disadvantage. The producer boards which till now

have focused on productivity and product improvement, need to reorient themselves towards building the brand. Historically, the focus of agri business has been to remain profitable by minimizing costs (improving productivity). Today, an increasing number of agricultural producers are examining how to increase profit through product differentiation. GI branding, in conjunction with an effective marketing program, can help agricultural producers and processors develop more profitable operations.

Some of the GI registered agri products

Basmati Rice Darjeeling Tea Assam Tea Nilgiri Tea Goa Feni Malabar Pepper Kerala Cardamom

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AROUND THE WORLDSuccessful Agri business branding stories

brand gives an identity to a commodity and desirability to purchase. Not only does it help in quality assurance, but also repurchases have often been allied with good quality branded products, thereby increasing loyalty among the customers. Majority of agri products in India are sold to the market as commodities. However increasingly it is observed that there is greater opportunity to make profits by selling branded produce. Branding efforts in agri business in India owe their genesis to Basmati rice and since then has been extended to Darjeeling tea and other products. These efforts though, are minuscule compared to the opportunity available. While the domestic market is fraught with its own unique challenges, branding is the need of the hour in the export market. Branding is the way for developing countries to be a force of reckoning in the global food economy. Typically, agri produce branding has been linked to the geographical regions where they are grown. Think of cheese and wine from France which carries the appellation dorigine contrle certificate and the prestige that it enjoys. However, developing countries like India are at a disadvantage. Products from developing countries are always viewed with suspicion and a higher discount is expected by consumers in the developed world. However globally, there has been success demonstrated by developing countries in creating strong agri brands

Brazil- Viva Tango Brazil has one of the top rated agri branding programs. Not only has Brazilian coffee been promoted extensively, but also branding programs have been in existence - Brazilian fruit, Brazilian chicken and even Brazilian Lobster tail! Brazil holds seven percent of the worlds agricultural commodity market and is the worlds thirdbiggest exporter of agricultural products. Agriculture is the most globalized sector of the Brazilian economy, accounting for 25 percent of GDP and 36 percent of exports. Brazil is the worlds leading exporter of: red meat (24 percent of the total), chicken (39 percent of the total), sugar, alcohol, orange juice, coffee and tobacco. Part of BRAZILIANS success can also be attributed to their acumen in market selection. Brazils focus for export is not the US or EU where they face trade road blocks, but the other developing countries. They understood that the greatest potential for growth in food and agricultural trade is among developing countries due to the large population and the rising income growth. Now Russia is the main buyer of Brazilian pork while Egypt is the main importer of Brazilian fresh beef and China is the biggest importer of Brazilian soy beans. Brazil has followed a strategy of diversification, globalization and brand differentiation, thereby reinventing Brazilian agricultural produce. The country today is seen as a producer of many high-quality products. Colombia- Rebranding a nation A well thought-out branding program for agri produce will do a great deal in even building the country brand. Perhaps the best example would be Colombia coffee. Colombia for a long time was synonymous with crime and narco terrorism until the Colombia coffee program came along. Similar to BRAZILS branding efforts, Colombias coffee growers federation took the initiative and started building a brand for their product back in 1959. They created the strategy that built recognition and distinction for 100 percent Colombia coffee. The aim was to emphasize

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coffees origins, on the same lines as Bordeaux for wine. It was successful too. Although it only grows about a quarter of Brazils coffee harvest, it is Colombias coffee that has the reputation for quality. Perhaps that has been the only positive thing about the country and it has changed the overall impression of the nation itself! Experience, across the world, indicates that aggregation and quality is a precursor to branding agri business.

Geographical indicator is a great tool for branding agri produce. Till recently, about 31 agriculture products including Darjeeling tea and Alphonso mango have got GI registration. Currently, the action related to GI appears concentrated on the registration of GI goods and has not made any headway in adoption of strategies for branding and promotion of GI products as well as their marketing and distribution in both domestic and export markets. It needs to be noted that GI coupled with effective marketing can mean greater profits to the local producers.

BRASMAR Lobster tail turns gold

The story of Brazilian Lobster tail is a case in point. Interbras is an export promotions board set up by the Brazilian government in 1976. One of its most successful ventures has been to organize the collective marketing and branding of lobster tails. Interbras recognized the opportunity to increase Brazils penetration of the large US market for lobster tails. They set about organizing the fishermen in such a way, as to ensure reliable supplies and to develop a strong brand identity. Interbras was initially able to convince about 50 percent of the fishermen to give them exclusive rights to export their lobster tails to the US. In return, Interbras gave them a better margin than the fishermen had been getting through the importers. Interbras offered a firm price to both the fishermen and to the brokers and in each case that price was guaranteed for a three month period. Moreover, whenever Interbras exceeded its target margin, surplus profits were channeled back to the fishermen. Subsequently, Brazilian Seafood Marketing Associates (Brasmar) was formed. Brazilian lobsters were packed in good quality cartons bearing the Brasmar label giving the product a single brand identity. The product was promoted on its quality attributes and so, was positioned as a direct competitor to South African lobsters. A rigorous quality control system was instituted to ensure that the brand image was sustained. Suppliers who consistently failed to meet the quality standards set by Interbras were ultimately excluded from the scheme. As for the South African product, restaurateurs are the principal buyers of Brazilian lobsters. Brasmar recognized that in addition to reliability of quality, the restaurants were concerned about portion control and were therefore interested in buying a product of uniform size. Interbras developed a grading system with 14 size categories instead of the 6 category system used by others. This augmentation of their product was well-received by buyers who could then purchase a carton of lobsters, knowing that it contained lobsters of uniform size. The success of Brasmar can be measured in a number of ways. Perhaps the most important of these is that 8590 percent of Brazils lobster fishermen now collectively market through Brasmar and the organization is able to claim that their marketing system brought US$6 million more into the country than did the system it largely displaced.
Source: FAO corporate documentation repository

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CHALLENGES IN BRANDING AGRI BUSINESSES

hy is it in a country like India which produces huge quantities of agricultural products, there exists a voluminous gap between proportion of branded and unbranded products? In a market where commodities like rice, pulses, fruits and vegetables are bought by visually and physically assessing the quality, establishing a brand is a colossal challenge. The fact of the matter is that export opportunities have contributed significantly to the field of agri-branding. For example, the overseas market for basmati rice gave an impetus to the rice producers and marketers in India to sell branded basmati rice. On the domestic front, the basmati and non basmati rice varieties are made available in various branded package variants suitable to consumer preferences. Similar is the case with pulses which is in nascent stages. Although commodities like Basmati Rice and Darjeeling Tea are well known and have a huge market overseas, the need of the hour is to look beyond to branding of such commodities with significant export value and look at developing brands in the domestic front So what prevents the wide prevalence of branding? Currently the branding efforts in India for agri products are driven by

the food processing and organized retail industry only. While organized retail has been growing, its contribution is still in single digits. Hence, vast majority of India continues to buy only unbranded agri produce.

Key Challenges which impede branding

Value-Seeking Indian Consumer The value conscious Indian consumer is always on the lookout for the lowest price. The perception that branded products are costly is deeply rooted in the Indian psyche. To many consumers, a branded product still means a product with an attractive label rather than an assurance of quality. The great Indian retailer India has been a land of Shopkeepers. Indian retailers enjoy high trust quotient by virtue of their superior service and relationship with their customers. This in turn means consumers trust the retailers choice implicitly and hence do not feel the need for branded products. However, this trend has been changing with increasing awareness about various products. Retail consolidation has also been a prime mover in the picking up of branding efforts in agri produce. Scalability Challenge A brand needs to stand for something to someone. The heterogeneity of the Indian population in turn means extensive localization and hence becomes unviable for making investment towards building a brand across a large geography. Only players with deep pockets have the capabilities to invest and build a brand. Since the very nature of agri business is oriented towards supplying to the local community at large, branding efforts are sporadic.

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Market Structure The system of aggregation for farm produce (Mandi) by itself is against branding. This method strives to consolidate without any allusion to the source and hence wipes out any opportunity for differentiation at the first point of sale. It does not incentivize farmers to provide a much superior produce and charge premium accordingly. This in turn goes against the grain of branding. Poor Farmer Awareness The average holding in India is way too small for any farmer to make efforts towards branding. Although dairy has seen the co-operative movement being successful in creating great brands like AMUL, there have been no concrete efforts in other spheres of agri products. The farming community in India is still caught up on efforts to sell and does not have the awareness of the relative merit of branding. The Way Ahead It is only a matter of time before the challenges are overcome. What are the ways to overcome this branding conundrum? Quality First Cheap & best possibly exists only in the Indian lexicon. However, increasingly people are realising that both

cannot always exist together. Continuous effort needs to be put on highlighting the superior quality of branded produce. o Visual differentiation is a key method of highlighting quality. For example, when branded sugar came into vogue, very clear communication about how the sugar is whiter and uniform in crystal size was highlighted. Dont undermine value - seeking Indian consumers cannot be divorced from seeking value. Use any scope of differentiation to highlight superior value to customers. o For example, long or rounded grains can be highlighted to prove that less quantity is required for cooking. Dont scare consumers One of the strategies adopted many times by brands is to scare consumers about adulteration in unbranded commodities. That is not a good way to build a good agri brand. It might give temporary results. However, it does not add any value to the brand in question.

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DOWN TO EARTH Young India forays into agri business

gri business today employs about 52% of the Indian population. However, there has been large scale rural to urban migration. People take up agri business not by volition but more because it has been their family tradition or because that is the only profession they can take up. Recently, the wind of change has been blowing in this direction with a chunk of educated professionals taking up agri business with gusto. Thanks to the economic slowdown and fall-out of countries, educated youth are realizing the importance and prospects of agri business and are exploring new avenues in this field. Agri business is one sector that will stay for long - till the survival of mankind. Young entrepreneurs are realizing this fact. Even when the economy is shattered, people need food to eat. Any business, if it has to attract new people, needs to provide intellectual stimulation and financial rewards. Its the same in agri business as well. Floriculture and Horticulture have been at the forefront of attracting new-age entrepreneurs.

the ability to experiment with crops which have a high export potential has been a trend. We have witnessed the efforts made by a 28 year old entrepreneur Mr. Rahul Gala who has successfully cultivated the Iraqi Bari Dates in Gujarat, which have a very lucrative market abroad. Todays youth are also willing to adopt technology. A complete wave of computerization has taken place in some farms, and technology is used to such an extent that a click on the computer will irrigate and fertilise the entire land as per requirements! Emergence of a new service engagement with the young entrepreneurs, has given rise to a completely new service industry of supporting the farming initiative with Know how. A successful revenue model which works on providing a one-stop solution on key farming information has created a new service business stream. Getting the youth to the earth - the need of the hour India has 60% of its population below the age of 30. A robust economic growth is achieved only if this youth population is gainfully employed and agri business does provide the impetus. Initiatives have already been rolled out by various governments. For example in Kashmir, floriculture by youth is actively promoted as a means to combat even terrorism. A sustained effort of this nature needs to be done across the country. Educating the youth-The agri education system needs a bigger impetus to reach out to more youth and educate them on practices leading to better revenue generation. This is absolutely critical to gainfully engage the youth and bring them back to working on the ground.

Down to earth - What do youngsters bring to the table?

The risk appetite of these new-age entrepreneurs is definitely more - hence

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Expanding scope of service sectors - Services like sale of farm machinery, processing of farm produce, extension of agricultural knowledge have very good scope in rural areas and will also help generate income in rural areas and engage the youth in the entire agri value chain. Overcoming the social stigma - The perception about farming is at the nadir compared to any other industry. This in turn means building up of family pressure to move out of this business. While there is certain truth in

some of the perceptions, it is still misplaced and a social rebranding of the sector needs to be taken up to instill the sense of purpose in being employed in and by this business. We are not going to witness a reverse migration from urban to rural and IT to agri in the near future. But small steps have been taken and there is a need to overcome the inhibitors and draw youth back to the ground.

Bhushan Agro - Young & Educated making a difference

With a strong intent to change the grim situation of farmers, Chandra Dubey (IIT-Kgp and IIM-L ), set out on a mission to improve the situation by using scientific methods of farming on farm lands leased out from poor farmers in Madhya Pradesh. Working on 56 acres of farm land in a village near Sagar, Madhya Pradesh, Bhushan Agro is focused on contributing towards rural transformation. The business model is to lease agricultural land from farmers at ` 8000-10,000 per acre per year and carry out farming using modern scientific methods, equipment, systematic crop rotation, and water harvesting techniques. The revenue from agricultural activities per acre per year is approximately ` 100,000 150,000. Also, because of the increasing number of farmers under debt and the consequent suicides, Bhushan Agro is looking to replace financial institutions and also provide them with crop insurance on reaching scale.

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EXPERT SPEAKMr. Prabhakar Rao, Managing Director, Nuziveedu Seeds Ltd., speaks on the challenges and future of Agribusiness
absolute growth in this sector cannot be compromised. In a country where about 60% of the population is engaged in agriculture and related occupation, it is important that society inequalities do not crop up and growth is maintained in this sector. I strongly believe that 4% growth is possible if we ensure that productivity is enhanced from the current levels and that is possible by virtue of bringing in technological innovations, extensive education to the farmers and developing a strong linkage between farmers and markets Yes, Agriculture can continue to make a healthy contribution to GDP and can grow at modest levels, provided right measures are taken. The role of government in this industry is very important. Yet the general feeling is that reforms are significantly pending in the sector. What are the significant reforms you think need immediate priority and attention?

r. M. Prabhakar Rao is the Visionary Chairman of the NSL Group and the Managing Director of Nuziveedu Seeds Limited. Hailing from an agricultural family, Mr. M. Prabhakar Rao is a post graduate in agriculture and has nurtured Nuziveedu Seeds to become the countrys largest seed manufacturer and the dominant player of Bt. Cotton seeds. Today, Nuziveedu seeds is recognized as a leading Bio-Agri company of India. Apart from seeds, the group has also diversified into several sectors like Renewable Power, Textiles, Integrated Sugar Factories and IT Infrastructure. In this exclusive interview, he talks to Vertebrand about the boon and bane of the agri sector.

agree that Government intervention and role is very high in this sector and there is an urgent call for reforms.

The contribution of agriculture to GDP has been steadily declining. The general impression seems to be that the future growth prospects for this sector are weak. On the other side there are a billion mouths to be fed. What is your opinion on the future growth prospects of this sector?

On the policy front, we urgently need a well thought-out policy on genetically modified crops. There needs to be adequate safe-guards, but in the larger interest of the people, we need to adopt GM crops soon. We need significant changes on the policy for subsidies for agri inputs. It is paramount that the benefit needs to reach the farmers directly. Currently, this is being partly implemented and we need a whole-hearted implementation going forward. Beyond framing policies, there is a larger government role in building rural infrastructure. With Indian agriculture being dependent on monsoon, we need better irrigation facilities. Point to note is that we already have a low cropping intensity (i.e. area under cultivation as against available area). Hence, it is important that priority is given to improve the availability of water supply.

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he Contribution of Agriculture to GDP is certainly declining. This is natural when other areas like manufacturing & services start to grow and hence contribute more to the GDP. However,

Warehousing facilities and Connectivity to Market need to be significantly improved. Government should champion PPP model in this area. Government needs to incentivize R&D to bring out innovative products. Information technology has been a game changer in many sectors. What do you think will be the role of IT in transforming agri business? IT is now an essential part of any business. A key area will be the availability of real-time information. Information about market prices and trends to farmers will certainly enhance their decision making capabilities. At a larger level, information on global commodity trends and innovations across the world will positively transform the industry. There is no doubt that information will play a key role in connecting the farmers to the world. Apart from BT cotton there seems to be no further roll out of GM seeds. Do you see any future for GM seeds getting into India? I believe that adopting GM traits in all crops will improve productivity, reduce losses and also improve the quality of output, thereby making agriculture profitable. However this is an area which needs the consensus of all stakeholders. As told in an earlier question there is a need for a well thought-out policy. To start with, we need robust and transparent regulatory mechanisms to roll out GM crops. This must be followed by extensive education programs to general public on the safety of GM foods. There is no doubt that India needs GM crops.

In your line of business i.e. Seed industry, what do you see as the significant challenge in the coming years? Currently, the agri sector is plagued with issues of low productivity due to poor agronomic practices in the context of constant arable land and increasing demand for grain and fibre. Hence, it has become imperative for the industry and government to enhance yield per unit of land. To accomplish that, there needs to be significant investments in R&D and technology. We also have too many regulatory challenges. A number of legislations are involved right from Seed Act; PPV & FR Act; EPA; Essential Commodities Act; State Cotton Control Acts; Biodiversity Act etc. to name a few. There needs to be concrete effort by the government to rationalize the controls. Unless it is done, R&D and its adoption will be stifled. The uncertainty in GM food crops is a dampener. With rising affluence of consumers, a significant change in the dietary pattern is experienced. What is your prediction of the consumption which is expected? In fact, price rise of dals has been attributed to the increasing consumption of protein rich food by Indians. Do you see any such future trends in food consumption in India? It is true that the rising income of the population has led to changes in the dietary pattern of people. The increase in demand for fine rice, vegetable/fruits, eggs and meat clearly indicates this trend. In fact, fruits & vegetables have registered significant growth not just in India but in all developing countries with the demand growth outpacing the production growth. Along with the increasing consumption of eggs and chicken, the demand for maize grain has also increased. Thereby, an increase in demand for maize hybrid seed is seen. As a seed manufacturer, we need to take consonance of such trends.

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There is a lot of buzz about Organic farming. Do you think it will be a sustainable movement and what will be its future in India? I dont think we are ready for organic farming on a large scale. Our task is cut out - We have one of the lowest levels of agricultural productivity and that should be improved to match at least the global average. Once we attain that standard, we may look at high-value agriculture. For now, it is not a priority area. If multi brand retail FDI becomes a reality, how will the face of Indian agri business change? Allowing Foreign Direct Investment in multi brand retail will benefit the farmers. In fact, both the farmers and retailers may benefit by avoiding the middle men. Lets wait & watch.

Indian corporate sector has made significant acquisition of farms in African countries. Do you see this corporatization of farming ever happening in India? Many corporates have initiated farming related activities in Africa. One has to wait for some more time to understand their success. I have no doubt that Africa is going to be the food bowl for the world in the future. The basic difference between Africa and India is the availability of large tracts of land in Africa, which is not so in India. Within the natural limits of our agriculture (like dependence on rain), we can grow only to a limited extent and hence am doubtful about this. There seems to be a trend of many youngsters returning to farming. What will be your advice to the budding entrepreneurs in the agri business space? Till recently, the rural young have been shying away from agriculture. I am not aware if there is a large trend of youngsters turning back to agriculture rather than turning their back on agriculture. However If it is true that youngsters are returning to this sector, it is the best thing that can happen to Indian Agriculture and I wish them the very best!

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THE EDITORIAL TEAM

Aparna Lakshmi (Chief Editor)

Aparna Lakshmi is the Head of Corporate Communication and Knowledge Management at Vertebrand. Her sectoral interests includes foods and consumer goods.

Syed Haque

Syed Haque is an Associate Vice President at Vertebrand and leads the Research and Strategy Development domain. In addition to business strategy and consumer research, Syed is also a specialist in supply chain management.

Richa Chhabra

Richa Chhabra is an associate and part of the business development team at Vertebrand. Her interests lie in tracking consumer patterns and behavioral trends.

Karthik Sunkara

Karthik Sunkara is an associate and part of the main business development team at Vertebrand. His area of interest is digital marketing.

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ABOUT VERTEBRAND
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