At a time, when India has set its eyes on achieving GDP growth rate of 9% with its focus on agriculture and infrastructure development in the union budget 2010-11, there is a requirement of simultaneous proliferation of allied sectors that will serve as a booster to the targeted objective.

Development of food processing industry in India has been on a roll in recent times with several leading multi-national companies showing their interest in developing business here. However, there have been several policy-related issues that most looked upon by the industry in recent times. In this situation, Gujarat is one of the states, that has emerged as a potential destination for the extensive proliferation of food processing industry with heavy investments flowing towards agro-infrastructure development. The state’s pro-industry policy has created larger avenues for agro-processing industry from across the globe.

In the process of developing Gujarat as a hub for agriculture and allied industries, Gujarat Agro-Industries Corporation (GAIC) – a state government venture has been playing a key role. D.Thara, Managing Director, GAIC expressed her views about the existing opportunities for agro-processing industry in Gujarat. Excerpts:

Commodity Online: How has been the growth of agro-business sector in Gujarat? What are the key drivers to this growth?

D Thara: The agriculture-business sector is thriving in Gujarat making a pathway for higher overall agriculture growth in the state. The unique quality of entrepreneurship and higher adaptability to newer farm practices than farmers from other parts of the country has created wealth for the Gujarat-based farmers. The state has achieved the agriculture growth rate of over 12% over past two years.

Gujarat has an advantage of diversified crop structure, climatic diversity that includes eight agricultural climatic zones and agriculture export zones of mango, vegetables, onion and sesame seed. The state has set its eyes on the future growth path and has adopted proactive measures in order to fulfill the desired goals, especially in the value addition in the agro produces.

Major agriculture crops of the state include Bajra, groundnut, cotton, rice, wheat, mustard, sesame etc, while horticulture crops include banana, mango, guava, tomato, potato, onion, cumin, garlic and isabgul. Interestingly, there are some natural clusters developed for the respective crops. This has led to the proliferation of allied processing industries in and around the crop cultivation area. This has improved the entire value-chain for the particular commodity by creating more business opportunity.

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COIL: How does this cluster concept help in developing agriculture and allied industries? What has been your experience so far?

Thara: These clusters are instrumental in spreading the wealth among the farmer community by increasing their participation for value addition in the agriculture produces. These farm produces are exported in raw form as well as in the form of processed food products including canned and packaged products. Gujarat is the leader in Banana exports with total production of about 30 lakh tonnes. Last year we exported 3,000 to 4,000 tonnes of banana, while gradually in next two years our target is to export 20,000 tonnes of banana from Gujarat, which includes supplies to different state within India.

Gujarat holds major contribution in India’s exports of some of the key agriculture commodities including cotton, sesame seed, onion, cumin and isabgul. We are at the top position in spices exports with revenues coming from spices exports totaling at Rs.3,000 crore. In the processed food products, different varieties of fruit pulp including mango pulp, guava pulp and banana pulp are also being exported from Gujarat. The total export revenue from processed and non-processed agriculture produces stands at Rs.15,000 to Rs.16,000 per year.

COIL: Being a state promoted agency, what progressive steps you have taken to improve agriculture infrastructure and create value-creation in agro-produces?

Thara: The Gujarat state government has adopted a progressive policy to encourage farmers towards greater participation in processing and value addition in the agriculture produces. Ours is a role of a catalyst to equip them with technology, assist them in marketing and thereby help them garner benefits of increased participation in government promoted schemes. There are various programmes under GAIC that encourages them for more value-based crop cultivation as well as set up a better marketing infrastructure.

COIL: What are these incentives provided by the government? And how is the agro-industry in Gujarat is unique from else where?

Thara: Gujarat government is offering policy-related incentives as well as fiscal incentives for the agro-industries. Agro-processing companies intending to set up units in Gujarat are given interest subsidy. They are also entitled for a 30% subsidy on the total project cost. In some cases the state government extends this limit to 40% or even 50% in some promising cases.

In order to improve the rural infrastructure the state government is also offering some encouragements in terms of exemptions in tariffs etc. Farmers would get 10-15% duty exemption on power tariff for setting up cold storages. None-the-less, farmers who have been engaged into processing are being given fiscal support by way of subsidy in logistical and other operational costs as well.

A special feature of state’s agriculture sector is that most of the farms in Gujarat are having first-hand cultivation, which means that the farmers themselves cultivate the farms. This improves the crop quality and sustains the land fertility. Better crop quality fetches good money and larger opportunity of value creation by processing it.

COIL: How has been the response from industry in terms of investments?

Thara: Industrial investments have been rising in agro-processing in Gujarat. Many national and multi-national companies have been attracted towards Gujarat for developing their food-processing operations. Gujarat has adopted dual growth model, on one hand there is constant focus on developing infrastructure, while on the other, there is steady policy-related support for the industry to expand their business operations.

Improved irrigation and water table, entrepreneurial ability of farmers and state sponsored incentives has created conducive environment for industries to venture into agro-industries here.

Last year in the Vibrant Gujarat Global Investors’ Summit-2009, the state had received promised investment of Rs.28,655 crore from 227 MoUs signed under food & agro business category. Some of the major projects are already under various stages of implementation. This reitrates the fact that agro-industries sector in Gujarat is pulsating with tremendous zeal not only from the farmers but also from the entrepreneurs. Growth will continue, provided we continue working in the desired direction.

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