Creating Efficient Linkages
To further strengthen backward linkages between the processing industry and the farmer, existing institutions local bodies, cooperatives and self-help groups, should work in unison. There is an equally urgent need to develop forward linkages of farmers/processors with consumers to remove intermediaries and reduce high cost to the consumer and low returns to the farmer/processor thus creating market-driven linkages across the entire supply chain, integration through partnerships and effective linkages.
The government has to come up with several regulatory changes to promote the agribusiness sector. In India the cost of packaging material is very high, compared to world standards, ranging between 10-64 percent of the product cost. Excise duty on packaging is 18 percent. Both needs to be reduced to enable the Indian companies become more competitive. Freight rates in India are significantly higher (up to 70 percent). This problem is compounded by fragile infrastructure, long supply chains with many intermediaries and uncertain farm produce. Deficiencies exist for grading and packing besides pre-cooling at farm site, which could feed into a formalized cold chain. The cold storage capacity today caters to less than 10 percent of the produce, this too is of rudimentary nature with over 80 percent designed only to handle potatoes. Paucity of chilling infrastructure for milk, meat and fish processing is too evident. India has limited Controlled Atmosphere Storage facilities. The proportion of agri exports to total exports came down from 11.9 per cent in 2003-04 to 10.2 per cent in 2004-05. The same for April-October 2005 is 9.6 per cent as against 9.9 per cent during April-October 2004. Major exports during April-October 2005 included marine products (US$773.6 million), meat and meat products (US $ 291.5 million), fruits and vegetables (US$207.1 million) and processed food (US$224.8million).