Overview Of The Indian Agriculture, Livestock And Food Processing Sector

The importance of the agriculture and allied sectors in the Indian economy cannot be undermined. Despite contributing to ~18.3% to the country’s GDP, the sector employs more than 50% of the country’s workforce and is the mainstay for a large percentage of the rural population. The country is endowed with diverse agro-climatic conditions which has helped India emerge as one of the largest producers of agriculture and horticulture products globally, contributing to around 25% of global agricultural production. Given the low levels of processing in the country as compared to the global standards, the Central and State Governments are promoting food processing to enable farmers move up the agri value chain and improve their realization.

The sectors have witnessed a paradigm shift over the years in terms of the supply as well as consumption trends. While the sector has fairly achieved self-sufficiency in most food crops and successfully addressed the issue of food security, it is now grappling with issues around sustainable development. With the growing population there will be an increase in demand for food and hence the need for intensification. However, with limited agricultural land it is difficult to improve productivity beyond limits through conventional farming. The Indian farming landscape largely comprises of small and marginal farmers who by and large have limited knowledge of Good Agriculture Practices (GAP), sustainable methods of cultivation, awareness about technology and end up over cultivating the plots which in the long run may not augur well for environmental sustainability. Climate changes have resulted in extremes which in turn have affected the production and productivity.

On the other hand, there had been noticeable changes in consumption patterns as consumers are increasing the percentage of protein and related foods in diets which earlier used to have a larger share of carbohydrates. Food safety, consumer health nutrition and need of convenience is on the rise and consumers are increasingly preferring foods which are sustainably sourced and manufactured. This has led to increased offtake of packet food and organized retailing. Such demand trends have been supplemented through supply side disruptions in terms of new product development, innovation, and emergence of various distribution models specially ecommerce and last mile logistics which has made accessibility and availability of products easier compared to the traditional models.

While the favorable demand and opportunities globally are good indicators of the future potential of the sectors, it is pertinent to focus on the structural challenges that affect these sectors. As the country aims to become the 3^rd largest economy by 2027-28, it is important to reflect upon those, refine the current policies to make them industry friendly and relevant and formulate forward looking policies which can unlock the true potential of these sectors and make them globally competitive.    

BDO India LLP released a knowledge paper titled "Agriculture, Livestock, and Food Processing Sectors - Opportunities, Challenges, and Way Forward." in association with ASSOCHAM and supported by NABARD. The report analyses the key trends , identify challenges & required policy interventions, and provide way forward to achieve the desired growth of these sectors.