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High-Value Agriculture in India: Past Trends and Future Prospects

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  • Sharma, Vijay Paul
  • Jain, Dinesh
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    Abstract

    Given the declining share of traditional agricultural commodities in production, consumption and trade, horticulture and other non-traditional high-value agriculture represent an important area of potential income growth in rural areas. The high-value agriculture-led-growth strategy also provides significant scope for achieving greater commercialization of smallholder agriculture. Despite the potential, the contribution of high-value agricultural exports is still small but increasing. This paper examines the past and existing performance and identifies likely challenges and opportunities for high-value-agriculture in the country. The findings of the study reveal a structural shift in consumption pattern away from cereals to high-value agricultural commodities, both in rural and urban areas, in the last two decades. This shift in dietary patterns across states and income classes is also observed. The results reveal a relatively strong and growing demand for livestock products and fruits and vegetables in both rural and urban areas. The average expenditure as well as share of beverages has increased by about six times in both rural and urban areas. Due to shift in demand pattern towards high-value crops, the farmers have also responded to market signals and gradually shifting production-mix to meet the growing demand for high-value commodities. This is reflected in the changing share of high value crops in total value of output from agriculture. The share of high-value commodities/products (fruits and vegetables, livestock products, fisheries) increased from 37.3 percent in Triennium Ending (TE) 1983-84 to 41.3 percent in TE 1993.94 and reached a level of 47.4 percent in TE 2007-08. The trade in high-value products has also increased during the last decade. Overall, fresh fruits and vegetables exports represent a very small share of domestic production and agricultural exports but have increased significantly. During the 2000s, the growth rate in value of exports of rice, sugar, marine products, tea, etc. declined, while high-value exports (fruits and vegetables, floriculture, meat, processed fruit juices) grew by about 18 percent annually. However, Indian exports face many constraints in major importing countries on account of quality and food safety issues. The rising demand for high-value commodities, particularly fruits and vegetables and livestock products has led to an increase in imports of many commodities like fresh fruits. While there is an opportunity for increasing exports of high-value products but there is a huge and increasing domestic demand which needs to be tapped. The study suggests that a future road map for high-value agriculture development should focus on investment in technology development and dissemination, basic infrastructure, improvement of technical capacity of producers and other players in the value chain, institutional support in core functions of production, logistics and marketing through concerted public sector support and active public-private partnerships, and provision of quality inputs, in particular planting materials for fruits and seeds for vegetables.

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    Paper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number WP2011-07-02.

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    Handle: RePEc:iim:iimawp:10671

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    1. Meenakshi, J.V. & Ray, R., 1996. "Regional Differences in India's Food Expenditure Pattern: A Complete Demand Systems Approach," Papers, Tasmania - Department of Economics 1996-06, Tasmania - Department of Economics.
    2. Joshi, P.K. & Joshi, Laxmi & Birthal, Pratap Singh, 2006. "Diversification and Its Impact on Smallholders: Evidence from a Study on Vegetable Production," Agricultural Economics Research Review, Agricultural Economics Research Association (India), Agricultural Economics Research Association (India), vol. 19(2).
    3. R. Radhakrishna & C. Ravi, 1992. "Effects of Growth, Relative Price and Preferences on Food and Nutrition," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27, pages 303-323.
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