Agriculture in India – Appears to be slow process and traditional, but it in reality, is more active than manufacturing.
When there is a business opportunity for a product, companies needs couple of years to put up a factory of a significant size for meeting the demand. But farmers need 6 months. Once they learn a crop has profit potential, the area for the crop increases.
In 2011, American drilling company discovered shale gas (natural gas) has good potential. Indian farmers immediately shifted their focus on production of gaur – a type of bean (guar gum is used in processing the shale gas).
The guar gum became most valuable export commodity – more than jewelry’s!! American companies spent $2.5 billion that year on this bean in processing shale gas. By 2012, guar production doubled. Typically, gaur grows on starving, unfertile farms with no investment from farmers. Today, this crop has moved grains and cotton crops and conquered irrigational lands!!
Farmers from Rajasthan, Gujarat, Andhra Pradesh, Karnataka, Haryana, Punjab and Chhattisgarh did not miss this opportunity. Some 100 companies around Jhodhpur gained more than 40% from $3 billion export market. There is no SEZ, or any scheme for these.
What makes this story of this guar remarkable is that there is no aid from government policy, subsidy or any support price.
So how it’s done?
Easy access to real-time information – mobiles, internet, future trading: helped farmers. More farms will shift to demand driven agriculture. The so called price signals should be clear, in order to get a clear demand for farmers.
Consumers need variety, convenience, and affordability. Farmers will invest in technology that creates this extra value. As the stakes are higher, farmers can use computers, social networking, and communication skills to find multiple marketing channels for capturing higher margins.
Analyzed from an article in ET, 11th Dec 2013