Tatas feel the pulse of the farming business4 min read . Updated: 15 Oct 2009, 10:37 PM IST
Tatas feel the pulse of the farming business
Tatas feel the pulse of the farming business
Mumbai: The Tata group, with businesses ranging from tea to trucks and salt to software, is considering entering the pulses market, seeking to tap a business opportunity offered by the deficit between domestic production and expanding consumer appetite.
Pulses such as moong, black gram, kidney bean, chick pea and pigeon pea are the main sources of protein for consumers in the world’s second most populous nation. India accounts for 25% of global production and 30% of consumption, meeting the shortfall through imports, mainly from Canada and Myanmar.
“We think some supplemental effort from the private sector is needed" to fill the shortfall, says R. Gopalakrishnan, senior board member of Tata Sons Ltd, the group holding company.
Pulses are produced by the poorest of farmers for the poorest of consumers, according to Gopalakrishnan. Yet, after paying the middlemen their cut, farmers earn just half what their produce costs in retail markets, where prices are marked up partly because of inefficiencies in the supply chain.
In recent months, pulse prices have risen sharply because of short supply and speculation that India would step up imports, says Ray.
Ray is a member of the Golden Agri Steering Team that the Tata group has formed to prepare a blueprint for its venture into the pulses market. The 20 members of the team include outside experts such as Y.K. Alagh, former deputy chairman of the Planning Commission.
One reason behind the shortfall in pulses is the low yield in India—622kg per ha, lower than Sri Lanka (965kg) and Bangladesh (807kg). Egypt boasts the highest yield of 3,058kg per ha.
While India’s population grew at an estimated compounded annual growth rate of 2% between 1970-71 and 2007-08, the production of pulses increased at 0.7%, widening the gap between supply and demand.
Gopalakrishnan stresses that the venture is still very much a nebulous “work in progress" and that it means much more than just another business for the Tata group.
“We are in the process of developing the plan," he says. “The core is to explore a combination of (a) better seeds, (b) economic water systems, (c) scientific agronomy package, (d) a degree of targeted farming rather than only marginal cropping, (e) some assurance (to farmers) through crop insurance or buy-back (of produce)," he says. “All of this is very much work-in-progress."
One thing the group could do as part of the initiative is to buy pulses from farmers at remunerative prices, using the network of group units Tata Chemicals Ltd and Rallis India Ltd, and distribute the produce.
Rallis India, which manufactures agrochemicals including pesticides, and Tata Chemicals, which makes fertilizers, have rural networks such as Tata Chemicals Kisan Sansar (farmers’ world) and Rallis India Kisan Kutumb (farmers’ family), both of which work closely with farmers.
Their participation in the pulses venture would be in keeping with a group tradition in which many Tata units work in tandem, extending their core expertise to other affiliates.
“Between the two companies, they directly connect to half a million farmers and the group will leverage this network with their pulses game plan," Gopalakrishnan says.
Tata Consultancy Services Ltd, or TCS, the country’s largest software services firm, and Tata Business Support Services are also being drafted into the initiative.
TCS’ new initiative, mKRISHI, or mobile krishi—a mobile agro-advisory system that allows farmers to post queries to agricultural experts in their own languages through a mobile phone and receive customized advice—will come in handy when the group’s game plan for pulses is finalized.
Tata Chemicals and Rallis, with technology enhancements from TCS and Tata Business Support Systems, are developing a plan called Tata MoPu to work with farmers in helping them increase yield. Uttar Pradesh, Madhya Pradesh and Maharashtra are being considered for implementing the plan.
The Tata group is also in touch with some institutions and companies that may wish to join the pulses initiative and is in the process of setting up a website, www.growmorepulses.com, to connect farm experts and devise ways to raise the pulse yield and acreage for cultivation.
“Fragmented land holding, limited capital investments and indiscriminate use of subsidies are the main factors impeding agricultural yields in India. The growing demand for food will therefore only be met through increasing yields," says Jehangir Engineer, assistant economic advisor to the group.
To be sure, various agricultural universities are already helping farmers cultivate pulses by providing them technical inputs. “So while I am not sure what the Tatas are going to do differently since their game plan is not finalized yet, I respect the nationalist view of this group," says farm scientist Thomas Verghese, who is also chairman of the Kerala State Agricultural Prices Board. “What ideally Tata could do is help farmers use less pesticides, avoid moisture stress environment, provide improved variety of seeds and introduce micro irrigation projects for these farmers."
Sharad Joshi, a member of the Rajya Sabha and founder of Shetkari Sanghatana, a farmers’ organization in Maharashtra, says corporatization of agriculture is the way to go for India. “Farmers should get rid of the cooperative format and should introduce company structure to improve farming. The agricultural land should be converted as equity contribution from farmers," he says.
The Tatas have no plans to enter corporate farming, says Gopalakrishnan.