While the prominence of India’s technology sector has dictated that much attention has been placed on its agtech potential, a pair of recent developments remind that the country is also destined for a significant influence over more traditional agricultural markets as well.
In early November, Cargill announced plans to invest $240 million in India over the next five years in an effort to develop its edible oil, cocoa and chocolates, starches and sweeteners, and animal nutrition businesses.
Announcing the plans at a World Food India Conference in New Delhi, chief executive Peter Van Deursen presented the planned investments as reflecting determination by the Minnesota-headquartered major to play a role in the “development of India’s agriculture and food-processing industry.”
“With the growing population and changing consumer trends, Cargill is committed to nourishing the people of India in a safe, sustainable and responsible manner,” he said.
‘Agri capital of the world’
Later in the month, the US Geological Survey announced that India is the biggest beneficiary of a revision to estimates of global cropland acreage that suggest an up-to-20-percent increase in total supply.
The researchers used high-resolution satellite imagery to include areas that were previously unmapped or inaccurately labelled.
“Earlier studies showed either China or the United States as having the highest net cropland area, but this study shows that India ranks first with 179.8 Mha, or 9.6 percent of global net cropland area,” USGS wrote. “South Asia and Europe can be considered agricultural capitals of the world due to percentage of croplands of the total geographic area.”
Defined as areas where crops are currently growing or could potentially grow, cropland constitutes between 60 percent and 70 percent of India’s land area, according to USGS.
However, Deepak Malik, managing director responsible for India at Proterra Investment Partners, told Agri Investor that it is unlikely any of that land will be approved for use in contract farming on any meaningful scale.
Malik noted that, while the dairy, animal nutrition and seed sub-sectors have attracted some investors of late, general investor interest in Indian agriculture has not kept pace with that of other sectors of India’s economy. The government has tried to encourage investment into food processing and logistics, Malik wrote, but agriculture’s contribution to India’s GDP has been decreasing for years.
Investors would pour capital into the eastern region once infrastructure is established and there is more regional political security
Deepak Malik, Proterra Investment Partners
Short-term thinking among entrepreneurs and the availability of water, which in India is largely dependent on monsoons, have proved among the biggest challenges to investing in India’s agriculture sector, according to Malik. While there have been positive developments recently regarding irrigation projects and river linkages to address these challenges, he said that these are likely to be a factor only over the long term, when changing weather patterns could make water availability an even more prominent concern.
“At a macro policy level, water-dependent crops such as rice should be discouraged to be grown in water-stressed and grown in water-surplus regions,” such as the eastern and northeastern regions of the country, where the government is currently focused on supporting the development of agriculture, Malik said.“The challenge is that the infrastructure, the private entrepreneurship in that region is missing. Investors would pour capital into the eastern region once infrastructure is established and there is more regional political security.”
Proterra’s investments in India are pursued under its food strategy, distinct from the land-based strategy the former Black River Asset Management pursues in other markets including Brazil. Focused largely on meeting growing protein demand from inside developing countries, Malik said that Proterra’s strategy in India focuses on processing and logistics, with a priority given to the dairy, aquaculture and poultry sectors.