As the Modi government prepares to present its Budget for 2016-17 next month in the face of growing rural distress, agri-business companies feel the country can ill afford to lose more time in taking steps to make agriculture a profitable business.
“There is need to invest more aggressively in agriculture by focusing on ramping up rural infrastructure, especially electricity, irrigation and roads, as well as bringing in FDI in multi-brand retail,” Ajay S Shriram, Joint Managing Director, DCM Shriram, told BusinessLine .
Citing the example of Rajasthan, he said: “The Vasundhara Raje government is setting up 25,000 retail outlets and has tied up with the Futures Group. Bringing in FDI, especially in food retail, will not only ensure money flow for the farmer but also bring in the latest know-how.”
The business conglomerate, which is celebrating 25 years of “consistent and sustainable” operations in the chemicals, sugar, bioseeds and farm solutions sectors, has clocked revenue growth of ₹6,400 crore in this period and has seen a 40-fold rise in profit after tax at ₹242 crore.
However, it admits that last year saw a lag, especially in its bioseeds operations, due to poor monsoons.
Poor monsoons With two back-to-back poor monsoons, the company feels it is too early to assess growth this year.
“For sure, growth in agri-business will not be too good,” said Vikram S Shriram, the company’s Vice-Chairman and Managing Director.
“There is a big question mark over farming. The basic issue in India is that that agriculture is a concurrent subject.
“A majority of the action needs to be taken at the State-level,” said Ajay Shriram, adding that some States, such as Gujarat, Madhya Pradesh and Bihar, had showed the way by achieving over 10 per cent agricultural growth over the last four-five years.
“In the long-term, farming has to be a profitable and viable business,” he said, warning that the youth are already moving out of agriculture.
Among various measures, the company feels the should move fast to completely dismantle the Agriculture Produce Marketing Act, as it “restricts farmers from getting the best price realisation.”
“Why should farmers feel bound by the mandi system,” said Ajay Shriram, citing the example of the sugarcane sector, where there is a direct link between the organised industry and cane growers.
“The farmers get inputs as well as an assured market at a good rate,” he added.
Calling for more policy focus on irrigation, he cited the example of Gujarat, where, when Narendra Modi was the Chief Minister, 9 lakh hectares were brought under drip irrigation.
Direct cash transfer The company, whose urea brand ‘Shriram’ has a strong rural presence, also pitched for expediting direct cash transfer of fertiliser subsidy to farmers.
“Let the farmer decide which fertiliser is good for him. It may take a year or two to stabilise, but it will ensure more judicious use of urea and lead to balanced fertilisation of soil,” he said, adding: “Today, the price of urea is running at ₹5,380/tonne, while DAP/MOP is over ₹20,000/tonne.
“As a result, urea is being misused or over-used and is spoiling soil health. Only balanced pricing can ensure the balance in fertiliser use.”
The corporate entity, which is investing ₹650 crore in expansion, such as doubling the caustic soda capacity in its Gujarat plant, upgrading its caustic soda chlorine plant in Kota, putting up high-pressure boilers and turbine sets in its sugar plants in Uttar Pradesh, said it believed in “consistent” growth.
“We are not into a 100-metre sprint, but a marathon race,” said Vikram Shriram, adding that the company’s topline and bottomline had seen an average of 15-18 per cent compounded annual growth year-on-year.