Fertile for growth, blessed with a basket of agro-climatic zones

For nearly two decades, the information technology industry has overshadowed another top-performing sector — agriculture — in Andhra Pradesh. The State either tops or ranks among the top five on several counts in the production of paddy, cotton, groundnut, chilli, castor, sugar, grapes and mangoes.

Above all, Andhra Pradesh stands out for its seeds. This acknowledged seed capital of India aims to become a hub of the seed industry for South and South-East Asia, as well as Africa. The State has a basket of agro-climatic zones that support the development of a variety of seed nurseries.

It now eyes revenues from non-traditional streams. While looking at opportunities in value addition, it has taken baby steps in a new avenue — hybrid rice.

The APEDA (Agricultural and Processed Foods Export Development Authority), under the Union Ministry of Commerce and Industry, has recognised the State's potential and provided funds for setting up a VHT (vapour heat treatment) plant at Nuziveedu to help mango exporters tap international markets.

APEDA has advised the processed foods industry and exporters to utilise the international airport by establishing facilities to store and export fruits and other processed foods.

Multinational seed technology giant Monsanto and Indian seed majors such as Nuziveedu Seeds Ltd (NSL) and Vibha Seeds have set up modern seed research and development and processing facilities in Mahaboobnagar, Rangareddy and Medak districts.

The other big opportunity the State offers is in commodities trading. One of the first few States to amend the APMC (Agricultural Produce Market Committees) Act, Andhra Pradesh hopes to connect the producer with markets directly. “This is a positive step. We are going to set up our infrastructure in the next few months to cash in on this new window of opportunity,” Mr Anjani Sinha, Managing Director and Chief Executive Officer of National Spot Exchange Ltd (NSEL), said.

The amendment would allow traders and farmers to trade freely. This would attract private sector investments into competitive marketplaces. Other commodity exchanges such as MCX and NCDEX too have begun talking to farmers and brokers to increase the volumes of commodity trade.

The State has five Agri Export Zones that offer pre- and post-harvest training programmes, integrated pest management information and assistance in setting up processing industries. The AEZs cover grapes, gherkins and mangoes in Hyderabad, mangoes in Vijayawada, mango pulp and vegetables in Chittoor, and chillies in Guntur.

The maize potential

Though grapes and castor lost out to the unprecedented growth of infrastructure in the middle of the last decade, crops such as maize and sorghum emerge as money-spinners for farmers. Rusni Technologies, using technologies developed by ICRISAT (International Crops Research Institute for Semi Arid Tropics), has successfully produced ethanol from sweet sorghum. This attracted the attention of business conglomerates such as Reliance and Rusni began consultancy services for multi-feed ethanol production facilities on turnkey basis.

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) brought out a maize report last week, showcasing opportunities available. “Do not see maize just as a commodity. It doesn't give farmers huge returns. Think of adding value to produce, say, corn flakes. With small intervention, you can get returns many times over. The Government will provide all help for setting up such units,” Mr V. Nagi Reddy, Principal Secretary (Agriculture, Government of Andhra Pradesh), said.

The Tobacco Board too has begun persuading tobacco farmers to shift to maize as an alternative crop. “We have identified maize as a potential alternative and we are asking them to shift to this food crop,” Mr Kamalavardhana Rao, Chairman of the Board, pointed out.

Hybrid rice too beckons seed companies. It was hitherto considered a big no-no as farmers believe in varieties. “If you want to feed the country in the next decade, you need to have more yields from the same chunk of land. After Green Revolution four decades ago, which transformed the way farmers produced rice and wheat, it is going to be hybrid rice that will help increase productivity,” Dr B.C. Viraktamath, Project Director of the Directorate of Rice Research (DRR), pointed out.

DRR had organised a meet for seed companies to showcase the latest technologies. “We are ready to give our technologies to seed firms to multiply seeds,” he said.

Value addition to dairy

The dairy sector, too, is emerging from the traditional mould of restricting itself to milk supply. The State ranked second in milk production countrywide with 10.43 million tonnes, or 9.3 per cent, in 2009-10.

If the interest of private equity firms is any indication, the sector seems to be the latest attraction for investors. Carlyle group had picked a stake in Tirumala Dairy for over Rs 100 crore, while Hyderabad-based Creamline Dairy Products, too, is close to signing deal for a similar sum. “The traditional dairy procurement network proves quite handy for companies like us. We are moving away from traditional dairy products to value-added products that would give us a premium,” Mr Bhasker Reddy, Managing Director, Creamline Dairy, said.

The dairy sector, in fact, will bid for the next annual dairy players' meet in Hyderabad. “We are going to showcase Andhra Pradesh as a potential hub for dairy industry,” Mr Reddy said.

This, however, doesn't mean all is rosy. The agribusiness sector faces several challenges. The Agri Export Zones while holding great promise, also face the challenge of attracting investments and a lack of support from the industry and Government. Infrastructure bottlenecks such as storage and inland and mechanical handling for agricultural exports are also a hindrance.

There is a need for professionalism and education to bring about a mindset change. The State also looks likely to lose its Seed Capital tag owing to the rising cost of production, poor remuneration for seed growers, and low returns for seed companies.

These issues have to be tackled for the State to harness its strengths and reap benefits from the agribusiness sector.