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Strategy to Enhance Export Opportunities of Sorghum from India SM Karuppanchetty Chief Operating Officer, Strategy to Enhance Export Opportunities of Sorghum from India SM Karuppanchetty Chief Operating Officer, Agri-Business Incubation (ABI) Program [email protected] org 17. 03. 2015

Vision A prosperous, food-secure and resilient dryland tropics Mission To reduce poverty, hunger, malnutrition Vision A prosperous, food-secure and resilient dryland tropics Mission To reduce poverty, hunger, malnutrition and environmental degradation in the dryland tropics

AGRI-BUSINESS INCUBATION (ABI) program Improving well-being of poor farmers through the creation of competitive AGRI-BUSINESS INCUBATION (ABI) program Improving well-being of poor farmers through the creation of competitive agribusiness enterprises by technology development and commercialization. NUTRIPLUS KNOWLEDGE(NPK) program Value addition and post harvest management in agri‑food sector through innovative processing and product development enabling achievement of ICRISAT‘s vision. INNOVATION AND PARTNERSHIP (INP) program Developing collaborative research partnerships with public, private and allied sectors to benefit the small holding farmers of dry land tropics across the Agricultural and Agribusiness Value Chain.

ABI DEVELOPMENTAL STRATEGY SERVICE STRATEGY ABI will promote ventures directly through its service strategy. ABI DEVELOPMENTAL STRATEGY SERVICE STRATEGY ABI will promote ventures directly through its service strategy. The identified new strategic services of ABI are in the areas of: Innovative Ventures Seed ventures Bio fuel Ventures Farm Ventures Agri Biotech Ventures OUTREACH STRATEGY To partner with Institutes /organizations globally on Business Incubation to promote these ventures and enhance technology commercialization Ø 22 BPD Units in India Ø 6 Value-chain based Agri-Business Incubators in Africa Ø 5 Food Processing Business Incubation Centres (FPBICs) in Africa Ø IIAM, AREU- Mauritius, STEP- Thapar and others

Consultative Meeting on Enhancing Exports of Sorghum & Sorghum Products From India OBJECTIVE • Consultative Meeting on Enhancing Exports of Sorghum & Sorghum Products From India OBJECTIVE • To develop the strategy and proposal on PPP mode to enhance the export marketability of sorghum and sorghum products from India. EXPECTED OUTCOME • Mapping the challenges and opportunities of all stakeholders on improving export of sorghum (Food, Feed and Industrial products). • Draft a strategic plan to enhance export of sorghum and sorghum products from India through PPP mode.

Key Stakeholders NABARD Key Stakeholders NABARD

Sorghum Industry Sorghum has a variety of uses including food for human consumption, feed Sorghum Industry Sorghum has a variety of uses including food for human consumption, feed grain for livestock and industrial applications such as ethanol production. In the world 50% of the sorghum produced is for livestock and 50% consumed by humans/other applications Food usage on the rise thanks to the gluten-free benefits of sorghum Most human consumption occurs in low-income countries, while high-income countries use sorghum as a component in livestock feed or to produce ethanol Sorghum is the leading cereal grain in Africa. Currently grown in over 66 countries. The area planted to sorghum worldwide has increased by 66 percent over the past 50 years, while yield has increased by 244 percent. Among the other cereals, feed use of sorghum is anticipated to increase by 10. 5 percent (2. 7 million tonnes), with much of the rise concentrated in China, where it is seen growing by 1. 8 million tonnes (43 percent) from the previous season(FAO) Total trade of sorghum (2014/15) is projected at 10 million tonnes, some 53 percent (3. 5 million tonnes) higher than last season (FAO)

Sorghum: Global Status Export (Green), Import (Red) and balanced (Yellow) Countries Source: Toepfer International Sorghum: Global Status Export (Green), Import (Red) and balanced (Yellow) Countries Source: Toepfer International Asia Pte. Ltd.

Sorghum in India Traditional marketing chain for sorghum grain in India Sorghum in India Traditional marketing chain for sorghum grain in India

Opportunities / Drivers: India ü Increased demand for sorghum grains in the international trade Opportunities / Drivers: India ü Increased demand for sorghum grains in the international trade for alternative uses like feed, starch and fuel. ü The health-, the environment- and animal welfare-conscious consumers are increasing and sorghum is being preferred ü Increasing demand for gluten-free products ü Well established research centers on sorghum and increased application of new technologies for the development of new cultivars, Products and Technologies. ü Conducive policy frame work and institutional supports for promotion of exports.

Increased Demand Case : Sorghum Volumes handled by Trade in Hyderabad Other Markets (510) Increased Demand Case : Sorghum Volumes handled by Trade in Hyderabad Other Markets (510) Food (890) Whole Grain (821) Branded Sale (6) 1. 2. 3. Flour (37) Branded Sale (13. 50) Loose Sale (815) Fresh @ (2. 75) Balaji Grand Bazar (0. 95) ‘More’ (2. 25) 1. 2. 3. 4. Sorghum Market Size 2050 1. 2. 3. 4. 5. Fresh @ (3. 75) Balaji Grand Bazar (4. 50) ‘More’ (1. 60) Suzane (2. 60 T) VSR (1. 15) Monan Lal (285. 25) Ramdayal (203. 25) Srikrishna &Company (81. 5) Others (244. 5) Poultry (650) Edible Cutlery (25. 30) Ravva (7) BK environment Innovations Loose Sale (23. 50) Branded Sale (2. 5) 1. 2. 3. Loose Sale (4. 50) Balaji Grand Bazar More (1. 50) VSR (0. 25) Source: Field Survey by ITC & DSR All grain in Terms All Unites in Tons

Opportunities / Drivers: Global Supply Sorghum has huge potential acreage increase mainly in Argentina/US Opportunities / Drivers: Global Supply Sorghum has huge potential acreage increase mainly in Argentina/US if prices continues supported as today. If China/Argentina sign agreement on Sorghum local prices will jump and farmers would increase acreage. US also shows some increase of acreages because of higher local prices. Australia acreage increase is limited. Demand Chinese demand changed the Supply &Demand dramatically and will drive the market for 3 reasons: 1) Huge difference between sorghum import price vs local crop 2) Sorghum is NO-GMO stem (corn MIR 162 issue). 3) China has NO IMPORT QUOTA on sorghum. ü Due to high prices others destinations switched sorghum demand to others products such as corn (Mexico/Colombia/Japan). ü Question is if Chinese demand increase will compensate the drop on usage from others destinations. ü Ethanol demand is also increasing in US and also China is considering to import more sorghum for Ethanol. ü Don’t see any impact for countries that use Sorghum for food as they are self-sufficient (African Countries).

Potential Sorghum Export Countries Cereal Preparations Ø Present level of exports -$ 471 mn Potential Sorghum Export Countries Cereal Preparations Ø Present level of exports -$ 471 mn Ø Projected exports in the next 3 years- $ 800 mn Ø Potential markets -USA, Bangladesh, UK, Nepal, UAE, Angola Grain China , Japan , Mexico, Chile, Africa, European Union and others Requisites for Enhancement of Sorghum Exports • Educate farmers and producers about markets, products and improved production technologies • Storing the grain to suit export demand • Identify up-scalable products which has international demand. • Identify niche markets for specified products • Develop value added products based on domestic & International market surveys • Develop and use low cost and appropriate processing technologies • Entrepreneurship development is another key component for enhancement of demand.

1. 2. 3. 4. 5. 6. Production & Supply Lack of consistent, uniform quality 1. 2. 3. 4. 5. 6. Production & Supply Lack of consistent, uniform quality of grain supplies Logistics and marketing costs are high due to scattered production Heavy subsidy to competing crops like paddy and wheat Acceptability of seed variety High cost of production Product modification 1. 2. 3. 4. 5. 6. EXPORT CHALLENGES Technology Suitable processing technologies unavailable Lack of long-term storability of flour made from grain Poor image of sorghum and millets among consumers Nutritional myths –high content of tannins, poor digestibility Grain molds Marketing Lack of demand for Indian Sorghum Products Lack of Internationally accepted products and Variants Poor Export Market information & Channels Branding and Quality Cultural barriers Bi-lateral and multilateral free trade agreements 1. 2. 3. 4. Policies Information on Import- export policies of country Liberalized government agricultural and trade policies The adoption and enforcement of intellectual property rights Elimination of phytosanitary constraints

POLICE MAKERS • • Ministry of Agriculture & cooperation (GOI) Ministry of Food Processing POLICE MAKERS • • Ministry of Agriculture & cooperation (GOI) Ministry of Food Processing & Industry Ministry of Industries & Commerce (APEDA) Ministry of Small Scale Industries Ministry of Finance National Insecticide Board State Department of Agriculture • Exporters , Commodity Exchanges Other International Agencies/Instit utes • • FINANACIAL SUPPORT NARS- ICAR CGIAR MNCs Corporations FPOs • QUALITY ASSURANCE • • • MARKET LINKAGE & DEVELOPMENT RESEARCH & PRODUCTION Key Institutional Players For Enhancing Export Of Sorghum • • MSME APEDA NABARD EXIM BANK Directorate of Marketing & Inspection Directorate of Plant Protection Quarantine & Storage National Insecticide Board Department of Food Processing Export Inspection Council Research centers International Food Safety Authorities

Sorghum Export Development Platform (SEDP) APEDA, Mo. FPI, MSME Funding Agencies Promoting R&D Institutes Sorghum Export Development Platform (SEDP) APEDA, Mo. FPI, MSME Funding Agencies Promoting R&D Institutes ICRISAT, IIMR, PJTSAU Go. I Mo. Fi (NABARD), EXIM Sorghum Export Developmen t Platform Farmers/ FPOs Food Processors • • • Product Development Access to new food technologies International Food safety standards Nutritional Profiling Establishing market linkages Contract Farming Feed Manufactur er Commodity Exporters • • • Identificationof Technologies Standardizatio n of technology Market Studies Establishing market linkages Contract Farming Regulator y Authoriti es/service providers • • • Access to feed technologies, Identification of export quality Cultivars Connecting with Farmer Groups Contract Farming & Buy Back arrangements Establishing market linkages Industrial Processers • • • Conducting Trails with sorghum as principal ingredient Supporting research on cultivars development for specific end-uses Providing technical guidance on consumption & quality of Sorghum Identification of International Standards for exports Contract Farming

Sorghum Export Development Platform Competitive Operating Environment for Enhancing Exports 1 2 3 4 Sorghum Export Development Platform Competitive Operating Environment for Enhancing Exports 1 2 3 4 5 Land, Infrastructure, and Real Estate l Security of investment for the life of the investment l Affordable lease of prepared, bare land standard buildings in the SEDP l Government facilitation to access land for production l Affordable access to on and off site infrastructure roads, energy, water, gas) ( Subsidies, Fiscal Incentives, and Affordable Financing l Financial subsidies to address key start-up costs (e. g. , one-off training costs for local employees) l Fiscal incentives (e. g. , tax holidays, duty exemptions) l Affordable financing and subsidies (APEDA/ MSME / SFAC/ NABARD) Supply Security Facilitation l Contract farming support in the SEDP, including subsidized & improved inputs l Raw material aggregation and linkage to storage infrastructure l Facilitation of commercial farming l Incentives for agro supplies traders l Preferential terms on imported inputs to cover supply shortages (where necessary) Export Market Development & Facilitation l Market Intelligence (Provision of Export –Import data, Opportunities, Tenders, New Technologies etc) l Export Promotion (e. g. , Advertisement , E-Marketing Participation in international Trade fairs etc) l Export Business services (e. g. , Facilitating orders through agents , networking and Co-BI’s, l Export Quality and Regulatory Services (e. g. , Facilitating quality services, Training Programs on Export certifications) Shared Services and Administrative Incentives l One stop shop roviding administrative services for increased ease of doing business p l Operating services (e. g. , facilities management, transport, housing, banking) l Business services (e. g. , recruitment support, customs services, business center) l Agro specific ervices (e. g. , health controls and certification, trading center) s Together, these incentives and services create Competitiv e Operating Environme nt for Enhancing Exports

SEDP bring down costs of production and improve quality of products to make domestically SEDP bring down costs of production and improve quality of products to make domestically produced sorghum competitive Drivers of Costs Drivers of Quality SEDP Solutions Challenges Unreliable Infrastructure Input Costs Technology and Farming Techniques Low Public Sector Investment Decision making and planning becomes highly uncertain when investments are put at risk by unstable or rapidly changing policies High input costs are significant barriers to the competitiveness of the sorghum industry A low technology base and level of mechanization puts sorghum farmers at a disadvantage when competing against high quality domestic importers Insufficient certification and food safety standards, in addition to a lack of consistent best practice techniques, has led to a sub -optimal quality of sorghum Access to adequate and reliable infrastructure, access to sufficient and affordable finance Guaranteed access to quality inputs for sorghum producers and processors. These may include cost of credit, imported equipment, appropriate seeds etc Adequate know-how and skill set of workforce. Access to improved seeds and inputs facilitates mechanization Existence of enabling policies for domestic market development. High level of investment from public sector. Effective value chain linkages

Connecting the dots…. CHALLENGES SCHEME LINKAGE Production & Supply Initiative for Nutritional Security through Connecting the dots…. CHALLENGES SCHEME LINKAGE Production & Supply Initiative for Nutritional Security through Intensive Millets Promotion (INSIMP) – a part of Rashtriya Krishi Vikas Yojana” (RKVY); 1. 2. 3. 4. 5. 6. Lack of consistent, uniform quality of grain supplies Logistics and marketing costs are high due to scattered production Heavy subsidy to competing crops like paddy and wheat Acceptability of seed variety High cost of production Product modification Rainfed Area Development Programme (RADP) – again a part of Rashtriya Krishi Vikas Yojana” (RKVY); and AGENCY Departme nt of Agricultur e & Cooperation Integrated Cereals Development Programmes in Coarse Cereals based Cropping Systems Areas (ICDP-CC) under Macro Management of Agriculture (MMA). INSIMP is the only comprehensive initiative to support millet production Technology 1. Suitable processing technologies unavailable 2. Lack of long-term storability of flour made from grain 3. Poor image of sorghum and millets among consumers 4. Nutritional myths –high content of tannins, poor digestibility 5. Meeting the international quality standards 6. Grain molds 7. Technical skills Technology and Quality Up gradation Support To Micro, Small And Medium Enterprises MSME Support For Entrepreneurial And Managerial Development OF SME’s Through Incubators MSME Micro and Small Enterprises-Cluster Development Programme MSME Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation MSME Technical & Managerial Consultancy Services MSME

Connecting the dots…. CHALLENGES SCHEME LINKAGE Marketing Enabling Manufacturing Sector To Be Competitive Through Connecting the dots…. CHALLENGES SCHEME LINKAGE Marketing Enabling Manufacturing Sector To Be Competitive Through Quality Management Standards And Quality Technology Tools (QMS/QTT) MSME 3. 4. 5. 6. Scheme For Marketing Assistance And Technology Upgradation In Micro, Small And Medium Enterprises (MSMEs) MSME Financial Assistance On Bar Code MSME Marketing Assistance and Export Promotion Scheme MSME Packaging for Exports MSME Market Development A. Packaging Development B. Feasibility Studies, Surveys, Consultancy and Database Up-gradation C. Export Promotion and Market Development APEDA 1. 2. Lack of demand for Indian Sorghum Products Lack of Internationally accepted products and Variants Poor Export Market information & Channels Branding and Quality Cultural barriers Bi-lateral and multilateral free trade agreements Policies 1. 2. 3. 4. Information on Import- export policies of country Liberalized government agricultural and trade policies The adoption and enforcement of intellectual property rights Elimination of phytosanitary constraints AGENCY Mo. A Mo. FPI Mo. C&I Mo. F

Connecting the dots…. Policy Formulatio n Regulation X X X National Insecticides Board Nat'l Connecting the dots…. Policy Formulatio n Regulation X X X National Insecticides Board Nat'l Institute of Agricultural Marketing Nat'l Institute of Post-Harvest Technology Small Farmers Agribusiness Consortium Ministry of Food Processing Industries Dept of Food Processing Industries Ministry of Small Scale Industries Ministry of Commerce and Industry Dept of Commerce X X X X X X X X X X X APEDA X X X X X X X Agency Ministry of Agriculture Dept of Agriculture and Cooperation Directorate of Marketing and Inspection Directorate of Plant Protection, Quarantine and Storage Department of Industrial Policy and Promotion Export Inspection Council Ministry of Finance National Bank for Agriculture and Rural Development Domestic Trading Post Harvest Management Agro Processing Exports Grades, Training/ Standards, Capacity SPS building Market Information Direct Marketing Activities Production Enhancement Source: Ministry of Food Processing Industries, Annual Report 2004/05; Ministry of Commerce Annual Report 2004/05, Patnaik, G. , 2005, “Review of Government of India Agricultural Marketing/Processing Policies and Programs”, Global Agri System, Pvt. Ltd Banks and Funding Agencies Research Centers Sorghum Export Development Platform X X X X X Policy Implementation, Coordination & Facilitation of Services and Funding with institutional partners, Technology resource center , Training & Capacity Building and Facilitation of Exports in coordination.

GROUP DISCUSSION POINTERS I. Divide into four groups for discussions 1 2 Food Feed GROUP DISCUSSION POINTERS I. Divide into four groups for discussions 1 2 Food Feed & Fodder 3 4 Other Industrial Fuel II. Pointers for discussion 1 Challenges (5) 2 Opportunities (5) 3 Way forward to address challenges 4 Suggestions on enhancing strategic framework II. Presentations by group leader DO ABLE SCALE ABLE SUSTAIN ABLE

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