Agri Buzz

Updated: Oct 22 2002, 05:30am hrs
With the renewed policy focus on Indias agricultural sector, it is but natural that global trading majors are eyeing the business opportunities opening up in the countryside. Many of them are beefing up their operations through full-fledged office facilities. When the pickings are not lucrative enough, such companies often make do with only representatives. So when the likes of USs agricultural trading major Cargill and Louis Dreyfus strengthen their base of operations here, its a clear enough indication that the potential business has reached a critical mass. Three other Singapore-based agri trading majors too have either recently entered the Indian market or have upgraded their earlier operations to get a part of the action that is hotting up. Agri trading may appear as a low entry business, but it requires strong and well maintained international linkages. Besides agricultural reforms, the recent flurry of interest by the global majors also reflects the growing importance of the Asian region as a hub for global agri trade. As most of these companies already have operations in neighbouring countries, a growing presence in India was perhaps inevitable.

The causa proxima for this recent flurry of interest, however, is the policy changes allowing exports of wheat and rice at subsidised rates. India now is one of the largest foodgrain exporters in the world, which obviously throws up lucrative opportunities for agri trade. In this connection, there are expectations that the government might extend the last date of December 31, 2002 for exporting these two subsidised commodities in the global market through the Food Corporation of India. But a valid question raised by the trade is how sustainable is this business over the long haul A more focussed policy approach is therefore called for. Besides foodgrains, the agri trading majors are interested in commodities like sugar, pulses and edible oils as well. For instance, there is a huge inventory of unsold sugar stocks lying with the mills clearly suggesting the need for an outlet through sales abroad. Interestingly, whenever the country had earlier sought to export this commodity, prices crashed. But whenever it sought to purchase sugar from the world market, prices zoomed upwards. Whether the active involvement of global agri majors will improve this state of affairs remains to be seen. The important point is that times are a-changing; that India can harness its vast potential in agri trade by continuing the policy thrust on agriculture and attracting more global and local players into the business.