Raking it in: Jang Bahadur Singh Sangha on his farm in Punjab. PHOTO: ADITYA KAPOOR/www.indiatodayimages.com
A whiff of Hugo Boss announces the arrival of Jang Bahadur Singh Sangha even before he steps into the room. At first glance, he looks every bit a corporate honcho with his sharp Armani suit, matching turban and exclusive Crockett & Jones shoes. You'd probably imagine him spending his days in some high-flying boardroom in Mumbai with giant Husains on the wall. You couldn't be more wrong. Sangha is a prosperous farmer in Punjab whose life revolves around growing potatoes and maize on acres and acres of farmland spread across the state.
Really? Potatoes and maize? Who would have thought anybody could make a fortune from these two simple agricultural commodities? But Sangha has - and a massive one at that. His family is the largest potato and maize producer in the country with more than 5,000 acres of land spread across Punjab. The Sanghas grow 45,000 tonnes of seed potatoes and about 7,500 tonnes of maize a year.
How did Sangha manage to hit pay dirt with the humble potato at a time when many farmers in Punjab had turned their attention to more lucrative wheat and paddy? Experts say the roots of his success lie in his use of high technology.
Blooming Business: Potato production growth has been driven mainly by area increase
"Vegetable crops are always more lucrative, but risk-prone. Farmers such as the Sangha family relied on technology, and reaped the benefits of this," says agricultural economist Sucha Singh Gill. "Those farmers who could take risk, had the wherewithal to set up cold storage and do crop management, succeeded and will continue to succeed."
But how has Sangha managed to scale up? Most investing directly in the field struggle with small-sized farms and the Land Ceiling Act that does not allow one individual to amass land. "We have three types of association with other farmers; one, we take their land on rent, second,we help them grow these crops - with our knowledge, learnings, experience - thirdly we do contracts," he says.
It was Sangha's father who first took up potato cultivation in the early 1960s, but Jang Bahadur is the one who took it to a different level. Today, he has succeeded in growing a family business into one of India's largest and most modern farming operations. Armed with a degree in plant physiology and pathology from Cornell University, he returned home to set up a modern tissue culture laboratory on his farm more than 20 years ago. He then changed traditional seed potato production by isolating disease-free clones of potato varieties and laid the ground for rapid multiplication of seedlings. His decision to break away from the conventional method of seed multiplication helped raise annual production by 15 to 20 per cent.
India's total geographical area: 328.7 million hectares; Net sown area: 140 million hectares
More than two decades on, the Sanghas still invest in the biggest and the best technology. Drive to his farm at Quadianwali village on the outskirts of Jalandhar and you get a sense of the scale of his farming business: farmers on his land do not use run-of-the-mill tractors but stylish John Deere machines to plough the land. The Sangha family has a fleet of 175 such tractors. Jang Bahadur says one of the biggest problems in potato farming is extreme price fluctuations. "I am one of the biggest farmers in the country, but I am still in debt," he says. "In the last three years, diesel prices have increased, interest rates are high and cost of labour has increased." To be sure, potatoes are the fifth-largest food crop in the world and India is the second-largest producer with around 40 million tonnes after China. Even so, the potential to grow is enormous.
According to the McKinsey-CII report, only seven per cent of India's potato produce is processed and despite its global top spot, the country is not among the top exporters of this commodity. Maize, too, is tipped to be India's next big area of opportunity with demand expected to increase to 44.4 million tonnes by 2022 from 18.6 million tonnes in 2011, according to estimates by global consultancy KPMG.
Experts see a pickup in demand because maize has multiple uses: it is used as cattle feed, for cooking and as an industrial raw material. "While demand is projected to increase by 8.2 per cent, the supply of maize increased by only 5.8 per cent, showing a critical shortfall in supply," says Angshuman Bhattacharya, Director, Strategy Group, KPMG India.
Not surprisingly, investor interest in this sector has been growing. French multinational Roquette, a top global starch producer, bought Indian major Riddhi Siddhi Gluco Biols. Global commodities major Cargill is setting up a corn milling plant in Karnataka with an initial investment of Rs 400 crore. "Maize starch is a highly versatile industrial raw material and finds extensive use in the textile, food, pharmaceutical and paper industryy," says I.K. Sardana, Managing Director, Sukhjit Starch & Chemicals, one of the oldest players in the market.
Despite growing foreign interest in the sector, Sangha is a staunch opponent of foreign direct investment in retail. He believes it will not help farmers, but make them dependent on big retail giants. However, he is open to investment in farming and is in touch with several big agricultural giants who want to invest in Indian farms. "We haven't closed any deal as yet, but are analysing it," he says.
The Sanghas' empire is spread across Punjab from Jalandhar to Ludhiana and they also supply potato seeds to farmers across the country. But, for the moment, Sangha prefers spot options to corporate deals despite growing corporate involvement in agriculture. Domestic players such as ITC and global giants such as PepsiCo India, who use potatoes for wafers, are certainly reaching out to farmers for supplies. PepsiCo works with farmers across the country. "We assure farmers with a certain price and do give a premium for good produce," says Vivek Bharti, Executive Director, agriculture and exernal affairs, PepsiCo India.
For farmers such as Sangha, the market is clearly ripe for the picking.