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Colour of money

Despite the appalling gaps in the delivery mechanics—cold chains, warehousing, processing centres and logistics—there is enough today to make entrepreneurs tackle specific projects in the farm-to-the table value chain. Entrepreneurs and investors are making most of the business opportunities that abound in the farm-to-fork value chain. Shamni Pande reports.

Shamni Pande | Print Edition: April 5, 2009

With manufacturing plants idling and export markets dying, investors are crowding back into basics like food. Consumers may shrink away from that new car or Plasma TV, but everybody has to eat. “Many sectors have fallen out of favour with investors, but food is one area that has shown resilience and is counter-cyclical,” says Rajesh Srivastava, Chairman & Managing Director, Rabo Equity Advisors.

Chairman & MD, Rabo Equity Advisors
Rajesh Srivastava
Srivastava should know: he’s now in charge of the $100-million India Agri Business Fund, which will look exclusively at India’s agricultural sector. One of Srivastava’s first investments: Hyderabad-based Sri Biotech Laboratories India, which makes biological and bioorganic products for crop improvement and protection. “We find post-harvest to be a very interesting area. Usually, for investors to get interested, there has to be a certain depth in scale of operation, and this is now visible. There are more players today, who have businesses of over Rs 20 crore that make them attractive,” he says.

This goes to show that despite the appalling gaps in the delivery mechanics—cold chains, warehousing, processing centres and logistics—there is enough today to make entrepreneurs tackle specific projects in the farm-to-the table value chain. Kalyan Chakravarthy G.K.D., Country Head (Food & Agri Strategic Advisory Research), YES Bank, concurs: “Today, it is clear that demand is not an issue, it is the supply side that has not been sufficiently worked upon by any player at the national level… there are efforts concentrated in specific regions and for specific food items.” The food sector has seen various players actually deliver a bounty: Global Green, part of the $3-billion Avantha Group of Gautam Thapar, has already become the third-largest gherkins player in the world, while Bharti Del Monte India, a joint venture between Bharti Enterprises and Del Monte Pacific subsidiary DMPL India, has become the largest exporter of fresh baby corn. These are just two examples.

Indeed, this promise of a take-with manufacturing plants idling and export markets dying, investors are crowding back into basics like food. Consumers may shrink away from that new car or Plasma TV, but everybody has to eat. “Many sectors have fallen out of favour with investors, but food is one area that has shown resilience and is counter-cyclical,” says Rajesh Srivastava, Chairman & Managing Director, Rabo Equity Advisors. 

Rich Pasture
There’s so much room for growth that investors can have a field day sizing up potential players in the following segments.

Seeds: The Rs 5,000-crore seed industry is in a take-off stage and there would be more PE and M&A deals in this space

Warehousing & post harvest handling: Though the market size is not estimated, the demand-supply gap for warehousing capacity is estimated to be about 38 million MT. With the changes in the legislation relating to warehouse receipt, there will be many investments in this space

Functional foods: The Rs 900-crore functional food market is growing at about 30 per cent per annum

Grain-based Indian snacks: The organised Indian snacks market is about Rs 2,500 crore and the segment is attracting PE investments

Alcoholic beverage (beer and wine): The 155-million-cases beer industry and the 2.5-million-cases wine industry are growing fast and will attract investments


Srivastava should know: he’s now in charge of the $100-million India Agri Business Fund, which will look exclusively at India’s agricultural sector. One of Srivastava’s first investments: Hyderabad-based Sri Biotech Laboratories India, which makes biological and bioorganic products for crop improvement and protection. “We find post-harvest to be a very interesting area. Usually, for investors to get interested, there has to be a certain depth in scale of operation, and this is now visible. There are more players today, who have businesses of over Rs 20 crore that make them attractive,” he says.

This goes to show that despite the appalling gaps in the delivery mechanics—cold chains, warehousing, processing centres and logistics—there is enough today to make entrepreneurs tackle specific projects in the farm-to-thetable value chain. Kalyan Chakravarthy G.K.D., Country Head (Food & Agri Strategic Advisory Research), YES Bank, concurs: “Today, it is clear that demand is not an issue, it is the supply side that has not been sufficiently worked upon by any player at the national level… there are efforts concentrated in specific regions and for specific food items.” The food sector has seen various players actually deliver a bounty: Global Green, part of the $3-billion Avantha Group of Gautam Thapar, has already become the third-largest gherkins player in the world, while Bharti Del Monte India, a joint venture between Bharti Enterprises and Del Monte Pacific subsidiary DMPL India, has become the largest exporter of fresh baby corn. These are just two examples.

Indeed, this promise of a takeoff trajectory is making even people like Abhiram Seth, a former Executive Director of Pepsi Foods, try his luck as an entrepreneur. He has set up Aquagri Processing to tap opportunities in sea plant agriculture—a venture that he started with PepsiCo and eventually bought. Seth aims to grow a particular variety of seaweed used to make carrageenan, an edible jelly-like ingredient used in foods, cosmetics, pet food and toothpastes. He has already organised 800 small farmers for this.

At the other end of the spectrum are seasoned agri-specialists such as Gokul Patnaik, Chairman, Global AgriSystem, who has discovered that in addition to his consulting practice, there is much profit to be made by actually getting his hands into the soil. “We are working with 400-500 small farmers in Bulandshahar to produce European carrots for the domestic market. I am also foraying into potatoes and onions,” he says. Patnaik, in addition to catering to domestic consumption, has also bagged orders to export pomegranates, mangoes and grapes. He is investing Rs 30 crore in building eight- pack houses that will take care of the specialised storage requirements of these items.

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