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BW Businessworld

GST Will Result in Higher And Faster Economic Growth: Cargill India’s Head

In the medium and the long term, GST, a major transformational tax reform, is going to improve the attractiveness of the country, draw more investments and result in higher and faster economic growth, Siraj Azmat Chaudhry, the Cargill India’s Head

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Cargill India Pvt Ltd., a part of multibillion-dollar Cargill Group, is known for its innovative and sustainable approach in the world food map. With more than one and a half century old legacy in the food business, they spearheaded the first wet corn mill plant in India with a massive USD 100 million investment which is the part of their 1,500 crore Rs investment plan in India for next five years under make in India campaign. BW Businessworld had a detailed interaction with Siraj Azmat Chaudhry, the Cargill India’s Head.

Cargill India’s views on recent step back of GEAC on the approval of GM mustard?

Cargill supports science-based safety and environmental regulation of biotechnology. We recognize that consumer preferences and producer acceptance ultimately will determine demand.

We believe GMO and non-GMO crops can and will co-exist to feed a growing population. GMOs are proven safe and help deliver a number of benefits (e.g. increased yields, sustainability). We also recognize that some consumers view GMOs negatively – the intersection of science and consumer values is a complicated meeting point. In our view, there is a role for both GM and non-GM foods.

Being one of the largest players in the food market of India, what are your views on open trade and 100 per cent FDI in food processing sector? 

Cargill believes open trade is beneficial and allows food to move freely across borders, which lowers the cost of food for consumers. Trade also promotes free enterprise and market competition, which also benefits consumers and small businesses. Open trade also creates jobs, grows economies and helps raise living standards.

With open trade and relevant enabling environment including 100 per cent foreign direct investment (FDI), Cargill believes India can become a global sourcing hub for the food processing industry and a food bowl for the world. This will benefit the agricultural economy and the farmers.

How about your initiative of establishing food bank chain in India? We produce on large scale but we can’t feed our own population. Who’s the real culprit? 

To improve access to nutritious food for those who need it the most, Cargill has partnered with the Global Food Banking Network (GFN) and has committed resources and provided leadership to establish the India Food Banking Network (IFBN) in 2011 which has a network of 10 Food Banks and multiple partnerships. IFBN is leading India’s fight against hunger through a national network of Food Banks that systematically acquire food from donors and channelize it to various feeding programs to address the problem of hunger.

India is home to the largest undernourished and hungry population in the world despite being one of leading countries in agriculture produce across different categories. On one hand, there is hunger and on the other, ~40% of India’s food produce is wasted & does not reach the end consumer.

Multiple interrelated factors contribute to the complexity of food insecurity in the country and across the world today, including the impact of weather-related production shortfalls; growth in the non-food use of crops for biofuels; the impact of agriculture on the environment; under-investment in research and development; price volatility, and non-acceptance of science and technology.

Farm to fork or a backward integration (fork to farm), what is more required for farmers connectivity to market? 

To be competitive in today’s global marketplace, farmers – especially smallholder farmers, need to be integrated with the Ag & Food value chain and connected with the markets – traders, customers etc.

“Fork to Farm” or market-driven agriculture is the need of the hour. The government also needs to play an important role and provide enabling policy environment including open trade, implementation of E-NAM. In addition, one also needs to build a robust information system for the farmers so that they get market signals on a real-time basis.

Our edible oil imports are just next to crude oil imports, and palm oil cannot top the charts due to its nutrient value. What will be the feasible solution? 

Self-dependence in food production has remained a focus area and the entire green revolution and subsequent agricultural policies/strategies have been designed to achieve this objective.

In view of the limited resources available, it is important for nations to focus on producing crops where they have inherent comparative advantage and then trade. In case of palm oil, Malaysia and Indonesia have a distinct advantage vis-a-vis other nations and since we have limited land area and other resources our moving from grains and cereals production to oil seeds and palm cultivation does not make economic sense.

Palm Oil being relatively cheap it would have a market in the country both for the customers - food processing and food service segment and consumers - for the families at the bottom of the pyramid.

How do you look at investor’s habit of investing in post-harvest processes only? Isn’t it a barrier to farmers’ economic condition in India? 

There are a few challenges which are hampering investments on the pre-harvest side. Firstly, the average size of land holdings is very small (less than 2 hectares. This results in the inadequate adoption of modern agricultural practices and use of technology. Secondly, the country needs a robust IP framework to encourage innovation, R&D and investment by the private sector. Private sector participation on the pre-harvest front would help farmers increase productivity and would result in an increase of their incomes and prosperity.

Farmer training is also very important aspect, isn’t it too early to think about smart agriculture or precision farming?

Farmer training plays an important role in harnessing various aspects. Around the world, farmers are using tools that help in increasing planting efficiency and allow more precise application of crop inputs, such as fertilizer, thereby boosting yields while reducing waste and environmental impact. Additionally, given the challenges climate change is creating for agriculture and food security, it is important that farmers should be given suitable training not only on the harmful effects of using excessive fertilizers and agrochemicals, but also on smart and sustainable agriculture or precision farming. I do see private sector playing an important role alongside the government on farmer education.

Quarterly GDP in agriculture has declined from 4493 billion INR in the first quarter of 2017 to 3977.81 billion INR in second quarter of 2017, is it the GST effect?

One was expecting a slowdown in the GDP growth post the GST implementation. However, there are no doubts that, in the medium and the long term, GST, a major transformational tax reform, is going to improve the attractiveness of the country, draw more investments and result in higher and faster economic growth.

Indian agriculture has an immense scope which is untouched. What is Cargill’s target for next 5 years and what about make in India? 

Cargill is committed to India and recently we have announced a new investment of $240m / INR 1,500 Cr over the next five years. This investment support’s India’s economic development, and agriculture and food processing sectors.

Last year, Cargill inaugurated its first wet corn milling plant in India; set up with an investment of US$100 million. The company also inaugurated a new dairy feed mill in Bathinda, Punjab which has been built with an investment of US $ 15 mn. With the growing population and changing consumer trends, Cargill is committed to nourishing the people of India in a safe, sustainable and responsible manner.

Cargill supports PM Modi’s ‘Make in India’ initiative and appreciates the various steps taken towards ease of doing business including implementation of Goods & Services Tax, creating of a competitive spirit amongst the states, focused approach towards skill development which would go a long way in making India a global an attractive investment destination and a global food processing hub.

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