World is Green

Organic farming seems to be the new growth area for Indian farmers.

So what exactly is a Cash crop?

In agriculture, a cash crop is a crop which is grown for money. The term is used to differentiate from subsistence crops, which are those fed to the producer’s own livestock or grown as food for the producer’s family. In earlier times cash crops were usually only a small (but vital) part of a farm’s total yield, while today, especially in the developed countries, almost all crops are mainly grown for cash. In non-developed nations, cash crops are usually crops which attract demand in more developed nations, and hence have some export value.

The Mint reports that 9 India states have applied to the “Agricultural and Processed Food Products Export Development Authority (Apeda), a government-run export promotion body, asking for accreditation to do the same.”

In the seven years since the National Programme for Organic Production was notified by the government, only 11 accreditations have been issued by Apeda, of which only one is to a state government organization, the Uttaranchal State Organic Certification Agency. The rest are international private agencies.

“Now, nine states, Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu, have submitted proposals for approval (for accreditation),” says K.S. Money, chairman, Apeda.
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According to a study by the US department of agriculture, consumers in the US and the European Union account for 95% of the world’s retail sales of organic foods, estimated at more than $25 billion (Rs1.03 trillion).

In 2005-06, India exported organic products worth $228 million.

Currently, India ranks 33 in the world in terms of total land under organic cultivation and 88 in terms of the ratio of agricultural land under organic crops to total farming area. With an eye on the market, a few states have begun to take organic farming seriously.

Interestingly, the state of Orissa, which has no policy for Organic farming has the largest organic farming production. Why?

“If you see, organic farming is working out in states which have a higher percentage of smaller farmers. It is difficult to push farmers, who own large tracts of land, to go organic. These farmers have been using pesticides for years and years,” says Arun Chandra, executive director, Chetna Organic Farmers Association, a group representing 7,500 organic farmers across five states.

The market is clearly there for the taking.

Rana Rosen on the rising cleantech venture funding in India by VCs.

Private equity (PE) investors, including early-stage venture capitalists, have poured more than $433 million (Rs1,775 crore) into environment-related businesses, primarily wind energy and clean fuel, in the country since 2001.
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So far, investors have put down an average of $33 million into companies that, for example, turn sugar into clean fuel or make cars that run on an electric battery. Overall, investments favoured wind energy, which saw four companies receive funding worth $224 million, and clean fuels, where five companies got $141 million (see accompanying table).
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Most investors are driven by the domestic need for power and water in India, and making that energy supply sustainable as the country develops. “People are looking at India as a market for things, not as a source for things,”
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“India has already seen its wind industry develop rapidly, and looking at China, where solar production and installation are increasing rapidly, India certainly has great potential here,” says Dan Kammen, professor in the energy and resources group at University of California, Berkeley. Many investors see India’s potential in tapping solar energy as even greater than wind, given that its sunny days are around 93% of the year and can be more easily distributed. Companies doing work in biofuels also will continue get attention.

“Anyone who has a biofuel plan, they are sold out,” said Buch. “They sell every litre they manufacture.”

This continues to show the growing market for energy in India. Energy efficiency, Uranium, Wind, Solar, Bio Fuels, Coal, Gas and Oil. India needs all of these and some more .

Irrespective of the correct number it is prudent to remember that VC investing is always the tip of the iceberg in most markets. One good source for this fact is the annual Inc 500 listing. This year they have taken a big step forward and created the Inc 5000 listing. The funding strategy for these high growth companies? Only 7% of them relied on VC funding. If this is true for the US, then India should be even lesser considering the smaller VC market.

The end point: Using the above reasoning, the clean tech venture market in India may have received $8-$9 billion dollars($433m*20 times) from 2001 till now.

IDC and Gardner have started looking at the benefits of greening technology.

In a sign that issues regarding technology’s environmental impact are climbing the IT executive’s agenda, both Gartner and IDC plan to devote a session to green IT in their annual conferences.
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In a statement, IDC said that for most the initial driver to green the IT infrastructure was cost cutting, but scarcity of resources and increasing energy costs was making it increasingly attractive. Legislation was also pushing change, and IT managers were taking green issues into consideration when taking to suppliers and production, it said.

Martin Hingley, chief research officer at IDC EMEA, said: “IT managers are taking into account the green credentials of suppliers when making purchasing decisions, and ‘greenness’ is already gaining traction in the marketplace and could serve as a key differentiator in purchasing decisions.”

Chian’s need for development rights in view of climate change:

China said Tuesday it was working hard to increase its use of renewable energy, but needs to be given some leeway in the global effort to reduce greenhouse gasses.
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“I hope the international media will give us some development rights, some development space and not overly blame us,” said Chen Deming, vice chairman of the National Development and Reform Commission, China’s top planning agency.
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However, Chen said China shouldn’t be held overly accountable because its has only recently become a major producer, contributing just 9 percent of global CO2 emissions between 1950-2000. China’s per-capita rate of CO2 production also remains low given its population of 1.3 billion, he said.

Chen also reiterated a goal of producing 15 percent of total energy supplies from renewable sources such as wind, hydropower and biofuels by 2020.

A similar argument can be made for India. Thomas Schelling made a strong argument for current economic growth and development as the adaptation plan for developing countries. (Check this link and go down the article where he mentions Singapore)

Every major decision is a compromise; in the sense you need to select one thing and forgo another.

A good example is the recent Qantas decision:

The airline yesterday announced it would cease its trial of flying over the north Queensland city from Monday, bowing to pressure from residents concerned about the increase in aircraft noise.
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“The most fuel-efficient flight path may decrease carbon dioxide emissions but increase the number of people exposed to aircraft noise, as has been the case in Cairns.