The Indian economy is undergoing a process of policy reform to respond to domestic and global challenges and harness the emerging opportunities. To provide adequate support in reforming agricultural policies and alleviating poverty, the International Food Policy Research Institute launched the South Asia Initiative (SAI) with the seed money from the Ford Foundation in September 2001. Since then, it has grown by several folds (more than 600%) wherein other donors such as USAID, ADB and World Bank have supported various activities under SAI. The purpose of the SAI is to better understand and analyze the emerging challenges to agriculture of the region, and assess their implications for food security and poverty alleviation. The studies presented in this workshop mainly form part of the project funded by the Ford Foundation to study the process of diversification in Indian agriculture and its implications for the firm farm linkages.

The dietary mix is changing fast on the plate of Indian consumers. The sustained economic growth and rising urbanization have gradually diversified the consumption basket in favor of high-value foods, such as fruits, vegetables, milk, meat, eggs and more processed food. As per the estimates of the National Sample Survey Organization (NSSO), the per capital consumption of cereals for the people below poverty line declined by 10% over the period 1983 to 1999-2000. But their consumption of milk increased by 30%, of vegetables by 50%, of fruits by 63%, and of meat, eggs and fish by 100% over the same period (Kumar and Mruthyunjaya 2002). This revolution is also reflected in the rapidly rising exports of high value agriculture, during the last two decades. For example, during the period triennium ending (TE) 1981-82 to TE 1999-2000, the exports of fresh fruits and vegetables went up by 140%, of processed fruits by 222%, of meat by 164% and of fish by 250% (Economic Survey 2002). Despite coming up from a low base, these percentage changes in the consumption and export of high value agri-products speak of a silent revolution under way.

Incidentally, the primary production centers of high-value agricultural commodities are largely concentrated with small holders. There is enough evidence that small holders are relatively more efficient in production of these commodities. However, due to tiny marketable surplus, and lack of appropriate market and information access, their transaction costs are high, which do not permit them to take full benefit of emerging opportunities. The small holders need to be integrated with markets through appropriate institutional arrangements. The key issue is to create enabling environment for HVA in such a way that the small holders are benefited. High-value agriculture requires a new set of policy environment, institutions and infrastructure, therefore, a new strategy would be used which would be quite different in nature compared to the one that led the wheat and rice revolution.