Note: I prompted this email with a self-explanatory question of my own:

Recalling a genuinely pained email from you some time ago - saying that Indians could not afford vegetables, assuming they could even find them, I was impressed to see packets of baby corn from India in our very good Waitrose supermarket today.

May I respectfully interrupt your busy day and ask: are you feeling any more optimistic about the food situation in India today?

The informative reply:

"To answer your question, exhibition of any optimism would be sheer folly, in the face of the history of ineptness, exhibited by the government, with regard to the handling of issues, of vital importance to the common man. But any amount of optimism is justified if private enterprise and small entrepreneurs gets enthused by the bonanza the agri sector offers.

"I am not surprised you have found an Indian food product in your local supermarket. Moreover, baby corn is not widely consumed, and perhaps, not even known, among the majority of Indians. But, perhaps, it does illustrate that, if the price is right, supply is usually forthcoming.

"This was mostly nicely illustrated by the recent rise and fall of vegetable prices. The month of May has traditionally been associated with low supply and high prices of vegetables but last May has seen the exact opposite. Higher prices in the earlier months, attracted more production, and since cold storage facilities are virtually non existent in India, this supply hit the markets en masse, crashing prices.

"A very high proportion of farming is rain fed. Rain is scarce in summer months so this supply of vegetables has come from producers who have access to (other) sources of water which has a definite cost. This indicates that (smart?) money is finding its way into this opportunity. I wonder if this is the birth of organised agriculture in India? This is necessary if India is to have food security. This may well be the start of a significant discontinuity in agriculture. The business boom for the last few years has ensured lots of liquidity which is searching for opportunity.

"The relatively low cost of entry will ensure "overhead supply" - supply that comes at higher prices - which will cap prices nicely for the consumer. This may lead to a situation which benefits everyone; especially if the private investor invests in agri infrastructure - such as cold storage chains and refrigerated vans. This would smooth out wild volatility in prices, such as was seen in the recent times. Uncertainty of prices is not good for any producer.

"What is perplexing is the official (Indian government) 'body language' with reference to agriculture as a whole as compared with that shown towards the industrial sector. Trying to talk down prices appears to be the main weapon used recently. The sensible option is to build cold storage on a war footing, but this is hardly talked about. Educating the farmer is something the government has not even attempted to do. Offering sops such as free electricity to farmers is the sum total of the governments effort to improve the agricultural growth rate. This free electricity is mostly diverted to the nearby industrial unit. The Indian government has a lot to answer for the misery, the recent price action in vegetables and pulses has caused.
One SENSEX company which has understood the huge opportunity and which is focussing on this sector, is ITC ltd. The company has opened a number of centers which offers everything a farmer needs - from fertilisers, seeds to information on markets, live internet access to prices in markets all over India, to state of the art agricultural practices on how to improve yields and profits. Long term investment (10 years plus) in this erstwhile blue chip should provide a wonderful window to the high growth that this sector may provide.

"And, no, I do not have any exposure to Indian stock market in any form."

David Fuller's view Thank you so much for this detailed and informative reply, contributed in the spirit of Empowerment Through Knowledge.

I am sure you are right about the business opportunities for modern farming, storage, distribution and marketing of agricultural products in India. If any further proof were provided, we can see it in the relative performance of ITC Ltd (monthly & weekly) (a member of BAT Group of the UK), which you mentioned.