Status and Potential of Agriculture and Agro Processing Industry in India.

The Green Revolution and Subsequent efforts through the application of science and
technology for increasing food production in India have brought self-reliance in food. India is among
the world’s major producer of food, producing over 285.2 million tons of food grains production every
year.
There has been a rapid increase in food production due to:
 Efforts of Government, State Agricultural Universities, State Departments of Agriculture.
 Use of Biotechnology in agriculture- introduction of numerous hybrid varieties of
cereals, legumes, fruits and vegetables.
 Improved management and agricultural practices.
Following facts reveals the supremacy and status of India in the world:

1) India ranks first in the production of food grains with 281.37 million tons (2018-19).

2) India ranks first in milk production, achieving an annual output of 176.35 million metric
tons during 2017-18 as compared to 165.50 million tonnes during 2016-17. Per capita
availability of milk in India is 335 grams per day by 2018-19.
3) India is among the top five producers of rice, wheat, groundnuts, tea, coffee, tobacco,
spices, sugar and oilseeds. Production of Rice- 115.63 MT, Wheat – 101.20 MT, Pulses –
2.22 MT, Oilseeds – 31.42 MT (2018-19).

Standings of India in the world

Ranking Sector

Total Livestock Population, Milk Production, Cattle Population, Buffalo

1st
Population, Car beef Production, Goat Milk Production, Total Bovine Population

2nd Goat Population, Bristle Production (a pig industry by-product), Fish Production

3rd Sheep Production, Egg Production

4th Chicken Production

5th Poultry Meat Production, Poultry Production

 8th Duck Production

9th Camel Population, Wool Production

4. India is the world's sixth-largest economy by nominal GDP and the third-
largest by purchasing power parity (PPP).. Agriculture accounted for 23% of GDP, and
employed 59% of the country's total workforce in 2016.

5. Agriculture, with its allied sectors, is the largest source of livelihoods in India. 70 percent of
its rural households still depend primarily on agriculture for their livelihood, with 82 percent
of farmers being small and marginal. India is the largest producer (25% of global
production), consumer (27% of world consumption) and importer (14%) of pulses in the
world. India's annual milk production was 176.35 MT (2017-18).
6. India's exports of Processed Food was Rs. 31111.90 Crores in 2018-19, which including the
share of products like Mango Pulp (Rs.657.67 Crores), Other Processed Fruit and Vegetable
(Rs. 2473.99 Crores), Pulses (Rs. 1680.18 Crores), Groundnuts (Rs. 3298.33 Crores),
Guargum (Rs. 4707.05Crores), Jaggery & Confectionary (Rs. 1606.32 Crores), Cocoa
Products (Rs. 1350.86 Crores), Cereal Preparations (Rs. 3859.37 Crores), Alcoholic and
Non-Alcoholic Beverages (Rs. 2103.97 Crores) and Miscellaneous Preparations (Rs. 4072.98
Crores).
7. Poultry industry ranks 3rd in the world with annual egg production of 123 million tons eggs
in the year 2018-19.
8. Global fish production peaked at about 171 million tonnes in 2017, with agriculture reporting
47% of the total and 43% if non food uses (including reduction to fish milk and fish oil) are
included.
9. The fisheries and aquaculture production contributes around 1% to GDP, and over 5% to the
agricultural GDP. According to Food and Agriculture Organization (FAO) report “The state
of World Fisheries and Agriculture 2018” apparent per capita fish consumption in India
(average 2013-15) lies between a range of 5-10kg.
10. India’s food processing industry has grown tremendously recording 11% growth rate which
is twice the pace of global industry.
11. Indian food service industry is currently worth Rs 3,80,000 crore(2017) and is expected to
grow at the rate of 11 per cent to touch Rs 4,08,040 crore by 2018.

The scenario is now changing for the better as the food-processing sector has been
registering a relatively higher growth rate. In today’s scenario, strong and effective food-
processing sector will not play a significant role in development of rural India sector but also
provide nutritional security to the nation.
 Food processing industry is likely to boom in the era of liberalization because of the
following reasons:

1. Food processing and allied activities add a lot of value to the farm produce. For e.g. the
price of tomatoes in season is around Rs. 5 to 7 / kg, whereas a tomato ketchup bottle
sells for Rs. 70/kg.
2. Food processing offers a lot of scope for increasing the income of the farmer, thus
diversifying the rural economy, promoting rural industrialization and finally helping in
poverty alleviation.
3. There are huge opportunities for export of agro-food products, consequently an
increase in foreign exchange earnings.
4. Food processing can generate huge employment opportunities.

Role of Agriculture and Agro Processing Industry in Indian Economy:

1. Value addition: Value is added by transforming of farm produce from its original state
to a more valuable state. The value of a changed product is added value, such as
processing wheat into floor. It refers to increasing the economic value of a commodity
through processing activities. Value addition to foods by processing is a mere 8 %
against 23% in China, 45% in Philippines and 88% in UK, 40% in Thailand.

2. Reduce Post Harvest Losses: Post harvest losses are in the form of qualitative,
quantitative and food waste. On account of poor post harvest management, the losses
in farm produce in India have been assessed to be a very high order (near about 22 %).
Various studies have estimated post production losses in food commodities to the tune
of Rs. 75,000 – 1,00,000 crore per annum. It may be mentioned that the estimated loss
includes losses during storage, handling and milling/processing. It does not include losses
at consumer’s end. It also estimated that the extent of losses could be brought down to
less than 50 percent of the existing level on proper transfer and adoption of agro-
processing technology. For reducing the rest of the losses, new initiatives need to be
called for. Hence, it could be in the long-term interest of the economy to invest in
 developing suitable infrastructure such as proper grain storage structures, cold
stores and processing systems to avoid the losses.

Table: Present level of production (million tons) of different types of food

commodities and their estimates of post-harvest losses (2003-04)

Present level of production Post-harvest losses

Sr. Type of food Quantity Average Value % Quantity Monetary Value
No. Commodity (MT) (Rs/t) (Rs.in crore) (MT) (Rs in crore)
1. Durables (cereals, 230 10,000 2,30,000 10 23.0 23,000
Pulses, oilseeds, etc.)
2. Semi-perishables 40 3,000 12,000 15 6.0 1,800
(potato, onion, sweet
potato, tapioca, etc.)
3. Perishables (fruits, 210 15,000 3,15,000 20 42.0 63.000
Vegetables, milk,
meat, fish, egg etc.)
Total 480 11,604 557,000 14.871.0 87,800

3. Employment Generation: Agro-processing is now regarded as the sunrise sector of the

Indian economy in view of its large potential for growth and likely socio-economic
impact especially on employment and income generation. Some estimates suggest that
in developed countries, up to 14 percent of the total work force is engaged in agro-
processing sector directly or indirectly. However, in India, only about 3 percent of the
work force finds employment in this sector. This sector provides employment to 52
percent of the countries work force, whereas agriculture, at present provides livelihood
to about 65 to 70% of the total population.
4. Contribution in National Income Generation: Agro-based industries play important
role in contributing national income or in GDP, national capital formation. GDP is the
total value of everything produced by all the people and companies in the country. Gross
Capital Formation in agriculture and allied sectors has remained stagnant at around 2.5 to
3.0 per cent from 2004 to 2010. The share of agriculture and allied sectors in gross capital
formations was 2.97 % in 2009-10.
The contributory share of agriculture and allied sectors in Gross Domestic
Product was 55.4 % in 1950-51, 52 % in 1960-61. As per estimates by the Central
Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture,
livestock, forestry and fishery) was 15.35 per cent during 2015–16.

5. Increase Farmers Income: Farmers can get income only from sale of agricultural raw
produce in the market. But farmers can get the maximum income from post harvest and
processing activities by decreasing post harvest losses and value addition to the
produce. When processing level will increase, some share of value addition will
automatically goes to the farmers.
6. Enhance Shelf Life: Most of the agricultural commodities are perishable or semi-
perishable in nature. Therefore, processing enhances its shelf life by changing its form or
characteristics of commodities.
7. Increase Export and Foreign earnings: An Agro-based industry contributes in export
and getting maximum foreign earnings to the country. Agricultural export constitutes 10
per cent of the country’s exports and is the fourth-largest exported principal
commodity. India's export of Processed Food was Rs. 41,309.04 Crores in 2012-13.
8. Share in International Food Trade: India’s share in international food trade is only 1.5
%. This indicates vast scope for both investors and exporters. Value addition to foods by
processing is a mere 8 % against 23% in China, 45% in Philippines and 88% in UK, 40%
in Thailand.
9. Agriculture Growth rate: The average annual growth rate during Eleventh Five Year
Plan (2007-12) was 3.6 per cent in the gross domestic product (GDP) from agriculture
and allied sector against a target of 4.0 per cent. As against a annual growth rate target of
4% for agriculture and allied sectors in the Twelfth Plan, the growth registered in the first
year in 2012-13 (at 2011-12 prices) was 1.2%, 3.7% in 2013-14 and 1.1% in 2014-15.
 10. Supply much food energy: Agro-processing industries play an important role in
supplying food energy to the Indian growing population.
11. Role in Technological advances: Increase in agro-based industries which is benefited in
technological advances aggressive rise of commodity branding & low cost technology are
changing economics of Indian food Industry.
12. Linkage between farmers to consumers: Food processing industries provide vital
linkage between industry and agriculture through contract farming.

DIFFERENT DEPARTMENTS AND INSTITUTE DEALING WITH AGRO

PROCESSING INDUSTRIES

1) CFTRI : Mysore - opened on 21 october 1950 ( central food technological research

institute ) is one of the council of scientific and industrial research .
 There are 16 research and development department including laboratory focusing on
food engineering , food biotechnology , microbiology ,molecular nutrition and food
sefty .
 The institute has developed over 300 products processes and equipment types .
 The institutes is engaged in research in the production and handling of grains pulses ,
oilseeds,spices,fruits,vegetables, meat , fish, and poultry.
 Reduce post harvest losses.

2) CLPHET – Ludhiana
( central institute of post harvest engineering and technology )
 September 1-7 , 2006
 Various technologies are developed at CIPHET for processing of pomegranate into
anardana and its powder
 Rind powder , anardana ready to mix chutney , anardana tablets, pomegranate jelly.

3) IARI - new delhi

( Indian agricultural research institute )
 Established in 1905 at pusa bihar
 IARI was responsible for the research leading to the green revolution in india of
1970
  It will serve the cause of science and society with distinction through first rate
research , generation of a appropriate technologies and development of human
resources .

4) NDRI – karnal Haryana

 Established in 1923 at Bangalore
 ( national dairy research institute )
 The institute has 3 major area of research and development activities . dairy
production
dairy processing
dairy extension and management

5) DFRL – Mysore
 Establishment 28 december 1961
 (Defence food research laboratory ) is an Indian defence laboratory of defence
research and development organization ( DRDO )
 Many of the DFRL foods born out of innovation state of the art technologies
 Retort processing in flexible pouches
 Preservation of tender coconut oil
 Instant / quick cooking foods

6) CIAE – Bhopal – 15 feb 1976

 (Central institute of agricultural engineering )
 Industrial extension , instrumentation
 Food processing and product development

7) IIT – Khargapur
 (Indian institute of technology )
 Agricultural and food engineering department 1952
 Sustainable food production through precision agriculture and mechanized food
processing
 UHT milk sterilized paneer and sandesh making machine development

8) National Horticulture Board (NHB) was set up by the Government of India in 1984 as
an autonomous society under the Societies Registration Act 1860. NHB has its
 Headquarters at 85, Institutional Area, Sector 18, Gurgaon (Haryana). Government of
India has also established a National Horticulture Board, Gurgoan (Haryana) for
increasing the production of fruits and vegetables and their preservation to reduce post-
harvest losses.
In 1949, the Government of U.P established a Fruit Preservation and Canning Institute at
Lucknow. The objectives of this institute are:

 To promote the development of fruit and vegetable processing industry.

 To conduct research on problems associated with post-harvest and processing technology of
fruits and vegetables.
 To impart training in fruit and vegetable technology so as to create an infrastructure of
trained personnel at supervisory and middle management levels.
 To popularize fruit and vegetable preservation on home scale.
9) Agriculture and Processed Food Products Export Development Authority (APEDA):

APEDA was established in 1986 with the aim of giving a boost to Indian agro-based products
through optimum utilization of the enormous resource base of the country.

Objectives of APEDA:

 Development of Indian agro-products in wake of global competition.

 To upgrade income of the farmers through higher unit value realization.
 To create employment opportunities in rural area by increasing value added exports of farm
products.

OTHER :

1) GPBAU & T – Pantnagar

Govind ballabh pant university of agriculture and technology
2) IGMRI – hapur
Indian grain storage management and research institute
3) TNAU – koimbatur
Tamilnadu agricultural university
4) PAU – Ludhiana
Punjab agriculture university
CHALLENGES BEFORE FOOD PROCESSING INDUSTRY:

1. Lack of adequate infrastructure: The biggest bottleneck in expanding the food-processing

sector, in terms of both investment and exports, is lack of adequate infrastructure like roads in
rural area, storage facilities, export facilities, uncertainty in power grid supply. The industry
requires about Rs. 290,000 million in investment over the next five years to 2005 to create
necessary infrastructure, expand production facilities and attain state-of-the-art-technology to
match the international quality and standards.
2. Lower technology and no facilities for R and D : Nothing much has happened in terms of any
major breakthrough in process technology in India. Our food research institutes including
universities have done very little in terms of technology upgradation and new product
development that are any commercial significance. No facilities are available for research in
small scale sector. Whatever little we have seen in new product development and product quality
upgradation is the result of the efforts on the part of the industry, largely triggered from the need
as a survival strategy in the face of competition.
3. India’s middle class segment and lower class segment : India’s middle class segment and
lower class segment which accounts for about 350-370 million holds the key to success or failure
of the processed food market in India. In rural area, many families are middle class or lower class.
Farmers are also not getting assured price. A majority of families in this segment have non-
working housewives or can afford hired domestic help and thus prepare foods of their taste in
their own kitchens. With increasing numbers of working couples, the profile of the middle class is
changing steadily and hired domestic help is becoming costlier. This is conducive to an expansion
in demand for ready-to-eat Indian-style foods.
4. Indian Peoples Habit: The Indian palate is accustomed to traditional foods, mostly wheat and
rice-based, rather than potato and corn-based western palate. Indian peoples like fresh fruits and
vegetables. In marketing perspective, this is considered an important factor for foreign marketers.
The USDA report says initially consumer-ready food products may have to be tailored to include
Indian spices and traditional ingredients.
5. Shortage of storage facilities and cold chain: Without a strong and dependable cold chain vital
sector like food processing industry, which is based mostly on perishable products, cannot
survive and grow. Even at current level of production, farm produce valued at Rs.70, 000
 million is being wasted every year only because there is no adequate storage, transportation,
cold chain facilities and other infrastructure supports. Cold chain facilities are miserably
inadequate to meet the increasing production of various perishable products like milk, fruits,
vegetables, poultry, fisheries etc.
6. Absence suitable processing varieties of the raw material: A major hurdle for the food
processing industry in India is the of absence suitable processing varieties of the raw material.
The varieties available in India are usually table varieties and are not suitable for processing.
Some varieties have such a short shelf life that they are even unsuitable for storing. For instance
potato is abundantly available in India. However, the varieties that are available develop a
different taste if they are coming from the cold stores. In addition, their characteristics make
them a poor choice for making chips. Most of the multinationals that process potatoes have to
import them. The Ministry of Food Processing Industries (MoFPI) as well as the National
Horticulture Board (NHB) has formed backward linkages with research bodies like Indian
Council of Agricultural Research (ICAR) to develop processable varieties of horticulture crops.
The efforts are beginning to yield results as ICAR scientists have come out with a new variety of
potato called ‘Chipsona’, that is good for marketing chips. More such efforts could widen the
scope for the industry.
7. Seasonality of raw material: Another problem faced by the industry is the seasonality of raw
material. The situation is, however, aggravated for small-scale units that process horticulture
produce. Such units can function only during the harvesting season of the crop they process,
whereas, the rest of the year, they are idle. Storing the produce in cold stores for use during the
off-season could work out to be an ideal solution. Most of the larger, more efficient units have
their own cold stores and they are thus ensured of a year-round supply. Smaller units too could
make use of the existing cold storage infrastructure, but lamentably, almost 95 per cent of the
cold sores in India are potato stores and are quite inept at storing horticulture produce.
8. Handling equipments: Handling equipments are not so modern and it affects on utilization &
efficiency. Fruits and vegetables have very specific handling and storing requirements if their
quality and freshness has to be maintained. Moreover, each product needs to be stored at
specified temperature and humidity levels. Single chamber potato stores are not capable of
sufficing such requirements. Multi-chamber, multi-product cold stores are more suited for storing
horticulture produce. Realizing the need, the national horticulture board has brought out a number
of schemes that promote multi-product multi-chamber cold stores. The board not only provides
grants for creation of new cold stores, but also for expansion and modernization of the exiting
 ones. Cold stores, coupled with cold chain infrastructure would provide the much-needed boost to
the sector.
9. Cold chains too are essential part of managing transfer of both the raw material as well as the
processed products from one place to another. Cold stores without the support of adequate cold
chain infrastructure loss their significance as the quality of even a well-preserved raw material or
processed product will deteriorate if not handle properly while transporting. Today cold chains
are required right from the from the farm gate till the end product reaches the consumer.
10. Huge storage and transportation costs: Uncertainties in availability of raw material, seasonal
nature of the activity, huge storage and transportation costs and limited demand for processed
food makes food-processing industry one of the most risk prone industries. Even more units are
coming up every year, an almost equal number of units have to close down due to the long
gestation period and small returns. Number of storages in India and their capacity is very less.
Storages are generally available around the city. Therefore, transportation cost is high.
11. Non-availability of timely financial assistance: This high-risk industry faces more problems
due to the non-availability of timely credit financial institutions and banks. More time is taken
to process the documents and more time is required for sanction.
12. Constraint in Law: Activities that are essential for the survival of the processing units are
prohibited. The processors are not allowed to stock the raw material beyond a certain limit,
as it would be termed as hoarding. The processors are also not allowed to book in advance, as the
booking period is restricted to 11 days. In addition, many laws are contradictory and repressive.
The penalty for even the slightest variances of the laws is quite stringent. Such repressive laws
restrict the growth if the industry; moreover, most of the rules have outlived their purpose. A
single legal code to govern food processing has become extremely essential.
13. Marine products the major processed products being exported from the country. The list can
grow much longer if Indian products are certified for Quality. Less export due to lower quality.
The sector should become quality conscious and should follow good hygienic practices if it wants
to acquire a sizeable presence in the international market. Unfortunately, most of the Indian
processors do not observe the stipulated guidelines. Even the basic practices like maintaining
cleanliness of the unit and wearing gloves are not followed. The government should launch an
awareness campaign to create quality consciousness among the processors and introduce
quality standards like ISO 9000 and HACCP. No technology up-gradation for marine products.
14. High cost of processed food is one of the major reasons for its limited market in India.
In most of the developed countries, processed food is generally cheaper than fresh
produce. The situation in India is dramatically opposite. High cost of the processed
 products is not only due to high cost of packaging, but also due to legion of taxes levied
on processed food. 16 percent sales tax, 7 per cent octroi tax, 4 per cent purchase tax on
raw material is just a tip of the Iceberg. The net tax paid by the consumer could be as
high as 35-50 per cent or even more in the case of soft drinks. The resultant high cost of
the end product leads to a poor demand in the market. Low demand results in minimal
capacity utilization, which in turn is again responsible for high cost of tile products. The
high cost of processed food is one main reason why these products have not been able to
penetrate into the rural markets. Rural India accounts for almost two-thirds of the total
consumers in India Tapping into the rural markets could widen the horizons of the food
processing industry. But to exploit the full potential of this sector, progressive
government intervention is necessary. Cost increases due to transportation – because
units are not established in rural area.

SWOT ANALYSIS OF AGRO-PROCESSING INDUSTRY IN INDIA:

I. STRENGTHS OF AGRO-PROCESSING INDUSTRY:

1. Round the year availability of raw materials:

Because of the varied agro climatic conditions some fresh fruits and vegetables are
available throughout the year. The fruits like bananas are non-seasonal. Some fruits like
guavas, oranges have two seasons. Because of some innovative agricultural practices like “off –
season cultivation of vegetables”, fresh vegetables are available round the year (agril-
biotechnology)

2. Cheap labour:

Total population of India is about 104 crores in that round about 50% was
workingpopulation. As the laborers are more in number, the wage rates are so lower that
industrialist got promotion for business.

3. Vast domestic demand/market:

India has the largest market in the world. Total population is round about 130 crores for
those large amounts of food grains are required. As they are perishable in nature, we want
processing. So that product got more utilities like form, time, place etc.
4. Local taste/brands.

An Indian person wants the local tastes, as there are people trusts in ‘Swadeshi.’ The
local brand has less prices than the imported one. That’s why three brighter future to agro based
industry.

5. Cross exchange of products.

Cross exchange of products or receipts may be done in food industry. Raw material
may be exchanged with final product or other industrial products.

6. Social acceptability of agro-processing as important area and support from the central
government.

7. Vast network of manufacturing facilities all over the country. Vast network of small
players like home scale based industry are available in all villages in India.

II. WEAKNESS OF AGRO-PROCESS INDUSTRY:

1. Industrial facility:

India is as far as lacking behind in infrastructure facilities for industry development.

The roads, electricity, cold store chains & communication system etc. Essential factors on not
adequately supplied that’s why food industry ceases it improvement.

2. Lower technology/inadequate automation:

Since it is truth for adoption of any new technology it requires capital. Due to low
availability of required capital, new & advance technology cannot get applied. Hence products
coming from lower technology cannot require good quality & ultimately it cannot be able to
coming in competitive market.

3. Unorganized sector:

Agriculture sector always remains to be unorganized since there is seasonability&

variability in product. Some produce is available all round year; some agriculture produce is
available only during particular season. Due to which prices are not stable.
4. Quality of raw material:

As like manufactured products, those products coming from agriculture sector are not
uniform in terms in size, shape, colour, taste, sweetness etc. Since different regions in the
country have different soil conditions, water, climatic conditions due to which quality
specifications cannot be same at all.

5. Government Policy

Government had not maintained any strong policy for food processing sector as
compare to those kept by govt. to various other sectors of economy. Also in case that policy for
agro-processing sector made is very time consuming. All procedure takes to much time to get a
subsidy.

Similarly food-processing industry has to obtain license from Government of India for
marketing of any processed food.

6. Unskilled labour.

India lacks business-oriented education that leads to unskilled labourers

unemployment problem. In case they are utilized in industry, they don’t work efficient and
productivity as well as quality doesn’t maintain, due to which product cannot complete in the
market.

7. Natural Calamities:

Agriculture sector always face the problem of natural calamities like flood, earthquakes,
drought etc. that ultimately affects the working of food processing industry.

8. Absence of Backward linkages-to control processing cost:

In foreign countries price of processed food product is less than its price before
processing fresh food. In India it is opposite situation. It is essential to maintain backward
linkage but food industry doesn’t have backward linkage itself. It depend on other middlemen
that will increase the cost of raw material due to which price of final product will rise.

9. Focus on Single Sector:

The food industrialists focus only on the single sector. For e.g. when the processing unit
is set up for mango preparation of Jam, Amachur etc. Industry can run only during the season in
which mango fruit is available. And when the season over, when there is no supply, factory
cannot run in remaining period of year.

10. Growth of industries & their interested expansion is limited:

The peoples are not much enthusiastic for the opening of good industry as is totally
depends on the natural calamities for raw material, doesn’t insurance of return, lack of market set
up, that’s why growth of food industry sector is limited.

11. Traditional method:

In most of agro processing units, superstitious and traditional methods of processing are
followed instead of using modern methods. That will affect the productivity and efficiency of
the industry.

12. High requirement of working capital.

13. Low availability of new reliable and better accuracy instruments and equipment’s.

14. Remuneration less attractive for talent.

15. Inadequately developed linkages between R&D labs and industry.

III. OPPORTUNITIES IN AGRO-PROCESS INDUSTRY:

1. Employment:

Food industry provides a lot of employment to skilled, semi-skilled and unskilled

persons, as a labourers, transporter, market agent etc. 18 peoples out of 100 are employed by the
food industry.

2. Banking Sector:
Now day’s banks provide financial support to agriculture. According to rule framed about 40%
of total credit must be spent on agriculture. Now, every agricultural plant gets 50 percent of total
plant capital from bank as financial support.

3. Tax reduction:

The taxes were withdraw led by the govt. on the agricultural processing sector. Some
exemptions on export & import duties were given by central govt. that reduces prices of product.

4. Contract farming for backward linkage:

By using new concept like contract farming industrialist can maintain backward linkage
with farmer in which agreement is made between farmer and industrialist. By which farmers
have to supply raw material of specified quality, at specified price, on specific date & in specific
quantity, at specified price, on specific date & in specific quantity to the manufacturer.
Manufacturer in an industry gives ready market to the farmers’ product by offering assured
product.

5. Exemption of income tax:

The agriculture is totally exempted from income tax so that raw material got to
businessman in lower prices.

6. Developing food parks in MIDC:

Now a days MIDC has been developing food parks. By rule 3% of place must be
restricted for agriculture sector in MIDC. So we have an opportunity to open a plant in MIDC
and got the facilities like communication transport and market base.

7. Urban and rural middle class population:

The processed food is now a best dietary food, which is used largely by working middle
class population. In India, at present 70% of population is in age range of 35 years who are
working. The food industry has a greater scope.

8. Increasing nuclear and Duel income families:

 The nuclear families means scattered families where there are less members in a family
and duel income families means those in which both husband & wife are working. These
families thus mostly prefer ready to eat foods products. Hence there is huge opportunity for food
processing sector.

9. Changing demographic pattern:

As already slated the target people for processed product are the new generations of 35
years age people in India. 70 percent of total Indian population is of this age.

10. Change of behavior and attitude of a consumer:

The Indian peoples now adopt foreign trend while accepting the processed food.

11. Large crop and material base in the country due to agro-ecological variability offers vast
potential for agro-processing activities.

12. Integration of developments in contemporary technologies such as electronics, material

science, computer, bio-technology etc. offers vast scope for rapid improvement and progress.

13. Opening of global markets may lead to export of out developed technologies and facilitate
generation of additional income and employment opportunities.

IV. THREATS OF AGRO-PROCESS INDUSTRY:

1. Natural Calamities:

Natural calamities are the most common threat of Indian food industry. Raw material is
the crucial point for working of food industry. Raw material depends on nature. Thus any
obstacle would results in food industrial collapse.

2. Import of branded product:

The imported product got various long time consuming producer that would persuate the
persons mind from the aim of opening agricultural industry. The higher error duties may avoid
it.

3. High cost of production:

 Due to inadequate infrastructural facilities seasonality of raw material it leads to increase
in the cost of production. Also due to high packaging charges & handling charges, price of final
product can be increased.

4. Change in Govt. tax policy:

Every year govt. will change their tax policy; there is always danger of imposing tax.

5. Risk bearing ability:

Indian peoples are comparatively poor so that they don’t have high risk bearing ability.
This is the most important thereat in establishing food-processing industry.

6. Competition from global players/foreign investors.

7. Loss of trained manpower to other industries and other professions due to better working
conditions prevailing there may lead to further shortage of manpower.

8. Rapid developments in contemporary and requirements of the industry may lead to fast
obsolescence.

Strategy to develop Food-Processing Industry.

To achieve the above objectives following strategy is suggested:

1. Contract farming: To get uniform and quality raw material for food processing, companies
like Pepsi Foods HLL have undertaken contract farming in few areas. These companies
provide seeds of desired varieties, other agri-inputs and other guidelines to the farmers and
then buy the raw material from those farmers at a pre-negotiated price. Farmers are also
happy as they get fixed returns regardless of market fluctuations.
E.g.-Suguna Poultry Farm Ltd, has emerged as one of the leading integrated broiler
producers in the country, with contract farming.
Hindustan Lever Ltd (HLL), Rallis and ICICI jointly promote contract farming in wheat in
Madhya Pradesh

2. Institutional finance: Unless the availability of institutional finance for investment is

commensurate with its needs, the industry cannot grow, let alone prosper. Although of late,
 the government seems to have realized this and The Ministry of Food Processing Industries
has declared this sector as a priority sector for providing credit.

3. Comprehensive law:
The Indian government has laid down many policies and schemes to help set up food
processing units and to provide them with financial support for modernizing the industry. In
order to start any food-related business, FSSAI license is mandatory. There are different
types of FSSAI license available and it varies according to the business type.
There is an urgent need of a comprehensive law for processed food. At present, there are
plethora of laws and agencies that govern this industry. The government has proposed
‘Processed food development Act’. The act aims to put in place a single windows service that
would bring all provision relating to food processing under one umbrella and one authority,
thus removing the exiting impediments. The Act also aims to consolidate the various
standards of quality and harmonize them with international standards.

4. Quality control is another key to success as international consumers are extremely quality
conscious. India quality standards should be benchmarked against international
standards like codex. This will definitely boost the export of processed food products from
the country. At present products like fruit pulps, fruit juice concentrates; frozen and canned
meat, poultry and marine products are among the main processed products being exported
from the country. The list could grow much longer if India products are certified for quality.
5. Proper packaging of food items is the most essential aspects of food processing. It has a
very important role to play, that of attracting the consumer’s attraction in today’s
competitive scenario. Packaging has become an integrated part of brand management. A part
from having an aesthetic appeal, packaging has other importance roles to play as well. Good
packaging should solve the following purposes:
i) Preserve the freshness of the product,
ii) Prevent spoilage,
iii) Maintain its self-life,
iv) Take care of its convenience, and
v) Maintain the original flavour and taste of the contents.
Many new forms of packaging for processed food products are being continuously introduced.
Unfortunately, packaging also adds almost 30 to 70 per cent of the cost of the product.

6. National plan for improvement and extension of agro-processing technology at farm

traditional small industry and modern industry levels should be prepared. The plan should
take into account the diversity in resources and needs of different regions in the Country. It
should include programme details and implementation schedule for the first four or five
years. The progress of plan implementation should be periodically reviewed to allow
adjustments and corrective measures, and to develop programmer details for years beyond
the period under review.
7. Thrust areas for research and development should be identified and medium term
research and development programme should be prepared and implemented to support the
national plan for improvement and extension of agro-processing technology at different
levels. Treatment and utilization of effluents from agro-processing industry should be
included in the R.D. programme.
8. Emphasis should be put on the establishment of new agro-industrial plants in the
production catchments to minimize transport cost, make use lower cost land and more
abundant water supply, create employment opportunity in the rural sector and utilize process
waste and by-products for feed, irrigation and manure.
9. Infrastructure in the production catchments selected for agro-industrial development
should be improved. Because of uncertain grid power supply to rural area, decentralized
 power generation using locally available resources may become an integral part of agro-
industrial development. Similarly, if the raw materials and processed products are perishable
or semi-perishable in nature, cold chain will have to be established.
10. The national plan should provide for management of agro-industrial activities in the
catchments area, both by private companies and individuals are well as cooperatives.
11. Financial incentives and support should be provided on liberal scale to promote the
modernization of agro-processing industry and for establishing new such industries in
production catchments.
Arrangements to supply market information to the farmer and agro-processor should be
put in place.