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Agro-Processing for Farmers Prosperity
7/8/2020 11:53:30 PM

Dr. Banarsi Lal and Dr. Pawan Sharma

Although there has been large industrialization in the last 60 years, agriculture still occupies the prominent place of importance. Still agriculture is considered as the backbone of the Indian economy. The most important problem now-a-days is to provide the remunerative price to the farmers for their farm produce. This problem can be solved by the value addition in different crops produce and can be marketed both inside and outside the country. This can also generate more employment for the rural people. Agriculture has provided us the food security but nutritional security is still awaited. Value addition is the process in which for the same volume of a primary product, a high price is realized by means of processing, packing, upgrading the quality or other such means. Value addition in agriculture is one of the important components of nutritional security. In the present era, agro-processing and crops diversification has become buzz words in the agricultural trade. The whole world has become a single global market and there is very tough competition in this market. Product diversification is essential for harnessing the full potential from present scenario of development. Agro-processing helps in the industrialization, employment generation, export, extended availability of produce, avoidance of post harvest losses, foreign exchange earnings, product diversification, easy marketing etc. Sometimes farmers get less price of a particular farm produce due to its surplus production. This problem can be solved by the crop diversification which creates an opportunity to earn more money from the different crops produce. Crop diversification and value addition are the two techniques for the profit maximaztion and nutritional security. Value added agriculture helps to increase the value of primary agricultural commodities through a particular production process. Small scale processing units, organic food processing, traditional crops production, agri-tourism and bio-fuels development are examples of various value-added projects that have supported to create new jobs in the rural areas.
Agro-processing is needed for the profitability of the farmers, to empower the farmers and weaker sections of the society, to provide safe, quality and branded food to the consumers, to reduce post-harvest losses, reduction in import and increasing exports, encourage the growth of subsidiary industries, to reduce the risk of marketing, to promote the crops diversification and to increase the financial stability of the farmers. Attentiveness to consumer demands in quality, variety and packaging are important. In order to be unique and novel, new product should be attempted. The product we develop should be one of its own kinds for which crop and variability indigenous to our country should be exploited. The product should be new and unusual like black or blue rose so that no one can compete in the market. Biotechnology can be utilized for the value addition especially in horticultural crops. The product we develop should have demand in the market. The product should have high value for low volume for ease of trading and distribution and the extracts such as spices and herbal plants can fulfill this requirement. Quality and quantity of the product should be maintained in the market. Ultimately market is the key for success of any product. Agro- processing industries can play a significant role in increasing the income and employment among the farmers.The consumption of processed foods is synchronous with the rise in incomes as income elasticity of these foods is very high. Presently our country reached the status of ‘lower middle-income’ among the countries in the world and therefore, the share of processed food in the food basket of our population is bound to go up. Urbanisation, diversification of diets, globalization of diets, rising share of women in work force, nuclear families, changing policy perspectives including digitalisation and export opportunities propel growth of food processing sector. Agricultural innovations have a significant impact on agricultural performances and can be beneficial for both the producers and consumers. Processed foods were considered as rich people food for a long time and suffered heavy taxation, riddled with so many taxes including steep taxes for packaged products. This has been gradually changed with successive reduction in excise duties and state taxes to benefit farmers. Concept of cold chain was non-existent before the nineties and post-harvest losses were very high due to poor infrastructure facilities. Transport costs were relatively high leading scholars to conclude that importing from other countries was cheaper than transporting from one part of the country to another. Standards and protocols for food safety and laws for food safety were almost negligible. Before eighties the food policy in India has mainly concentrated on increasing the production with a view to substitute imports which became a common feature during the immediate post-independence years. Before eighties the issue of processing the food did not arise as a policy question. On the other hand, the industrial policy since the second five year plan concentrated on the heavy industries required to build up the necessary infrastructure for the industrial development. Though there were some foods processing industries in the organized sector, they were part of small and village industries and have no separate identity. The consistent rise in per capita incomes and the shifting of the incomes after 1981 to a higher growth path led to the rise in middle classes, who were able to purchase the power to buy the processed foods.
The growth of manufacturing industry also necessitated encouraging food processing sector. The central government, in view of these changes, has started attempts to invigorate the sector by forming a separate ministry for food processing industries in 1988. India is a late entrant into the food processing sector and international market. Though some measures are initiated after the formation of the ministry for the speedy development of the sector, it is only after the country embarked on full scale liberalization in 1991 that the food processing sector got real impetus. Several policy initiatives for freeing the licensing system, foreign investment etc., are taken during this time to encourage this sector. The concept of food parks, agri-export zones, mega food parks, cold chains and human resource development have been initiated besides several incentive schemes. The central government has released a food processing policy in 2001 and again in 2005. The new agro-processing industries set up to process, preserve and package fruits and vegetables are allowed under Income tax act. The role of state is considered to be vital. Hence, the centre has urged the state governments to allow exemption for this sector from sales tax and other local taxes. Several state governments have also announced food processing policies. Most recently, centre has allowed 100% FDI in trading of food products including through e-commerce to boost growth of the sector. 42 food parks were sanctioned for setting up of processing units. The scourge of organised food processing sector continues to be very low value added at just 12% in 2013-14 and much less in some of the important industries like vegetable oils and fats (5%), dairy products (10%), grain mill products (8.6%) and fish products (7.7%). The main paradox in food processing industries is the dichotomy between organised and unorganised segment in regard to output and employment. While output and value added are higher in the organised segment, unorganised segment with one-fifth of output employs three times higher employment. Food processing sector creates lot of employment in comparison to the manufacturing sector as a whole. The productivity of this sector needs improvement though studies show that there has been improvement after 2000s. There is a need to infuse more technology in both the organised and unorganised segments with liberal provision of credit. Value of land poses the biggest threat to unorganized manufacturing in general and food processing in particular and it needs special attention of the policy makers. Recent initiatives like mega food parks and cold chain schemes are well conceived and showing signs of positive impact. India still needs a lot to do in the agro-processing sector.
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