[Solved] What are the reasons for poor acceptance of cost effective small processing unit? How the food processing unit will be helpful to uplift the socio-economic status of poor farmers? ( UPSC GS-3 Mains 2017)

[Solved] What are the reasons for poor acceptance of cost effective small processing unit? How the food processing unit will be helpful to uplift the socio-economic status of poor farmers? ( UPSC GS-3 Mains 2017)

Despite the agrarian strength of production in India, food processing industry is still in a nascent stage, but holds tremendous potential to grow, considering the wide ranging and large raw material base that the country offers, along with a consumer base of over a billion.

 The Food processing industry in India has a very small share of 1.5% in the total GDP of the country and as part of total manufacturing accounts for 9%.

 Reasons for poor acceptance of Small Processing Unit

 • Small processing units generally face higher costs of procurement as unlike larger corporates, they can’t go for large scale corporate farming.

 • They also lack large scale well-equipped warehouses, increasing their wastage and cost structure further.

 • They also suffer from inconsistency in quality because of poor procurement system and lack of control. Which makes it very difficult for customer to adopt such products.

 • Most-importantly, they lack funds and large-scale market presence to develop a brand value and name. which again gives advantage to large players. Thus, India’s food processing market is dominated by big players.

 Development of the food processing units will aid in increasing the farmers income significantly in the following ways:

 • providing employment, especially in rural areas;

 • providing steady demand at consistent prices to farmers.

 • stimulating rural development;

 • assuring better market opportunities to the farmer through corporate farming; • reducing population migration to urban areas;

 Government Initiatives

 • Realizing the importance of food processing and its potential in India, the government has set up a separate Ministry for Food Processing Industries.

 • In a bid to achieve the vision of the proposed National Food Processing Policy which is to position India as a World Food Factory, the government has launchedSAMPADA – (the Scheme for Agro-Marine Produce Processing and Development of Agro-Processing Clusters.) It will complete the on-going Mega Food Parks and take up more cold chain projects.

 small processing unit in India are suffering from many challenges such as-

  • Infrastructure: Small processing units cannot invest heavily in infrastructural support such as grading, packaging, cold storage, warehousing, logistics, supply chains etc. They rely on the common facilities in these activities.
  • Manpower: Skill shortage is hampering the competitiveness of this sector. There are few institutes which provide adequate training to the labour force in this sector.
  • Seasonality and perishability: Most of the agricultural products such as fruits, vegetable, fisheries etc are highly perishable and thus increase the vulnerability of the entrepreneurs to wastage of commodities. The supply of raw materials is also seasonal in nature.
  • Credit: Although the industry has been included in the priority sector lending, there are inherent risks involved in small enterprises.
  • Competition: Increasing investment in the sector has led to intense competition which has adversely impacted the operating profitability of the units.
  • Technology: Value addition is the key factor in the food processing but India still lacks the universalisation of robust technology in this sector.
  • Food processing industry plays an important role in uplifting the socio-economic status of poor farmers through following ways: By providing a vital link between the agriculture and manufacturing sectors, it reduces the wastage of agricultural raw materials and increases shelf life of food products. This helps farmers to sell more in the long run.
  • It links farmers to the agricultural market and provides them better income especially for horticultural products.
  • Farmers can also earn more through more exports as value addition increases the competitiveness of products in the international market.
  • It provides employment opportunities in sectors such as packaging, sampling, logistics and other non-farm activities. Thus it helps farmers to shift from farming to non-farming activities and have better lifestyles.
  • India must leverage all the available resources to emerge as a leader in food processing sector. It has come out with SAMPADA scheme, Mega Food Park Schemes, Value Addition Centres, Irradiation facilities etc. to promote this sector. However more needs to be done to enable small farmers to benefit from these initiatives.
  • Food processing is the process of transformation of raw agricultural products into other forms of food. It includes different food processing methods like grinding grain to make raw flour, potato chips from potatoes, etc.
  • Previous Initiatives
  • Food infrastructure like packing labeling was conducted in the mega food park. Investment cost was curtailed for this initiative.
  • Several government schemes have been initiated and the green revolution boosted the agricultural sector.


  • Small units are debarred from the facility of packaging, cold storage, warehousing, logistics, supply chains, etc.
  • Lack of manpower and lack of skillset created impediments in the production sector.
  • Climate change and string fruits in the cold storage for a long time cause wastage.
  • Lack of adequate technology.
  • How a small processing unit helps
  • The process units enable farmers to produce other food-related products that are long-lasting and the wastage of food also gets reduced.
  • The income of farmers also increased due to the adoption of the food processing method.
  • The export facility becomes reachable to the farmers.
  • The transition of farmers from direct agricultural to non-agricultural activities ultimately improves the condition of the farmers.
  • The government has initiated several schemes like Pradhan Mantri Kisan Sampada Yojana, Krishonnati Yojana, SAMPADA scheme with the vision of doubling the income by 2022. Addressing all the problems faced by the small processing units, the government will definitely succeed to enhance the condition of agriculture as well as the lifestyle of the people associated with farming activities.

 The reasons for poor acceptance of cost effective small processing unit are:/reasons for poor acceptance/

  • Lack proper cold chain supply system
  • No proper marketing facilities
  • Quality of the products
  • Food habits of people
  • No regular suply of inputs
  • Economically non viable if units are small.

 Food processing industry is growing now a days, the prices of agricultural products mostly fruits, vegetables are uncertain and they are perishable. So if we add value to it by processing them then we can store it, farmers also get a regular demand for their produce and wastage in travelling also reduced , middle men also eliminated. Then they were paid remunerative prices. if income of farmer increases then his social status also improves. Because of farmers suicide , for not getting remunerative price they are entering into debt trap, the entire family get disturbed ,social relations changed but if we prevent such incidents we eliminate such trauma and they can more assimilate into the main stream society easily. This will enhance their social status. If the farmer is women then socially she will become more assertive.

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