Development

of Agro Based
Industries

VAIBHAV
What is an Agro-based industry?

Agro-based industries are industries that use

plant and animal-based agricultural output as
their raw material. Also, they add value to
agricultural output by processing and
producing marketable and usable products.
Some examples of agro-based industries in
India include Textile, Sugar, Vegetable Oil, Tea,
Coffee and Leather goods industries.
Importance of Agro-based industries in India

 (i) help in increasing industrial production.

 (ii) provide employment to landless agricultural labor and tribal population from rural and
backward areas.
 (iii) ensure the development and stability of rural economy through diversification and
reduced dependence on agriculture.
 (iv) ensure the alleviation of poverty by providing steady sources of income and livelihood.
 (v) earn much required foreign exchange for the country.
 (vi) improve the standard of living in rural areas.
 (vii) help in reducing the extreme inequalities in the distribution of income and wealth.
 (viii) are easy to establish.
 (ix) support balanced growth between agriculture and industry, and
 (x) help in avoiding wastage of perishable agricultural products.
Types of Agro-based industries
 Agro-produce processing units – These units are not involved in manufacturing and
mainly deal with the preservation of perishable products and utilization of by-
products for other uses. Rice and Dal processing mills are perfect examples of these
kinds of units.
 Agro-produce manufacturing units – These units engage in the manufacturing of
new products where the finished goods are entirely different from the raw materials
used. Sugar factories, solvent extraction units and textile mills are some of the
examples of these kinds of units.
 Agro-inputs manufacturing units – These units are engaged in the manufacturing of
products, either for the mechanization of agriculture or for increasing agricultural
productivity. Some examples of these units include agricultural implements, seed,
fertilizer and pesticide manufacturing units.
 Agro Service Centres – Agro service centres are workshops and service centres,
which are engaged in the repairing and servicing of pump sets, diesel
engines, tractors and other types of farm equipment.
Agro-based Industries in India
 1. Textile Industry

 2. Sugar Industry

 3. Vegetable Oil Industry

 4. Tea Industry

 5. Coffee Industry

 6. Leather Goods Industry

Problems Faced by Agro-based Industries in India

 Small Landholdings – Small landholdings make it difficult for farmers to achieve economies of
scale because of which farmers are forced to rely on subsistence farming.
 Seasonal nature – This means that the farmers have a very small window to reap the benefits of
their hard labor. In recent times, climate change has affected weather patterns because of
which there has been an adverse effect on agricultural production.
 Perishable nature of products – Agricultural products are perishable in nature because of which
they require huge infrastructure in the form of cold storage, excellent road connectivity. India
suffers on both accounts, forward and backward linkages.
 Variability – Agro-based industries involve variability in the quantity and quality of raw materials.
Quantity of raw materials suffer because of fluctuations in weather and soil conditions. The
quality suffers because of lack of standardization. These factors, exert additional pressure on
agro-based industries in terms of operations related to production, scheduling and quality
control.
 Limited Knowledge – The absence of information, lack of awareness and limited knowledge
about opportunities, technology and production systems is also a major hurdle.
 Competition – India is increasingly facing competition from other countries in the region such as
Bangladesh, which offer similar advantages in terms of low labor costs and soil fertility.
What is Food Processing
 Food Processing includes process under which any raw product
of agriculture, dairy, animal husbandry, meat, poultry or fishing
is transformed through a process (involving employees, power,
machines or money) in such a way that its original physical
properties undergo a change and the transformed product has
commercial value and is suitable for human and animal
consumption.
 It also includes the process of value addition to produce
products through methods such as preservation, addition of food
additives, drying etc. with a view to preserve food substances in
an effective manner, enhance their shelf life and quality.
Problems in Food Processing Industries
Farm level problems

 Poor yield of farm produce and therefore low returns.

 Lack of material resources necessary for
development.
 Primitive methods of farming.
 No control on the quality of inputs and lack of
finance to manage.
 Vagaries of weather.
 Unavailability of reliable handling and transportation
system.
 Lack of storage facilities at farm.
Distributors’ problems
 Lack of modern transportation facilities and high cost
 Inadequate cold storage faculties
 Irregular quality and quantity of farm produce

Processing industries problem

 Financing
 Higher import duties
 Higher cost of raw material and packaging
 Inadequate transport and cold storage facilities
 Infrequent availability of refrigerated containers
 Staggering advertising costs
 Limited domestic market
ECONOMICS OF
RURAL
INFRASTRUCTURE
What is Infrastructure
Infrastructure provides supporting services in the main areas
of industrial and agricultural production, domestic and
foreign trade and commerce. These services include roads,
railways, ports, airports, dams, power stations, oil and gas
pipelines, telecommunication facilities, the country’s
educational system including schools and colleges, health
system including hospitals, sanitary system including clean
drinking water facilities and the monetary system including
banks, insurance and other financial institutions. Some of
these facilities have a direct impact on production of goods
and services while others give indirect support by building
the social sector of the economy.
Infrastructure
 Infrastructure is the basic facilities and services that are necessary for carrying
out the economic activities and which help in the economic development of the
country. These basic facilities do not produce goods and services but facilitate
the production and distribution processes.
 Infrastructure refers to the fundamental facilities and systems serving a
country, city, or area, including the services and facilities necessary for its
economy to function.

 Infrastructure defines as :
 a) The basic structural foundation of an economy.
 b) An underlying base or foundation especially for an organization or system.
Rural infrastructure
India’s heart lies in its villages! At one hand where
the cities have grown immensely over the last few
years, rural areas are still looking for significant
infrastructural expansions. Infrastructure plays a
crucial role for not just the country’s economic
growth but also its progress in human development.
Rural infrastructure is not only crucial for
agriculture, agro-industries but the overall economic
development of a country.
Infrastructure Types
Some divide infrastructure into two categories — economic and
social. Infrastructure associated with energy, transportation and
communication are included in the former category whereas
those related to education, health and housing are included in
the latter
 Economic Infrastructure

Economic infrastructure ❖ Energy( electricity, coal, oil and gas)

means those basic ❖ Transport( railways, roads, ports)

facilities and services ❖ Telecommunication (including posts)

which directly benefits ❖ Special economic zones

the process of ❖ Urban infrastructure(water supply,

sewerage, drainage, city roads)
production and ❖ Rural infrastructure
distribution of an
economy.
 Social Infrastructure
Social infrastructure means those ❖ Health and family welfare.
basic activities and services ❖ Education and training.
which, in addition to achieving ❖ Human development and social
certain social objectives, indirectly
security.
help various economic activities.
❖ Poverty and poverty alleviation
For example, education does not
directly affect economic activities programs.
like production and distribution ❖ Labor Employment and Welfare.
but indirectly helps in the ❖ Empowerment of women.
economic development of the ❖ Empowerment of socially
country by producing scientists,
disadvantaged groups.
technologists and engineers.
Where the problem lies?
Different sections play their role in improving the
rural economy as well as life of the people.
 1. Rural road infrastructure:
It provides mobility and connectivity to people living in rural areas. It
also provides the much needed boost to agricultural activities by
making available water, seeds and other raw materials to the farmers.
By improving connectivity, rural roads also enhance employment
opportunities for the rural people in non-agriculture sector, thereby,
increasing livelihood opportunities. Rural roads also ensure that the
rural areas are served with better public services and all the benefits
offered by the state reach the far-flung areas easily. They can even
provide access to education and health services.
 2. Rural electrification infrastructure: It basically caters well to the
requirements of agriculture and other activities including irrigation
pumpsets, small and medium industries, khadi and village industries,
cold storage chains, healthcare and education
 3. Rural water supply system: It can lead to sustainability of systems
and sources and tackle the problem of water quality, thereby,
increasing good health of people.
 4. Rural housing infrastructure: It has the potential to improve
living standard of the people.
 Overall and as per various studies, development of rural power,
irrigation, water, sanitation and road infrastructure can increase
productivity, savings, income and tourism and result in better jobs and
health of rural people.