What are the reasons for the poor acceptance of cost-effective small processing units? How the food processing unit will be helpful to uplift the socio-economic status of Poor farmers? (150 Words, 10 Marks)

The poor acceptance of cost-effective small processing units can be attributed to a combination of factors that hinder their widespread adoption. Firstly, limited awareness among farmers about the benefits and potential impact of these units plays a crucial role. Additionally, the upfront cost of acquiring such units, despite their long-term cost-effectiveness, poses a financial challenge for many small-scale farmers. Moreover, inadequate infrastructure, technical know-how, and inconsistent government support contribute to the reluctance in embracing these technologies. Despite these challenges, integrating small processing units into food production holds immense potential to uplift the socio-economic status of poor farmers. These units can enhance the value addition of agricultural products, reduce post-harvest losses, and create employment opportunities. By enabling farmers to process and package their produce efficiently, they gain access to higher-value markets, thereby increasing their income and contributing to overall rural development. Hence, overcoming barriers to acceptance is crucial for realizing the transformative impact of cost-effective small processing units on the livelihoods of impoverished farmers.

Tag: Food processing and related industries in India- Scope and significance, location, upstream and downstream requirement, and supply chain management.   

Decoding the Question:    

• In Intro, try to write about the food processing industry.   
• In Body,   
• In the first part of the answer, reasons for poor acceptance of small processing units.   
• The second part justifies how food processing will help in uplifting the socio-economic status of farmers.   
• Try to conclude to double farmers’ income by 2022.   

Answer:     

India being an agricultural country offers ideal conditions for the development of the emerging food processing industry. Diverse and different types of Agro-climate made it possible to grow various types of fruits, food grains, vegetables etc. offers ideal conditions for the development of the Food Processing Industry(FPI) as the sunrise sector.  Currently, the FPI contributes 1.5% of total GDP and 9% of all manufacturing output.   

Factors favoring FPI in India:   

• Easy availability of raw materials,    
• Favorable recent policies,    
• Scope for large exports of processed foods,    
• Available low-cost workforce.    

However, the food processing industry is still in its infant stage with tremendous growth potential due to poor acceptance of small units in the FPI sector.  

Reasons for poor acceptance of small processing units:    

• 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. Few institutes provide adequate training to the labor force in this sector.  
• Seasonality and perishability: Most of agricultural products such as fruits, vegetables, fisheries etc are highly perishable and thus increase the vulnerability of the entrepreneurs to waste of commodities. The supply of raw materials is also seasonal.  
• 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 universalization of robust technology in this sector.  

Development of multiple small food processing units and if their potentials are used at highest level then it will be very productive and helpful for increasing farmers income in the following manner:   

• Vital Link: The food processing industry provides vital links between farmers and industries sector, helps in eliminating middlemen, reduces wastages of raw materials and increases the shelf life of food products. This helps farmers to sell more in the long run.   
• Improve Income: Direct linkages between manufacturers and farmers help farmers to bargain well and get good prices for their produce.   
• Increased Export:  Processed food has a big scope for export in various countries. This export can help to increase Indian exports and gain foreign currencies and it also increases farmers’ income manifold.    
• Improve Employment: The food processing industry will help to increase employment opportunities for rural youths and farm laborers on a large scale. This will also help in reducing distressed employment in the agricultural sector. On-farm employment or at village-level employment will also help farmers to earn more and save more.   
• Cooperative Farming: Better marketing opportunities may be provided by cooperative agricultural marketing mechanisms. This will help farmers to make an organization on the village level for better-informed decision-making and price discovery.   
• PM SAMPADA: Pradhan Mantri Kisan SAMPADA Yojana (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) is the correct step in the direction of promoting small processing industries. It is a comprehensive package that will result in the creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet with a focus on MSME and the rural sector.   

Thus, to double farmers’ income by 2022 the government needs to focus on developing small food processing units. The government is pushing for Agri- entrepreneurship, clubbing small processing units with aspirational entrepreneurs in villages will help in achieving many objectives like alleviating poverty, increasing entrepreneurship among youths and increasing agriculture contribution to GDP. Hence food processing industry’s potential and its scope need to be utilized. 

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