Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on ‘Harnessing Opportunities to Improve Agri-Food Systems’ on July 24-25 , 2014 in New Delhi. The two day conference aims to discuss the agricultural priority of the government and develop a road map to realise these priorities for improved agri food systems.

1. Beyond farming:
Entrepreneurship, Enterprise and
Industry
Paper presented to the workshop on “Harnessing Opportunities to Improve
Agri-Food Systems” held on 24-25 July, 2014 at the NASC Complex, Pusa,
New Delhi
Nilabja Ghosh
Institute of Economic Growth
Delhi University Enclave, Delhi 110007
India
nilabjag@yahoo.com
nila@iegindia.org
Ph : 2766-7424

2. Acknowledgement
 For primary data based study team work
involving AERCs of: Ludhiana (Punjab);
Jorhat (Assam); Sardar Patel University
(Rajasthan); Shimla (HP); Delhi (Uttarakhand,
Haryana); Bhagalpur (Bihar & Jharkhand);
Allahabad (UP); Vishakhapatnam (AP)
 Rajeshwor and Roopal of FASAL support in
Consolidation and analysis

3. The transition of Agriculture:
Subsistence to Market
 Farming may be viewed as enterprise and recognized for the
risk taking by farmers of food and export items for sale. After
all production!
 Food production is not just crop cultivation
  < => 
 Agro-processing as a link in the supply chain
 End products-Food, chemical, pharma, beverage, craft, fuel etc.;
Use of different parts and components- grain, husk, extracts,
organs etc. Serial and sequential processing, Alternative
processing, co-production or sundry varied with tradeoffs
Consumer Agriculture ManufacturingFarm

4. THE SPACE: FROM FARMER TO CONSUMER
contract
ENTERPRISE
INDUSTRY

5. Gains from value addition to
agricultural products
 Appeal, taste, packaging, convenience, variety
 Employment generation, also in ancillaries (infa, machines,
packaging, labeling, research)
 Higher farm incomes
 Quality gain, improved farm technology
 Reduction of product wastage food value loss leading to
saving of resources (water, land, others)
 Gender empowerment- women joining workforce
 Exports, informed purchase, health
 Full use of agro-products and by-products

6. Agro-Processing

7. PADDY
Raw rice, Powder rice, Par
boiled, Broken rice, etc.
OTHER
PROCESSING
CONSUMER
SNACKS
Grain milling
Millingservices

8. PULSES (UNMILLED)
MILLED PULSES
OTHER
PROCESSING
CONSUMER
FOOD
PROCESSING
Milling

9. RAW WHEAT
ATTA, MAIDA,
FLOUR, etc.
OTHER
PROCESSING
CONSUMER
BREAD, CAKE, BISCUITS,
etc
Grain milling
Millingservices

10. GROUNDNUT
OILS OTHER PROCESSING
(oil cakes, etc)
CONSUMER
FOOD
PROCESSING
Oil Milling
REFINING

11. LIVE ANIMAL
STOCKS
Carried over
SLAUGHTER
Basic Processing
CONSUMER
Food Processing
Other (leather, industrial
products lard etc.)

12. RAW WHOLE MILK
Pasteurized Milk OTHER
PROCESSING
(milk fat, pharma,
etc.)
Basic Processing
Creamskimmed/
whole milk
flavored
milk, yogurt,
paneer,
khoa, ice
cream, baby
food
SMP,
WMP,
Casein
Butter,
butter oil,
ghee
Derived
products
(bakery, etc.)
Exports
CONSUMER

13. Entrepreneurship
 Economic activity with risk-return tradeoff
 Major instrument for employment generation and poverty
alleviation in RD policies
 Flagship prgrm- Integrated Rural Development Programme
(IRDP) -poor achievement of product development and human
capital formation
 National Agricultural Technology Project (NATP),
agricultural extension mechanism- addresses the dual
issues of the farm technology/drudgery reduction and
diversification
 Addresses women entrepreneurship also
 Flexible and more compatible with family workload

14. Three studies
Objectives
 To study the opportunities for processing activities related to
Agriculture
Three levels-Overview and main results
 Entrepreneurship of farm women- using primary data
 Small enterprises in the unregistered sector using NSSO data
 Registered factories in organized sector using ASI data

15. Entrepreneurship of Farm Women
 Coordinated study- based on Primary survey
conducted between 2004 and 2005 (MOA sponsored)
 Enterprises that draw on inputs from surrounding
agriculture and nature
 Surveys in Nine states (by AERCs) in districts selected
on the basis of availability of enterprises- trained
(NATP and other creditable sources) and non-trained.
 Mostly NATP (extension) promoted, training
important (KVK, KVIC SAU-Home Sc etc.) but all
surveyed are not trained

16. Activity types
 Primary production (PP)
 Food processing (FP)
 New and eco-friendly products (NEC)
 Crafts (CRF)

17. Women in agriculture
 Agrarian development in India overlooked the
importance of gainful participation of women.
 Tedious and exhaustive farm operation- little relation
with human development.
 Mostly as family labour (no direct income,
recognition) or as farm labour (low paid, poor
bargaining power in labour market).
 Bias and social norms against work participation,
regional and class dimension
 ‘Women in Agriculture’ series of pgms sponsored
by national and international agencies

18. Details of Samples in various Regions
State Districts Activities
Punjab Gurdaspur
Amritsar
Dairy (PP), Bee-keeping (PP), Papad-Badi (FP), Pickles (FP)
Assam Jorhat
Golaghat
Live-stock (PP), Bee-keeping (PP), Fruit and Vegetable processing (FP)
Rajasthan Udaipur
Chittorgarh
Vermi-composting (NEC), Improved animal feed (NEC), Fruit-
vegetable, preservation (FP), Nursery raising (PP), Papad making (FP).
Haryana Hissar Dairy (PP), Vermin-composting (NEC), Pickle making (FP)
Himachal Kangra,
Bilaspur
Dairy (PP), Bee-keeping (PP), Vermi- culture (NEC), Potato production
using Bio-pestiside (NEC), Diversified Farming (PP), Fisheries (PP).
Uttarakhand Udham Singh
Nagar
Beekeeping (PP), Dairy (PP), Poultry (PP), Papad making (FP),
Mushroom (PP), Quilt making (CRF)
Uttar Pradesh Sultanpur Agarbatti (CRF), Blanket making (CRF), Spice processing (FP), Dalia
making (FP), Milk processing (FP), Basket making (CRF)
Andhra
Pradesh
East Godavari,
Srikakulam,
Visakhapatnam
Coir products (CRF), Jute handicrafts (CRF), Leaf plates (CRF)
Bihar Banka,
Bhagalpur,
Munger
Preservation of Fruits vegetables (FP), Preparation of Jamjelly (FP),
Preparation of Potato chips, Badi and Papad (FP), Preparation of
pickles, and Murabba (FP)

19. Different Aspects of Agro Enterprises reported by Farm Women
Enterprise Product
Nature
Of product Raw Material
Male
cooperation Land
Dairy Milk Meat
Egg, Dung
Perishable Fodder
Feed straw
Moderate OL, CL -
Moderate use
Bee keeping Honey
Wax
Colony
Fragile
(Stored)
Sugar
Medicines
Sheets
Moderate CL-Low use
Fishery Fish Perishable Seeds, Dung,
Chemicals
Moderate CL-high use
Craft/utilities Basket,
quilt,plates
fragile Forest and farm
wastes, others
Moderate CL-high use
Food
products
Papad
Badi,
Pickles,
Jams,
Squash etc.
Fragile
Can be Preserved
Salt Spices Oil
Pulses Fruits
Vegetables
Preservatives
Moderate Low use but work space
needed
Agro/Live-stock
inputs
Animal feed,
Vermi-compost
Bio-pestiside
Perishable Vermin Dung Flour Moderate OL-High use
CL-High use
Crop
Diversi-
fication
Fruits &
Veg. Nur-
Sery
Perishable (veg) Seedlings, Fertilizers,
Farmyard manure
High OL-High use
Note: Land includes space within and without premises. OL-operated land; CL-common land. *additional inputs (new) provided by
promoting agency.

20. Results
 Micro scale of Operation (Rs 40K avg) Low income- Rs 18000 for year
(supplementary), per capita monthly earning avg only- Rs 300 (5 member), less
than poverty line, income to paid resources ratio- 3.8, Labour return-Rs 200 per
8hours day.
 PP most lucrative followed by FP.
 Bee-keeping - high return/Cost ratio but small scale of operation, Vermin-composting
low profitability demand low, Papad-Badi in Punjab highly profitable labour shortage,
Dairy cooperatives better performing in Punjab and Haryana
 Performance-Associated with the economic conditions of the states, but found Viable
 Employment generation 132 days (comparable with NREGA) highest for crafts and
the least for the group NEC
 Satisfaction- contribution to household income –Avg 16%, nearly 50% in UP
sample, self-esteem, empowerment
 Negotiation, participation and exposure, human capital formation, leadership skills
 Freedom from drudgery
 Beneficiaries -middle level background rather than the poorest –many possess comfort
items, transport, Salaried members in households, mostly from landed households

21. Features
Cost advantages from ecology
o Bee-keeping in pristine environment (no vehicular pollution) in
Himachal
oFishery topological advantage (reservoirs) in Himachal , FV (fertile
climate) BHR, Vermin from Common lands
Organization generally individual, proprietary and mostly home
based –few cases of common work space
Techniques-manual/ simple machines, household implements
for F&V processing. FP and CRF use electricity
Family labour, own finance, few cases of borrowing from
traders, SHG
Cheap sourcing from own farm, neighbours, commons (vermin,
dung), forests

22. Problems
 Marketing greatest constraint reported
 Not all product sold (esp NEC little demand)- used
for home/farm use
 Sold mostly through traders, Direct sales in village
haats, Kissan melas (DWACRA), cooperatives in
HRY, PJB (branded), ASSM (weak), national
company (branded honey) in HP
 Training not always useful as in FP
 Male support crucial for marketing or input
purchase

23. New features
 Group operation (distinct from partnership) in Rajasthan, Bihar and
Andhra Pradesh –- cost economy
 Common workshops-share rents, machines (purchased or provided by
supporting agencies or traders). Individual raw materials collective
bargaining.
 Not reported in most regions including Punjab and Haryana.
• Branding
• Cooperative with brand in PJB HRY -Dairy
• Contract with company for national market-branded Honey in HP, Coir
Board
• Revival with new technology and training
 Brinjal in HP using biopesticides and cross-bred cows with improved feed
in HP
• Gender
 Female labour intensive, FP women have traditional expertise, Women
supervision, easier access to credit, Male cooperation but help in outdoor
work and negotiation (familiar stereotype)

24. Potentials
 Farming can be integrated with and supplemented by
enterprises of basic level processing services
 Post harvest operations manual or with simple machines,
cleaning/sanitizing, threshing, feeding animals/fertilizing soil
separating, cutting- primary processing –preservation, making
butter etc., craft work with by products and wastes.
 Farming of new crops with new inputs/methods as special
enterprises- need advert, awareness, support
 Certified training primarily hygienic practices, customer
preferences, nutrition of human and animals, efficient
methods- basic managerial practices
 Specialized marketing support needed- State, corporate
responsibility, cooperatives

25. Small Enterprises (Only Food Processing
NIC 15)
 Data-NSSO 62nd round (2005-06) and 67th round (2010-11)
secondary
 Unregistered units in unorganized sector
 Undertakings engaged in production meant for sale fully or
partly
 Operated by hhds singly or jointly
 Excluding those registered under Factories Act or run by
govt/ PSU
 Include hhld and non hhd entrpr with and without hiring
labour

26. The decline of the small units
 Unorganized sector dominance strong in number
of units (only 1%in Orgnzd) but poor (less than
5%) in value of output, 79% employment; 19%
value of material
 Between 2000-01 to 2010-11, number of units
declined by 25%, employment by 30%
 Shift to urban location (small increase in
number, workers), huge fall in rural
 Workers per unit 2.3 to 2.14- fall in both Rural
and Urban

27. Missing opportunity
 Integrate/tie with agriculture, trading and larger industries,
malls/retailers and export markets
 Understand their difficulties of viability
 power supply, management deficiencies, capital, inconsistency with
global norms/customer preferences, dependence on State support,
Land issues, Environment
 Delineate core competencies
 Traders generally link with both farmers and business
 Contentious relation with traders-
 Ideally synergy with agriculture and large industries- need to improve
professional relations
 Traders play useful role, take risk, bring information esp price and market
opportunities
 Generally same traders as for agro-products

28. Factory sector (using agro-inputs)
 Manufacturing activity
 Employing 10 or more workers with power and 20 or
more workers with or without power
 ASI data- unit level identified by ASICC/NPCMS
codes of agro-inputs, all NIC
 Output mostly food but others like pharma, tobacco, fuel,
dominant grain milling, starch feed etc.
 Quantity data quality raised questions, deflated value
by WSP to derive quantity processed

29. Sun rise sector
 Between 20001-10-11 number of units rose by 4.4
Empt by 2.7% value of production and raw materials
by over 30%.
 Increasing worker on contract (16%-24%)gender
ratio (16%)no change
 Contracts with farmers, technology finance
monitoing, quality standards and rejection
 farmers offload rejected in APMC markets
 larger national companies (as Pepsi), also regional
processors (Potato, Tomato, Amla) cases of NGO
intermediation
 Depends on state policies
 Challenges- price discovery, adjudication possible
linkage with SSU

30. Organized and Unorganized sectors in Food
processing in India
Enterprises
(No)
Enterprises
(No)
Value added
(Lakh)
Value added
(Lakh)
Organized Unorganized Organized Unorganized
2000-01 21649 3011300 1644731 466752
2005-06 23734 2602807 2345568 1540575
2010-11 30253 2241195 5521147 2205400
Sources: National Sample Survey Office (various) and Annual Survey of
Industries (various)

31. 100
150
200
250
300
350
400
2000-01
2001-02
2002-03
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Total Factories
Production nominal
Employment
Production Real
Growth (Index) of organised sector in Food processing in decade 2000s. Source: ASI data
Food processing sector in the Unorganized sector in 2000s. Source: NSSO data

32. Share of the Organised and Unorganised Sectors in total
Quantity processed in 2005-06

33. What is Agro-processing
 Complexity of definition and specification of activities
 Some activities are basic, essential for consumption
 Milling of paddy, wheat, slaughtering animals, pasteurizing milk,
crushing of Oilseeds, sugarcane
• Done in Domestic kitchen, Commercial in informal sector or as services
 Some output feed in as inputs in other enterprises
 Multiple products from same input, Gnut as nut, to oil, other
snacks (chikkis), Oil to refined oils, to other food
 Value added sophisticated technology for varied food- paddy
to rice- idli mix, milk- cheese to pizza
 Some activities cleaning and packaging (for marketing) like spices, rice

34. Agro-processing as manufacturing:
Wide variety
 Agro processing: Alteration by heat, pressure, and/or freezing
temperatures.
 Processed products : Can be food, Beverages, non-food
(chemicals, paints, varnishes, inks, bricks, porcelain, energy,
furniture, broom, brushes, craft)
 Byproducts and or constituents: Different uses – paddy-
rice/rice products/husk/fuel-feed/craft/other purposes, wheat-
atta/ flour/ suji/ bakery items/ noodles, husk for fuel, gluten,
daliya, bran, Sugarcane-sugar/gur/ethanol, cogen, oilseeds-
oil/feed/ manure, FV-presvtion/juice/puree/sauce/
jams/wine/medicines/compost, Milk-dairy products/other food
products/whey/casein/fat, Animal-milk/meat/egg/ leather/other
articles/medicinal inputs, fertilizer

35. Milling as service industry
 Milling and processing may be integrated in
manufacturing activity or given as services by
commercial providers
 Farm retention, PDS and other distribution
 Government procurement of paddy/wheat from farmer-
custom milled as service (nor mfg) and distributed as
rice/atta
 Procurement from millers (rice)allows more processing as
mnfg (market rate?)

36. Estimates
 Extent of processing is a measure of linkage between
agriculture and industry
 Complexities- few reliable estimates explaining
methodology
 Literature quotes that estimates of food processing
vary among countries 70% Brazil, 30% Thailand,
78% Philippines, 30% China and 80% Malaysia,
(KPMG-MoFPI-FICCI, 2007) whereas in India it lies
low at about 1.3% (D’ Essence Consulting, 2009).
 Data sources, methods, specification not elaborated

37. Need for estimates in India
 Estimates cited (probably insights and insider information from
industries) for FV as 2.2%, Milk as 35% and meat 21% (KPMG-
MOFPI-FICCI, 2007)
 APEDA quotes estimates at 1.7% for FV, 37% for dairy and 21% for
meat.
 Our estimates using ASI unit level data (% of net production corrected
for SFW) : 1.79% for fruits; 2.52% for vegetables, 10.85% in milk, and
1.29% for milled rice, 2.16% for milled wheat and 15.4% for milled
coarse cereals. (average of org sector, 2003-04 to 2010-11)
 Largest value share of use of agro-inputs for grain mill, Oil,
Sugar and dairy products, also fish feed, bakery, beverage, small
share of chemical, bio electricity, furniture, crafts, paints etc.
 Our estimates based on FAO data 2009-10 (% of net availability) are
0.2% for fruits, 49.5% for milk (whole) and 0.26% for milled cereals.
 Estimates of milling services not counted

38. Concluding suggestions
 Immense scope of developing enterprise and integrating agriculture with
industry
 Processing can start from farmer level
 Need for useful relevant training, standards, mostly sanitary
 Marketing- tie ups, support
 New forms of organization (collectives) more exposure
 Halt the decline of smaller units: Core competency
 Advantage of cooperation with bigger industries- Prevent competition with LSU
 Awareness of standards, technology and demands-policy support
 Harness synergy with farm enterprises and larger industries
 Processing service (milling etc) potential
 Government procurements come in the way
 Policy support to bring in investment in Larger industries (Fiscal and other
macro policy )
 Diffuse benefits through the supply chain (Farms, entrepreneurs, Traders, SSU, LSU,
Consumers)
 Monitoring and statistics
 Improve statistical protocols-Attention to emerging and detailed consumption
behaviour, processing amenable for public use and evaluation, consistency among
databases

40. Features
Cost advantages from ecology
o Bee-keeping in pristine environment (no vehicular pollution) ,Himachal-
oFishery topological advantage (reservoirs), FV in fertile areas, Vermin from
Common lands
Organization generally individual, proprietary and mostly home based –
few in common work space
Techniques-Mostly manual involving simple machines household
implements for F&V processing (mixer, grinder and refrigerator). FP and
CRF are two categories that are found to be users of electricity
Family labour, own finance, few cases of borrowing from traders, SHG
Cheap sourcing from own farm, neighbours, commons (vermin, dung),
forests

41. Share (%) of Organized and unorganized sectors in
food processing activities (05-06)
Sector Enterprises Employment Value of outputs Materials
Organized 0.90 21.09 96.85 80.51
Unorganized 99.10 78.91 3.15 19.49
Total 100.00 100.00 100.00 100.00
Note and Sources: Based on ASI and NSSO data for 2005-06

42. India's organized food processing sector in 2000s
Year Total Factories Value of
Production
Materials
Consumed
Income Employment
(In number) (Rs'000 Crore) (Rs'000 Crore) (Rs'000
Crore)
Lakh number
2000-01 21649 135.52 107.54 10.52 13.33
2001-02 22395 130.35 103.76 9.74 13.07
2002-03 22490 157.00 129.23 8.25 13.08
2004-05 23471 175.41 144.48 12.45 13.43
2005-06 23734 201.28 162.59 18.10 13.92
2006-07 23951 246.02 194.97 28.56 14.76
2007-08 24616 296.66 243.21 26.79 15.05
2008-09 25788 354.69 292.62 30.30 15.64
2009-10 25915 385.47 317.50 33.21 16.06
2010-11 30253 507.58 422.75 41.79 16.62
Average
growth% 4.42 30.51 32.57 33.02 2.74
Source: Annual Survey of Industries (various)