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Dr. KSS Kanhaiya
BE, DCPA, MBA, MA (App. Psy.), PhD (Mgmt.) C.Eng. (I), FIE (I), MIMA, LMCSI, LMISCA
email@example.com (Views expressed are personal to the author)
Introduction Agriculture in India has a long history. Indian agriculture began by 9000 BC. Double monsoons led to two harvests being reaped in one year. Settled life soon followed with implements and techniques being developed for agriculture. Today, India ranks second worldwide in farm output. Agriculture and allied sectors accounted for 16.6% of the GDP in 2007, and employed 60% of the total workforce. Despite a steady decline of its share in the GDP, it is still the largest economic sector and plays a significant role in the overall socio-economic development of India. India is the largest producer in the world of milk, cashew nut, coconut, tea, ginger, turmeric and black pepper. It also has the world's largest cattle population (281 million). It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for 10% of the world fruit production with first rank in the production of banana. Slow growth in agricultural sector is a concern as some two-thirds of India’s people depend on rural employment for a living. Jharkhand remains among the most food-insecure states in the country. Close to half of the state GDP comes from industry. Forestry contributes only about 1.3% as its huge potential is yet to unfold. Its varied agricultural economy also supports a host of agrobased industries that includes food processing. It is with this backdrop that we shall discuss about relevance, policies, potentials, and factors for Agro Industrial Development of India in general and Jharkhand in particular and shall try to identify areas of concern that need to be pondered upon for achieving the desired development. An Overview of Agro Industrial Policies in India Agro-industry is an omnibus expression. It can generally be defined as “industries which have direct or indirect links with agriculture.” It covers a variety of industrial, manufacturing and processing activities based on agricultural raw materials as also activities and services that go as inputs to agriculture. In 1944, Famine Enquiry Commission defined Agro-based industries as “those, which are involved in supplying the farm with agricultural inputs besides handling the farm products”. James E Austin avered in 1981 in a UK publication on Agro-industrial Project Analysis that “An agroindustry is an enterprise that processes raw materials, including ground and tree crops as well as livestock. The degree of processing can vary tremendously, ranging from the cleaning and grading of apples to the milling of rice, to the cooking, mixing, and chemical alteration that create a texturized vegetable food”. Processing of agricultural produce is a well-known agro-industrial activity. Besides the two-way linkage to agriculture, one would need additional criteria to classify agroindustries.
To make no distinction between the nature of economic activity involved in spinning and weaving in modern mills and the traditional village weaver working with home-spun yarn would, for obvious reasons, not be justified. While agriculture is the main source of raw material for cotton textiles, textile industry of Ahmedabad and Mumbai should not be classified as agro-industries. From the viewpoint of backward linkage to agriculture also, it would appear odd to label fertilizer and tractor manufacturing units as agro-industries. Traditionally, Indian agriculture drew most of its inputs locally from the village and agroindustries were essentially perceived as first level post-harvest processing of farm produce. Agro, village, cottage and rural industries meant the same set of economic activities. The expressions were interchangeable. The need for a rigorous definition of agro-industries is obvious. It is not very clear whether agro-industries are to denote only the activities directly related to agriculture or the total farm output and related activities. An appropriate classification of dairy farming, poultry, piggery and other farm activities needs to be done and a clear-cut view to be taken on whether tea, coffee, rubber, spices and other plantations should be. classified as agro-industries The vision of agro-industries/rural industries, as projected by the political leadership during the pre-independence era, had some serious limitations. These were seen in terms of production in a traditional village and not the village of the future modern India. It did not consider the likely impact of: (i) Spread of literacy and technical education, (ii) Availability of alternative technologies, (iii) Growth of mass media, (iv) Changing aspirations of the people and the youth in particular, (v) Easy availability of power and electricity and efficient transport. (vi) Changes due to occupational structure, employment of women and a variety of gainful employment opportunities, (vii) Recognition of environmental and other factors associated with large industrial complexes, and (viii) Urbanization. It also remained un-appreciated that techniques of production are not always independent of the socio-economic system. Agro-industries were viewed as a safety valve to be built within rural areas to absorb surplus labour and provide relief to the problem of large scale disguised unemployment. Many Indian official reports and other important writings make a plea for agro-industries in the context of rural-urban migration. Soon after independence, an Economic Programmes Committee was constituted to provide a broad direction to the Central and State Governments. The Committee, headed by Jawaharlal Nehru, observed in its recommendations in January 1948: Industries producing articles of food and clothing and other consumer goods should constitute the decentralized sector of Indian economy and should, as far as possible, be developed and run on a cooperative basis. Such industries should for most of the part be run on cottage and small scale basis. The First Five Year Plan made a distinction between village industries, small industries and crafts. The First Plan also visualized that an increase in agricultural production would raise farmers' incomes and expand opportunities for processing raw materials in the villages and more persons could get employment within the village itself.
The First Plan envisaged that Amenities in rural life such as pure drinking water, street lighting, sanitation, hospitals, recreation grounds, community centres and roads increase the field for village industries. The possibility of turning waste into wealth, for instance, production of gas from cow dung and other refuse of the village through gas plants, soap making out of non-edible oils, etc will further provide scope for the development of village industries. The Planning Commission decided to draw up Village Industry Programmes in consultation with experts. For this, the industries covered were: (i) Village oil industry; (ii) Soap making with neem oil; (iii) Paddy husking; (iv) Palm gur industry; (v) Gur and khandsari; (vi) Leather industry; (vii) Woollen blankets; (viii) High grade hand-made paper; (ix) Bee keeping; (x) Cottage match industry and. (xi) Others like: Khadi, coir, sericulture, fisheries, forests, dairying and horticulture, Two schools of thought dominated the policymaking during the early sixties, one represented by the official circles and the other by seekers of integrated rural development. The main concern of the official policy has been to pursue Plan objectives of growth and sectoral targets, whereas the non-official view had a deep concern for holistic rural development. The sixties witnessed the beginning of the green revolution in some parts of India. Agricultural output per hectare rose markedly as a consequence of higher agro inputs per unit of land. The enlarged inputs were obtained from the switchover to electricity, diesel and pumpsets; the high-yielding seeds brought in from research centres; and tractors and agricultural implements, supplied by national and international sources. The green revolution brought Indian agriculture in close contact with industry, the nature of agro-industry relationships extending themselves to supply of industrial inputs instead of agriculture playing the raw material supply function only. With a view to reducing problems of procurement of industrial inputs for agriculture, the State Governments were advised by the Centre to set up Agro-industrial Corporations with the objectives that included : (i) Undertaking and assisting in the distribution of inputs for agriculture; (ii) Promotion of industries undertaking production, preservation and supply of food; (iii) Distribution of agricultural machinery and equipment pertaining to processing, dairy, poultry, fishery and the industries connected with agriculture; and (iv) Providing technical guidance to farmers and persons concerned with agroindustries to enable efficient conduct of their enterprises. All objectives did not find a priority in actual working, for they chose the easier course of promoting sales of tractors, agricultural machinery, fertilizers, pesticides, etc. In some states, beginning with the early seventies, subsidiary corporations were also set up to provide cold storage and crop processing facilities. Post-1985, a substantial change occured in the official policy towards technology import and role of private foreign capital, in general, and in the food industries, in particular. Of the 111 foreign collaborations in food related industries approved during 1951-1985, nearly 40 per cent of the collaborations by nature were for “plant and machinery”. Fruits, vegetables, edible oils and other food-related products did not have much of a place. In contrast to the 35 pre-1986 years, the number of collaborations in the area of foodrelated industry approved during the next seven years only (1986-93) stood at 293. For foreign collaborations, seeds and fruits emerged as new areas. The soft areas such as
alcoholic beverages, soft drinks, chocolates, and confectionery accounted for many collaborations. A keen interest in investments in the area of food processing and soft drinks was evident. For the present, agro-industries and food industries have become a well sought-after area for foreign technology and capital. "Food processing" and "agroindustries" seem to mean the same in most of the present day Indian policy debates. The establishment of the Ministry of Food Processing Industries at the Centre is an indication of the government's thinking. The MoFPI is obliged to increase rural job opportunities with specific reference to women, and unemployed youth by development of primary produce through a network of processing units. The MoFPI is expected to promote technology and marketing techniques in aid of the farmers. Large food processing unit would bring in a substantial increase in the demand for the farm produce and provide better market prices to the farmers. As there would be thousands of small farmers as suppliers to processor, this market scenario would encourage stronger one seeking to exploit the situation. The experience of agro-based industries of sugar and tobacco shows that the processing units tend to thrive at the cost of the farmers. The sugar industry of UP is a case in point. On the other hand, when processing is undertaken in a cooperative framework, there is a faster growth both for the farmer and the industry. The sugar cooperatives of Maharashtra, Gujarat and Karnataka, and the Amul experiment of dairy development on cooperative foundations are examples. An important policy assumption is that agro-industries have a large potential for exports. One wonders, if there is any scope for generating export surpluses at the present stage of India's level of food, vegetables and other farm production. The per capita availability of cereals, pulses, vegetables and fruit in India is so low that export surpluses can only be obtained at the cost of their consumption. The poor would, of course, suffer the most. The impact of exports of essential vegetables was well demonstrated by the abnormal price rise for onions during the mid-seventies. The question is whether India should undertake food exports when millions remain half-fed. The policy needs focus on strengthening the food processing industry; but with relook at the export argument for the same. Given the Indian reality, a number of factors need to be taken note of in formulating a policy mix for the agro-industries. These include: a) Inelastic nature of arable land dictates that agri-development will require more cropping intensity, better water management, improved seeds and crops, and appropriate use of manures and pesticides. b) Low agriculture productivity necessitates newer industrial inputs and improved research infrastructure and information channels. We also require regional specialization, as every crop cannot be grown profitably in all the locations. c) Nearly 10-15 per cent of the grains and 20-25 per cent of the fruit and vegetables in India perish each year. Efforts are required to minimize wastage and to cut down processing losses.. It is necessary to scrutinise post-harvest processes. For instance, the traditional manual rice-husking results in breaking of the rice grain, and the husk is left as a waste, because the quantity at individual sites is not substantial enough to permit technically feasible use. Improved quality and capacity of grain warehousing and expansion of cold storage facilities are required, but creation of cold storage capacities requires substantial investments with demands of energy, so cold storage is not a convenient or long term remedy to the problem of preservation. Fruit may be less
perishable, when preserved as juice or pulp, and vegetables may have a longer shelf life, if stored after vacuum dehydration or packaged in saline water. The indigenous systems of Ayurvedic and Unani medicine are based on herbs, plants, fruits, vegetables, and seeds. They are relatively cheap and safe, compared to allopathic drugs. With growing awareness of the side effects of allopathic drugs, more natural medicines are being demanded. Many personal healthcare products based on traditional remedies have succeeded commercially. Keener understanding of forest and agro-products as health foods and remedies is now recognized in most industrialized countries. There can be a large national and international market for agro-based health products, provided these are processed, packaged and marketed in accordance with internationally accepted standards. The poor in India suffer from food deficiencies on two counts, i.e. inadequate calories and absence of nutritional balance in food. Development of food processing industry would reduce wastage and make for better returns and production incentives to farmers. The associated advantage offered by food processing is the possibility of addition of appropriate vitamins and minerals in which the average Indian diet is considered deficient. Examples include iodised salt, processed milk supplied in urban areas, hydrogenated vegetable oil and bakery bread. Food-processing, viewed in this perspective, can contribute to the evolution of a more balanced diet system, especially for the poor. It is required to encourage cooperatives to take up agro-processing to realize the economies of scale and offer the best means of harmonizing the interests of the producer, processor and consumer. Problems of pest control, canal or underground water management and preservation of seed purity against pollen transfers require special coordination. Coordination by official agencies proves more difficult than in a cooperative system, which brings farmers together as a result of enlightened self-interest. A publicly managed industrial system would be more responsive to societal needs such as introduction of environment friendly processes. The farmers should be encouraged to form cooperatives to establish agro-industrial complexes. Policies have been governed by mere supply of inputs – fertilizers, insecticides, seeds, etc. – to the locals. But surpluses are taken out and processed outside. There are already many proven commercially viable waste-use processes, which could be taken up for implementation in agroindustrial complexes. The specialized agro-product complexes could be equipped to process a crop for its various products and byproducts up to viable stage. Modernisation per-se can never be unacceptable. A modernized industry in a rural setting would also find employment for the educated unemployed, semiskilled and the unskilled rural workers. It would also help realize the objective of "back to villages". Marketing requires special attention to utilize the existing infrastructure to distribute the products of cooperatives. As members of cooperative societies can get goods at concessional rates, it could provide the initial thrust for their consumption and a demonstration effect for further acceptance of these products by others. Besides, consumer cooperatives could be made to provide a certain shelf space for cooperatives products. Reservation of a portion of advertising time on the public television network at concessional rates is another step necessary to balance the thrust of large corporations. Preferential treatment in purchases by public bodies might also be extended to cooperatives, provided the products meet quality standards and prices are within the acceptable limits.
j) Advancement of agro-industries, fully integrated with the developmental needs of rural population, calls for bold and possibly unconventional measures. At the administrative level, it requires creation of a district level authority vested with wide-ranging powers and having majority representation of cooperative bodies. This authority should be the nodal agency for providing various support services such as information on crop varieties, weather, products, markets and coordination of technology acquisition. Constraints & Drivers of Growth for Agro Industries Post-liberalization trends of changes in lifestyles and food habits, organized food retail, and urbanization are the key factors for processed foods in India. There has been a notable change in consumption pattern and now the share for fruits, vegetables, meats and dairy have gone higher compared to cereals and pulses. It implies a need to diversify the food production base to match the changing consumption preferences. Also in developed countries it has been observed that there has been a shift from carbohydrate staple to animal sources and sugar. Going by this pattern, there will be growth in demand for prepared meals, snacks and convenience foods followed by demand shift towards functional, organic and diet foods. A SWOT Analysis of indian Food–Processing Industry shows the following: Strengths Weaknesses • Abundant availability of raw material • Low infrastructural facilities • Priority sector status given by Govt • Inadequate quality control and testing • Country-wide network of manufacturing methods as per international standards facilities • Inefficient and intermediaries laden supply chain. • Vast domestic market • High requirement of working capital. Opportunities • Inadequate linkage between R&D labs • Large crop base offering a vast and industry. potential for agro processing activities • Seasonality of raw material • Setting of SEZ/AEZ for providing incentive to develop greenfield projects Threats • Rising income levels and changing • Affordability and cultural preferences of consumption patterns fresh food • Favourable demographic profile • High inventory carrying cost • Integration of technology development • High taxation in electronics, material science, bio- • High packaging cost technology • High transportation cost • Opening of global markets Initiatives (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) of Central MoFPI to drive the industry through policy support include: Formulation of the National Food Processing Policy Complete de-licensing, excluding for alcoholic beverages Declared as priority sector for lending in 1999 100% FDI on automatic route Excise duty waiver Customs duty reduction on freezer van Implementation of Fruit Products Order Implementation of Meat Food Products Order Food Safety and Standards Bill, 2005
Current Agro-Industrial Status in India As accepted by MoFPI, the Indian food processing sector is highly fragmented. It comprises of several sub-segments. Entrepreneurs in this industry are small in terms of
their production and operations, and are largely concentrated in the unorganized segment, which accounts for more than 70% of the output volume and 50% in value. An overview of the Sub-Segment wise status can be seen as below: Fruits & Vegetables: The installed capacity of fruits and vegetables processing industry doubled from 1.1 mn tonnes in 1993 to 2.1 mn tonnes in 2006. Presently, around 2.2% of the total production of fruits and vegetables in the country is processed. The major processed items in this segment are fruit pulps and juices, fruit based beverages, canned fruits and vegetables, jams, squashes, pickles, chutneys and dehydrated vegetables. The new arrivals in this segment are vegetable curries in pouches, canned mushroom and mushroom products, dried fruits and vegetables and fruit juice concentrates. A large number of units are in household and small-scale sector, having capacities of up to 250 tonnes pa. As per the latest official figures available, CAGR in Exports of Processed Fruits & Vegetables during 2001-02 to 2004-05 has been 15.2% in volume and 9.9% in value with 2004-05 export of around Rs. 1463 Cr. Milk and Milk Products: India has highest livestock populations in the world. It accounts for 50% of the buffaloes and 20% of the world’s cattle population, most of which are milch cows and buffaloes. India’s dairy industry is considered as one of the most successful development industry in the post-Independence era. In 2005-06 total milk productions in the country was around 90 million tonnes with a per capita availability of 229 gms per day. During 1993-2005, the dairy industry recorded an annual growth of 4%, which is almost 3 times the world average dairy industry growth rate. The total milk processing in India is around 35%, (of which the organized dairy industry accounts for 13%) while remaining is either consumed at farm level, or sold as fresh, non-pasteurized milk through unorganized channels. In an organized dairy industry, dairy cooperatives account for the major share of processed liquid milk marketed in India. Milk is processed and marketed by 15 State Cooperative Milk Marketing Federations consisting of 170 Milk Producers’ Cooperative Unions. According to the Ministry of Food Processing Industries, exports of dairy products have been growing at the rate of 25% per annum in terms of quantity and 28% in terms of value since 2001. Significant investment opportunities exist for the manufacturing of value-added milk products like milk powder, packaged milk, butter, ghee, cheese and ready-to-drink milk products. Meat & Poultry : Growth rate of production of meat and its products since 1995 has been 4% per annum. Presently the estimated processing level of buffalo meat is 21%, poultry at 6% and marine products at 8%. But only about 1% of the total meat is converted into value added products like sausages, ham, bacon, kababs, meatballs, etc. Presently India has 3600 slaughterhouses, 9 abattoirs and 171 meat-processing units licensed under the Meat Food Products Order, 1973. Poultry industry is growing at a rate of 8% per year. It is observed that the vertical integration of poultry production and marketing has lowered costs of production, consumer prices of poultry meat and marketing margins. There are eight integrated poultry processing units in the country. As per MoFPI, exports of meat and meat products have been growing at the rate of 29.5% per annum in terms of quantity and 12.2% in terms of value since 2001. It is considered that the growing number of fast food outlets in the country has and will have a notable impact on the meat processing industry.
Marine Products : India is the third largest fish producer in the world, while it ranks second in inland fish production. Processing of marine produce into canned and frozen forms is carried out fully for the export market. Infrastructure facilities for processing of marine products include 473 pre-processing centres, 372 freezing units with a daily processing capacity of 10320 tonnes and 504 frozen storage facilities for safe storage capacity of 138229 tonnes, and 236 other storages. Processed fish products for export include conventional block frozen and individual quick frozen products, minced fish products like fish sausage, cakes, cutlets, pastes, texturised products and dry fish etc. Exports of marine products have been inconsistent and declining due to the adverse European and American market conditions. Grain Processing : It includes milling of wheat, rice and pulses. Primary milling is important activity in the grain-processing but it adds little to shelf life, wastage control and value addition. Around 65% of rice production is milled in modern rice mills. There are more than 91000 rice hullers and 43000 modernized rice mills and huller-cumshellers. Wheat processing for flour, semolina and grits is done through 820 large flourmills and over 3 lakh small units operating in the unorganised sector. Dal milling industry has about 11000 mechanised mills in the organised segment. Oilseed processing is largely concentrated in the cottage industry with approximately 2.5 lakh animal operated ghanis and kolhus, 50000 mechanical oil expellers, 15500 oil mills, 725 solvent extraction plants, 300 oil refineries and over 175 hydrogenated vegetable oil plants. Indian Basmati has gained international recognition, and is a premium export product. Branded grains and grain processing are gaining popularity due to hygienic packaging. Beer & Alcoholic Beverages: India is the third largest market for alcoholic beverages in the world. The estimated domestic beer and alcoholic beverage market is around 373 million cases per year. There are 12 JV companies having a licensed capacity of 34000 kilo-litres per annum for production of grain based alcoholic beverages. Around 56 units are manufacturing beer under license from the Government of India. Country liquor and Indian Made Foreign Liquor are the two liquor segments catering to different sections of society. Packaged/ Convenience Foods: It consists of ready-to-eat and ready-to-cook products, salted snacks, chips, pasta products, cocoa based products, bakery products, biscuits, soft drinks, etc. There are around 60000 bakeries, and 20000 traditional food units in India. The bakery production has been increasing consistently in the country in the last few years. This activity is mostly concentrated in the unorganized sector. Only 40% of total bread is produced in the organized sector, in biscuits the share of unorganized sector is about 80%. Bread and biscuits constitute the largest segment of consumer foods with an annual production of around 4 million tonnes. Bread manufacturing is reserved for the small-scale sector. Cocoa Products: Cocoa products like chocolates, drinking chocolate, cocoa butter substitutes, cocoa based malted milkfoods etc. are highly in demand these days, 20 production units are engaged in their manufacture with an annual production of about 34000 tonnes. Soft drinks: Soft drink segment is the 3rd largest in the packaged foods industry after packed tea and packed biscuits. Over 100 plants are engaged in aerated soft drinks
industry and provide huge employment. It has attracted one of the highest FDI in the country. It has Strong forward and backward linkages with glass, plastic, refrigeration, sugar and the transportation industry. Soft drink segment has a huge potential in the Indian market, as a vast portion of the market is still to cover. 11th Plan Strategy of MoFPI MoFPI, while deciding their strategy for the 11th Plan (2007-12), observed that though the Tenth Plan schemes would continue, some of these need to be restructured with appropriate implementation arrangements in Public Private Partnership mode. It was envisaged to decentralize the Scheme for Technology Upgradation and operate it through Nodal Banks in place of State Nodal Agencies to provide back-ended credit linked subsidy.The new integrated approach addresses issues of financial assistance and investment as well as skill development and entrepreneurship. Core elements of the strategy are: • Better project selection, development and implementation • Decentralized cluster based development, for creation of infrastructure and fostering linkages to retail outlets. • Industry led capacity building and upgradation of standards • An integrated food law and science based food standards. The strategy plans intervention with redesigned schemes and strong implementation arrangements at the following points: • Carefully planned, cluster based, privately driven Food Parks. • Integrated cold chain facilities and strategic distribution centres. • Upgrading quality and hygiene of Street Food in the cities/towns. • Liberalized Wine Policy leveraging the agri/horticultural surpluses. • Development of both public and private Testing & certification labs. The priority areas identified for intervention include: • Infrastructure development • The food park scheme to be modified into a scheme for an Integrated Food Zone • Setting up of National Meat Board • Cold Chain and Preservation infrastructure like Cold storages & Reefer vans • Irradiation Centres • Research and Development in Products, Technology, Quality and Skills • Capacity Building for Human Resource Development, R&D, Quality, Safety, and Related Infrastructure • Upgrading safety and quality of street food • Establishment of Wine Board for Wine Sector DevelopmentGovernment has been proceeding to implement the strategy with all the associated unique characteristics of the governmental plan implementations. Economy of Jharkhand Jharkhand is a young state which came into being in November 2000 on being carved out of Bihar. Its 23% area is covered by forest and nearly 45% land area is arable in the state. In 2004, Jharkhand's GDP was estimated at $14billion. Agriculture has an important role in the economy of Jharkhand. In fact, despite being mineral-rich, 80% of Jharkhand's population resides in villages and depends primarily on agriculture and other associated activities for their livelihood. The principal foodgrains of Jharkhand are wheat, paddy, maize and pulses. The state has become a vegetable surplus state. The soil as well as the climatic conditions of the state is favourable for the growth of mushroom, tea, ornamental plants
and spices. Favourable agro-climatic conditions also facilitate the year-round production of various types of off-season vegetables and fruits. Jharkhand is rich in forests and woodlands. it largely comprises of the forest tracks of Chhotanagpur plateau and Santhal Pargana. The forest cover with resources like Tasar, Shellac etc support agro based industries, horticulture and floriculture in the state However, though being a potentially rich state, it is facing some teething problems towards its development, which largely pertains to infrastructural lacunae. With 40.3% population living below poverty line, Jharkhand is one of the only four indian states having more than 40% of BPL population, while the All India figure stands at 27.5%. Poverty in Jharkhand in view of its natural resources richness is miserable. Out of the population of 26.95 Million, (Male 13.89m, Female 13.06m), work participation rate is only 37.5% through 10.11m persons (M 6.66m &:F 3.45m). Jharkhand remains among the most food-insecure states in the country. The Vision 2010 document of the government admits to a 52% deficit in food grain production, with half per-capita availability of food compared to the national average. Close to half of the state GDP comes from industry. Mining, quarrying and registered manufacturing contribute nearly 78% of the state’s industrial output. Manufacturing contributes 27% of the SDP compared to the national average of 17%. Forestry contributes only about 1.3% with a huge potential that is yet to unfold. Its varied agricultural economy also supports a host of agro-based industries in the state that includes food processing. Old Agro-Industries of the State A number of indigenous agro based industries existed in Jharkhand in olden times. These include Cotton Weaving, Coffee and Silk. Cotton Weaving: People belonging to certain castes such as Chik Baraiks, and Muslim Jolahas used to manufacture coarse cloth for local consumption. The production was household based. In spite of the dominance of mill-made cloths this tradition has been carried on because of surplus labour and specialised weaving skill, through manufacture of lungis, bed-covers and curtains. The Cooperative Credit and Marketing have provided facilities to the weavers, who now use mill-spun yarn. The production is spread over villages around Ormanjhi and Mandar. Coffee: In the early 20th century experiments showed that coffee could do well in Chota Nagpur. Its cultivation was started near Ranchi and the local Roman Catholic Mission made pioneering efforts to propagate it. However, cultivation remained restricted and at present no coffee is grown at all in the state. Silk: Formerly the rearing of tasar cocoons was carried out on a small scale in portions of Tamar and Khunti thanas. Wild cocoons were very rare and tasar was usually obtained from cocoons reared on the Asan tree. The Roman Catholic Mission at Khunti made some efforts to encourage this industry in the vicinity of Khunti. However, lot of potential of this industry is yet to be reaped. Agro Development in Jharkhand Despite of agriculture being the mainstay for the 80% of rural population of the state, its agricultural economy characterized by dependence on nature, low investment, low productivity, mono-cropping with paddy as the dominant crop, inadequate irrigation facilities and small holdings. The Irrigation facilities and bank credit can serve as the twin drivers to increase the agricultural productivity of foodgrain yield from current levels of 1077 to 2000 kilograms per hectare.
Irrigation: Jharkhand fares pathetically compared to all other states in area under irrigation. Jharkhand currently has less than 10% of sown area under irrigation and this figure is almost stagnant for the last many years. The low irrigated area has become a big constraint on raising the agricultural productivity. It also diminishes the prospects of cultivating multiple crops in a year. Although the state receives good seasonal rainfall, the surface water availability to agriculture is not sufficient due to inadequate storage. Ground water status is in poor state due to little recharging by natural process in absence of artificial recharging facilities. As a result ,the water level in the plateau is going down. Presently, the availability of water resourse is only 2878 crore m3 – 2379 crore.m3 surface water and 499 crore m3 ground water. The total utilization of surface and ground water in the state for irrigation purposes so far is only 474 crore m3 – 397 crore m3 surface water and 77 crore m3 ground water. As Jharkhand, efforts towards creation of ponds, tanks and lakes across the state will not only enable maintaining a high ground water level, but will also be directly used for irrigation. Bank Credit: Bank Credit in Jharkhand at Rs. 12.38 Cr. ( 2007) is considerably lower compared to other states. Improving productivity requires greater investment in farm inputs, which can be spurred by facilitating provisions for easy bank credit. Though agricultural lending is considered as a priority lending area by banks; lack of knowledge about the same and the multitude of regulations have thwarted this lending. Mechanisms like microfinance & lending through NGOs need to be developed. Enabling market mechanisms to ensure price guarantees and, deployment of IT to eradicate intermediary transactions will be required to improve efficiencies once the structural inadequacies are tackled by improving irrigation and bank credit facilities. Forestry Development in Jharkhand Jharkhand has 30% land under forests. It has valuable Sal species for timber, Mahua, Palas, Ber, Piar, Jamun, Imli, Sarifa fruit etc. which can be promoted for livelihood. Jam, Jelly, Pickles based on forest produce can create enough employment particularly for women, whose dependence on sale and collection of fire wood is immense at present. Other opportunities include production of medicines and health tonic products, Karanch oil from Karanch tree etc. There is great scope for Tasar and Lac cultivation in Santhal Parganas and Singhbum regions. Tasar cultivation is also suitable in the South Chottanagpur region also where there are abundant Asan and Arjun trees. However, forest resources provide employment only to 4-7% of people, including the Basket makers (Mahlis) who get their raw material – bamboos – from the forests. Average expenditure on forestry (Rs. 407 per ha) is nearly 26% higher than the national average, the average revenue per ha of forest cover is significantly lower at Rs. 71 per ha. The forest productivity in Jharkhand is half of national average. JSFDC employs too many people (600-700 for a few months work) but profits are <1% of sales. As regards sales, JSFDC regulated sales of Tendu leaf are not encouraging. There had been a time, in 2003, when 51 % of tendu remained unsold. Other initiatives are also proving less fruitful. When economic prospects of Non Timber Forest Products improved, well-to-do households also got involved in using tractors inside forests. Joint Forest Management does not produce better results than state controlled management, as the Joint committee is dominated by large land-holding farmers, biasing its functioning. Utilizing the enormous potential of forests to increase output requires concerted effort.
Potential of various Agro-Industries in Jharkhand The agro-industrial potential of Jharkhand needs to be tapped through investments by capable investors. Attracting them needs multifaceted and sincere efforts from government and concerned NGOs, opinion makers, thinkers and intellectuals. Jharkhand provides investment potential in Cattle feed, Spices, Jute and other fabrics, Tea cultivation, processing and packaging, Paper production, Herbal, Medicinal and, Aromatic plants, Floriculture and Horticulture. Jharkhand has 24 lakh hectares of horticulture cultivable land out of which 22-lakh hectares are rain fed. Productivity of horticulture crops is 8-12 t/ha and CII has observed that net profit in horticulture is much higher in Jharkhand compared to other states. Vegetables availability in Jharkhand is estimated as 135 gms per person per day against required value of 285. This leaves us with potential of additional 15 lakh tonnes of vegetable requirement per year within the state. Estimated per-capita daily fruits availability in state is 37 gms against required 85gms. Thus intrastate annual potential is of additional 4.7 lakh tonnes. With varied fruit and vegetable production in different disricts of Jharkhand, there is great potential for developing fruit and vegetable production and related processing industries. Other possible ventures include export oriented fruit & vegetables, Exotic vegetables, Cold storage, Micro propagation, Floriculture and Ornamental gardening, Bio fertilizer, Bio pesticides, Medicinal and Aromatic plants, Mushroom culture, Vegetable seed production and Nursery for fruit plants. There is adequate market for the fruits and vegetables within and around the state. The presence of Horticulture and Agro-Forestry Research Center (an ICAR division) in Ranchi and their research projects can help investors in achieving higher yields and quality. The state government has been reiterating its committment to provide support and benefits to agencies engaged in horticulture and related activities. As there is need to establish multipurpose, multichamber hi-tech cold storage for surplus fruits and vegetables, setting up such storage will be highly profitable. This will regulate the market, enable off-season produce availability and subsequently increase production. This facility shall help in handling of horticulture produce for distant markets. Micro Propagation: At present only 1.05 lakh ha (4.5% of cultivable land) is under horticultural crops. A large area is unused or merely used for crop production, which can be brought under horticultural crops for sustainable development. About 80000 ha area has to be brought under fruit production by the year 2010 as per govt projections, which will require about 348 lakh fruit plants. For expansion of area under horticulture, a large number of quality planting-material of different horticultural crops will be required. Thus there is a need for establishment of large-scale disease free plant multiplication units in the state. Micro-propagation is one of the most efficient methods for rapid multiplication of plants. Commercial plant propagation through tissue culture and setting up micro propagation units would bring quantum change in the present state. Floriculture: The type of cut flowers available under protected cultivation in the region is of world class. Investment in floriculture of Roses, Gerbera, Orchids, Lilies and Gladiolus for the export market provides better opportunities. Marigold, Dahlia, Gerbera, Chrysanthemum, Gladiolus, Tuberose, Golden Rod etc. have potential for internal market. Govt. efforts to develop onward linkages with International markets is needed. Exotic vegetables: The climate of the state is conducive for the cultivation of exotic vegetables such as Broccoli, Red cabbage, Baby corn, Kale, Swiss chard etc., which have growing market in the state as well as adjoining areas.
Bio fertilizer and Bio pesticides: Present time of bio intensive agriculture requires several production units of bio fertilizer and pesticides, also for environmental safety. This is more particularly required in Jharkhand as the land is always deficient in nutrients and low cost sources of N, P, K and micronutrients are a necessity. Medicinal and Aromatic plants: The large forest cover of the state serves as reservoir for several medicinal and aromatic plants species. Establishing industries for collection, conservation and utilization of these plants to cure different diseases will be helpful. Mushroom culture: The mild climate of state is well suited to cultivate mushrooms. Raw material like paddy straw is abundantly available here, which can be utilized for rearing mushrooms whereas its waste can be used for production of vermi-compost. Sericulture in Jharkhand Cloth making from the fiber which the silkworm spins into a cocoon was first discovered in China about 2600 BC. Since then, silkworms have been bred for the sole purpose of producing raw silk. Tasar silk production originated in Chotanagpur plateau in India. There is great scope for Tasar cultivation in Santhal Parganas, Singhbum and South Chottanagpur region also due to abundance of Asan and Arjun trees, which are breeding ground for the moth that produces the cocoon from which Tasar yarn is reeled. With 9 lakh hectares of host plant forests and 60000 active rearers available, Jharkhand has the potential of producing 70 crore pcs. of Tasar cocoon p.a. giving an expected yield of 700 tonnes of raw silk valuing Rs. 100 crores which translates to processed silk worth an expected value of Rs. 300 crores. To reap this potential, the state requires 3500 grainages to produce 120 lakhs DFL (Disease Free Laying). As Jharkhand carries the status of producing 60% of the total tasar production of the country, extensive plantation of Arjun/ Asan/ Sal/ Mulberry in the forest areas, waste lands and other available areas shall help in development of this export oriented agro industry having immense potential of employment and direct welfare of the weaker sections of the society, particularly the tribal and women folk. For the purpose, it is imperative to strengthen the Jharkhand Sericulture Development Institute (JSDI) and Jharkhand Silk Textile Development Institute (JSTDI). Jharkhand's forest department encourages planting of Arjuna trees in place of the traditional Acacia or Eucalyptus. As per the Industrial Policy 2001, Jharkhand govt. provides following incentives to entrepreneurs involved in post-cocoon activities like yarn and fabric production: • Reduced stamp duty on purchase / acquisition of land and building. • Cost reimbursement subsidy for Feasibility study/ Project report. • Capital investment incentive. • Pollution control equipment subsidy. • Interest subsidy and • Commercial tax benefits The actions required for development of sericulture in the state are: • Promote proper silkworm rearing techniques amongst Seri culturists. • Reaching out to places where people have been traditionally involved in Tasar sericulture and spreading grainage activity so as to increase production of DFLs. • Seed rearing activities need enforcement. While yarn is produced using cocoons harvested in commercial crop rearing, the seed cocoons harvested in the seed crop cycles are utilized in grainages for the production of DFLs. Creation of more grainages and training seed rearers in technological skills are required. • Seed crop rearing i.e. seed cocoon stock building through multiplication of basic seeds in a few rearing cycles prior to the commercial crop rearing, needs thrust.
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Finance for setting up new grainages and ensuring basic seeds for them. Better arrangements for sale of cocoons through local Haat markets. Increase post-cocoon activities by training beneficiaries on thread reeling and fabric weaving, extending support in sale of prepared fabric and organizing bank supports for self-employment of trained beneficiaries. Campaigns to improve productivity of commercial crop rearing are also required. Commercial crop is taken up through the final life cycle of tasar insect in a year. Cocoons harvested in commercial crop contain higher amount of silk filaments. Encouragement for setting up of reeling centers is also required.
Thrust area industries of Jharkhand The Jharkhand State Industrial Policy has classified some industries as thrust area industries to inculcate their rapid growth. The criteria for selection of these has been “industries which aim to utilise natural resources available in Jharkhand and which can generate employment for local inhabitants”. It has been intended to give boost to those industries, which propose to add value to the forest produce and agro based products available in the state. The following industries are included as thrust areas for focussed industrial development in the State: • Agro based industries like Cattle feed, Jute, hemp, sisal and other fabrics, Tea cultivation, processing and packaging, Paper, Floriculture and Horticulture. • Forest based industries like Shellac, Bamboo, etc. and those based on medicinal and aromatic plants • Live stock based industries, such as dairy, poultry, piggery, aquaculture, meat processing, etc • Sericulture/ Tasar • Cold Storages • Tissue culture products • Seeds and planting materials • Foods and Vegetable processing • Bio-technological processes and products • Post Harvest technologies General Issues regarding Agro-Industrial development in Jharkhand We have seen that there are various government policies and programmes for encouraging agro-industrial development. We have also seen that still there lies a lot of untapped potential. We need to think about some general issues that too may need attention to facilitate attracting necessary investments and desired development. Some such areas are enumerated below: R&D, Skill upgradation and Innovation: To have commendable development, technological upgradation is necessary. Encouraging important technical institutions like ISMU, BIT Mesra, BIT Sindri and management institutions like XLRI, XISS etc. to help in this aspect may be advantageous. Jharkhand govt. agencies like Jharkhand Sericulture Development Institute (JSDI) and Jharkhand Silk Textile Development Institute (JSTDI) need strengthening. Central govt. also runs many R&D Organisations in Agro-Industrial development area such as Indian Agriculture Research Institute, Indian Institute of Horticulture Research, Directorate of Wheat Research (ICAR), Central Food Technological Research Institute, National Dairy Research Institute, Central Institute of Fisheries Technology, Central Inland Fisheries Research Institute, Central Plantation Crops Research Institute, National Research Centre for Mushroom, Paddy Processing research Centre, and Central Potato Research Institute etc.. More effective utilisation of these for Jharkhand specific purposes may need higher levels of involvement and zest from state officials.
Industry Friendly Atmosphere: A single window empowered interface between the various governmental agencies and entrepreneur shall save lot of time, effort and cost to the latter if the interface is set up with accountability to provide effective, responsive and time-bound service. A system must be created so that the investors are assured of support when threatened of exploitation by unscrupulous politicians or public servants. The system support they receive during such crises impacts their strategic business planning as well as planning of others who learn from experience of the former. Law and Order: Jharkhand needs to improve the general law and order situation here from what is perceived today. The widespread belief that Jharkhand is challenged by insurgency needs to be tackled. It would help if investors had confidence about safety and security of their investments in the state. Government Procedures and Mechanisms: Governmental procedures and mechanisms of clearances, leasings, licences, permits, registrations, reports, returns, inspections and controls are necessary for balanced social development including those of industries. Care is required to see that these do not impede industrial development by way of introducing avoidable complexities and cumbersome situations. Necessary adjustments towards simplification of rules should be a continuous government process. Conclusion Agro-Industrial development is necessary to be encouraged in India as a whole and Jharkhand has to exert a lot to utilize its potential. Much needs to be done by Industries, Public Servants, Public representatives and Government. Much study, thinking and research is required by scholars and development organisations to find out exact opportunities of action and to benchmark Jharkhand with the best practice states in different aspects. This paper is aimed to ignite the minds of concerned individuals, groups and bodies to create a 3D environment of Discussion, Deliberation and Dialogue so that concerted efforts can be put in for tapping the AgroIndustrial potential of Jharkhand.
Published in the Proceedings Souvenir of National Industrial Exhibition cum Seminar 2009-10 held at Bokaro Steel City during Jan. 30 to Feb. 03, 2010