Agro Industrial Parks

K Laxminarayana Rao, Consultant, India

Regional Workshop to promote MSMFE in Asian Region
16-17 Dec 2013, Bangkok, Thailand
1. Why Agro Industrial Parks:
Need for Processing:
Processing agricultural produce at the point of production or source improves value
addition of the produce. Depending on the processes involved it may also reduce bulk by
lowering moisture content, separate out unwanted material or contaminants such as fibre
or soil. Processing can also be for grading the produce to provide uniformity and to remove
spoiled or substandard factions. Grading also helps segregating the produce for different
markets (domestic consumers of different class, and for processing).
Processing and packaging is also required to improve shelf life of the produce,
reduce spoilage during transportation, storage and distribution of the products (fresh and
processed), add conveniences for cooking, make certain foods ready to eat or improve
quality by formulation and blending. Appropriate packaging also increases market appeal
and, makes available the product into marketable portions in an easy-to-handle and/or sell
package.
While much primary processing is concerned with retaining the original
characteristics of the produce, transformation also improves shelf life and assists with
distribution, transport and storage between field and shop. This is particularly important
when the products are distributed over a wide area.
Providing the infrastructure to help establish processing facility within the producing
regions results in value addition to local produce, and also improves shelf life when shipping
into the cities. Adding value to that fraction of the crop or material that can sustain it
economically enriches everyone dependent on (and working within) the supply chain, with
the additional income filtering into local economies. Grading enables the selection of the
best produce for fresh markets and/or the least valuable produce to remain at point of
production, with the appropriate intermediate quantities and grades directed into
processing.
Need for Dedicated Agro industrial parks:
There are a number of discrete advantages with establishing a dedicated agroindustrial park that will attract similar or complementary specific-type enterprises. Working
in close proximity of one to the other enables rationalization of:
Management,
Supervision
Services
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Helps establish a measure of goodwill on the part of the Association of Food

Producers on the Park.
Shared market exploitation.
The different enterprises in the park will be able to share and/or exploit the
complementarities of raw materials, utilities, information resources, transport,
import/export arrangements and similar co-ventures that come from a cooperative and
well-coordinated industrial park supported by both local government and external private
industries.
Transition economies are often characterised by market imperfections and barriers.
They lack access to information, new technological knowledge, and finance. They also face
high transaction costs because of a lack of infrastructure and weak institutions. Agroindustrial parks can be used to overcome these hurdles and accelerate economic
development. They are a useful instrument for attracting investment, fostering
technological learning and innovation, and for creating jobs. With the potential to generate
comparative and competitive advantages, agro-industrial parks will be able to attract
innovative businesses, leading to both more jobs and a larger tax base.

2. Agro-industrial Park design and Pointers for success of the Park:

Market for the products manufactured and services available in the park represents
the single most important determinant for the establishment of the individual agroindustrial enterprises, and thus the viability of the park. If services are lacking or not offered,
then the park may face difficulties with both attracting investors and retaining those that
may establish there, even if the market for the products exists. The costs involved with
development of the park by promoters (whether private or public sector), and cost charged
to investors for purchasing and/or renting the plots or facilities are crucial factors for the
success of the park. These will influence the investors. Levels of costs will depend on the
location of the park, the type of facility being offered and the efforts made by the
promoters to attract industrial units to fill the park.
The park and the region where the park is located should offer a competitive edge
over land and buildings outside the park, in addition to providing a range of requisite
facilities available on site. The availability of skilled labour at reasonable cost and adequate
socio-economic infrastructure to encourage the stability of the work force within the region
is essential. This is not always easy to achieve, for skilled labour may be in demand
elsewhere and people will seek the best possible income available for their families.
Costs are reduced through economies of scale in the provision of common services
and facilities. Buyers, producers, and suppliers can operate in the same location, thus
cutting the transaction costs of economic learning while establishing new standards and
norms of entrepreneurial behaviour. Firms located in industrial parks often use the services
of local companies, creating not only backward and forward linkages, but also diffusing
economic learning to the wider business community. A concentration of certain types of
companies attracts innovation and investors and may facilitate the development of clusters.
Indeed, from the outset Agro-industrial park should be linked to clusters in the regional
innovation system.

Successful Agro industrial parks can, therefore, become growth hubs, creating high
growth regions and directing national economic development.
Over the decades, Agro industrial parks have become increasingly flexible and have
expanded the range of facilities and support services provided to firms and individuals they
host. The latest generation of parks promotes new innovative industries and technologies
and seeks to provide attractive environments for employees to work and live in innovative
clusters. Agro-industrial parks should strive for high environmental, economic and social
benefits. They should bring together businesses that cooperate to minimise resource use
and reduce waste. They must function according to a shared goal of maintaining the
economic viability of industry, trade and commerce while sharing the same core principles
of the industrial park of creating business niches, supporting business incubation and
competitiveness.
Potential investors for Agro Industrial Parks
An agro-industrial park can cater to the infrastructural needs of a large variety of
agri-horticultural produce grown in a region. Existing processing activities in the region can
be encouraged to relocate to the park and integrated with new units. This brings in
experience and knowledge from which others in the park may benefit. Industrial units
scattered across a region can pose environmental problems. Relocation into a park brings a
measure of control and security, but this has to be undertaken with the cooperation of the
entrepreneurs involved, that production levels remain firm (with no loss/drop), with similar
(or lower) production costs. There is little point in encouraging (forcing?) successful
enterprises to relocate for the benefit of other industrial units and for environmental well
being, only to penalise what had previously been a successful enterprise. In reality, few
enterprises are willing to relocate simply to provide for a better organised private sector,
The advantages in the medium to long term have to reflect in the balance sheet of the
enterprise, with higher earnings a major opportunity.
Design and Planning Agro-Industrial Parks:
It is essential to study the resources and requirements of the region, and design the
park with facilities based on the needs of the types of agro-processing industries that are
likely to be introduced into the park. Scientific and technical studies of this kind are best
funded by the state. There are considerable indirect benefits to the state with the
establishment of viable agro-industrial parks. These include enhanced productivity of the
agricultural sector, more money circulating in local communities, increased tax revenues
(based on increased production and added value) and, where social welfare may be
concerned, more food and materials available for local people. There is also less in the way
of wasted resources and materials within local production systems. Although not always
easy to define in strictly monetary terms, these benefits normally far outweigh the initial
expenses of promoting, establishing and nurturing the park into being.

The concept of Agro-industrial parks, with the provision of common infrastructure

and services that may be available for a selection of similar processing enterprises, offers
the potential to minimise expenditure (and thus reduce both borrowings and risks). There
are also issues of scale involved, for example, with the provision of plant for treatment
and/or disposal and/or recycling wastes. These may require a minimum of throughput that
could not be provided economically for the many separate enterprises involved. An agroindustrial park may have a greater chance of being self-sustaining from the outset, with
costs shared across the many enterprises involved.
Food processing industries can be categorised into three categories, viz. primary those that involve the basic processing of natural produce, for example, cleaning, grading
and de-husking; secondary those that include simple or elementary modification of natural
produce, for example, hydrogenation of edible oils; and tertiary those that include some
form of advanced modification to the natural produce, for example, to make it ready to eat
(tomatoes into ketchup and dairy products into ice cream are two examples).
A crucial and rather basic constraint facing many food-processing industries in
developing countries is the difficulty of developing local markets for products that may
come within secondary and tertiary categories. Most people may simply not be able to
afford to pay for the additional added value costs involved. The concept of purchasing
power parity (PPP) is important when planning for industrial development. For example, a
country with a per capita income of US$1,000 per annum (on a PPP basis) may only be able
to support a pre-primary food processing industry, another country with a per capita
income in the range US$1,000-5,000 per annum may be able to support a primary
processing industry, and only those countries with a per capita income of US$5,000-10,000
can be expected to support secondary and tertiary food processing industries. Considering
that only a small fraction of the population in any one particular country may have an
income in excess of US$5,000 per annum, the secondary and tertiary food processing
industries will have access at best to small markets (and, in some cases, only to niche
markets). These may not be sufficient to enable an industrial unit to remain profitable.
There is a huge market for processed foods waiting to be introduced and developed
in most societies. Traditional practices and choices with foods have always been dynamic,
and have changed with access to new crops, to new technologies and to increases in
income. In this respect, people in developing countries are no different from those in the
industrial countries. However, the types of processed foods required by the market
frequently come from the introduction of new technologies and plant and equipment with
which to produce these foods. High quality production is essential to meet the demands of
middle-income people
The technologies involved have to be cost effective, particularly if the product is
destined for the local market. Where possible, the technologies should also aim to reduce
the waste of materials (> 30 percent with fruits and vegetables, for example) of existing
4

methods of production. Increasing purchasing power and health consciousness on the part
of many people in developing countries encourages trends from overseas, with demands for
processed foods that have a fresh-like or dietary-beneficial quality. Suppliers of processed
foods are required to adapt to changing trends as the market may demand.
Agro-industrial Park should support start-ups, new enterprise incubation, and the
development of knowledge-based businesses, and offer an environment where local and
international firms can interact with a particular centre of knowledge creation for mutual
benefit.
A major advantage of Agro industrial parks is that they provide an institutional
framework, modern services and a physical infrastructure that may not be available in the
rest of the country.
Industrial parks must use modern services, such as information and
telecommunications as well as extension services that are critical for innovation,
technological learning and company growth.
A step by step Planning and Development process for a Agro-Food Industrial Park is
shown in Annexure -1.
Major constraints to the development of food processing industries have been:
1. High cost of raw materials (due to low yields) and wide variation in the quality of raw
materials produced by smallholders.
2. Inadequate and/or expensive refrigeration facilities for storage.
3. Inadequate transport and distribution systems.
4. Lack of proper infrastructure.
5. Limited availability and high cost of good quality packaging equipment.
6. Outdated processing technologies, and an inability to keep pace with technical change.
The Government policies together with the infrastructure within the agro-industrial park
should address these issues to the extent feasible.
Demand patterns for processed foods have been changing in most developing
countries in recent times. Reasons for change are many:

Rapid urbanisation and growth of cities have brought new demands on the food
industry. Changing life styles have contributed to a virtual boom in certain types of
processed foods. With improved communications and transport into cities, rural
populations have become better informed and more adaptable (susceptible?) to urban
patterns of consumption.

Increase literacy levels have lead to more people becoming conscious of good nutrition
and the importance of a balanced diet particularly for children. This is resulting in
5

increased demand for special foods for infants, growing children, convalescing patients,
invalids, old folk and others with special dietary needs such as diabetics.

An increase in working women in the labour force has resulted in high demand for
convenience foods, and those that can be prepared with minimum effort in the family
kitchen at the end of the day.

Advertising is having its own impact on the consumption pattern of many people and is
responsible for changing food habits, particularly amongst the young.
Promoters of Agro industrial parks should identify such processed foods and create
adequate infrastructure and other facilities to promote such processed foods capable of
creating domestic market and popularise local specialities in the export market.
An agro-industrial park should have the potential to support a selection of common
infrastructure for use by those on site. This should become fully commercial in approach
that those located on site become responsible for all operational and plant replacement
costs. Much, however, will depend upon local government policies that are put into place
during the start-up phase, and those that may come on-stream later (as demand grows).
Other factors will also apply including the incentives available from the Government,
payment based on volumetric use, payment based on the toxicity of wastes produced, offpark use of facilities, complementary or competitive state-wide (or neighbourhood)
supporting services, etc. Examples of facilities with potential for on-site location for various
agro industries are listed in Table 1
Table 1: Supporting Services and Facilities for an Agro-Industrial Park
Type of Industrial Activity

Supporting Commercial Infrastructure

Food grain processing units

Warehouse facilities, drying units, testing

laboratories, waste utilisation & power
projects.
Oilseed processing units, including solvent Warehouse facilities, drying units, testing
extraction plants, refining and packing units.
laboratories, common effluent treatment plant,
power projects & solid waste conversion.
Fruits and vegetable processing.
Packing and grading houses, post harvest
treatment facilities (washing, drying, Wax
coating, vapour treatment, irradiation),
ripening chambers, cold stores, testing
laboratories, common effluent treatment plants
solid wet waste composting plants.
Tissue culture laboratory and green/poly Cold stores, laboratories & container terminals
houses for flowers and vegetables.
(airports, ex-state shipment).
Fruit and vegetable dehydration units.
Laboratories, cold stores & fumigation
facilities.
Food ingredients, value added convenience Laboratories. Frozen storage, product display
foods and ready to eat foods
and permanent exhibition centre.
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Other commercial facilities:

Agro industrial park apart from providing a host of facilities like roads, drainage
system, parking, landscaping, power supply and distribution system, telecommunication
infrastructure, security infrastructure etc, the development cost of which is loaded to
individual plots or built up sheds, should also provide certain essential commercial
infrastructure (table 2)
Table 2: Examples of Commercial Facilities in Agro-Industrial Parks

Category of facility
Industry
commercial

related:

Industry related: social

Government
offices

and other

Facility to be provided
Spare part agencies and shops
Seed, pesticide/chemical suppliers
Motor rewinding shop
Business centre
Restaurants and fast food eateries
Supermarkets
Hospital/nursing homes
First aid/emergency services
Banks
Convention centre
Transport operators office
Container terminals, if required.
Petrol bunkers
Fuel depot (coal/furnace oil/diesel)
Schools
Housing colonies
Playgrounds
Clubs
Hotel/guest houses
Bus terminus/car parks
Parks
Religious centers
Residential colonies for key staff
Pollution control board office
District industries centre
Inspection/certification agencies
Industry association
Local body offices
Electricity board
Police station
Post office/telephone exchange
Training centre
Fire fighting services
Single window agency
Weather quality monitoring station
Agro-industrial park office

Zoning of the Park:

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It is advantageous for a park to have different zones for different types of industrial
and non-industrial activities. Zoning will help by achieving economies of scale, for example,
with the provision of services and the collection and treatment of wastes, recycling of
wastewater, transport networks, public amenities and similar. Normally, industrial zoning is
required to segregate polluting and non-polluting industrial processes, heavy and light
industries, wet processing and dry processing industries and similar. Table 3 provides some
examples of the different types of industries that may be involved.
Table 3 Industries and Industrial Zones in the Park
Classification of industry

Industrial activities

Heavy water consuming/wet solid

wastes

Medium water consuming/wet solid

wastes

Medium water consuming/chemical

wastes

Low water consuming/dry solid

wastes

Zero
waste
waste/effluents

or

minimum

Fruit juice/pulp/slice canning industry

Fruit juice extraction and concentration
Tomato past and puree
Tamarind juice/paste
Starch from corn/potato/tabioca
Sugar mill
Soluble coffee/tea
Vegetable pickles
Gherkin/baby corn in vinegar/brine
Fruits and vegetable dehydration
Potato wafers/finger chips
Spice oils and oleoresin
Essential oils from herbs
Floral concentrates
Vegetable oil refining
Cotton seed oil expelling
Vanaspathi and margarine (Hydrogenated fat)
Distillery
Oil seed decorticating/dehulling
Coffee curing
Rice milling
Dhal milling
Cashew nut processing
Bakery
Confectionery
Convenience foods
Spice powder/Masala powder
Flour mills
Grading and packing of pure spices

All wet solid generating units can be located together so that wet solid wastes can, for
example, be re-directed and treated in a single digester after due treatment in preparation for
digestion. Biogas produced can be utilized by industries located close by, for example, for the
generation of steam or heat energy. Similarly, industrial units producing dry solid wastes can
be grouped together so that all solid wastes can be incinerated for the generation of power or
pelletized for the production of easily transportable fuels. Such fuels can be marketed within
the park for industrial use or sold into the local community as a domestic fuel.
8

Supporting industrial units, such as those involved with ancillary activities for
printing, plastics, packaging and similar, can be located into another part of the park. Separate
enclosures may be provided for common facilities that cater to the needs of individual groups
within a particular zone. Commercial Infrastructure can also be located separately, but within
a convenient distance from each zone. Long travel distances and/or inadequate transport links
will result in services being under-used, and may encourage ad hoc alternatives (such as
street food vendors) establishing in non-zoned areas.
Finally to keep the expenditure on development of infrastructure at reasonable levels
and to ensure the availability of adequate raw materials in the long term, the choice of
location of the park is important. It helps to locate the park where some infrastructure may
already exists such as roads, housing, commercial services and similar. Investment levels
will be lower and this will enable the plots to be sold at lower cost (or limit the levels of
subsidization required), for example, as described in location A in Table 4.
Decisions for a preferred choice of location are not always taken simply on the basis
of the economic factors involved, but costs remain a prime consideration. It helps to have the
entire country or state mapped for resources, infrastructure, and points of consumption and/or
processing and sale to assist with making choices. For most planners in developing countries,
however, data will normally be strictly limited, and a preferred choice of location may not
always be immediately available.

Table 4 Matrix for Locating an Agro-Industrial Park

HIGH EXISTING
AND
FUTURE
RAW MATERIAL
DEVELOPMENT
POTENTIAL
MEDIUM
EXISTING AND
HIGH FUTURE
RAW MATERIAL
DEVELOPMENT
POTENTIAL
LOW EXISTING
AND
HIGH
FUTURE
RAW
MATERIAL
DEVELOPMENT
POTENTIAL

HIGH
INFRASTRUCTURE
DEVELOPMENT
INDEX

MEDIUM
INFRASTRUCTURE
DEVELOPMENT
INDEX

LOW
INFRASTRUCTURE
DEVELOPMENT
INDEX

Government Support Policies:

In the newly industrialising countries progressive policy support from the
Government is a prerequisite for the establishment of a commercially viable agro-industrial
sector. It follows that Governmental support should attract the entrepreneur and be just
sufficiently viable to enable him/her to establish. From here on he/she should remain as the
risk taker and, equally, keep the rewards that may accrue. Issues of subsidisation may arise
if the incentives offered are too attractive. Factors of time will also apply, that Government
support should be phased out once the private sector is firmly in control.
In many cases policies already in place to provide support for industrialisation and/or
agriculture may be modified to encompass an agro-industrial sector, thereby linking the
producer to the processor or trader. External investment has to be a main aim to enable
facilities such as roads, stores, markets, collecting points and factories to be constructed.
Investment in production may also be required, with the confidence that comes from
producer groups working in harmony with buyers. This leads to increased yields, improved
quality of crop and, eventually, a trickle down enriching effect for the remainder of the
community; more employment, more income and more development. Neither the agrofood industrial sector nor farmers/producers can develop if the production/processing
sector are working under stress.
Stress comes from lack of information, unfair competition (between the different
stages of the food/materials chain) and insecurity. Competition for prices between producer
and processor inevitable brings a measure of disharmony but, once contractual prices and
quantities have been agreed (usually pre-season), then supplies should flow from farm to
factory. In the industrial countries the infrastructure (including the law) is normally in place
to ensure delivery once contracts are firm. This, unfortunately, is not always the case in
developing countries. Here the processor may never really have a measure of control over
production, and the farmer may never really be certain that he/she will be able to sell at
costs which cover production (and then make a reasonable profit). Traders proliferate, and
frequently to the detriment of the supply chain. The many small producers working outside
of organised supply groups have alliances that can sometimes be easy to shift, particularly
with money on-hand at times of crop delivery.
Food preservation and processing industries hold a key position in the agro-industrial
development plans of many developing countries. These industries can:
Stimulate the cultivation of crops of high quality and obtain yields 2-3 times
higher than traditions cropping; they may be able to utilise land considered
comparatively poor and, with the right farm inputs, obtain better economic
returns.
Generate employment in production, preservation and processing to improve
community incomes, particularly in rural areas.

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Generate employment in rural (agriculture) and peri-urban (processing) areas,

which can help reduce migration to cities. Overburdened cities already face
serious problems of habitat, health, environmental protection and social tension.
Provide adequate supplies of nutritious and hygienic foods to overcome dietary
deficiencies of vitamins, minerals, etc. (some of which may be serious) that are
responsible for diseases such as night blindness, goitre and rickets.
Increase exports of freshly packaged, processed and value added products, which
can earn 3-4 times more foreign exchange (when compared to the sale of the
original unprocessed raw materials). This helps to overcome trade deficits and
improves the debt service ratio.
Increase demands for products from other complementary industries such as
sugar, chemicals, containers, freighting, packaging materials, machinery, etc. and
a demand for services that may provide information, finance, transport and
communications to food industries. The net effect is one stimulating local
industries and local economies.
Make savings in energy. Centralised food processing consumes less energy,
which is always expensive and in limited supply in the newly industrializing
countries.
Reduce wastes. Wastes from agro-processing industries may be a valuable raw
material for a number of allied industries, and helps to contribute to GDP.
Further, a reduction in waste reduces the environmental impact of waste
disposal. Pollution may be reduced and better living conditions result.
The policies affecting the development of agro-food processing industries may
include: Policies related to land, agricultural development, licensing, monitoring and
controls, financial, trade policies especially import-export policies, and science & technology
policies.
Subsidies for the Agro-industrial Park:
(Based on Indian Experience)
Full recovery of capital costs of establishing an Agro Industrial park cannot be
expected, since the capital cost involved in land and building in case of single units located
outside the park would be lower and thus becomes difficult to convince users to shift from
existing lower cost locations and buildings. In addition common facilities provided may not
be commercially viable unless at least the capital cost is subsidized by the state. In view of
this the government introduced a scheme of capital subsidy to create common facilities in
the park.
In India 60 food parks were promoted during 8th, 9th and 10 Plan period (19922007) and the pattern of Government assistance was as follows:
The grant-in-aid was provided @ 25% of the project cost in general areas and @
33.33% in Difficult Areas (North Eastern Region including Sikkim, Jammu & Kashmir,
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Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, Lakshadweep and ITDP
Areas) subject to a maximum of `40 million for provision of common facilities in Food
Parks.
Table 5: Status of food parks implemented in India during 1992-2007
Grant
Grant
Approved
released
State
No. of Parks
` million
` million
Haryana
1
29.3
29.3
Karnataka
2
80.0
80.0
Kerala
4
128.7
128.7
Madhya Pradesh
6
237.08
233.19
Manipur
1
40.0
40.0
Fully funded and
Maharashtra
5
190.27
190.27
Operational
Mizoram
1
38.2
38.2
Rajasthan
2
40.69
40.69
Tamil Nadu
1
40.0
40.0
Tripura
1
40.0
40.0
Uttara Pradesh
3
120.0
93.8
West Bengal
5
156.62
156.62
Manipur
1
40.0
35.40
Total
33
1180.86
1146.17
Plots
Units
Partially Operational
allotted
Operational
Andhra Pradesh
1
39.81
20.0
12
5
Assam
1
35.0
26.25
22
0
Haryana
1
40.0
30.0
217
212
Jammu & Kashmir
2
80.0
62.83
55
55
Karnataka
2
79.85
49.63
23
2
Maharashtra
2
80.0
60.0
118
19
Nagaland
1
38.71
19.36
0
0
Orissa
1
40.0
30.0
81
28
Rajasthan
2
47.34
28..29
209
99
West Bengal
1
40-0
30-0
0
0
14
520.71
356.36
737
420
To be Closed - Grant refunded
Bihar
1
Chhattisgarh
1
West Bengal
1
Proposed to be closed
Tamil Nadu
1
4
To be Closed - Partial grant released but not implemented
Jammu & Kashmir
1
34.6
25.95
Punjab
1
40.0
20.0
Uttara Pradesh
2
71.81
15.58
Proposed to be closed
West Bengal
1
40.0
7.5
5
186.41
69.03
No New Food Parks were approved during the 11th Plan period and first year of 12th
plan period under the old scheme. Based on the lessons learnt from these food parks, during
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the 11th plan period a new scheme of Mega food park was being introduced with a subsidy
component of up to `500 million per park. 30 Mega Food Parks were approved during the
period 2008-2013.
Providing for the economic performance of common facilities is also a major
constraint, and these facilities may not become economically self-sustaining. Experience
proves that this is difficult (if not impossible) unless the park facilities are heavily subsidized
by the government. Real costs cannot always be charged at the outset if the state wishes to
attract investors and establish new industries in the park.
Agro-industrial/food Park may have to provide various facilities at subsidized cost to
food processors, farmers, retailers and exporters, thus help in fast growth of food
processing industries. Government subsidies for capital investment or for maintaining such
facilities are justifiable in view of the benefits that accrue to various stake holders and
indirect revenue to the Government. The key benefits expected to these stake-holders are*:
Food Processors
Farmers
Developed plot in the Agro-food Park on
Sell produce to collection centres
lease with Power, Water and ETP
Benefit from higher pricing
facilities
Information regarding best farm practices
Cutting edge processing facilities in CPC
and agro-input supplies
Reap benefits of power cost, common
Improved produce quality
facilities, testing, government support
Retrieval of losses due to better post
Backward and forward linkage benefits
harvest practises, packaging and handling
Increased profitability
Can use primary processing facilities,
cold storages, ripening chambers and
warehouses
Retail Chains
MNC Exporters
Assured good quality produce
Good quality fresh/processed products
Standardised products
Assured product quality and traceability
Benefit of quality assurance facility
throughout the food chain
through testing labs
Benefit of quality assurance and
Transportation facilities including refer
certification through the testing lab
trucks and vans
Assured supply of products through
Can use common labelling and packing
contract
farming
and
contract
facility of the park
manufacturing
Satisfy customers through good product
*Note: As published by the Press Information Bureau, Government of India, Release id:
85271 dated 05.11.2013 justifying the subsidy granted to Food Parks.
The present status of implementation of these food parks is also slow as can be seen from the
table 6. The first Mega food park approved in 2008-09 is nearing completion and is
operational and 13 food [arks are in various stages of implementation.

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Table 6: Status of implementation of these Mega Food Parks (India) as on 01-04-2013

(Source: MFPI, Government of India)
Subsidy
Amount
spent on
Project Cost Sanctioned
Year of
Released
the Park
State
Sl.
Approval
` million
` million
` million
` million
No.
(% of 4)
(% of 3)
(% of 3)
1
2
3
4
5
6
Andhra Pradesh
Dec 2008
1170
500 (42.74)
450
1053
1
(90.00)
(90.00)
Uttarakhand
Dec 2008
951
500 (52.58)
300 (60)
657
2
(69.08)
Assam
Dec 2008
760
500 (65.79)
300 (60)
320
3
(42.11)
Jharkhand
Dec 2008
1140
500 (43.86
150 (30)
138
4
(12.11)
West Bengal
Dec 2008
1327
500 (37.68)
300 (60)
600
5
(45.21)
6
Tamil Nadu
Dec 2008
1335
500 (37.45)
50 (10)
108 (8.09)
Karnataka
Aug 2010
1443
500 (34.65)
150 (30)
314
7
(21.76)
Punjab
Aug 2010
1304
500 (38.34)
300 (60)
523
8
(40.11)
9
Bihar
April 2011
1540
500 (32.47)
50 (10)
32 (2.08)
Tripura
April 2011
875
500 (57.14)
208 (42)
221
10
(25.26)
Gujarat
April 2011
1411
500 (35.44)
50 (10)
279
11
(19.77)
12 Orissa
April 2011
802
500 (62.34)
50 (10)
31 (6.23)
Madhya Pradesh Oct 2011
1308
500 (38.23)
124 (25)
202
13
(15.44)
14 Maharashtra
Oct 2011
1246
500 (40.13)
0 (0)
57 (4.57)
15

Uttara Pradesh

Sept 2010

1687

16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Chhattisgarh
Pondicherry
Chhattisgarh
J&K
Haryana
Rajasthan
Andhra Pradesh
Bihar
Gujarat
HP
Maharashtra
Orissa
Sikkim
Uttarakhand
West Bengal

Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012
Sept 2012

1249
1499
1297
810
1471
1131
1191
1430
1083
976
1323
1171
804
1245
1139

In-principle approval has been accorded.

Extension granted to SPV till30/06/2013

In-principle approval has been accorded.

14

Impact of Agro Industrial Park on the Region:

The establishment of an agro-industrial park would bring a measure of security for the
supply of food in a region. Markets for a range of crops will improve where processing may
augment fresh food supplies, and where losses typical of most post-harvest systems may be
minimized. Thus the rises in efficiency from the use of land, agricultural inputs and postharvest systems that may follow. Industries become more cost-effective. The park may
become a focal point for development within a region, in the way in which further
investments may be attracted, the flow of information improved and wealth created and
shared.
Employment is improved, and more people are able to find work. [Food industries
account for 18 percent of the labour force in India, and provide economic security for
dependent families (perhaps >200 million people). These industries contribute 20 percent of
industrial GDP to the country]. This, despite low capital investment by industry at large. The
construction of a park helps to change attitudes, and brings greater security to both investors
and workers. Links to producers become stronger and rural communities throughout the
region benefit.
The benefits from promoting food processing industries through establishing
agro industrial parks may be summarized as follows:
Improving availability of food for domestic consumption and for exports by triggering
farming interest using better technology, reducing wastage, improved quality and
improved shelf life
Lower cost of food through waste reduction, reduction of distribution costs (because
of reduced bulk alone).
Non edible portion of the agriculture produce remain near the point of production and
can be utilized for other uses such as animal feeds, composting for use in agriculture,
power generation etc.
Generation of employment in the region
Bye product utilization possibilities
Economic development of the region through better pricing possibilities for farmers
and reduced wastage, increased employment opportunity, increased trade and
business opportunity for the local people.
The Opportunity provided by FAO and Other agencies in Thailand is gratefully
acknowledged. This text has been prepared mainly based on the experience of the Author in
Agro-Food Industrial Park Development in India mainly in the states of Karnataka, Kerala,
and UP during the period 1998-2010, A Text on Agro Industrial Parks prepared by the
Author and published by FAO, Hand book of Commodity Value chain prepared by the Author
and published by FAO, Value Chain Studies conducted by the author for various crops in
India and Product value chain Mapping (Cambodia) were also used in the preparation of this
text. Various reports prepared by the author as a consultant to Industrial Infrastructure
development agencies in India (Karnataka Industrial Areas Development Board, and Kerala
Industrial infrastructure Development Corporation) as well as those published by the
Ministry of Food Processing, Government of India, Press Information Beuro of Government
of India were referred while preparing this text and gratefully acknowledged.

15

Annexure-1

Agro Industrial Park Planning and Development Process

A. Part I: Studies on Policies, Resources and Costs
1. Study of the resources available in the region
a. Raw material base
b. Power/Water/Fuel resources
c. Manpower-Technical/Managers/Professional-Doctors/Engineers-Legal-FinanceOther University educated/Skilled Workers/Semi &Unskilled workers
d. Land and Construction material
e. Socio-Economic Cultures and related Infrastructure
f. Health infrastructure
g. Tourism Hospitality Infrastructure
h. Rail Road networks-Airports-Containers terminals-Sea ports.
i. Consultants/professionals

2. Study of the Prices and costs

a.
b.
c.
d.
e.
f.

Raw material costs

Cost of Power/fuel/water
Cost of construction materials
Manpower and Labour costs
Finance and financing costs
Other costs: Transportation-Accommodation-Hotel-Restaurants-Consultancy fees of
professionals-Insurance costs (General/Life/Health)-Living costs

3. Government Policies
a.
b.
c.
d.
e.
f.
g.
h.
i.

Industrial Policy
Agriculture Policy
Tourism Policy
Health Policy
Environmental Policy
Factory and Labour Laws
Building Laws
Transport Policy
Subsidies and Incentives available for Industries-Agriculture-Infrastructure
development

Part-II: Industrial Park Planning and Design

1. Identification of Potential Agro Industries
a. Resource based
b. Local demand based
c. Exportable products
2. Preparation of pre-investment reports/project profiles for identified industries
3. Identification of Common Facilities
a. Common facilities for identified industries:-Dry & Wet waste utilization and disposal,
Power and Water supply systems, Ware houses/tank terminals for fuel, Ware
houses for construction and maintenance raw materials, Ware houses for raw
material and product storage, Parking facility, Quality control/testing labs, R and D
infrastructure, Tele-communication and IT infrastructure, Exhibition and convention
center, Office complex for housing banks, government offices, security, hotel and
restaurant, conference rooms, others
b. Common facilities for resource development:- Post harvest treatment facilities, Pack
houses, Storage facility (Warehouses and cold storage)
16

4. Identification of land for locating the Park:

a.
b.
c.
d.
e.
f.
g.

Extent, Prices and suitability of land

Procedure and time frame for land acquisition
Conditions for land acquisition-rehabilitation of displaced persons (alternate land,
compensation, employment/business opportunity)
Location details of land advantages and disadvantages
Environmental issues (EIA/EMP)
Socio-economic benefits
Summary of comparison with alternate locations

5. Appointment of Consultants /Architects etc for the Construction of the park

a. Identify jobs and requirements of consultants
b. Short listing of consultants
c. Procedures to be followed for appointments and appointment
6. Preparation of a Detailed project Report for the implementation of the park
a. Survey of the land and preparation of the civil drawings for the Layout Plan of
the park
b. Estimation of costs for various components of the park with the help of
consultants/experts appointed for the purpose
c. Preparation of the project report
d. Tariff Studies for various services and
e. EIA EMP studies, Socio Economic Impact Studies and Plans.

Part III: Project Implementation

1. Mobilizing Finance:
a. Long term loans
b. Working Finance
c. Subsidies
d. Promoters
2. Approvals:
a. Government approvals
b. Environmental clearance
c. Approvals of Power/Water Suppliers
d. Financial Approvals (Loans/Promoters/Banks & FII)
3. Project Implementation:
a. Tendering civil works (Layout formation, EMP implementation, Buildings for
CFC, Ware houses, Cold Storages etc)contracts and award of contracts
b. Tendering Plant and Equipment for Common facilities-ETP/Post
harvest/Power and Water Supply/Waste disposal etc) and placing orders,
Erecting and commissioning of equipment.
c. Marketing the Park - Allotment Process
d. Formation of Management committees for common facilities, and fixation of
tariffs for various services.
e. Assistance to establish Individual Units in the Park
f. Project Implementation, Monitoring and Post Project Impact Evaluation
g. Marketing Assistance to Individual Units
h. Agricultural Extension Services
i. Rehabilitation of displaced persons and other CSR issues.
17