MANAGEMENT OF AGRO INDUSTRIAL PROJECTS

Specimen answer sheet of question bank. It’s only for private circulation
Not for publication (Kirtiraj).
Q.2 what are the Unique features of the Agro Industries and discuss each one of them in
detail. (5 Marks)

Ans: Agro-Industrial Projects are Unique because of their three characteristics:

1) Seasonality
2) Perishability
3) Variability
1. Seasonality:
• Because raw material for agro-industries is biological, its supply is seasonal, available at
the end of the crop or livestock reproduction cycle.
• Although raw material supply is usually available only during one or two brief periods
during the year, the demand for the finished product is relatively constant throughout the
year.
• Unlike the non agro-industrial manufacturer, the food processing factory must contend
with a supply and demand imbalance and problems of inventory management,
production scheduling, and coordination among the production, processing and
marketing segments of the farm to consumer chain.
• Not all agro-industries share these characteristics equally; for example, timber, unlike
tomatoes, does not have a marked, seasonal production pattern, nor is it very perishable.
2. Perishability:
• Deployment of post-harvest management techniques is the only way to ensure that
farmers get a remunerative price for their produce.
• There is a need for private investment in cold storage chains for reducing the amount of
argil-products that is wasted owing to lack of adequate storage and processing facilities.
• Growers are selling commodities very cheaply at due to lack of cold storage facilities.
3. Variability:
• The final distinctive characteristic of agro-industries is the variability in the quantity and
quality of raw materials.
• Quantity is uncertain because of weather changes or damage to crops or livestock from
disease/pest.
• Quality varies because standardization of raw materials remains elusive, even though
there have been advances in animal and plant genetics.

Q.3 what is a Project? What are the Common Features of a Bankable Project in a Agro
Processing Project? (5 Marks)
Ans:
Project: A project is an investment activity in the economy, and its development, wherein
monetary resources will be spent to create capital assets, to gain benefits over an extended period
of time.
Thus, it is a specific activity, with a specific starting point and ending point, intended to
accomplish specific objectives within a given time frame.
Common Features of a Bankable Project:
Nevertheless, there are certain common features as to what are the broad outlines for preparing a
bankable project.

1. Introduction
2. Location
3. Objective
4. The Entrepreneur
5. Project/Scheme Details
6. Phasing
7. Project Cost
8. Margin/Subsidy
9. Bank Loan
10. Project Benefit
11. Economics
12. Financing Bank
13. Rate of Interest
14. Marketing
15. Repayment of Bank Loan.

Q.4 enlists the factors for growth of Food Processing Industry and discusses them in detail.
(5 Marks).
Ans:
• Agricultural Processing is of growing importance in the economies of developing
countries.
• With rising incomes & growing urbanization in developing countries, the demand for
processed foods is increasing rapidly.

There are two types of factors

1. Demographic
2. Health

1. Demographic:
 Various factors resulting in Importance:
1) Growing Urbanization
2) Growth in Income
3) Growth of Nuclear Families
4) Growth in Dual Income families
5) Growth in Working Women
6) Younger Indian Population (Av. Age 25 yrs.)
7) Changing Lifestyles
8) Changing Attitudes
9) Changing Tastes
10) Shift to Westernized habits of food
11) Health Consciousness.

2. Health:
1) Consumers worldwide are getting more and more health conscious, & are turning
towards healthy food.
 2) There has been a considerable shift, from high fat food to low fat and high protein
vegetables and fruits, which is possible with processed foods.
3) With growing food related health scares, like mad cow disease, bird flu, etc. there has
been compulsive push out of the fresh meat eating habits.
4) People are either shifting to processed meat or processed fruits and vegetables.
5) It is not only more nutritious but also more safe & healthy.

Q.2 Give the scope and potential of the Agro Processing Industry in India. (5 Marks)
Ans:

1. Market Size
• India is a largely untapped domestic market of over one billion consumers of whom 300
million consume processed and packaged foods.
• While an additional 200 million are expected to shift to processed food consumption by
2010.
2. Production
• India has a vast potential of growing agricultural produce, processing and exporting it.
• Second Largest Country with Arable land after USA.
• The country has 1/10th of the world's arable land at around 160 million hectares, which is
higher than China.
• The country produces over 700 million tonnes of agricultural, horticultural and dairy
produce annually, thus making it one of the world's largest food producers.
• This includes food grains, oilseeds, fruits, vegetables, sugarcane, milk, eggs, meat, fish,
tea, coffee, fiber crops, floricultural produce, forest produce and so on
• India currently produces about 50 million tonnes of fruit (about 10% of the world's
production) and
• About 90 million tonnes of vegetables (14% of the world's production).
3. Exports
• Despite being the world’s third largest food producer and the largest producer of fruits
and vegetables ---
• India’s share in exports is miniscule.
• Only about 1.5%
• It is because of inappropriate product quality and insufficient infrastructure to produce
that quality.
• Though India is one of the largest producer of food, very little is processed.
• The major markets for processed food includes EU and USA.
• The quality specifications in these countries is very high, if we can match it, we will have
a huge potential to export in these countries.
• At present, India's share of global trade in the value added processed food sector is less
than .03%.
• Which is very small considering that globally the sector is estimated at a whopping US $
3.2 trillion.
• This clearly defines the scope for export led growth for the Indian food processing sector.
• India, with its easy availability of raw materials and low cost of production is
strategically poised to capitalize on this market.
4. Rise in FDI
• Seeing the potential, Foreign Investment in this sector is growing.
• According to official data, the Indian food processing sector has received about $15
billion of foreign direct investment (FDI) in the last five years.
 5. Low Processing
• According to a recent report, domestic meat production is estimated at one lakh million
tonne,
• While fish production is projected at 72.5 lakh tonne.
• But, if the processing levels of these are taken into consideration, they have been stagnant
between 2-4 per cent.
• Similarly only 2-3% of Fruits & vegetables are processed. More processing is required.
• Indian mangoes managed to get access to the US market in the year 2007 after the then
US President; George Bush had announced the opening of the US market.
• A dose of gamma radiation which helps in resolving the phytosanitary risks mainly the
fruit fly, facilitated the import.
• Kay Bee Exports has had more than 70% market share in USA this year.
6. Big Processing:
• There is opportunity for growth.
• The processed food sector, which presently is a muscular dwarf has capacity &
capability to do for rural India what IT & Computers have done for the urban
India.
7. Future:
• It is expected that in future,
bulk investments and
modern food processing technologies
• are going to turn the fortune for Indian food processing industry.

Q.4 Fill in the Blanks: (5 Marks)

i) An average Indian uses up 52 % of his income for food consumption.
ii) Only 3% of poultry meat in India is consumed in the processed form.
iii) The per capita consumption of biscuits in India is 2.1kg.
iv) India is home to more than 10% of global fish biodiversity.
v) Cadbury company leads the chocolate market in India with a share of 72 %

Q.5 Fill in the Blanks: (5 Marks)

i) The processed food industry in India ranks fifth in size.
ii) In the biscuit industry in India Britannia company is the market leader in value
terms; whereas, Parale has higher share in terms of volume.
iii) Which country ranks first in milk production in the world? India.
iv) In India about 70 % of the chocolate consumption takes place in the urban
markets.
v) The full name of the abbreviation APEDA is Agriculture & Processed Food
Product Export Development Agency.
Q1. GIVE AN OVERVIEW OF THE AGRO PROCESSING INDUSTRY IN INDIA,
DISCUSS ANY TWO SECTORS IN DETAIL?
An overview of the Agro Processing Industry in India…..
Highlights:
Agro industry has great scope because,
• The ability to preserve the food has enabled the producer to make its product
available to the consumers sitting in the other corner of the world, even out of the
season.
• There are various innovations released in Processing industry, also processed food
become affordable and easily available around the world.
• agro-industry offers a means of adding value to a raw material through manufacture,
like cotton, wood & rubber.

Examples of Agro Processing:

• Cleaning, Grading of Fruits, Vegetables

• Polishing of Rice,

• Canning of Vegetables,

• Processing of Fruits & Vegetables for Pulps, Jams, Squashes.

The Indian Food Sector : Introduction

• India is one of the major food producers in the world

• The food sector contributes to about 18 % of India’s GDP

• In terms of world ranking India stands :

o 1st in the production of Cereals, Milk & Livestock population

o 2nd in producing Fruits & Vegetables

o Ranks amongst the top 5 in producing Rice, Wheat, Groundnut, Tea, Coffee,
Tobacco, Spices, Sugar & Oilseeds

• Total market for food products:

o Rs. 4, 00,000 crores (US $ 100 billion)

• Of this, processed food:

o Rs. 1,50,000 crores (US $ 37.5 billion)

• Total market for food products (US):

o Rs. 22, 00,000 crores (US $ 550 billion)

 sectors in detail:
1. Poultry Meat : Market Size

• The poultry meat processing industry is still in its nascent stage.

• Around 97 % of poultry meat in India is consumed in the fresh form.

• Only 3 % or about 23,000 tonnes is processed at present.

• Western Hatcheries (part of the Venkateswara Group) were the first to set up a poultry
processing unit in India (1986).

• Top 10 major players contribute for 95 % of total processed poultry meat market.

• Annual growth rate of poultry production is higher than any other agriculture commodity
about

• 10 % for eggs and

• 15 % for broilers.

• Annual egg production is reported to be 47,000 million eggs, which ranks fifth largest in
the world.

• Annual broiler production has reached 2.2 million tonnes and is ranked 18th in the
World.

• Large commercial poultry farms are concentrated in 5 to 6 states in the country viz.
Andhra Pradesh, Maharashtra, Tamilnadu, Haryana, Punjab and Delhi.

2. Potato Wafers (Crisps) : Market Size

• The market has a few national brands, a large number of regional brands and a vast
unbranded segment.

• The market for potato wafer is estimated at around Rs. 26 Bn.

• Of this, branded potato wafer (organized sector) contributes to around Rs. 7.5 Bn.

• Frito Lays (subsidiary of Pepsi Foods) is the market leader in the organised potato wafers
market.

• In the last 4 - 5 years the market for branded wafers has been growing at 12 - 15 %.
• While export market is estimated at around Rs. 14 Mn., import is almost nil.