Essay on the Agro-Based Industry in India

Essay on the Agro-Based Industry in India

These are those industries which derive their raw materials from the agricultural products. These industries have huge base in our country because agricultural activities contribute about 30 per cent to our national gross domestic products and about 65 per cent of labour force is employed in the agriculture.

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Textiles, sugar, vegetable oil and plantation industries derive their raw materials from agriculture. These are therefore called agro-based industries.

The Sugar Industry:

After the cotton textile industry, the sugar industry is the most important agro-based industry in India. It provides employment to about 0.5 million skilled and unskilled workers constituting about 7.5% of the rural population and about 45 million sugarcane farmers.

India ranks second in the world production of sugar despite the fact that it is the largest producer of sugarcane. There are two main reasons for this:

1. The sugarcane grown in India is of low quality with low sugar content.

2. More than half of the sugarcane is used to produce gur and khadsart.

India has emerged as the largest sugar producing country in the world with a 15 per cent share of the world’s sugar production. However, the share in international trade of sugar is only 0.5 per cent.

Development of the Sugar Industry:

India is the native of sugarcane and the art of preparing gur and khand owes to this country. The development of the industry on modern lines dates from 1903 when a sugar mill was started in Bihar. Subsequently, sugar mills were started in other parts of Bihar and Uttar Pradesh. In 1931, their number reached 31, of which 14 were in Uttar Pradesh, 12 in Bihar and only 5 in other states. After 1932 this industry made remarkable progress and the country became self-sufficient in sugar.

Production of sugar increased during the war. In 1950-51, 139 factories were in operation producing 11.34 lakh tonnes of sugar. Sugar production in India has been cyclic in nature due to good monsoon and increase in sugarcane area under cultivation sugar production from sugarcane during the seasons 2006-07 and 2007-08 increased substantially to 282 lakh tonns and 263 lakh tonns. However sugar production declined to about 147 lakh tons in 2008-09 sugar and then increased to about 188 lakh tannes 2009-10. There were 654 installed sugar features in the country son 2010.

India is the largest producer-of sugarcane in the world. Along with khandsari and gur, India also ranks first in the production of sugar. As sugar industry is based on sugarcane, which is heavy, weight losing and perishable, the mills are located close to the sugarcane producing areas.

Location of the Sugar Industry:

Sugarcane is a weight-losing crop; sugar produced from it ranges from 9 to 12 per cent of the weight of the cane. Cane is more difficult to transport than sugar. Further, its sucrose content begins to deteriorate after it has been cut from the field, and better recovery is dependent upon its being crushed within twenty-four hours of its harvesting. Besides, the price of sugarcane constitutes 52 per cent of the total cost of white sugar. Therefore, sugar factories are located within the cane producing regions of the country.

The cane producing belts are the great northern plains and peninsular India. The southern states enjoy more favourable climatic conditions for the cultivation of cane. Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh are major sugar producing states in the country. The first two together produce nearly two-thirds of the total sugar of the country.

The industry is concentrated in the states of Uttar Pradesh and Bihar which is considered the “sugar-belt” where more than 60% of the factories are located. There are many reasons for this.

1. The largest quantity of sugarcane is grown in the fertile northern plains with heavy rainfall.

2. Coal is the main source of power for the sugar factories which is easily available from the nearby coal mines in Bihar.

3. The Northern Plains being the most densely populated part of the country provides cheap labour.

4. Kanpur is a great distribution centre for northern India. This is because it is well connected to the different parts of the country by means of rail, road and river transport.

In recent years this industry has shown a tendency to migrate south since the sugarcane produced there has a higher sugar content. This is due to many reasons:

1. Geographical conditions are more suitable in the south. The soil is well drained and free from water-logging. Southern India is free from frost and has high temperatures ideal for sucrose development.

2. Fertilizers are more commonly used which results in higher sugar content since it is soil exhausting.

3. The cooperative movement has made greater headway in the south than in the north. The holdings are larger and well- planned. Scientific methods and modem machinery is used.

4. The factories are closer to the fields (within a 30 km radius) and so there is no loss of sugar content in transportation.

5. The “sugar lobby” in Maharashtra is responsible for huge capital investment and so there is a vested interest in getting the maximum returns.

Besides Uttar Pradesh and Bihar, the other sugar producing states are Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Punjab, Haryana and Rajasthan.

Sugar Industry in North India:

Uttar Pradesh is now second in the production of sugar. Its proportion in total production declined from 38.9 per cent in 1964-65 to 26.5 per cent in 2000-01. Sugar factories are concentrated in two belts-the Ganga-Yamuna doab and the Tarai region.

Major sugar producing centres in the Ganga-Yamuna doab are Saharanpur, Muzaffarnagar, Meerut, Ghaziabad, Baghpat, Muradabad and Bulandshahar districts; while Gorakhpur, Deoria, Basti, Gonda, Sitapur, Behraich, and Faizabad are important sugar producing districts in the Tarai region.

Sugar factories are located in Bihar, Punjab, Haryana and Madhya Pradesh and Gujarat. Bihar contributed about 12 per cent of total sugar production in 1964-65, which declined to 1.6 per cent in 2000-01. Saran, Champaran, Muzaffarpur, Siwan, Darbhanga and Gaya districts are important for sugarcane. However, relative significance of Punjab has declined, though Gurdaspur, Jalandhar, Sangarur, Patiala and Amritsar are major producers.

In Haryana, sugar factories are located in Karnal, Ambala, Rohtak, Hissar and Gurgaon districts. Sugar industry is comparatively new in Gujarat. Share of this state in total sugar production in the country increased from only 1.5 per cent in 1965-65 to 5.9 per cent in 2000- 01. There are 16 sugar mills located in the cane growing tract of Surat, Junagarh, Rajkot, Amreli, Valsagd and Bhavnagar districts.

Sugar Industry in South India:

Maharashtra has emerged as the leading sugar producer in the country. At the same time, Tamil Nadu, Karnataka and Andhra Pradesh have increased their share. They together produced 59.1 per cent of the total production in 2000-01. It was only 40.5 per cent In 1964-65. Maharashtra produces more than one-third of the total production of sugar in the country and thus, ranks first.

There are 119 sugar mills in the state in a narrow belt extending from Manmad in the north to Kolhapur in the
south. Most of these mills (87) are in the cooperative sector.

This state increased its share in total sugar production of the country from only 19.7 per cent in 1964-65 to nearly 37 per cent in 2000-01. Moreover, the recovery rate (11.6 per cent) of sugar from cane is higher and crushing period is longer (162 days). Kolhapur, Sangli, Ahmednagar, Solapur, Pune and Manmad are principal sugar producing districts in the state.

In Tamil Nadu, sugar factories are located in Coimbatore, Vellore, Tiruvanamalai, Villupuram and Tiruchirappalli districts. The state produces 8.3 per cent of total sugar production of the country. Contribution of Karnataka is 8.1 per cent; here sugar factories are located mainly in Belgaum, Bellary, Mandya, Shimoga, Bijapur and Chitradurgs districts. Contrary to these states, Andhra Pradesh lost its share from 9.5 per cent in 1964-65 to 5.7 per cent in 2000-01 in country’s sugar production.

The industry is distributed in the coastal regions, which possess suitable climatic conditions for sugarcane. East Godavari, West Godavari, Vishakhapatnam, Nizamabad, Krishna, Medak and Chittoor are sugar producing districts of the state.

By-Products of the Sugar Industry:

Important by-products are obtained during processing of sugar which are commercially very important.

1. Molasses:

It is the dark brown syrup that drains during the manufacture of sugar. It is used to manufacture industrial alcohol, fertilizers, rum and yeast.

2. Bagasse:

It is the crushed sugarcane after the juice has been extracted. It is used as organic fertilizer, cattle-feed, fuel for mills and as raw material in the manufacture of paper, fibre-board and synthetic fibres.

Vegetable Oil Industry:

Vegetable oil is an important item of Indian food as it is the major source of fat. Extracting oil from oil seeds is an age old village industry in India. India is the largest oilseeds and vegetable oil producing country in the world. It is also the biggest consumer of vegetable oil as it is the most popular cooking medium. The most common sources of oil are groundnut, mustard and rapeseed, sunflower seed, soyabean and coconut.

Vegetable oil industry of India can be divided into three broad groups depending upon the technology used.

(i) Ghani is the main technology for expelling oil in the villages. Different oil seeds are used in different areas. For example, groundnut is used in Gujarat, coconut in Kerala and mustard seed in Uttar Pradesh.

(ii) Factories using intermediate level of technology are located in towns. Oil seeds used are region specific.

(iii) Large scale sophisticated mills are located in big cities and are oriented towards bigger market. They also procure oil seeds from a much larger area.

The ordinary oil was replaced in a big way by hydrogenated oils giving semblance to ghee. Vanaspati is ‘hydrogenerated’ oil. The first vanaspati factory was established in 1930 which produced a meagre of 298 tonnes. The World War II and the levy of import duty on vanaspati gave a fillip to this industry and in 1951; there were 48 factories with a capacity of 3.3 lakh tonnes and a production of 105 thousand tonnes.

The major producing states are: Uttar Pradesh, Punjab, Haryana, Delhi, Madhya Pradesh, Maharashtra, Gujarat and West Bengal, which account for 70% of the total production. Gujarat leads all other States in vegetable oil, particularly the groundnut oil. The industry is widely spread owing to the universal nature of market, and availability of various kinds of oil seeds in different parts of the country.

Maharashtra has the largest number of Vanaspati producing units. Other important Vanaspati producing centres are—Kanpur, Amritsar, Ahmedabad, Bhavnagar, Ghaziabad, Modinagar, Hyderabad, Chennai, and Jaipur.

A Government stipulation since 1976, made the use of imported soyabean oil compulsory to the extent of 75% of the’ total oil quantity consumed by a factory. As part of liberalisation, the industry has been allowed to use expeller groundnut, sesame and mustard/rape seed oils up to a level of 30% since 1993. The public sector factories at Kozhikode, Delhi, Kanpur, Amritsar and Bhavnagar are among the largest units in the country. Together they have an installed capacity of over one lakh tonnes.

Crushing of major oil seeds, namely, groundnut, mustard and sesame is reserved for small scale oilseed grower’s co-operative section and state agro industries. In terms of the liberalised industrial policy of the Government, no licence is required for an activity relating to processing of vegetable oils, provided the proposed unit does not come under the locational policy angle.

Tea Industry:

India can offer to the world at competitive prices all varieties of tea—from the finest flavoury Darjeelings and Nilgiris and brisk Assams to a number of common varieties. Tea is an agro-based labour intensive industry. In India, it provides direct employment to over one-million persons. Through its forward and backward linkages, another 10 million people derive their livelihood from tea.

It is one of the largest employers of women among organised industries in India (women workforce is 50% of the total workforce). The industry continues to maintain its track record of growth. From a level of 560 million kg in 1981 to an all time record high of 870 million kg in 1998—the achievement has been exemplary.

Some Recent Trends:

i. A shadow of uncertainty has fallen on the tea industry due to successive years of price decline.

ii. Over the years, there has been a clear shift towards CTC teas. Orthodox manufacture came down from million kg (20 per cent of the total crop) in 1990 to 78 million kg in 1999 and now it is below 100 million kg.

This is against the position in the world market where orthodox tea forms 50%, CTC 36% and Green Tea 14%

iii. Larger availability of CTC has resulted to oversupply in the domestic market leading to lowering of prices and reduced availability for export and hence lower exports.

iv. Internal consumption of tea has grown from 319 million kg in 1981 to a staggering 697 million kg in 2003.

In the international arena, the industry faces major challenges. The sweeping changes in the erstwhile Soviet Union and major economic upheavels in Key West Asian markets have compelled India to look for fresh pastures and to respond more flexibly to the emerging trading conditions.

v. A remarkable feature of exports during 2002 was the sharp rise in shipments to Iraq which had become second largest (22%) destination of Indian tea after Russia (24%).

The depressed exports scenario can be attributed to:

1. Yielding space to Sri Lanka in the international market particularly Russia, where orthodox tea has again become popular.

2. Ban on tea imports by Iran in 2003 adversely affecting India’s Orthodox production and exports.

3. Large quantities of indifferent quality tea (CIF as low as Rs. 38.18 per kg), are being imported and re-exported severely affecting India’s quality image in international market.

4. Insignificant or no exports to large markets like Egypt, Libya and Pakistan. Egypt is a vast CTC market but Indian exports are severely affected because of COMESA tariff arrangements. Exports to Libya have come to zero after a dispute on quality with some Indian exporter, affecting 20 million kg orthodox market.

Coffee Industry:

Coffee is grown over a constricted area around the Nilgiris in Western Ghats because of its narrow range of agro-climatic conditions. The crop require hot-west climate and is very sensitive to frost. The plant cannot bear strong sun and as much it is grown in shade. Over 100 cms of well-distributed rain is a must as the plant cannot tolerate long spells of drought. Plenty of labour is needed for prunning, plucking, separating the seeds, washing-drying in the sun for about a week and other marketing operations.

Coffee is cultivated in about 3.49 lakh hectares in India mainly spread over 3 southern states, namely Karnataka (57.8%), Kerala (24.3%) and Tamil Nadu (8.8%). Arabica and Robusta are the two varieties grown comprising of 48% and 52% of the area respectively.

Over 80% of coffee produced in the country is exported. The annual domestic consumption is around 50-60 tonnes. In recent years, global coffee prices have fallen due to global oversupply thus adversely affecting all the coffee producing countries including India.