Study of working of small scale agro-base industries with special reference to Ahmednagar district, Maharashtra, India

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1 Study of working of small scale agro-base industries with special reference to Ahmednagar district, Maharashtra, India Malkar Vinod Ramchandra Associate Professor, Sanjivani Rural Education Societys s, College of Engineering Department of MBA, Kopargaon, District- Ahmednagar- Affiliated with University of Pune, Maharashtra, India, Abstract- Agro-base industries in rural areas of India create more employment opportunities in rural areas as well as it helps to get good prices to farmers for their agriculture produce, which reduces the farmers suicides and improves agriculture GDP. To establish and run economically viable small scale agro-base industries and to utilize available agriculture resources there was need to do research in this area. This paper on Study of working of small scale agro-base industries with special reference to Ahmednagar district, Maharashtra, India thrown light on working of small scale agro-base industries which includes average number of employees working, number of hours, average number of days in a year, qualification of entrepreneur, average age of entrepreneur and organization structure of small scale agro-base industries. Keywords Small scale agro-base industries, working, organisation structure, Entrepreneur, profit and relation of organisation structure. I. INTRODUCTION With a population of just over 1.2 billion, India is the world s largest democracy. In the past decade, the country has witnessed accelerated economic growth, emerged as a global player with the world s fourth largest economy in purchasing power parity terms, and made progress towards achieving most of the Millennium Development Goals. India s integration into the global economy has been accompanied by impressive economic growth that has brought significant economic and social benefits to the country. Nevertheless, disparities in income and human development are on the rise. Preliminary estimates suggest that in the combined all India poverty rate was 32% compared to 37% in Going forward, it will be essential for India to build a productive, competitive, and diversified agricultural sector and facilitate rural, entrepreneurship and employment. Encouraging policies that promote competition in agricultural marketing will ensure that farmers receive better prices. India s agriculture sector has an impressive long-term record of taking the country out of serious food shortages despite rapid population increase. The main source of long-run growth was technological augmentation of yields per unit of cropped area. This resulted in tripling of food grain yields, and food grain production increased from 51 million tonnes in to 217 million tonnes in India is the largest producer of milk in the world and second largest producer of food grains, sugar cane, fruits and vegetables in the world. But till in India the processing of agro-produce is very low, Fruits and Vegetables (2.2%), Poultry (6%), Milk (35%) as compared to developed countries (60 to 70%). In nearly three decades, the structure of rural employment has not changed much. According to the NSS figures, agriculture continues to employ 70% of our rural workforce, industry (14.4%), and services (14.8%) make up for the rest. However, in view of the decline in agriculture s contribution to GDP and the near constant proportion of workers dependent on it, there is need for rapid generation of employment. The real potential for employment generation, however, rests with the agro-based industries. In developing countries like India, agro-base industry is a very important arm of the manufacturing industry to build on the industrial capabilities. Properly developed agro-base industries in rural areas of India create more employment opportunities in rural areas as well as it helps to get good prices to farmers for their agriculture produce, which reduces the farmers suicides and improves agriculture GDP. To establish and run economically viable small scale agro-base industries and to utilize available agriculture resources there was need to do research in this area. This paper on Study of organization structure of small scale agro-base industries with special reference to Ahmednagar district will guide in this area. II. REVIEW OF LITERATURE Planning Commission of India (1966) had set for the following criteria for distinguishing the agro-industries. The Industries which satisfy the criteria are those i. Encourage greater input into agriculture. ii. Lead to better processing and conversion of agricultural commodities iii. Ensure high returns on proceeds goods 47

2 iv. Increase agricultural production. Obliviously planning commission has included under agroindustries not only those industries which are concerned with the processing of agricultural product but also such industries which are involved in the production of farm input and farm implements. Reserve bank of India(1969) observes the agencies supporting agriculture by way of designing and manufacturing of input generally term as agro-industrial are by nature somewhat different from those supported by agricultural products which are known as Agro-base Industries. According to reserve bank of India industries which mainly depend for their raw materials on Agricultural products including plantations, animals, husbandry products but excluding forest products are brought under agro-base industries. It has further classified agro-base industry into food excluding salts, beverages, tobacco, textiles products leather and leather products and rubber and rubber products industries. M. Ahmed (1969) have used the term agro-base industries instead of agro industries in the view that it is difficult to give precise definition of agro industries because in the ultimate analyze the whole economy depend on agriculture sector either directly or indirectly as agriculture is feeder to industries. Village and Small scale Industries Committee Report (1955) popularly known as Karve Committee Report, since a substantial number of employed and underemployed belongs to the village and small industries group, setting up of small scale and village industries will provide employment to them in occupations in which they have been traditionally trained and for which they posses equipments. The committee realizes the necessity of introducing better techniques in the village industry, so that they can keep pace with the progressively expanding economy and do not become unsuitable tomorrow. Baharul (2009) in his doctoral research says that small scale industrial sector faces a number of difficulties in marketing their products due to growing competition among themselves and in recent years due to the emergence of stiff competition from foreign goods in the era of liberalization. It is due to weak financial base of the small scale units they cannot afford to spent as heavily as the large units does on marketing their product. Owing to the limited resources and lack of experience small scale units cannot incur heavy selling cost on publicity, advertisement and other sales promotion measures. Moreover, market analysis is almost absent in the sector which leads to failure in marketing the products. Ahulwalia Montek S. (2011) in his article says that The shift of labour out of agriculture follows from the fact that productivity in the agriculture is relatively low and if agriculture is not expected to grow at more than 4% a natural movement to higher paid employment in nonagriculture sector. Agricultural development will itself give rise to new demands for non-agricultural services and generate employment in agriculture related sectors such as modernized marketing and Agro-processing activities. Mintzberg (1979) on organization structure of small scale industries says that one of the most elementary decisions a small firm owner or manager has to make is the design of the firm s organisation. As soon as a small firm hires one or more employees, some kind of organisational structure develops. The actual design of this organisational structure is a mix between intended, deliberate choices and unconscious, emergent developments. Who decides on what, who is responsible for what, and how do we coordinate these decisions and responsibilities effectively? Acknowledging an ongoing debate on the interrelationships between strategy, structure and performance, the outcome of the organisational design process is unmistakably an important determinant of the performance of firms. Theoretical support of the importance can be found almost anywhere. Engineers, economists and sociologists have written on organisational structure and design. 48 III. RESEARCH METHODOLOGY A. Objectives of study 1. To study working of Small Scale agro-base 2. To study Organization Structure of Small Scale Agrobase industries. B. Hypotheses 1. Organization structure of small scale agro-base industries and its Profits are co-related. C. Area of study The area of the study covers Ahmednagar district of Maharashtra state. Ahmednagar is the biggest district of Maharashtra in terms of area. The total geographical area of the district is lakh ha. The net cropped area is 12,56,500 ha, out of which an area of 3,30,000 ha. (26.27 %) is under canal (84,000 ha) and well irrigation. About 9,26,500 ha.( %) area is rain fed. The area under Kharif crops is 4,60,000 ha. (36.6 per cent) while 7,58,000 ha (60.32 per cent) area is under Rabi crops. A multiple cropping system is followed on 1,10,500 ha. area. D. Sample design The study has covered industries which mainly depend for their raw materials on agricultural products According to MSME act 2006, Govt. of India defined the small scale industries are the industries having investment in plant and machinery are above Rs. 25 lakhs and upto Rs. 5 crore. E. Universe The universe under the present study spread over Ahmednagar district in Maharashtra. It covers all agro-base industrial units having investment in plant and machinery is above Rs. 25 lakhs and upto Rs. 5 crore for units established after 2006, which are working at the time of survey and are registered with District Industries Centre. Large scale agro-base industries, Medium Scale Agro-base Industries and Micro industries were excluded from study. F. Sampling procedure 1. There are three major types of small scale agro-base industries in Ahmednagar district, that are Dairy based, Poultry based & Food based. 2. A list of total population of these type of industries were collected from District Industries Centre (DIC), Ahmednagar. G. Sample size 1. The total population of Dairy Industries in Ahmednagar district was 50 out of them 30 industries

3 (Lottery Method) 2. The total population of Poultry Industries in Ahmednagar district was 198 out of them 35 industries 3. The total population of Food Industries in Ahmednagar district was 177 out of them 35 industries H. Data collection Primary Data: Researcher adopted direct Personal Interview method by making well structured questionnaire, direct personal investigation and observation method to collect data. To supplement these researcher had discussions with managers of the units. These methods helped to collect reliable and accurate data from the respondents Secondary Data : The secondary data were collected through various research journals, Books, Government reports, News papers, Company reports, Ph.D thesis and Internet. I. Scope and limitation of the study 1. As the study is limited to only Ahmednagar district, it may happen some conclusion will not match in other region. 2. This study is limited only for small scale Agro-base industries. 3. As the researcher is going to collect information by taking interviews of the owner, it is also possible that some Entrepreneur may not give correct information. Therefore it will affect the conclusion. 4. Due to business competition and internal rivalry of the companies some officials may be reserved while giving the information IV. DATA ANALYSIS A structured questionnaire filled from 100 respondents and data entered in the SPSS and analysis done as per the objectives and hypotheses framed. TABLE NO. I AGE OF ENTREPRENEUR Sr. No. Age Group Frequency Percentage (%) Through the table, it is clear that the maximum entrepreneur are in the age group of years while the average age of entrepreneur found 46 years. TABLE NO. 1I EDUCATION OF ENTREPRENEUR Sr. No. Education Frequency Percentage 1 Post Graduate Graduate Diploma HSC SSC It was found that all entrepreneurs are literate and maximum are graduate. Through survey no entrepreneur found education below 10th standard. TABLE NO. 1II LEGAL STATUS Sr. No. Legal Status Frequency Percentage (%) 1 Proprietorship Partnership Pvt. Ltd Co-operative Through the survey it was found that majority of small scale agro-base industries are Proprietorship and Private limited status, while very few are Partnership and co-operative status TABLE NO. IV AVERAGE WORKING DAYS OF EMPLOYEES WORKING IN SMALL SCALE AGRO- BASE INDUSTRIES Sr. No Type Working Days 49 1 Dairy Poultry Food days With the above analysis, the employees in dairy based industries working throughout a year with no holiday for production or processing, while average working days for poultry industries found 300 and for food based it found 271 days because of some food industries working in seasons only. TABLE NO.V AVERAGE WORKING HOURS PER DAY EMPLOYEE WORKING IN SMALL SCALE AGRO- BASE INDUSTRIES Sr. No Type Working Hrs Per Day Working Hrs 1 Dairy Poultry Food 8.46 (Source : Survey) With above data, the employees in dairy based industries working more time as compared to poultry and Food based industries. The average working hours in dairy based industry found 13 Hrs, in poultry it is 09 Hrs and in food based 08 hrs. The average working hrs of employee found 10 hrs in small scale agro-base industries. TABLE NO. VI AVERAGE INVESTMENT IN PLANT & MACHINERY IN SMALL SCALE AGRO- BASE INDUSTRIES Sr. No Type Investment Rs Rs. 1 Dairy Poultry Food The average investment in small scale dairy based industries found highest as compared to poultry and food based industries i.e. Rs. 92 lakhs, while in poultry based industries it found rs.28 lakhs and in food based industries it found Rs. 35 lakhs. The average investment in plant & machinery in small scale agro- base industries found Rs. 50 lakhs. TABLE No. VII

4 AVERAGE EMPLOYEES WORKING IN SMALL SCALE AGRO-BASE INDUSTRIES Type Male Female Dairy Poultry Food Mean % of 49.3% 18.1% 44.3% Std N Mean % of 18.6% 34.3% 21.1% Std N Mean % of 32.1% 47.5% 34.6% Std N Mean % of 100.0% 100.0% 100.0% Std Above data analysis shows that working in the dairy based industry is 19, Poultry based 08 employees and in Food based 13 employees. The average employee working in small scale agro- based industries was found 13. Objective No. 2 : To study Organization Structure of Small Scale Agro-base industries. Through review of literature a researcher came to know that small scale industries uses functional type of organisation structure. The researcher extends further and added subtypes of functional organisation structure that were a) Single Lever Organisation Structure (SLOS) b) Double Lever Organisation Structure (DLOS) c) Triple Lever Organisation Structure (TLOS) d) Four Lever Organisation Structure (FLOS) The small organisation which only having production department that were termed as single lever, the organisation which posses production and marketing department were termed as double lever, the organisation having production, marketing and raw material supply chain department were termed as triple lever organisation structure and the organisation having four department named as four lever. The average profits of last three years and type of organisation structure was measured. TABLE No. VIII ORGANISATION STRUCTURE AND AVERAGE PROFITS OF LAST THREE YEARS IN RUPEES Sr. No. 50 Type of Structure Avg. Profits of last three years in Rs. 1 Single Lever Organisation Structure (SLOS) 2 Double Lever Organisation Structure (DLOS) 3 Triple Lever Organisation Structure (TLOS) 4 Four Lever Organisation Structure (FLOS) Interpretation: With the above data, It is clear that there is positive co-relation between organisation structure and profits of small scale agro-base industries. TABLE No. IX HYPOTHESES: ORGANIZATION STRUCTURE OF SMALL SCALE AGRO-BASE INDUSTRIES AND ITS PROFITS ARE CO-RELATED. Correlations OST PL_3yrs Kendall's OST Correlation ** tau_b Sig. ( PL_3yrs Correlation 0.458** Sig. ( Spearman's OST Correlation ** rho (Source Sig. (2- : Survey)..000 PL_3yrs Correlation 0.574** Sig. ( **. Correlation is significant at the 0.01 level (2-. The co-relation was measured through Kendalls co-relation method and Spearmans co-relation method at 0.01% level of significance and found significant, Kendall (0.458) and Spearman s (0.574). Hence Null hypotheses there is no relationship between Organization structure of small scale agro-base industries and its Profits is rejected and the alternative hypotheses, there is significant relationship between Organization structure of small scale agro-base industries and its Profits is accepted. V. FINDINGS After data analysis through SPSS-17, various results are generated in cross tables and the important results generated were summarized below 1. employees working in small scale agro-base industries were found 13 in numbers in which dairy 19, Poultry 8 and food 13 average employees working. 2. Percentage of Male workers in small scale industries found 84%, while female s are 16%

5 3. 78 % small scale entrepreneur not attended any training Program related to their business % small Scale agro-base industries not making charts of duties & responsibility of their employees % small Scale agro-base industries not using writing reporting System for their employees % small scale agri entrepreneur says that there is sufficient work for their employees % small scale agri entrepreneur says that there is relevant qualification for their employees % small scale agri entrepreneur says that they used absolute technology used by competitor % small scale agro-base industries utilizes their capacity fully, while 52% of industries uses their capacity satisfactory 10. The reasons of under utilization of capacity were found Less demand for product and Competitive markets condition. 11. The researcher observed that 81% industries having not any type of agreement to farmers. 12. The major tools of advertising were pamphlets, newspapers and wall painting. 39% small scale agro-base industries not uses any advertisement techniques. 13. Through review of literature and discussion with entrepreneurs, the food industries having high future potential % Small scale agro-base industries uses Two lever Organization structure, 30% industries uses Three lever Organization structure, 20 % industries uses Four lever Organization structure and 9 % industries uses One lever organization structure % Dairy industries uses four levers Organization Structure % Poultry industries uses Two lever Organization structure % Food industries uses Two lever Organization structure 18. There is positive correlation between organisation structure of small scale agro-base industries and their profits. VI. SUGGESTIONS 1. Small scale agro- base industries should use three lever organization structure, which includes First Lever- Purchase- Supply of raw material from Farm to Factory. In this there should be tie-up with farmers to supply of raw materials, Contracts with transporter for transportation of goods from farm to factory. Cold storage should be established for perishable items, whenever necessary. Second Lever- Production Processing of Agri-produce, Modern and hygienic technology should be used for production of finished goods. The product produced should be excellent quality as per the standards. As per the need the number of employees should be recruited and maintaining hierarchy the structure should be formed. Third Lever Marketing, The products that are manufactured should be communicated to the target customer. Accordingly marketing Organization should be established. 2. The small scale entrepreneur should attend various training program which is related to their business to update their skills and knowledge. The entrepreneur should take advantages of various training program organized by MSME, MCED, MITCON, EDII, IIM s, NABARD, ICAR etc. 3. The small scale entrepreneur should concentrate three important tools of communication of their product to their target customer, that are Advertising, Branding and Public relation. 4. There are some low priced innovative tools of advertising like social networking websites, Advertising, SMS advertising, that should be used according to the target customer. 5. Now the world is moving towards branded product, so small scale entrepreneur should concentrate to build their brand in the minds of target customers. THERE ARE GREAT POTENTIAL FOR FOOD PROCESSING INDUSTRIES IN INDIA. THE PROPER TRAINING SHOULD BE GIVEN TO THE FARMERS TO ESTABLISH THE PROCESSING UNIT IN THE VILLAGE AND AS PER THE NEED EASY PROCESS OF LICENSING AND FINANCE SHOULD BE ESTABLISHED. 51 REFERENCES [1] Ahulwalia Montek S., Prospects and policy challenges in the 12 fifth plan, Economical and Political Weekly Vol XLVI No.21 May P.N. 90. 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