CONSTRAINTS FACED BY SAMPLE AGRO BASED FOOD INDUSTRY RESPONDENTS IN THENI DISTRICT A. Sagaya Nambikai Mary 1 and S. Maria John 2

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1 CONSTRAINTS FACED BY SAMPLE AGRO BASED FOOD INDUSTRY RESPONDENTS IN THENI DISTRICT A. Sagaya Nambikai Mary 1 and S. Maria John 2 Affiliations 1. Research Scholar, Department of Commerce, Mother Teresa Women s University, Kodaikanal,Tamil Nadu, India. 2. Principal, Annai Velankanni College, Tholayavattam, Tamil Nadu, India. ABSTRACT The Agro-based food industry is primarily based on the utilization of locally available rawmaterial and skill with little capital outlay. India has been a land of villages and agriculture is going to remain for years to come, the mainstay of its population. Therefore, the agro-based food industries have the following features. These industries are conveniently taken up by the people in the rural areas without any encroachment on their main occupation. They are simple so that they could be taken up by them with their own labour and that of the labour of their families. As far as possible, these involve small capital, and this should be available from the financial institutions available locally. They are based on the regional Introduction Many industries bring income to the nation. They are agriculture related sector industry related sector and service oriented sectors. But the Agro based industries play a dominant role in developing the country to a large extent for India is basically an agriculture dominant country. Majority people not only eke out their income from agricultural operations, but also work as labourers in various capacities. Agro based industries have a large classification. But agro based food industries are very easy to start, establish and expand. They get even selfmotivated in the context that they live in an agricultural situation. facilities and comparative advantages of particular district in regard to the supply of raw-materials, availability of nearby market and the facilities of power. These industries can be easily and conveniently developed in different parts of the country. There is diverse nature of markets ranging from local and regional to national and international. The Agro- based Food Industries functioning in India in general and in Tamil Nadu in particular face different problems at different situations. They are categorized as production related, management related and pre-marketing related problems. Keywords Agro - based Food Industries, Production, Management and Pre Marketing. The Agro-based food industry is primarily based on the utilization of locally available rawmaterial and skill with little capital outlay. India has been a land of villages and agriculture is going to remain for years to come, the mainstay of its population. Therefore, the agro-based food industries have the following features. These industries are conveniently taken up by the people in the rural areas without any encroachment on their main occupation. They are simple so that they could be taken up by them with their own labour and that of the labour of their families. As far as possible, these involve small capital, and this should be available from the financial institutions available locally. They are based on the regional facilities and comparative advantages of particular district in regard to the supply of raw-materials, 1

2 availability of nearby market and the facilities of power. These industries can be easily and conveniently developed in different parts of the country. There is diverse nature of markets ranging from local and regional to national and international. Luh B.S and York G.K in their book entitled Commercial Vegetable Processing have stated that modern food processing technology has greatly expanded the farm produce markets both at home and road. The increased need for processed foods has resulted from increased standard of living, desire for a more diversified diet year round, expanding urbanization and an increase in population. 1 Lakshmi A. in her study entitled "Indian Agriculture- Agreement on Agriculture" has some issues emphasized most of the developing countries have a persistent shortage of foreign exchange. In this context, it may be wiser for these countries to have as much domestic production of necessary food items as their land resources permit. It is desirable, even if the domestic production is costly compared to the import of the food article. 2 Sidhu and Kamal Ratta, in their study entitled Development Experiences of Indian Agriculture:. An appraisal of Post Reform Period, have stated that agricultural developed states like Punjab, Haryana and Western Utterpradesh are facing the problem of stagnation in agro food production and productivity. 3 Ramachandran. R. in his study entitled Indian s Position in Global and Regional Food Production has stated that the agricultural sector has its influence on industrial development which not only helps earning of foreign exchange, but also in satisfying the basic needs of the population. Therefore, agriculture could assist in transforming a traditional low income economy to a modern high income one. 4 Anjaiah. J, in his study entitled Inter- Regional and Inter- State Disparities in cultivation, production and productivity in food processing agricultural commodities in Andra Pradesh has described that it is a common knowledge that lack of sufficient quantity of agricultural material, uncertainities in the economy on account of dependence on monsoon are the major bottlenecks for agro based units. 5 Nageswara Rao M and Srinivas Rao S. in their article Direction of Trade in Indian Agricultural Commodity Exports have stated that the share of agricultural commodities in the total value of trade is dwindling very fast. Indian exporters are required to improve their processing and packaging facilities to meet the international quality standards. 6 Maheshkumar S. in his study entitled Food Industry in India has stated that the food processing industry is still nascent as India has an abundant supply of food; the food processing has been declared a priority sector with various government incentives. 7 Ammannya K.K. in his study entitled Union Budget Primary to Agriculture and Rural Development has quoted that increased funds is made available on development of food processing industries by providing the state of the art infrastructure. In addition to 10 mega food parks already being set up, the government has decided to set up 5 more such parks. The government has also proposed a major reduction in indirect taxes for agricultural and food processing industries. 8 The Agro- based Food Industries functioning in India in general and in Tamil Nadu in particular face different problems at different situations. They are categorized as production related, management related and pre-marketing related problems. Methodology The objective of the study is to examine the problems faced by the respondents to select the agro based food industries. Theni district was 2

3 selected as it is agriculture based district. This study is an empirical research, based on the survey method. First-hand data required for the study were collected from respondents directly by the researcher herself. The data relating to the customers were collected with the help of an Interview Schedule. Secondary data have been collected from the published and unpublished records of the offices of the Department of Agriculture, the NABARD, Government of India and publications, Action Plan of the DIC, Journals, Bulletins, Magazines and Reports of the Assistant Director of Statistics, Theni. An interview schedule was prepared by the researcher for collecting the necessary data. Before preparing the schedule, the researcher made a comprehensive review of the literature directly and indirectly connected with the topic of the study. A field survey has been conducted covering 327 sample agro food industrial units of the district. The Proportionate Random Sampling method has been used. Three categories of agro food industries namely Rice and flour mills, Vegetable and fruits processing units and bread making and confectionaries are prominent in the district. The various problems encountered by the selected respondents of the Agro- based Food Industries were analyzed with the help of Garrett s Ranking Technique. This technique was suggested by Garrett. TABLE 1 PRODUCTION RELATED PROBLEMS S. No Cause Mean Score Rank Power Supply 1 Volatility in Supply I 2 Delay in Connection II 3 High Charge on Power III 4 Shortage of Power IV 5 Uncertainty in Supply V Raw Material 1 Variation in Quality I 2 Inadequate and Irregular Supply II 3 Difficulty in Transport III 4 Non-Availability IV 5 High Cost V Machinery 1 Maintenance Cost is Heavy I 2 Out Modeled II 3 Repair Cost is Higher III 4 Technology Update is not followed IV 5 High Capital Expenditure V Source: Computed data Production Related Problems cost of production. The various causes of Production means conversion of raw materials into finished products. Many factors are responsible for this production. When these factors get affected by internal or external causes, production also gets affected. It will result in high production related problems are power supply, raw materials and machinery. Power Supply In olden days machines were operated by hand or leg. Now power is used in operation. A 3

4 power supply is a device that supplies electric power to an electrical load. The term is most commonly applied to electric power converters that convert one form of electrical energy to another, though it may also refer to devices that convert another form of energy (mechanical, chemical, solar) to electrical energy. A regulated power supply is one that controls the output voltage or current to a specific value; the controlled value is held nearly constant despite variations in either load current or the voltage supplied by the power supply s energy source. The respondents face problems of this nature too. Raw Material Generally raw materials are used to denote material in an unprocessed or minimally processed state. They are raw latex, coal, iron ore, logs, crude oil, air or seawater. The use of raw material by non-human species includes twigs and found objects as used by birds to make nests. Machinery Man, material and machines are needed for producing a product. A machine is a tool containing one or more parts that uses energy to perform an intended action. Machines are usually powered by mechanical, chemical, thermal or electrical means and are often motorized. Historically, a power tool also required moving parts to classify as a machine. However, the advent of Electronics Technology has led to the development of power tools without moving parts that are considered machines. A simple machine is a device that simply transforms the direction or magnitude of a force, but a large number of more complex machines exist. Examples include vehicles, electronic systems, molecular machines, computers, television and radio. In order to high light the problems associated with power supply data were collected and analyzed with the help of Garrets Ranking Technique and the results are presented in Table 1. It is observed from Table 1 that among all power supply related problems faced by the respondents in the study area, the cause Volatility in supply which is related with power supply has ranked first with the highest mean score of for variation or fluctuation in supply of power is common everywhere. It is followed by the cause, Delay in connection which has ranked second with a mean score of for connections are not granted without delay. There is high rate of charge in power and shortage too. Hence causes High charge on power and Shortage of power have ranked third and fourth with and as mean scores and as there is uncertainty in Supply of power it has been ranked the last among the various causes of power supply related problem with a least mean score of It has also been observed from the above Table that among all raw material related problems faced by the respondents in the study area, the cause Variation in quality which is related with raw material has ranked first with the highest mean score of for quality is not constant every time on every lot in purchase. It is followed by the cause, Inadequate and irregular supply which has ranked second with a mean score of for there is inadequate and irregular supply of raw materials as some are seasonal in nature. Sometimes there is non supply of raw material and very offer it is the factor that transport too causes some constraints. Hence causes Difficulty in Transport and Nonavailability have ranked third and fourth with and as mean scores and as there is the cost constraint it has been ranked the last among the various causes of raw material related problem with a least mean score of It is also revealed from the Table that among all machinery related problems faced by the 4

5 respondents in the study area, the cause Maintenance cost is heavy which is related with machinery has ranked first with the highest mean score of for it costs heavy in maintaining the machines whose costs runs to lakhs. It is followed by the cause, Out modeled which has ranked second with a mean score of for fashion technology, taste, preference and the like changes very often. The cost of repair depends in the usage of the machines for they are used for a very long TABLE 2 Managerial Related Problems time without rest and small business men are not able to update technology. Hence causes Repair cost is higher and Technology update is not followed have ranked third and fourth with and as mean scores and as there is heavy expenditure which is termed as capital expenditure which occurs once. It has been ranked the last among the various causes of machinery related problem with a least mean score of Sl.No Cause Mean Score Rank Human Resource 1 Non Availability I 2 Recruitment in Capacity II 3 Lack of Training to Staff III 4 Wages are not Proper IV 5 Wage Disparity V Administration 1 Less Experience in Control I 2 Poor Planning II 3 Lack of Management Techniques III 4 Lack of Co-Ordination IV 5 Less Constant and Continuous Care V Labour 1 No right Person in Right Job I 2 Absenteeism II 3 Technological Change is un Updated III 4 Trade Union Involvement IV 5 Strike for High Wages V Source: Computed data Managerial Related Problems Management is concerned with lot of elements. They include PODSCORB, which is explained as enterprise. Among the three managements, men is very important and abundant supply of human resource has become scarce now-a-days. Planning, Organizing, Directing, Staffing, In order to high light the problems Coordination and Control, Recruitment, Budgeting and the like. Such elements are consolidated in the form of human resources, administration and associated with management data were collected and analysed with the help of Garrets Ranking Technique and the results are presented in Table 2. labour oriented problems. These causes are Administration enlightened in the following lines. Administration is otherwise called Human Resource Management. Management in business and Added with Men, Machines and Material organizations is the function that coordinates the many other matters are responsible for efforts of people to accomplish goals and management of products and the business objectives using available resources efficiently and 5

6 effectively. Management comprises planning, organizing, staffing, leading or directing and controlling an organization or initiative to accomplish a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources and natural resources. Labour Labour are the backbone in production. Labour may refer to employment of any kind, manual labour, physical work done by people and wage labour, delivery of services by person for payment. There are different types of labourers. Additional labour and employment topics are labour economics, the functioning and dynamics of the markets for labour, child labour, and the employment of children under an age determined by law or custom. Debt bondage is a system of un free labour where a person must work to pay off a debt, Labour Day, a national holiday in many countries, labour movement, the development of a collective organization of working people, labour relations, the study of the relationship between management and workers, Trade union, an association of wage-earners meant to maintain or improve conditions of employment, Labour/Le Travail, an academic journal focusing on the Canadian labour movement, Un free labour, slavery or penal labour, labour force of a country (or other geographic entity), the people actively employed or people actively seeking employment and workforce, the labour pool, the people working in a company, industry, nation or other group. It is observed from Table 2 that among all human resource related problems faced by the respondents in the study area, the cause Non Availability which is related with human resource has ranked first with the highest mean score of for there is no availability of human resources many a time. It is followed by the cause, Recruitment in capacity which has ranked second with a mean score of for there is problem in recruitment capacity as there is difference in potent abilities. There is lack of experience in among the employees. Imparting training is another problematic feature. Hence causes Lack of Training to staff and Wages are not proper have ranked third and fourth with and as mean scores and as there is the wages constraint it has been ranked the last among the various causes of human resources related problem with a least mean score of It is inferred from the Table 2 that among all administration related problems faced by the respondents in the study area, the cause Less experience in control which is related with administration has ranked first with the highest mean score of for many have not acquired full experience and controlling capacity of business. It is followed by the cause; Poor planning which has ranked second with a mean score of for the business is agro based there is the problem of poor and improper planning. Many latest techniques must be followed in every business. But here there is lack of managerial techniques. Hence causes Lack of management techniques and Lack of co-ordination have ranked third and fourth with and as mean scores and as there is Less constant and continuous care it has been ranked the last among the various causes of administration related problem with a least mean score of It has also been observed from the Table 2 that among all labour oriented related problems faced by the respondents in the study area, the cause No right person in right job which is related with labour oriented has ranked first with the highest mean score of for very often fixing right persons at the right time at the right job is difficult in this type of business. It is followed by 6

7 the cause, Absenteeism which has ranked second with a mean score of for when the demand of the labourers are not filled up, they will not come to work according to the terms and conditions fixed by the concern. Techniques need be updated according to the requirements of the customers. Technological change is un updated and Trade union involvement have ranked third and fourth with and as mean scores and as there is unnecessary involvement of trade unions it has been ranked the last among the various causes of labour oriented related problem with a least mean This is another problems. Hence causes score of TABLE 3 PRE MARKETING PROBLEMS S.No Cause Mean Score Rank Infrastructure 1 Seasonality in Markets I 2 Inadequate Infrastructure II 3 Unsuitable Location III 4 High Market Fees IV 5 Space Insufficiency V Sales Promotion 1 Advertisement Cost is High I 2 Lack of Assistance and Subsidy II 3 More Salesman Remuneration III 4 Inappropriate Advertisement IV 5 Competition in Selling V Terms of Selling and Pricing 1 Heavy Middle Man Charges I 2 Delay in Getting Payment II 3 Price Variation III 4 Long Credit Period IV 5 High Price Due to Many Factors V Source: Computed data Pre Marketing Problems structural elements that provide framework Before goods are produced, there is a necessity of analyzing the causes of pre marketing problems. So proper planning is needed regarding infrastructure, sales promotion techniques to be followed and the terms of selling and pricing of goods made. The various causes of pre marketing problems are explained in the following lines. Infrastructure One among the basic requirements is infrastructure. It is the good organization is the basic physical and organizational structure needed supporting an entire structure of development. It is an important term for judging a country or region s development. In general the term typically refers to the technical structures that support a society, such as roads, bridges, water supply, sewers, electrical grids, telecommunications and so forth and can be defined as the physical components of interrelated systems providing commodities and services essential to enable, sustain or enhance societal living conditions. for the operation of a society or enterprise or When it is viewed functionally, reproductive system, or the services and facilities necessary for an economy to function. It can be generally defined as the set of interconnected infrastructure facilitates the production of goods and services and also the distribution of finished products to markets as well as basic social services 7

8 such as schools and hospitals for example roads enable the transport of raw materials to a factory. In military parlance, the term refers to the buildings and permanent installations necessary for the support, redeployment and operation of military forces. Sales Promotion Many techniques are used in promoting sales. A sale is the act of selling a product or service in return for money or other compensation. Signaling completion of the prospective stage, it is the beginning of an engagement between customer and vendor or the extension of that engagement. The seller or sales person-the provider of the goods or services completes a sale in response to an acquisition or to an appropriation or to a request. There follows the passing of title (property or ownership) in the item, and the application and due settlement of a price, the obligation for which arises due to the seller s requirement to pass ownership. Ideally, a seller agrees upon a price at which he willingly parts with ownership of or any claim upon the item. The purchaser, though a party to the sale does not execute the sale, only the seller does that. To be precise the sale completes prior to the payment and gives rise to the obligation of payment. If the seller completes the first two above stages (consent and passing ownership) of the sale prior to settlement of the price, the sale remains valid and gives rise to an obligation to pay. Terms of Selling and Pricing Sales are the impact of production goods once produced means they must be sold at any cost. There are many terms of sales. The very purposes of providing those terms are beneficial to both the buyer and the seller. They include FOB, CC, and DC. Pricing assumes a significant role in a competitive economy. A good price policy is of great importance to the producers, wholesalers, retailers and the consumers. Marketers try to achieve their long-run pricing objectives through both price policies and price strategies. If the prices are high, few buyers purchase and if the prices are low many buyers purchase. Thus pricing is a critical situation. Therefore, a sound pricing policy must be adopted to have maximum sales revenue. The price is greatly affected or influenced for future production and marketing. In order to high light the problems associated with infrastructure data were collected and analysed with the help of Garrets Ranking Technique and the results are presented in Table 3. It is observed from Table 3 that among all infrastructure related problems faced by the respondents in the study area, the cause Seasonality in markets which is related with infrastructure has ranked first with the highest mean score of for many of the agro based food products are found to be seasonal. It is followed by the cause, Inadequate infrastructure which has ranked second with a mean score of for there is improper use of infrastructure which is most essential in the total running of the business. Very often selection of the site for the industry in also an important cause for infrastructure related problem. Hence causes Unsuitable location and High market fees have ranked third and fourth with and as mean scores. As there is Space insufficiency in order to market the goods it has been ranked the last among the various causes of infrastructure related problem with a least mean score of The Table shows that among all sales promotion related problems faced by the respondents in the study area, the cause Advertisement cost is high which is related with sales promotion has ranked first with the highest mean score of for without advertisement goods cannot be sold rightly. If not it will result in 8

9 heavy loss. It is followed by the cause; Lack of Assistance and subsidy which has ranked second with a mean score of for sometimes government may not release the subsidy or any assistant timely. Payment of remuneration cannot be stopped or prevented which increases the cost of sales. Hence causes More salesman remuneration and Inappropriate advertisement have ranked third and fourth with and as mean scores. There is hectic competition in selling the products it has been ranked the last among the various causes of sales promotion related problem with a least mean score of It has also been observed from the Table that among all terms of selling and pricing related problems faced by the respondents in the study area, the cause Heavy middle man charges which is related with terms of selling and pricing has ranked first with the highest mean score of for no product can be sold without the interference of middlemen. When it is there it results in additional cost of productions. It is followed by the cause, Delay in getting payment which has ranked second with a mean score of or without selling at least some position of the goods produced on credit, we cannot achieve the exported sales and consequently profit. Frequently price of these goods also varies depending in many factors. Hence it causes Price variation and Long credit period have ranked third and fourth with and as mean scores and as the credit is granted for a very long period. High price due to many reasons has been ranked the last among the various causes of terms of selling and pricing related problem with a least mean score of Summary The main part of analysis of this study, namely the constraints faced by the Agro Based Food Industries was analysed with the help of data collected through an Interview Schedule. The various problems identified in this study are Production Related Problems, Management Related Problems and Pre-Marketing Related Problems. The various suggestions in this regard are that the government must take earnest steps to provide a considerable subsidy on power supply and machinery. Good quality raw materials should be used in production wage disparity may be overcome by giving proper training to the staff at various levels. When more number of sales promotion techniques are implemented, there will be improve in sales, followed by profit and expansion when the above mentioned measures are taken into action the level of the Agro-based Industry may get evaluated. Reference 1. Luh B.S. and York G.K. (2000), Commercial Vegetable Processing, second edition U.S. Dept. Agric. Handbook Lakshmi. A, 2007, Indian Agricultural Agreement on Agricultural: some issues, Southern Economist, December 1, pp M.S. Sidu and Kamal Vatta (2007), Development Experience of Indian Agriculture: An Appraisal of post- Reform Period, Southern Economist, October, 2007 pp Ramachandran R (2008). Indian s Position in Global and Regional Food Production, Kisan World, February, pp Anjaiah J., 2008 Inter Regional and Inter- state Disparities in cultivation, production and productivity in food processing Agricultural commodifies in Andra Pradesh, Southern Economist, January15, pp

10 6. Nageswara Rao M. and Srinivas Rao S, 2009, Direction of Trade in Indian agricultural Ecommodity Exports, Southern Economist, February1, pp Maheshkumar S (2009) Food Industry in India, Kisan World, September pp Ammannya K. K. 2010, Union Budget Primary to Agricultural and Rural Development, Southern Economics, Vol.48, March.15, pp