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SWOT ANALYSIS OF FOOD PRODUCTION INDUSTRY
Strengths
The Indian food production is large, competitive and well developed, offering products at low
prices. The sector experiences a constant demand, as Indians have a strong preference for
fresh rather than processed foods and for local spices and ingredients (The World Bank, 1997).
Provides employment for a large Indian population, living in rural territories.
Recent advances in technology and government initiatives support the development of the sector.
In pursuance of the government policy to strengthen and promote IT led governance, the
department of agriculture and cooperation has been taking various measures to promote the use
and application of technology
with the aim of making agriculture “online” for the use of farmers, exporters, and traders, etc.
Weakness
One of the major weaknesses present for the agricultural sector in India is in the lack
of government support. Unlike in East Asian countries, the shift of the labour force from food
production (agricultural) to non-food production (agricultural) in India is peculiarly slow, largely
attributable to rigid labour laws in both the food production and industrial sectors. Gliessman
(1989) also highlights the need for pressing on with reforms in agriculture, in particular, trade
liberalization and export promotion strategies. Becker and et al. (1992) also claim that though India
spends on agriculture nearly twice as much as some East Asian economies, this level of
spending on agriculture does not translate into a significantly higher sectoral performance.
Inadequate road linkages also remain a major constrain for the development of well- functioning
agricultural markets. A continuing fragmentation of land-holdings, poor maintenance of existing
irrigation systems and declining soil fertility in some areas are other factors. Another weakness is
based on seasonality and the fact that agricultural sector output heavily depends on the
annual monsoon, as less than one-third of cropland is irrigated. The main foodgrain crops, for
example, and some cash crops (oilseeds, cotton, jute and sugar) depend on the south-west monsoon
(This brings 80% of India's rain, usually within a three-month period from June to mid-September.
The 2002 south-west monsoon was disastrous, causing the autumn grain harvest to fall by 18%
year on year. In 2004 the sector stagnated in comparison to the previous year when the best
monsoon rains in a decade generated growth of around 10% in the agricultural sector. Excessive
rainfall in 2005 caused severe flooding in Maharashtra (The Economist Intelligence Unit
Report, 2005a)
Opportunities
A growing population, rapid economic development, and political and social demands exceed the
mandate and capabilities of any corporation in an emerging economy (Bhagwati, 1998), and India is
no exception to this. A growing population has made industrial development and one-half of this
area is reserved for the production of timber and other forestry products (Varshney, 1998).
However, there are increasing concerns from environmentalists and local government over the
rapid depletion of forest areas, ecological factors, and scarcity of natural resources. As income rises,
India is becoming an increasingly important market for processed foods, especially in the cities and
among young people. Aware of quality and international brands, consumers are less likely to
support national products, and are more vulnerable to pay premium prices for foreign products of
better quality. This represents a potential substitution to the local products, impacting the
production levels of agriculture sector. Food support prices for wheat and rice have given farmers
little incentive to diversify and have filled government storage facilities to overflowing, while
keeping the market price of foodgrains artificially high. Current agricultural policy, which
supports cereal production, is exceedingly expensive and will be unable to deal with the
likely scenario of a shift in consumption from cereal food towards non-cereal food. A lack of market
infrastructure also hampers the movement of crops, leading to sudden shortages. India has
considerable potential as an exporter of rice, cotton, many types of fruit and even flowers, but this
has so far not been tapped (Yeoh and Siang, 2006). The introduction of high-yield crop varieties and
new fertilising and irrigation techniques over recent decades ' the so-called Green Revolution
' dramatically increased productivity in some regions. India has been self-sufficient in food sincethe
mid-1970s, maintaining buffer stocks adequate to meet demand despite failed harvests and
seasonal fluctuations (Ramakrishnan, 1993; The World Bank, 1997.
PEST ANALYSIS
Realizing the importance of Indian food production for economic development, the central
Government of India has played an active role in all aspects of agricultural development.
Planning is centralized and planned priorities, policies, and resources agricultural sector. One
of the most critical obstacles of policies applications in agricultural sector is in ensuring
food security - access of the population to sufficient food to meet nutritional requirements.
Food security issues tend to cover not only issues related to availability and stability of
food supplies but also issues of access to this supply. This last is related to the resources needed
to procure the required quantity of food. However, these issues in India are considered to
be sensitive and hence, where a large percentage of the population is dependent on
agriculture need a certain degree of autonomy and flexibility in determining their domestic
agricultural policies. The Economist Intelligence Unit Report (2005) also implies that the
government does not fully understand its importance. These would have to be geared towards
improving productivity, enhancing income levels, reducing vulnerability to market fluctuations
ensuring stability of prices and so on.
Economic
India is a two-tier economy, with a cutting-edge and globally competitive knowledge-driven service
sector that employs the brightest of the middle classes on the one hand, and a sprawling largely
rain-fed agricultural sector that employs the majority of the vast and poorly educated labour force,
on the other. The agricultural sector, with fishing and forestry, accounts for around 20% of GDP,
services 53% and manufacturing 27%. Agriculture represents an important economic activity for a
large population of the developing world India’s agricultural sector provides employment for about
60% of the country’s workforce and accounts for one-fifth of GDP (Meisinger, 2006). Both in terms
of foreign investment and number of joint- ventures / foreign collaborations, the consumer food
segment has the top priority. The other attractive features of the Indian agro industry that have the
capacity to lure foreigners with promising benefits are the deep sea fishing, aqua culture, milk and
milk products, meat and poultry segments. The serious foreign-exchange crisis in 1990 led to
a number of well-publicized economic reforms in the early 1990s dealing with trade,
industrial licensing, and privatization. The reforms had an impact on the agricultural sector through
the central government's effort to withdraw the fertilizer subsidy and place greater emphasis
on agricultural exports. The cut in the fertilizer subsidy was a result of the
government's commitment to reduce New Delhi's fiscal deficit by removing grants and subsidies
from the budget. The government action led to a reduction in the use of chemical fertilizers
and protests by farmers and opposition from political parties. The government was forced
to continue the subsidies but at a somewhat lower level (Yeoh and Siang,
2006). Agricultural exports from India were 44 percent of total exports in FY 1960, decreasing to
27 percent in 2003 (India Economic Survey, 2004). This drop in agriculture's share was somewhat
Misleading because agricultural products, such as cotton and jute, that were exported in raw form
in the 1950s, have been exported as cotton yarn, fabrics, ready-made garments, coir yarn, and jute
manufactures since the 1960s. The composition of agricultural and allied products for export from
India changed mainly because of the continuing growth of demand in the domestic market. This
demand cut into the surplus available for export despite a continuing desire, on the part of
government, to shore up the constant foreign-exchange shortage (Edward, 2006). Over the period
1994-2005, the drive for market liberalization and globalization has severely imposed on the rural
household economies. The traditional mode of agricultural practice has been destroyed. The
government allocations on the agriculture sector constantly register a decline (The Economist
Intelligence Unit Report, 2005). The recent economic system giving a free hand to multinational
corporations in agriculture sector has further caused a rapid shrinkage of the traditional practices
and replacement of folk crop varieties with high yielding and hybrid varieties, which escalated the
cost of agricultural production while stagnating productivity. The farm credit system in Indian
agriculture, evolved over decades has been instrumental in enhancing production and marketing of
farm produce and stimulating capital formation in agriculture. Credit for Indian agriculture has
to expand at a faster rate than before because of the need to step-up agricultural growth
to generate surplus for exports, and also because of change in the product mix towards
animal husbandry, aquaculture, fish farming, horticulture and floriculture, medicinal plants,
which will necessitate larger investments.
Social
Since its independence in 1950s, foreign aid has made a significant contribution to the agricultural
progress in rural India. Increasingly since independence, India has been sharing its agricultural
technology with other developing countries. Numerous foreign scientists have received special and
advanced training in India; hundreds of foreign students have attended Indian state agricultural
universities. In the late 1980s and early 1990s, India provided short and long-term training courses
to hundreds of foreign specialists each year under a variety of programs, including the Technical
Cooperation Scheme of the Colombo Plan for Cooperative Economic and Social Development in Asia
and the Pacific and the Technical Cooperation Scheme of the Commonwealth of Nations Assistance
Program. India is one of the oldest civilizations with a kaleidoscopic variety and rich cultural
heritage. During the period of 55 years independence, it has achieved multifaceted socio-economic
progress and is now the tenth industrialized country in the world and the sixth nation to have gone
into outer space to conquer nature for the benefit of the people. However, those people employed in
agricultural sector, are those less educated, living in rural areas. More than 60% of the India’s
population is dependent on the food production. The last ten years of development in the
agriculture sector in India, show that the lower government investment in agriculture and market
driven system has adversely Maffected the livelihood of rural India. Nilekani (2006) suggest that in
India a majority of the farmers come under the category of small and medium farmers and are
solely dependent on the local market rather than international market. The prices of their product
are determined by local variables rather than international markets, so the trade liberalization may
lead to an adverse impact on the Indian agriculture sector and women may suffer. Large numbers of
women are engaged in agriculture, primarily in the production and processing of food. With male-
selective migration from rural areas on the increase, women are often left behind to take care of
both family and the farm on their own. According to the 2001 census, 27.5 percent of cultivators in
the rural areas are female, while in the case of agricultural labour, as much as 46.9 percent are
women. Of the rural workforce, an overwhelmingly large proportion, i.e., 80% are employed in the
agriculture sector. About 36.5% (40.6 million) work as cultivators on their own/family landholding,
while about 43.4 percent (48.4 million) are engaged as hired agricultural labour (Palmer-Jones and
Sen., 2003). It is, therefore, obvious that women play no small role in food production. In other
words the mode of female participation in agricultural production varies with the land owning
status to farm household. Women’s roles range from managers to landless labour. Also, as
globalization shifts agriculture to capital and chemical intensive system, women bear
disproportionate costs of both displacement and health hazards.
Technological
The last few decades have witnessed a visible transition in the industrial landscape of
India. Technology has helped society to cut across the traditional boundaries for getting
converted into an emerging information society. The Government's long-term vision on
“Information and Communication Technology (ICT) in the Agriculture Sector” aims to bring
farmers, researchers, scientists and administrators together by establishing a system known
as “Agriculture Online” for the exchange of ideas and information. A land information system has
already started using geographic information systems (GIS) and remote sensing to help the farmers
to plan their activities and facilitate decision-making and planning at the local level (India, 2004).
Farmers can find out the chemical composition of their land through lab testing to know how fertile
their land is and what should they grow to make maximum profits. Achievements of Indian
agriculture supported by technology like development.
Conclusion
From the above research it is evident that agricultural sector represents one of the most significant
sectors of the economy of India. Therefore, its prospective growth has to be one of the primary
objectives of the government development plans. The current state of the agricultural sector is a
cause for concern and calls for a change in the government’s agricultural policy, indicating not only
a greater restructuring of the public spending and more government funds, but also an integrated
tolerant approach to farming, ecological concerns and future growth prospects. However, it still
represents a big challenge for the industry; (though the industry has seen some policies and
regulations) there is still a gap between the intent of these environmental policies and the actual
development.