The Indian food processing
industry, despite its substantial contribution to value addition, employment
generation, and international trade, remains at a nascent stage, processing
only about 10 per cent of the total agricultural output. The juxtaposition of
strong growth indicators with persistent structural constraints presents a
question of whether the expansion of Indian FPI has been propelled primarily by
input expansion or by genuine efficiency and productivity improvements. To
address this, the present study attempted to assess the Total Factor
Productivity of the Indian food processing industry by employing the data
collected from the Annual Survey of Industries for its various sub-sectors from
2008-09 to 2019-20. The widely used technological framework of the Cobb-Douglas
production function was utilised to analyse the data. The major stake of Indian
FPI was held by grain processing units that accounted for more than half of the
total registered units, followed by the “others” category, which constitutes
seed and nut processing units along with the units involved in the preparation
of sambar powder, papads, appalam, etc, and the oil sub-sector. The results
revealed that India’s organised food processing sector continued to be
dominated by traditional sectors, with blooming non-traditional sectors.
Analysis of output elasticities revealed that most of the sub-sectors were
largely driven by capital expansion, and further, results on TFP growth
unveiled a heterogeneity pattern of productivity gains, with macaroni
processing units registering the highest productivity improvement. The dairy
sub-sector showed negative TFP growth and, coupled with decreasing returns to
scale, indicated efficiency gaps, while the meat and bakery sub-sectors with
positive TFP growth and increasing returns to scale exhibited untapped scale
potential. This mixed productivity pattern highlighted the need for targeted
policy interventions focused on technological diffusion, strengthening supply
chain efficiency, skill development, and sustainability rather than merely on
augmenting production. Although this study analyses productivity in the
organised food processing sector, future work could examine the unorganised
segment, which offers considerable scope for rural employment and income
diversification. Further exploration on policy impact, supply-chain
constraints, technology adoption and resource use efficiency can provide deeper
insights into the sector-wide productivity.
Author(s)details:-
Cheela Soumya
Division of Agricultural Economics, ICAR-Indian Agricultural Research
Institute, New Delhi, India.
Rajat Kumar Nath
Division of Agricultural Extension, ICAR-Indian Agricultural Research
Institute, New Delhi, India.
Pavithra V
Department of Agricultural Statistics, Uttar Banga Krishi Vishwavidyalaya,
Pundibari, West Bengal, India.
Vaishnavi Sakaray
Division of Agricultural Extension, ICAR-Indian Agricultural Research
Institute, New Delhi, India.
Please see
the book here:- https://doi.org/10.9734/bpi/fsarh/v5/6594
